schneiderism

Just read a really interesting post by Noah Davis at businessinsider.com (see link above) that recounts the dysfunction and chaos of Conde Nast's digital division. Read the full article. It would seem that "digital" at Conde Nast could be defined by a mono-platform (all iPad app all the time) strategy and not by a content strategy that addresses multiple platforms. More of the same in publsihing. Especially telling was this excerpt:

"His (Scott Dadich, executive editor of digital magazine development at Conde) efforts are not achieving the success the company hoped. Although the party line remains bullish, the results show that people aren't running out to purchase iPad apps.

The latest unaudited numbers from the Audit Bureau of Circulation show Wired’s digital downloads capping at an average of 27,369 per month for the six months ending this past December. (For context, its first iPad App got more than 100,000 that month.) GQ’s app has less than half of that, with an average of 12,377 per month for those same six months, and Vanity Fair clocked in at just 9,438. Glamour’s iPad app, which was released in August, had a mere 2,471 monthly average for downloads."

I feel even more strongly about my previous statements that the iPad and Apple's Newsstand, as interesting as they might be and as good as they are for Apple, are serious distractions to innovation in publishing and ultimately to the reinvention of the publishing business model.

Filed under "failing digital strategy."

I read an overview of Apple's Newsstand, introduced at yesterday's WWDC, via The Guardian (link to article above) and felt compelled to add on. Newsstand is not entirely unexpected given the iBooks model Apple has been refining over the last year. It is also the follow up to the digital payments service Apple introduced for subscriptions earlier this year. The article gives some insight into what this means for publishers, but I want to hit this just a bit harder:

Apple's Newsstand is an obstacle to innovation and a distraction.

There, I said it.

I am not entirely surprised that Apple's Newsstand is remarkably devoid of innovation and, in fact, actually a retro homage to the glory days of publishing with racks of printed magazines and newspapers overflowing at your local bookstore. Why? Why continue to perpetuate the creation of editions, or archives of content that are mostly irrelevant by the time they reach the intended audience? Why support the continued use of non-interactive content capsules that have way more in common with that October 2010 issue of Time sitting next to your bed than the future of publishing? Because it's easy money for Apple. Publishers are largely desperate for a path to digital revenue and have been conspicuously absent from the conversations about their own business model. Apple senses an opportunity, and an easy one at that, to repackage existing infrastructure to throw publishers a bone. A bone they really have no choice but to gratefully accept. They're all missing the point, and the revenues generated by this exercise will be a setback in ultimately getting the future of publishing and the future of professional content on the road to a sustainable and meaningful engagement with all of us.

Here are my demands for publishing (and how Apple is now an obstacle to what I believe are eventualities):

- Unhinge yourselves from the concept of "editions" and from the need to produce a serial discrete object. Apple's Newsstand keeps editions alive and well.
- Focus on creating and curating the most amazing content possible. Images. Video. Journalism. Research. Insights. Editorial. Prose. Get to it and make it dynamic and accessible in realtime. Make us HAVE TO HAVE IT. We want information when we want it, not in three weeks when the next edition is released.
- Distance yourself from a reliance on advertising and innovate other ways to monetize your content (why this has yet to happen is insane).
- Think more like a disruptive startup and less like a 19th century publishing industry. Think more like Apple and less like Microsoft.
- Blow some things up, starting with your notion of what you are and your meaning to those that give you money.

I'm sure I am way out of bounds on all of this. But still, Apple's Newsstand? Really?

Post via businessinsider.com by Henry Blodget(link above) looking at some of the results of the recently launched New York Times paywall. Admittedly, I've been a vocal critic of their paywall strategy, going as far as to say that they have no idea what they're doing in a previous post. Well, let's see where the chips are falling via the Business Insider post and the graph above from that post…

It would seem that things are improving, though marginally. 100k new digital subscribers added since launch of the paywall is notable, but still very small with regards to revenue contribution. Print subscribers still generate the dominant amount of revenue (on average about $879/year per subscriber to the digital subscriber's $3.85/year), but that print subscriber audience is slowly but consistently shrinking. So this begs the question:

Will the NYTs be able to increase the digital subscribers at a rate that offsets the loss of print subscribers?

Here's the big problem: A New York Times print subscriber is worth 228x that of an online subscriber. Add in the expense of maintaining a business model that has one foot firmly rooted in the 19th century (analog dollars) while the other is attempting to find footing with some relevant future (digital dimes), and you've got some tension on your hands.

Anyway, nice piece by Henry Blodget at the Business Insider.

Revealing piece in the Business Insider (link above) this morning outlining the $40 million cost of the New York Times pay wall. $40 million? For the pay wall? The piece points out that the NYTs already owned the following:
- sophisticated credit card processing system
- database management system for keeping track of web site registrants

So, what exactly did that money buy for them? Massive inefficiency and a probable perpetuation of the current trend in the newspaper's EBITDA.

It looks as if Apple will be in the digital mag game with more than just subscription apps.

According to the Gadget Daily News, Apple is creating a publishing tool “that will be in a future release of their developer environment and toolkit – Xcode.” This magazine template will allow users to create a magazine through the template, which Apple will then publish and will be available for sale through iTunes.

This looks to be Apple’s solution to user complaints that the magazine interfaces aren’t uniform from one publication to another. Undoubtedly, the magazine template will take self-publishing to a new level, as anyone who can pay for the tool will be able to utilize it. As Gadget Daily News say, “I could see all kinds of these ‘Garage Magazines’ as I call them, being created. Undoubtedly, quality would vary widely.”

Apple hopes to launch Xcode by the end of 2011.

Adobe released their own set of publishing tools on March 7th, with their Enterprise Edition of the Adobe Digital Publishing Suite already in use by Conde Nast, Dennis Publishing, Martha Stewart Living Omnimedia and National Geographic for Android.

Bonnier credits the Digital Publishing Suite “as an integral part of our News+ platform,” said head of IT development, Tore Jjaertoft.

Another option for publishers looking to create digitized magazines is Bonnier’s Mag+ platform, which is available from Moving Media (the company will make its official announcement April 4th). Mag+ is built around XML-based technology, and the app “...is essentially a MIB-reader, [which] can render them with our unique functionality and architecture,” said Mike Haney, former executive editor of Popular Science and U.S. director of Moving Media.

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What publishing has been slow to do for themselves Apple is going to do to them.

At this point I'm just piling on, but those that know me will acknowledge that this has been a consistent theme within my diatribes for years. So, when you're at the bottom everywhere you look is up. How about an iPad app?

Kicker posted an interesting perspective on our behavior with printed magazines and the state of magazine applications to their site the same day that I had lunch with a publisher where we talked about the same exact topic. You can read the entire Kicker piece at the link above. Here's an important excerpt:

"The problem is not that the editors are focusing on rich, visual graphics. The problem is the lack of functionality. People don’t just read their favorite magazines, they use them. Magazines are shared, saved, and used. All kinds of articles are torn out or photocopied; corners of interesting articles are dog eared and put on a shelf just for future use in case they somehow remember what issue that great article was in. Current digital magazines have not yet tackled this problem."

Given how we actually use magazines the current state of magazine applications are actually less useable than their print counterparts, and that's precisely why the adoption levels of those applications remains still very low. They're all bling and no backbone. Being interested in this space I have a couple dozen magazine apps on my iPad and I feel they're all poor in execution, and these are from major publishers who could have easily done a better job. They've universally missed the point and the opportunity that digital presents.

Back to the conversation with the publisher, over lunch we discussed the sorry state of applications for magazines and how she is using this situation as an opportunity for disruption. She's working on an app for one of her pubs and I've seen the demo. She's taking the right approach and focusing on three important aspects of how we now interact (and demand to interact) with information:
- content quality and contextual relevance
- functionality of value (integration, sharing, access and reference)
- customization

It's the customization/functionality opportunities that are so blatantly missing in just about every magazine application I've experienced to date, and it's her focus on customization/functionality that is going to give her an incredible advantage in connecting to the broad audience that she needs to be successful. Also, she'll be able to replicate and iterate this approach across her entire portfolio of publications as content/customization/functionality is pretty much what content consumers of all demographics demand today.

What I don't understand is how so many know what needs to happen regarding moving the publishing model effectively to digital, but there really are no examples of this being done well. At least not that I've seen as of yet. I will say that the imminent app from my lunch companion seems to have the potential of being a significant and disruptive step in the right direction.

Quick overview of the impact of Apple's recently announced subscription and content purchasing rules with publishers via TechCrunch at the link above. Game is on.

It all boils down to this:
"Up until now, Apple took a 30 percent cut of one-time purchases in iTunes. So the 30 percent number doesn’t seem strange, at least not to consumers. What do we care how the money is split up as long as we all of these digital goodies are affordable? But publishers and other media companies with subscription businesses (cough, Netflix, cough) care very much. Apple is saying if we deliver a paying customer, we will take 30 percent of their subscription dollars in perpetuity as long as they consume your media on our devices."

And this:
"Apple is now telling media companies to forget about the way they’ve been doing business for decades. There are new rules in its digital newsstand. And, while some big publishers like might try to hold the line or go over to Android, in the end if consumers decide they want to read digital magazines on their iPads, they may have no choice but to do what Steve tells them to do."

This seems to have slipped under most people's radar, but if you're in publishing you're probably feeling like Apple just owned you a bit.

Nice post at TechCrunch (hit the link above) looking at how print companies have mistakenly looked to the iPad as the fix to what ails them. I encourage you to read the post, but the gist of it is that publishing needs to get out the "thing" business (printing magazines, newspapers, books and iPad apps) and fully embrace that they are in the content business. Consumers of media and information care little for the medium on which they consume that media and information. In fact, we want it available to us whenever and wherever we decide it's most convenient. We'll pay for it, too. Publishers need to embrace this changed reality and appropriately atomize and monetize their content accordingly.

Beyond that, it's embarrassing how many magazine and newspaper iPad and tablet applications seek to mimic the experience of actually reading a magazine or newspaper. Embarrassing for them and annoying for us. This weekend I downloaded the latest Wired for the iPad hoping that there might be some glimmers of innovation. Beyond some embedded video and a couple slideshows the app is still laid out with "pages" and a non-intuitive navigation. Why? Are we so set in our legacy thinking about content that it must conform to arcane structure, hierarchy and organization? Apparently. TechCrunch writer Erick Schonfeld had a similar experience:

"Meanwhile, most iPad magazines are little more than PDFs of the print issues with some photo slideshows and videos thrown in. They end up being huge files—I recently downloaded a single issue that was 350 MB, some issues of Wired are 500 MB—with the same stale articles as in the print version. Replicating a dead-tree publishing model on a touchscreen is a recipe for obsolescence."

The iPad is an impressive device. Publishers were right to be excited about the opportunities it presented them, but have universally missed in actualizing this opportunity and have been narrowly focused on the iPad as the "medium" for their content. How is the value of the greater ecosystem of mobile and web content still lost on these people with the resources and urgency to explore this value? For publishers still stuck in an arcane model I think this is an excellent case study in the obstacle of expertise and the challenge presented to innovation and change by legacy thinking.

The Newspaper Business Model: Unsustainable in Any Form

The 'newspapers are dying' story line is hardly novel

Dec 14, 2010

-By Jeff Mascott

U.S. newspapers as we know them will be extinct by 2017.

So says Ross Dawson, a self-proclaimed “futurist” from Australia who released a global newspaper extinction time line in October. Dawson’s latest time line makes country-by-country predictions based on factors including a nation’s demographics, consumer behaviors and technological capacities. Unsurprisingly, the U.S. newspaper empire is predicted to crumble first, given Americans’ widespread adoption of handheld technology and the declining state of the nation’s newspaper industry. The newspaper will apparently endure a slow and painful death around the globe, spanning from 2017 to 2040—and, perhaps, beyond. (He predicted that Australian newspapers would meet their demise by 2022.)

The “newspapers are dying” story line is hardly novel. Most media gurus agree that the paper-and-ink newspaper is on the decline and will eventually become a relic. Yet many, including Dawson, believe that the news organizations themselves will survive in some transformed state. Forbes’ media columnist Dirk Smilie, for instance, is another one who argues that newspapers will stage a comeback after widespread efforts to cut costs and staff. In some cases, he expects that new management will provide much-needed energy to the dying organizations.

The rationale: people have to get their news from somewhere, right? If a market for news content still exists, it’s believed, newspaper organizations will just have to adapt their methods of delivery. Specifically, they’ll have to abandon newsstands and paperboys in favor of Web sites, blogs and mobile apps.

But this confidence in the newspaper industry’s ability to adapt is misplaced. The newspaper business model is simply not flexible enough to undergo such a dramatic transformation—especially given the increasingly competitive online news industry.

One example is The Huffington Post, which now trails only The New York Times in monthly Web traffic. Some reports note that it regularly outperforms other major dailies like USA Today, The Los Angeles Times and The Washington Post. Yes, The Huffington Post is primarily an aggregator. It produces little original content and certainly nothing on the scale of a major daily’s investigative reporting. But the growing Web site maintains a full-time staff of approximately 185 employees. More importantly, after struggling to monetize its popularity for the past several years, Forbes magazine expects HuffPo to triple its revenues in 2010.

If—or, according to Dawson, when—The  New York Times stops printing newspapers, it will be able to eliminate an incredible amount in overhead costs: no more paper, no more ink, no more delivery trucks, no more production staff. Yet even a streamlined, paperless New York Times will have operating costs that are simply unsustainable. In particular, it’s difficult to envision how the organization—which had 1,332 newsroom employees alone in 2008—will ever be able to operate on a shoestring staff of 200.

And HuffPo is only the tip of the iceberg of competition. National newspapers once dominant in niche areas no longer enjoy monopolies. For example, Politico’s coverage has forced The Washington Post to fight for its once faithful political audience. In-depth investigative reporting is increasingly being performed by nonprofit organizations.

Even regional dailies’ classic areas of coverage are in jeopardy. ESPN.com, for instance, has launched a series of Web sites providing localized coverage in regional sports markets.

A lot can happen in the next seven years. New technologies could present entirely new challenges to newspapers and their upstart competitors. Creative solutions could emerge. But today it seems unrealistic to expect that newspaper organizations will be able find a profitable business model to support the type of dramatic transformation that is necessary to compete.

The newspaper business model appears financially unsustainable, both in its current form and any conceivable future variation. From a business perspective, 2017 may be too generous a prediction.

Jeff Mascott is managing director of Adfero Group, a Washington, D.C.-based public affairs firm. He can be reached at jmascott@adfero.com.

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The printed medium. Books. Newspapers. Magazines. Everybody has their opinion on the future of print, and my survey over the last few years certainly does not bode well for print as a delivery vehicle of information in a meaningful way. I have been railing on the business model of newspapers and magazines for nearly five years, and yet I don't see mainstream vindication of this viewpoint in AdWeek as anything more than acceptance of the inevitable reality of changed media consumption habits.