Friday, August 21, 2009

How publishers can make web content pay

Third of three parts. Parts one and two.

If publishers are blocked for the most part from charging for content in the inherently open and unruly interactive marketplace, then what can they do? Go with the flow.

And the flow on the web is to provide consumers with unencumbered access to content in exchange for information that will enable publishers to effectively target premium advertising to them. That’s the ViewPass idea, an idea in which I have a commercial interest.

As summarized more fully here, ViewPass would consist of a simple, one-time registration system that would remember users as they moved among participating websites.

Though the system could handle payments for individual articles or subscriptions, its primary job would be to profile individual users from demographic information supplied by them and by tracking the content they viewed as they moved from site to site.

The customer profiles would enable superior ad targeting, thereby improving consumer response. Improved response would generate higher CPMs, boosting revenues as advertisers competed for access to available page views. It is important to note that the information offered to ad networks would not identify individuals, thus protecting their privacy.

Significantly, a number of publishers have proven for themselves the prodigious value of having enhanced information about their web visitors.

Some of the leading members of the Newspaper Consortium say they are fetching rates of up to $15 per thousand by selling advertising through a targeting system developed by Yahoo that, while valuable, falls short of delivering the level of detailed demographic and contextual information that could be provided by ViewPass. (A partnership similar to the Yahoo deal is being planned by Advance Publications and Microsoft.)

The $15 CPMs that publishers obtain when they sell ads using the Yahoo system spectacularly overshadow the average rates of less than $1 per thousand that newspapers net when they use generic banner ads to fill otherwise unsold inventory. The unsold inventory at many papers, by the way, amounts to half or more of their page views.

A system like ViewPass would help the industry sell more targeted advertising. It also would drive higher CPMs by delivering such prized, but previously unavailable, data as a specific customer’s authenticated Zip Code. The closest the Yahoo system can get, by contrast, is to place a reader within a cluster of five neighboring Zip Codes. To be clear, however, the Yahoo system and ViewPass would be complementary, not competitive.

In short, ViewPass would compensate publishers handsomely for embracing, rather than battling, the culture of the web.

The need for an initiative like ViewPass is urgent, given the massive systemic changes confronting the industry. Here is why:

The strength of traditional media companies historically arose from their control of the means to create and disseminate information in their respective markets and then to sell advertising directed at the large audiences that coalesced around their products.

But interactive technologies have blown up this classic business model by fragmenting audiences as consumers gained the ability to gather information from multiple sources and to view it at the time, at the place and on the platform of their choosing.

Given the growing number of competing interactive sites and the generally declining loyalty of consumers to even the strongest of the media brands, it is highly unlikely that traditional publishers and broadcasters will be able to reverse the disintermediation steadily eroding their respective audiences and advertising bases.

With granular information about individuals bound to replace geography as the most valuable asset a publisher can have, ViewPass would give publishers the unsurpassed strategic advantage of being the sole owner of the definitive database of authoritative information about the demographics, preferences, desires and behavior of each and every registered consumer.

If publishers fail to seize this opportunity as a group, they are likely to fail individually as readers and advertisers over time forsake their one-size-fits-all media products.

It is gratifying to report that several publishers support the ViewPass idea, not the least because it would be owned and governed by the industry instead of third parties like Yahoo and Microsoft, which, of course, have business motives and profit objectives of their own.

“We're excited and appreciative of the work you are undertaking,” the president of one company wrote in an email after hearing a presentation about ViewPass. “Noble work, I might add.”

But the work on ViewPass won’t go forward without a bold commitment from a broad array of publishers to build it. So far, no collective resolve has materialized for ViewPass or any other idea.

Meantime, the year when publishers finally were going to start charging for interactive content is steadily ticking away.

33 Comments:

Blogger David L Macaulay said...

This is an interesting issue and the most pressing one facing our industry. It's one thing for Murdoch to say his papers will charge for content but that's a bit like closing the stable door after the horse has bolted. It surely must be possible to get greater advertising revenues from our websites.

5:38 AM  
Anonymous Anonymous said...

No where in this discussion do you mention anti-trust laws. Newspapers are generally local monopolies, although they don't like to emphasize their monopoly positions. Do you think the Justice Department would sit aside as newspaper giants conspired together to control further a market over which they already have an unbreakable iron grip.

7:09 AM  
Anonymous Anonymous said...

I said it a few days ago and I'll say it again. Your "idea" seems to be that I, the consumer, should pay money for a wretched online experience which I already hate, and on top of that you want probe me for personal information so you can throw even more ads at me. What exactly is supposed to be in it for me? Why would I agree to it?

The only thing I am willing to pay for is a streamlined, ad-free (or at least limited), user-friendly, non-intrusive online news-reading experience. In other words, you could leverage the mess that free online news has become by recognizing that the absence of a bad experience has real value, and offering it as an alternative.

But to do this, you have to be willing to think of your readers as your customers, treat them with respect and let them call the shots. Or is that no longer the secret of success?

8:34 AM  
Anonymous Anonymous said...

You describe three forms of targeting that ViewPass would enable: demographic, geographic and contextual. You go on to say that those forms are superior to behavioral targeting.

I respectfully disagree. Of the three, only geographic rises to the level of behavioral, and only for certain advertisers, those who seek their customers within an area smaller than the site's full local market.

Demographic (and geographic to the extent that it is used as a surrogate for demographic) is of some value, particularly to national advertisers, but we are seeing it rapidly eclipsed by behavioral.

Contextual targeting on a general news site is pretty close to worthless. That is because very few general news contexts correspond to targets that are valued by advertisers, unless you consider hearing aids and age-related medications. There are exceptions, of course. Travel content correlates well with a desirable target. Business content implies a certain income level in its readers. But general news sites tend not to do well with either, because specialty sites are able to serve the readers better.

9:09 AM  
Anonymous Anonymous said...

This blog has become an ad for the author's economic interest.

10:59 AM  
Anonymous Anonymous said...

I found this a thoughtful package. I disagree with you on two simple grounds:
1. newspapers can make more money from open readership than from charging charging readers.
2. there is not enough value in local news stories to charge the public to read them. As I read this, you would not have variable charges for "important" stories versus run-of-the-mill stories.

5:26 PM  
Anonymous Anonymous said...

Sheesh Alan, three posts in as many days all pushing paid content for which you now have a vested interest. I normally consider you unbiased, but not this time.

5:35 PM  
Blogger Greg said...

You have no shame Mr. Mutter, no shame at all.

6:45 PM  
Blogger Steve Ross said...

Targeting is always a good idea. Many newspapers try to start to do it with free registration for their own sites -- but find that they don't generate enough data and certainly don't know how to use they data they DO generate. So the more the merrier.

Concerning paid sites and the limited vision and brainpower of newspaper publishers, what about the plight of the enlarged community of freelance writers who actually do the work and need exposure?

My wife, an accomplished professional journalist, had a good story idea turned down by the nice but clueless new assignment editor at an ethnic newspaper in New York City. So she wrote it for a paper with similar readership in Boston, for just $50. The editor there apologizes for his paper's stinginess, but my wife was not even given free access to the paywalled site, for which the paper charges $18 a year. Instead, the editor is sending her (at much greater out-of-pocket expense) a stack of physical papers so she can send copies on to people she mentioned in the article -- none of whom live in Boston where the paper has limited newsstand distribution.

The editor (who, I guess, was glad to see a well written piece cross the transom) would like her to do more stories for the same insulting rate -- stories that almost no one who could offer her more lucrative assignments would ever see.

She also writes for the Nashua Telegraph, which has a flaky (although free) site that is only partially visible to search engines. Why newspapers do this defies understanding.

She has dialed down that gig as well due more to the lack of exposure than the small fee, to spend more time for MUCH more money helping edit a new UN website and to finish a book proposal, now sitting with a publisher.

Why (aside from the fact they all believe Craigslist stole their revenue, when the data clearly shows otherwise) do I have such low expectations for the people who run this industry, one in which I have spent most of my working life?

7:37 PM  
Anonymous Anonymous said...

Sorry, but I don't think so. This is the "nickle and dime" approach. I deliver my newspaper to my target audience for FREE every week. If you want a digital version, I'll sell you one based on a low cost annual subscription. Our readers won't find most of the news we provide any where else. If you write it well, they will come.
Bruce Wood

8:19 PM  
Anonymous Anonymous said...

Please.. the last several posts are laughable if noting else.

12:07 AM  
Blogger Steve Ross said...

Laughable how?

10:14 AM  
Blogger Elinor Ferrars said...

Anon said "Contextual targeting on a general news site is pretty close to worthless." I agree with that, and it's creepy, too. Those of us who do research on unpleasant or risque subjects, for instance, don't want some bot sending us so-called "related" ad content, or even worse, assuming it knows anything about us at all and telling that to some marketer somewhere else. Ugh! Yet, I will freely sign up to receive ad content for the goods and services I think I need or wish to have. My choice, not yours.

Curating what is of interest to your audience brings readers, and not capitulating to advertisers on the value of online advertising can bring the money.

You have to know your reader. And with a general interest publication that is no mean feat. Better behavioral research is what is needed, respectful of privacy, not same-old geography-demography-contextual crap that no one trusts anyway.

Dialing for dollars, you are far better off targeting the ISP, wireless and broadband corporations who freely deliver your content for some piece of the pie, rather than hitting up the readers who you have never been truly charged for what they are reading. Rather, they were paying (only partially) for the price of home delivery, i.e. easier access to the content, not the content itself. Not sure how or if it would work, but it might be worth some braintime.

Meanwhile, curate easily accessible high-quality content, what people want to know whether local, national or international, and make the advertisers pay more to be delivered on the same page.

11:02 AM  
Blogger Bradley J. Fikes said...

Alan, I'm afraid you've fallen too much in love with your approach to see the flaws. One of them has already been mentioned in the comments; the continuing Web-unfriendliness of newspapers. Even a good strategy can be ruined by inept implementation.

This Web-unfriendliness is caused by the same top-level executives you hope to sign on. They need to depart for Web strategies to work, but they're not going to fire themselves. That is the fatal contradiction in your plan, even if it otherwise could work: You're entrusting it to dolts.

The other flaw is the sheer creepiness of this own-the-reader concept. How secure will that data be? Will personal information about thousands of readers be lost in a stolen laptop? You write:

ViewPass would give publishers the unsurpassed strategic advantage of being the sole owner of the definitive database of authoritative information about the demographics, preferences, desires and behavior of each and every registered consumer.

I'm sure the privacy rights groups will be very supportive.

12:24 PM  
Anonymous Mike Donatello said...

Alan, I respect your right to do whatever you like with your own blog, but this is pretty surprising. What about putting up a separate site touting ViewPass, and referring interested readers to that?

I'm starting to feel like the pitch for vinyl siding will come next.

2:20 PM  
Blogger DigiDave said...

Facebook will beat everyone to this.

Think about the amount of information we divulge on Facebook freely.

Now imagine Facebook connect.

Now imagine where Facebook connect is going.

Why try and build the system yourself. It already exists.

5:31 PM  
Anonymous Walter Dnes said...

> With granular information about
> individuals bound to replace
> geography as the most valuable
> asset a publisher can have,
> ViewPass would give publishers
> the unsurpassed strategic
> advantage of being the sole
> owner of the definitive database
> of authoritative information
> about the demographics,
> preferences, desires and
> behavior of each and every
> registered consumer.

My politest response, is that you, sir, are out of your bleeping mind.

In the old days, people gave out their names/addresses/phone numbers so that publishers knew which house to deliver a paper to. That was all that they used the info for.

Nowadays, if you subscribe to a paper, they sell your details, and you get bombarded with junk mail, telemarketing phonecalls, and spam.

To give an idea of how deeply this mentality is ingrained, read http://www.dailyfinance.com/2009/08/05/murdochs-ultimatum-to-amazon-give-us-the-names-or-else/ To summarize, Rupert Murdoch isn't happy with merely getting paid for WSJ subscriptions via Amazon Kindle, he wants WSJ-subscribers-via-Kindle personal info so he can profile them and sell that info for money, after which they get bombarded with tons of "marketing".

If that is how Viewpass "works", then I predict it will flop monumentally as soon as people realize what it is. I'd be willing to give my billing info for a newspaper subscription to a paper I like, but *NOT* my age/sex/job/race/religion/income/etc. And my "payment" should *NOT* include having my personal info shopped around to the highest bidder.

4:13 AM  
Blogger Howard Owens said...

It sounds to me like view pass = tacoda.

That didn't exactly work out.

What's different about the newspaper consortium approach is there is enough critical mass to make it work. The only way to get that critical mass is to partner with Yahoo!

Tacoda didn't have the Yahoo! partnership and the publishers I know who tried it were greatly disappointed, which is what created the oppening for Yahoo!

12:23 PM  
Anonymous Anonymous said...

Why is it that I have the idea your ViewPass is sort of similar to what Gannett is already doing with its Ripple6 purchase? They have been deploying it across GCI's properties, and if you look at the Web, you see there already is some reader backlash.

1:52 PM  
Blogger Steve Ross said...

Tacoda was bought by AOL about a year ago, I think, and has been combined with a bunch of so-called "contextual marketing" properties.

From what I saw (a limited sample of clients and former clients) newspapers simply were unable to make use of the data -- and were certainly not interested in changing their operations to make such use easier.

But these are more desperate times.

4:34 PM  
Blogger Howard Owens said...

Steve, it's not just that newspaper sites were unwilling to make use of the data, it's that the data was completely useless on the small sample slice any particular market could provide. To make behavioral targeting work (and it can work) you need extremely large data slices, and only by two or three markets in the US are large enough to provide those slices.

7:58 PM  
Anonymous Anonymous said...

One time registration has to make sense. And better targeting will undoubtedly improve CPMs. But neither solves the problem of banner blindness. People simply don't read on screen in the same way as they do the printed product.

So publishers need to stop thinking of the screen as a page. They need to find a new way of presenting advertisements to online readers to improve their effectiveness.

At the same time they should offer readers the choice between being exposed to advertising or paying for content.

ViewPass, or Google, or whoever they appoint as their agent, should offer this option.

Register and agree to accept advertising or subscribe and remain anonymous.

The subscription cost, allowing access to all participating newspaper websites, should at least initially be sufficiently low to make it a no-brainer. Say $5 per month or $50 per year - "less than a dollar a week!"

Subscriber revenues would then be divided amongst publishers in proportion to both pages viewed and time spent reading.

However, for this to work nationally, all newspapers would have to sign up. Local might be a different matter.

I've blogged more on this subject here: http://www.reviewsreviewed.co.uk/index.php/mobileblog/How-apps-can-make-news-on-your-mobile-profitable.html

6:46 AM  
Blogger Mr Max said...

Online readers are different than print readers. They have much less loyalty.
Especially when the content may exist somewhere else.
Things like School Bus routes, Police Reports, Local Obituarys at legacy.com.
When online readers can find something that they are looking for on a website, they continue searching.

Print readers can't go buy every newspaper, or call all the local agencies to get all the info we need, but a web reader can.



There used to be a lot of newspaper buyers that purchase the paper for other reasons than the stories.

Employment classifieds - Gone
Auto's - Almost gone
Advertisements - Available online and will go soon.


Newspapers will either aggregate the content the readers want or die.

8:57 AM  
Blogger Steve Ross said...

Howard, I often saw data that was voluminous enough even in a small market, when combined with other available marketing data newspapers could pay for -- family size, composition, imputer income, credit limits etc, on a neighborhood-by neighborhood or other aggregate basis. I even got a local BMW dealership to combine its data (provided by BMW) with the paper's data. I did some k-means clustering based on educated guesses (the sample was too small to let the data cluster itself) and we tried 1000 tightly targeted inserts. It worked... three times.

But the sweet spot was for restaurant ads. Lots more purchases and thus lots more data. for a given population base. But THST data has to be purchased now. Much better if the industry can grow its own.

10:14 AM  
Blogger Lake Country Blogger said...

I think there is a fundamental flaw here. The assumption that news/journalism sites actually have a market for all that advertising.

The problem is not that content is free, but that web advertising is ubiquitous. Where mainstream media once was the only game in town, now every blog or website can provide an audience to advertisers. In fact, advertisers can simply create their own audience.

1:00 PM  
Anonymous Anonymous said...

"The subscription cost, allowing access to all participating newspaper websites, should at least initially be sufficiently low to make it a no-brainer. Say $5 per month or $50 per year - "less than a dollar a week!"

Perhaps I am missing something ...

I subscribe to the Chronicle at the present, and it's costing me much more than $50/year, of course.

I expect that I would like access to the websites of at least some of the newspapers that would be participating in any consortium.

How would any consortium deal affect those of us subscribers who would likely to also want access to the other sites? Would the newspaper subscribers get free access to all the sites or would we be expected to pony up extra $$$?

I hate to say it, but if it came down to getting access to a number of newspaper web sites for much less money that I am paying for a hard copy subscription, then I would very likely drop the paper, which I am not sure the Chronicle would want if the newspaper is still the medium that is bringing in the bulk of advertising bucks.

9:01 PM  
Blogger janet said...

Remember when you first got caller ID so you could screen those annoying telemarketing calls? The national 'Do not call' registry is now permanent, you don't have to re-register. Remember how many sleezy companies were trying to rip off grandma because they could? Remember that first telemarketing call you received on your cell phone and how annoyed you were? Unless ViewPass is an opt-in solution, this will establish demand for the next generation software, 'Do Not Pass' to remove targeted advertising from consumer's online experience. Instead of asking the publishers, please ask other advertisers (like me!), those footing the bill. 'Annoy me and detain me from my online quest' is not the brand awareness experience advertisers desire for their prospects.

6:23 AM  
Anonymous Anonymous said...

janet, too many marketers either have convinced themselves that that is what consumers really want, or else they don't care. This is how to build a brand??? Keep on sticking up for your prospects, please. The hunt-em-down-and-kill-em school of advertising must be relegated to the ash heap.

12:28 PM  
Blogger janet said...

Actually Anonymous, been reading your posts so I took the liberty of reserving you a front row seat at the ‘Pop Up? Opt Out!’ Americas tour coming to a town hall near you! This bud’s for you… and I agree – some branding works and most falls on deaf keyboards. Tivo was invented for a reason, no?

Newspapers seek what every business owner seeks: consistent growing revenue base, competitive advantages, happy customers who see results and repeat business. It’s 7 times easier to sell more services to an existing customer, lifecycle of a customer rules every business lives and dies by. To attain these goals, newspapers need readers to buy from businesses that pay to keep the lights on. Readers will visit news sites, but newspapers need those readers to purchase. They don’t. I can’t tell you how frustrating it is to shell out the bucks for newspaper advertising and inserts and not see a return on my significant investment. I bought that ad to reach my local prospects and break away from the pack. I don’t care if Rupert Murdoch and Sam Zell make less dough. I care if I make less dough. If newspapers think advertisers are footing the lion share of the bill, they need to hear me.

6:15 PM  
Blogger Greg said...

It is funny to see how people like Janet the Ad-Woman forget who DOES foot the bill. It is not YOU, Janet; it is the customer who pays for you and the product you want to deliver.

It is a bit like listening to the Tax man, who complains that the taxes are too low or people pay too little, because he cannot send his children to college.

Sorry, janet, but who cares about you? The less you make the cheaper and better for us, the paying customers. Advertising do not add value to the product, does it?

10:51 AM  
Blogger Steve Ross said...

An interesting turn in the discussion. Ads fail either because the medium is wrong or the product is wrong or the price is wrong or the timing is wrong... or all of the above. I find it hard to put all the blame on the newspaper for an ad not pulling if advertisers, on average, were paying almost $900 a subscriber per year to reach newspaper readers, at the end of 2007. THEIR ads must have been pulling... and were, until the recession hit.

Advertisers, on average, were paying three times what readers were paying for the print editions.

Obviously, the $900 comes from the readers as well -- by purchasing products. The typical family spends $7,000 a year for food, a similar amount for each car, more than $10,000 a year for housing and utilities. All of those things (and more) are local purchases.

As Google and other online ad sellers proved, if you can make the marketing proposition more efficient (by targeting, pay-per-click, etc) the money spent on advertising grows because more marketing propositions are cost-effective for more businesses.

That's why online advertisers did not "take away" revenue from newspapers -- newspaper per-subscriber advertising revenue and total ad revenue (I nag again) has grown all through the internet age, even after inflation is taken into account.

But newspapers' SHARE of all advertising revenue in all media has fallen. Surely a more efficient way to target readers would be a good thing, although surely it is not a magic bullet.

12:06 PM  
Blogger janet said...

Well you figured out I’m not a journalist but I’m not an ad woman either. I’m a business owner that would like newspapers to view me as a long-term relationship; our shared success means I am a loyal customer. I want you to succeed because of your unique advantages over all other advertising venues. Newspapers are one choice for me to reach my prospects; I am suggesting that there may be a cultural shift in order to view your advertisers as customers as well as your readers. If newspapers are losing market share of the advertising pie, then perhaps you should care if my investment in your venue is paying off. High ad costs generate expectations.
As stated earlier, I believe there are problems with advertising - problems for consumers and for businesses. Advertising is necessary to build brands, no doubt about it. Newspapers have a vested interest in exploring markets and customer segments: one size does not fit all. Interesting report for you: businesses live everyday what Montreal, Harvard and Stanford recently reported: advertising extends brand awareness but does not address perceived quality. http://www.springerlink.com/content/f777j638nx434417/ For millions of businesses quality is what breaks them away from the pack.

11:32 AM  
Anonymous Anonymous said...

Janet, The Montreal, Harvard and Stanford report you mentioned costs $34 to download. So I guess people are paying for content online, just not the news.

8:32 AM  

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