Thursday, June 04, 2009

What I recommended to publishers in Chicago

Yes, it’s true. As reported today by the Nieman Journalism Lab, I was one of the three people who presented ideas to newspaper publishers at the (formerly) under-the-radar meeting to explore ways to monetize content.

In a minute, I will share what I can of what I told the publishers. And I’ll tell you why I think those ideas are on the right track. But first, here’s the story of how I wound up standing in front of a room filled with just about every mover and shaker in the industry.

Most of you know me only as someone who has been kibitzing about the newspaper business for the last 4½ years as Newsosaur. In real life, I have been a Silicon Valley guy since 1996, where I started or ran a number of companies involved in online media, software development, commerce systems and high-availability networks.

With the newspaper industry in a fight for its life, a friend and I had some specific ideas about how publishers could leverage technology to solve one of the most vexing problems any business ever faced: How to charge for something after 1½ decades of giving it away for free.

I partnered with that friend, Ridgely Evers, a technology wizard and fellow serial CEO in Silicon Valley, to urge publishers to create their own system to monetize their content – and to do so principally by boosting the value of their page views rather than merely erecting pay walls that could provoke a dangerously negative reaction among many of their readers.

We call the system ViewPass and that’s what I introduced to the publishers last week. I presented it as a conceptual framework that represents perhaps the best chance for the industry to revitalize itself as it transitions its emphasis to the interactive media. To bring the idea to life, I offered the services of a talented technical team that Ridgely and I have assembled.

The ground rules of the session at the O’Hare Hilton in Chicago called for confidentiality on the part of all of the participants. Now that the comments of all three presenters have been leaked to Nieman Labs, I feel free to discuss ViewPass so readers know where my interests lie. While I will be happy to discuss ViewPass itself, I will not discuss any past or future conversations that I may have with industry leaders.

ViewPass would be a single, ubiquitous brand to enable consumers to access valuable content on the websites and mobile platforms of all participating publishers. It would be deployed as a widely recognized and widely accepted brand in a manner similar to the way Visa cards were established by the banking industry as a ready substitute for cash.

The other parallel to Visa worth noting is that ViewPass would be not merely a consumer-facing brand, but also an industry-owned, high performance backend authorization system, one which provides all parties with a uniform mechanism and significant economies of scale.

ViewPass would consist of a simple, one-time registration system that would remember users as they moved among participating websites. It would build a profile of individual users from demographic information supplied by them, as well as by tracking the content they viewed as they moved from site to site.

Like many of the several monetization systems coming to market, ViewPass would support payments for individual articles, subscriptions and bundles of content.

But the system’s greatest value would be the data it assembled on each individual consumer, because the data would enable publishers to sell their advertising inventory at premium rates to advertisers seeking to target their messages to the most likely consumers.

ViewPass is designed to complement, rather than compete with, existing ad networks. Each page rendered to a ViewPass member would provide the networks serving ads to participating publishers with richer, more accurate data about that viewer.

The data would enable superior ad targeting, thereby improving consumer response. Improved response would generate higher CPMs, boosting revenues as advertisers competed for access to the availabilities.

It is important to note that the information offered to the ad networks would not identify individuals, thus protecting their privacy.

Based on the models Ridgely and I have constructed in consultation with a number of newspapers, we believe the enriched customer data potentially will enable publishers to more than double their ad rates.

In addition to lifting their revenues, industry leaders could improve their profitability by owning ViewPass in a co-operative type of structure that would enable them to share in the profits of the business each year after covering the cost of the operation.

This, of course, would be a major improvement over what they could hope to achieve by working with what almost certainly would be a fragmented collection of third-party vendors, each of whom would naturally expect to make a profit from providing similar services

Taking into account the improvements in revenues and profits discussed above, we believe the industry could rapidly triple its online margins by adopting ViewPass.

In addition to me, the three-member panel meeting with the publishers in Chicago included Jim Pitkow of Attributor, who has developed a system for identifying websites that are poaching copyrighted content, and Steve Brill of Journalism Online, who is advocating the industry-wide adoption of a system he hopes to build to enable the sale of content for cash.

The Attributor solution, as discussed here, could be reasonably effective in policing copyright abuse. But a more positive approach to copyright compliance would be welcoming the broadest number of websites into the ViewPass system, where each participating site would be motivated to respect copyright to protect the value of everyone’s content.

The ViewPass carrot would be greater revenue for participating publishers. The stick for copyright violators (the detection of whom could easily be provided by a partner such as Attributor) would be the sanction of being booted off the ViewPass network.

The approach advocated by Journalism Online seems to be a concerted campaign to force consumers to subscribe to online content after some 15 years of getting it for free.

But there’s a huge problem with that.

If you suddenly put a pay wall on a website that used to be free, you are bound to lose a substantial amount of traffic representing a considerable amount of potential advertising inventory. Once customers are turned off, it will be awfully hard to get most of them back, especially as plenty of free websites will be glad to welcome them.

You could argue, as Steve does, that some newspapers are doing a poor job of selling their existing online inventory. But the solution is to sell the ad inventory better, not to write it off.

The publishers successfully selling targeted advertising on Yahoo’s Apt system have proven that it pays to have superior data about their customers. If you ask them, they will tell you so. But the problem with Apt is that Yahoo gets 50% of the revenues.

An industry-owned, co-operative venture like ViewPass would put publishers in a stronger negotiating position than they are today with such partners as Yahoo and the other online mega-powers.

If ViewPass were expanded to other print, broadcast and online publishers across the globe, it could give the American newspaper industry some badly needed mega-power of its own.

39 Comments:

Anonymous Anonymous said...

This sounds a lot like CircLabs.

No doubt there are other businesses brewing out there that hope to make a quick profit selling hope to newspaper publishers.

Long term, newspapers need to develop new and premium consumer products, both in print and online, to remain viable businesses.

10:25 AM  
Anonymous Dhyana Sansoucie said...

I generally like this idea. I like it even more if it will be possible to get people to use the system but to still leave most content perfectly free. That would allow better ad targeting and profitibility but wouldn't cut down on traffic.

It needs very careful positioning to the public, I would think. Why should they sign up? Why isn't it nefarious?

I hope you have a good marketing plan. Something along the lines of save newspapers ... have access to your local news ... but it doesn't have to cost you. Only if you want it to.

And hopefully publishers will be smart enough not to overcharge. The beauty of this system is that they would probably quickly realize if they are indeed overcharging by the traffic falloff.

I don't actually foresee getting publisher buy-in as a huge problem.

10:30 AM  
Anonymous Anonymous said...

Any how does ViewPass authenticate the demo data that the user supplies about themselves? Do potential users (i.e. publishers and/or advertisers) even begin to have a clue about how many people supply FAKE data when creating user registrations??

10:46 AM  
Anonymous Anonymous said...

this is facinating-- thanks, Alan. But it also reveals that you're in a hopeless conflict of interest in writing about ViewPass's potential competitors and alternatives, and thus in continuing to write about many of the issues this valuable blog discusses. I wish you the best with your business venture (for your sake, and everyone's), but I'm very sorry to learn that you have such a big axe to grind on these questions.

10:55 AM  
Anonymous D.S. said...

Yes, we can't trust him completely to write about his competitors. He does have years of experience and a good idea, though.

And he could still be trusted for a lot of things.

It's not so much an axe to grind as a solution to promote.

At some point if you care about the industry you might have to get off the soapbox and do something about it.

11:06 AM  
Blogger David Brauer said...

So this is a little like the grocery store or gas station that wants me to use their free frequent-buyer card, enabling them to make extra $$ by targeting their pitches based on my behavior.

Expect many chains would use this, and there would be some protections on individual information.

Am I understanding this (more or less) right?

11:20 AM  
Anonymous Joe Clark said...

This plan would be illegal under any number of privacy laws. It would be immediately illegal in Canada, for example. Just try keeping Canadians out of your English-language news-service network.

Then there’s the pesky issue of antitrust.

I don’t understand how you and the newspaper industry seem so intent on organizing an illegal combine right out in the open. Do you really think you’ll get away with it?

11:22 AM  
Anonymous Jeff said...

Why do increased revenue strategies have to be an either-or proposition? Yes, charging for access to certain content will lead to a loss of some existing readers. But those who will pay are a very desirable group for most advertisers.

Plus, as the current recession has shown, companies with multiple revenue streams tend to fare better than those who are reliant solely (or almost entirely) on ad revenue.

Charge for access AND develop ways to increase ad rates. Anyone who suggests that the "solution" is one or the other is likely looking to profit themselves from one or the other.

11:26 AM  
Anonymous Anonymous said...

Canada won't let you opt in to giving up some private info?

11:51 AM  
Anonymous Bob said...

Alan,

I'm glad someone is advising the big newspaper owners to scrap the paywall idea, because if they do that, it will be like spraying themselves with invisible paint as far as the Internet is concerned.

In a few days I'm going to make a list of web links that I can use to obtain pretty darn good news and information locally (Houston area), nationally, internationally, in business, energy and any other areas of daily interest - all without the need of visiting a major newspaper site.

In my opinion, the big newspaper owners suffer from a bad case of overestimation of self-importance. If they ring themselves with a magic Visa wall, the most likely audience reaction will be one collective yawn.

Your idea has a lot of merit. It's certainly a much better plan than buying invisible paint.

But I wonder if it wouldn't amount to creating two classes of web news operations - the elites such as Rupert, Dean, Gannett and their ilk, and the mom-and-pops, the community, small and medium chains.

I personally would, if I owned a major paper or a fair-sized chain, hire web-savvy people and good programmers with the money I'd be saving from not printing on newsprint, and then I would attempt innovative uses of government databases and other editorial resources, hire back investigative reporters and work to take breaking news back from the TV stations (the web is an instant publishing medium, ya know).

All of it designed to boost page views, on which ad revenue is based.

I would also pay the going rate to find and hire a genius to create the best interactive ad agency in the country, which would serve as my site's ad department and would also generate revenue by creating kick-butt digital ads for clients who are now throwing away good money on the digital crap all the other agencies are passing off these days.

Trouble is, the big paper owners don't know how to either compete or innovate. Their strong suit is lobbying for the right to ignore anti-trust laws - which is why three-quarters of America's newspapers disappeared in the '80s and '90s.

Really, the question is, do these guys deserve your help, or are we better off in the long run allowing them to fail through their own bad ideas, so that more nimble and able competitors will take their place at the helm of new journalistic endeavors?

11:56 AM  
Anonymous Anonymous said...

To me, the big question is, where would the added revenue go? I don't particularly want to hear about how the revenue would help save newspapers, because the newspapers of today, with a very few exceptions, aren't worth saving. If publishers would commit to using the money to improve the product, rather than just paying down debt and enriching the owners, that would be a different matter.

12:23 PM  
Anonymous Mike Phillips said...

Alan, you're onto something. I buy some of the household groceries at Kroger. My wife buys the rest -- also at Kroger. When she checks out, she gets coupons on the back of her receipt that correlate to her buying behavior. I get different coupons because I buy different stuff. We're both happy, and so are the marketers at Kroger. Ultimately, your tool would let digital news organizations transcend mass advertising and make money facilitating direct marketing.

I've long shared your belief that charging for content is a Quixotic crusade. But I've gotta tell you: Now that my job description has changed from editor and publisher to community activist, I am STARVED for local news, and so are all the other community activists I know. If the Cincinnati Enquirer keeps on starving me, I have two choices: offer to pay or start a digital alternative. Want to guess which way I'm leaning?

12:57 PM  
Blogger suzanne said...

Jeff:
"Charge for access AND develop ways to increase ad rates."

That's about the dumbest thing I've ever heard. Yes, Mr. and Mrs. Advertiser, please pay double your previous ad rates for half the audience, out of the kindness of your hearts.

Great idea.

1:07 PM  
Blogger suzanne said...

Alan, quick question - is this anything like kachingle.com?

1:07 PM  
Anonymous Anonymous said...

I guess the question is, will the news consumer pay a fee or is the money to be made from the marketing information only?

Given a big enough pool, I would think it could be free to the customer - CVS drug stores not only give discounts for scanning your free 'ExtraCare' card, they give cash back periodically, because the consumer info is so valuable to them.

I'm no lawyer, but I would think the anti-trust issue could be defused by having papers buy or contract for this from a separate entity. As for privacy, there's little or no need for information to actually ID someone - just track web habits, which is already done by a number of companies.

Joe Clark: Is AP an "illegal combine?" This sounds like it could be set up in a similar manner.

1:32 PM  
Anonymous Anonymous said...

You sure about the magnitude of the revenue enhancement for the traffic?

age/sex/zip data for surfers is widely available (see Lookery now, Tacoda in the past) already and has been for years. Also see Facebook, a closed system.

To the extent that this is valuable, folks have been doing the arbitrage for years on the ad networks. Buying "cheap" traffic, then enhancing it with targeting information and increasing value.

It's always sounded good in theory. And it certainly works okay in practice. Good thing it's easy enough to test. Just use the traffic from a few newspapers now, enhance it profile information available from companies like Lookery and use that as a lower bound for how much money you'll make.

1:37 PM  
Blogger Kiyoshi Martinez said...

Why not just use PayPal? Or Google Checkout? That seems easier.

1:47 PM  
Blogger Newsosaur said...

Thanks for all the comments, pro and con. In answer to some of the questions above:

1. So far as I can tell from the modest details revealed to date about CircLabs, there may be points of overlap with ViewPass but the concepts are well differentiated. If nothing else, the idea of industry vs. private ownership is a major difference.

2. Nothing like PayPal, though ViewPass would need credit-card clearing capabilities.

3. Nothing like Kachingle. Its "tip-jar" system takes a distinctly different approach to monetizing content.

3:16 PM  
Blogger Bill said...

in reply to anonymous at 1:32 PM.

Yes.. I would argue that the AP has become an "illegal Combine". it exists more as a stand alone news entity, more for its own benefit than for its members and not like the member organization it claims to be.

3:27 PM  
Anonymous Anonymous said...

Facebook Connect has the potential to be everything that Viewpass wants to be and more.

4:29 PM  
Anonymous Anonymous said...

I'm sorry, but your idea is too little and too late. My idea? Legally allow the top 50 newspapers by circulation to get together to save themselves. Congress could and should allow it. Then, have these newspapers drop their on-line services. Make everyone buy the paper. Make other online services pay for the content, but in a highly edited format. You want local news? Sports? The weather? Obits? International and national news? Make people pay for it by no longer giving it away. I subscribe to three daily newspapers to get what I want. I'm rkslicer. Thanks.

5:43 PM  
Anonymous Louis Bucciarelli said...

Great idea. Go further. Many advertisers (especially DM) value retargeting. Finding a way to aggregate data off-newspaper sites and rolling this into View Pass profiles will generate another multiple in revenue.

8:04 PM  
Anonymous MM said...

Try to think of a better name than ViewPass.

8:40 PM  
Blogger Steve Cusumano said...

I can see how the news organizations benefit from a system like this, as well as advertisers, but what is the incentive for customers to join a system like this? I hope there's more marketing involved than "Save your local paper!", cause I don't see that as enough motivation to bring people to this system.

The explanation mentioned in a comment above comparing this system of a frequent-buyer card makes the most sense to me, and in that system, there is a clear benefit to the customer: reduced cost by access to personalized coupons based on your buying patterns, or at the very least, access to general discounts on commonly purchased products available to anyone registered in the system. But since we're talking about content that is generally available online already for free, offering a discount doesn't make any difference.

Perhaps consumers have to register to view the content? Assuming registering is free, that's not terrible and still provides the viewing patterns to news organizations as well as advertisers...but the interface better be perfect, because it seems like consumers are generally skeptical/lazy when it comes to registering...When presented with that "Please create an account" page, I know I'm certainly guilty of deciding I didn't really need the content after all.

Of course, hypothetically, if this system was ubiquitous throughout the online experience, then a consumer would have to sign up to view any content at all.

9:27 PM  
Anonymous Anonymous said...

I agree that this is one part of a possible solution, and the bodies already exist to oversee something like ViewPass. The national press agencies like the AP or the PA in UK would be best placed to implement this on behalf of their members/shareholders. But having worked for both I'd say it would require a seachange for them to be able to implement this effectively.

2:53 AM  
Anonymous Anonymous said...

Where's the monitization model? Having licked the news gathering, audience development aspects you don't present a plan for selling more advertising. Right now there are only so many advertising sports available on a web site at any time. And with click throughs abysmal the industry needs a new plan. Google is reaping all the rewards right now because they are being allowed to congregate information, without permission. Move the local news search function back to the newspapers and its a whole new revenue ballgame.

4:37 AM  
Anonymous Dhyana Sansoucie said...

Could you offer people a credit for signing up, usable at any site that uses the system? So that they get $2 or $5 off ... and the first 20 articles that cost .10 would be basically free, for example?

Giving people the knowledge that signing up will give them free access to content that otherwise would cost them or not be available if they are not in the system would be an incentive.

8:11 AM  
Anonymous jydurocher said...

Well, Joe Clark took power in Canada 30 years ago today, lost it so fast that he was a blip on the radar.
Now apart from my modest duty as a publisher, I did dabble in privacy issue in a former life, enough to be the pr hack for a House of Commons committee that look into privacy in the mid 90's.
So, will someone tell me which laws in Canada prevents data aggregation and sharing if properly explained to any person over 14. By the way, civil law matters are a provincial responsability and once again, I want the exact name and article for each province and territories.
As for Mr. Mutter idea, it's worth looking into.

9:05 AM  
Anonymous Anonymous said...

Has everybody read this? It's about the prospects for micropayment schemes. By Clay Shirky.

http://shirky.com/writings/fame_vs_fortune.html

9:55 AM  
Anonymous Anonymous said...

Newspapers could have been doing this all along? They already have some demographic data on their subscribers readily available - their names and addresses.

They could have given every home subscriber a login/password to "premium" content on the websites - photo archives, news archives, better, search, whatever. Anything different on the site to give the subscriber a reason to use that free login you provided them rather than looking at the "free" stuff.

Once those home subscribers are logging into the website, then you have useful usage data that you take advantage of. For example, target LOCAL web ads to them for businesses in their zip code, neighbourhood, city, etc.

But of course, this would have required some progressive thinking on the part of publishers and actually having to spend some time/money/resources developing it - something they have never wanted to do. They much preferred to try to squeeze every last penny they could out of their cash cows.

Charging subscribers for access to content is their lazy way of dealing with the real issue - declining ad revenue. Plummeting print ad sales are what's destroying their business (profit margin), not free stories on a website.

10:11 AM  
Anonymous Anonymous said...

First of all there are several patents issued in the last two years that cover the ad insertion and managed media to streaming wireless devices. The View Pass concept will undoubtedly have to license the right to provide the targeted advertising along with the corresponding viewer demographics. I know the IP exists because I have read the patent abstracts. Mobility is the next frontier for newspapers. who wants to read a paper with a laptop? Net books and data phones are the new paper, and video is the new columnist writer. Check it out. An abbreviated dial code will opt in the reader to the managed media services.

12:44 PM  
Anonymous Fakeperosnalinfo Provider said...

Do I have it right that the user pays to read the content, and also allows personal information to be (anonymously) harvested?

10:37 AM  
Blogger King Kaufman said...

Interesting how many commenters choose "Anonymous" as their identity here. Ironic, I daresay.

10:38 AM  
Anonymous Anonymous said...

I grant that this sounds like an interesting idea. But here's my issue: I work for a large newspaper chain (who was represented at that NAA shindig) and you know what?

We have pretty much the same functionality in already in place, and have for about 10 years.

No, we have not leveraged it to the extent you have described above across all our properties and while we have used it to implement paywalls we don't currently (pretty much because they all failed).

The idea that we would rip all that out to sign on with ViewPass (or whatever the next guy is selling) is laughable. So laughable that it's completely plausible that we would in fact throw out this existing infrastructure (and its investment in time and development) for a new, unproven, product.

How is this helping again?

But for now this framework is still there and the technical headaches of "complementing rather that competing with" our various systems - advertising, analytics and user integration - are all there as well.

Have you addresses these issues in ViewPay yet?

I continue to hear a lot of "Silicon Valley CEOs" pontificate about their solutions and whatnot, but I've seen none with a real deliverable. And not some early beta or demo but a real product that can stand up to the demands of not one market, not 30, but several hundred markets who's needs vary wildly literally by day and what may or may not be news happening in their market.

My fear is the online newspaper industry is ripe for being taken by yet another round of profiteers who promise lots but will ultimately deliver something inferior that will only serve to exacerbate our problems.

12:22 PM  
Blogger pr said...

Free and anonymous beat pay and reveal any day.
There is NOTHING to prevent a local one person blogger to post a paraphrased version of many of the same stories or literally the headline facts...then LINK to your content...Many people would be happy with just the core facts...the score of the game, the way the vote went, who won the election and so on without reading the dreary details. The journalism of 10 years from now will be tiny staffs all online, pumping out a ton of stuff amalgamated from 29 other sources, paraphrased where necessary, linked where necessary or gleaned as news always has been, by asking questions. If it is FREE to the end user and asks for no private information so you can be "advertised to" it will trump the "detailed account" of the game every day.

9:56 PM  
Blogger TomForemski said...

It sounds like a glorified cookie. Anything that enables advertisers to be more efficient at targeting prospects is going to save them money, and thus pull money out of the media on which they advertise.

12:01 PM  
Blogger Dorian Benkoil said...

reminds me a little of AOL: how you used to get access to magazines in the Time Warner empire if you subscribed to AOL. Which reminds me: I'd hope magazines would be on this, too.

7:12 PM  
Blogger SpartanburgSpark.com said...

Not to sound contrary, but this is how porn websites worked -- shared memberships for content -- until very recently. That model is falling apart too, and if it doesn't work with sex, something people actively seek out and due value enough to pay for, I really don't see how it'll work with news.

My thinking is very different. Why not go with something that DOES work? Give away the information for free, as now, and then charge people to be able to interact with it.

That is, if you want to comment, to get the RSS feed, to have an avatar, to do all of the stuff that regular site users take for granted, but don't actually NEED to do, you'll have to pay a nominal fee. $10 a year, or $5 a month. Or even $10 for life ... whatever fit the model best. It could also open up some social networking options within the site for people who are all there because of a shared interest.

FARK.com and SomethingAwful.com are two examples of this basic idea that are viable, self-sustaining companies. What's more, both have been doing this for years, have grown and retained members, so it's obviously working. Yet almost no one in our industry seems to cite them as examples of possible models, even though they're not only viable, but also dead-easy to implement.

1:37 PM  
Blogger John said...

Re: "Try to think of a better name than ViewPass."

With NewsPass being the obvious choice.

10:31 AM  

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