Entries Tagged 'Entrepreneurial journalism' ↓

Twice in recent weeks I’ve had conversations with fellow journalists that settled on the old advertising-versus-subscription myth: “There are just two types of revenue for news organizations – advertising and audience.”

Each time, I told them that split is too simplistic – and doesn’t match how The Bosses have historically managed the business.

I’m usually willing to cut slack on this issue – I was basically stupid about news-industry finances until I left the newsroom. But given its increasing importance, I want to elaborate on those conversations and weave in some stuff from my business-of-journalism class.

Don’t think about “advertising” or “audience” revenue. Think about why people are willing to pay you; what they are actually paying for; and how you organize to serve those customers.

(Credit-where-due note: This piece borrows heavily from the late Tom O’Malia at USC and the inestimable Clay Christensen at Harvard Business School.)

For our examples, let’s take the largest revenue category at most shops – advertising. The very notion of it as a monolith  masks the “why” and “what” questions above: The problems of, say, car dealers differ radically from those of cell-phone companies. So let’s throw out the framework of “advertisers” and instead think of separate groups of customers, and their different needs.

The “how” question? Let’s build our internal organization structure around “lines of business” – or the specialized teams (sales people, designers, product managers) who serve particular groups of customers.

Tom used to illustrate the concept like this:

The customer may seem self-explanatory: “The advertiser.” Nope. Get more granular: Used-car dealers versus human-resources recruiters. Ad buyers at Target and Best Buy seeking distribution for their Sunday sales circulars versus your neighbors publicizing their garage sale.

The benefit they receive should be similarly nuanced. This is the job the customer is hiring you to do on their behalf.

That job is not “exposure to my audience.” Remember: No one wakes up in a cold sweat at 5 a.m. thinking, “My God! I have to buy an ad in the morning!” But lots of business owners wake up in a cold sweat thinking “Where am I going to get some new customers?” – or “How am I going to find that left-handed Django engineer?” or myriad other problems.

You need to understand your customers’ problems – and how your products can help fix those problems. Those solutions can (and should) stretch far beyond mere publicity. The live-events line of business is often about making direct introductions between sponsors and certain attendees; the digital classifieds business (car sales, help-wanted postings) has evolved well beyond mere listings to using algorithms to matching specific shoppers with specific listings. A used-car dealer trying to move a lime-green Honda Civic doesn’t really care about people looking for brand-new minivans.

The sales channel is how you connect the dots – how you convince the customer that you have a product that can solve their problem – that you can deliver value to them.

In other words, don’t think of a single bucket of revenue called “advertising” – think of it as six, seven or eight different buckets, each with its own unique value to the paying customer, each requiring its own measurement and management.

Print and digital ads sold to local retailers to promote their wares? Let’s call that local display, and let’s have a dedicated team of sales reps who spent most of their days out of the office working with those clients.

The same kinds of ads sold to national cell-phone companies and really big local advertisers like the big hospitals? Let’s call that major accounts – retail, and have them work closely with our sales team in New York.

Garage sales and other general listings tucked back in the want ads? Let’s call that classifieds – other – and since most of those customers only buy a couple ads a year, let’s keep the costs way down by handling all those business over the telephone and via email.

And so on, through categories like “help wanted” and “automotive.” You could tell how seriously each line of business was being taken by The Bosses: You just looked at the quality of the managers assigned to the category. General classifieds (the garage sale and lost-pet ads) almost always had the youngest managers, and the sales teams never left the building. They sat at a phone bank with headsets on, waiting for the phone to the ring.

In theory, the best leaders and sales people got promoted over time to the biggest and toughest accounts – major local retail and the car dealers. (Theory isn’t always practice, of course: I remember flummoxing one allegedly senior rep when I kept asking why her account, the largest health-care and hospital group in town, was down 30 percent year over year in their spending with us. Have they changed their strategy? Do they have a new leader who hates our company? Are they shifting everything to radio and TV? Time after time, her only answer was “I don’t know!” until finally she yelled at me: “Look, all I know is that no insertion orders have come out of the fax machine!” No wonder that sales team had the reputation for being mere order takers, better suited to work at McDonald’s. My buddy Bill eventually fixed that.)

Thinking in terms of “lines of business” also allows you to spot new opportunities. For years, the newspaper industry treated subscriptions the way grocery stores treat milk: A loss leader. Those 99-cents-for-13-weeks circulation come-ons did not make a dime of profit. (In fact, on balance, it cost about 25 to 50 cents per copy to simply print and deliver each day’s edition; the subscription fee typically didn’t even cover those costs.) The real profits were in the advertising.

When ad revenues started plummeting in 2006-07, it took counter-intuitive thinking, and heavy-lifting analysis at The New York Times to figure out the digital-subscription puzzle: Very few people are willing to pay anything for news. But a smaller, passionate group of super-users values us so much that they will pay a lot. Hence the nearly-universal metered-wall – which a lot of people (me included) though was the height of stupidity when The Times launched it in 2009. (Tim, I apologize for all those nasty things I said.)

The point of all of this: Don’t fall into the trap of limiting your thinking to the traditional notions of “advertising” or “audience revenue.”

Instead, think of “specific jobs my organization can do to solve a problem for someone who is willing to pay us for it.” Examples? That’s another long post for another day – but here’s a hint.

If you’re able to shift your organization thinking, you – and your journalism – will be better off for it.

Got a question? Want to argue a point? Ask in the comments below.

More musings after another session of an entrepreneurial journalism course:
Four years ago, when I first taught my AU class (with the insightful Bill Day), traditional media were reeling from a double-whammy – the secular collapse of classified revenues, driven by pure-play Internet companies and the general economic downturn.
American’s grad program was awash with students from traditional media backgrounds. As Bill and I coaxed them to think through the business potential of new ventures, many of their proposals reflected what they knew: big organizations requiring multi-million payrolls and other cost-prohibitive expenses.
Through four versions of the class, that has shifted slowly, but inexorably. Today’s students tend to be younger, much more familiar with digitally native ventures – and much more comfortable pitching small, focused ideas that can be executed with very little investment.
So instead of 40-person organizations that were attempting to re-invent the newsroom of the past, this year’s group produced compelling ideas like:
– A tiny operation that combined concert listings with Storified reviews of the show from earlier stops on the tour to help users decide whether to shell out the bucks for tickets. (Watch for a test launch soon.)
– Community-driven sites combining the power of talk boards with tight editorial focus to help nurses in North Carolina, or schools struggling to pick educational technology in Georgia.
– A hyperniche sports site – not all sports in an area, not even high-school sports there. Just high-school football in the D.C. area. (Too niche, you think? It emulates successful sites in other football hotbeds.)
In fact, only one student dared to pitch a project that needed to generate millions a year in revenue to survive. That’s a tough putt – but she made a compelling case that her idea (an extension of existing video efforts at her current organization) made both editorial and financial sense. All she needed, she said, was 20-some employees.
(Any validation she wanted came the following Monday morning. Unbeknownst to her, her company had been considering a remarkably similar idea. They announced it to the world barely 48 hours after she had finished her pitch. Except they weren’t spring for 20-some employees – they were hiring 75.)
Ideas like these are what give me hope for the future of journalism. As Clay Shirky and Jeff Jarvis suggest (and teach), the future will be smaller, nimbler, and more collaborative – dozens or hundreds of small organizations rather than two or three massive ones.
I’ve left out a description of my favorite project from the class, lest I jinx it.

Let’s just say this: The premise of the class is that students must develop a project as a thought exercise. In other words, if I were to try something like this in the real world, how would I generate revenue? What problems would I seek to solve – both for my audience, and for my paying customers.

Someone in the class must not have read the word “if.”

I last taught my media entrepreneurship class at American University two years ago.

That group’s ideas were, in a word, transitional. Many revolved around how they could take familiar media ideas and adapt them to a digital age: let’s capture listings for my traditional newspaper in a different way. Let’s build a tool to allow sources and traditional newsrooms to collaboratively assess documents. Let’s turn the classic suburban weekly newspaper into a digital-only publication.

By contrast, this year’s class pitched more-radical rethinks. Yes, their project ideas had familiar themes – hyperlocal sites or food-and-drink blogs.

But they had a couple real head-snappers, too: A medical-information site that blended scientifically-reliable reporting with Angie’s List-style reviews of docs and hospitals. Or projects executed almost entirely as a YouTube partner channel. Or – my personal favorite – a multi-screen, API-driven site to allow users to view their favorite sport* in a new way.

(*Yes, I’m being intentionally vague to honor NDAs. In doing so, you’re losing a little of the flavor. Most of you, in fact, wouldn’t even recognize the “sport” the student is pitching – and I guarantee that heads at Comcast Sports Net would explode if they saw the usage data and dollars spent on this sector – because it’s nowhere on their radar.)

Once again, the students reinforced what is to me the dominant theme of last half-dozen years in media: Digital forces may be flaying traditional operations – but those same forces create myriad opportunities for entrepreneurs.

The most gratifying element? Well, one student is already neck deep in executing a variation of her project pitch inside her (very traditional) organization. Two more have been in touch to say they’re still tinkering to try to execute their idea. Fingers crossed for all of them.

From the inestimable Owen Youngman, the sort who always says his mood has never been better in spite of whatever crisis is breaking.

Here he outlines the birth of Red Eye, the youth-focused commuter paper of The Chicago Tribune, and a classic example of disruptive and lean product innovation at work.

Two must-read blog posts from erstwhile colleagues prodded me into finishing this entry, which I started far too long ago.

It’s for all those friends of mine – unemployed, underemployed, or just feeling dead-ended in their traditional newsroom gig.

There’s a  type of job out there you might be good at. It has a title you’d probably never think to look for. Your skills might match it anyway.

“Product manager.” (Here’s an example.)

Terrible title. (Could it be more bureaucratic?)

Great job, though — especially in terms of influence and power.

Product managers get to decide what functionality to add to a website (think commenting and audience-photo submissions for a newspaper site).

They’re at Ground Zero of the launch of new freestanding brands (think of a locally focused entertainment product), or managing the digital equivalent of an old warhouse.

At its core, the role is about representing the customers (note the plural, please) in all decisions – designing a site, deciding what functions a mobile app should have, figuring out what forms of content and advertising a new digital venture should have.

Years ago, when I first started developing new products, I was struck by the similarity of product management to  the role great section editors play – especially over how to allocate your staff and what the highest priority was at the moment.

In other words, if you’re inquisitive, smart and decisive, you can be a great product manager.

Many of the great ones I’ve known and worked with started their careers in newsrooms. They’re always asking questions. They’re voracious readers of anything related to the topic at hand. They know what the competition is up to. And they’re always, always pitching new ideas.

I’m not the only one who has latched onto that analogy. Matt Sokoloff – a long-time product manager for the Orlando Sentinel and Tribune Interactive, now a Reynolds Journalism Institute fellow at Missouri, uses it with students all the time.

“A good journalist can write a good article. But a great journalist can write a great story,” he says. In the same way, “a great product manager can build a great product.”

A couple caveats – both around the idea that you can’t simply waltz into the job and play everything by ear.

Section editors and street reporters tend to rely on experience and intuition (at least they did back in that other century, when I had those jobs).

Product managers risk disaster if that’s their main research tool. They need to use real data – and if none exists, run tests to generate some. (See Eric Ries’ excellent The Lean Startup for more.)

Second, about that plural noted above: Almost every product has multiple customers – and the ones who actually pay are highly important. For most news media, that means the advertisers, not just the audience. And even those segments have sub-segments that you must understand.

Understanding all those nuances takes enormous work. But then being good at a beat, or running the best features section in the state takes work, too.

Leftover stuff:

It’s worth noting that both of the blog posts that prompted me to finish this screed tie back to perhaps the most-brilliant piece of the year about entrepreneurial journalism: David Skok and James Allerton’s remarkably thorough three-part discussion with Harvard Prof. Clayton Christensen.

The piece takes Christensen’s groundbreaking research on disruptive technology and applies it to the business side of news. It’s a true must-read for anyone interested in the future of our business – and it’ll be required reading for the next group of students I’ll be teaching at AU.

Finally, if you want a condensed, rigorous look at those ideas, get your boss to send you to API’s upcoming session on disruptive innovation for news, part of its Transformation Tour.

I love tools that allow writers and producers to create digital-native content in a hurry. One of my new favorites is Qwiki – a video-generating platform that gets several things right:

* It recognizes that digital devices are non-linear, and benefit greatly from annotation.

* Unlike, say, Final Cut Pro, it is stupid easy to learn.

(I’d show you the first Qwiki I created – it took only 20 minutes – but I built it by annotating a simple speech. (Hey, the video was laying around, so I grabbed it.) Here’s a much better use case, from fashion blogger Shea Marie:

Play the Qwiki: 5 Easy Summer Hair Styles to Try

I just spent 45 minutes showing the tool to some colleagues from around PBS. I think it’s safe to say you’ll see some interesting tests in the coming weeks (and for once, nothing bad will happen to poor Beaker. I think).

(Edited to fix a typo. H/T to Dani Abraham @Qwiki for the catch. Hey, I was a line editor, and always grateful the copy editors were behind me.)

I’ve been having interesting conversations with a number of folks lately around a basic premise:

Webinars suck.

They seem a useful way to disseminate information to a large audience at once. But the format isn’t terribly engaging – and as a friend always reminds people, on the Internet, porn your email is just one click away.

I’ve conducted webinars that seemed engaging – yet when I looked back at the dashboard later, I’d see that at any given moment (even during my best jokes!) a third of the audience or more had some other app at the front of their screen. (Yes, the webinar system spies on you.)

So what’s better? Well, I’m playing around with that, and I’ll share results when I know more.

But along the way, a couple interesting free/low-cost tools:
– Have a PowerPoint that you really need turned into an embeddable video? Yeah, the latest versions of PPT will do that for free – but if you’re using PowerPoint 2007 or earlier, try Brainshark. (Free to try; as little as $10 a month per prezo to get rid of the nagware and open up the full feature set.)

Here’s a sample (one that happens to emphasize how cheap digital technology has democratized content):

* And speaking of video, I’m especially intrigued at how people are using overlays to add hyperlinks to video content. It reminds me of the first days of (quotes imply irony here)  “hot links.” (Or, to date myself even more, HyperCard).

Video is on the verge of becoming a non-linear, ever-extensible story-telling form … and my obsession of the moment is Qwiki. Play with it and you’ll probably see why. (And your reactions are welcomed in the comments.)

I can tell there was another round of layoffs at one of my old newsrooms: I’ve had a flurry of LinkedIn invites from former colleagues.

There’s been the usual grumbling about the heartless bastards at corporate, at how these cuts will only further diminish our Noble Religious Calling, etc. – but the reality is these cuts are only going to continue in traditional media.

The financial numbers are awful: Print ad revenue at publicly reporting companies keeps going down, down, down.  Revenue is off by half since the 2006 peak, and has dropped for 20 straight quarters.

And it’s not the economy, stupid (sorry, Carville). Digital ad revenues at most shops continue to grow and the overall interactive ad economy grew by an astounding 23 percent in Q1 vs. the same period in 2010. Does anyone need more proof that the long-predicted seismic shift in ad-spending patterns has happened? Does anyone really think the financial picture will automagically improve? Buehler?

So: what should my newly unemployed friends do?

My erstwhile colleague Mark Potts offered sage advice in this neatly packaged 2009 blog post: 10 Tips for Suddenly Unemployed Journalists.  Some of my former colleagues must have already read it: The LinkedIn tip is No. 5.

I would add only a couple additional thoughts:

1) Start on all of Mark’s tips now – before the Reaper comes.

2) Keep backup files of everything – beat notes, your story ideas and especially your Rolodex. I know too many people whose employers locked their access to their email accounts the moment the layoffs took effect, and who suddenly lost years of carefully organized contact information. (My bosses were kind enough to extract it from Outlook for me. As a printout. Um, thanks.)

3) Get digital. Now. To paraphrase a delicious job-interview story,* there are two kinds of journalists these days: digital ones, and unemployed ones. Start a Tumblr blog, follow Andy Carvin to see  how Twitter can be used as a reporting tool, join ONA – just get in the damn pool.

The future of new is being invented right now, and plenty of traditional journalists are part of it.

But most of them aren’t at their traditional organizations anymore.

*OK, so that’s far from the most-elegant line I’ve ever written. But it gives me an excuse to tell a great story.

Years ago, just before the Great Collapse, a hot-shot job candidate was interviewing with the interactive corporate staff at the place I worked. She was an articulate, high energy MBA from a seriously good business school, and she totally nailed every interview. The team wanted to hire her quite desperately.

So in one of the final meetings in the process, our uber-boss makes an effort to impress her. He looks across the table, and intones in his most sophisticated and leaderly air: “You know, we’re in the process of turning this place into a digital media company.”

The candidate, who by that time had clearly and correctly decided that we were doomed, snapped back: “That’s good – because in about five years, there are going to be only two kinds of media companies: Digital ones, and dead ones.”

I’ve often commented that the future of news will be distributed among smaller, nimbler and collaborative organizations. And when anyone can publish, the point of  “sustainability” – the amount of cash each needs to keep going – will vary wildly.

My former colleague Buddy Nevins today writes about the perfect illustration – an independent blogger in Deerfield Beach, Fla., whose work has led to three indictments of sitting city officials. (Which is, um, three more than my old city-desk staff managed during my tenure.)

Particularly noteworthy: I doubt that Chazz Stevens would fit your definition of “journalist.” Heck, he might not even accept the title if you offered it to him. Nor is his site – the aptly named My Acts of Sedition – anything more than a labor of passion.

My takeaway: If you’re a traditional media operator – or even an entrepreneurial journalist – you have to recognize that others out there can and will survive and publish on far less than you need. Rather than fight them in a race to the bottom, embrace them as potential members of loose content (or even advertising) networks.

H/T to Buddy for his original post – and for the fine, independent journalism he continues to inflict upon* offer to South Florida.

(*I’m betting he’ll consider that a compliment.)

My friend and former colleague Bill Day and I just finished a great six-week course in entrepreneurial journalism for 18 graduate students in American University’s Interactive Journalism master’s program.

We set out to be intentionally provocative, because Bill and I have seen too many great ideas for projects and products turn into smoldering wreckage because of miscommunication between journalists and business folks. (OK, and partly because Bill and I just like being provocative.)

So we taught it as if it were a master’s level business-school class. We used case studies about interesting media start-ups. We taught the ABCs of financial statements (yes: We made journalists look at numbers) and the grandular details of different revenue models. And we required every student to pitch a sustainable news-and-information venture.

We heard some terrific ideas. But as Tom O’Malia*, a serial entrepreneur and director emeritus of the Lloyd Grief Center for Entrepreneurial Studies at USC,  reminds anyone who will listen: Ideas are cheap.

Entrepreneurial ideas are only useful if they can be refined into a workable business concept – one that has real, paying customers, and delivers clear value to those customers.

Tricky distinction, especially for reporters.

No, your audience is usually not a paying customer. (We won’t get into the tiresome paid-content discussion here – but even at newspapers and magazines, subscription fees from the audience are a small portion of revenues, and an even tinier portion of the profits. The real paying customers are the advertisers.)

We were gratified at how quickly the group caught on.

Many of the ideas were terrific, and got only better by the final pitch session. We’re going to be intentionally vague about the specifics – several folks are still working on their ideas with an eye towards actually executing them in the real world. Suffice to say our interest was piqued by proposals to:

• Mine rich internal archives of entertainment reviews at a major media company
• Connect reporters and people who have compelling information to, um, share. (“Leak” is such a loaded word, wouldn’t you agree?)
• Attack a classified-advertising niche that has largely – and strangely – been left untouched. So far, anyway.

Great. But you know what was even better?

The weak ideas – the ones that started life as “Hey, kids! Let’s put on a website!” (All credit to Mark Potts for that line.)

Over just two months, those weak ideas got better. From vague beginnings emerged sharp proposals to create:

• A unique alliance around a hyperlocal site to provide modest, yet stable, funding that doesn’t rely on local ad dollars.
• Community and hobby-driven sites that focus on narrow, but attractive, niches. (All I’ll say about one of those niches: The hobbyists scraped together $15 million to construct a building for their pastime?!? That’s a niche I’d like to capture.)
• A clever blending of non-profit status, cheap technology and Internet cafes to support women in West Africa.

The point here is not that all of these ideas will work. Perhaps none will.

The point is that 18 young people – hard-core traditionalists, inexperienced cubs, even some NGO and government types – innovated. They combined creativity, perseverance and some basic business principles to develop concepts that are worth testing in the marketplace.

And therein lies the future of journalism: Smaller, nimbler, more creative.

*(As an aside: Bill and I owe a huge debt to Tom for graciously sharing his curriculum and research.)