Content Is Advertising... In The Newspaper Industry

from the not-that-they-realize-it dept

Continuing my series of posts on content being advertising, I wanted to look at the newspaper industry. This seems rather fitting, as the industry seems to be freaking out about a new report claiming the largest ad revenue plunge in the newspaper business in over fifty years. While there's some movement to online ad revenue, it's not making up the difference and there are signs that the online ad business is slowing as well (which is what kicked off this series of posts anyway). First off, though, it's worth pointing out, as Chris Anderson does that things aren't nearly as bad as they look. While there is a downturn, the industry is still making a ton of money, much more than even 20 years ago.

However, I did still want to take a look at how the newspaper business has struggled to deal with changing times in the context of the discussion of "advertising is content, content is advertising." The simple fact is that, for many years, newspapers acted as "advertising" for eyeballs. That is, the "news" content was there merely to bring in eyeballs in order to sell print ads and classified ads. So the news itself (the content) was advertising to get the attention of people who might then go on to look at the ads in the rest of the paper (or, ideally, place some ads themselves). When there were relatively few competing sources of news, this system worked. Readers were effectively a captive audience, who would come back day after day, and even put up with less than stellar news coverage and slightly annoying or unhelpful ads.

Unfortunately for newspapers (but fortunately for everyone else) that equation has changed drastically. That captive audience is gone, and with so many different options for news, simply reposting AP reports that everyone saw online yesterday, combined with weak local coverage just isn't that compelling. What happens is that the content isn't advertising anything worth looking at any more -- so people go elsewhere. Google gets them the relevant news and Craigslist handles the classifieds in a much more efficient (and cost efficient) manner. Newspapers, unfortunately, are still acting as if they have a captive audience. Many have done little to differentiate themselves or to provide content that matters to their select readers that distinguishes them from the same content that can be found elsewhere. In other words, they're missing out on that final key element of understanding this space: the advertising/content needs to be useful and valuable.

So how should newspapers adjust? Well, it's time to redefine what news is, and start providing useful information to communities of individuals who value that. That means not playing to the broadest possible audience, but enabling specific audiences to get very specific content that they want and value, which is more difficult for others to provide. And, as we were just discussing, that includes making that community a part of the process. Stop focusing on trying to sell ads and focus on ways to deliver useful and valuable information in a manner that a specific community can gain value out of it and then suddenly your content acts as effective "advertising" again, leading to business models that make sense.

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Other posts in this series:

• Advertising Is Content; Content Is Advertising
• On Content, Promotions, Basic Economics... And Loutish Statements
• Content Is Advertising... In The Newspaper Industry
• Content Is Advertising... On TV
• Newspaper Content Is Advertising For More News Content

Filed Under: advertising, content, newspapers

On Content, Promotions, Basic Economics... And Loutish Statements

from the content-and-advertising dept

Last week, I wrote a post that kicked off an interesting discussion on the fact that all advertising is content... and that all content is advertising. The discussion only convinced me I hadn't clearly explained myself on the subject. I'm thinking of maybe doing another short series of posts to discuss this concept further. And, what better way to kick it off than to point out more faulty logic from Nick Carr. Just yesterday we had discussed how incorrect Carr was in his assessment of Billy Bragg's equally incorrect op-ed piece in the NY Times. Mike Arrington over at TechCrunch chimed in as well, making many of the same points that we make around here, and have made for years. Oddly, Nick Carr then responded to one particular sentence from Arrington, calling it: "the saddest, stupidest sentence I've ever read." Carr also called Arrington's explanation "loutish." What deserved such a claim?

"Recorded music is nothing but marketing material to drive awareness of an artist."

Now, I'm not going to speak for Arrington, but I will speak for myself, and note that I've been saying similar things for nearly a decade. So I'll defend my own statements and explain exactly how it fits into the point last week about all content being advertising -- and all advertising being content. First off, I don't think that recorded music only drives awareness of the artist. I think it helps drive awareness of a whole host of other scarce goods related to the artist. But awareness is the biggest and most important in implementing a useful business model. So I find it hard to see how it's either sad or stupid, considering that it's actually quite accurate and a fundamental understanding of economics would show how it's true. Besides, if that's really the saddest or stupidest (or both!) sentence Carr has ever read, he doesn't read much.

So why is Arrington right and Carr incorrect? Because Carr still doesn't seem to understand the difference between scarce and abundant (or infinite goods). He doesn't seem to understand externalities. And he doesn't seem to recognize basic econ 101 points, such as price being set at the intersection of supply and demand, or price being equal to marginal cost (two ways of saying the same thing). Finally, he doesn't understand that non-monetary value is equally as important as monetary exchange (and that non-monetary value can be turned into money). For someone who is apparently (is he really?) a well respected economic commentator, these are odd omissions to his education. With an infinite good, the price gets pushed to zero over time. Map out the supply and demand curves and you see that, and you can confirm it when you see that the marginal cost is zero. But this doesn't mean that all is lost. In fact, it's a benefit, because that infinite good now becomes a resource that makes any scarce good it touches much more valuable. In other words, it acts as "promotion" or "marketing material" or "advertising" for those scarce goods. But, you've heard this before.

This is also why all content is advertising. Content is an infinite good. All content advertises something and makes something scarce more valuable. Nick Carr's blog, for example, helps advertise him and convinces people to buy his book (a scarce good) or hire him for consulting (which is buying his time -- another scarce good). Billy Bragg's music acts as advertising for Billy Bragg. It helps him sell more concert tickets at a higher price, or better yet, embrace newer more interesting business models like Trent Reznor, Jill Sobule or Maria Schneider. All of whom are examples of using their content to sell something scarce. It's that content that makes the scarce item valuable, but the content itself, once it exists, is an infinite resource. Once you think of it that way, it's a promotional good that can be given to everyone for free, making every other scarce good you possess more valuable. It's hard to think of why you wouldn't want to promote that way.

And that leads us to Carr's mocking of Arrington with the following paragraph, showing how little he understands the difference between scarce and infinite goods:

"As a printed poem, one assumes, is nothing but marketing material to drive awareness of a poet. As a sculpture is nothing but marketing material to drive awareness of a sculptor. As a film is nothing but marketing material to drive awareness of a director."

As for the first example, yes, a poem is marketing material to drive awareness of a poet. And that allows the poet to sell many scarce goods, including books of poems, the ability to write a new poem, the ability to perform the poetry or even to get a job (say, as a poet laureate or a poetry teacher). None of those things are possible if the poems are not known. A sculpture is not an infinite good, so the statement doesn't quite fit. But an image of a past sculpture absolutely does help promote the sculptor and get them additional work in creating new sculptures (scarce goods!). As for the film, we've discussed this in great detail in the past. It is marketing material to drive people to buy scarce goods: seats in a theater. Even the great theater owner Marcus Loew recognized that: "We sell tickets to theaters, not movies." The movie is the content. It "advertises" the seats. It makes those scarce seats valuable. The content, you see, is advertising. That's not loutish, sad or stupid. It's just a basic economic truth.

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Other posts in this series:

• Advertising Is Content; Content Is Advertising
• On Content, Promotions, Basic Economics... And Loutish Statements
• Content Is Advertising... In The Newspaper Industry
• Content Is Advertising... On TV
• Newspaper Content Is Advertising For More News Content

Filed Under: advertising, business models, content, economics, michael arrington, nicholas carr, promotions

Turkish Officials Never Learn: Ban Slide Along With YouTube

from the the-definition-of-insanity dept

It would appear that Turkish officials don't seem to understand quite how the internet works these days -- despite having received quite a few lessons already. After all, this is the country that has banned YouTube for a sophomoric video making fun of the country's founder. It's the type of silly video no one would pay attention to... until Turkey decided to block access to all of YouTube because of it. Then, of course, this silly little video that no one cared about was seen everywhere. Eventually Turkey lifted the ban, but having learned nothing put the ban back in place not just once, but two more times. Each time, it provided much more attention to the silly pointless videos. Apparently, that message has not gotten through to Turkish authorities who have now banned the multimedia hosting site Slide as well. Again, they didn't bother to inform Slide or even ask the company to take down the offending content. They just banned the entire site over some content that very few people had probably seen.

Filed Under: bans, content, streisand effect, turkey
Companies: slide, youtube

Advertising Is Content; Content Is Advertising

from the took-'em-long-enough dept

There's been a bunch of buzz this week over an Ad Age report suggesting that firms are finally realizing that no one pays attention to online banner ads. For all the hype about online advertising, this one point should have been obvious from quite early on. That doesn't mean that banner ads haven't been lucrative for some publishers who place them on their sites -- but it does call into question how long that sort of advertising will last. Sooner or later the advertisers will recognize that they're not getting much bang for the buck. For publishers (us included, mind you), that could mean that an easy vein for revenue goes away -- but the end result should be better. Companies will start to learn that there are better ways to achieve their goals than banner ads.

There are a few key points in the discussion that shouldn't be surprising to most folks around here, but apparently have just hit the consciousness of ad execs on Madison Avenue:

1. The captive audience is dead. There is no captive audience online. Everyone surfing the web has billions of choices on what they can be viewing, and they don't want to be viewing intrusive and annoying ads. They'll either ignore them, block them or go elsewhere.
2. Advertising is content. You can't think of ads as separate things any more. Without a captive audience, there's no such thing as "advertising" any more. It's just content. And it needs to be good/interesting/relevant content if you want to get anyone to pay attention to it.
3. Content is advertising. Might sound like a repeat of the point above, and in some way it is -- but it's highlighting the flip side. Any content is advertising. It's advertising something. Techdirt content "advertises" our business even if you don't realize it. Every bit of content advertises something, whether on purpose or not.
4. Content needs to be useful/engaging/interesting. This simply ties all of that together. If you want anyone to pay attention to your content (which is advertising something, whether on purpose or not) it needs to be compelling and engaging.

So, for the "brand" marketers out there who are starting to worry that banner ads aren't particularly effective, it's time to start rethinking how you build a brand along these points. Techdirt even has a way to help you put these ideas into practice. Give us a call -- we'll explain how it works in more detail. So, yes, even this is an "advertisement," but hopefully, it's also useful content.

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Other posts in this series:

• Advertising Is Content; Content Is Advertising
• On Content, Promotions, Basic Economics... And Loutish Statements
• Content Is Advertising... In The Newspaper Industry
• Content Is Advertising... On TV
• Newspaper Content Is Advertising For More News Content

Filed Under: ads, banner blindness, captive audience, content, marketing, techdirt feature

Hey MySpace, Aren't You A Little Late To The 'Portal' Bandwagon?

from the retro dept

Brian Stelter opens his piece on MySpace on a generally positive note, suggesting he was intending his write-up for the New York Times to be a sympathetic look at the company's relationship to its corporate parent, owned by Rupert Murdoch. But the article ends up painting a picture of a site without a clear vision of its future. In probably the most damning paragraph in the article, an advertising executive says that the MySpace's parent company had envisioned the site as a portal, but that he "thought they would be much further along with that today." For about a decade, websites have tried to mask their lack of focus by labeling themselves portals. A decade ago, that strategy worked pretty well for Yahoo! in 1996, when it had enough content to really make it stand out from the crowd. But it's hard to imagine that a similar strategy will work in 2008. Users have many more choices and more sophisticated tools for finding the content they need, so the attraction of a one-size-fits-all portal is much lower.

I suspect that the fundamental problem is that it just doesn't make much sense for an "old media" company like News Corp. to own a tech startup like MySpace. They key to MySpace's success in the years before the acquisition was precisely that the company didn't need to produce content; users created "content" of their own by swapping messages, posting pictures and music, etc. Social networking sites are fundamentally technology platforms that enable users to share their own content with one another. Trying to produce "original content" for the site is a step in the wrong direction. There's no way they can satisfy the diverse tastes of their millions of users, but they can waste a lot of money trying. And while MySpace focuses on becoming more like the mainstream media, its competitors—especially Facebook—are working feverishly on enhancements to their underlying technology platforms. Meanwhile, the MySpace user experience continues to deteriorate. I regularly get spam from other MySpace users (although this has become less common in recent months), the site is littered with gaudy banner ads, and I encounter error messages a lot more frequently than I do on Facebook. These are the sorts of problems that an 80-year-old newspaper mogul like Murdoch just isn't going to know how to deal with. He is, by all accounts, a brilliant businessman, but he's not a technologist, and it was probably a mistake for him to buy what was fundamentally a technology company.

Filed Under: content, portals, social networks, technology
Companies: myspace, news corp.

Funny That HBO Is Putting Shows Online, Just As Parent Time Warner Starts Charging Extra For Bandwidth

from the coincidence? dept

The NY Times is covering the news that HBO has finally decided it needs a real internet strategy, and will start offering its content online, free of (additional) charge to existing subscribers. The idea of putting the content online makes a lot of sense, and it sounds like it's offering features that many HBO subscribers would find useful, from access to archived materials to live streams. However, there is something a little odd about all this, as noted by the folks at The Hollywood Reporter. HBO is owned by Time Warner. Time Warner is the same company that is now starting to experiment with overage fees, sometimes based on very low usage -- which would clearly preclude watching very much online video.

It is true that both of these programs are merely tests -- and they're tests in totally different markets right now. However, the HBO online video will only be available to Time Warner customers. The Hollywood Reporter story suggests that it's a case of two parts of a business not communicating with one another -- but I'm sure some more conspiracy-minded thinkers will naturally assume it's really Time Warner's attempt to squeeze more money out of people. Sure, it will say the HBO streams are "free," but just wait until you get that broadband bill... Of course, there is also another possibility. The Hollywood Reporter story mentions the possibility that Time Warner would create a special "exception" to the bandwidth rule if that bandwidth was for watching Time Warner-only videos. That, of course, is exactly the sort of thing that will be sure to get network neutrality advocates up in arms, though it's a subtle shift from traditional network neutrality claims. This time it won't be about "better quality," but about which content counts towards a bandwidth cap.

Filed Under: bandwidth caps, content, hbo, online, video
Companies: time warner

I Learned It From Watching YOU, Big Content

from the bad-copyright,-bad dept

The Washington Post is running an article covering a bunch of cases where big companies have been using content from user-generated content sites, like Flickr, without permission -- upsetting the amateur content creators. Some of the cases we've talked about in the past, and a few others are pretty well known as well. Basically, they usually involve someone at a big company making use of an image he or she found on Flickr without getting permission and then using that on TV, in a magazine, in an advertisement or on the web. Quite often, the companies that are doing this are also known for their own overly-aggressive attempts to combat copyright infringement of their own works. What's unfortunate about these cases is that, rather than recognizing how silly copyright is no matter which direction it's going in, many of the people are reacting just like the big content companies themselves. This isn't surprising, but it is a little depressing. The Big Content companies only have themselves to blame, of course. Their "education" campaign has only alerted people to become more attuned to thinking of content as property, and more ready to sue over its use. This situation is only going to get worse, as more and more amateur content is out there, unless we start realizing that it's time to peel back copyright law, stop thinking of ideas as property that can be owned, and start recognizing there are ways to embrace the sharing of information and content that makes everyone better off. The Washington Post asks if that would be "total anarchy," which suggests little recognition of the history of content creation or free markets.

Filed Under: content, copyright, user generated

New AllAdvantage Meets Same Fate As Old AllAdvantage

from the we're-shocked dept

We've said before that bribing users to watch ads isn't a good strategy. If an ad is relevant or entertaining, users will pay attention to it without financial inducement. And if it's not relevant or entertaining, it's not likely to be effective no matter how much you pay users to watch it. The latest example of this principle is Agloco, a reincarnation of the bubble-era AllAdvantage. Agloco, like AllAdvantage, paid users to display a window with advertisements on their screen. Also like AllAdvantage, it was a pyramid scheme where users would get paid a bonus for signing up other users. And now TechCrunch is pointing out that, like AllAdvantage, Agloco is going belly-up. It seems that their revenues are "not enough to support operating costs." When we covered Agloco's launch a year ago, we wondered whether the reincarnation of AllAdvantage was a sign of a new bubble. Their failure suggests that the markets are more rational this time around. The problem with the original bubble wasn't just that bad companies managed to get funding. It was that their stock values got inflated to ludicrous values and then crashed all at once. This time around, poorly-conceived companies like Agloco are able to get funding, but they run out of money relatively quickly and go out of business without dragging the rest of the market down with them.

Filed Under: advertising, content, paid advertising
Companies: agloco, alladvantage

Why Would A DRM Company Buy TV Guide?

from the because-it's-thinking-in-the-wrong-direction dept

Macrovision, a company that's well known for its DRM products, made quite a splash today with its announced plans to buy Gemstar-TV Guide for $2.8 billion. The rationale for the deal seems to be that the folks at Macrovision may actually believe the commonly stated myth that DRM "opens new business models." Macrovision talks about how combining its DRM with Gemstar listings and content could enable a bunch of new offerings -- but it's difficult to believe those new offerings will be particularly compelling. DRM has never been about enabling new business models, but about making any content less valuable by limiting its usefulness in the hopes of being able to charge separately for each use. Perhaps that's what they mean by "new business models" but it's hardly a business model if it's simply pissing off consumers. As Saul Hansell at the NY Times notes, the direction Macrovision seems to be moving in is (along with the recent story of hard drives that block MP3 sharing) one where technology companies feel that they need to be policing how people use content. That's a very anti-consumer position to be in -- and it's generally not a good business proposition to be focused on limiting consumers. Apparently, investors agree -- as they've sent the stock price of both companies way down in reaction to the deal.

Filed Under: content, drm, tv guide
Companies: gemstar, macrovision, tv guide

Can Silicon Valley Repeal The Laws Of Economics?

from the not-paying-attention dept

The changes we've been seeing in the content industries is driven by some very basic economic forces: competition pushes the price of goods and services toward their marginal cost. There's now lots of competition in markets for information goods, and the marginal cost of producing those items (i.e. distributing a copy of an already-produced song or article) is very close to zero. Therefore, we should expect that over time, the prices of those products would also fall, to the point where the price becomes zero and producers use those information goods as a way to sell other goods. And that's exactly what we've been seeing over the last few years. Newspapers are dropping their paywalls and selling ads. Bloggers are giving away news and commentary as a way of building up their reputations. And we're starting to see musicians give away more of their music as a way to build up a fan base for their concerts. These trends are driven by some pretty fundamental economic forces, and there's not much any one person or industry can do to change them.

But some people are very confused about this. For example, writing in the New York Times, Jaron Lanier tries to blame Silicon Valley for setting the Internet up wrong. He claims that "we" could "design information systems so that people can pay for content." Apparently, Lanier hasn't been paying attention over the last decade. What Lanier is alluding to is micropayments, and micropayments have been tried over and over again. Silicon Valley was only too happy to offer consumers opportunities to pay small amounts of money for content. But it turns out that customers hate micropayments. They're a headache to deal with and they produce very little revenue for content creators. After years of trying to get customers to sign up for micropayments, websites finally discovered that it just works a lot better to give the content away and sell ads.

The other thing Lanier apparently hasn't noticed is that there's already a massive industry devoted to producing content and giving it away in order to sell ads. Last time I checked, a ton of people make a living in the television industry, despite the fact that virtually all the content they produce is given away free of charge. Yet inexplicably, Lanier seems to believe that giving away content and selling ads won't be a viable business model in the Internet age. The problem isn't that ad-supported content isn't viable. The problem is that a lot of incumbent media companies have executed their Internet strategies so ineptly that hardly anyone is visiting their sites. You can't sell very many ads if you've got a tiny audience. The solution is for them to come up with more appealing products (hint: dropping DRM is a good first step), not to once again bang their heads against the brick wall of micropayments.

Filed Under: business models, content, economics, free, jaron lanier, silicon valley