Month: February 2011

Making the transition from traditional print publishing to being digital-first media outlets hasn’t been easy for newspapers — in fact, many have stubbornly resisted this change, and tried to dip their toes into digital waters gradually without really investing any substantial effort or resources. As media analyst Frederic Filloux pointed out in a post yesterday at The Monday Note, this strategy (or lack of a strategy) is turning out to be a slow-motion train wreck. As author Clayton Christensen described in The Innovator’s Dilemma, it is almost impossible to cope with market disruption by making incremental changes, and newspapers are a perfect example of that principle at work.

Filloux uses financial results from the Washington Post to make the point. In some ways, the newspaper company is better off than a lot of other media entities, because it generates a lot of revenue from its educational arm — more than 60 percent of the company’s revenue comes from it, as well as 60 percent of its operating income — which creates a nice cushion for its newspaper business. And that business needs the help, Filloux notes, because advertising revenue for the paper side of the business has continued to decline at a rapid rate, and even though online revenue has grown, it hasn’t even come close to making up the gap. This is the “digital pennies in exchange for print dollars” problem:

As Filloux points out, the math in this graph is not pleasant: over the last seven years, the Washington Post has lost five dollars in print revenue for every dollar that it has added in the form of online ad revenue — losing almost $90 million in print revenue while its online business has grown by less than $20 million. Other newspapers may have somewhat different numbers, but the trend is likely to be very similar. And Filloux correctly diagnoses the main reasons for this online-revenue problem:

• Too much free content, which has diluted the value of editorial brands like the Washington Post

• The rise of competitors such as The Huffington Post, who have taken advantage of digital technology to build audiences at much lower cost

• The downward pressure on ad prices created by the explosion of content, as billions of pageviews depress the market for banner ads

The big problem for newspaper companies is that incremental change is not really helping them adapt, or as Filloux puts it: “mere adaptive tactics won’t save the traditional news industry in their multi-front war against disruptive technologies.” The Washington Post has done as good a job as any paper of trying to build a business online — online revenue accounts for 43 percent of overall revenue, up from just 10 percent in 2004, according to the figures that Filloux quotes — but overall its business continues to decline because online ads are worth so much less than their print counterparts.

There are no signs that this is going to change any time soon — if anything, online advertising just keeps getting cheaper (newspaper companies are forming private ad networks, but this seems both too little and too late). Newspapers are fighting the law of diminishing returns.

So what is to be done? Many companies, including Rupert Murdoch’s News Corp. and the New York Times, are trying to fight a rear-guard action by putting up paywalls to protect some of their print revenue, or pinning their hopes on iPad apps and subscription revenue, despite Apple’s 30-percent fee for doing business on its platform. Filloux argues that “radical re-engineering is needed,” and I think he is right — print may still be producing a large proportion of revenues, but it is also the source of a large proportion of a media company’s costs, and that spells doom if you are competing with digital-only outlets such as AOL and Yahoo that have a dramatically cheaper business model.

The radical restructuring that Filloux describes, which involves a much smaller newsroom, lower costs and a digital-first approach to publishing, sounds very much like what Journal-Register CEO John Paton is trying to do with the company he took over last year after it emerged from bankruptcy. Above all, Paton says, media outlets need to become digital-first, because the print side is only dragging down their businesses and preventing them from being as competitive as they should be. So far, that’s a message too few traditional newspaper publishers have heard.

News360 says it does recommendations using semantic filtering, etc. Washington Post launched a service called Trove that it says will do the same — and aspects of recommendations appear in other apps as well, and the New York Times recently launched its own recommendation service attached to its site.

These kinds of recommendations are largely algorithmic, although the NYT has some behavioral info that comes from anyone who has joined its internal Times social network, which was an interesting experiment — although it’s not clear how many people are actually using it.

The biggest source of recommendation-type data is Facebook, which can see when your friends like something, when they share it, etc. Huffington Post has driven a lot of traffic to the site by making smart use of Facebook integration to recommend stories that people you follow have liked or read, and as I keep pointing out to people — social networks like Twitter and Facebook are inherently farther ahead when it comes to recommendations because of all the social signals that are embedded in my social graph, the relationships with the people I follow and my friends and social network.

There are some services and apps that make use of the links that get passed around via Twitter and Facebook — there’s Twitter Tim.es and Paper.li for showing you links from your Twitter stream, and PostPost does something similar for Facebook links, producing a kind of personalized newspaper. News.me, the social news platform that Betaworks and the New York Times have partnered on, shows you content from other peoples’ streams, which is an interesting twist. And Flipboard pulls in links from your Twitter stream, your Facebook graph and RSS feeds and shows it to you.

But no one is really doing much when it comes to recommendations. I’ve tried playing with Trove, and it is not much better than a random sampling of news that is being shared on the web — and News360 seems equally haphazard. It’s possible that they could get better over time, of course, although there doesn’t seem to be any way to tell either service that it is wrong when it suggests a particular story to you. And News360’s choice of a visual interface with photos sliding by is interesting, but I’m not convinced it’s particularly useful.

Others are trying to solve the recommendation conundrum, including **, which former ** is developing as a kind of **. But so far, if you want recommendations about what to read, your Twitter stream and Facebook graph are probably the best solution — and anyone who wants to do better is going to have to leverage both of them to do it.

Blogging is on the decline, according to a New York Times story published this weekend — citing research from the Pew Center’s Internet and American Life Project — and it is declining particularly among young people, who are using social networks such as Twitter instead. Pretty straightforward, right? Except that the actual story said something quite different: even according to the figures used by the New York Times itself, blogging activity is actually increasing, not decreasing. And as the story points out, plenty of young people are still blogging via the Tumblr platform, even though they may not think of it as “blogging.”

The NYT story notes that blogging among those aged 12 to 17 fell by half between 2006 and 2009 according to the Pew report, but among 18 to 33-year-olds it only dropped by two percentage points in 2010 from two years earlier — which isn’t exactly a huge decline. And among 34 to 45-year-olds, blogging activity rose by six percentage points. The story also admits that the Blogger platform, which is owned by Google, had fewer unique visitors in the U.S. in December than it had a year earlier (a 2-percent decline), but globally its traffic climbed by 9 percent to 323 million.

In many ways, this “blogging is dying” theory is similar s to the “web is dying” argument that Wired magazine tried to float last year, which really was about the web evolving and expanding into different areas. It’s true that Facebook and Twitter have led many away from blogging because they are so fast and easy to use, but they have also both helped to reinforce blogging in many ways.

What’s really happening, as Toni Schneider of Automattic — the corporate parent of the WordPress publishing platform (see disclosure below) — noted in the NYT piece, is that what blogging represented even four or five years ago has evolved into much more of a continuum of publishing. People post content on their blogs, or their “Tumblrs,” and then share links to it via Twitter and Facebook; or they may post thoughts via social networks and then collect those thoughts into a longer post on a blog. Blog networks such as The Huffington Post get a lot of attention, but plenty of individuals are still making use of the long-form publishing that blogs allow, including programming guru Dave Winer, and Hunch founder and angel investor Chris Dixon.

One of the reasons why Tumblr seems to have taken off, particularly with younger users, is that it is extremely easy to set up and use — but it also offers many of the same real-time sharing options that have become popular with Twitter and Facebook. For example, Tumblr makes it easy for users to follow others, and then with a simple click they can “re-blog” another user’s post, which redistributes it to all their followers in much the same way that a “retweet” does on Twitter.

So what we really have now is a multitude of publishing tools: there are the “micro-blogging” ones like Twitter, then there are those that allow for more interaction and longer-form or multimedia content like Facebook, and both of those in turn can enhance existing blogging tools like WordPress and Blogger. And then there is Tumblr, which is like a combination of multiple tools. Not every platform is going to appeal to every user, but the fact that there are multiple methods available means there is even more opportunity for people to find a publishing method they like.

So while “blogging” may be on the decline, personal publishing has arguably never been healthier.

Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Did you hear that noise? It sounded like a cannon shot. And it was: a cannon shot fired from Twitter headquarters, directly across the bow of UberMedia — and, by extension, across the bow of every third-party developer whose app competes in some way with the micro-blogging service. With little or no warning, Twitter flipped the “kill switch” and shut down several of UberMedia’s apps on Friday afternoon, including UberTwitter and the popular Android app Twidroyd.

Twitter says the reasons were simple: trademark infringement and breaches of the terms of service. But there is more to this than just a squabble over usage, and Twitter’s heavy-handed behavior is drawing some fire even from the company’s supporters.

The first notice that anyone had of serious issues between Twitter and UberMedia came when users suddenly couldn’t access the network through UberTwitter and Twidroyd. Shortly afterward, a blog post appeared on the Twitter support blog saying that the apps had been shut down for “violating our policies” — but even that explanation only came after a description of the “official” clients for Twitter (with some helpful links to them) and a generic-sounding statement about how the company asks applications “to abide by a simple set of rules that we believe are in the interests of our users, and the health and vitality of the Twitter platform as a whole.”

The blog post didn’t even describe what the actual violations by UberTwitter and Twidroyd were — those details didn’t come out until someone posted a question on the Q&A site Quora about the shutdowns, which drew a comment from Twitter communications staffer Matt Graves that included the statement the company sent to the media. According to the statement:

The violations include, but aren’t limited to, a privacy issue with private Direct Messages longer than 140 characters, trademark infringement, and changing the content of users’ Tweets in order to make money.

Graves said the company had “had conversations” with UberMedia about some of the violations since April 2010, including the use of terms such as “tweet” and “twitter” in product names, and that the company hoped “that they will bring the suspended applications into compliance with our policies soon.” Meanwhile, UberMedia founder Bill Gross was busy doing damage control, posting on Twitter that the company was making changes to bring its applications into compliance (including changing the name of UberTwitter to UberSocial, something he said had been in the works for some time) and issuing a news release with the details.

I wrote recently about the potential for a serious collision between UberMedia and Twitter — based on Gross’s accumulation of Twitter clients, his attempts to launch a competing advertising product, and a recent financing that saw a series of venture funds put $17.5 million into the company — and this seems an obvious signal that Twitter is not going to take UberMedia’s potential competitive threat lying down.

If it had wanted to handle things quietly, Twitter could easily have negotiated something with UberMedia via back-room diplomacy. Instead, it clearly decided to send a message, both to UberMedia and to other third-party developers: Namely, don’t step out of line.

Obviously, Twitter has the right to manage its network and provide access to whoever it wishes. But the heavy-handed way in which it terminated UberMedia’s apps drew criticism even from some of the company’s supporters, including venture investor Mark Suster. A partner with GRP Partners, Suster — who doesn’t have a stake in either Twitter or UberMedia — wrote a sharply critical Quora note and a somewhat friendlier blog post about the incident, saying he didn’t appreciate being cannon fodder in the war between Twitter and one of its third-party app developers. Angel investor Dave McClure, meanwhile, yanked the company’s chain with a tweet about the company not having to worry about any Google-style “don’t be evil” mantra.

When Twitter started buying up applications and clamping down on third-party apps last year, it was obvious that the company was no longer the free-wheeling, “everyone join the party” kind of operation it seemed to be in the early days, when third-party apps were seen as partners who could help the network grow and no one worried about things like trademark infringement (TwitPic and Tweetmeme and other apps and services continue to function without any problems — so far). But the no-holds-barred attack on UberMedia suggests that Twitter is even more willing to throw its weight around now, especially since there is a potential $10-billion valuation on the line. No more Mr. Nice Guy.

At a conference in British Columbia this morning, author and media blogger Jeff Jarvis told a room full of corporate and government privacy advocates something many of them probably didn’t want to hear: that society needs more protection for what he calls “publicness,” and less focus on locking down our personal information or prosecuting companies that use that data. “Privacy has plenty of advocates already,” Jarvis said. “It is potentially over-protected, but in any case it is well protected. But publicness also needs its advocates.” Despite stumbles by both Facebook and Google when it comes to privacy, said Jarvis, the benefits of sharing information about ourselves through social media are plentiful and obvious — including the ability to organize popular revolutions like the one that just occurred in Egypt.

In his presentation to the Reboot conference in Victoria — whose tagline this year is “Security and privacy: Is there an app for that?” — Jarvis gave a preview of some of the arguments he makes in his new book, Public Parts, which the CUNY journalism professor said he is still working on. Jarvis, who has written at length on his blog about his battle with prostate cancer, talked about how sharing what might be seen as incredibly personal and private information can have an enormous amount of value. Writing about his cancer, he said, connected him with friends who had had similar issues that he had never known about, and “I got more help and support than any doctor’s pamphlet could ever have given me.”

In the brief video interview embedded below, recorded after his talk, Jarvis spoke about what he sees as the benefits of publicness not just on an individual level but for society in general, and the challenge of balancing that with the ability for governments — including those in Egypt and elsewhere — and others to use our information against us.

Jarvis made a point of saying that privacy “is not binary, not on or off — it’s a continuum,” and that different societies and individuals come down at different points along that continuum. Scandinavians publish the salaries of all their citizens publicly, he said, something other people might recoil at. And in the United States, photos of people who are accused of crimes are published without any concern for their privacy, unlike some other countries. “I am not a proponent of 100-percent openness,” Jarvis said. “For example, I would like to point out that I am wearing clothing. [But] there are benefits to being public, and we need to acknowledge those at the same time as we talk about what could go wrong — we can’t always focus on what might go wrong.”

Among the benefits of being public, according to Jarvis, are that relationships and connections are formed that have value, which is the fundamental purpose of Facebook. “It also enables collaboration, and builds trust,” Jarvis said. And in places like Egypt, those tools have created what the author called “an incredible wave of publicness — and that deserves protection. Yes, privacy deserves protection, but by God so do the tools of publicness.”

Jarvis’s presentation came as a stark contrast to the one before him, which was from British Columbia’s Privacy Commissioner Elizabeth Denham, who said that Google chairman and Facebook founder and CEO Mark Zuckerberg “don’t think privacy is relevant any more,” (something Jarvis challenged in his talk as untrue) and argued that with so much potential danger around “excessive sharing of personal information,” regulators need enhanced authority and broader powers of oversight, and that federal laws “need more teeth.”

Senator Hillary Clinton gave a speech today at George Washington University about Internet freedom, an updated version of the address she gave a year ago calling for more openness and an end to dictators and foreign governments repressing their citizens through the Net. As it was then, the Secretary of State’s speech was a heart-warming defence of the open Internet and the need for freedom of speech — with one notable exception: namely, WikiLeaks. While other governments need to be lectured by the U.S. on how to be more open and free, apparently it is fine for the U.S. government to persecute a web-based publisher that is widely viewed as a journalistic entity, and is run by someone who isn’t even an American citizen.

Much of the senator’s speech was eminently supportable — the parts where she called the Internet “the public space of the 21st century—the world’s town square, classroom, marketplace, coffee house, and nightclub,” or where she called on foreign governments to “join us in a bet we have made — a bet that an open Internet will lead to stronger, more prosperous countries” (there’s a transcript of her address available at Scribd). The senator even waded into the debate over what role social media tools such as Twitter and Facebook have played in the uprisings in Iran and Tunisia and Egypt, and provided a summary that could easily have been written by a social-media skeptic such as Malcolm Gladwell. She said:

Egypt isn’t inspiring because people communicated using Twitter; it is inspiring because people came together and persisted in demanding a better future. Iran isn’t awful because the authorities used Facebook to shadow and capture members of the opposition; it is awful because it is a government that routinely violates the rights of its people.

That said, however, Ms. Clinton also went out of her way to defend the U.S. government’s approach to WikiLeaks, which has involved not only imprisoning the man who allegedly leaked thousands of diplomatic cables (former Army intelligence officer Bradley Manning), but also going after WikiLeaks founder Julian Assange by any means available. The U.S. Justice Department has been working on a legal case involving the Espionage Act, despite the fact that publishing classified documents is not actually a crime under U.S. law — and despite the fact that if it is successful, the same charges would apply to the New York Times and other media outlets who have also published the cables.

As part of its case, the government sent a court order to Twitter — and apparently to other web companies such as Google and Facebook, although they have not admitted as much publicly — demanding that the company turn over a wide variety of personal information about Icelandic MP and early WikiLeaks supporter Birgitta Jonsdottir, hacker and open-Net advocate Julian Appelbaum and a number of others involved with WikiLeaks. The government order covers not just IP addresses and therefore locations, but also private messages, methods of payment and other materials. Jonsdottir and others named in the order are fighting these demands in a case that ironically was heard today.

And how did Senator Clinton justify this? She said that one of the principles the U.S. upholds is the need for transparency, but that this must be balanced with the need to protect confidentiality, and in particular government confidentiality. This has been a topic of debate in the past few months because of WikiLeaks, Ms. Clinton said, however:

It’s been a false debate in many ways. Fundamentally, the Wikileaks incident began with an act of theft. Government documents were stolen, just the same as if they had been smuggled out in a briefcase. Some have suggested that this act was justified, because governments have a responsibility to conduct all of their work out in the open, in the full view of their citizens. I disagree.

The senator argued that by publishing the cables, WikiLeaks exposed diplomats and activists “to even greater risk” — despite the fact that no one has made any credible claims that the cables published by either WikiLeaks or media outlets such as the New York Times and The Guardian have put anyone in danger. Ms. Clinton said in her speech that denouncing WikiLeaks “does not challenge our commitment to Internet freedom,” but on that point she is clearly wrong. And she seemed unfazed by the fact that her comments about targeting WikiLeaks came right after she censured foreign governments for attacking bloggers instead of upholding their rights to freedom of speech.

It’s obvious that while the U.S. government is content to preach to foreign countries like China about how they need to open up and not persecute their citizens, it is more than happy to go after WikiLeaks using whatever means necessary — despite the fact that what the organization did isn’t even a crime. That’s called trying to have your cake and eat it too, and it makes all the stirring talk about freedom in the senator’s speech difficult to take seriously.

After much rumor and speculation, Apple has finally launched its subscription service for publishers, and like many of the things the company does, it has caused equal amounts of enthusiasm and consternation. The enthusiasm stems from the fact that magazines, newspapers and other content companies now have an easy way to sign up users, instead of forcing them to pay every time they download a new issue. At the same time, however, Apple is taking its usual 30-percent cut of any sales, which is a big chunk — and it has also put up walls to keep users buying from within apps instead of on the web, and that could have a significant impact on some publishers such as Amazon.

As Darrell explains, Apple has made some concessions to publishers with its subscription offering — which comes on the heels of the recent launch of Rupert Murdoch’s iPad newspaper The Daily, the first to use the new subscription feature. While initial reports were that Apple was not going to give publishers any information about the people who sign up from within an app, the company says that publishers will get names, email addresses and zip codes (although users can also opt out of providing this). And if someone signs up on a publisher’s website, that company gets to keep 100 percent of the subscription revenue. Publishers can also offer free subscriptions, something Apple had also seemed to be cracking down on, at least in the case of some European newspapers.

That’s the good news. The bad news for publishers is that Apple now requires that all subscriptions be offered via in-app purchasing. Companies can also offer those deals on their websites, but they must offer exactly the same deal through their app (which prevents publishers from jacking up prices to cover the 30-percent take that Apple removes). The important line in the news announcement is that:

[P]ublishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

This seems pretty clearly directed at companies such as Amazon, which currently allows users of its Kindle app on iPhone and iPad to click a link and get taken to the retailer’s website to finish the transaction when buying a book. In effect, Apple has put up a roadblock for publishers that makes it difficult to route around the in-app purchase — increasing the likelihood that users will opt for the simplest choice, which is to buy the item through the app itself. Although publishers can obviously try to convince users to do otherwise, by putting call-outs to go to the website or downplaying the in-app purchasing option, many are likely to choose the easiest route, and that means a quick 30-percent payoff for Apple.

The reality here is that Apple knows that it has most publishers over a barrel, just as it did with the music industry when it first launched iTunes. Amazon may have other options since it owns its own platform, but magazine and newspaper companies are desperate to find some way of charging their readers, and Apple provides the easiest method of doing that. But the walled garden that Apple gives them access to, while it is very inviting and pleasant and well-maintained, comes with some serious trade-offs, as I tried to explain when Apple’s subscription plans were being discussed a few weeks ago. There’s a pretty attractive carrot, but there’s also a big stick.

That leaves publishers to ask themselves: How much is it worth to you to let Apple handle your sales for you? Rupert Murdoch has decided with The Daily that he is willing to make the trade-off, but Time Warner and some other publishers such as Conde Nast have made it clear that they are looking for other options, by signing up to offer their publications via Android devices as well as Apple’s iOS devices. Market dominance is a powerful thing, however, and so far Apple has the customers that publishers want to reach. For better or worse, they will have to submit to the stick if they want access to that carrot.