Paul Wallbank – Brilliant Communications

Tag: media

  • Lords of the digital manor

    Lords of the digital manor

    There is something fundamentally wrong with AOL’s media business states a Business Insider headline.

    What is fundamentally wrong is quite basic to anyone who has owned or managed a business – money.

    The problems at AOL illustrate the deep flaws in the “digital sharecropper” business model of putting free or cheap content on the web to harvest online advertising.

    Lords of the digital manor

    Sites like Demand Media and Huffington Post can’t make money from content if too many staff expect to get paid. Chris Anderson illustrated this in a rebuttal to Malcolm Gladwell where he examined the economics of his GeekDad blog and the work of its manager, Ken;

    So here’s the calculus:

    • Wired.com makes good money selling ads on GeekDad (it’s very popular with advertisers)
    • Ken gets a nominal retainer, but has also managed to parlay GeekDad into a book deal and a lifelong dream of being a writer
    • The other contributors largely write for free, although if one of their posts becomes insanely popular they’ll get a few bucks. None of them are doing it for the money, but instead for the fun, audience and satisfaction of writing about something they love and getting read by a lot of people.

    It’s almost touching to picture the modern day digital serf touching his flat cap and murmuring “thank you m’lud” on receiving a ha’penny from the lord of the digital manor before scampering back to working on becoming a well read, but unpaid writer.

    We don’t pay writers

    The business model of the Geek Dad blog or the Huffington Post relies upon these unpaid writers donating their work and time –the digital sharecroppers as described by Jeff Attwood.

    Low paid or free labour is essential to the success of these site, when the bulk of advertising income goes straight to the proprietors the digital aristocrats – Lord Chris of Wired or Duchess Arianna – can live well.

    The business model falls apart when management starts taking a cut of the profits; install a highly paid CEO and management team with their squadrons of Executive Vice Presidents or Group General Managers with the Medici-esque perks and entitlements these folk demand and the profits disappear.

    AOL’s problem is it has too many highly paid managers extracting wealth from the company’s cashflow.

    This is exactly the same problem print and television media empires have, once the rich rivers of gold allowed them to build up well paid management castes that are now crippling the businesses as revenues can’t support their financial burden.

    Paying for digital media’s future

    Over time, online media revenues are improving. As Morgan Stanley analyst Mary Meeker pointed out in 2010 that U.S. consumers spend 28 percent of their media time online, yet in 2010 only 13 percent of ad spending goes to the Internet. As advertisers follow consumers, publishing on the web will become more profitable.

    The risk for big media organisations is their money will run out before the digital renaissance arrives and when it does, they may have squandered their natural advantages by shedding quality journalists, experienced sub-editors and good editors in an effort to prop up executive bonuses.

    AOL’s management problem is part of a much bigger problem across markets and industries, we can call it managerialism – there are too many highly paid managers getting in the way of the writers, engineers, scientists, artists and tradesman who add real value to their organisations.

    Strangely, it may be Chris Anderson’s “free” model that kills the managerial culture as enterprises that can’t afford to pay product creators certainly won’t pay an Executive Vice President’s entitlements.

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  • The death of local newspapers and media

    The death of local newspapers and media

    The bankruptcy of Lee Enterprises, publisher of 48 newspapers across the United States, is the  latest episode in the steady decline of local  printed media. Is the newspaper, particularly the local publication catering for a smaller market, dead?

    Futurist Ross Dawson certainly thinks so, last year predicting US newspapers won’t exist as we know them by 2017 with them being replaced by digital platforms like the web, iPad and Kindle.

    The problem for the media industry is how to fund news gathering in a digital environment. Newspapers are dying because advertisers have moved online, so Google now makes $30 billion a quarter on the income the local paper has lost in classifieds and display advertising.

    For web surfers, this is also a problem as much of what appears on the net — in blogs, Facebook, on Twitter and circulated around message boards — comes from newspapers and largely subsidized by their rapidly eroding print revenues. Take out the traditional media, and many of the authoritative online sources disappear.

    Much of the free web content we’re seeing is a transition effect as we evolve to paid online models, something that is going to be driven by advertisers following consumers’ eyeballs to the net.

    For the publishers who don’t go broke in the meantime, this will probably save them in whatever form they evolve into.

    Cutting costs to survive the current lean period is essential for newspapers, the tragedy is many are following other industries in cutting the very areas that give them their competitive advantage while keeping antiquated and expensive management who hang on to failed strategies.

    Poor management is probably a bigger threat to the news empires, as it is for many other industries.

    The damage done by poor business leadership is far greater than the cost of outsized management salary packages and entitlements. Until shareholders address the number, cost and suitability of the managers charged with running their investments, the future for these organisations is bleak .

    Local journalism is going to change as we start seeing old media’s economies of scale being replaced by cheaper technology that allows local people to reclaim their news and community stories.

    They will be doing this through blogs and social media while using their mobile phones and cheap cameras to capture and document local news.

    For the local newspapers and media outlets who understand and harness their community, they’ll remain valued local commercial citizens; for those who see their readers as a mass of dumb consumers, they’ll be lucky to last the decade.

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  • Spotting a security charlatan

    Spotting a security charlatan

    Google’s Open Source Programs Manager, Chris DiBona recently pointed out how IT security industry charlatans keep making false claims to push the sales of their software products and consulting services.

    “If you read an analyst report about ‘viruses’ infecting ios, android or rim,” says Chris,  “you now know that analyst firm is not honest and is staffed with charlatans. There is probably an exception, but extraordinary claims need extraordinary evidence.”

    Sadly, the computer press tends to accept these extraordinary claims at face value and allows the charlatans to repeat their snake oil pitches without subjecting them to critical analysis.

    Fortunately for those who care about the security of their home and business IT systems, there are ways to spot the charlatans and their dodgy wares.

    The Big Target theory

    When you read a claim that the Windows malware epidemic of the early 2000s was due to Microsoft being a big target as opposed to the tiny market shares of Apple and Linux, you can be sure they are the words of someone who is at best clueless selling a dubious product.

    This theory is nonsense, as I’ve explained previously, and anyone who genuinely believes this has no experience in dealing with the poorly secured operating systems that were Window98, Me and the early versions of XP.

    If you are confronted by somebody making this claim ask them why, now smartphones are outselling desktop computers, where is the widespread malware promised for mobile systems? It doesn’t exist for exactly the reasons Chris gives in his Google+ post.

    Real Soon Now

    The other key indicator is the “real soon now” claims – that a virus is about to burst onto the scene that will rub the smile off the face of smug Mac and Linux users.

    Invariably the hysterical headlines are backed up with claims, almost always taken from a vendor’s press release, that a security company’s researchers have identified a threat that is about exploit wilfully clueless users.

    Daring Fireball’s John Gruber has done an excellent job of dismantling this rubbish in his classic post “Wolf”.

    His post was provoked by the ‘news’ that a wave of Apple malware was on its way. That was six months ago and we’re waiting. John tracked similar stories back to 2004, none of which came to fruition.

    The modern snake oil men have an advantage in that tech journalists are desperate for page views and in many media organisations they no longer have the resources to critically analyse PR claims.

    Sadly there are real security issues that home and business users need to be aware of. Of course, much of the solution for this doesn’t sell dubious antivirus or expensive consulting services.

    In some respects, the proliferation of these stories is a reflection of the decline of the mainstream media business model.

    As more ‘news’ stories become lightly rewritten PR spin, the less readers take those outlets seriously and once trusted journals of record become little better than online gossip rags.

    Important issues, like information security, deserve more than repeating the lies of those who profit from fear, uncertainty and doubt.

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  • Price points

    Price points

    It’s no coincidence Amazon’s media release announcing the new range of Kindle e-book readers was headlined introducing the All-New Kindle Family: Four New Kindles, Four Amazing Price Points.

    The $79 price for the base model has authors excited, and quite rightly too as this will guarantee sales of the e-readers and spur sales of e-books.

    Once a product’s perceived as being affordable by the market, sales take off. The classic is Josiah Wedgwood selling bone china at prices affordable to the 18th Century English working classes. The basic product was similar in all but the decoration to the ornate wares Wedgwood sold to Europe’s royal families and the then new methods of mass production guaranteed a quality product to all customers.

    Just over a century later, Henry Ford did a similar thing with the motor car, meeting the price points that made the horseless carriage accessible to the middle classes in early 20th Century United States.

    In more recent times we’ve seen similar trends happen; the under $2,000 personal computer in the 1990s, the sub $500 netbook in 2008 and the affordable smart phones of recent years.

    We can add broadband Internet and budget airlines as other examples of how demand has exploded when the cost has dropped below a certain price point.

    As technology becomes affordable, we use more of it. A point that’s often lost monopolists and established players in industries.

    This is the real opportunity Amazon are now offering with the cheap Kindles and we’ll see e-books boom as people are prepared to make a small investment in the devices.

    Almost certainly this will open new markets and unforeseen opportunities for entrepreneurs and writers. The resulting pressures on competitors like the Apple iPad and the various Windows or Android tablet devices should increase innovation as well.

    In our own businesses we need to ask what those price points are and what is stopping us from meeting them. As other price busters have shown, if you can meet these price points, the riches are there for the taking.

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  • ABC Nightlife Computers: The Internet Name Wars

    ABC Nightlife Computers: The Internet Name Wars

    The online empires want our names and identities, are the real costs of social media now being exposed? Our September ABC Nightlife spot on September 22 from 10pm looked at these issues and more.

    Paul and Tony discussed how Google’s “Name Wars” or “nymwars” came about, why social media sites like Facebook and search engines want you to use to use your real names.

    The podcast from the program is available from at Nightlife website, more details of Tony’s programs can be found there as well.

    Is this a good thing or are there costs we should consider before handing over our intimate details to a social media or free cloud computing service?

    Some of the topics we covered included;

    • What are the “name wars’?
    • Why do companies like Google and Facebook want us to use our ‘real’ identities?
    • How can they use the information they gather?
    • What problems does that cause for Internet users?
    • Can these problems spill into real life?
    • Are all web services doing this?
    • What are the risks to businesses using social media?
    • Is this the real cost of social media?

    Some of the information we mentioned can be found here;

    The cost of lunch: Google and Information Revenue
    Google’s real names policy explained
    Google’s Eric Schmidt on being an “identity service”, not a social network
    Google’s company philosophy (note item two)
    Why Twitter doesn’t care what your real name is

    We’ll be adding more resources in the next few days, the next ABC Nightlife spot is on 20 October and our events page will have more details. If you have any suggestions for future programs or comments on the last show, please let us know as we love your feedback.

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