I attended the Aaron Swartz memorial Thursday evening at the Internet Archive building (above) in San Francisco where several hundred people gathered to mourn his passing.
It was an excellent turnout organized by Internet Archive founder Brewster Kahle and supporters. And it was a perfect setting, in a wonderful former Christian Science church (see below).
Chris Anderson has exited one of the top jobs in publishing - Editor-in-Chief of Wired magazine - to pursue the life of an entrepreneur, making a big bet that 3D printers represent a massive new phase of the industrial revolution.
He spoke at a Wired "Culturazzi" event, at the Marriott Union Square and to sign copies of his latest book: "Makers: The New Industrial Revolution."
I was thinking about my dad, Jerzy Foremski today (Father's Day in the US), he passed away last year. The photo (above) shows him holding me, (8 months old) and was taken shortly after my parents had escaped Poland and arrived in London.
We lived in Hackney, London's poorest neighborhood, in the heart of the inner city. Hackney, and the neighboring Shoreditch district, are where immigrants to London have, for more than 150 years, made their first start in life.
[Here is a draft of an article for the fifth anniversary of the Society for New Communications Research (SNCR) - a Palo Alto, California based think tank. I'm a founding fellow of SNCR.]
It's easy to forget that we are still in the very early stages of the Internet -- a basket of technologies that continues to evolve and affect nearly every aspect of our business and personal lives.
The first phase of the Internet emerged into the commercial space only in the mid-1990s, from military applications at first and then university research uses.
In this first phase of the commercial Internet, the development of web browsers meant that we could now publish a page of content: text, photos, video, to any computer screen regardless of the platform. It didn't matter what the operating system was, or the type of computer: mainframe, minicomputer or pocket computer -- as long as it can run a web browser we can publish a web page to it from anywhere.
That was a significant achievement because you used to have to be on the same network, for example AOL, or CompuServe to be able to publish the same content to other users. There was no cross-platform communications, even email was difficult. I remember it took years for gateways to be developed that could send email between CompuServe and MCI Mail - two popular email networks.
It took government funding and support for industry standard protocols to be able to achieve what we call the Internet. And once the rivalries between the competing self-contained networks could be bypassed, the Internet took off like a rocket.
The Internet's potential effect on business was extraordinary. In the mid to late 1990s, stock market investors built a massive "dotcom" bubble. A company only had to announce that they would launch a web site to have a massive spike in its market value.
Those days seem ridiculous in hindsight but only because we did not yet have the means to truly transform business operations, at least not yet. But the investors were correct in their prediction that there was a truly disruptive force at work and that those companies that were forging ahead would have significant advantages.
In those heady, early days, large corporations were faced with threats that the "dotcom" companies would "eat their lunch." Many companies panicked and launched expensive Internet operations without thinking things through; many companies were frozen in indecision and did nothing.
The dotcom dotbomb soon arrived and established businesses breathed a collective sigh of relief: their lunch was intact and most dotcoms disappeared overnight. A recession gripped the entire tech sector for several years as the excesses of those early years played themselves out.
Recessions, however, are excellent nurseries, it's where innovation emerges. And the early 2000s is where blogging started to emerge, and thats when the first social networks such as Friendster and MySpace appeared. And it is where the roots of what we now call social media emerged.
There is much written about, and spoken about, and tweeted about social media, social networks, social CRM ... "social" with everything. But the "social" part is a red herring because what emerged in the early 2000s was the second phase of the Internet.
The first phase allowed us to publish content to any computer screen. The second phase of the Internet is where any computer screen can publish back.
We now have a two-way Internet.
If you thought Internet 1.0 was impressive then look out because now we have a two-way Internet, and this time, the new "dotcoms" will be far more challenging to established businesses, they will eat lunch, breakfast, and anything else of value. It is an Internet on steroids.
For example, we now have a printing press in our pockets that can potentially reach tens of millions and soon billions of people. It's no wonder that Rupert Murdoch is pissed. You used to have to be a media mogul, buying ink by the barrel to have the potential reach an audience that anyone with a smart phone, or desktop computer can now reach.
The Internet is a powerful media technology, it's a publishing technology. And it has become very easy to use thanks to sophisticated development tools and services that anyone can use.
- You used to have to be a computer expert to set up and publish a web site, now anyone can do it in less than ten minutes.
- You used to have to build a large audience in order for your content to be seen now you can post something to Facebook or Twitter and your network of friends or contacts will republish it and potentially reach huge audiences.
The Internet has become a two-way medium.
What does this mean?
It means that "social" media is just one application of this next stage of the Internet. It means that every company, every person is potentially a media company and has to learn how to use this two-way Internet.
Every company, even if it makes diapers or ball bearings is also a media company because it publishes to its potential customers, employees, neighbors, etc. And it also has to learn how to listen and engage with those communities as they publish back.
Businesses that figure out how to use the two-way Internet will prosper and the ones that don't, won't.
New types of applications will emerge such as personalized advertising that is location based; and a whole host of other applications that have yet to be imagined.
- A two-way Internet means that anything and everything can become connected.
- A two-way Internet means that there is a huge amount of data to be mined that can provide businesses with incredible insights into their markets.
- A two-way Internet can provide businesses with real-time responses to changing market conditions.
- A two-way Internet will unleash a tremendous amount of innovation in the forms of applications, new media formats, and new societies/communities.
A two-way Internet will also transform the way we consume and interact with media. The media is dying but long live the media because we now have more forms of media, in more formats than at any time in our human history.
How will that affect us? Media is how society "thinks" it is how countries develop policies, it is how we figure out solutions to important problems such as the economy, the environment, education, elderly care, energy and those are just the problems that begin with "e."
What are the new cultures being formed? What will the cultural changes mean to business?
A business that doesn't understand its changing culture won't be in business for long.
It is these types of issues that SNCR was formed to research and to try and understand.
We have plenty of technology and technologies in our world but so what? It's how these technologies are used, how they are applied, how they affect and effect our society that SNCR seeks to understand and to share with others.
We now live in a two-way Internet and that's an immense field of study and it is one that will continually surprise us with its near infinite permutations.
For journalists, for professional communicators of all kinds, these are troubled times but also extremely exciting times. At no other time in our professional lives will we see such huge changes in our jobs, our lives, our communities.
We don't know the answers, we know some of them but there are so many more to discover.
We all can take part in figuring out what those answers are. Those answers might keep changing or they might become the new rules for the next phase of the Internet. We don't know yet, we don't even know all the questions but it's sure exciting finding out.
And that's why SNCR has managed to attract some of the best people working in this area, eager and curious about the future and what it might look like.
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If you liked "The Two-Way Internet" there are similar posts in my book: "In My Humble Opinion"
Eric Schmidt, Google's CEO, loves to tell the newspaper industry what it needs to do to be relevant in today's online world. A sample of recent headlines:
Yes, the newspaper industry needs to get wiser about how to adapt to the online world, but Mr Schmidt's lecturing is the pot calling the kettle black. Google is about as bad at monetizing content as the newspaper companies Mr Schmidt likes to lecture. And Google is getting worse at it! The evidence is hiding in plain view.
I was at Chris Brogan's Inbound Marketing Summit on Wednesday, speaking on a panel moderated by Paul Gillin, on the subject of "Media in Transition: The Future of News in a Democratized World." My old friend Dean Takahashi from VentureBeat (formerly with Wall Street Journal, Red Herring, San Jose Mercury) was also on the panel, along with Ken Doctor, analyst with Outsell.
Media in transition is a fascinating subject, I can talk for days, for weeks on this subject.
Between the four of us on the panel, we probably have nearly a century of experience with news media. We now find ourselves taking part in an incredible transition within our industry of a like we will never see again in our lifetime.
And few people realize that Silicon Valley is the main instigator of the disruption happening in the media industry. It is Silicon Valley technologies and companies that are at the forefront of developing the new landscape of the media industry, and also transforming SIlicon Valley into a "media valley."
Take a look at some of our largest companies, such as Google, Yahoo, Ebay. These are media companies. These are not tech companies, you can't buy any tech from them, these are technology-enabled media companies.
They publish pages of content with advertising. What's not a media company about that?
Facebook, Twitter, Craigslist -- are all media companies, they publish pages of content and advertising. And so are most Web 2.0 companies.
Take a look at the Internet, it is a media technology. It allows you to distribute and publish web pages, data, to any computer screen, any computer platform. Now, in this second phase of the Internet, anything with a computer screen can publish back -- it's now two-way, it's read/write, we now use both sides of the glass screen.
It is Internet technologies and services, it is online companies such as Google, Craigslist, etc, that are helping to disrupt the media industry. Or more accurately, disrupt the business model.
When we talk about the death of newspapers, what we really mean is the death of traditional media business models.
On Silicon Valley Watcher, I often use the tag line: "reporting on innovation at the intersection of technology and media." Because that's what's happening, that's what I see, a tremendous intersection of technology and media. It's like tectonic plates coming together and crumpling the landscape into a new mountain range.
And mountain range is a suitable metaphor because there are always two sides to a mountain range, one side is dry and the other is wet and fertile. For example, the Andes protect and enable the massive, wet, fertile Amazon rainforest with its incredible diversity of life, while the west side of the Andes is dry and relatively barren.
The mountain range being created by the intersection of technology and media is a barrier to the traditional media companies, most don't seem to be able to climb and transition to the other side; most won't make it.
But, I'm confident we will have a new type of Amazon rainforest emerging in the media industry, we will see an amazing diversity of media companies and services. You can already see the tremendous amount of innovation emerging and we've only just started.
For example, Facebook and Twitter are very new, even to us in Silicon Valley, and they are spanking brand new for the majority of people today. What other new forms of media will we have a year from now?
We can create incredible mashups of media technologies and media formats that have never been seen before. How will we use them? How will we deal with the loss of traditional media? How will our society handle the transition? How will we pay for journalists and the vital Fourth Estate service that they provide? How do we sell products and services? How do we find trusted sources of information?
There are tons of questions waiting to be answered. And that's what's so wonderful about all of this, we are directly involved in figuring out those important answers. We, the people working in media, in communications, in marketing, in startups, we get a chance to help create and define the future.
This is why I love my job, writing Silicon Valley Watcher, and reporting on innovation at the intersection of technology and media.
I caught up with Eva Chen, CEO of Trend Micro Tuesday morning just before her two appearances at the RSA security conference. She was in great form, enjoying a rare San Francisco heat wave, while we all melted into puddles.
Here are some notes from our conversation:
- I was on the plane recently and watching the movie Benjamin Buttons, which shows a man becoming younger over time. And this led me to think about the security industry and why it hasn't consolidated like other industries. Usually, an industry will go through a consolidation where companies are acquired or go out of business, and the industry matures over time then disappears. I've been in this industry for 20 years and it still hasn't consolidated. It seems to stay forever young. And it's because we are constantly challenged by young hackers, there are always new exploits and security threats to deal with, and that leads to new startups, it leads to innovation, and that's what keeps our industry young.
- People often say that security will be consolidated by the platform, but that hasn't happened because platforms change slowly. Security changes very quickly.
- Focus is really important at Trend Micro. We focus on security and that's what keeps us on our toes. For example, a competitor such as Symantec is also in data storage. But data storage doesn't change much, it pretty much stays the same, and that affects management. At Trend Micro we focus on security, an area of constant change. That keeps us fresh.
- At Trend Micro we have had to reorganize the company to deal with the new security challenges. We have our various groups such as anti-virus, spam, malware. We manage by objective, so we would give each group their objectives, and each group would build large databases to manage their security risk information to meet their objectives. We did away with that system, now each group shares all their information about vulnerabilities, and we give collective objectives to all three groups, which leads to a much better result.
- Some of the cultural differences are interesting. US teams are very "star" based, there is a lot of emphasis on individual performance. Asian teams are much more collaborative. For example, in the US, commissions are paid to individuals based on their performance. But in Japan commissions are team based. In the US the attitude is 'why should I be punished by someone else's poor performance?' In Japan people don't like to stand out in that way. Their attitude is that they don't want to make more money than their team colleagues, because then they would hate them. The Harvard Business school chose Trend Micro in a case study of management culture in a global company.
- Cloud computing mirrors the challenges we face globally. A recession in one country affects many other countries. If you dig a well in one spot, you affect the water supply of people far away. The same is true in cloud computing. If you manage your bandwidth well, you can free up bandwidth for a partner supplier in Malaysia or China -- everyone benefits. In cloud computing you are a community of services and connections, everyone can be affected by bad or good behavior.
- I get a lot of my best ideas in planes because I spend a lot of time traveling. I'm always in the 'clouds.'
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It is RSA Conference week this week, which means lots of security companies are in town. Among my Monday meetings I had the pleasure of dinner with Gil Shwed, CEO of Check Point Software Technologies [CHKP], one of Israel's most successful software companies.
The media roundtable included several journalists, analysts, and some new members of Gil's team thanks to the recent acquisition of the Nokia Security Appliance business group.
Here are a few quick notes from our conversation:
- Even though valuations are improved there aren't many acquisition opportunites for Check Point. The company is interested in companies that have hundreds of customers, not dozens of customers.
- Companies face many risks and the greatest risks are from security breaches that can take place seemingly undetected. Check Point checks for behavioral signatures to root out intrusions.
- Check Point has made 5 acquisitions, three of them are large. It generally integrates companies by bringing people over to Israel for a week or so, to get to know the company culture.
- Check Point has been a public company since 1996. Being a public company is not so bad, dealing with private investors is a lot worse.
- The Check Point offices in Israel are not open planned. The company has surveyed employees and they prefer to work in rooms of about three or so people. Open plan doesn't work because Israeli's can be loud and they like to offer their opinions freely, they get pulled into other conversations.
- A new law in Israel mandates that all companies have to account for their employees' time so that there is no exploitation of staff. In the few weeks that the law has been in effect, Check Point has had to measure employee time and discovered that staff are working at least one hour longer per week.
- Check Point culture is heavily dominated by food. Senior executives are expected to take turns preparing or bringing breakfast to weekly meetings. There can be a lot of competition between people in serving the best breakfast.
- Food is also important within the entire company. In Israel, each day, employees choose a lunch from 15 different restaurants that is delivered. And each day there is a new set of 15 different restaurants to choose from.
- Communal eating is important. In Israel company dining rooms hold about 400 people. The company has about 2300 staff worldwide and it tries to create the same environment everywhere.
- Gil notices what people eat, especially if they order the same thing every day.
- Rule number 1 at Check Point: If you are at a restaurant with colleagues, you cannot order the same food as your neighbor.
- A former employee found religion and wrote to Gil confessing that he spent about 30 per cent of his time playing online games and hanging out in communal areas, and catching up on personal tasks. He apologized and asked to be forgiven for stealing company time. Gil forgave him and said 30 per cent was on the low side compared with other employees.
It was a fun evening, good food and great conversation. And I didn't order the same food as Gil.
Lately, I've been writing about the new laws in South Korea that impose requirements on web sites to verify the real names of users. It was an issue that hadn't been reported much by the US media until just this week. And there is lots more Korean legislation in the pipeline that is jaw dropping in its ambitions to use the Internet and mobile phone technologies to monitor Korean citizens.
For example, the government is trying to pass a bill that would give Korea's spy agency real-time monitoring of all Internet and mobile communications, and real-time access to every cell phone's GPS location data.
The government says measures like these are needed for a variety of reasons. Critics of the measures see a government hitting back in retaliation because of several embarrasing online incidents. Such as the bungled prosecution of a blogger over his economic predictions.
The Korean people have a strong culture of fighting injustice and the excesses of government. It's a culture that readily takes to the streets in demonstrations and protests. And not surprisingly, this is reflected in its online communities, where there is a sophisticated society of Internet users using their online skills to organize resistance to government policies.
To fight back, and to try to dampen the spirit of its digital opposition, the government has passed laws such as the one that requires web sites to verify the real name of any Korean citizen, before allowing them to upload files or leave comments. And it is seeking even greater powers of regulation.
These are interesting developments because they could very well be providing us with a sneak preview into our future. South Korea is several years ahead of the US in terms of how much time its population spends online and its relatively long history of access to high speed Internet services.
The Koreans are dealing with many issues that result from living in a society that lives far more in an online world than we do. It will take the US several years to catch up.
Hopefully, the Koreans can figure out how to deal with Big Brother governments and other societal issues, before we get to the same stage.
. . .
The Korea Times: Is Korea Turning Into Internet Police State?
"According to the draft, the National Intelligence Service (NIS), the country's spy agency, gets expanded surveillance power that allows real-time interception of mobile phone and Internet communication, compared to current law that limits monitoring to fixed-line telephone calls.
All communication operators, including telephony carriers and Internet companies, will be required to operate surveillance equipment and save call recordings and log-on records of their users.
The bill also enables law enforcement authorities to collect and monitor location-based information, or Global Positioning System (GPS) records, of civilians. Considering that GPS capabilities are increasingly included in the latest mobile phones and portable Internet devices, a fast-growing number of people would be susceptible to investigators tracking their real-time movements..."
"Some analysts have suggested that it would be too burdensome for Google to challenge South Korea’s Internet policies because the government had promised 1.2 billion won (911,200 dollars) in research and development support, and the possibility of more through online advertising business."
"Google managed to avoid this law by disabling uploads and comments on its Korean version of YouTube, while at the same time telling people that they could continue anonymous uploads and commentary by accessing other countries' YouTube sites.
It seems that this is the preferred method for the Presidential office of South Korea, the Cheong Wa Dae.
The Korean newspaper The Hankyoreh reports that the Presidential office, of South Korea, the Cheong Wa Dae, has been using this loophole to post PR videos of President Lee Myung-bak."
"Rachel Whetstone, vice president of Global Communications & Public Affairs at Google, offered in a statement posted on Google Korea's Website the reason why the company has refused to comply to the real-name system. In a statement titled, "Freedom of Expression on the Internet," Whetstone said, "Google thinks the freedom of expression is most important value to uphold on the internet." Whetstone continued to say, "We concluded in the end that it is impossible to provide benefits to internet users while observing this country's law because the law does not fall in line with Google's principles.""
"Google wouldn't have much to lose if it stood up to the Korean government. It's YouTube business isn't profitable, so no shareholders would be hurt. It could argue that its servers aren't housed in South Korea and therefore it doesn't have to comply with the local law.It would be a bold statement and it would focus world attention on the South Korean government and its efforts to curb its citizens from using the Internet to criticize politicians. A bold stand from Google might even discourage other governments from following with similar laws."
Things are very interesting in media and PR communications these days. Things are changing so fast and we are all learning so fast. The changes happening in our industries are unprecedented, we have no frame of reference except our old ways.
For much of my 25 years in Silicon Valley I've been reporting on innovation and what people have been doing in software, IT systems, chips, etc. These days, the innovation isn't so much in technology, but in media communications.
These days I spend a lot of time talking with reporters about the changes in media and PR. There is a tremendous amount of innovation happening in media communications: Twitter, Friendfeed, Facebook, etc, represent just a tip of an iceberg, a tip that barely existed a year ago, what will be there next year?
And that's what's great about all of this innovation in media communications, that we are in the midst of it, and that we get to help create the future. We get to make the mistakes, and we get to discover and create things that no one has ever done before. It's like making fresh footprints in the snow. It's not often that we get to do that.
I covered the opening of the Apple's San Francisco retail store in February, 2004. It was Apple's seventh store and its first flagship store, the first to feature a very modern design.
The building was a minimalist cube and inside were two floors of stunning decor and a centerpiece glass staircase. We were told Steve Jobs was involved in every aspect of the design, down to choosing the seats in the upstairs theater.
It was impressive, but what was more striking to me was its location: Across the street sat a huge Virgin Megastore, 6 floors of music and movies.
Megastore. It sounded so 1980s. Two floors versus six floors. It was an apt metaphor for the changing landscape in commerce.
I walked past the San Francisco Virgin Megastore yesterday and it was festooned with colorful banners. It's closing. A mega sale at the megastore. I pulled out my iPhone and snapped a picture.
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Rupert Murdoch wants a Google rebellion, says Forbes. Murdoch calls Google, Yahoo copyright thieves, says Wired. Newspaper groups step up propaganda war on Google, says the Daily Telegraph. And in today's New York Times, A.P. seeks to rein in sites using its content.
The saber rattling has been going on for a while but now the battle lines are being drawn. And it is all because news is not free. News has been made available for free, and it has been made into a commodity but that is not its future because there is no future in that model. You will have to pay for it.
That means the end of the news aggregators. That means the end to arguments that the news aggregators send high volumes of traffic to the online publishers.
What is the use of more traffic when it cannot be monetized to support the work of the news organizations?
The only "news" that will remain free will be press releases--but there is little value in that type of unfiltered "news" source.
But, there may be a solution to keeping news free, one that takes advantage of the distribution power of Google, bloggers, and the large number of of social network users sharing content -- while at the same time making some money for the media companies.
In Monday's NYT article: Associated Press Seeks More Control of Content on Web
They [A.P. executives] said they did not want to stop the appearance of articles around the Web, but to exercise some control over the practice and to profit from it.
I have a solution: A content license for any online site that also publishes the content owners' designated ads.
For example, if you republish a news story you also publish alongside it one or more "adtribution" links, simple text ads with live links, designated by the content creator.
In this way, news media companies get a big benefit from having their news stories distributed for free by the news aggregators, bloggers, and online socialistas -- and their advertisers also get the distribution, which would improve ad revenues for the content producer. News would (might) remain free.
Adtribution links would "stick" with the content. These days fewer and fewer people visit a news site, they read news stories in their RSS newsreaders, or on news aggregator sites. News content is ever more becoming divorced from its web site, which means so are its advertisers.
Adtribution links could be sent along with RSS feeds and help reunite content with its supporting advertisers.
It would be simple to automate it, news aggregators and blogging software could be set up to automatically copy a set of associated live ad links, at the same time the content is copied and pasted.
Adtribution links could be attached to any shareable, embeddable media. And they could be widgetized so that their ad content could be changed at any time.
In some cases, sites that republish content might agree to run adtribution links in a permanent part of their page, so they aren't directly next to the content, for aesthetic or other reasons.
Would something like this be enough to appease the newspaper industry and keep our news free?
Will bloggers etc, be willing to republish text ads? Probably not. But they could get used to it. We can all get used to it.
I remember the hue and cry in the early days of the Internet that users would not tolerate advertising on the Internet. We got used to it, and I predict we'll get used to many more online business models. Some will work.
Here's a catchy slogan: "Adtribution supports the source." Maybe the media moguls will catch notice.
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Silicon Valley Watcher:
It seems as if it doesn't matter how old you are, kids or grownups and beyond, everyone is complaining they are having trouble focusing on tasks, and that they are constantly distracted.
I remember when MTV launched in 1981. The music videos were a big hit at the time, they were imaginative and innovative -- it was very compelling content. But there were concerns that the fast edits, combined with the seductive imagery of the music world, would shorten the attention span of viewers, especially kids. There was talk of an "MTV attention span" syndrome.
However, today I know people that would kill to have the breadth of an MTV attention span. In this world where worlds of compelling content are just a click away, it's like being in a garden of Eden and feasting on every type of fruit, a cornucopia of amazing content and knowledge. And it is all available in any format you want, at anytime, and in anyplace.
The death rattle of the newspaper industry makes it seem as if media is dying, yet there is more media being created today than at any other time in human history.
Plus, there is more compelling content today than at any other time. And it has never been easier to find because our social networks constantly tip us off on Twitter, Facebook, Friendfeed, email, sms, blogs, phone, and when we get together to talk. We are all sharing (and creating) massive amounts of compelling content, all the time.
The problem with compelling content is that it's compelling. That's why we now all seem to have the attention span of a gnat.
I've been thinking about this question for a while: In a world of compelling content what do you do? How do you deal with the distraction of its easy reach and abundance?
I have a suggestion. I'd love to hear yours, please send to tom(at)foremski.com or leave a comment.
Web 2.0 Expo has become very dated. You aren't missing anything if you couldn't make it. But it is always nice to catch up with old friends.
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Some prior SVW coverage:
The Web 2.0 sector is a vibrant sector that is supported by hundreds of millions of dollars in venture capital. But how many "Web 2.0" companies are profitable?
They started arriving Friday evening from all over. By Saturday evening there was a large British encampment in the Clift's Redwood Room. Sunday the Germans were holding court, and Monday the Finns were throwing a party at The Foreign Cinema...
There must be a lot of money rushing into PR firms around next week's Web 2.0 conference in San Francisco because I am way more swamped than usual with requests for interviews....
Virtual currencies are booming, they have become the best way for gaming sites to monetize their content, and it might also offer a way for news sites to earn revenues. That's what popped into my head when I recently interviewed Jason Bailey, CEO and co-founder of Super Rewards.
This company today launched a virtual currency monetization platform to help primarily gaming sites earn money from their users. Some of Super Rewards customers are already making more than $1 million per month!
Gamers can convert real money for virtual money and use it in a variety of ways to gain access to higher levels, gain status, etc. But many gamers don't have to use real money, they earn it through engaging with advertisers.
The Super Rewards platform allows advertisers to offer virtual cash in exchange for a specific action, for example, signing up for Netflix, or applying for an insurance quote, etc.
Mr Bailey says that Super Rewards handles the entire transaction. It chooses an advertiser from a database of about 4,000, the advertiser pays Super Rewards if an action is completed, Super Rewards buys the virtual cash from the site owner and gives it to the gamer, taking a small cut (of real money) for itself.
"We've been able to help companies move out of their parent's garage and make a lot of money," says Mr Bailey. Many sites are making $20,000 to $30,000, and some are making more than $1 million per month. He says that this approach provides a much higher return than online advertising.
Super Rewards is also targeting virtual worlds, and games found on social media sites.
This got me thinking that this would be a great way to monetize news content. Online news is free but it isn't produced for free and newspapers, magazines and TV have so far failed to find an effective online business model.
The recent Pew Project's 6th annual survey painted a bleak picture of the state of the news media:
- online ad revenue to news websites now appears to be flattening; in newspapers it is declining..
-nearly one out of every five journalists working for newspapers in 2001 is now gone
The problem is not that there isn't an audience for online news, there is, and it continues to reach record numbers, the problem is that online advertising can't generate enough revenue to support news reporting.
The Pew survey soberly states: "It is now all but settled that advertising revenue—the model that financed journalism for the last century—will be inadequate to do so in this one."
Charging for the news through micropayments is a possible solution but micropayments have a poor track record of success.
Virtual currencies could offer the best of both worlds, providing a surrogate micropayments system, and an advertising model that pays more than CPM ads. Local businesses could provide wads of virtual currencies to online newspaper readers, either in exchange for some survey data, or as a complimentary service.
- Local businesses could provide wads of virtual currencies to online newspaper readers, either in exchange for something such as survey data, or as a complimentary service to build goodwill.
- Businesses could also provide virtual cash that could be associated with reading specific sections in a newspaper, say furniture sellers to the "Home" section. Best Buy could provide virtual cash for reading the gadgets pages, etc.
- News sites could reward readers with virtual cash for contributing user generated content, such as a popular column, or for photos.
- Virtual cash could be exchanged between blogs and other online publishers for republishing great content. And there are a myriad other creative ways virtual cash could be used in news media.
The beauty is that the virtual cash would be purchased from the news media publishers with cold, hard cash by businesses, instead of purchasing online ads. And the virtual cash then powers an entire dynamic economy within a news site that helps produce great content and provide other services.
Compare that to buying an online ad that just sits there, usually unnoticed on the side of the page.
How do you set up a virtual currency system? "That's our next product, a tool that manages virtual currencies for web sites, so that you don't have to build it yourself," says Mr Bailey. That would be great for news media sites.
It's these types of monetization technologies, borrowed from other publishers, in this case games publishers, that news media businesses would do well to investigate and adopt. What do they have to lose?
By the way, what should be the name of a virtual currency in the news media world? My suggestion is "lede" it rhymes with seed and it is very specific to journalism, it denotes the first sentence of a news story.
[This is a 2 lede article.]
Google [GOOG] has quietly dropped its "Don't be evil" motto as part of a broad strategy to refresh its image. This shift in its corporate PR includes focusing media attention on key executives such as the very photogenic Marissa Mayer, VP of Search Product and User Experience.
Ms Mayer is in the middle of global media tour, and recently appeared on The Charlie Rose Show and she is scheduled to be on Jay Leno's new show next week.
PR Week recently reported that Google has been interviewing several large PR firms to help it spruce up its image, which has become tarnished over the past year with senior executives defecting to Facebook, and allegations by Internet commerce companies that it has been abusing its dominant position in search marketing.
Google's "Don't be evil" motto was first revealed when the company filed for an IPO in 2004. It was part of a letter to investors that founders Sergey Brin and Larry Page published as part of the 350 page IPO document that detailed its business and its ambitions.
In a Letter from the Founders titled "An Owner's Manual" for Google's Shareholders" Mr Brin and Mr Page wrote:
. . .Google is not a conventional company. We do not intend to become one.
. . .Our goal is to develop services that significantly improve the lives of as many people as possible.
. . . Don't be evil. We believe strongly that in the long term, we will be better served-as shareholders and in all other ways-by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.
However, as Google has grown larger over the past five years and now has a dominant position within massive online advertising and Internet commerce markets, the motto has become an easy target for its critics.
Signs of a possible change have been evident for a while. Eric Schmidt, CEO of Google has often complained in interviews with the press that the motto has been misunderstood.
Here is a quote from a news story by Reuters' Eric Auchard in June of 2008:
In an on-stage interview with writer Ken Auletta of the New Yorker magazine, Schmidt said "Don't be evil" is meant to provoke internal debate over what constitutes ethical corporate behavior, rather than representing an absolute moral position.
"We don't have an 'Evil meter' we can sort of apply -- you know -- what is good and what is evil," Schmidt said.
David Krane, a senior spokesperson for Google, told SVW: "I never liked it. I always felt that it would come back to bite us in some way, that we would end up building concentration camps, or something even worse. The universe seems to love irony, why leave ourselves wide open?"
Mr Krane wouldn't say if the "don't be evil" motto will be replaced with something else. But maybe we can crowd-source a replacement.
Here is my suggestion for a new Google motto: "Brush your teeth between meals and try to get 8 hours of sleep."
If Google doesn't manage to live up to this goal, then no harm done, just a little drowsiness and personal hygiene issues. But if it messes up on "Don't be evil", that could harm a lot of people. Let's not tempt the fates.
What do you think Google's new motto should be?
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Silicon Valley is a leader in clean and green technologies and it is counting on considerable government support through tax breaks, grants and other programs, to build a large industry. Without government incentives progress will be slowed.
President Obama has cited Spain as a reference point because of the government's strong support for renewable energy programs over many years. And he has proposed investing as much as $210 billion to create five million "green-collar" jobs as part of a New Energy for America plan.
A new study from the Spanish university of Rey Juan Carlos in Madrid, is the first critical analysis of government aid programs for green jobs. It shows that if the US adopted similar policies, it would destroy more than double the number of jobs created. The "Study of the effects on employment of public aid to renewable energy sources" shows that the US goal of creating 5 million green jobs could destroy as many as 11 million jobs elsewhere, a ratio of one to 2.2, or 9 jobs lost for every four green jobs.
The Spanish study also calculated that it cost 571,138 Euros to create each job. That's more than $755,000 for each green collar job.
With this type of economic cost in investment, and the large loss of other jobs, green tech in the US will face a tough road. If government subsidies for fossil fuel energy and jobs in other industries were removed, the comparison might be less alarming.
However, it is clear that it will be difficult to accelerate a trend towards a greener economy through government subsidies. And that will mean a cooling of private investment in many green and clean tech enterprises, profoundly affecting Silicon Valley's ambitions in these sectors.
(Hat Tip Jeff Nolan!)
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Please see the executive summary: Lessons from the Spanish Renewables Bubble
"1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain’s and Europe’s “green jobs” schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is “at what price?”
2. Optimistically treating European Commission partially funded data1, we find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.
The first survey of nearly 300 online journalists by the Pew Project for Excellence in Journalism found "uneasy optimism" compared with colleagues in traditional media and concern that the Internet "is changing the fundamental values of journalism."
They were also more likely to express confidence that a profitable online business model would be found. Most reported staff increases in their organizations.
The survey results form part of the recently released Pew Project's 6th annual survey of the US news media, a depressing read. More than 180,000 words of it on 700 pages.
I pulled out a few extracts:
- Newspaper ad revenues have fallen 23% in the last two years.
- Growing by a third annually just two years ago, online ad revenue to news websites now appears to be flattening; in newspapers it is declining.
-Some papers are in bankruptcy, and others have lost three-quarters of their value.
-By our calculations, nearly one out of every five journalists working for newspapers in 2001 is now gone, and 2009 may be the worst year yet.
- In local television, news staffs, already too small to adequately cover their communities, are being cut at unprecedented rates; revenues fell by 7% in an election year—something unheard of—and ratings are now falling or are flat across the schedule. In network news, even the rare programs increasing their ratings are seeing revenues fall.
- Perhaps least noticed yet most important, the audience migration to the Internet is now accelerating. The number of Americans who regularly go online for news, by one survey, jumped 19% in the last two years; in 2008 alone traffic to the top 50 news sites rose 27%.
- Yet it is now all but settled that advertising revenue—the model that financed journalism for the last century—will be inadequate to do so in this one.
- In trying to reinvent the business, 2008 may have been a lost year, and 2009 threatens to be the same. Imagine someone about to begin physical therapy following a stroke, suddenly contracting a debilitating secondary illness.
- The problem facing American journalism is not fundamentally an audience problem or a credibility problem. It is a revenue problem—the decoupling, as we have described it before, of advertising from news.
Several interesting special reports:
-There is one on citizen-based media, including a university study of 363 citizen websites in 46 markets.
-There is an essay by Bill Kovach and Tom Rosenstiel on the Lessons of the Election.
-There is a backgrounder on the growing models of entrepreneurial journalism, new Web news organizations run by professional journalists outside the mainstream press.
-There is a review of changes in the last year in public attitudes.
Here are the direct links to the different sections of The State of the News Media 2009:
Two years ago I suggested Google should build its data centers in Iceland because of all the nearly-free green geothermal energy. Plus, it's a great location, midway between North America and Europe, with access to high speed submarine data cables (illustration above).
But it's not just Google that is building large data centers. There is growing demand for cloud computing services and that means companies will need to build lots more data centers, and operating costs will play a large role in determining success. Since electric power costs are one of the largest expenses for a data center, Iceland starts to look very attractive as a cloud computing site for many companies.
The attraction is even greater these days. Iceland's economy isn't doing too well following the collapse of its largest banks last year. And its economy continues to worsen with unemployment expected to reach nearly 10 percent in March from 1 percent a year ago.
The economic crisis means that land and labor costs are cheaper than ever. And the government is keen to encourage investment by foreign companies, which means tax breaks and other incentives. Plus the government is investing in programs that would aid the business environment such as its plans for "4000 man-years of job creation." This includes:
. . . supporting an innovation centre in Reykjavík, utilising specialists currently unemployed to assist start-ups, improving the competitive position of start-ups and innovative companies. . .
Part of the government's stimulus efforts include building more hydro-electric and geothermal power plants because only about one-quarter of the green power potential of Iceland has been tapped.
However, generating more electric power isn't very useful because you can't export it. You can't run a power line half-way across the Atlantic.
That means you have to convert the electric power into something that can be exported. Aluminum production requires a lot of electric power and so this has become the main method for Iceland to monetize its abundant green energy.
The irony is that aluminum smelters are anything but green, they pollute the environment and have been linked to increases in the number of birth defects and cases of cancer in local populations. And they don't provide much local employment. This is leading to growing criticism of the government's plans to expand aluminum production and the role of energy executives in selling cheap power to the smelters.
The web site Saving Iceland reports that earlier this month:
...three black dressed individuals, masked with aluminium foil, threw green Skyr (traditional Icelandic dairy product) on representatives of Icelandic energy companies during a greenwash presentation in the University of Iceland.
[Throwing Skyr is a traditional way for Icelanders to communicate disrespect and disapproval.]
Converting power electrons into data electrons would be a much better use of Iceland's green energy. Cloud computing data centers would provide high quality jobs, and could help transition Iceland's dependence on polluting aluminum smelters.
The Invest in Iceland Agency has put together a few web pages and a pdf to try and drum up interest in data centers [Please see Iceland: The coolest location for data centers.] Not much luck so far. It probably requires a more direct approach by Iceland's government.
Maybe Google could step in and buy Iceland, which would about double its GDP. It could then relocate the entire Googleplex and many of its data centers. Google would be able to have its own banks, it could rename the Krona currency the Gollar, Googlers could enjoy an amazing number of outdoor activities, cheap housing, long summer days, and surprisingly mild weather. It could end Icelandic whaling, kick-out the polluting aluminum smelters, . . . and be out of reach of any pesky anti-trust lawsuits.
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Monday, Intel will officially launch it's most important chip in more than 15 years, a high performance Xeon server microprocessor built using its advanced Nehalem design. It has the potential to shakeup not only the microprocessor market for IT systems but also trigger a tsunami of data center upgrades worldwide.
The reason is its exceptional performance and a design that significantly reduces power consumption. On Monday, Intel and customers such as Hewlett-Packard, Sun Microsystems, IBM, Dell, Cisco Systems, and others, will release benchmarks that are expected to show dramatic performance improvement across a broad range of business applications.
"With one Nehalem server customers will be able to replace nine servers. And that's before using virtualization, with which you'll be able to replace as many as 18 servers, and reduce power consumption by abut 20 percent," said Kirk Skaugen, VP and General Manager of Intel's Server Platforms Group.
Nehalem has been in development for four years and is manufactured on Intel's most advanced 45nm chip technology. This dramatically speeds up performance and reduces energy use because electrons have shorter distances to travel and there is less leakage of power.
"When I joined Intel in 1992, the fastest supercomputer performed at 93 gigaflops and cost $130 million. One Nehalem server will give you the same performance," said Mr Skaugen.
This combination of high performance and support for critical IT technologies such as virtualization, means data centers will be able to reap massive cost savings by consolidating the number of servers in their data centers. This means lower administration costs, and big savings on power consumption -- two of the largest issues facing data center managers.
Mr Skaugen said that a Nehalem server will pay for itself within just eight months. "After 8 months they become cash machines," said Mr Skaugen.
With these types of dramatic cost savings, and the extraordinary economic pressure on data centers to reduce operational costs because of the recession, Nehalem servers could trigger the largest upgrade cycle ever seen in IT systems worldwide.
The exceptional performance of Nehalem systems could also trigger a consolidation of the microprocessor market for IT systems, which includes server chips from Sun Microsystems with its SPARC, and IBM's POWER microprocessors. This RISC market has been in Intel's cross-hairs for more than a decade but now it holds a strong hand of cards, including the availability of Sun's Solaris operating system on Xeon, which will make migration from RISC systems easier.
The Itanium microprocessor, introduced with much fanfare in 2001, was Intel's first attempt to take on the lucrative RISC microprocessor market. Although Itanium failed to meet its high expectations, Intel's Xeon server chips based on the PC X86 architecture succeeded in dominating the low end of the IT systems market.
However, nearly half of the installed server market is still RISC microprocessor based, valued at about $27 billion, said Mr Skaugen. For the first time, Intel's customers can build IT systems that are highly competitive with RISC based IT systems on performance and total cost of ownership.
In addition, the quad-core design of Nehalem means that single core Xeon servers are also ripe for replacement.
That means there are tens of billions of dollars in business opportunities opened up by Nehalem based servers in replacing aging IT systems worldwide. This will essentially lead to the complete rebuilding of global IT resources and the Internet itself. And it will potentially spark a reordering of the IT vendors as new entrants into the server market such as Cisco Systems, and low cost computer makers such as Dell, move to establish significant market shares.
Sun Microsystems is especially vulnerable. Its SPARC microprocessor has a good track record for performance and low power use but Sun must maintain large investments in keeping it competitive. That scale of investment is increasingly challenging for Sun especially with the competition from Nehalem. This is very likely the reason Sun has been seeking to be acquired.
If IBM were to buy Sun the RISC microprocessor market could be consolidated into a single architecture and development could be concentrated into producing POWER based IT systems that could potentially maintain a performance and cost of ownership competitive with Intel's Xeon server microprocessors.
[Intel is a sponsor of SVW]
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The panel is part of a pilot program called "Fridays with Foremski" that follows me around Silicon Valley as I speak with local entrepreneurs, thought leaders, report on conferences, etc. Silicon Valley is an unique place and we want to produce a professional program that captures some of the essence of this amazing community.
We'd like to attract a couple of large underwriters for the series, we're talking with one large company, if you know of another, let me know. That way you might see a second episode . . . coming to a Friday near you :)
Please see a Silicon Valley sampler:
The problem with social media is that if you try to manipulate it for marketing purposes it can blow up in your face and bite you in the butt (mashup metaphor #32).
Take a look at the Procter and Gamble experiment to sell "Tide" t-shirts. Brian Morrissey, Digital Editor at Adweek describes what happened:
This is what was going on last night at the P&G Digital Hack Night, when P&G got a bunch of agency types, media execs and others to troop to Cincy to perform for it. The idea: use social media to get people to buy Tide t-shirts –- some of the proceeds going to Feed America -- with an emphasis on "use." It was cooked up as a marketing exercise for the CPG giant’s army of brand managers to see the true power of social media.@bmorrissey: The feel-good social marketing bribe
P&G asked people to use a hashtag on Twitter so that they could follow how this campaign developed and then develop marketing methods for using Twitter and other social media to promote hundreds of everyday products.
How did it go? More than 2,000 shirts were sold at $20 each by about 150 "media and marketing people."
Mr Morrissey reports: "This was a marketing exercise, nothing more, yet I wonder if it’s going in the wrong direction."
A lot of people agree. Nick, commenter on @bmorrissey wrote:
150 determined salespeople sold 2000 shirts in four hours? That's 13 each. I've seen better results from bake sales.
Further, I can only imagine most T-shirt buyers will feel suckered pretty quickly, knowing their interest and $20 was converted into a case study for the social media minds they diligently pander to.
But the bigger issue, for me, is the education issue. Clients still don't understand the fundamentals of digital. I hear it time and time again from frustrated companies. It's great P&G wants to help employees understand. But, as a learning exercise, you put 40 invitees into crisis mode to sell T-shirts for four hours? Is frenzied Tweeting the behavior you want to impress on clients as how you work for them?
At least everyone gets to post self-congratulatory blog entries about it.
This is the conundrum facing PR and marketing people on social media. There are lots of PR and marketing gurus on social media. They do very well and they have lots of friends and followers. And they do well because they give out a lot of value. They give out lots of tips and links to information that helps others do their job.
But what happens if you try to convert that audience into an army of followers who are retweeting and blogging commercial messages on the behalf of paying clients? It's like the hackers that create botnets of thousands of infected PCs and then use them to broadcast millions of spam messages. Can you create a human botnet army? Or a Twitnet army?
No you can't, it won't work. And so here we have the conundrum of social media. Yes, you can rapidly gain a large number of "friends" and build a large Twitter following. But if you try to to sell access to that network to commercial enterprises you will run into trouble.
These days many PR firms advise their clients to hire them to build a large Facebook friends or Twitter following. This is not good advice, imho.
Corporations might have the status of an individual person in US law, such as freedom of speech, but in a social media context they will be seen as being in it for themselves with little to share except coupons and discount codes. That's value enough but it's not much more than is already available.
There is clearly value in creating a personal brand in social media but you can only do it by providing lots of value, and do it consistently. You cannot buy a personal brand. So what is the future for commercial brands in social media? What is the future for corporations wanting to buy a social presence?
For example, on Facebook, Seagate asked me to be its friend, to join its fan page etc. It might work if it was Hugo Boss but I'm pretty sure I don't want a social relationship with my hard drive. And I'm pretty sure other people feel the same way.
Commercial brands have to tread carefully in the social media space because missteps get magnified tremendously. I wonder how much the P&G experiment has left a sour, soapy taste in the mouths of many people.
(Hat tip to Gumshoo) Here is a Gumshoo 'toon.'
Last night I was having drinks with a friend and a lady sitting next to us at the bar joined in once she heard we were talking about Facebook, Twitter, and public relations.
She said she had been in PR for 15 years and was preparing a course to teach MBA students about the importance of PR for business strategies. And she gave some examples of advising clients about social media, Facebook and Twitter.
I asked her if she is on Facebook or Twitter. She said, "No, not personally." But, she said she knew "all about Facebook and Twitter."
I said that you can't advise clients about how they should best use social media such as Facebook or Twitter if you aren't involved in Facebook or Twitter.
She strongly disagreed.
There seemed no sense in continuing that discussion because her position is nonsense.
- You cannot know much about social media by reading about social media.
- If you don't blog, or aren't involved in blogging through reading and commenting, you cannot know about blogging.
- If you don't use Facebook you can't know what is acceptable behavior on Facebook.
- If you don't use Twitter you cannot know what is possible with Twitter.
You cannot get it unless you are in it.
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(Building from yesterday's post...)
I'm just one of many people coming up with business ideas for saving newspapers. There are a lot of posts being published on this subject.
Someone should collect all the advice because it's turning into some kind of open source business model. And the beauty of this approach is that only a few newspapers need to have the courage to try new ideas--if any one of them succeeds then the rest can piggyback. They win and we win.
Here are my 25 ideas on how newspapers might be able to survive and become innovative media businesses:
1: Focus on original content, do not rewrite wire stories or press releases. If newspapers start charging for content people are more likely pay for content they can't get anywhere else.
2: Focus on hyper-local coverage, newspapers should "own" their regional beat because they have the best contacts and the best understanding of local companies and issues. For example, SF Chronicle or the San Jose Mercury should be breaking all the top Apple or Google stories.
3: Don't run foreign bureaus unless you are the New York Times or the like, or are publishing a unique perspective relevant to your community.
4: Be a regular and visible part of your local communities by making sure journalists get out of the office.
5: Become an active teacher of media literacy and also media production in your local communities. Help teach citizen journalists how to be great journalists, editors, photographers, videographers, etc. Teach how to be effective and ethical.
6: Celebrate the best citizen journalists/bloggers in your communities, publish them on your platform.
7: Become involved in local events, organize conferences. There is a lot of money in conferences. The newspaper becomes a vehicle for drawing people to the conferences.
8: Don't let advertising networks sell your advertising. They take a huge cut for serving ads and you lose the customer connection. I often see newspapers running Google AdSense on their front page and at the bottom of the ads there is the message: "If you'd like to advertise on this site click here." That click takes prospective customers to Google and not to the newspaper. Newspapers should always own their customer relationship.
9: Develop a hybrid content strategy for search engines and news aggregators that takes advantage of the distribution power of the Internet without giving away all the content.
10: Adopt a culture of a "news organization" rather than a "newspaper." Paper or electron, it shouldn't matter how the news is delivered.
11: Offer some way for readers to pay. Every newspaper has a group of fiercely loyal readers, some more than others, but there is no way for them to pay if they want to read their newspaper online. Many people like the positive ecological aspect of reading online and are proud they are saving resources--and many would be willing to pay for this vastly improved product yet the newspapers don't offer any way to collect this easy revenue. One way might be witha PBS-style volunteer membership package? With discounts among local businesses.
12: Become the host for all important discussions about local issues and politics. Moderate the discussions to ensure civil discourse. Nothing kills discussions faster than offensive comments made by anonymous people.
13: Newspaper journalists need new publishing skills in video, audio, images, and should have some basic knowledge of HTML and CSS. Being able to type is not enough.
14: Help raise money for schools and other essential local services. Show you are part of the community.
15: Create a safe online experience, free from phishing, malware, and adverts for scam services.
16: Create a search site to search local resources and businesses.
17: Create a news aggregation site that provides your readers with access to news and other articles available elsewhere.
18: Each newspaper section should provide a search engine specific to its topic and region: Business: Company information and financial services. Home: Search for builders, furniture, decorators. Food: Search for recipes, local restaurants, etc.
19: Offer free classified adverts online and also have a free section in print. You can charge for a premium listing that offers better visibility.
20: Create informational pages to help people in your communities with common tasks such as how to get a business license. Where to find your car if it has been towed. Information for people that have recently moved into the area. In different languages. Have your web people create pages that are mashups of available online data but presented in a more accessible form, such as mapping police reports onto regional maps. School information, etc.
21: Hire additional salespeople. It is is a different sales environment today and it requires a fresh approach. Salespeople used to selling full page or half-page print ads are not the going to be able to transition easily.
22: Host web sites for important community groups in your region for free. You can run advertising on them and the groups will benefit from having an easy way to publish online.
23: Create a way of allowing readers to share in the ownership of the newspaper, or somehow give them a role in what the newspaper should be doing to become more useful to its community.
24: Create a directory of local businesses with space for user comments. Offer premium listings for a fee that also shows the business is supporting the newspaper, with a sticker. Yellow pages is a huge local business that the newspapers could easily own.
25: What are your ideas for helping newspapers transition into the online world?
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As newspapers lose revenues from their print business they are forced to rely on revenues from their online business. But their costs of running a news organization are far higher than their online revenues.
Print advertising was once able to cover the costs of running a newspaper and do it profitably. But online advertising cannot cover the costs of running a news organization--even when online readership is larger than paper readership and growing.
This problem of more readers, yet declining revenues, is frustrating the newspaper industry. Lately, there has been a tremendous amount of discussion within the newspaper industry on this issue and the emerging consensus is that readers will have to pay for the news. It might be micropayments, it might be a monthly subscription, but the era of free news is going to go away.
The Wall Street Journal is a good example of a business model that appears to be working--it offers some free news but it charges a subscription for most of its news. And this seems to be the type of business model with the most support among newspaper publishers.
But who will go first?
The Wall Street Journal is a specialist newspaper without much competition. Daily newspapers have a broad range of news content and there is a lot of overlap in their news stories. Any metropolitan daily newspaper will have many of the same stories as any other metropolitan daily.
They all use a tremendous amount of wire copy from Associated Press, Reuters, Dow Jones, Bloomberg, etc, even if the newswire stories are from their locality. This was fine when newspapers monopolized their regions because you couldn't get that news in any other way.
Now, thanks (or no thanks) to the Internet, newspapers thousands of miles from each other compete for the same readers. A columnist in Chicago now gets to compete against a columnist in New York or Philadelphia. A movie reviewer in San Diego now competes against a movie reviewer in Toronto.
Most newspapers have very low brand loyalty. More than 60 per cent of newspapers' web site traffic comes from search engines and news aggregators -- and not from people going directly to their site.
This is the first mover disadvantage. Lock up your content behind a paywall and your readers will find free news stories elsewhere.
There is a last mover advantage. The last newspaper to charge for content wins, at which point they'll also have a huge readership collected from all the other newspapers.
This is why pay-for-news won't work.
So what is the solution? How can newspapers transition to becoming viable news organizations that make money through paper or electron?
It's a situation best described by the Maine saying: "You can't get there from here." It's a phrase that doesn't seem make any sense but it makes perfect sense in this context: The mainstream media world cannot transition to the newstream media world of online revenues. Your online revenues cannot support the costs of your news organization. You can't get there from here.
This is why the Internet is a disruptive technology. And the key point about a disruptive technology is that it disrupts. It disrupts individual companies and entire industries. Even though you can clearly see the train wreck way ahead of you, you can't get out of the way, you cannot downsize quickly enough, you cannot change tracks quickly enough--you slam into it.
The newspaper industry clearly sees the train wreck of its print business model way ahead. It will slam straight into it.
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Charlie Rose today started a series on the future of journalism.
A conversation about the future of newspapers with Walter Isaacson of "Time," Robert Thomson of "Wall Street Journal" and Mort Zuckerman of "The New York Daily News"
It was a fascinating discussion about micropayments, subscription models, and how newspapers can adapt to the challenge of low online ad revenues. And Poynter.org produced an excellent transcript.
Robert Thomson, Managing Editor of the Wall Street Journal, said many interesting things that showed a deeper understanding of the issues than the other panelists.
Mr Thomson said, "Google devalues everything it touches. Google is great for Google but it's terrible for content providers." He said that Google doesn't distinguish between the quality of the content around which it serves up ads, it is concerned with quantity rather than quality.
Walter Isaacson agreed. "Also, what Google does is it allows ads to be spread all over the Web. You can go to Google ad servers and put ads on any site there is."
Mort Zuckerman didn't think that micropayments for news articles would work. He said "We're ready to be the second or third newspaper that does that."
Mrt Zuckerman placed his hope in a new printing press. "You get a premium from advertisers if you have color."
Charlie Rose said,"But you're saying maybe the only thing that your new business model has in it is a better printing press and a cheaper printing press?"
Mr Thomson laughed off camera. Mr Zuckerman said, "Well, it's not -- yes, well, it's more efficient. We don't like to call it cheaper."
Mr Thomson supported Mr Zuckerman's belief that newspapers wouldn't go away. "I think Mort is on to something. Dead trees are definitely not dead. . . the idea of spending 30 minutes with any medium, with -- and the only multitasking you're doing is drinking a cup of coffee, that does make newspapers unique. And actually if you talk to ad people, they're starting to recognize that."
Mr Isaacson said nice things about citizen journalists and bloggers. "We're getting citizen journalists, bloggers, that are adding immensely to the wealth of information that we have."
He said that citizen journalists should be paid. "I think what you are trying to do is incent good, decent people who want to cover their town planning meeting or become citizen journalists or write blogs that are actually worth reading. You want them to be able to do it not just as an ego kick or as a hobby or as a civic contribution, but have people who have to put food on their table be able to afford to be citizen journalists, afford to be good bloggers."
The most important point was said by Mr Thomson: "Every newspaper is of itself a great brand, and to have brand value on the Web is to have a great advantage."
Mr Thomson has a better understanding of the issues because he spent several years as Editor of The Times newspaper in London. British newspapers have been able to adapt to, and exploit the Internet, in ways that US newspapers are only now learning.
[I used to work with Mr Thomson when he was Editor of the Financial Times in the US. And I met with him on a recent trip to New York. He said that on The Times, they had a team of people making sure that the news stories could be easily indexed by Google, but US newspapers are only just beginning to do the same.]
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Poynter.org has an excellent transcript here:
And I begin with you, Walter. Tell me how bad is it, from all the surveys that you took in putting this piece together, and what's a modest proposal?
WALTER ISAACSON, ASPEN INST.: I think it's pretty bad, because I think we've realized after the fourth quarter of last year in which Web advertising for newspapers started to decline, that Web advertising wasn't going to continue to shoot up and form a business model where you could keep giving away newspapers for free online and hope that Web advertising would support it.Poynter Online - Romenesko
Here is the video of the Charlie Rose segment.
I was showing my friend Jill the power of the Geek Beacon the other evening--it works wonders! In case you don't know about the Geek Beacon, let me explain with a couple of my earliest posts. . .
. . . is BFG seeking love in all the wrong places?
I went to a garden party in the backyard of Heidi Roizen's house in Woodside. The event was the annual SDForum Visionary Awards.
This is a great event, because much of the Silicon Valley aristocracy turns out for it. It is small and comfortable; and people let their hair down and tell funny stories about each other.
The winners this year were:
It was a great evening and here is the rest of it. . .
Garden party part two: McNealy's tips for creating room at the top
Garden party part three: Bill Draper, the godfather of Silicon Valley's oldest VC dynasty
Garden party part 4: Larry Sonsini leads valley lovefest for Carly Fiorina . . .
Garden party part 5: SVW uncovers backyard plot by Microsoft loyalists