[LINK] Shirky on Newspapers, Paywalls, and Core Users

Tom Koltai tomk at unwired.com.au
Sat Jan 7 10:52:41 AEDT 2012


> -----Original Message-----
> From: link-bounces at mailman.anu.edu.au 
> [mailto:link-bounces at mailman.anu.edu.au] On Behalf Of Roger Clarke
> Sent: Friday, 6 January 2012 1:07 PM
> To: Link list
> Subject: Re: [LINK] Shirky on Newspapers, Paywalls, and Core Users
> 
> 
> At 10:34 +1100 6/1/12, Jan Whitaker wrote:
> >>http://www.shirky.com/weblog/2012/01/newspapers-paywalls-and
> -core-user
> >>s/
> >Why doesn't the online information provision services (news, essays,
> >etc.) work under the same model that has spawned these?
> 
> My take on it is this:
> 
> -   traditional publishers have high costs associated with:
>      (a)  labour-intensive information gathering, checking, writing,
>           editing, and sub-editing.  [This has been reduced in recent
>           years, with 700 positions gone, but at considerable cost to
>           quality and far more 'mere reprinting', of both stories
>           from other outlets and media releases from 
> 'reliable' sources]
>      (b)  printing processes
>      (c)  distribution processes across a great many outlets
>      (d)  accounting for, and collecting money, from a great 
> many sources
>           through a great many channels
> 
> -   online-only publishers nominally face only (a), no (b), 
> very low (c),
>      and either no (d) or very low (d) - fewer sources, few channels.
>      Their set-up costs are not enormous and are spread 
> thinly over volume.
>      Many use virtual organisation practices rather than big offices
> 
> -   traditional publishers that become online publishers as well face
>      much higher set-up costs that online-only publishers, 
> because they
>      have to interface with long-established processes and formats,
>      and have to handle high volume
> 
> -   traditional publishers that become online publishers inevitably
>      cannibalise their own revenue, because the norm for 
> online content
>      has always been 'free as in beer' and few traditional publishers
>      have been successful in imposing payways.  (The big 
> exceptions are
>      WSJ, The Economist, FT, Nature?)
> 
> -   the proportion of total ad revenue that goes to formal publishers
>      is much lower online than it was in print.  That's because of all
>      the micro-businesses and prosumers that were fleet of 
> foot and got
>      in early.  (Tom may have some figures to offer on that aspect).

Somewhere, I did. An extensive spreadsheet covering ten years of
revenues for all elements of the advertising industry. But after running
a search in the most likely directory tree, I failed to find the dataset
that I was looking for. So anecdotal A/P only.
Banner advertising started in the 1980's with BBS owners keen to make
their hobbies pay, selling a portion of their sign on screens to local
businesses. It expanded to NNTP as the earliest form of Spam (e.g.:
almost all of Amazons early -1990- advertising was on NNTP
"rec.arts.second.hand.books" or something similar. By 1999 (Yahoo and
Excite, had cornered approximately 3% of the global advertising market
and the concept engendered a flood of free ISP's that were going to make
banner advertising the revenue stream for "free" access. 
The Google AdWords phenomenon by 2007 had increased this to around 7% of
all advertising. In turn, reducing the publishers and catalogue
industries dramatically, (i.e.: wiping away approximately 50% of their
business models.
Concurrently, increasing bandwidth capacity made possible Video on
Demand (except in Australia) models which together with the Napster/IPod
revolution started denting the Television and Radio audience numbers.
Today, due to the availability of feedback metrics, and pre-qualified
eyeballs, the global advertising spend has reduced from approximately
(here's the A/P) 380 billion down to 330-340 billion with (an estimate)
59-65% of that being now online.
The Google "edge" is now being further whittled away with edge feeders
offering low cost flat rate keyword SEO marketing click-thrus (at around
three to four cents) in opposition to Google's auction process. 

Industry expectations are that dead tree newspaper and magazine
advertising will reduce to around 1-2%, with the principle players being
Online Video (although Youtube was barely worth a billion dollars in
advertising last fiscal), Mobile (aka the Steven Jobs function
interception spamvert) and other digital out of the home. E.G. Future
GPS screens... You are now getting close to Joe's Pizza. Why not stop in
for a heart stopping slice of cheesy delight; and of course, the
biggy... Which we haven't yet seen. Context based (in video and e-book,
location based) overlay non-interruptus annoying little characters
zipping around the e-ink screens doing nasty things to the
viewers/readers concentration.  

Australia, because of it's antipodean locale and subsequent low
population, can usually only afford the US cast-offs. However, in one
regards, we can thank an aussie initiative, (the Rasmussen family) for
those delightful geo location additions to our advertising experience.
(Without the maps, all of the big brother geo based privacy issues would
never had arisen.) An example of where the value to the community of an
innovation is more expensive than it's benefit.
I do however believe that citizen journalism (aka the 2004 Mayor
Bloomberg "Dob in a neighbour" initiative) is likely to form the basis
of tommorrows AAP Reuters news services. (Think Paparrazzi Commando
Journalists.)
Today, initiatives like "Delimiter" where the journo also obtains his
own advertisers as well as organising his own syndication are only one
step removed from Citizen Journos approaching the local butcher and
trading advertising for meat.
A new advertising paradigm and a new era in economic stability.

The return to the community.

News Limited and Fairfax is essentially aware of this trend (even if
subconsciously) with the most read papers being the MX (on the Trains)
and the local weekly suburban newspapers in the outlying immigrant
suburbs of our capital cities.
This then gives a timespan for the disappearance of paper journalism,
i.e.: the lifespan of our current immigrant baby boomer populations.

>      If the normal sequence occurs, industry consolidation will occur
>      as the industry matures;  but 'news-e-papers' have to 
> survive long
>      enough and strong enough to be the ones doing the takeovers when
>      that time finally arrives
> 
> -   the proportion of ad revenue that reaches publishers in online
>      contexts appears to be much smaller than was the case with the
>      print media.  One reason is Google's monopoly power being used
>      to dictate very large margins, and internal capture of all of the
>      economies that have been available in the all-electronic context
> 
> The above is off the top of the head, not based on any formal 
> analysis.
> 
> But some years back I did an analysis of costs for journal publishers:
> 
> Clarke R. (2007)  'The Cost-Profiles of Alternative Approaches to 
> Journal-Publishing'  First Monday 12, 12 (December 2007), at 
> http://www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/ 
>view/2048/1906, PrePrint at http://www.rogerclarke.com/EC/JP-CP.html
plus Appendices


TomK




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