ideasarehere

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.

January 19, 2011

Voilà, Promotion

Filed under: internet,marketing — Erik Dobberkau @ 00:32

The other day it just occured to me why Twitter is a better means of promotion than Facebook, not meaning advertising but “spreading the word”. The key is the default action, so to speak.

When someone posts something on Facebook, the default action to show your appreciation is to click the “Like” button. But this doesn’t create a movement (so it’s no literal ”pro-motion”), it’s a popularity feedback for the originator of the post because it stays within the boundaries of his circle of friends. The promotion happens when people click “Share”, so the post translates to their own circle — but that happens very rarely in comparison.

This is where Twitter does better, because it makes no sense to reply “I like your tweet” to the author. The only sensible thing you can do is re-tweet the original tweet (Twitter word for post), so now your followers will read it. Voilà, promotion.

January 18, 2011

Fooled by the Status Quo

Filed under: business,internet,media,personal — Erik Dobberkau @ 00:58

It’s always amazing how one’s imagination is being fooled by the status quo though the own memory should tell otherwise. When Wikipedia celebrated thier 10-year anniversary three days ago, I was thinking back when I actually started using it. In 2001 I didn’t — and it’s worth noting it’s the same year I started using that new search engine called Google. It occured to me that when writing my diploma thesis on analogue audio compressor circuitry design and implementation in 2002, finding mere bits of information was actually work that was not too far from the days when you had to go to the library and skim through boxes of index cards. The whole thing just went off well because a fellow student was writing his thesis on EQ design so we could update each other about our latest findings.

Just a few years later, maybe in early 2005, I was using Wikipedia to pull together a script for my students’ electronics lecture, just as an expanded appendix for all the stuff I couldn’t cover in detail because the lecture was quite dense already. Only 4 years after its birth, Wikipedia had become the go-to resource for every geek topic, not to mention the thousands of other sites that had spawned up on stuff like audio circuitry. But what was funny back then is that most of them still referenced the same sources that we had to dig out years before.

Today, more or less everybody is online, be it as a consumer or content creator, but you better not assume that the absolute number of “web literates” has increased proportionally. In this is becoming a problem, because at some point, we’re passing it on to the next generation. According to an interview with two media experts published in the German magazine “Der Spiegel”, there is a shocking deficiency in media competence among teachers, and as they point out, it is the responsibility of schools to educate the kids in the why and how of media, because it’s the only place where all of these kids go — and you don’t know how well-informed their parents are in terms of Web and so forth.

The real problem is of course not media but responsibility, and it’s hard to teach responsibility because it’s rather something you learn. The digital era has a massive downside compared to the glory days before it: As Google put it, the Web doesn’t forget. People do. If you broke a window, it’d be a shock at first, you’d get punished, and some years later you’d have a funny story to tell. I don’t want to spread paranoia here, but in absence of a better excuse a digital record of you having smashed a window in your child days might serve as an unspoken reason why you’re not getting a job. So it may well mean the chance of anyone getting a second chance (to do better) will go down, just because you’re the one who, as is anybody on one subject or the other. The Web is no good place to start when you haven’t learned the analogue model. The only advantage we have today is that we still have analogue models, because there a only few web services that don’t have a real world counterpart.

On the other hand, it’s hard to draw a line in terms of when available information is to be used fairly. When a government can use information published on WikiLeaks to prosecute tax evaders — no matter if this information was obtained legally or not, it’s available now, and it’s hard to argument that one shouldn’t use it to enforce the law — it seems unfit to force an employer to not consider dubious information they got about their job candidates. It’s again a question of responsibility. And as we know, when faced with the opportunity, most people will prefer to get rid of it instead of taking some more, something they learned along the way too. Everything scales, you just need enough iterations to make a small difference to yield a large result. It actually works both ways. That’s why Wikipedia won.

January 17, 2011

Coin-age

Filed under: creativity,internet,media — Erik Dobberkau @ 17:50

The number varies, but there are at least 5 new words “invented” each day in English alone. And I concur that in cases where we have a whole new thing going on that can’t be described any other way that’s fine. But I do start getting trouble when the new term is being coined for no other reason than the desire to coin a term, to tag whatever you think should be tagged without thinking about if it’s really appropriate.

Some years ago, this was something reserved for scientists and copywriters, but since everyone has their own funnel to yell at the world it’s become a nuisance, especially when some of these words, e.g. neoliberalism, are catalogued in encyclopedia or the all-popular Wikipedia, and suddenly people start showing up saying “no, that’s not how I meant it when I was using it”. Worse when they claim to have “invented” it, and then the hassle begins.

Instead, it might be better to remove the ambiguity first and then start yelling.

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.

September 16, 2010

First, make a Point

Filed under: business,internet,marketing,media,music — Erik Dobberkau @ 21:01

If you’re into music, you might already have heard of Kirby Ferguson’s Everything is a Remix, a documentary in which he argues by the example of Led Zeppelin that a lot of music we believe to be original is indeed remixed. In his case remix is rather a euphemism for stolen or copied.

Feel free to watch the video, it’s quite educative. The problem I’m having with it: There is no point. Which, if you think about it, is a deficiency of a lot of documentaries, because the information you’re presented with has already been filtered, so the author might as well make his point himself.

The hard part for Kirby is to raise money for the 3 other parts of the series that are yet to come, but how likely is it for someone not making a point to find support? Besides, how likely is it that with today’s consumptive attitude towards music people care enough?

Well, with about 900 “likes” (by the time of writing) he might pull it off, if he had a dollar for every one. Somehow I just don’t feel like buying an affiliate-linked Led Zeppelin DVD from someone who just tried to sell me on the opposite.

September 15, 2010

Where applicable

Filed under: business,internet,marketing — Erik Dobberkau @ 08:41

Over the last few years it seems free has gained a lot of traction as a pricing model. Free software, free online services, free e-books — and of course the free samples of physical products you’re presented with at every turn. Free has turned the default strategy to gain market share. But is it?

In his (appropriately named) book “Free! The Power of a Radical Price” Chris Anderson points out that all economies gravitate towards abundance. We will always produce as much as we can and try to sell it at maximum profit. To maximise profit, we find cheaper components and manufacturing, giving a decrease of marginal cost, i.e. the cost difference to make one more piece, which ultimately drops to zero (if rounded down). To gain market share, products and services also become ever cheaper until they also are free at some point. This is obvious in the digital domain (a digital copy doesn’t produce any marginal cost), but it also happens in the physical world — you don’t pay extra for long-distance calls, for example.

But in the physical world, most free is calculated into the price of products that must be paid. This (cross-)subsidization can also be found in the digital area, when you have free software with limited functionality, and you have to pay for the full version. Or free personal editions, but enterprise versions must be paid. Anderson calls this versioning “Freemium”. Basic versions are free, premium editions must be paid.

To be concise, I will also add the third model of how free is being financed, which is by a third party. In practice this is sponsoring or advertising: Advertisers pay a TV station to get air time, and the viewer gets both the programme and the ads without paying extra. (By the way, charging viewers for HD delivery is no business model for the future. Handling files on hard drives is cheaper than handling video tapes.)

So how do you use this to gain market share? It depends on your market. Not all markets are the same. What you need is attention. But neither is all attention the same. Getting noticed is not enough. The crucial question is: How pressing is the problem that you service or product can solve? If it’s not, a free offer is of no use because it’s not relevant. The point is that free itself is not necessarily a conversion mechanism, no matter how valuable the product or service is. This is a common mistake among marketers who rely on free only, believing that once people see how good it is, they will buy it. In fact, it’s the other way round: The more people need something regardless of actual value, the more likely they buy it regardless of cost.

That said, free does not spare you the effort of promotion. It is merely step 2. Step 1 is to find people who need it. Then you can promote the free offer. And if you get no response, you should put it back and focus on something else. Don’t cancel it entirely, just put it at the bottom of your priority list — it might well be that you’re just too much ahead of your time. The wrong thing to do is to put more and more value and effort into something nobody wants (yet).

September 7, 2010

What’s missing

Filed under: creativity,internet,music — Erik Dobberkau @ 20:57

When Apple released the lastest version of ITunes last week, they also announced that they had redesigned the icon of the application. They got rid of the CD, because they claim to have outsold CDs (go figure, in one third of the lifetime of the silver disc), and lots of (self-appointed) designers have started mocking the new icon for looking cheap and they’d expect better and so forth.

Have a look yourself. Some are neat reflections of technique. What’s missing in every single one is art.

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