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Summary:

Some traditional media entities seem to be hoping for a single magic bullet that will cure their revenue problems, but it is more likely success will come from making a number of smaller bets. Unfortunately, large media players don’t tend to be good at that.

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As traditional media revenues continue to fall off a cliff thanks to the precipitous decline in print advertising, there seems to be a desire on the part of media companies to somehow find a single solution that will magically cure this problem — hence the increasing popularity of paywalls. But as media industry analyst Ken Doctor points out in a recent post at the Nieman Journalism Lab, it is far more likely that success for media entities of all kinds will come by making smaller bets on a number of different things. The big problem for the industry’s traditional players is that they have spent decades getting good at doing one thing. But now not as many people want that thing, and experimentation and rapid innovation is not in the media companies’ DNA.

Doctor says that after years of hoping the rise of the Web and digital media would not decimate the industry, followed closely by the hope that digital ad revenue would somehow arrive and close the gap, print executives are finally starting to understand that both of these hopes are futile:

Until recently, the holy grail was summed up in two words: replacement revenue. Now the jig’s up. No matter how fast you shovel digital dirt into the chasm of print loss, you can’t recreate the past; you can’t fill the hole.

Stack those digital dimes as fast as you can

John Paton, the CEO of Media News Group and a leading advocate of the “digital first” approach for newspapers, has said that the only possible response to the problem of digital dimes’ not making up for the loss of print dollars is to “stack those digital dimes” as fast as possible. In other words, accumulate as much as possible from as many sources as possible (while also reducing costs to try to stem the bleeding). In his Nieman post, Doctor notes that Meinolf Ellers, the managing director of German multimedia agency dpa-infocom, made a similar point at a recent conference of news executives:

What we all see — newspaper publisher or news agency — is that the bundle is eroding, losing its power. The more we see the bundle losing market share and reaching the end of its lifecycle, the more we have to work on smaller, fragmented products that, not each by each, but overall, can compensate. That’s the strategy.

This reminds me of a phrase that David Weinberger, a fellow at Harvard’s Berkman Center for the Internet and Society and co-author of the book The Cluetrain Manifesto, came up with to describe how the Web works: He called it “small pieces, loosely joined.” One of the things I took from this is the idea that the Web allows for individuals and small groups or entities to have almost as much power as — and in some cases more power than — established players. The barriers to entry, and the barriers to discovery, are so much lower now, thanks to the Web’s “democratization of distribution.”

We have seen the impact of exactly that phenomenon in the media industry in spades over the past few years, with the rise of digital-first entities such as the Huffington Post, TMZ, Politico and others, as well as the rise of individual media sources’ using social tools to become the equivalent of media entities in their own right or hybrids such as Andy Carvin of NPR and his one-man Twitter newswire model.

What will readers pay for other than just a paywall?

In his discussion of what media outlets can do to make a number of smaller bets instead of one or two big ones, Doctor refers to a number of things, including “in-sourcing” — using printing presses and distribution chains to provide services to others who need those skills — as well as providing marketing services outside the traditional newsprint platform. These are also things that Paton has focused on while trying to remake the Journal-Register Co., a chain of papers he took over after it emerged from bankruptcy.

But the things that really interest me are the ones that fit the kind of “velvet rope” model I have argued for as an alternative to a hard paywall around content: the ones that encourage a kind of membership approach, where new features or ways of packaging content or experiences related to that content are offered to readers. So live events, for example, which both the Texas Tribune and the Atlantic have been using to their advantage, or e-books, which are a different way of packaging content, can be remarkably profitable, even if that content has already appeared on the Web for free.

Unfortunately, many traditional media companies simply don’t have the kind of culture that allows for random experimentation or rapid iteration and prototyping: in other words, a startup culture. Some papers such as the New York Times have a skunkworks or research lab, and others such as the Washington Post have experimented with new features such as the Trove recommendation engine or the Facebook social reader. But many of these still feel like afterthoughts or side projects rather than a coordinated plan of attack on multiple fronts. The ones that are trying the hardest always seem to be the digital natives, or the ones with the gun to their head.

Post and thumbnail images courtesy of Flickr user See-ming Lee

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  1. wow is this column off. Integrated retail which is the future main revenue of interactive web tv and video…which is becoming the dominant platform of the web… only works with long form content. Short clips can’t carry the ethos, pathos, logos of retail instigation. Such a misguided piece.

    1. Thanks — but did you read the column? The “small pieces” reference isn’t to short clips, it is about seeing the business opportunities of digital media as being located in many different — and smaller — aspects of the business rather than a one-size-fits-all solution.

      1. Yes. But/and the implication is… this is “the future of media = small pieces, loosely joined” – just silly.

      2. Yes, and/but the implication is “the future of media = many small pieces, loosely joined. Silly and misguided. Like I said the little pieces loosely joined are only because we are in a paradigm shift and people don’t know how to join them. Those little pieces will be a very small (and $$$ challenged) in the model that is clearly filtering up within understanding of integrated retail …which has always been the final destination of the model. Just new media people in dissing traditional media did not understand entertainment revenue models missed that they have little understanding of “audiences” over users. Loosely -Ethos pathos logos drives purchase instigation or emotion, appetite, utility… the architecture that creates that is not sustainable in small pieces outside restaurants and location.

    2. Citizen Journalist dlwillson Saturday, April 14, 2012

      @dlwillson, you speak perfectly to the tunnel-vision that traditional media has with regards to distribution. The only way that your fairytale of “integrated retail” (a newspaper stand model) could work is if the old guard in the media are able to perverse the nature of the Internet and turn it into a consumption only channel. Your paradise is a continued monopoly on attention. You’re upset and I can understand that, you’re becoming irrelevant. :(

      I believe that Mathew is correct in his statements.

      Traditional media is dead, unless they can change the nature of the Internet to make it more like cable television. But that’s most likely not going to happen outside of an act of Congress (CISPA). The cost of broadcasting a lens is now pennies and anyone with a Smart Phone can do it.

      There is no future for large newsrooms that egocentrically run around like soldiers of information. If you wanna hold onto that boyhood dream of yours, don’t ruin the fun for the adults.

  2. Ridiculous & faulty assertion- Fox News is making tons of money – “traditional” media revenues falling because ultra liberal 60s radicals now control “tradional” media and lack the professionalism to report without bias. So the 50% of Americans that are conservative, are turning off ABC CBS CNN and NBC – they watch FOX – great competitive advantage Fox has-they get 50% of media market without any competitors-while 85% of media market only going after 50% of “liberal” viewers-very crowded. MSM pull your heads out-lose the bias-the viewers & money will follow.

    1. If FOX News is your model for successful media then we, as a culture, are screwed.

  3. Matthew,

    There is a lot of truth here, but I think you’ve missed something. Your column is basically advocating a “long tail” approach, which is true enough. However, that type of content tends to be a commodity and is often centralized (i.e. Reuters and AP).

    To make a great media product, you need a “short head” as well. So while start-up tend to monetize the long tail very well, they fall far short of the revenues and influence of a New York Times.

    I encountered this problem when I was running a news brand a while back and it seemed to work (at least for us).

    Greg

    Where I think some of the major players miss out is monetizing the entire curve. How much commodity content can a Paul Krugman or David Brooks support? Probably quite a bit, but they tend to integrate other columns with columns rather than basic articles.

    1. Thanks for the comment, Greg. I’m not saying the long tail is the only thing newspapers should focus on — I agree that you need both that and the short head. But I disagree that the long tail is always commoditized content. It certainly doesn’t have to be. In any case, my point is that media companies need to be thinking about all the parts of the value chain, not just one.

  4. I am happy to pay for currently free content, but not on the terms currently on offer. I – like many people – have ideas about what a gateway to News Journalism could look like. Why would any of us share the detail with you, for free.

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