The Praized Blog

Continuing our series on the atomization of content and business models, today I look at the newspaper industry.

First, from the user point of view: online (vs. the print version), it’s much more difficult to find the glue that will make your news container (your URL) stick together. if you have a strong brand (the New York Times, for example), people will navigate directly to your site but readers can now access your content via RSS readers, blog posts and news aggregators like Google News. These have been flourishing, reorganizing newspapers’ articles (the new content atoms), into flexible reading formats. For newspapers, it’s a catch-22. You want to be indexed by news aggregators to drive traffic back to your site but you wonder if you’re losing brand equity at the same time. Efforts at trying to get readers to register to newspapers’ sites (to generate potentially valuable socio-demographics information) have been a major failure. Clearly, the only strategy now is building a strong brand online while allowing readers to access your atomized content via a variety of vehicles but that creates problems from a monetization point of view.

Traditionally, the newspaper business model has been found in these three revenue categories: reader subscriptions, traditional display advertising and classifieds. Except for a few exceptions (the Wall Street Journal comes to mind), experiments in paid online user subscriptions have been failures as digital content is much more difficult to sell as an aggregate than print content. Classified revenues are being nuked by free sites like Craigslist or Kijiji, or aggregators like Oodle. Newspapers have been also forced to offer free classifieds, managing to generate some priority placement /enhanced content revenues but not to the previous print level. Online display advertising is working but it does not monetize as well as print advertising.

To better monetize their destination site, newspapers have been looking at various new solutions. One is in-line text ads (double-underlined sponsored keyword ads appearing directly in the article text) delivered by companies like Vibrant Media but, as I mentioned yesterday, the blurring of the line between editorial and advertising content has created ethical issues within news organizations. Already in 2006, in an article called “Is It News…or Is It an Ad?”, the Wall Street Journal exposed the various issues around the product:

“This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers’ haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.’s Fox News, Cox Enterprises Inc.’s Atlanta Journal-Constitution and Hearst Corp.’s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising. “Journalism ethics counselors decry the trend. “It’s ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility,” says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.”

More recently, Tim McGuire from the Walter Cronkite School of Journalism in Arizona wrote about its use in the Arizona Central web site:

Michael Coleman, Vice-President of Digital Media for AzCentral, told me late Friday that the site has been using Vibrant Media for “two or three weeks.” Coleman described the relationship as a test and said this is not a “Gannett roll-out” of the concept even though some Gannet papers are using the system. “We’ve got a pretty non-committal contract with them, Coleman said. “The publisher made the call, and we decided to try it and see what happened.” Coleman said the experimental aspect of the deal explains why nobody has announced this deal.

Business Week wrote about the phenomenon in December:

Many journalists believe that selling the words in a story blurs the line between editorial and ad content. Some worry it creates an incentive to insert ad-linked words or order up certain types of stories. Forbes’ online arm caused a ruckus in 2004 when it rolled out in-text ads. After an outcry among the editorial staff and negative media coverage, Forbes ended the practice. (…)

Publishers are paid by Vibrant and other marketing companies based on how many times readers scroll over a word. Advertisers only pay Vibrant for how many times a reader actually clicks on an ad. In-text ads draw a higher response than traditional Web ads: About 0.2% of Web users click on posterlike ads known as banners; Vibrant CEO Douglas Stevenson says 3% to 10% scroll over and click on in-text ads, depending on the category.

I think the use of in-line text ads might be problematic thus far because newspapers have been using the technology to better monetize their destination site. I would suggest that the better use of this new ad vehicle would be to monetize a smaller atom of content, i.e. the news article, decentralized from the destination site. Embedding in-line text ads within RSS feeds or other distribution mechanisms might be a small price to pay to allow readers to access news article outside of the newspaper’s site. Another option would be to have RSS ads, like the Feedburner Ad Network.

I think the general takeaway here is that newspapers shouldn’t look at the same business models to monetize centralized and atomized content.

Update: The Kelsey Group discusses “Newspaper Next 2.0, a “progress report” by the American Press Institute on the evolution of newspaper companies beyond the print edition.” I took a quick glance at it (it’s a 110-page document) but it does not seem to address many of the business model issues that newspapers are facing. As my friend Peter K. says in the post, “The report has a better fix on consumer-oriented solutions than business solutions. But that’s not surprising for a newspaper industry (i.e. editorial-driven) product. If the Yellow Pages Association commissioned similar research, it would probably be the other way around.”

“My exit strategy is death”

Craig Newmark, talking at the Google Local Markets Symposium, when asked if he was thinking of selling his craigslist business eventually.

(via SpringWise)

What do you get when you cross online classified ads with web-based video? Realpeoplerealstuff.com is equal parts Craigslist and YouTube—a whole new way for customers to reach out to one another to sell their used appliances, automobiles, collectibles, concert tickets and countless other goods and services. “Realpeoplerealstuff.com combines the hottest internet trends in one, easy-to-use site: e-commerce, snarky writing, funny videos, everyone’s desire to be a star and video sharing.”

With a few clicks of a mouse, customers can upload their own video commercials, recorded on their camcorders, webcams, digital cameras or cameraphones. Ads are organized by category and location, and users can enter text descriptions, prices, thumbnail photos and tags along with their video clips. For best results, users are encouraged to engage their personality, creativity and sense of humour when filming their commercials. And who knows? One may well turn out to be the next average Joe or Jane launched into internet stardom. The service is entirely free—for now at least, though there may come a day when, like Craigslist, modest charges apply to select portions.

What it means: I really like the concept as I’m very visual. But I wonder about the quantity of energy needed to produce a video vs. taking a simple picture, even if there are many video-capture devices out there. I remember when I started selling stuff on eBay in 2002. There used to be some barrier to entry if you wanted to post a product picture. Then, eBay introduced one of their coolest seller function: the UPC code product finder. When listing a product in some categories (like videogames), you just need to enter the product’s UPC code to instantly get the default image attached to the product, usually a cover shot. By removing friction, eBay got me to post more stuff for sale. I think Realpeoplerealstuff.com will have to think about how they can remove some of that friction.

I also think that classified advertising is all about local. Right now, local seems to be a second thought to the whole site. They need to embrace local much more to eventually be successful. There’s also a chicken & egg problem with local content. You need local content to make your site relevant to local users. I think Realpeoplerealstuff.com should be looking at doing backfill content deals (maybe with Oodle.com) to improve their local content breadth and depth.

“This is a time of creative destruction, (…) I do have a great deal of sympathy with the people who run printing presses because I think they’re screwed. … The people who do news and the people who fact check it have great futures ahead of them.”

Craig Newmark (from Craigslist fame) when asked “Does he feel any guilt for being what some call a newspaper killer?”. He was being interviewed by Charlie Rose at the NAA National Convention (reported by PaidContent.org)

Meta-Praized is a collection of links & stories we’ve “dugg” on Digg.com in the last 7 days. Feel free to add us as a friend: PraizedDotCom .

• “How Much Privacy?” (re: ComScore MediaMetrix) in Forbes Magazine
• “Fox, Viacom, CBS and NBC discuss YouTube rival” via Reuters
• Google adds new layers to Google Earth via TechCrunch
• BidNearBy.com: a cool eBay, Craiglist and Google Maps mash-up via ProgrammableWeb.com
• “Google’s Click Fraud Rate is Less than 2%” via Marketing Pilgrim
• “Google Base Has a New Interface” via the Google Operating System blog
• Google adds “+ box” to show Google Maps in regular search results via Search Engine Journal
• “LiveDeal.com Adds Yellow Pages to its Online Local Marketplace” via PrNewswire
• ” Consumers Prefer Movie Rentals To Downloads By A Wide Margin” via TechWeb
• Yahoo’s business case for acquiring Facebook.com pops-up on the Web via TechCrunch
• Skype reorg, eBay people now in place via GigaOM

MediaPost reports on a speech Craigslist CEO Jim Buckmaster gave to the investment community at UBS’ 34th Annual Global Media & Communications Conference in New York.

According to the article, it was a “culture clash of near-epic proportions”. When an UBS analyst asked him “How does the site plan to maximize revenue? “, Buckmaster replied “That definitely is not part of the equation. It’s not part of the goal.”

“Buckmaster insisted that the company doesn’t especially want to make money. While it charges for job listings in seven cities ($75 in San Francisco, $25 in the other six) and apartment listings by brokers in New York ($10), those charges aren’t to make a profit as much as to cover expenses and keep out scammers, Buckmaster said. He added that some users requested the fees, in hopes of keeping the listings legitimate.” When asked: “How did the site arrive at $10 for real estate listings”, he responded “Ten dollars sounded like a nice round number”.

He was also asked questions about how the site could make more money, more specifically with text ads from Google. He said they had been approached, that the numbers had been crunched for them and that this number was quite staggering but, no, the site wasn’t interested. “No users have been requesting that we run text ads, so for us, that’s the end of the story. If users start calling out for text ads, we’ll listen.”

The ZDNet blog has more excerpts from his speech: “When asked why Craigslist wouldn’t use eBay technologies such as PayPal (eBay owns 25% of Craigslist), Buckmaster says users haven’t clamored for it. “eBay has fantastic technology but the key difference is that 90 percent of eBay transactions are over a long distance,” says Buckmaster. “Ninety-five percent of our transactions are between people that live near each other. It’s wonderful as a technology but not relevant to what we do.”

According to a joint UBS & Comscore report discussed on John Battelle’s blog, Craigslist was #8 in the US in terms of page views, #6 in terms of Average Minutes Per Day Per Visitor and 3# in terms of Average Pages Per Day Per Visitor.

Update: Mathew Ingram tries to calculate how much Craigslist is worth: “Craigslist currently gets a mind-blowing 5 billion page views or so a month. A premier site like Craigslist — and one that is focused on classified advertising, which is inherently purchasing-type behaviour — would likely command a fairly high CPM rate for ads. Let’s say theoretically it was $10 per thousand. That would bring in $50-million a month (StartupBoy says Craigslist is worth more than eBay, and he doesn’t even include ads).”

What it means: As his bio says, Jim Buckmaster is possibly the “only CEO ever accused of being anti-establishment, a communist, and a socialistic anarchist” :-). But kidding aside, if you’re in the same space as Craigslist, what do you do with a competitor that does not play by “your rules”? Do you use the same strategy that you’re using with other “typical” competitors or do you have to play by “their rules”. I think this is yet another example of a company that has always been user-focused and has drastically succeeded like Google. And I think you have no choice but to follow their lead and improve on what they are doing.