Ten Good Reasons To Buy: The Newspaper Edition

from the it-works dept

Recently, Mike posted a concise list of Ten Good Reasons to Buy – one of two essential elements in the Connect with Fans + Reason to Buy strategy that he has been observing and helping to define for some time. These reasons were brainstormed at Midem 2009, so they focus on the music business – but CwF+RtB has potential in all sorts of industries (Techdirt itself employs it).

So, with the New York Times going metered and rejecting a proposed membership model that would have been much more CwF+RtB-ish, I thought it might be worth looking at Mike’s list from the perspective of newspaper publishing. Though some of the ideas are more suited to musicians, it still qualifies as Ten Good Reasons to Buy.

(It should be stated from the outset that I believe advertising will continue to be the primary source of revenue for newspapers, and that I think paywalls and meters are doomed to fail. See my recent post here on Techdirt and my extensive ramblings on good.is for more on why. That being said, if newspapers use CwF+RtB in truly innovative ways, they might just turn the whole industry on its head. Stranger things have happened.)

“1. Access: Access to the actual content creators is a real scarcity and one that can often be used to make money in ways that make fans quite happy.”

Sometimes newspapers do this backwards. When fundraisers and events and the like seek media sponsors, newspapers will request a hosting spot for one of their writers or editors as a condition for the sponsorship. In other words, the content creators buy access to the fans.

This isn't always how it goes though – it depends on the event in question and the profile of the staff. In some cases the newspaper seeks sponsorship for their talent, and throws in event appearances and panel discussions to sweeten the deal. But in all cases, the main purpose of the whole shebang is to sell more subscriptions.

There might be a lot more opportunities here. Why just panels and events? What about workshops, custom reports and analysis, even one-on-one attention? The thing to remember here is that the fans in question, or at least the most profitable ones, are business fans. Businesspeople read newspapers because the information and expertise has direct and immediate value to them. Connect finance writers with traders, legal writers with law firms, tech writers with software developers – with some creativity, there could be money to be made.

I can think of some ideas outside the business sphere too, but I have gone on for too long already and I'm only on Reason #1.

“2. Attention: One of the most important scarcities in the digital age. Attention is incredibly scarce, and if you've got it, you can do a lot with it.”

This one is simple: active, vibrant comment sections where writers, columnists and editors regularly participate. Many newspapers see some of the trash that inevitably turns up in every comment section and go sour on the whole affair, allowing their columnists to shutter their comments when they should be requiring them (and paying them if necessary) to get involved. They will quickly realize that online communities become self-moderating once rational, intelligent debate is established and readers know they have the writers’ attention.

So far this isn't a reason to buy – at least not for the readers themselves. Advertisers are another story. An engaged community of readers is worth a lot more than the impressions they bring to a website – savvy advertisers will want their ideas, not just their eyes. See Techdirt's IT Innovation blog for a prime example of this.

“3. Authenticity: This one also includes ‘trust.’ The ability to be authentic carries tremendous weight and is quite scarce at times. But if you can provide something that is authentic and valuable, it's often a very strong reason to buy.”

Authenticity is what everyone already touts as the strength of newspapers and the reason that people will consent to pay for their content. But newspapers are far from perfect, and in a world where transparency is becoming as important as trust, their reticence about sources and methods is starting to seem old-fashioned. If newspapers continue to resist the linking culture, and continue to leave out details that could easily be added in appendices and footnotes online where space is unlimited, they risk being left behind. Moreover, if big names leak too much talent to more innovative startups, they could quickly lose authenticity (and surely someone will say they've jumped the shark.)

So I guess what I’m saying is: yes, without authenticity none of these other RtBs matter in the slightest – so don’t go sacrificing it now.

“4. Exclusivity: Many people value having something that very few (or perhaps no) others have.”

This is essentially what has allowed the WSJ paywall to succeed where so many others have failed. At the business level, and especially in finance, exclusive information has significant value, and the paywall created a certain sense of exclusivity. Ultimately the flimsiness of that exclusivity could be what brings it down – but what about something truly exclusive? Custom news aggregators for businesses have been showing some success – what about exclusive news aggregators managed by a team of the newspaper's respected editors? That's just one idea of many.

Outside the business world this is a tougher nut to crack. Financial news gets more valuable with exclusivity, but most news is the opposite: a big portion of its value comes from sharing it. Nonetheless, there may be certain forms of exclusivity that avid readers will pay for. It will come down to individual newspapers knowing their strengths and their audiences, and seeing ways to offer them something they want. If anyone has any creative ideas, I'd love to hear them.

“5. (New) Creation: The ability to create something new is a scarcity. This often confuses people, because a digital good once created is no longer scarce -- but the ability to create it is still very much a scarcity.”

Most newspapers understand that gathering information and creating content is what they do, so there's not much to say here. Newspapers that are drastically cutting back reporting staff and ramping up the wire content should remember that, while distributed reporting makes a lot of sense in many situations, every publication needs to continue creating something new that has value, or all is lost.

“6. Tangibility: The granddad of scarcities: physical products.”

News on paper is the core physical product at the moment, but that’s not going to be around forever. I suspect that some newspapers will transform into news magazines, since the market for glossy, full-colour formats with good photography and long-form journalism will likely outlive the market for cheap newsprint broadsheets. A nice physical product has always been important to magazines, and people are willing to pay for it; newspapers are designed to be as cheap and disposable as possible, which is why the internet renders them obsolete. This shift to a magazine format might actually make sense for some newspapers, if they can establish a role for themselves as what Devin Coldewey calls the delayed media.

All that being said, the money from selling the physical product has never carried the weight of newspapers or magazines, and it’s certainly not going to start now.

In terms of other physical products, I don’t see any reason why newspapers couldn't sell more merchandise, though I’m not sure how to go about it in a way that would bring in significant revenue. Lots of newspapers sell things like photo prints and keepsake copies, but so far it hasn’t proven to be that lucrative. On the other hand, those initiatives are often old and mechanical, and some may not have had fresh marketing treatment in years – who knows what they might be overlooking?

And if all else fails, the New York Times can just become an authorized Apple retailer.

“7. Time (saving or making): People will pay if you can save them time (or give them extra time in some manner).”

Time is especially valuable in business. As far as saving time goes, there might be a market for rapid fact-sheets and summarized reports that supplement the newspaper’s core editorial. Though difficult to sell by themselves, if combined with some level of exclusivity this could be a great revenue stream: customized reports, similar to the aggregator model I mentioned earlier. Some business publications do sell reports, but more often than not these are of the annual reference tome variety, a format that today is about as useful as a phone book. If there is money to be made, it will come from more rapid and direct business services.

“8. Convenience: If you make things more convenient, many people will buy, even if free options are available. That's one reason why iTunes has done so well.”

This is what a lot of people in the industry are banking on with the iPad and other tablets, but if they seriously believe the iTunes store will work for newspapers just like it does for music and movies, they are in for a rude awakening. Apple is selling music to people who are used to paying much more for CDs, and they still face stiff competition and had to remove DRM to satisfy their customers. Newspapers have an audience that is accustomed to getting the news for free, sharing it openly on social networks, blogging about it, linking to it and generally enjoying it without restriction. Moreover, while the digital alternatives to iTunes for music and movies are torrents or peer-to-peer programs, the alternatives to iTunes for newspapers will be countless news websites that are equally convenient and which stay free to soak up all the advertising revenue. Very few people, if any, are loyal to a newspaper the way legions of fans are loyal to a favourite recording artist. Convenience is still an important part of delivering the news, but that’s because readers already expect it.

It should be noted separately that the concept of Convenience also ties in with the custom business services I propose under Time and Exclusivity.

“9. Belonging: Never underestimate just how important a sense of belonging to a group or a tribe is – and being able to provide that in an authentic manner can be a true scarcity.”

A sense of belonging stems from the attention I discussed earlier. I talked a lot about comment sections, but those aren't the only form of audience engagement: Twitter is an extremely valuable tool, and I've often wondered if good old fashioned forums might have some potential on news websites.

But I think the real goldmine could be participatory journalism: there are a lot of citizens out there who want to get involved in the reporting process, and the concept is gaining steam, with YouTube and CNN getting on board, among others. So, why aren't there more people out there training citizen journalists? I bet newspapers, especially at the community level, would have an easy time finding groups and clubs that would pay for reporting workshops and seminars. Or they could try something like the PPF Group in the Czech Republic: opening hyperlocal newspaper-cafés where editorial staff will interact with the public (and partnering with Google in the process.)

And yes, I know that's an NYT link. It's ironic on two levels.

“10. Patronage: Definitely depends on the situation, but there are some people who just want to support an artist, no matter what. And that presents a scarcity.”

Out of curiosity I searched “newspaper patronage”, and I found this highly amusing editorial in an 1878 edition of a New Brunswick newspaper from the Google News archives (don't you just hate the way Google is destroying our culture?).

Filed Under: journalism, news, reasons to buy, scarcities

Ten Good Reasons To Buy

from the scarcity-plus-value dept

So I already put up my post about all the Connect with Fans + Reason to Buy (CwF+RtB) stories from last year, which kicked off with my presentation at Midem 2009 all about Trent Reznor and his business model experiments. This year, we wanted to do something a bit different at Midem and get a lot more interactive. So, we set up a brainstorming workshop to see if we could build these sorts of business models for some artists. I did a (very) short presentation to kick off the session (no video, sorry) and then we broke up the audience into groups where we could pick specific artists and (quickly) run through the process of setting up a business model. I wanted to share a basic writeup of what I presented, and sometime later I will try to do a writeup on some of what the groups discussed.

I was going under the assumption that, by now, most people understand the basics of how to "connect with fans" (though, we keep hearing stories suggesting that many still struggle with this a lot) and wanted to focus in the presentation on understanding the "reasons to buy." One of the problems is that many people assume that "value" alone is enough to get people to buy -- but as we've discussed multiple times there's a difference between value and price -- and assuming that value alone is enough to get people to buy isn't going to cut it -- especially if the product is abundantly available.

So the key is to find scarcities -- as we've said many times. But, not just any scarcities. Those scarcities must also be valuable. Value plus scarcity is the real reason to buy. And, the intersection may be different for each kind of content creator. In fact, it should be different for each content creator, because it is essential to recognize how to express the key value that a particular creator brings to the table. To help explain that, we discussed 10 key scarcities that are helpful to think through in creating reasons to buy. The list is not complete, but is a good starting point.

1. Access: Access to the actual content creators is a real scarcity and one that can often be used to make money in ways that make fans quite happy. In fact, a study released at Midem claimed that, in a recent survey, 19% of respondents claimed they would pay anything to meet their favorite star. Now, obviously, that's a bit of hyperbole, but it does suggest a high degree of demand for access from top fans.
2. Attention: One of the most important scarcities in the digital age. Attention is incredibly scarce, and if you've got it, you can do a lot with it.
3. Authenticity: This one also includes "trust." The ability to be authentic carries tremendous weight and is quite scarce at times. But if you can provide something that is authentic and valuable, it's often a very strong reason to buy.
4. Exclusivity: Many people value having something that very few (or perhaps no) others have.
5. (New) Creation: The ability to create something new is a scarcity. This often confuses people, because a digital good once created is no longer scarce -- but the ability to create it is still very much a scarcity.
6. Tangibility: The granddad of scarcities: physical products. Sometimes when we discuss scarcities people seem to think that we're only talking about tangible products. Nothing is further from the truth, as we often think that other non-tangible scarcities represent much larger opportunities, but that doesn't mean you should ignore the value of tangible products.
7. Time (saving or making): People will pay if you can save them time (or give them extra time in some manner).
8. Convenience: If you make things more convenient, many people will buy, even if free options are available. That's one reason why iTunes has done so well. Apple has made the whole process super convenient. It's also one of the top reasons why people say they buy bottled water -- even if they know the water quality is no different than tap water. They just find it more convenient.
9. Belonging: Never underestimate just how important a sense of belonging to a group or a tribe is -- and being able to provide that in an authentic manner can be a true scarcity.
10. Patronage: Definitely depends on the situation, but there are some people who just want to support an artist, no matter what. And that presents a scarcity.

So, we've got the list, but then what do you do with it. In my presentation, I looked quickly at a few artists (most of whom we've discussed before, so don't be surprised that you know their stories) and listed out what scarcities they appeared to use -- and made sure to include artists of all types: small to big. Among those we discussed were Josh Freese's hilarious tiers, as well as Jill Sobule's tiered offerings, noting that they involved a combination of access (hanging out with the artist, private concerts, phone calls, etc.), authenticity (in both cases, the lists were very much reflective of the individuals' personalities), exclusivity (many were limited), new creation (both involved the ability for the artists to write songs for the buyer), tangibility (offering tangible goods like CDs, t-shirts, and Josh's Volvo), belonging and patronage (big fans of both wanted a chance to support the artists they love).

We then looked at Moldover and Motoboy who each have offered really cool physical goods (Moldover's CD case that doubles as a virtual theremin and Moto Boy's wonderful music box). I showed off each of these products, highlighting how they clearly played up the tangibility scarcity as a reason to buy (as well as things like authenticity, exclusivity, belonging and patronage) to make this work.

As a final less well known artist, we looked at Matthew Ebel, whose experiments with giving fans a subscription service that provides new music and additional opportunities for access are working quite well. In that case, he's obviously using access, authenticity and exclusivity along with belonging and patronage.

Of course, this isn't just a model for small or up-and-coming artists. It can work quite well for big name artist, as well -- and on that front we discussed both Pearl Jam and Mariah Carey. As you may recall, Carey and her team put together a whole issue of Elle magazine, all about Carey, where Carey's team was allowed to sell the ads and keep the money. Some of the ads were for Carey-branded products, such as perfume. In this case, with a star this big, that particular aspect of the model is not about access (which is regularly used by smaller artists), but about belonging and tangibility (the magazine is tangible, as is the makeup that Carey was selling). But perhaps an even bigger point is that Carey was really selling her biggest fans' attention in selling advertising directed at them. As for Pearl Jam, they have their "Ten Club," which gives fans earlier access to the best tickets at shows (convenience, time saving, belonging, exclusivity) along with special physical goods, such as a special vinyl single, a magazine and other members' only contests and giveaways (tangibility, exclusivity).

Of course, there's a lot more that goes into building good "reasons to buy," but using these ten scarcities as a starting point is an excellent way to start a brainstorming process - as we did ourselves at the conference.

Filed Under: reasons to buy, scarcities

How 'Free' Economics Are Going To Impact The Video Game Market

from the it's-coming... dept

Reader Ben points us to a well done article over at GameIndustry.biz warning the industry to start understanding how "free" plays a role in digital economics. It does a great job summarizing the key points associated with "free" infinite goods, such as the fact that it really has little to do with "piracy," though the "piracy" may be an early indicator of where the market is heading:

The notion of Free isn't new in economics, of course. It's well understood that as a commodity becomes less rare, its value tends towards zero. When something becomes sufficiently commonplace, you can no longer charge a notable price for it - unless you artificially create a market based around image and prestige (bottled water) or find a way to add value (pure oxygen canisters, flavoured water).

You can also create artificial scarcity to keep prices high, although there are obvious moral problems with doing that with anything other than luxury items - and markets, like networks, interpret this kind of interference as damage, and usually find a route around it.

The whole thing is worth reading, and does a good job laying out the issues. It doesn't, however, suggest much of a solution -- though, there are plenty of potential solutions for the video gaming industry, focusing on finding scarcities to provide that can't be had for free. So, for example, giving away the core game for free, but charging to play multiplayer versions on an authorized server. As many are finding, that can be quite a nice business. Unfortunately, it does seem like some think the answer is to sell virtual goods within a game, but that has the potential to face the same eventual issue (the goods are really infinite, and will face the same deflationary economic pressure). But the fact is there are always additional scarcities created, which will present opportunities.

Figuring out just how to break out those scarcities from the infinite goods was the point of that economic series I wrote up a few years ago, which we're now offering nicely packaged as the Approaching Infinity book (as a part of our CwF+RtB experiment) -- which actually helps demonstrate the point. You can read most of the basic content for free online in the series, or you can buy the physical (scarce) book in a nice readable package which has been updated and expanded with more material and edited to better flow as a book (and you get a t-shirt as well). You can always take infinite goods and find a scarcity... whether it's with blog posts or with video games. So, yes, free is important to understand, but equally as important is understanding how to use it to your advantage, rather than just worrying about how it may hurt your old business model.

Filed Under: business models, economics, free, infinite goods, scarcities, video games

More Artists Recognizing The New Business Model: Sell The Scarcity

from the very-cool dept

Laughing Squid, in talking about how Eminem is the latest artist to embrace the tiered selling structure (though, I think he got the model wrong -- the music is priced way too high), calls our attention to a short article by famed musician Brian Eno that highlights the point we've been suggesting for years. The music industry is doing great, and it's doing it by selling scarcities:

Digital technology has made music easier to make and copy, with the result that recorded music is about as readily available as water, and not a whole lot more exciting.

This seems like bad news, until you pick up a copy of Time Out. Then you realise that the live music scene is exploding, for, unable to make a living from records sales, more and more bands are playing live. That experience can't be put onto a memory card--and people are willing to pay for it, and to pay quite a lot. Concert attendances are at an all-time high: recordings are increasingly ads for live shows, and live shows have become once again the real thing, the unduplicable.....

The duplicability of recordings has had another unexpected effect. The pressure is on to develop content that isn't easily copyable--so now everything other than the recorded music is becoming the valuable part of what artists sell. Of course they'll still want to sell their music, but now they'll embed that relatively valueless product within a matrix of hard-to-copy (and therefore valuable) artwork. People who won't pay £15 for a CD will pay £150 for the limited edition version with additional artwork, photos, booklet and DVDs. They often already own the music, downloaded--but now they want the art. They're buying art, and they're buying it in a new way. That suggests to me the possibility of a refreshingly democratic art market: a new way for visual artists, designers, animators and film-makers to make a living. So, as one business folds, several others open up.

It's so great to see more and more content creators realizing this.

Filed Under: brian eno, business models, economics, scarcities

My Keynote At Mesh: Growing Communities And Adding True Scarcities

from the have-fun-with-it dept

A bunch of folks have been asking for video from my keynote talk at the excellent Mesh Conference, and here it is (and if you really want to download it, there's an iTunes link as well). It's also embedded below if you click through. The whole thing is an hour, but split into four separate videos. The first two are my presentation and the second two are the Q&A that followed:





It was, as always, lots of fun to do. Also, I met tons of great, wonderful, interesting and fascinating people at the event. Interacting with people is always the best part of these things. Thanks to everyone who came out -- and a special thanks to the Mesh Crew: Mathew, Rob, Michael, Stuart and Mark who have created something really special with the Mesh event and who are each amazing individuals as well.

Also, since people were quizzing me about it later: I actually do "memorize" the presentations and what's coming next. I don't see what the next slide is before I bring it up and no (as two separate people asked me...) I did not have a little device in my ear telling me what was coming next....

Filed Under: business models, economics, keynote, mesh, scarcities
Companies: floor64

BitTorrent Site Mininova Makes It Easier To Sell Scarcities With Downloads

from the neat dept

A bunch of folks have been sending in the news that popular BitTorrent site Mininova is now making it much easier to monetize your own BitTorrented music. Basically, it makes it easy to sell other things alongside the torrent. This is very much about using the free music to sell related scarcities, such as concert tickets, CDs or other promotional goods. Imagine taking the various tiered upsell solutions that are becoming popular and connecting them directly to your own torrent of the music? As the story notes, at least one indie record label, Beep! Beep!, has signed up and is releasing all of its music via this system -- and even offering those who download a 20% discount on products as a thank you for helping to seed the files:

"It's only fair not to pay for something you haven't heard yet. In our opinion torrents are an excellent way to present you with our music. That's why Beep! Beep! and Mininova have teamed up. We like the fact that you're taking the effort to get to know new music. In fact, we'd like to thank you for downloading and seeding our music by giving you a discount on our hardcopies."

But, of course, we'll probably still hear from people about how such torrent sites are destroying the recording industry... even as it helps enable exactly what's coming next.

Filed Under: business models, music, scarcities, selling, torrents
Companies: beep! beep!, mininova