March 14, 2011

Everything becomes most dangerous

Filed under: business,current affairs,media — Erik Dobberkau @ 21:00

…when you forget about it.

On the other hand, things that are, even if just temporarily, on top of everyone’s mind are not interesting to talk about and sometimes way off point.

Our biggest problem is for us today matters more than tomorrow.

January 24, 2011

When Adding Momentum

Filed under: current affairs,internet,media,politics — Erik Dobberkau @ 00:15

In one of the early Spiderman comics it says “ With great power there must also come — great responsibility!” (and further reading on the quote can be found here, it’s quite interesting). It also applies when power is little. And often enough, responsibility doesn’t scale down proportionally.

The issue I’m talking about: Last week, a show host of German radio station Fritz (located in Berlin) published an Open Letter to Kristina Schröder, German Minister for Family, Senior Citizens, Women and Youth (or as I used to refer to it, DEBYM), in which she heavily attacked the minister who had tried to sympathize with young families because she’s pregnant now. Voilà, promotion — Twitter took it to the next level. And then Fritz’s program director stepped in and took the page offline, accompanied by a statement that “the Open Letter did not represent the opinion of Fritz’s editorial team … [and they would] not accept infringements of Personal Rights.”

And that’s how the fight started. What the program director did wasn’t the best he could (and should) have done. The appropriate thing to do here is to make your employee see sense and ask her to publicly apologize for the inappropriate remarks. That way he would have avoided the accusations of censorship that are now being raised by the audience who have already taken care of the issue themselves.

The problem is that the Web makes it easy to let things run out of control. Once an information has been published, it’s being cached, copied, multiplied in all sorts of ways, and whenever it’s done manually, the ones in charge don’t necessarily pay attention to what they’re doing. Issues like this are easy to pull out of frame, because the outraged public doesn’t necessarily understand that just because you feel a certain way, it’s not okay from a moral point of view, neither from a legal one, to insult a person in whatever medium. That’s why the page was taken offline, but it’s not what the public thought the reason was. The story of some politician trying to undermine Freedom of Speech spreads much better, and so does support by people who think that censorship must be fought against with all means available. The only problem is that whoever re-publishes the original article without additional comments, just to add momentum for a perceived good cause, becomes liable for the same reasons that Fritz would have become liable had they not taken the page down, and this is what most people don’t know.

Which again leads us back to media competence, and why this would make an excellent case study for social science lessons at school. It’s a multidimensional issue, covering social dynamics, media dynamics, public law and, last not least, communication. This is something not only the next generation better knew, but it’s also the most sensible place to discuss the topic outside of Fritz’s commentary section, in the real world, because that’s where having the discussion can really have an impact and make a difference.

December 21, 2010

WikiLeaks is Facebook Inverted (and Time Magazine is stupid)

Filed under: current affairs,media — Erik Dobberkau @ 14:49

Time Magazine, as you may have heard or read, made Mark Zuckerberg the person of the year 2010. The reason they chose Zuckerberg over Julian Assange is that they think that Zuckerberg has transformed people’s lives by changing the way they exchange information and create a network with 500,000,000 members — while Assange was just a fad that nobody would care about any more in 6 months time. As always, someone hasn’t done their homework, I reckon.

First, not only is it not Zuckerberg who made Facebook successful, but the every single one of the people who joined and persuaded their friends to join. Other venture firms who (finally, because FB is not the first of its kind) realized the potential of this platform and added value by providing services that made it ever more exciting to be “in”. That said, the reason behind FB’s success is, quite bluntly, peer pressure. And wherever you find peer pressure peaking, you can assume it’s a fad at work.

Second, business models. Let’s compare both.

What WikiLeaks does is take information form ominous closed circles whose motifs we know little about but we believe to manipulate our lives, and spreads it online for the general audience to start offline activity. The premise is that an individual takes a huge risk to obtain the secret information, and she takes massive efforts to avoid any exposure.

Facebook, on the other hand, collects information about peoples’ offline activities and transfers it to ominous closed circles we know little about. The premise is that an individual is looking for an easy way for maximum exposure, not willing to invest too much effort for some hoopla only for herself.

As we know from hundreds of thousands of past examples, the first business model is rarely taking the route to success, whereas the second is unstoppable when it has enough momentum, because there’s obviously little to lose and lots to win. With WikiLeaks, it’s the other way round — unless, if you think about it, everyone were using (i.e., contributing to) it.

To reference my last post, Facebook is not an electric vehicle. It’s a 20th century chassis with a 21st century bodywork. And it keeps on running because segments of certain industries chose to make it so, believing it would give them an upside. Some were right, some were wrong. But the correlation between chances of winning and the number people playing the game is a negative one anywhere, not only online.

December 19, 2010

Forced to Noise

Filed under: business,current affairs,politics — Erik Dobberkau @ 16:27

Last friday US Congress passed a law on electric vehicles, which until then used to have two upsides: Their exhaust carbon footprint is eco-friendlier and they make a lot less noise. The latter is what the US Senators and Governors seemed to be concerned about, because the law they passed says that an electric vehicle must be audible so you can hear it approaching. It’s not too hard to imagine a bunch of elderly folks wondering what the difference between this new tech and their old tech is, suddenly having a rare Eureka moment: “It’s the sound! Yes! We need sound! Vroom!” (People who are more into conspiracies can feel free to prefer the idea that Big Oil has, ahem, brought in some persuasive, irrefutable arguments.)

When you think about it, this is not only nonsense, it’s madness. Instead of taking the leap forward, they took the step backward. What would have made sense is passing a law obligating car manufacturers to fit their cars with an autonomous telemetric system that recognizes people crossing the driving lane and automatically slowing down the car. This is not SciFi, these systems are already at hand. Of course today no one would buy this expensive extra because everyone believes they’re a good driver, it’s only the others who are the idiots. Instead of using the potential that’s available through electric vehicles and take it to the next level, which by the way also means a push for technology ventures (now there’s an incentive to improve these systems!) and enhances the circulation of money (re-defining “must-have-extra”), people with poor imagination minimized the benefit of innovation by taking the choice to make the new technology more similar to the old one. Car manufacturers now have to increase air friction to produce more noise, or install sort of a loudspeaker making noise, adding more weight—either way the mileage goes way down.

So now both advantages electric vehicles used to have could be gone in the future. What remains is increased cost, because service for these vehicles won’t become a lot cheaper if there are not enough models on the road. The consumer’s choice, again, is thrown back to where we’ve already been. Hint: It’s not where we should be going.

November 12, 2010

(Re-)Defining Value

Filed under: current affairs,internet,marketing,media — Erik Dobberkau @ 10:38

Before expanding on yesterday’s post, I would like to point to some great articles (last link only available in German) and a video related to the topic. What they all agree on is that you can’t transfer the physical business model to the online or digital world. What I want to argue today is that if you take this for granted, you shouldn’t expect the financing works as it used to.

First, advertising. As stated before, advertising in the old media still is a bet. You buy physical space or a timeslot, hoping to attract the eyeballs of those who are reading the article next to your ad or watching the programme around it. You do so because you believe that this will help you to stay on top of the mind of the “consumer”, so she eventually buys your brand instead of the other. This kind of advertising focuses on the Attention-Interest-Desire part, not Demand or Action. Same with a full page ad for your new car model. The odds of someone seeing your ad who actually needs a new car right now are ridiculous. It’s a bet about staying in the game. On the other hand, if a local market advertises for discount tomatoes on Saturday, their chances of selling those tomatoes go way up with this fraction of the readership who are going to the market on Saturday anyway.

How does it work online? Since the invention of banner ads, their price has only ever decreased. Because on the web, the idea of advertising is not only Attention through Desire, but Demand and, most important, Action. The web offers a huge benefit for advertisers: The can measure effectiveness and ROI a lot easier than offline. And that’s what they’ve been doing. So today the problem for content providers is the clickthrough rate of an ad or their page, because it determines price, and thus revenue.

Second, value. Clay Shirky has nailed it pretty well: Online, newspapers (magazines not as much) offer nothing but a commodity. There is too much content, too much other news to compete with, not mentioning the billions of other pages that want our attention at least as much. And the user will not see a point ever in paying for an abundant resource. What makes it even worse is already said in its name: current affairs. Here today, gone tomorrow. The whole situation is paradoxical: To ensure the level of quality a paper wants to maintain, it needs to run a network of correspondents, distributed over the country or even the world, that’s why we see dozens of microphones and handheld recorders popping up once an MP comes out of parliament. But we as the users are not satisfied with reporters only parroting press releases. What we want is background information, an analysis how this fits into the big picture, not a filtered story merely tweaked to make a title page to cause public outrage.

What publishers are trying to sell us on today is that their value is the guarantee of free (i.e., independent) information because of its network. Which is not true. A publisher’s major asset is the level of control he has (or used to have) because he owns the physical printing press, allowing him to reach more people more efficiently and simultaneously than a real person could. Who controls the most channels has the most power, just like in every other industry, and as a result he can charge the most money from advertisers or put pressure on politicians or other organizations. After all, it is hard to monetize an abstract concept like freedom, but on the other hand, the history of monetizing control is even older than money itself. Now, empowered by the web, everyone has a printing press. And everyone is using it.

Especially the print press used to be nebulous organizations which shrouded themselves under the argument of “quality journalism that must be paid for”, and they still do today. But today we expect everything to have its price, and this price’s structure be made transparent. This is what my last post was about. Once it’s clear what the actual price of an article (of whatever quality) is, it’s our privilege as users to decide whether we’re willing to pay for it or not. Value is not the total manufacturing cost, it is a subjective attribute, how much what someone is saying matters to us. This brings us to another component of value: trust. A source I trust has a higher value than the one I don’t trust. The boiling question then becomes if there is a source I trust and it starts charging for its contents, will I switch? What are the readers’ criteria for re-decision?

Third, payment. I had a brief email exchange with Marcel Weiss, a German blog author, yesterday and he said that the 10 cent model was not going to work because the emotional transaction cost is too high and the handling of these small payments itself would almost cost as much. The emotional transaction cost is covered in the value section above, so I can focus on the money here. Clay Shirky also wrote that these small payments have the connotation of being nickeled-and-dimed, which is not a positive one, and users will flee in favour of subscription-based or subsidized offers. Wired’s Chris Anderson currently also believes future financing will comprise subscriptions and advertising in equal amounts. Fine with me, though I tend to believe that this model works more for magazines than newspapers. Magazines have always focused on their readers and how they can delight them, that’s why people subscribe, a regular piece of delight that cares about what they care about.
Marcel also said that there is a high probability that people will only lurk until the article is accessible for free without ever paying. This is completed by Clay’s point that small payments don’t add to the conversation. That’s right. The payment is a bare necessity. People who don’t care enough aren’t going to pay, but I don’t think this can be applied in general. Peer pressure is enough to make people pay. If in the long run a magazine or paper can be financed by subscriptions and ads, and puts content on the web for free but, say, only a basic version, that’s good. But I don’t think we users can expect full media broadside (journalistically neutral, of course) for free (i.e., entirely subsidized by a third party) from any provider.

Fourth, professionalism. It’s not as much about you and your workmates having the same conversation topic in the morning as it is about seriousness and reputation. Everyone can publish today because they have the button on their blog. But that makes them neither a publisher nor a journalist. And we need to acknowledge that a journalist is not a reporter and a reporter is not a journalist, so they must be treated differently. As I wrote above, we users demand more than the press release, therefore we need to treat the crafting of an article as work. Labour. Something the one who does it must be compensated for. On the other hand, the ones writing these articles need to treat their jobs more serious again. Over the past decades, journalism has been going down a road leading to its own demise, on the verge of which it is dwelling now, and that’s why people see ever less reasons to pay for information that’s available in better quality elsewhere for free.

That said, the question really becomes if a journalist needs a publisher. Do musicians need record labels? The history of the past decade has given the answer. There’s no difference whether a journalist wants to sell his article to a publisher or releasing it on his own. If he does the latter, the only thing he needs is a big enough audience, either several hundreds who subscribe for a small fee or several thousands who visit his site and click some ads. Of course it takes longer to build an audience. So this is nothing I would recommend a seasoned (but unknown) journalist to do. It just takes too long. But if you’re young and only starting, that’s the way to go, because then you remain independent.

November 10, 2010

How to Finance Online Journalism (Freemium 2.0)

Filed under: business,current affairs,internet,marketing,media — Erik Dobberkau @ 22:30

In the last few weeks the debates on the business models of online journalism (which can be extended to any online business) have been boiling high, and it seems there are three alternatives at the moment:

  • Make everything free: This model is based on advertising, so it’s not really free, but a user or reader doesn’t have to pay extra. The downside for the provider of the service is of course that having ads on your site doesn’t generate much revenue when the monetary transaction depends on a user action (someone must click the ad). Pay-per-click will become the dominant payment model because it allows for exact measurement. This will result in decreasing revenue, so it’s not profitable in the long run. Free can also be combined with voluntary payments through Flattr or other (micro)payment services where users can donate.
  • Paywall: Users have to pay to see whatever content (and ads). But this permanent barrier prevents the spreading of the content too, so you’re less likely to gain audience because they eventually discover it.
  • Freemium: The free part of your content has only basic functionality. To enjoy the full service (premium), users will have to pay. This usually works very well but doesn’t seem to make too much sense for, say, a newspaper.

All of these three models have their individual up- and downsides and none alone seems to be sensible for online newspapers in particular. That’s when I got struck by this idea: Why not combine all of them? Here’s how it’d work.

Premium component: Users can subscribe for a monthly or annual fee and access all of your content. No hassle.
Paywall/free component: In case of a newspaper, each article has (i.e., is assigned) a monetary value (longer features with lots of photographs are expensive, short articles cheap). Users can read the headline and an excerpt (5 lines or so) for free, and if they want to read the whole article, they have to pay. Not a lot, maybe 10 cents. Once enough people have read the article and it’s been paid for, it becomes available for free until the end of time.
Example: an article’s value is €400,- , including the journalist’s royalties, photo royalties, rent, electricity, whatever expenses need to be covered (in proportion), so after 4,000 people have read the article (not including subscribers), it goes free. Why are subscribers not included? Because they’re paying for comfort, not access. I think it goes without saying that ads will be there as well (though I hope interruptive banner ads will go away soon in favor of relevant contextual ones).

Not only is this a reasonable pricing and revenue model, it also pays tribute to what people care about. The more often an article is read, the faster it goes free, the sooner it will be linked to from other sites, the more the idea spreads.

At this point you might want to ask “But why would anyone stop cashing in when people are coming to see it?” See, the logic is this: Good article/hot topic—lots of readers—incoming links—more readers. It’s not going to work the other way round. It’s always a bet. What’s new is that the financing is split between subscribers and casual readers: Subscribers are pre-financing, paying readers (and ads) re-financing. And free makes you a good person.

October 20, 2010

Competence Creates Redundance

Filed under: business,creativity,current affairs,internet,marketing,media — Erik Dobberkau @ 12:55

Last week, a new quiz show debuted on German TV, and something remarkable happened: The candidates were asked what service a certain phone number belonged to (it was the coastguard). Next day the coastguard posted a (outraged) press release that their phone lines had been down until early morning because people called them as they were still seeking proof that TV had not given them incorrect information.

Now someone might think that this is a one-in-a-million event, but I don’t think so. It’s just the tip of an iceberg that the old media doesn’t (want to) see. I bet if you go through all online search queries from that night, you’ll find a similar result.

This happens all the time, and it’s increasing each day. People are getting more competent on how to find information they’re looking for, it’s a slow but steady adoption process. They realize that everyone has instant access to information, unlike a few years ago, when in order to spread a bit of information a journalist would have to search an archive, going through microfilms and almanacs for hours. That’s when information was scarce, because it was isolated.

Today almost everything is connected, creating an abundance of information. So the journalists’ job has shifted from retrieving to collating information. What’s unchanged is the verification part, but exactly this is the critical point. As people become more sceptical of what they’re presented, your verification only matters so far as they’re going to trust you. (Note: This only seems to apply to news, when it comes to entertainment people still shut their brains down.)

The notion that not all content (i.e. news) is created equal only holds true with regard to trust and relevance. If you remove these two, everything is just noise. That’s what the web is. And we have learned to search and pick our sources according to our personal preferences. We’re collating our information ourselves, the vast majority of which is free. This is what bothers people like Springer CEO Mathias Döpfner because it renders their business model redundant. So he’s not getting tired of fighting for paid content for the online and app versions of his print products. Politicians have joined this quest too, mostly because they are afraid of a future where people cannot be influenced through an established and limited number of channels they more or less control. They want to make the internet a reflection of the “real world”.

But this is not going to happen. People have become their own journalists because the entire chain is availbale for them. From research to printing press, they have everything at hand, plus a worldwide audience. If they care about some topic so much they eventually become the best in their field, and also are writing for a loyal audience, then maybe they can monetize their passion this way, be it by ads or a premium subscription model or something we haven’t thought of up to now. The Springer approach, trying to trick people into believing that their content is better just because it must be paid for doesn’t work out. The value is elsewhere, and sometimes, it’s moving quickly.

August 6, 2010

Outrage, for Starters

Filed under: business,current affairs,politics — Erik Dobberkau @ 00:17

Germany’s Federal Department for Family, Senior Citizens, Women and Youth (a.k.a. the department for everything except young men, because they’re taken care of by the department of defense, a remainder of history) has started an initiative with 5 corporations in which, for one year, applicants will not reveal their names, age, nationality, marital status and religion. This pilot project is meant to qualify if this process leads to more equal employment opportunities and the avoidance of discrimination.

And while this project has not been launched yet, conservative lobbyists are already outraged and defending the status quo. “Enterprises need information about age and gender because they are crucial decision criteria.” Which is to say, when in doubt, they don’t employ women. Another quote: “If we don’t know who the candidate is, we would have to invite everyone for an interview.” Which means they don’t invite people whose names they can’t pronounce.

Both men (no surprise here) that have been quoted above represent a mindset where employers still a looking for replacable cogs at minimum cost. The irony is, they too would profit from an application process I posted one month ago. Other than that, the good old resumée still offers enough options to say no:

  • what kind of school did they go to?
  • extra-curricular activities
  • hobbies
  • languages spoken
  • university: who can afford to study in a state where students have to pay a semester fee?

All of these will be more important, but different than expected, because employers will try to extract as much additional, yet speculative, information from the chunks that are left. This initiative is surely well-meant, but it won’t change a lot because the old system remains in place.

More equal employment opportunity does not translate to more equal employment. Doing things by half doesn’t get them halfway done.

July 26, 2010

New found Power

Filed under: current affairs,internet,politics — Erik Dobberkau @ 00:10

One of my favourite news releases last week came from the German chancellor, Angela Merkel, in which she complained that it’d be ever harder to get political messages and issues to people because especially the younger generation would not get their overall news coverage from the traditional media, but instead selectively from their favourite channels on the internet. Her final conclusion was that things used to be easier years back, because when people met in the workplace, they’d all talk about the same topics (note: this was back in the days when there were only three channels on TV, and people got their paper every morning).

This is all true, except she elegantly left out the part that’s worst for her and all the others that made a profit from the way things used to be. Not only do the established channels keep on losing their influence, but it is ever easier for people to practise real democracy. Because if you really care about something, you just have to connect to people who do as well. Then you can start an online petition, and all it takes is 50,000 subscribers within 3 weeks. And if there’s one thing we can learn from a pretzel, it’s quite easy to gather 50,000 people — if they care. Because if they don’t, they won’t go through all hassle with registering on the parliament’s web site just to click a button. That’s the only obstacle. Other than that, there’s nothing that could stop anyone from using their democratic power.

And that’s scary for polticians, because not only will their flaws and misbehaviour be spread faster than ever, but also people can now make them go away, or the rules they’re trying to establish. Who loses? Everyone who profited from the old system: Lobbies, who still spend millions to buy votes help MPs reconsider their opinion. Politicians who are now exposed more than ever and thus have to deal with the consequences. Some years ago these “minor issues” would go by the board in favour of “important news” in the general news coverage. Yet the traditional media are losing power and influence in both directions. And if they can’t control the public, they don’t help to maintain civil order, and then they’re losing value to the ones in power, who in return won’t see a lot of use in supporting a system that doesn’t support them. This top-down system was built in the fact that there was no other choice, no politician or similar folk needed to build an asset of permission to talk to the people directly — because this taken care of by the media, mostly public broadcast. The situation has flipped over (to be honest, it did so slow enough that anyone could have easily figured where this was going), and no matter how much anyone who seemed to have a voice that mattered now doesn’t.

There used to be a small number of players on the political field — now everyone can have their license to play too. This is a great opportunity which can change our lives dramatically, only if we make use of it.

May 12, 2010

Journalists are marketers too

Filed under: current affairs,internet,marketing — Erik Dobberkau @ 11:27

Over the last few years the discussion about the future of journalism has been going back and forth, going in circles, going nowhere. I’m not even starting to get in there now, my point is an entirely different one.

A friend pointed me to the latest excess of this topic:
Some days ago, a German blogger wrote a post about how she thought about journalism and its future. The way she wrote was sympathetic you-and-me eye-level. A few days later, she adressed  two newspapers who printed her letter. The difference was that with the change of the medium her tonality changed too. It had this teaching, patronizing, “I’m gonna tell you something” touch. Enter the media expert: The researcher from some university put in all his sweat so it became clear that the 57-year old pro out-argues the 22-year old amateur. But in the end, none of them had an answer.

What surfaces here is that journalism does not have a content problem, it has a marketing problem.

First, what publishers do is fill the gaps between the ads in their papers. Ads don’t make as much money as yesterday, hence to get content as cheap as possible, they prefer news agency and press releases over individually researched relevant articles.

Second, the old media (papers, radio, TV) is too slow. When they pick up a piece of news, so do thousands of others at the same time. And while a journalist is typing his article, Twitter, Facebook and the watercooler gang spread it with far more velocity. When the paper is out the next morning, hot news has frozen to death.

Third, as we can see in recent current affairs, there’s a tremendous shift of what matters to people — and they are who journalists should believe they’re working for.

Fourth, a lot of journalists have an outdated idea of what their job is. Especially when it comes to writing, I am totally pissed off by the pretentious tone you hit upon in every paper that deems itself a piece of “quality journalism”. Here’s the point: The paper is not a stage to get on and pretend cleverness by using educated words (and to fail miserably at coining terms believed to earn a Pulitzer). A shroud of intellectualism is no proof of validity. It is possible to explain complex topics in simple words that deliver every piece of information, meet your readers on eye-level, not patronizing them. Every other approach loses effectivity because if your readership is as clever or cleverer (or educated) than you, they might think “What a puff-up! Who’s he trying to impress other than himself?” — and if they’re less clever, they’ll turn away because they don’t understand the language you’re speaking.

Fifth, the chances of making a buck from something that is also available for free are getting smaller and smaller. This is only fair. If there are people who are passionate about politics, celebrities or whatever there is in a paper, the best what can happen is they share their passion for free by providing high value information on their blogs — and if there are people who are into that as well, they can subscribe for updates via RSS or email, they can get in touch via Facebook or Twitter and engage in comment discussions.  I don’t share the media expert’s idea that people don’t know what they want to know. I think they don’t know where to go to find what they care about in a convenient way. With billions of web pages out there this is no surprise. Enter the power of referrals and links. And of course this is scary for journalists, because they’re confronted with the fact there are millions of extremly clever people out there, who don’t have to write an article in time or depend on making money with their writing, so they can put more effort in deliberately, which may result in a better product.

Sixth… I forgot about number six.

Seventh, there is a common notion, even a legal one, that there must be journalism in order to protect democracy. My guess is when the fathers of our constitution thought up the public obligation, they would never have thought there would be so much information that people would stop listening, rendering the argument obsolete. (Think about the irony that the ones privileged by this law try to cut the underlying law (i.e. freedom of speech) for everybody else (i.e. bloggers) because it’s ruining their business model.)  They also thought that people care about the truth. They don’t. People care about what they believe. ]

Conclusion. We have more ways of communicating and spreading ideas than ever before. The old monopolies are gone. So are some of the truths and common wisdom related to them. What matters now is honesty, consistency and passion.

Trying to persuade a government of whatever dimension to uphold yesterday’s status quo will kill business in the long run too, so better invest the same amount of energy to build a business for the future. Even if that means going out of the old business.

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