Tag: media

The Daily Mail and the visibility fallacy

Is just getting internet clicks the path to online media success?

Reuter’s Felix Salmon has an interesting take on the The Daily Mail’s internet success.

The site might be a traffic powerhouse, but the internet is full of high-traffic sites which are worth very little. Traffic, in and of itself, is worth very little, and there’s no indication that readers are willing to pay for Mail Online, or that advertisers are willing to pay much for those readers. (The site’s revenue of $7.2 million is about 0.25% of DMGT’s $2.7 billion total revenue.)

Felix Salmon makes an important point about the web and the fallacy of high traffic – many of the internet’s high traffic sites are of little value.

In falling for this fallacy we’re making the mistake of thinking in old media terms where high newspaper circulation numbers or ratings winning TV programs translated directly into advertising dollars.

That model worked because of restricted inventory. There were a limited number of TV stations or newspapers in our cities and regions which most people relied on for the day’s news and entertainment.

In the internet age, inventory is not a problem. We live in an era awash with information and the old models of restricted supply no longer work.

To make money, we have to add value. We can no longer rely on broadcasting licenses or prominent mastheads supported by classified advertisements and real estate puff pieces.

Rewriting other peoples’ stuff in a way that grabs the attention of search engines is a way of getting fleeting readerships but it isn’t adding any value and, as revenues from online advertising continue to fall, it isn’t the way to make money either.

Whoever figures out how to make money out of online news and journalism will be the Randolph Hearst or Rupert Murdoch of the 21st Century. Right now it doesn’t appear The Daily Mail, or competitors like The Huffington Post, will be those champions.

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Sports cars, the cloud and the need for broadband

How the V8 Supercar races use the internet and networks shows why businesses need reliable communications and the way organisations are using cloud computing.

How the V8 Supercar races use the internet and networks shows why businesses need reliable communications and the way organisations are using cloud computing.

My relationship with sports cars is similar to horses – I have a vague idea of which end water goes in and where not to stand.

So Microsoft’s invite to the Launceston V8 Supercars to showcase their Office 365 cloud service as the race’s official sponsor wasn’t expected but it was a good opportunity to see how a sports organisation uses modern technology.

Riding the cloud

V8 Supercars David Malone and Peter Trimble

At the opening media conference V8 Supercars CEO David Malone and Finance Director Peter Trimble described the IT problems the organisation had in the early days.

“We were penny wise and pound foolish” said Peter about their small business system that couldn’t grow with the event.

To properly meet their needs V8 Supercars would have needed a bank of servers, cumbersome remote access software and a full time team of several IT staff for their scattered workforce and constantly changing locations.

With cloud services, they eliminated many IT costs while simplifying their systems.

That staff can now access documents regardless of location is a very good case study of where the cloud works well and understandable that Microsoft wanted to show off what their services can do.

Networking the cars

When challenged about the point of car racing, enthusiasts cite how the sport is a test bed for the motor industry.

The motor industry is one sector leading the internet of machines with one car manufacturing executive recently describing the modern motor vehicle as being a “computer platforms” on wheels.

Pit crews monitoring in car systems
Pit crews monitoring in car systems

Eventually we’ll see our cars connected to the net and reporting everything from the engine’s servicing needs to the driver’s musical tastes.

That’s reality in today’s high performance racing, both the drivers and the cars are in constant contact with the crews as sensors report everything from engine performance to the foot pressure the driver is putting on the accelerator pedal.

As continuous data feeds from the cars is essential to the teams the event has its own trackside network with receivers located along the course that are used for both vehicle telemetry and the video feeds from both car mounted and fixed cameras.

Owning the rights

In what’s becoming the future of sports broadcasting, the V8 Supercars organisers run their own camera crews and provide the feed to their broadcast partners and media outlets.

This allows them to control all the rights across TV, cable and online channels.

Having full control of the pictures also gives the V8 Supercars more revenue through signage and sponsorship by guaranteeing advertising placements which wouldn’t be available if they didn’t manage the feed.

Connectivity matters

v8-supercars-launceston-communications-cable
Spaghetti Junction as the various feeds come together

Getting the images out to the media and broadcast partners along with delivering the in car data to the racing teams is major challenge for organisers. The communications centres resemble a giant bowl of cable spaghetti as various groups plug into the network.

It’s no coincidence that part of the deals the V8 Supercar management strike with track owners and governments includes providing fiber and microwave links to the venue.

That single factor illustrates how vital communications links are to a modern sporting event.

Another important factor is that everything will be packed up and taken away. Following Launceston, the entire show is packed up and moved onto Auckland, New Zealand. This in itself is a major logistic challenge which would fail without good connectivity and reliable systems.

v8-supercars-launceston-truck-fleet
the fleet of trucks ready to move on

It’s easy to dismiss the V8 Supercars as a bunch of testosterone driven rev-heads, but the challenges in staging these complex events fifteen times a year shouldn’t be underestimated.

We also shouldn’t underestimate how important communication links are to any business. It’s why debates about the need for high speed internet services are last century’s discussion.

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A question of relevance – why the PM welcomes bloggers

The Prime Minister’s courting of bloggers in the run up to the Australian Federal election later this year shows how credibility and relevance are most important asset of any media outlet

The Prime Minister’s courting of bloggers in the run up to the Australian Federal election later this year shows how credibility and relevance are most important assets for any media outlet.

Late last year the Prime Minister invited bloggers to Kirribilli House for lunch then to dinner during her Rooty Hill adventure a few weeks ago.

The press gallery grumbled and wrote patronising articles about North Shore mummy bloggers but failed to recognise the real threat to the established media outlets – these writers are more relevant to people’s lives than the machinations of ‘anonymous political sources’, sports stars or Hollywood celebrities.

Now the Prime Minister is giving one on one exclusive interviews to some of those bloggers, something that will irritate the nation’s political journalists even further.

Old media’s loss of relevance

The press galleries’ problem though is relevance, which lies at the heart of any successful media outlet.

In 1831 when The Sydney Herald’s first edition was published, the front page was made up of advertisements and shipping notices as it was with all newspapers of the time.

That was relevant to the readers, they paid 7d – not an insubstantial amount in 1831 – to find out the latest in shipping movements, real estate sales and livestock prices which were essential to life and business in the colony.

It wasn’t until 1944 that the now Sydney Morning Herald moved news to the front page, the London Times held out until 1966. What was now relevant to readers were photos and wire stories from around the world.

Papers continued to do well despite the introduction of radio in the 1930s and TV in the 1950s because they were continued to be relevant to their readers. If you were looking a job, a house or where to take your mum for her 60th birthday then the local newspaper was the place to look.

The shift to sensationalism

In the 1980s all the media – newspapers, TV and radio stations – started a shift to sensationalism and infotainment and steadily all became less relevant to the populations they served.

At the time media outlets got away with it as there was no-where else for people to get news. If you didn’t like stories about Princess Di’s wedding dress then you had to curl up in the corner with a good book.

Then the web came along.

All of a sudden engaged readers could get relevant information from all over the world.

With social media and blogs, reporting Kim Kardishian’s latest wardrobe malfunction raised a ‘so what’ from an audience that learned about it two days ago on TMZ, the Huffington Post or Facebook.

Making matters much, much worse were the advertising rivers of gold moved to specialist websites and Google.

Newspaper executives found their revenues were evaporating and they worked their way deeper into the quicksand by cutting costs in the areas where their editorial strengths lay, making them even less relevant to the readerships they want to serve.

Relevant lifestyles

Today the mummy bloggers – along with the food bloggers, travel bloggers and political bloggers – are attracting  audiences with relevant, useful content that the audience can engage with.

Last week’s embarrassing circus in Canberra was an example of how irrelevant the media, and much of politics, has become to the average Australian.

Indeed it’s interesting to contrast the self important Canberra press gallery pushing non-stories while fawning over their discredited ‘anonymous party sources’ with the genuinely questioning tone of the some of the bloggers.

So the mainstream, established media can kiss the mummy bloggers’ backsides; if they can’t find relevance in today’s society then they may as well shut up shop.

For politicians relevance is important too – political parties that pitch themselves to 19th Century class struggles or 1980s corporatist ideologies are as irrelevant to today’s society as the Soviet Communist Party.

It would serve the Prime Minister and her staff well to listen closely to what the mummy bloggers and their readers are saying.

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The high cost of new media experiments

The BBC’s expensive exit from their Lonely Planet investment shows the costs and risk for old media empires as online business models evolve.

The BBC yesterday sold Lonely Planet to US media company NC2 Media. Their £80 million loss on the venture puts them in good company as established media struggle to find new online channels and revenue streams.

While the losses aren’t trivial, they are not quite in the league of News Corporation $545 million loss on MySpace or Time Warner’s billion dollar adventure with AOL.

All three stories show how tough it is for ‘old media’ adapting to a new landscape.

The problem is there for ‘new media’ as well, most ventures struggle to make money and many of the success stories like Huffington Post rely on a combination of free content and a greater fool buying them.

No-one has really figured out what the new media revenue models are; not the established publishers or the online upstarts.

Lonely Planet’s online success was due to their forums which, like most web discussion boards, can feature discussions politely described as “robust”.

This was always going to a problem for the BBC’s public service management culture and it resulted in the shutdown of the Lonely Planet Thorn Tree forums over Christmas.

So it’s not surprising that the BBC has decided to end its experiment and now the corporation’s management is dealing with the criticism of those losses.

While it’s easy to criticise the BBC for the deal, at least the broadcaster was attempting something different online, doing nothing is probably a poorer strategy than buying MySpace or Lonely Planet.

Over time, we’re going to see a lot more experiments and many will be public embarrassments like those the BBC and News Corporation have suffered, but there will be successes.

Someone will crack the code and they will be the Randolph Hearsts of this century. It could one of the Murdoch heirs, it could be the owners of NC2 Media or it could be some young, hot shot developer working in a Rio favela or the slums of Kolkata.

But it will be someone.

It’s an exciting time to be in business.

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You call that a graph?

A good chart can help tell a story, all too often though graphs are designed to mislead.

One way to illustrate a story is with charts. All too often though misleading graphs are used to make an incorrect point.

A Verge story on Groupon shows how to get graphs right – clear, simple and tells the story of how the group buying service’s valuation soared and then plunged while it has never really been profitable.

The vertical axis is the key to getting a graph right, cutting off most of the y-axis’ range is an easy way to mislead people with graphs. In this case you can see just the extent of Groupon’s valuation, profit and loss over the company’s short but troubled history.

Since its inception, The Verge has been showing other sites how to tell stories online, their Scamworld story exposing the world of affiliate internet marketing sets the bar.

Using graphs well is another area where The Verge is showing the rest of the media – including newspapers – how to do things well.

For Groupon, things don’t look so good. As The Verge story points out, the company’s income largely tracked its workforce which grew from 126 at the start of 2010 to over 5,000 by April of 2011. Which illustrates how the business was tied into sales teams generating turnover.

The spectacular growth of Groupon and other copycat businesses couldn’t last and hasn’t. The challenge for Groupon’s managers is to now build a sustainable business.

For investors, those graphs of Groupon’s growth were a compelling story. Which is another reason why we all need to take care with what we think the charts tell us.

Graph image courtesy of Striker_72 on SXC.HU

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Can hyperlocal media work

One of the promises of the web and a hoped for future of publishing was the rise of hyperlocal websites that report news on individual suburbs, or even blocks. It appears though the hyperlocal concept isn’t working.

One of the hoped for futures of publishing was cheap, hyperlocal websites that report news on individual suburbs or neighbourhoods and get advertising from local businesses.

Last week US TV network NBC abruptly closed down its Everyblock online service, leaving loyal users angry and bemused. Right now it appears though the hyperlocal concept isn’t working.

The failure of Everyblock

Founded five years ago, Everyblock had an interesting model of mashing up local data like Flickr pictures and government information with news so residents and visitors would have an accurate up-to-date picture of what was happening in their neighbourhood.

Everyblock’s failure follows AOL’s struggle to get their hyperlocal play Patch working, although AOL reported in 2012 that Patch’s revenues have doubled.

Whether that doubling is enough to save Patch remains to be seen, it’s quite clear that some question the sustainability of AOL’s growth in revenues and page views.

All of this raises the question of why hyperlocal isn’t working.

A game for amateurs

The main reason is that there’s not enough money it –anybody who is going to run a hyperlocal site is going to be doing it for love or because there’s a dumb corporation burning shareholders’ equity on the venture.

In most communities there simply aren’t enough advertisers interested to pay the bills and you can forget any paywalling.

Most critically for local publishing ventures, the local advertising market has been suffocated by the web. Twenty years ago, the local plumber or cafe would hit most of their market by spending $2,000 on their Yellow Pages listing and probably double that with a weekly ad in the classified section of the local newspaper.

Today, a web site with sufficient SEO smarts to come up on their first page of searches for their suburbs is enough, many can get away with a free Facebook or Google Plus for Business page, despite the dangers of using other people’s services to promote your business.

For the telephone directories this change has been catastrophic while local newspapers only survive thanks to their less than healthy relationship with real estate agents.

Local market failure

The interesting thing with the evolving local media market is just how poorly the web giants have performed.

Two years ago, Google appeared to have the sector sown up with the Google Places service but a combination of poor service, restrictive rules and an obsession with Google Plus have seen the company squander their advantage, leaving their local search service underused and irrelevant.

Similarly, Facebook looked like they could take that market off Google but they too haven’t executed well.

Which leaves local businesses reliant on their own websites and a hodge-potch of services like Yelp!, Tripadvisor and Urbanspoon.

This doesn’t serve the business or the customer well.

Where to for local news?

A bigger question though is where do people go to find local news?

Increasingly it looks like social media sites like Facebook and Twitter are the place as people see what their friends and neighbours post. It’s not great, but it’s better than the local newspapers increasingly stuffed with syndicated content with a few local stories from an overworked part-timer.

It’s not clear that hyperlocal news has failed, but right now it’s not looking good. Perhaps it needs somebody with a truly disruptive model to find what works in our communities.

image courtesy of davidlat on sxc.hu

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2013 – the year of the incumbents

Deloitte consulting’s technology, media and telecommunications predictions for 2013 sees smartphones, tablet computers and televisions causing a data crunch.

Bigger, quicker and more congested are the predictions from consulting firm Deloitte’s 2013 Technology, Media and Telecommunications survey.

In Sydney last Friday, the Australian aspects of the report were discussed by Clare Harding and Stuart Johnston, both partners in Deloitte’s Technology, Media and Telecommunications practice.

Most of the predictions tie into global trends, with the main exception being the National Broadband network which Stuart sees as addressing some of the bandwidth problems that telecommunication companies are going to struggle with in 2013.

Technology predictions

For the technology industry, Deloitte sees 2013 as being a consolidation of existing trends with the trend away from passwords continuing, crowdfunding  growing, conflict over BYOD policies and enterprise social networks finding their niches.

Some technologies are not dead; Deloitte sees the the PC retaining its place in the home and office, with over 80% of internet traffic and 70% of time still being consumed on desktop and laptop computers.

Deloitte also sees gesture based interfaces struggling as users stick with the mouse, keyboard and touchscreen.

Media predictions

Like 3D TV two years ago, the push from vendors is now onto smart TVs and high definition 4K televisions. As with 3DTV, much of the market share of smart and hard definition TVs is going to be because television manufacturers will include these features in base models.

Deloitte’s consultants see 2013 as one where “over the top” services (OTT) like Fetch TV and those provided by incumbents delivered start to get traction on smart TVs with 2% of industry revenues coming from these platforms.

Catch up TV is the main driver of the over the top services with 75% of traffic being around viewers watching previously broadcast content. This will see OTT services firmly become part of the incumbent broadcasters’ suite of services.

The bad news for some incumbents is the increase in ‘cord cutters’ as consumers move from pay-TV services to internet based content.

Smartphone and tablet computer adoption which is expected to treble will be a driver of OTT adoption as viewers move to ‘dual screen’ consumption, the connections required to deliver these services will put further load on already strained telco infrastructure which is going to see prices rise as providers respond to shortages.

Telecommunications predictions

The telecommunications industry is probably seeing the greatest disruption in 2013. With smartphones dominating the market world wide as price points collapse.

One of the big product lines pushed at this year’s CES was the “phablet” – while the Deloitte consultants find it interesting hey don’t seem convinced that the bigger form factors will displace the standard 5″ screen size during 2013.

As a consequence of the smartphone explosion is that apps will become more pervasive and telcos will try and build in their own walled gardens with All You Can App to lock customers onto their services.

With smartphones moving down market, largely because of the cost benefits for manufacturers, Deloitte also predicts many new users won’t access data plans given they’ll use the devices as sophisticated ‘feature phones’.

Data usage will continue to grow, particularly with the adoption of LTE/4G networks, although much of the growth will still be on the older 2 and 3G networks as lower income users choose plans which don’t require high speed data.

The looming data crunch

There is a cost to booming data usage and that’s the looming shortage of bandwidth, Deloitte sees this as getting far worse before it gets better.

With bandwidth becoming crowded, prices are expected to rise. In the United States, the “all you can eat” nature of internet plans is being replaced with “pay as you go” while in Australia data plans are becoming stingier and per unit costs are rising.

The London Olympics were cited as an example of how the shortages are appearing – while the Olympic site itself was fine, outside events like the long distance cycle races strained infrastructure along the route. We can expect this to become common as smartphones push base station capacity.

Where to in 2013

Deloitte’s view of where the telecom, technology and media industries are heading in 2013 is that incumbents will take advantage of their market positions as technology runs ahead of available bandwidth.

In Australia, governments might be disappointed as telcos internationally aren’t interested in bidding huge amounts for bandwidth. As Stuart Johnston says “globally what we’re seeing is that carriers are not as willing to spend. It’s not the cash cow that governments are expecting.”

For government and consumers, we’re going to get squeezed a little bit harder.

While things do look slightly better for telcos, broadcasters and other incumbents there’s always the unexpected which eludes all but the most outrageous pundits, it’s hard to see what the disruptive technologies of 2013 will be but we can be sure they are there.

The main takeaway from the 2013 Deloitte report is that smart TVs, 4K broadcasting, tablet computers and smartphones are going to be the biggest drivers for the technology, media and telecommunications industry for this year. There’s some opportunities for some canny entrepreneurs.

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