miércoles, septiembre 27, 2006

Para un Diario Mejor, Primera Parte

En este artículo, Bob Cauthorn, vicepresidente del San Francisco Chronicles y presidente de de Digital Media, entrega una visión llena de ironía sobre la realidad de los diarios, que conoce de sobra, y la postura de los puristas, que no entienden que hoy los medios son marcas y productos. Los cambios que ha acarreado la industria de las audiencias, sin duda ha golpeado a los diarios, por lo mismo, es importante saber cómo combinar negocio, credibilidad y capacidad de adaptarse a las nuevas audiencias (¿sin peder las antiguas?)y a los nuevos medios. No suena fácil.

Por Bob Cauthorn
They call it Black Tuesday at the New York Times and Boston Globe where the layoffs come because the margins are squeezed.
The don't even have a name for the buy-outs at the defiantly anti-margin San Francisco Chronicle, where leadership can neither grow revenue nor circulation and thus always loses money.
Staff reductions are also taking place in Philadelphia, and more soon at a newspapers near you.
It's only September. For real fun, wait until October hits. You see, September and March are when the audit periods take place for the all-important "Publishers Circulation Statement" at newspapers across America. The September statement is published in October and those results are what support ad rates.
Just so there's no October Surprise for Corante readers, here's next month's headlines today: In October metro newspapers across the country will post astonishing year-over-year declines.
The circulation fall-off at large metro papers will be between 9% and 15%. Smaller market and mid-sized market newspapers will fair slightly better. But across America, the average decline will be somewhere between 3% and 5% year-over-year.
Those bleak numbers will be a best-case scenario. Why? Katrina. Newspapers are the accidental beneficiary of the the Gulf Coast's torment -- readers eager for Katrina news in September will provide an offset to even the darker baseline circulation in the month. Katrina won't help much, though, because it's mostly a television and web story.
When the circulation numbers hit, general industry panic will ensue because they come at a time when advertisers finalize budgets for 2006. National advertisers, in particular will recoil from metro newspapers' inability to sustain readership, much less grow it. Advertisers bet the winner. Newspapers are not acting like winners right now.
As advertisers chill, the pundits will get worked into a lather. It has already started in one quarter. And financial analysts, formerly sanguine because even weak newspapers deliver a decent margin, are sharpening their knives too. Warren Buffet himself looks to be cooling on the sector, despite his massive holding in the Washington Post.
Faced with admitting that readers duck and cover as newspapers get thrown at them, the industry will provide spin and false comfort. It will talk about "high quality readership" and suggest the fall-off is really because newspapers are dumping low-quality (i.e. free or sponsored) fake circulation.
Ummm, does that mean advertisers will get a refund from an industry that sold ads based on what it now admits was hallucinogenic circulation? No? Didn't think so.
The "high-quality readership" blather gets scary when you ponder it at length. But we'll leave that for another day.
The pro-industry spin will talk about combining web-site and print readers, which is disingenuous in exactly 1,465 ways. For example, does someone from Islamabad dipping in for one story on your web site have equal value to a seven-day-a- week local print subscriber? No? I'm shocked!
Nationally, the average time people spend on newspaper web sites is under four minutes. Clearly, people are reading a story or two and leaving. That's not to say that online readership doesn't matter -- hell, online readership is my religion -- but let's be honest about how people use newspaper web sites. You can't transform the media by lying to yourself about it.
To put the cherry on top of the "bad news is really good news" sundae, the industry will talk about "platform shift."
Good old platform shift. It's a popular idea among editors who, in reality, couldn't attract a new reader with a free back massage.
The notion of platform shift -- people moving from print to web just, you know, because -- is a comfort to the media establishment as it suggests people still really, really, really love their product, they're just selecting a different distribution mechanism.
Nonsense. The platform shift doctrine is a dangerous -- and for some media companies, ultimately fatal -- illusion that blinds the industry to necessary changes in the core product. Platform shift is the argument for the status quo: We don't have to do anything different. We don't have to change. We just take our super-wonderful content and shove it down a different pipe and everyone can retire happy.
Hey, platform shift is a no-brainer! Problem is, you need brains now to save newspapers. Active brains. Big ones. With fresh ideas and no fear.
Why? Because as readers flee and advertisers follow and confused newspaper executives fiddle with their Blackberries the one thing that almost certainly won't be discussed as the cause for readership decline will be the product itself.
Of course, there is statistical support for the platform shift argument. Study after study demonstrates that readers are replacing print media with online readership of essentially the same content. The results are irrefutable. And these results are damned comforting if you're after business-as-usual.
Unless, of course, one steps back and challenges the context in which the studies take place.
All of these studies -- sincere as they are -- have a pre-defined outcome. Of course people replace print with the same content online because they have no other option today. Nearly all online efforts of print companies are little more than shovelware. Media companies have not provided meaningful product differentiation between print and the web, leaving aside the odd multimedia package here and there.
Newspapers, in particular, position their online offerings as perfect substitutions for their print products and then they knit their brow at the results. Platform shift? Try platform monotony instead.
The spin of the traditional media continues: "It's really all about brand anyway. We're a trusted brand and we'll blast that brand at you through any hose you want. Brand, brand, brand...."
Business thinking tends to run in generational cycles. For the last 15 years or so, the fashion in business thinking has focused on the ascendency of The Brand. Instead of being product oriented, modern companies tend to be brand driven. There are precious few companies left that fuse the two orientations -- think Apple, which defines itself entirely by its products and thus gets a brilliant brand in the process.
Brand logic is the bulwark of defending the status quo. Product logic is where the revolution comes.
When it comes to a war between products and brands, products almost always win in the end.
A few examples:

Ford and Chevrolet had the great brands in the 1960s. In the 1970s, the Japanese ate Detroit's well-branded lunch by focusing on products
Sun Microsystems assured us it was the "dot in dot.com" and could rightfully claim to be at the core of the early internet. But the company collapsed becaue its products didn't meet the needs of the marketplace. We all used Sun. And then we all stopped using Sun. And now, some us are returning to Sun again because -- amazingly -- it is becoming a product-oriented company once more.
Sony was exciting when it was all about products. It became passe and complacent when it started to think too much about what the Sony brand meant. Now Sony is in a panic because while it's still "the lifestyle company" it has discovered that innovation is thwared by brand logic. Sony tosses in its sleep mumbling: "Apple. Ipod. Samsung. Apple. Ipod. Apple. Apple. Apple."
Microsoft has one of the best-known brands in the world and yet finds itself flailing against the open source movement, which is all about product.
And indeed, the internet itself is all about products. The notion of brand in this space is much more fluid than it is in other places. Brands don't confer protection on the net, products do.

More or less, you start talking about brands when you don't want do anything new. New ideas chase their own outcomes and sometimes those outcomes are corrosive to the brand. Tough.
Traditional media in general, and newspapers in particular, shall pay a grievous price for excessive brand consciousness. In a worldview filtered by brand, it's logical to take what you do in print and plaster it unaltered online. In a brand-driven universe, constistency matters above all. Don't want to violate that brand promise, do we?
And if print readers migrate to the web because you've given them nothing else to do, at least the brand is intact.
Or it will be until barbarian products arrive to sack your neat little branded cities.
So what if....
...newspapers were to become product focused rather than brand focused? The old modes of thinking will crumble. The print problem and the digital opportunity will be viewed as separate, but entwined, issues.
Digital media will be recognized for exactly what it is: a full medium in its own right, with its own internal logic, unique advantages, specific shortcomings and opportunities. Newspaper companies will begin to ask the proper questions about digital media, instead of simply mumbling about cannibalization and print.
What are the right questions? Just a few starters: what form should storytelling take online, what is the natural and robust role the community plays, what does geo-focused and just-in-time news delivery look like, does data presentaion itself become a story, what does true interactivity looks like, how can the social conversation be distributed now, what level of personalization is valuable and what level is numbing to the intellect, how can digital media provide real value to local advertisers?
A product-driven newpspaper would look at digital media and say, what can we do differently here and how does the digital product differentiate itself from a print product?
A product-driven newspaper would look hard at its print results and come to the only sane conclusion possible: readers leave print because the print product is broken. It's not a product people want, so they walk away from it. They happen to walk to the web because, well, to date the industry has offered nothing more than a straight-up replacement.
Rather than shrugging and saying "it's just the web's fault" serious questions need to be asked about the print product. Print still works when editors and publishers -- who need to start accepting real accountability -- deliver the right product.
Across the world, people return to revived print products. You see it when formats change to compact, you see it when newspapers return to locally focused news (like the "20 Minutes" newspapers in Europe), you see it when upstart free newspaper products arrive and topple the 100-year-old brands of the incumbent newspaper.
A clever newspaper makes its online product do one thing and its print product do something else. Some players are finally moving in that direction. Example: the Denver Post and its smart effort at hyper-local online news.
Proper differentiation between print and online products encourages people to use both. The industry's current direction of creating undifferentiated products simply ensure readers will switch media.
If newspapers fix their print products circulation will grow -- change format, revive local coverage, alter the hierarchical approach to the news, open the ears of the newsrooms and get reporters back on the street where they belong. If you want to get really daring, re-imagine print newspapers as a three-day a week product rather than as a seven-day a week product.
As a practical matter, print newspapers only make money three days a week anyway. Imagine the interplay between a seven day a week digital product and a densely focused (and wildly profitable) three-day a week print product . Each doing different things. Each serving readers and advertisers in different ways.
Unfortunately, it appears the brand fetish/platform shift paradigm is the dominant one right now. No less than the New York Times itself is promoting this view of the world. And of course, Tuesday's layoffs demonstrated the inevitable payoff of this old-world thinking.
Newspapers, meet precipice.


Para un Diario Mejor, Segunda Parte

Esta entrevista es un complemento al artículo anterior, en el cual Bob Cauthorn entrega un pequeño panorama de la situación de los diarios en EE.UU. Enfrentado a las preguntas del Online Journalism Review, el investigador aclara su punto de vistas sobre el futuro de los diarios, los contenidos y las audienciencias. Sin dejar de velar por las virtudes informativas de internet.

I first ran into Bob Cauthorn when he was giving a speech at a Western Knight Foundation seminar. He talked about how the mainstream media was missing a really crucial story: An entire way of life in small-town America was disappearing, maybe forever, yet accounts of this rarely show up on the national radar. It's only during election years, when reporters trail after politicians in the fly-over states, that any attention is paid to people who aren't plugged in to the hip urban flavor of the month.
This really put the hook into me, and it's one of the reasons I went out looking for a story that took place in a small, out-of-the-way place. The fact that I was able to find such a compelling story in Point Reyes delighted and excited Cauthorn, and I rather suspect that he might have been planning to use this story in some of his future speeches, rants or presentations.
So here, in its entirety, is my conversation with Cauthorn:

OJR: A recent article said that "if newspapers are the cockroaches, the Web may be Black Flag."
Bob Cauthorn: Yeah, I saw the BusinessWeek piece. But you know what they're missing? And this is the thing that I keep trying to drive home, and it's so frustrating. People need to make a distinction between newspapers and journalism and the newspaper companies that currently run newspapers and make the decisions. The companies that run newspapers and make the decisions, they're the ones that are in error. It's not the concept of journalism. It's not the concept of newspapers. It's the companies who are producing a product that is failing. That people don't want. This is basic – if Detroit makes a car that people don't want to buy, their business future fails, correct? If people make a newspaper that no one wants to read, and since circulation's been dropping every year annually, nationwide since 1987 … if people make a newspaper that nobody wants to read because the most experienced readers of that newspaper walk away from it – I mean, everyone knows what a newspaper is, right? From a brand perspective … everyone knows how to use it, it's ubiquitous, it's cheap, everybody at one point or another has tried it. There's nobody in America above a certain age who hasn't at one point or another tried a newspaper. The whole goal of branding and advertising exercises is to try to get someone to use your product once. Well, newspapers have that. Yet, the most experienced users, the most sophisticated customers are walking away from newspapers … BusinessWeek needs to talk about the companies that make newspapers are failing. And they're making a product that people don't want. If I were Tony Ridder, I'd be looking hard at my operation, saying, "Now wait a minute. Maybe we need to stop defending the idea of newspapers, because the idea of newspapers is different from the companies that own newspapers. And maybe we need to look at our company and say – let's say I'm Bob the Generic Newspaper Mogul – maybe we need to look at my company and say, "Why do people walk away from my product? Why?"
Journalism works. And the story about what happened in Point Reyes proves it.

OJR: Well, not to get too metaphysical about all this, but one of the things that struck me about this story is that David Mitchell makes his decisions based on news value rather than on what focus groups are telling him. His mission is to serve the community rather than figure out ways to swindle them out of as much money as possible.
Cauthorn: The other reality is that, particularly with small-market papers, these people are aligned with their readers because they are part of their community. The practice of modern journalism, at anything from a mid-size market up, takes place over the telephone. Newsrooms and editors have done everything possible to insulate themselves from the public, which is why they have focus groups.
I'll tell you what. If you have your ass on the street where it belongs, you don't need a focus group. Simple as that. And the reality is that Point Reyes proves it. Of course your instincts are right if you're aligned with your readers. And if you're aligned with your readers, your circulation grows. Simple as that.

OJR: One thing that comes to mind is the first President Bush, when he went to the supermarket and was just stunned by the scanner. He looked at it in utter amazement, and the rest of the country looked at him and knew in that instant that he had absolutely no clue what their day-to-day lives were like.
Cauthorn: Right. Modern journalism as it's practiced, the companies that conduct modern journalism right now – they're the problem. It is incredibly removed from the life of the community around it. It is insular, it takes place over the phone. It does not pay attention to reader habits. The fear – I always laugh at this – you talk to newsroom people about the news that people want to read and they say, "Well, we will just be pandering then." As if being aligned with your reader is wrong. Not only that, but newspapers in their glory days – at the height of the power of modern journalism, in the 60s and 70s, when newspapers really made a goddamn difference – their circulation was exploding. And trust me, people who were reading about civil rights stories and Vietnam and women's rights – these people were not reading fluff stories, you know?
The assumption that if you align yourself with your readers – somehow or another you're dumbing down – means that you think your readers are dumb. That's the inescapable result of that logic. And it's wrong! Our readers aren't dumb. Our readers are great.
You know what's fascinating – compare the log files of say 10 newspapers, compare what they've read, and take shovelware sites so make it as positive as possible for the newspaper. But compare with what was read with what was put on the front page. As a measure of how aligned the editors are with their readers. Because if the editors are aligned with their readers every story on the front page will at least be a top five story. Or at least in the top 10.
I guarantee you that if you were to study this, most of the stories in the top 10 would not be one of the stories on the front page. Because we're not aligned with our readers. We've got this wonderful daily focus group with real readers called the Weblog, but newspapers are afraid to see what's in them. They don't want to know. They don't want to know what the most popular stories are. It's terrifying to them. Because it means that their news judgment might not be right.

OJR: Well, the argument goes that that will contain only the Michael Jackson story or the two-headed cat story or something about a porno star.
Cauthorn: Yeah, right, that's the argument. Let me take a second to refute that. As one of the guys who launched one of the first five papers on the Web, I've been looking at log files longer than anybody. And I look at them every single day. And the fact of the matter is that the reading public is smart. The reading public is a helluva lot smarter than you think. And yes, invariably two of the top 10 stories are the type of thing that someone would say are celebrity news or pandering or something like that. And guess what? What's wrong with that? If that's what readers want, great. Serve the reader.
But the rest of them are stories of significance. The rest of them are stories of interest. The point is that if someone launches that argument … they say, "Well if we give them what they want … ." Well, look at what you just said, Mr. Editor. If we give readers what they want, it'll be a bad product. And they're saying that the readers are stupid.
You know what? These readers should abandon these editors. These readers should run in the other direction. Because these editors have no interest in serving the reader.

OJR: A barely concealed contempt for the audience?
Cauthorn: It's not concealed at all. It's overt. The irony of it is that the largest circulation growth happened when we were writing really tough stories. It happened when journalists, in a country that was segregated, were writing stories about civil rights. These were stories of great gravity. And that was the largest period of growth in newspaper circulation. The fact of the matter is that readers want newspapers of consequence, they absolutely do.
Yes, they also want more trash. Who doesn't? Everybody reads that. There's nothing wrong with that. It just has to be part of the mix. The problem is that newspapers today don't realize they need to have a complicated mix of content for their audience.
Looping back to Point Reyes, what you see there, and I do think there is a metaphysical story in there – not metaphysical as in magical – but deeply emotionally compelling. And that's why I'm delighted that you're bringing this story to light. Because what this tells you in no uncertain terms, with a kind of heat and passion that I wish existed in the normal newsroom, that our public wants us to succeed.
Our public wants us to survive. Our public wants us to thrive. Our public wants newspapers that matter. Our public is leaving us because we are chasing them away with a stick.
Point Reyes proves it. I love it when I hear these puffed-up editors standing up talking about big-J Journalism. When they don't know a thing about growing readership. When they haven't brought a reader in through honest means in a decade. And they're going to tell me about big-J journalism? Why don't we talk about journalism period. Journalism that matters, that vibrates through a community.

OJR: Well, what Dave Mitchell was talking about was the importance of having a point of view. An informed point of view, yes, one that gives each side its say and doesn't pretend to this false objectivity. And that's what makes papers relevant.
Cauthorn: The mistake people are making is that they say that the reason people are leaving newspapers is because they just want a different distribution mechanism. Well, that's nonsense. They were leaving newspapers for 15 years before the Internet arrived. They're leaving newspapers because newspapers don't matter to them. And if you look at any market where innovative new news products have been introduced, particularly in Europe, you'll find that people flock back to print. This isn't a media choice.
Certainly people love digital media. They love it for different reasons, though. The simple fact is that they're walking away from papers because it doesn't work from an editorial standpoint.
The argument that someone is leaving newspapers because of lifestyle choices and the Internet is like somebody making steam engines in the 1940s saying, that "Hey, we're making the right product, it's just that lifestyles have changed." No. Why don't you make a different goddamn product.

OJR: The problem is that everyone seems to be married to whatever consultant took their money last, looking for a magic bullet, one little solution that they can stick in and then they don't have to worry.
Cauthorn: The reason they're looking for a magic bullet is that we're talking about a class of newspaper person – primarily the executive class, who are a bunch of people who inherited a monopoly and have done a terrible job of managing that monopoly. The only people who've done a worse job of managing a monopoly are the Telcos. These are not creative people; these are not people used to creating things.
These people follow each other like lemmings. The existing belief has nothing to do with creativity. They don't value creativity; they don't value controversial thinking.
Somebody like me scares and enrages these people. When what they should be doing, is that they should be saying, now give me some of that mojo.
Of course they're frightened of this. They just wish the world would go away. They're the guys with the steam engine, going "Well, steam cars are still good in many ways. They still have a valuable role. We'll sell three this year."

OJR: Look! We put a new handle on it!
Cauthorn: Yeah, "Look! We're moving away from wooden rims!"
OJR: I see a lot of parallels between the movie and television industry and newspapers.
Cauthorn: The challenge on that is that there's more than an economic argument to be made for movies. By the time I take my family out, it's more than 60 bucks. And that's not like buying a 50 cent newspaper. And when all you have to do is buy a DVD, because of the quality of home theaters, if you track – this might be something you could do for OJR – the sales of home theater equipment and the release volumes of DVDs and plot that against audience sizes, you'll find that the lines crossed a while ago. As quality home theater experience gets better, people … . 50 cents is not such a barrier to entry, and Christ, because there are so many specials out there, you can get newspapers for a couple of pennies a day, right? In most markets. This 50 cents is not such a big part of our disposable income.
Nobody's going to say, "Oh I'm going to log in so I can get it so I don't have to pay for it." People are going to the Web for their news for other reasons. They want to control their information consumption, they want things packaged differently, they want a different media experience, they don't like the hierarchical thinking.
I mean, part of the problem is the hierarchical thinking at traditional newspapers. They don't want to be exposed to that, there's a lot more entry points in digital media – there's a whole bunch of other reasons for that. It has nothing to do with the cost. The idea that somehow or other we're going to get people to pay for content is also hallucinogenic.
Here's an interesting thing that Peak Media is trying to do – group them together and maybe get people to pay for content that way – but content per se, Christ, the cost of a newspaper has never deferred the content. Never in any meaningful way. Not for the last 55 years.

OJR: Are weeklies going to have to move to the Web?
Cauthorn: No, they won't have to. They want to. But they won't necessarily have to put all their product up on the Web. The weeklies and small market papers have got significant mojo. This is good stuff and this is the soul of journalism. I sometimes wish we could transplant some of that thinking to metro markets because, I tell ya, we'd get a lot better newspapers if we did. The reality is that yes, if weeklies were to go to shovelware models of delivery, they would have problems on their hands. However, there are real interest plays in journalism that weeklies can engage in. It has to do with blogs, citizen journalism, being the host and the focus for that. Use your weekly newspaper brand to be the focus for a very compelling kind of on-line experiences that don't duplicate print behavior.
Part of my mantra about how to build on-line newspapers, because I think our on-line papers are built just as badly as our print products, is that you need to not try to duplicate the print experience. You need to try to do something different. Then you have the best of both worlds. Then you don't hurt your circulation as much in print – well, a small percentage will move from print to online. But a lot of people will find that they have a use for both if you build your product right.
Weekly newspapers are a wonderful experiment for that. Now let's imagine what an online newspaper would look like if we didn't just repurpose our existing content. If we invited new comment from the community, we focused on community calendars. Things that would be of value each day between the publication of the newspaper.
Let the community speak on those days between your publishing dates, and then you have your piece in print on Friday. I think this would be really interesting, because then you have a really dynamic model where you're flowing readers back and forth between print and online.
The kind of thing that we could do be doing in metro markets, but that would require – oh my God – creative thought.

OJR: Can the Web help a newspaper become this place that David Mitchell talks about, where a community comes together to work out the issues that matter to it?
Cauthorn: Well, the Web can certainly enter into this. The heartening message, the reason that everybody, when you write this story, should have it pinned to their chest, frankly, is that this should remind everybody that our public gives a damn. While the newsroom may have contempt for the public, well, guess what?
The public doesn't have contempt for us. If we make the right product, they'll fight for us. They will fight savagely for us. They will fight for a free press, you know? Well, if we stop embedding reporters – nudge nudge. They will fight for a free press, they will fight for a free newspaper even if they disagree with the newspaper sometimes.

OJR: Well, that's what happened in Point Reyes, where some of the biggest critics of the paper came forward and said, "Look, we just can't let you go under."
Cauthorn: What's fascinating is that – look at that in light of what I said earlier about pandering and making a newspaper be what the readers want. Our public is telling us, "Man, you make a newspaper that we care about and we'll fight for it." That's what's so beautiful about this. I wish we could see this all over. Now, interestingly enough, in San Francisco we had a fascinating development in the last year. The SF Examiner that had fallen into utter disrepute. It was just a mouthpiece for just an extreme political interest. They have focused on just serving San Francisco very aggressively, they're giving it away for free as a tabloid, and it's making a mark now. On a daily basis, it's beating the San Francisco Chronicle on San Francisco news. With a staff of six reporters. It's growing rapidly, and everywhere you go, you see people reading the Examiner. It's fascinating to see how well a newspaper does when it tries to align itself with its community. And it's reaping the benefit.
The Point Reyes experience holds up. If a newspaper honestly says throw out the focus groups and ask why aren't people fighting for us? Why aren't people wrestling to get that paper every day? Could that mean perhaps there is a problem with the product? Maybe we have to re-think our product? Not more graphics, but change the content model.
We're very comfortable talking about business models, but let's talk about content models. What we need to talk about is looking at a paper in a new way … to break things down so the print piece is this and the online piece is that, and they're not the fucking same thing. You know? We need to be creative and attack this in a brand-new way.
Because newspapers have got, and Point Reyes proves it, newspapers have got a really exciting future. If they address the product. If not, then BusinessWeek is right. But again the BusinessWeek distinction has to be drawn. The people who make the product now are wrong. That doesn't mean that the concept of newspapers is over.
When Detroit was losing to the Japanese, nobody ever said, "Well, cars are wrong." They said the product is wrong. Why isn't anybody looking at papers and saying that it's not the concept of newspapers is wrong – it's the product that these companies are making that is wrong.

OJR: To continue with your automotive metaphor, you can look at GM, which basically got addicted to making huge profits off their SUVs and is now in a dead end, and Chrysler, which unleashed their creative people and built cars that people want to buy.
Cauthorn: Exactly. Just think what's going to happen when online people start to redesign newspapers. And trust me, that's going to happen. Because of what they've learned. The online folks, they're the rebels within the newsroom by definition anyway. And they've paying very close attention to what readers have done. Their religion – if you read online, where someone is one click away from making another choice – your religion is knowing what your reader wants. If it's not, you're in big trouble.
The fact of the matter is that the idea that our best online people are not running newspapers right now is shocking to me. Because if you want to reward success, look at the people are succeeding. Get some of that mojo in the rest of your operation.
OJR: OK, how about the concept that by delivering a story the Point Reyes way, by dragging it out in the soap opera model – is that something that can be translated elsewhere, that can get traction?
Cauthorn: Well, this goes back to my whole concept of content modeling. The reality is that there is narrative structure from one day to the next in stories. What we do in a typical newspaper is that … we spend more time rehashing the previous day's events rather than actually providing news. Now for a weekly, the rules are slightly different because a lot has happened in that previous week, so there is a narrative skein to be unraveled. But clearly in an online context, people really do want a genuine narrative to take place. The narrative structure in this world is slightly different though because it is a hyperlinked world.
OJR: So you can have context. To find out what's gone before – it can be only a click away.
Cauthorn: Exactly, I mean how you bundle together your previous coverage really matters. It can be very enriching. But in my experience, people very seldom actually go back and read online – well, let's say we have a 10 part series – people very seldom go back and read the previous day's parts, even if they enter for the first time on part number eight. This is an interesting thing that I haven't quite gotten my head around.
This intrigues me. This whole question of how narratives are spun online. I've played with it in a lot of ways. What I think is happening is that people are afraid to follow the previous coverage in a series online because they don't know how much of an investment of time they're making. I think if there's a visual reference – because you can't tell someone until they click that a story is 70 inches long. However, if you turn a page, you can see, "Oh geez, I don't have the time to get into that."
This is a real formal concern of the media itself. Doing fairly sophisticated long narratives online is still a real challenge. I don't think anybody's really cracked the nut yet on how to do that. It's a real interesting area. It's one of the things I've come back to time and time again. You have to really have that whole package there. But this is where print excels, one of the areas that print can continue to own, going forward.
OJR: What are the prospects for weeklies and small town papers?
Cauthorn: Other newspapers think that this is a strength that is unique to small towns. And that's not the case. Most of our metro areas consist of a collection of small towns. Are cities are smaller than we think they are, you know. You have a historic example in the Orange County Register, where a paper said, "We're going to cover this entity known as Orange County." And it was not until the 1970s as a distinctive entity – it was series of small towns. Newspapers today can create the concept of significant regional differences that therefore have their own interests and therefore have their own coverage and therefore have eager readers – if they were to do it. If they were to go down that road.
The problem with zoning has been that it's always been undertaken as a circulation exercise rather than as a journalism exercise.

OJR: To crush any competition that might try to spring up.
Cauthorn: Yeah.
OJR: Anything else to add?
Cauthorn: Yeah, there's these small weeklies within communities which are very interesting. Here in SF we have 14 neighborhood newspapers. And these are intriguing. They're all profitable. They write about stuff the metros don't pay any attention to. They've all got this significant niche. If you look at them and the alternative weeklies, which of course grab the young audience, you really have to start to ask yourself if we're not misunderstanding today's metro market as a series of small towns basically strung like pearls. That leads to some interesting questions about how a dominant daily would play into that. But these look like small town newspapers for all intents and purposes. They talk to advertisers that nobody else talks to you. You can learn about a school bake sale.
OJR: Like in Point Reyes, where there's an environmental law that could cost every homeowner there $60,000 to re-do their sewage system. You tell that to a homeowner... .
Cauthorn: You're relevant. That's right, you're relevant. They'll buy you next week. See, this is the point to drive home about Point Reyes, is that every newspaper leader in America and every journalist in America should be paying close attention to what happened there. Because there's a message for everybody. There's a very powerful moral for everybody and it should be viewed as an opportunity to renew our compact with our audience. A compact that we've walked away from over generations.
And the message here – and it is a "It's a Wonderful Life" kind of moment – the message here is that our readers are waiting for us to come back home.
We're the ones who have strayed. It's not the readers who are straying from us.
It's us who have strayed from our readers.
That's why Point Reyes is incredibly important story, because this tells you that all the things that those of us who love newspapers hope is the case, that people really do love us – are true. And it really is true also that what we've done right now is look at ourselves in the mirror and say, "OK, we've failed the very people who want to fight for us. We can turn around and fix this. Come on. Let's go. Let's go save newspapers."
Somehow or other, I don't think Tony Ridder is going to listen to me on that, do you think?
Wait until September hits. Oh my god. The Baltimore numbers which are down 11 and 15 percent for daily and Sunday, you're going to see that across the country. You're going to see a bunch of papers that are down 8, 9, 10 percent.
We gotta start firing editors. We have to at some point or other face the fact that the circulation numbers are down because nobody wants to read this fucking product. Make it the product we want, and we'll read it.

OJR: Make it be relevant.
Cauthorn: That's right. This is not a complicated business.


lunes, septiembre 25, 2006

Pequeñas audiencias Masivas

El artículo de Chris Anderson, editor de la Wired, ha sido uno de las más visitados en la historia de los medios de comunicación online. Long Tail después de transformó en libro y su éxito creció. Qué Pasa lo publicó hace una semana y creo vale la pena darle una mirada a un texto que no deja dudas sobre el triunfo de las audiencias, especialmente de los consumidores no masivos. Hace un tiempo que la revista editada por Enrique Mujica está tocando estos temas, lo que se agradece.

Por Chris Anderson
En 1988, Joe Simpson, un montañista británico, escribió Tocando el Vacío, un relato sobre su experiencia de estar al borde de la muerte en los Andes peruanos. Obtuvo buenas críticas, pero un éxito modesto y pronto cayó en el olvido. Una década más tarde, ocurrió algo extraño: Jon Krakauer escribió Mal de Altura, otra novela no-ficción sobre una tragedia de montañismo -en este caso, en el Everest-, la cual se convirtió en sensación editorial.
Pero de pronto, el olvidado Tocando el Vacío comenzó a vender.Random House se apresuró en sacar una nueva edición para satisfacer la demanda. Las librerías lo promocionaron en las estanterías junto a Mal de Altura y las ventas siguieron creciendo. Una edición revisada se mantuvo 14 semanas en la lista de best sellers del New York Times. IFC Films lanzó un docudrama del relato, que obtuvo la aclamación de la crítica. Actualmente, Tocando el Vacío vende más del doble que Mal de Altura.
Todo fue obra de las recomendaciones de Amazon.com. El software de la librería online advirtió patrones en los comportamientos de compra y sugirió a los lectores que les había gustado Mal de Altura que también disfrutarían Tocando el Vacío. La gente lo aceptó y escribió elogiosas reseñas. Hubo más ventas, más recomendaciones y más feedback positivo de los usuarios.
Cuando llegó a las estanterías el libro de Krakauer, el de Simpson estaba casi agotado. Hace unos pocos años, los lectores de Krakauer nunca se habrían enterado de Simpson, y si ello hubiese ocurrido, no habrían podido encontrar el libro. Amazon cambió todo aquello.Creó el fenómeno de Tocando el Vacío al combinar un ilimitado espacio de estanterías con información en tiempo real acerca de las tendencias de compra.
Pero esto no es sólo una virtud de las librerías online: es un ejemplo más de un modelo económico totalmente nuevo para la industria de la entretención y de los medios de comunicación, un modelo que recién está comenzando a mostrar su poder. La selección ilimitada está revelando verdades acerca de qué es lo que desean los consumidores y cómo quieren obtenerlo, a través de diversos sitios online: desde DVD en Netflix, a videos musicales en Yahoo! Launch, hasta canciones en iTunes Music Store y Rhapsody. La gente se sumerge en los catálogos online, bucea en las listas de títulos disponibles, mucho más amplias que las de Blockbuster Video, Tower Records y Barnes & Noble. Y mientras más encuentran, más es lo que les agrada. A medida que se apartan de los típicos éxitos de ventas, descubren que su gusto no es el mayoritario.
Un análisis de las ventas y tendencias de estos servicios muestra que la emergente economía digital del entretenimiento será radicalmente diferente a la actual. Si la industria de la entretención del siglo XX estuvo enfocada en los "éxitos", la del siglo XXI lo estará en los "fracasos".
Durante demasiado tiempo hemos sufrido la tiranía del precio del denominador común más bajo, hemos sido sometidos a éxitos de taquilla descerebrados y al pop prefabricado. ¿Por qué? Por la economía. Muchos de nuestros supuestos sobre el gusto popular son producto de un deficiente calce entre oferta y demanda.
El problema principal es que vivimos en un mundo físico y, hasta hace muy poco, ése también era el problema de la mayoría de los medios, porque dicho mundo impone dos limitaciones dramáticas:
1) La necesidad de encontrar audiencias locales. Una sala de cine promedio no exhibirá una película a menos que pueda atraer a unas 1.500 personas, durante dos semanas; ello equivale al arriendo de pantalla. Una disquería necesita vender al menos dos copias de un CD al año, para que valga la pena; eso equivale al alquiler de media pulgada de espacio de estantería. Y lo mismo vale para las tiendas de arriendo de DVD, juegos de video, librerías y quioscos de diarios. En todos estos casos, los minoristas sólo trabajarán con contenidos que puedan generar la suficiente demanda para ganarse su sustento. Pero sólo se puede recurrir a una población local limitada, quizás un radio de 10 millas para una sala de cine, menos que eso para una tienda de música y menos aún (una o dos millas) para una de arriendo de videos.
Pero eso no basta para que un excelente documental tenga una audiencia nacional de medio millón de personas. Hay mucho entretenimiento de calidad que no puede superar la valla. Un ejemplo impactante es la situación de Bollywood en EE.UU. Cada año, la industria fílmica de India produce más de 800 estrenos. Existen cerca de 1.700.000 indios en EE.UU. Sin embargo, la cinta en lengua india mejor listada (según Amazon), Lagaan: Once Upon a Time in India, fue estrenada en apenas dos salas. Es la tiranía del espacio físico.
2) La otra restricción del mundo físico es la física en sí misma.El espectro radial sólo permite transportar un número limitado de estaciones; así como el cable coaxial, uno limitado de canales de TV. Además, sólo se cuenta con 24 horas de programación diarias.
En materia de entretención, el siglo pasado brindó una sencilla solución para estas restricciones. Los éxitos llenan las salas, vacían las estanterías y mantienen a los auditores y espectadores alejados de los diales y del zapping. Pero somos muchos los que deseamos algo más que éxitos. En algún momento, el gusto personal se aparta del mayoritario, y a medida que exploramos más alternativas, nos sentimos más atraídos.
La economía impulsada por los éxitos es la creación de una era que no tiene suficiente espacio para brindarles a todos de todo.No hay suficiente espacio en estanterías para todos los CD, DVD y juegos que se producen. No hay suficientes salas para exhibir todas las películas disponibles. No hay suficientes canales para transmitir todos los programas televisivos, no hay suficientes ondas radiales para tocar la música grabada, y no hay suficientes horas al día para aprovechar al máximo cada una de estas opciones.
Este es un mundo de escasez. Pero con la distribución y retail online estamos entrando en un mundo de abundancia. Y las diferencias son profundas.
Es el caso de Robbie Vann-Adib, gerente general de Ecast, una compañía de máquinas de discos digitales, cuyos equipos para bares ofrecen más de 150 mil canciones, y aportan estadísticas sorprendentes. Da pistas sobre ello con una pregunta que los visitantes responden invariablemente en forma errada: "¿Cuál es el porcentaje de los 10 mil títulos top en cualquier tienda online (Netflix, iTunes, Amazon) que será arrendado o vendido al menos una vez al mes?".
La mayoría dice que 20%, y por una buena razón: hemos sido entrenados para pensar de esa manera. La regla de 80/20, también conocida como el principio de Pareto (por Vilfredo Pareto, un economista italiano, quien creó el concepto en 1906), está en todo. Sólo el 20% de las películas de los principales estudios será un éxito.Lo mismo vale para los programas de TV, de radio, los juegos y los libros. Las posibilidades son incluso peores para los CD: menos del 10% son rentables, según la Recording Industry Association of America.
Pero la respuesta correcta, dice Vann-Adib, es 99%. Existe demanda para prácticamente cada una de las 10 mil grabaciones top. Él lo ve en las estadísticas de sus propias máquinas: todos los meses, miles de personas gastan sus monedas para escuchar canciones que no están incluidas en las máquinas tradicionales.
Las personas responden mal a la pregunta de Vann-Adib porque va contra el sentido común. Al menos en dos formas:
1) Nos olvidamos de que la regla del 20% en la industria del entretenimiento vale para los éxitos, pero no para cualquier tipo de venta. Estamos atrapados en una mentalidad determinada por los éxitos: creemos que si algo no lo es, no generará ganancias y, por ende, no retornará el costo de su producción. En otras palabras, suponemos que sólo merecen existir los éxitos. Pero Vann-Adib, al igual que los ejecutivos de iTunes, Amazon y Netflix, ha descubierto que los "fracasos" también generan dinero. Además, como existen tantos de ellos, ese dinero puede convertirse en un inmenso pozo.
Sin tener que pagar espacio de estantería y, en el caso de servicios completamente digitales como iTunes, sin costos de fabricación y casi sin tarifas de distribución, la venta de "fracasos" es sólo otra venta, con los mismos márgenes de un éxito. Un éxito y un fracaso se basan en la demanda, ambos valen igualmente la pena de ser usados. De pronto, la popularidad ya no tiene el monopolio de la rentabilidad.
2) La industria tiene una pobre noción acerca de qué desea la gente. Por ejemplo, suponemos que existe poca demanda por las cosas que no son ofrecidas por Wal-Mart. Pero por muy igualitario que parezca Wal-Mart, en realidad es tremendamente elitista.Tiene que vender al menos 100 mil copias de un CD para cubrir sus gastos minoristas y obtener suficientes ganancias; pero menos del 1% de los CD obtiene ese volumen. ¿Qué pasa con las 60 mil personas que desearían comprar el último álbum de Fountains of Wayne o de Crystal Method, o cualquier título que se aparte del gusto mayoritario? Tienen que buscarlos en otro lugar. Solemos igualar mercado masivo con calidad, cuando en realidad aquel se trata de familiaridad y publicidad ingeniosa.
Para tener un sentido de los gustos reales, sin pasar por el filtro censor de la economía de la escasez, es cosa de ver Rhapsody, un servicio de música online basado en suscripciones (RealNetworks es el dueño), que actualmente ofrece más de 735.000 canciones.Si se ven sus estadísticas mensuales, se obtiene una curva de demanda que se parece mucho a la de cualquier disquería. Ésta muestra un enorme atractivo por las canciones top, la que luego se reduce y deja una "larga cola" -o long tail (ver recuadro)tratándose de las menos populares. Pero algo realmente interesante ocurre cuando se explora debajo de las 40.000 canciones top, que corresponden al inventario de una tienda musical offline promedio.
En este caso, los Wal-Mart del mundo real se van a cero. Sin embargo, la demanda en Rhapsody se mantiene. No sólo se descarga cada una de las 100.000 canciones top al menos una vez al mes, sino que lo mismo vale para los top 200.000, los top 300.000 y los top 400.000. A medida que Rhapsody agrega canciones a su catálogo, éstas encuentran una audiencia, aunque sólo sean unas cuantas personas al mes.
Se puede encontrar de todo en esta "larga cola o long tail".Existe un catálogo de álbumes antiguos que todavía son recordados con cariño por fanáticos de siempre o que son redescubiertos por otros nuevos. Existen grabaciones en vivo, lados B, y covers.Existen miles de nichos, género tras género: imagine a Tower Records enteramente dedicada a las bandas de los '80 o al sonido ambient. Imposible.
Por cierto, hay un montón de basura. Pero también la hay escondida en los álbumes de éxito. Las personas tienen que saltárselas en los CD. Pero en el mundo online es más fácil evitarlas. A diferencia de un CD, en el que cada canción basura vale cerca de un décimo de un álbum de US$15, cuando son online están en algún servidor, ignoradas por un mercado que sólo vende canciones individuales.
Lo que realmente impresiona de esta "larga cola o long tail" es su tamaño. Si se suman los no éxitos que están en ella, se obtiene un mercado mayor que el de los éxitos. Por ejemplo, en el caso editorial, un local promedio de Barnes & Noble cuenta con 130 mil títulos. Sin embargo, más de la mitad de las ventas de libros de Amazon corresponde a aquellos textos que no están entre sus 130 mil top. Considere las consecuencias: si las estadísticas de Amazon sirven de guía, el mercado de libros que no se vende en las librerías offline es mayor que el mercado que sí se vende en ellas. En otras palabras, el mercado editorial potencial podría ser el doble de lo que aparenta, siempre y cuando se pudiera superar la economía de la escasez. El capitalista de riesgo y ex consultor Kevin Laws lo explica: "Existe más dinero en las ventas más pequeñas".
Lo mismo vale para los demás negocios del entretenimiento. Basta con comparar las empresas online con las offline: un Blockbuster promedio tiene 3 mil DVD. Sin embargo, sólo el 20% de los arriendos de Netflix.com está dentro de sus 3 mil títulos top. Mensualmente, en Rhapsody se descargan más canciones fuera de sus top 10 mil que dentro de esa lista.
Lo que están haciendo las empresas más exitosas en internet es agregar, de una forma u otra, la "larga cola o long tail". Por ejemplo, la mayor parte de los ingresos de Google proviene de pequeños avisadores. Al superar las limitaciones de la geografía y de escala, Rhapsody y Amazon, Google y eBay han descubierto nuevos mercados.
Las compañías que están en la vanguardia aportan tres grandes lecciones. Se les podría llamar "las reglas de la nueva economía de la entretención":

Regla Nº 1: Que todo esté disponible
Si usted es amante de los documentales, entonces Blockbuster no es el lugar apropiado. Sí lo es Netflix.com que ofrece más de mil cintas de este género. Esto le ha dado un fuerte empuje al negocio de los documentales; el año pasado, Netflix representó la mitad de los ingresos por arriendo de Capturing the Friedmans, un testimonial acerca de una familia aproblemada por acusaciones de pedofilia.
El gerente general de Netflix, Reed Hastings, un admirador de los documentales, llevó su influencia a PBS, la cual produjo Daughter From Danang, una cinta acerca de los hijos de soldados estadounidenses y mujeres vietnamitas. En 2002, fue nominada al Oscar y elegida el mejor documental en Sundance, pero PBS no tenía planes de estrenarla en DVD. Hastings ofreció hacerse cargo de la fabricación y distribución, si PBS acordaba que fuera una exclusiva de Netflix. Ahora, Daughter From Danang está entre los 15 documentales top de Netflix. Ello equivale a un mercado de decenas de miles de clientes que de otro modo no existiría.
Son muchos los géneros y subgéneros de igual atractivo que son omitidos por los canales de DVD tradicionales: películas extranjeras, animé, filmes independientes, dramas de la televisión británica o antiguas series estadounidenses. Sólo las cintas de Bollywood suman cerca de 100 mil arriendos al mes para Netflix. La disponibilidad de títulos poco convencionales atrae a nuevos consumidores: cualquier cosa que baje los costos de adquirir clientes es oro para las empresas que basan su modelo en la suscripción.
Netflix ha hecho un buen negocio a partir de todo lo que no es rentable para las salas de cine y las tiendas de arriendo de videos. No importa si los miles de clientes que alquilan todos los meses los episodios de Doctor Who están en una sola ciudad o diseminados a lo largo del país: para Netflix se trata de lo mismo. En resumen, rompió la tiranía del espacio físico. Lo importante no es dónde están los clientes, ni cuántos buscan un título en particular: lo vital es que existan unos cuantos en alguna parte.
Es decir, vale la pena ofrecer prácticamente de todo, ya que siempre habrá compradores. Lo opuesto a como piensa hoy la industria del entretenimiento: la decisión de lanzar un filme antiguo en DVD se basa en estimaciones de demanda y en oportunidades de marketing, como aniversarios o premios. Esto explica por qué sólo una fracción de las películas existentes están en DVD.
En 2004, por ejemplo, cerca de 6 mil filmes fueron enviados al Sundance Film Festival. De ellos, 255 fueron aceptados y apenas 24 fueron elegidos para ser distribuidos; para ver el resto había que estar allí. ¿Por qué no lanzar los 255 en DVD cada año, como parte de una Serie Sundance? En esta nueva economía es más caro evaluar que lanzar.
Esto también se aplica a los libros. Ya se está borrando la línea entre títulos disponibles y agotados. Amazon ha logrado que encontrar un libro de segunda mano sea casi tan fácil como hallar uno nuevo.Si ello se combina con los bajos costos de las tecnologías de impresión, parece claro por qué cualquier libro debería estar siempre disponible. De hecho, se puede apostar que los niños de hoy crecerán sin haber conocido el concepto de agotado.

Regla Nº 2: Bajar el precio a la mitad y después seguir bajándolo.
Gracias al éxito de iTunes de Apple, tenemos un precio estándar para las canciones que se descargan de la red: 99 centavos. Pero, ¿es el costo correcto?
Si les preguntamos a los sellos, responderán que es muy bajo: aunque 99 centavos por canción es más o menos el mismo precio que el de un CD, la mayoría de los consumidores online compra una o dos pistas de un álbum, en vez del CD completo. En efecto, la música online está viviendo un retorno al negocio de los 50, que era impulsado por la venta de singles. Así, desde la perspectiva de un sello, los consumidores deberían pagar más por el privilegio de adquirir "à la carte", para compensar los ingresos perdidos de los álbumes completos.
Si se les pregunta a los consumidores, en tanto, éstos dirán que 99 centavos es muy caro. Para los que recién se integran a este tipo de compras, el precio representa 99 centavos más que Kazaa. Pero dejando de lado la piratería, la cifra de 99 centavos viola nuestro sentido innato de justicia económica: si para un sello de grabaciones cuesta menos entregar una canción online (no tiene empaquetamiento, ni fabricación, distribución o espacio de estanterías), ¿por qué el precio no es también más bajo?
Sorprende que haya habido pocos buenos análisis económicos acerca de cuál debería ser el costo correcto de la música online. La razón principal es que los precios no son fijados en la actualidad por el mercado, sino que por el cuasi cartel de los sellos musicales.Las compañías de grabación cobran un precio mayorista de 65 centavos por canción, dejándoles a los minoristas online poco espacio para experimentar.
Ese valor mayorista es fijado para que calce con el precio de los CD, para evitar los temidos "conflictos de canal". Los sellos temen que si fijan precios más bajos para la música online, sus minoristas de CD (la mayor parte del negocio) se rebelarán o, probablemente, se retirarán mucho más rápido de lo que ya está sucediendo.
¿Pero qué pasa si los sellos dejan de jugar a la defensiva? Una renovada mirada debería calcular lo que realmente cuesta colocar una canción en un servidor de iTunes, para luego ajustar el precio.Los resultados son sorprendentes.
Es cosa de eliminar los costos innecesarios del canal minorista: gastos de fabricación del CD, distribución y ventas. Eso deja en pie sólo los costos de encontrar, producir y comercializar la música. Hay que mantenerlos tal cual, para asegurar que la gente del lado creativo y de los sellos gane tanto como ahora.En el caso de un álbum que vende 300.000 copias, los costos creativos equivalen a US$ 7.50 por disco, o 60 centavos por canción. A ello hay que agregar los costos de entregar la música online, que equivale al gasto para levantar y mantener el servicio, más que a los costos de banda ancha y almacenamiento. El precio de ello: cerca de 17 centavos por canción. Según este cálculo, la música de éxito tiene un sobreprecio de 25% en el mundo online: debería costar sólo 79 centavos por pista, reflejando los ahorros de la entrega digital.
Precios de acuerdo a los costos digitales, no a los físicos.Estas excelentes noticias para los consumidores no tienen por qué dañar a la industria. Cuando se bajan los precios, las persones tienden a comprar más. El año pasado, Rhapsody hizo un experimento de demanda elástica. Durante un período breve, ofreció canciones a 99 centavos, a 79 centavos y a 49 centavos. Aunque las de 49 centavos sólo valían la mitad que las de 99 centavos, Rhapsody vendió tres veces más que éstas.
Como las empresas de grabación cobran 65 centavos por pista -Rhapsody además pagó otros 8 centavos por derechos de autor-, la compañía perdió dinero. Sin embargo, buena parte del contenido de la "larga cola o long tail" es material antiguo que ya ha recuperado la inversión: música de bandas que tuvieron bajos costos de grabación, o grabaciones en vivo.
¿Qué deberían hacer los sellos? La respuesta surge al examinar la psicología del consumidor de música. La elección que enfrentan los fanáticos no es cuántas canciones comprar en iTunes y Rhapsody, sino que cuántas canciones comprar en vez de descargarlas gratis de Kazaa u otras redes P2P. Intuitivamente, los consumidores saben que la música gratis no es realmente gratis: aparte de los riesgos legales, toma mucho tiempo juntar una colección.La calidad varía y un 30% de las pistas son de algún modo u otro defectuosas. Y lo que es cierto para la música es doblemente cierto para las películas y juegos, en los que la calidad de los productos pirateados puede ser aún más lúgubre, en los que los virus son un riesgo y en los que las descargas toman mucho más tiempo.
#Regla Nº 3: Ayúdame a encontrarlo
En 1997, un emprendedor llamado Michael Robertson inició lo que se atisbaba como un negocio long tail. Llamado MP3.com, éste permitía que todos pusieran archivos musicales en la red, los que estarían disponibles para cualquier usuario. La idea era que el servicio se saltara a los sellos, permitiendo a los artistas conectarse directamente con los auditores. Las ganancias de MP3.com vendrían de las tarifas que se les cobraría a las bandas por promocionar su música en el sitio.
Dejando de lado el hecho de que mucha gente utilizó el sitio para colocar y compartir pistas comerciales -lo que condujo a los sellos a demandar a MP3.com-, el modelo no cumplió con su propósito. Las bandas emergentes no encontraron audiencias nuevas.De hecho, MP3.com se ganó la fama de ser lo que en realidad era: un intrascendente acopio de música, por lo general mala.
El problema con MP3.com fue que no tenía acuerdos de licencias con los sellos para ofrecer música comercial. Por lo tanto, no existía ningún punto de entrada conocido para los consumidores, desde el cual se pudiera comenzar a explorar lo desconocido.
Ofrecer solamente éxitos tampoco ayuda. Es cosa de pensar en los servicios de video bajo demanda de las empresas de cable.O en Movielink, el servicio de descarga de video manejado por los grandes estudios. Debido al control de los proveedores y los altos costos, mantienen contenidos limitados: apenas unos cuantos cientos de estrenos recientes.
Por el contrario, el éxito de Netflix, Amazon y de los servicios de música online demuestra que se necesitan ambos extremos de la curva: los éxitos populares y también "la larga cola o long tail". Los éxitos siguen siendo importantes para atraer a los consumidores. Las grandes empresas "long tail" pueden posteriormente guiar a los consumidores, siguiendo los perfiles de sus gustos y aversiones, facilitando su exploración hacia lo desconocido.
Por ejemplo, Rhapsody incluye a Britney Spears. Junto a las listas de sus álbumes hay links a "artistas similares". Entre ellos está Pink. Si se hace click y lo que escucha es de su agrado, se puede hacer lo mismo con los artistas similares a Pink, como, por ejemplo, No Doubt. Y en la página de No Doubt, la lista presenta a "sus bandas inspiradoras", entre las que está Selecter, un grupo ska de los '80. Con tres clicks, Rhapsody podría haber animado a un fan de Britney Spears a escuchar un álbum de Selecter que difícilmente se puede encontrar en una disquería.
Ésta es la diferencia entre empujar y atraer. Para la industria del entretenimiento, las recomendaciones online son una forma de marketing notablemente eficiente, que permite a los filmes y a la música menos masivos encontrar una audiencia. Para los consumidores, una recomendación online fomenta la exploración y puede reanimar la pasión por las películas y la música, creando un mercado mucho mayor (el cliente promedio de Netflix arrienda siete videos al mes, tres veces más que la tasa de las tiendas tradicionales). Además, el beneficio cultural de todo esto es mayor diversidad, terminando con la tiranía de los éxitos. Ese es el poder de la "larga cola o long tail". Y su tiempo ha llegado.l


viernes, septiembre 15, 2006

Google Vs Microsoft

Este no es un artículo nuevo. Lo publicó The Economist en mayo pasado, pero creo que es importante tenerlo en cuenta. Más allá que Google y Microsoft son medios y compiten con los medios por avisaje y por audiencias, esta disputa puede dar luces sobre el comportamiento de la industria en los próximos años. Además, este artículo es más clarificador que uno pulicado recientemente en este blog. Es un texto largo, pero vale la pena.

The Economist
MATHEMATICALLY confident drivers stuck in the usual jam on highway 101 through Silicon Valley were recently able to pass time contemplating a billboard that read: “{first 10-digit prime found in consecutive digits of e}.com.” The number in question, 7427466391, is a sequence that starts at the 101st digit of e, a constant that is the base of the natural logarithm. The select few who worked this out and made it to the right website then encountered a “harder” riddle. Solving it led to another web page where they were finally invited to submit their curriculum vitae.
If a billboard can capture the soul of a company, this one did, because the anonymous advertiser was Google, whose main product is the world's most popular internet search engine. With its presumptuous humour, its mathematical obsessions, its easy, arrogant belief that it is the natural home for geniuses, the billboard spoke of a company that thinks it has taken its rightful place as the leader of the technology industry, a position occupied for the past 15 years by Microsoft.

In tone, the billboard was “googley”, as the firm's employees like to say. That adjective, says one spokeswoman, evokes a “humble, cosmopolitan, different, toned-down” classiness. A good demonstration of googley-ness came in the speeches at a conference in Las Vegas this year. Whereas the bosses of other technology companies welcomed the audience into the auditorium with flashing lights and blasting rock music, Google played Bach's Brandenburg Concerto Number Three and had a thought puzzle waiting on every seat. The billboard was also googley in that, like Google's home page, it had visual simplicity that belied the sophistication of its content. To outsiders, however, googley-ness often implies audacious ambition, a missionary calling to improve the world and the equation of nerdiness with virtue.
The main symptom of this, prominently displayed on the billboard, is a deification of mathematics.
Google constantly leaves numerical puns and riddles for those who care to look in the right places. When it filed the regulatory documents for its stockmarket listing in 2004, it said that it planned to raise $2,718,281,828, which is $e billion to the nearest dollar. A year later, it filed again to sell another batch of shares—precisely 14,159,265, which represents the first eight digits after the decimal in the number pi (3.14159265).
The mathematics comes from the founders, Sergey Brin and Larry Page. The Russian-born Mr Brin is the son of a professor of statistics and probability and a mother who works at NASA; Mr Page is the son of two computer-science teachers. The breakthrough that made their search engine so popular was the realisation that the chaos of the internet had an implicit mathematical order. By counting, weighting and calculating the link structures between web pages, Messrs Page and Brin were able to return search results more relevant than those of any other search engine.
So far, they have maintained this superiority. Danny Sullivan, the editor of Search Engine Watch, an online industry newsletter, ranks Google as the best search engine, Yahoo! as second-best, Ask (the re-named Ask Jeeves) third, and Microsoft's MSN last among the big four. Google's share of searches has gone up almost every month of the past year. Including those on AOL, an internet portal that uses Google's search technology, Google had half of all searches in March. Excluding AOL, the figure was 43%. This is why people “google”—rather than, say, “yahoo”—their driving directions, dates and recipes.

Mathematical prowess is also behind the other half of Google's success: its ability to turn all those searches into money. Unlike software companies such as Microsoft which get most of their revenues from licence fees, Google is primarily an advertising agency. It does not sell the usual sort of advertising, in which an advertiser places a display on a page and pays per thousand visitor “impressions” (views): it has perfected the more efficient genre of “pay-per-click” advertising. It places little text advertisements (“sponsored links”) on a page in an order determined by auction among the advertisers. But these advertisers pay only once an internet user actually clicks on their links (thereby expressing an interest in buying). This works best on the pages of search results, which account for over half of the firm's revenues, because the users' keywords allow Google to place relevant advertisements on the page. But it also works on other web pages, such as blogs or newspaper articles, that sign up to be part of Google's “network”.
The world brain
These two interlocking “engines”—the search algorithms coupled with the advertising algorithms—are the motor that powers Google's growth in revenues ($6.1 billion last year) and profits ($1.5 billion), as well as its $117 billion market capitalisation. Its horsepower is the reason why Andy Bechtolsheim, Google's first investor (as well as a co-founder of Sun Microsystems, a big computer-maker) still holds on to all his shares in the firm. It's all about advertisers “bidding up the keywords” in Google's auctions, he says. “How far this thing could go, nobody can say.”
Since its stockmarket debut, however, Google has been adding new and often quite different products to this twin engine. It now owns Picasa, which makes software to edit digital photos on computers; Orkut, a social-networking site popular mainly in Brazil; and Blogger, which lets people start an online journal. It also offers free software for instant-messaging and internet telephony, for searching on the desktop computers of users, for (virtually) flying around the Earth, for keeping computers free of viruses, for uploading and sharing videos, and for creating web pages. It has a free e-mail program and calendar. It recently bought a firm called Writely, which lets people create and save text documents (much as Microsoft's Word does) online rather than on their own computers. Google is also scanning books in several large libraries to make them searchable. It is preparing to offer free wireless internet access in San Francisco and perhaps other cities, and dabbling in radio advertising. And that is only the start of a long list.
Whether these are arbitrary distractions or not depends on one's point of view. For Messrs Brin and Page, they make mathematical sense. Mr Brin (“the strategy guy”) has calculated that Google's engineers should spend 70% of their time on core products (ie, the search and advertising engines), 20% on relevant but tangential products, and 10% on wild fun that might or might not lead to a product. The result is that lots of tiny teams are working on all sorts of projects, the most promising ones of which end up on the prestigious “top 100” list that Mr Page (“the product guy”) spends a lot of his time on. Most of the items on that list in theory have something to do with Google's mission, which is “to organise the world's information”. Scanning and indexing books, for instance, brings offline information online.
The outside world increasingly sees it differently. Among Google fans, the company has come to epitomise the more mature (ie, post-bust) internet generation, which goes by the marketing cliché “Web 2.0” (see article). In this context, it is assumed to be working on absolutely everything simultaneously, and every new product announcement, no matter how trivial, is greeted as a tiny step toward an eventual world-changing transformation.
At a minimum, this hypothetical transformation would consist of moving computation and data off people's personal computers and on to the network—ie, Google's servers. Other names for this scenario are the “GDrive” or the “Google grid” that the company is allegedly working on, meaning free (but ultimately advertising-supported) copious online storage and possibly free internet access. Free storage threatens Microsoft, because its software dominates personal computers rather than the internet; free access threatens other internet-access providers.
At a maximum, the transformation goes quite a bit further. George Dyson, a futurist who has spent time at Google, thinks that the company ultimately intends to link all these digital synapses created by its users into what H.G. Wells, a British science-fiction writer, once called the “world brain”. Google, Mr Dyson thinks, wants to fulfil the geeks' dream of creating “artificial intelligence”. Passing the so-called “Turing test”, created by Alan Turing, a British mathematician, to determine whether a machine can be said to be able to think, would be the ultimate reward.
From primes to share prices
But many who deal with Google in their daily lives are getting fed up with such grandiose notions. Google's shares, after nearly quintupling since they began trading, have fallen in recent months. Pip Coburn, an investment strategist, says that “Google was a simple story at one point: online ads on top of the most popular search mechanism on the planet. Simple. But now it is pretty much a mess and to get the stock going again, the company may need to work on its own simplicity so as to match the simplicity of the Google home page itself.”
Mr Sullivan of Search Engine Watch says Google has become distracted. “Oh, give me a break,” he wrote in his blog after yet another product announcement. “A break from Google going in yet another direction when there is so much stuff they haven't finished, gotten right or need to fix.” He points to a rule in Google's corporate philosophy that “it's best to do one thing really, really well,” and suggests that the company is “doing 100 different things rather than one thing really, really well.”
Google is thus starting to look a bit as Microsoft did a decade ago, with one strength (Windows for Microsoft, search for Google) and a string of mediocre “me-too” products. Google Video, for instance, was supposed to become an online marketplace for video clips, both personal and business, but has been overtaken by YouTube, a start-up that is a few months old but already has four times as much video traffic. Google News, where the stories are, characteristically, chosen by mathematical algorithms rather than by editors, perennially lags behind Yahoo! News, with its old-fashioned human touch. Google's instant-messaging software is tiny compared with AOL's, Yahoo!'s and MSN's.
Google is beginning to resemble the old Microsoft in another way, too. A decade ago, Microsoft stood accused of stifling innovation, because entrepreneurs would stay away from any area of technology in which it showed any interest. Google, whose slogan is “Don't be evil”, hates this comparison and wants to think of itself as ventilating rather than stifling the ecosystem of developers and entrepreneurs. “I don't see how they can say that,” says an entrepreneur and competitor who is too afraid of unspecified consequences to speak on the record. Like most of Silicon Valley these days, he finds Google's slogan ridiculous, because “we're not evil either, we just don't go around saying it.”
Entrepreneurs like him are getting annoyed by Google's seemingly endless “betas”, also known as “technical previews”, when new products are not yet officially launched but available, ostensibly for testing and review. Traditionally, beta reviews were meant to last weeks or months and were targeted at testers who would find and report bugs. Google seems to use betas as dogs sprinkle trees—so that rivals know where it is. Google News recently graduated out of its beta after about four years.
In fairness, Google's role today is more complex than Microsoft's was in the 1990s, when start-ups often hoped to “exit” by listing their shares on the stockmarket, and were occasionally expunged by Microsoft before they got there. Today, start-ups (such as Writely, Picasa, Orkut and Urchin) often use Google (or the other internet titans) as the exit, selling themselves to the big guy. It works for individuals too. Paul Rademacher is a software engineer who last year came up with a clever way of combining Google's interactive maps with other websites. Google hired him.
To Google's initial surprise and subsequent chagrin (is it not enough to vow never to be evil?), it alienates more groups of people as it enters more areas of modern life. It appeared to be genuinely taken aback that some book publishers oppose its plan to scan their books and make them searchable. Google also seemed surprised when privacy advocates voiced concerns over its practice of placing advertisements in contextually related e-mail messages on its webmail service, and again this year when it announced a Chinese version that censors the search results.
Slowly, the company is realising that it is so important that it may not be able to control the ramifications of its own actions. “As more and more data builds up in the company's disk farms,” says Edward Felten, an expert on computer privacy at Princeton University, “the temptation to be evil only increases. Even if the company itself stays non-evil, its data trove will be a massive temptation for others to do evil.” In a world of rogue employees, intruders and accidents, he says, Google could be “one or two privacy disasters away from becoming just another internet company”.
Such concerns are forcing Messrs Brin and Page, still in their early 30s, and Eric Schmidt, whom they hired as chief executive and who is in his early 50s, to behave increasingly like a “normal” company. Google recently sent its first lobbyists to Washington, DC. Its decision to build an “evil scale” to help it devise its China strategy was more unusual, but its hiring of Al Gore, a former American vice-president, to aid the process, was just the kind of thing that old-fashioned empire-building firms do all the time.
Other companies are reacting in traditional ways to Google's dominance. Former rivals, such as eBay, Yahoo! and Microsoft, are exploring alliances to counter its influence. When Microsoft tried to buy AOL from its parent, Time Warner, Google's Mr Schmidt flew in for talks that led to Google taking a defensive stake in AOL, thus keeping it out of Microsoft's and Yahoo!'s reach. In response, Microsoft has contemplated buying all or part of Yahoo!, and has recently announced a vague but large increase in research spending which amounts to an arms race. Google is now alleging that Microsoft is unfairly steering users of its web browser to MSN for searches, and is preparing to dispatch lawyers to keep Microsoft in check.
Google thus finds itself at a defining moment. There are plenty of people within the company who want it to play the power game. “The folks who are closest to Larry and Sergey are very, very worried about Microsoft, as well they should be,” says John Battelle, the author of a blog and a book on Google. Yet the company's founders themselves may not be prepared to drop their idealism and their faith in their own mathematical genius. They have always wanted to succeed by being good and doing good. “Never once did we consider buying a big company,” says David Krane, Google's 84th employee, by way of example. It would not be googley. It would, he says, be “yuck”.


jueves, septiembre 14, 2006

Los editores y los 10 años de Internet

La columna de Steve Outing, publicada en Editor Publisher, es una interesante reflexión sobre la reflexión. Internet ya cumplió una década y más y es bueno que los editores de los medios tradicionales se pregunten sobre cómo hemos hechos las cosas. Es conocido que el NYT tiene de cabezas a los suyos para que incorporen el concepto de diálogo con sus lectores. Outing es colaborador del Poyter Institute y una persona dedica a pensar desde el interior de la industria.

Por Steve Outing
In the world of "new media," it's safe to say I'm an "old geezer." I left the print journalism world for good at the end of 1993 and switched my career to online media. One of the first things I did back then was start an Internet e-mail discussion list for the then still small group of media people who were starting to work -- or were at least interested in -- this new thing called the Internet and the then-prevalent proprietary online services.

The list was (and still is) called Online-News, and it grew to be the primary place for online news junkies to talk to each other, bounce ideas off colleagues, and gripe about how most other people in their organizations failed to understand the importance of the online world. (There was also a companion discussion list called Online-Newspapers, which was limited to participation by newspaper people working or interested in online.)

Anyway, recently my mind was diverted back to Online-News' early days when another online geezer, Howard Owens, asked if I had archives of the list's discussions in its first few years. The earliest days of the conversation weren't properly archived, and all I found in my files were some piecemeal archives on old disks. But that didn't deter Owens, and he searched a bit more on the Web and found some Online-News archives from 10 years ago.

Excellent! ... So, I thought it would be entertaining -- and I hoped, informative -- to look back at some of the industry chatter from the mid 1990s. I've perused some of the archives that Owens unearthed, and this column will look at what we talked about then with the benefit of 20/20 hindsight.

'Smart ads' -- what a concept!

How amusing, through 2006 eyes, to read a discussion about the novel concept of targeting online advertising based on the content of news articles! The conventional wisdom a decade ago was that such a notion of linking ad and editorial content was fraught with ethical problems.

But wrote one Online-News participant, "If Yahoo! and the rest can run ads that pop up when a search reveals certain pages, then newspapers should be able to." (Early on, Online-News attracted media people willing to think outside of the box.)

That most newspaper people resisted such notions -- as shown by the mid-1990s discussions on this topic -- is a telling demonstration that even then, pure-play Internet companies were leading the way with innovative ideas, while the newspaper industry wasted time fretting about ideas that challenged "the way we've always done it."

Of course, contextual advertising is now a multi-billion-dollar business -- and much of the money spent on search and contextual ads was taken away from newspapers. With hindsight, newspapers early on should have jumped on the idea of "smart ads" that were relevant to the specific content of a page.

If there's a lesson for today, it's to free up your media company from old ways of doing things -- to permit new ways of doing business and practicing journalism that directly challenge the status quo. "Citizen journalism" (a.k.a., user-generated content) is perhaps today's similar and biggest challenge to traditional media thinking. Many traditional journalists think that content from "the audience" is a silly idea, and that what news organizations will get by opening themselves up to user content is "a bunch of crap." (I'm paraphrasing journalists who I've argued with on this point.)

My prediction is that another 10 years out, we'll see that media has incorporated citizen media with mainstream journalism, and journalism as a whole will be better for it. And most of those traditional journalists who argue against the worth of citizen media today will be won over. But I expect that history will show how mainstream news companies lagged while other Internet companies ran with the concept and figured out how to make it pay.

The widening job description

I hit upon a conversation in the Online-News archive about the wisdom of asking reporters to code their stories in HTML. That was in the days before everyone had content management systems that eliminate the need for writers to know even basic HTML coding. Concern back then was that reporters were good at only writing and reporting, and it was perhaps unreasonable to expect them to add new skills like learning rudimentary HTML. It would distract them from their core task, the argument went.

What a laugh! While today's news reporters generally don't need to know HTML, their journalistic repertoire has by necessity expanded considerably in the last decade. Today's reporters ideally should be comfortable not just with writing, but also be able to record digital audio, perhaps shoot some video, collect material for multimedia versions of their stories or for supplemental content that's published online, etc. They can be expected to participate in online chats with readers occasionally. They are expected to write instant news alerts for their organization's website.

Reporters in 2006 are more versatile than it seemed we gave them credit for in 1996.

Our content vs. theirs: What's more important?

An interesting 1995 discussion on the list dealt with an issue that's been long running on Online-News: newspapers using online as merely a more modern distribution channel for traditional news, vs. newspapers taking an approach of emphasizing things like interactive discussion groups and getting the audience to participate. In one thread, a majority of participants supported the continued domination of "plain old information content" presented in new ways (online) and utilizing new technology. A typical comment: "I think providing high-quality content will be the critical service, just like it is when we smear ink on dead logs."

The minority view came from people like Rosalind Resnick, then editor and publisher of a newsletter called Interactive Publishing Alert. She wrote on Online-News: "To me, the incredible thing about the Net is that now the reader *is* the publisher, and amateurs ... are just as likely to succeed in Internet publishing as the New York Times. Or does the newspaper industry arrogantly believe that it can control content of every kind?"

It's interesting that back then, most newspaper people still hadn't grasped that while online indeed does make for a powerful publishing medium for traditional journalistic content, it's even more powerful in its ability to empower non-journalists to communicate what they know to a wide audience and to enable communication between "the people" and other people, and between the people and journalists.

That's something that 11 years later I still think many journalists don't get. When I hear from some traditional journalists that what they produce is superior to blogs and citizen journalism, I just shake my head. That thinking is "so 1995." Just as the work of professional journalists will continue to record and make history, so too -- on occasion -- will amateur bloggers and eyewitness amateur reporters.

If you contemplate recent headlines about the newspaper industry -- with investors revolting, readership flat or declining, and advertising migrating more and more to the Internet -- it's no wonder things are looking bad. The industry continues to be largely stuck inside its box labeled "professional journalism" while going way too slow in implementing participative and interactive models that allow the audience to take express themselves.

Don't get me wrong; in the last 10 years the newspaper industry has come a long, long way. But while websites like MySpace have attracted tens of millions of active users, the best the newspaper industry has done so far are experiments in something similar like the localized version of MySpace by the Bakersfield Californian, Bakotopia. Newspapers are still dabbling, in large part, while others build substantial businesses.

(Well, yes, MySpace is now owned by a newspaper publisher, Rupert Murdoch. And that indeed may be the model we see from the newspaper industry from here out: If newspapers can't manage to build innovative and successful online services themselves, they'll just have to buy out the innovative thinkers outside of the industry.)

History lessons

How many times in your life have you heard the phrase, "Those who forget the past are destined to repeat it"? The thing that's so striking in looking at what industry insiders were talking about 10 years ago is that the same issues repeat themselves with whatever new thing comes along.

Some of today's "threats" to the established ways of newspapers include citizen media (Backfence.com), social networking (MySpace, et al) and free classifieds (Craigslist). I certainly see movement in the newspaper industry in responding to each of these areas, but there's not big movement.

It doesn't seem to me that we've come far enough along as an industry to make a smooth transition from the old news business models to the new ones that will need to supplant those revenue streams that are beginning to dry up. Today's discussions within the industry have some similarities to those of a decade ago.

A nostalgic list

Lastly, if you want to get nostaligic with me, take a look at this list of online news activities from early 1995. I stumbled on it via Google search. It's a long report I compiled back then, documenting the online activities of the newspaper industry.

This was back in the days before newspaper companies settle on the World Wide Web as the ultimate online publishing venue. You'll find a long list of papers with presences on proprietary online services like America Online, CompuServe, Delphi, Prodigy, and even a bunch of papers still operating online BBS's (bulletin board systems) -- as well as the then-fledgling Web.


martes, septiembre 12, 2006

Un Semestre para Internet

Este es un estudio bastante clarificador. Lo realizó TNS Media Intelligent y entrega señales claras sobre el desempeño de la publicidad en EE.UU. Son cifras duras, sin el análisis posterior de otros artículos publicados en este sitio. Pero es interesante ver que Internet sigue liderando el crecimiento y como los diarios locales han mantenido una rebanada no despreciable a pesar de las dudas sobre el sector. Este estudio -y otros- debieran ser parte del ejercicio de muchos publicistas que aún creen que el punto de venta supera en todos los sentidos a internet.

Total advertising expenditures in the first six months of 2006 increased 4.1 percent to $73.0 billion as compared to the prior year period, according to data released today by TNS Media Intelligence, the leading provider of strategic advertising and marketing information.
“Coming off a 5.3 percent gain in the first quarter that was aided by the Winter Olympics, the growth in total ad spending for the second quarter fell back more than expected and finished at 2.9 percent,” said Steven Fredericks, president and CEO of TNS Media Intelligence. “Pro-forma monthly expenditures, excluding the stimulus of special events such as the Olympics and World Cup, have been tracking steadily within a range of a 2 to 4 percent increase. Third and fourth quarter political spending will be incremental to this base, helping total year performance.”

Ad Spending By Media
Spanish Language Media, paced by an enormous surge in June ad spending associated with the World Cup event, rose 20.5 percent to $2.40 billion. Internet display advertising, riding five consecutive quarters of double-digit growth, rose 18.9 percent to $4.69 billion for the half-year.

Expenditures on Network TV advanced 5.7 percent in the first half to $12.28 billion. Excluding February, when the Winter Olympics were telecast, the medium was up 1.2 percent for the remainder of the first half. Consumer Magazines encountered softening demand during the second quarter and finished the half year with a 4.4 percent increase in spending, to $10.90 billion.

Local Newspapers, confronted with over $600 million in reduced automotive spending year-to-date, saw total expenditures erode by 3.9 percent to $11.65 billion. Radio media also lagged, down a combined 1.4 percent to an aggregate of $5.26 billion.

Advertising Spending by Media: First Half 2006 vs. First Half 20051

MEDIA Jan-June 2006/ Charge

NETWORK TV $12,277.3 / 5.7%
NEWSPAPERS (LOCAL) $11,645.2/ -3.9%
CABLE TV $8,142.1/2.6%
SPOT TV $7,691.8/4.8%
INTERNET $4,692.0/18.9%
LOCAL RADIO $3,554.3/-1.5%
B-TO-B MAGAZINES $2,181.9/-1.1%
OUTDOOR $1,832.7/8.2%
NATIONAL SPOT RADIO $1,226.0/-1.4%
NETWORK RADIO $484.1/-0.6%
LOCAL MAGAZINES $226.3/10.6%
TOTAL $72,977.9

Share of Spending By Media
The Internet continues to grow its share of total advertising expenditures. For the first half of 2006, the Internet accounted for 6.4 percent of total ad spending, up from 5.6 percent a year ago. Newspapers lost 1.3 share points over this period, slipping to 18.6 percent of expenditures and falling behind magazines

Share of Advertising Spending by Media: First Half 2006 vs. First Half 20058

MEDIA TYPE Jan-June 2006 Jan-June 2005
TELEVISION 44.3% 43.7%
MAGAZINES 19.6% 19.6%
NEWSPAPERS 18.6% 19.9%
RADIO 7.2% 7.6%
INTERNET 6.4% 5.6%
ALL OTHER 3.8% 3.5%
TOTAL 100.0% 100.0%

The top 10 advertisers in the first half of 2006 spent $9.29 billion, 0.6 percent less than the prior year period. Extending outwards to the top 50 advertisers, a group that accounts for one-third of total ad spending, expenditures fell 1.0 percent. Beyond the top 50, outlays advanced a healthy 6.8 percent, continuing a recent trend of middle-tier spenders lifting the overall ad market.

Procter & Gamble strengthened its grip on the top spot with $1.60 billion in spending, up 8.0 percent versus last year. Telecommunication companies continued their vigorous spending with AT&T up 32.9 percent to $1.18 billion and Verizon Communications up 13.3 percent to $948 million. Toyota Motor Corporation entered the top 10 with expenditures of $636 million.

General Motors pared its budgets by over $270 million in the second quarter and finished the half year at $1.29 billion, a 17.4 percent decrease. Johnson & Johnson reduced its expenditures by 21.3 percent and has now cut spending in four consecutive quarters. Declines were also registered at Time Warner (-13.5 percent), Walt Disney (-7.5 percent) and News Corp. (-8.1 percent). At each of these companies, the reductions came primarily from the movie divisions.

The Telecommunications category maintained its top position with $4.70 billion in expenditures, up 16.6 percent. In addition to higher spending from AT&T and Verizon, aggressive marketing at Vonage and Deutsche Telekom also contributed to the gain.

Financial Services was the second largest category, growing 7.9 percent to $4.33 billion due to credit cards and investment brokers. Other categories posting strong results were Local Services & Amusements, up 11.8 percent to $4.26 billion, and Direct Response, up 7.4 percent to $3.16 billion.

Automotive, which occupied the top two spots in the rankings as recently as year end 2005, tumbled to the middle of the pack. Reductions were widespread among both factories and local dealers, pushing Foreign Auto advertising down 3.8 percent to $4.17 billion and Domestic Auto down 13.3 percent to $3.79 billion. Automotive advertising has declined in four consecutive quarters and the aggregate cutbacks during the past 12 months amount to $1.4 billion, or approximately 1 percent of total annual expenditures for all media.

Branded Entertainment
TNS Media Intelligence continuously monitors Branded Entertainment within network prime time and late night programming. The tracking identifies Brand Appearances and measures their duration and attributes. Given the short length of many Brand Appearances, duration is a more relevant metric than a count of occurrences for quantifying and comparing the gross amount of brand activity that viewers are potentially exposed to in the program versus in the commercial breaks.

In the second quarter of 2006, an average hour of prime time network programming contained 2 minutes, 51 seconds (2:51) of in-show Brand Appearances and 18:12 of commercial messages. The combined total of 21:03 of marketing content represents 35 percent of a prime time hour.

Unscripted reality programming had an average of 7:04 per hour of Brand Appearances as compared to just 1:41 per hour for scripted entertainment programming, such as sitcoms and dramas. Late night network talk shows continue to have even higher levels, averaging 12:17 minutes per hour. The combined load of Brand Appearances and paid commercial messages in these shows exceeds 35 minutes per hour.