What Role does Google Play in Editorial Decisions?

The blog at the Nieman Journalism Lab has two seemingly unrelated stories on its site today that I thought actually bring up an interesting question.

Today's top story centers around a directive by the New York Post not to credit bloggers or other sources who break stories first. In the case written about in the Neiman article, which is worth a complete read, the reporter, Alex Ginsberg, re-reported the work of a Brooklyn blogger who uncovered a major zoning violation in her neighborhood. (side note: Ezra Butler recently asked if citizen journalism is really working out. In this case the answer would be "yes.")

On the blog, Ginsberg wrote in a comment:

Post policy prevented me from crediting you in print. Allow me to do so now. You did a fantastic reporting job. All I had to do was follow your steps (and make a few extra phone calls).

I won’t discuss at length the policy of not crediting blogs (or anyone else). I’ll just briefly explain that as long as we can independently verify every bit of info, we don’t credit.

You will find that the Daily News observes the same policy, but the Times does not. (They often write an explanatory phrase like, ‘The investigation into Mr. Spitzer was first reported in the New York Post.’ That’s not a real one. I just made it up. Although I would note that another Times policy would prevent them from actually printing the name of your blog, presenting them with an unresolvable conflict between two inflexible rules.)

Looking forward to “amplifying” more of your good work in the future.

There is still a question as to whether this is Post policy or, as the Neiman article calls it, a "marketing goof."

Also on the Neiman blog is a piece about what it takes to get on Google News, as spelled out in a Google video. In the list of tips is this gem:

It can detect phrases like “the Los Angeles Times reported” in wire stories and promote the original L.A. Times piece among the many other versions of the story.

That just makes me wonder if the Post move is more defensive than anything. Not just fighting with the Daily News, but also trying to simply eliminate one thing that may put them at a disadvantage in the eyes of Google.

More importantly, is this an effort to make sure that bloggers don't move up the chain and become more respected news sources? Today, Google still makes a distinction between blogs and news, but does that distinction come down if a number of publications say "as first reported in the blog..."?

Old Marketing Lessons for New Media

Doug Haslam recently had a difficult experience at a bike store. They called at 5:50 after fixing his broken front derailleur and told him he could pick up his bike, but he had to be there by 6pm. He asked if they could stay 5 minutes late so he could get there. They said no.

He wasn’t happy, won’t go back, and shared that with this Twitter and Facebook followers.

Given that Doug has more than 17,000 followers on Twitter and nearly 1000 friends on Facebook, he’s a guy with influence. Throw in the fact that he’s riding in the Pan Mass Challenge, so spends a lot of time on his bike (and his followers know it) it gives his experience with a bike shop that much more credibility. Since Doug has major social media influence there must be a great social media lesson here.

The lesson for the bike shop? Mind your customer service.

That’s not new. My great grandfather could have told you that from running his kosher butcher in Brooklyn. My other great grandparents could have told you the same thing from running their grocery store on Blue Hill Avenue in Roxbury.

The only real difference here is the easy with which Doug could express his displeasure and the number of people he could reach.

This got me thinking about marketing truisms and how social media hasn’t really changed anything about marketing, just the tools.

Lesson: Know whether your goal is awareness or action

To take a line from Law and Order, marketing is broken into two separate yet equally important groups. Awareness, which drives customers, and action, which makes them buy something. (dom dom)

During a recent social media breakfast a quick back and forth erupted between the speakers and the audience about how to track ROI on a social media project, such as Twitter outreach. Many noted how Dell recently credited Twitter with driving $1 million in business over a year and a half. This brought up the question of how well Dell could actually track this kind of information.

At least one audience member noted that by providing codes and other such actionable Tweets, Dell could get a relatively accurate count.

That, replied Michael Troiano, was action as opposed to awareness.

One of the joys of social media is that the broad reach isn't limited to large companies like Dell, but also open to mom and pop operations. I recently got a free 20x30 metallic print from iPrintFromHome.com, just by responding to a Tweet for their "Tuesday Tweet" and entering a code.

“Wow,” you say, “what a great use of Twitter!”

Well, yes, it is. This small family-run photo print shop reached a national audience of photo enthusiasts. And there are some great tool-based lessons here in terms of how they targeted key influencers and used them to increase their reach.

But it’s also old-school marketing. They gave away a coupon for a service in order to get information about individuals (like me) with which to sell directly later.

Not so revolutionary as it is evolutionary.

Lesson: Direct marketing gets .5 percent to 2 percent conversion rates

In the old days of direct marketing you would target your market, design a piece of mail collateral then buy a targeted list. After paying for the mailing you’d assess your response and if you came through with 2 percent of your total mail number coming back, you considered it a success.

The same holds true today.

Recently I sat down with a VP of Marketing who conducted what he considered a very successful social media campaign. It utilized a customer who had a strong Twitter, MySpace and Facebook presence, galvanized that user’s audience and drove paid users.

The conversion rate of traffic to paid users, he noted, was about 1 percent.

The main difference here is in the cost of driving that 1 percent. Instead of paying for a list and then paying printing and mailing costs, a company needs only to pay for the creative to get the project moving. Social media lets them build the list themselves while online distribution takes care of the rest.

Lesson: You can no longer make money from content.

The newsroom has never been a profit center, it has, in fact, always been a cost center. I spent many years working at TV and radio stations and I found that most general managers came out of the sales side of the house, not the news side.

The reason is simple: news is the loss leader.

This isn’t a new phenomenon, but traces its roots back to Joseph Pulitzer. While Pulitzer sunk a lot of money into his news operation, and is remembered for his contribution to news, he was primarily a businessman. His newspapers didn’t exist as public properties, they were businesses meant to make money.

Pulitzer (and his primary competitor Hearst) understood very well that if you lower the price of a newspaper to a penny, practically giving it away, and make it a desirable product by filling it with great stories, you could sell ads to the readers. News provided the channel to the people while the people attracted the businesses that would pay money to have access to the channel.

When the price of news production came down so did the exclusive control over that channel, so advertisers no longer needed newspapers (or any other big media) to reach their audience. In fact, a business like Craigslist, taking advantage of the lower cost structure, was in a great position to steal the classified advertising by simply creating a marketplace and growing it over time.

But news does, in fact, remain as a loss leader. Look at a company like Kaspersky Labs which operates Threatpost, a security blog that provides news about the IT security industry, employing many of the same journalists who used to write and edit industry trade publications like eWeek and Information Security Magazine.

Kaspersky doesn’t make money on the news, but providing information does give them a channel that attracts the audience of security-focused IT workers into which they want to sell. It also provides them a level of credibility as well as influence.

The catch for Kaspersky (and for any company) is to properly manage that news channel and not turn it into a marketing channel. For now, they seem to be doing that pretty well.

To be sure, social media caused some fundamental changes in how people interact with information and each other. Individuals, for example, now have a much louder voice to express their gratitude and displeasure. Information production no longer resides in the hands of the few and now does belong to the masses.

However, for marketers some basics still apply. No matter how new the tools, the goals and the expertise necessary to drive customers remains the same.

Isn't the New York Times Already Pretty Social?

You can read all about the New York Times new social media editor nearly everywhere today. Or, you can just follow Jennifer Preston on Twitter and hear from her directly. Of course, there's the original memo announcing her new role, the CJR article telling us, um... not much, and Mike Volpe's on target criticism of her hiring, pointing out that a single person can't do it all, that social media needs to extend through out an organization. Though, to be fair, when I read the original memo I felt that her hiring was as much an internal educational move as an external outreach play.

All that being said, if all Preston takes away from this job is a few ideas from the peanut gallery like creating standardized hashtags for breaking news, then I'd call this a failed experiment.

Isn't the Times already a pretty good community? They have content, people who come to read the content and the ability for people to comment on that content. In fact, they have multiple communities, not just the readers but also the various communities they cover. Shouldn't the Times be working to galvenize those communities and strengthen them, rather than simply trying to Tweet more?

The Times, and other newspapers, should start inviting their readers to be editors. Their model should be Facebook, letting people interact and use the information as the basis of that interaction. I touched on this concept back in 2005, but I think it's much more important now.

The social media world has taught us that people follow people, but that organizations such as the New York Times and its more localized sibling the Boston Globe command trust and respect from their readers. They need to build on that, but also let the people have a say.

And not just on Twitter.

Eric Schmidt: Google Wants to Help Newspapers

Fortune Magazine's Adam Lashinsky has an interesting interview with Google CEO Eric Schmidt in which they discuss the future of the newspaper industry. The bottom line? Google would love to help, Schmidt wants newspapers to succeed, they just don't know how to do it. It happens that Dan Froomkin has some good ideas.

I agree entirely with Schmidt on this:

They don't have a problem of demand for their product, the news. People love the news. They love reading, discussing it, adding to it, annotating it. The Internet has made the news more accessible. There's a problem with advertising, classifieds and the cost itself of a newspaper: physical printing, delivery and so on. And so the business model gets squeezed.

Yes, that's exactly the point. People WANT information. They demand it. It's a strange industry in which demand is high, supply is strong, but it still can't figure out how to sustain itself.

For years the industry has been giving us the news for free while feeding us ads. Even when we subscribed to physical newspapers we never paid full value for the news. Those pages upon pages of classified ads, as well as the display ads paid for by the likes of Macy's, Filene's and Jordan Marsh managed to keep our news fully subsidized.

Those days are gone. The business model just doesn't work. We need something else.

Branded Journalism: It's already happening

Dave Chase has a great post on Reflections of a Newsosaur about the problems in online ad sales. He's right that news organizations need to make basic changes to their ad sales channels in order to maintain revenue in the short term. Boston.com admitted as much during the launch meeting for Boston.com/Newton in which the sales executive noted that many advertisers complained that ads on Boston.com were too high. The solution for Boston.com was to focus on a smaller geographical area in order to offer cheaper and more targeted advertising opportunities.

But as I mentioned, I still think the ad model is irrevocablly broken and the while Chase offers a short term solution, something else needs to happen over the long term.

I believe that long term news and information will be supported directly by brands. That is, thsoe brands will hire news people to work independently and they will start to offer information. While to the average consumer this information will appear to be the same as before, there will be a subtle bit of branding going on.

When I suggest this to friends the response is one of horror. The idea that a Coke could be supplying entertainment news sends a shudder through their system, leading them to use terms like "icky."

Of course, this move will happen slowly and will have to be handled carefully, but it's already going on.

Tonight while doing the dishes I turned on the MLB Channel to hear some Hot Stove chatter. The MLB Channel is, of course, owned by the Major League Baseball brand and there to promote MLB teams. Both the NFL and NHL have similar television networks, all look like copies of ESPN, often with former ESPN anchors and reporters doing the work, but focused just on one sport.

Sure, there is an advertising play here, but advertising is just one of the revenue opportunities, the rest are about attracting viewers to promote the MLB brand and that of its associated teams. This leads to other licensing opportunities and sales of MLB branded materials.

The "news" is the loss leader.

Fundamentally, News Broke

During a recent podcast, Harvard Business Professor Clayton Christensen gave an overview of his recent HBR article on how companies need to change their business models to adapt to new threats. It's a very interesting concept and I plan to read the article as soon as I can get my hands on a copy.

The premise, as I understand it so far, is that traditional business models don't work when new threats arrive. As an example he pointed to IBM, which focused on mainframe computers, but when mini-computers hit the market IBM opened an entirely new division in a new location with new profit and loss models to combat this. It did the same thing when PCs hit the market, opening a different office utilizing different skillsets.

During the recent podcast interview Prof. Christensen praised the Boston Globe for taking steps to change its business model to combat the new reality. Not having spoken with Prof. Christensen yet I have to assume he is referring to Boston.com and the digital arm of the publication.

The concept, as I currently understand it, lines up with something I've been thinking about for a while: the fundamental problem with the journalistic business model. Traditional journalism is built on the concept that it can be supported by advertising, but separate from it. The journalist reports on the news, the news brings readers, the advertisers then pay for access to those readers.

This model extends back to the penny newspapers of the 19th century. Why sell a newspaper for a penny when it cost more to produce? So you can get the readers and sell access to that distribution channel to advertisers. The more people who read the paper, the more you can charge for the ads. This concept has grown up over the years but it's fundamentally sound.

The New York Times, for example, earned $1,950,021,000 from advertising in 2007, compared with $889,882,000 from circulation revenue according to its financial statements. Advertising figures in 2006 and 2005 were certainly more robust, but the same calculation applies.

Today it's not just the number of people who read your publication, but the type of people. If you're the Boston Globe, for example, and have great penetration in the affluent suburbs, then you can charge more for access to those readers. Most news organizations regardless of medium use the same basic concept: gain an audience, charge for access to the audience.

A main reason this worked was the high barrier to entry for any new news organization. In order to start one you needed:

• Capital for production;
• Access to production equipment (printing press, TV cameras, etc.); and
  
• A method of distribution (broadcast license, subsribers, newsstands sales, etc).
  

Each one of these factors made starting a new publication an uphill battle. Sure, there could be a "lonely pamphleteer," but the chances of that person gaining the reach and scope of a Washington Post were remote at best.

Now flash forward to the Internet. Today instead of a printing press you can use a free and publicly available blog, Facebook page or Twitter account. Instead of capital you can simply use the computer at the public library, or the $400 computer you bought for the house. As for distribution, any blog is technically available to anyone on the globe, you just need to tap into the right search terms to attract the audience from Google.

In other words, the news organizations no longer have the monopoply on the audience, so the advertisers no longer need them to reach an audience. The fundamentals are completly broken.

So what now? More on that later.

Restart: Branded Journalism

I am returning to this long-abandoned blog to play with a few concepts that have been floating around my head. Specifically, what is the future of journalism?

You don't have to go far around the web to find people lamenting the fall of newspapers, even as they take full advantage of all the publishing freedom the web offers. I'm not going to sit here and tell you that life is over because newspapers face certain death.

The way I see it, people will always want information. In fact, they'll pay when the information will benefit them in some way. However, we've created a situation in which people believe the basic information in life is free. So what we have is a demand and when there is a demand there will always be a supply.

The question isn't whether journalism will survive, but how it gets funded and who does the funding. I believe that funding will come from brands. Yes, those brands can be news brands like the New York Times or the Wall Street Journal, but they can also be from companies like Coca-Cola and Pepsi.

Over the next few weeks I'll expand on this.

But in doing research I spent some time playing with the New York Times company numbers and present the following two charts. This first compares revenue from circulation and advertising. If you notice, circulation revenue remains relatively steady while advertising revenue is on a relative decline.



The second chart compares circulation by source. The numbers seem relatively steady year over year, with the exception of single copy (newsstand) sales, which show a precipitous decline.



I have more research to do to see whether this is just the Times or industry wide, but the advertising decline seems to be almost independent of readers, and the increase in online readership seems to relate only to newsstand sales. This doesn't make sense from a business perspective, but I believe that it is not that newspapers are dying, but that they were never built on a solid advertising base to start.