In the post below, on Google standing up to China over its spying on dissidents and censorship, I note how Zeit Online calls Google a quasi-state — in a post under the headline “The Google Republic” — and Fallows says Google “broke diplomatic relations with China” as if Google were a nation.
What this says, of course, is that the internet is the New World and Google is its biggest colonizer: the sun never sets on Google.
It also says that on the internet, new states form across interests, ignoring borders. Those interests can be business — and we’ve seen what look like business-states before — but also causes, principles, and dangers (e.g., Al Qaeda). Interest-states will gain more power and that power will come from nations.
Just as what we’re seeing in the economy is more than a mere crisis — it is the shift from the industrial economy to what follows — similarly, in political structure, we are beginning to witness the emergence of new and competitive interest-states. In What Would Google Do?, I said this:
Whatever causes they take up, Generation G will be able to organize without organizations, as Shirky wrote in Here Comes Everybody. That ability to coalesce will have a profound destabilizing impact on institutions. We can organize bypassing governments, borders, political parties, companies, academic institutions, religious groups, and ethnic groups, inevitably reducing their power and hold on our lives. In an essay in Foreign Affairs in 2008, Richard Haass argued that the world structure is moving from bi- and unipolarity (i.e., the Cold War and its aftermath) to nonpolarity (i.e., no one’s in charge). We now operate in an open marketplace of influence. Google makes it possible to broadcast our interests and find, organize, and act in concert with others. One need no longer control institutions to control agendas. Haass chronicles the dilution of governments. Bloggers Umair Haque and Fred Wilson have written about the fall of the firm, and earlier I examined the idea that networks are becoming more efficient than corporations. In my blog, I follow the crumbling of the fourth estate, the press. One could debate the stature and power of the first estate, the church. What’s left? The internet is fueling the rise of the third estate—the rise of the people. That might bode anarchy except that the internet also brings the power to organize.
Our organization is ad hoc. We can find and take action with people of like interest, need, opinion, taste, background, and worldview anywhere in the world. I hope this could lead to a new growth in individual leadership: Online, you can accomplish what you want alone and you can gather a group to collaborate. Being out of power need not be an excuse or a bar from seeking power. That may encourage more involvement in communities and nations—witness the youth armies that gathered in Facebook around Barack Obama, a powerful lesson for a generation to have learned.
: MORE: Siva Vaidhyanathan responds (as part of a conversation between us in both this post and the one below):
My book plays this in a slightly different way: The Internet has enough diverse interests and players that it demands governance. No traditional state is in the position or willing to assume that role. So Google governs the Internet.
One could read this showdown (as I do) as a classic international power conflict between a major traditional state and a new, virtual state: the Googlenet.
Google is taking a risky stand to defend the Internet generally. This is what a weaker, threatened state would do.
Two things strike me about News Corp.’s battle to get cable fees:
(1) Again and again lately, the company is surrendering the advertising battle. In newspapers, it is saying that advertising won’t support its high costs and so it will sacrifice traffic and advertising the hopes of building build pay walls. In MySpace, the company handed over its advertising fate to Google and then couldn’t produce. Now in TV — which is where Murdoch fils says the future of the company lies — they’re trying to eke fees from cable operators.
(Under must-carry rules, a station can demand premium placement — which would benefit audience and advertising — or can demand a fee, but the cable company can decline to pay and carry the station. That’s the stand-off occurring now.)
(2) News Corp. may succeed at getting fees from cable operators, but I predict that will raise prices for consumers as more and more fees are passed along; consumers will be further enraged that they have to spend money for bundles of channels they don’t want or watch; and that will give regulators the cause they need to demand a la carte pricing — which will end up hurting and likely killing second- and third-tier cable channels subsidized by bundles and wil hurt cable operators as they end up charging less.
Add to this the paper-tiger nature of News Corp. threat to take Fox stations off cable. Oh, no, they taunt on crawls across the screen, you won’t get American Idol. Except we will, online, on Hulu, co-owned by News Corp. For News Corp. knows that the value of its own stations as ad vehicles is diminishing as the value of internet distribution rises. And so then this story comes full circle as News Corp. will likely threaten to charge consumers on Hulu — again, a capitulation in the advertising model.
What we’re seeing is the disaggregation of another media form. We don’t buy albums; we buy singles. We don’t buy newspapers or magazines; we aggregate, curate, and link to the best stories we like, bypassing editors’ packaging. We don’t go to bookstores to get the books the system decides to put on the shelves; we buy what we want from Amazon. We listen to radio less and listen to our own playlists more (a trend that will only accelerate as we listen to new forms of radio on our phones). Now we will end up picking and choosing TV channels and even shows, diminishing the power network and station programmers’ and cable MSO’s hold over us.
At the highest level, what we’re seeing is the death of the mass audience — and the value of distribution — and the advertising model that supported it.
I don’t think advertising is dead. I think it’s dying for mass companies with high cost structures. Advertising will shrink, as Bob Garfield argues in the Chaos Scenario, and it will migrate to new media and new forms. News Corp. knows that; every media company finally does.
So I think we’re seeing News Corp. milk the dying cash cow. Newspapers aren’t going to grow and will shrivel and sometimes die. The value of local stations is only going to shrink. (MySpace was a mistake.) So News Corp. is begging for cash wherever it can get it — from readers online or viewers on cable (via cable companies’ billing) — no matter that there’s no strategy there.
On the latest This Week in Google, we talked about many of Google’s product announcements and enhancements and though none on its own was earthshattering, as we added them up, I started to see synchronicity approaching — all the moreso last night when TechCrunch reported that Google’s negotiating to buy Yelp.
I see a strategy emerging that has Google profoundly improve search by better anticipating our intent and then moving past search to build hegemony in local and mobile (which will come to mean the same thing).
Add up Google’s recent moves in local/mobile:
* Yelp would bring Google a scalable platform to get information and reviews about every local business using community. Yelp enhances Google’s place pages. Place pages enhance Google Maps. Google Maps are our pathway to local information on what we still mobile phones but will soon see as our constant connectivity devices.
* Google distributed 190,000 QR codes for local businesses to paste on their front windows. Take a picture of it and Google will give you information about the place (see: above). Businesses have another reason to advertise on and be found through Google and its business center.
* TechCrunch also speculates that we could use these QR codes to check in to Foursquare, Gowalla, et al. Local is social.
* Google Goggles goes the next step and lets you take a picture of a place — or object (or soon, person) — and use that as a search request to get local information — or leave it.
Thus Google becomes a doorway to the annotated world. Everyplace has information swirling around it; Google organizes it and motivates and enables us to create more information for it to organize (more on this idea of the annotated world in another post).
* Google’s reported phone is said to have a “weirdly large camera.” If that camera becomes a key to visual search, that makes sense, eh? That also gives us a better way to take more geo-tagged photos, which better annotates the world and gives Google more information to serve back to us.
* Google is trying to get better at recognizing speech to prepare for a voice-controlled (read: mobile) web world. That, say Chris Anderson and Tim O’Reilly, is why they give away GOOG411 for free: to learn our voices. And now note that Google is asking people to donate their voicemails to Google’s effort to improve its own transcription. Search will become visual and aural (read: mobile).
* Google Earth is coming to the cockpit of the new Audi, giving drivers rich geographic data about where they are and where they’re going.
* GoogleMaps on Android will now tell you what’s nearby.
* Let’s not forget that Google will make money on local — Eric Schmidt said on CNBC a year and a half ago that Google will eventually make more on mobile than the web (which, to me, doesn’t mean phones; it means our constantly on connection devices). This is why Google bought mobile ad leader AdMob for $750 million.
That’s mobile. Now look at some of its search enhancements to better intuit intent:
* Go to the Google home page. Start typing “Weather in Lon” and stop there. Google will not only suggest that you want weather in London, it will give you the forecast for London right there in the search box. You didn’t even finish typing in what you wanted to ask and Google gave you the answer without you even having to click and go to a site.
Google’s holy grail, they’ve long said, is to anticipate your intent. That explains, I think, some of Google’s other moves.
* Google DNS is supposed to speed up the web for you (speed is a big Google cause these days) but it also gives Google an invaluable source of data about web usage: who goes where when and before and after what sites looking for what. Now, your ISP knows that. But with DNS, Google could know that. It makes Google smarter about the web and its content as a whole, certainly, and so long as it is careful about privacy, it can enable Google to target to us better.
I see a day when search (like news) is no longer one size fits all. Search will be customized, personalized, and targeted to us and our contexts: who we are and where and when we are asking for something. This, I think, could mean the slow death of the dark art of SEO.
* How will Google get us to use its DNS? Well, I’ll bet it will be the default in computers equipped with Google Chrome OS. And I wouldn’t be surprised of the Google Chrome browser can provide some of this data to Google.
* Google launches social search. This creates more context and gives Google another clue to intent.
Now add back in all the mobile developments above. This gives Google more context to anticipate our intent.
But that’s not all. I’ve said for sometime that Google is behind in battles for the live and social web and was going to say here that it was bypassing those strategies to concentrate on mobile/local. But as I wrote the post, I saw more threads in both live and social.
* Google added Twitter to its search results. That’s pretty much a BFD. But it shows they’re trying to grapple with the live web. And that’s why there are never-ending rumors about Google buying Twitter.
* Wave is an important shift in the metaphor for content creation, making it collaborative (read: social) and live. Google added social tools to Google Docs. It make Docs a path to publishing (and being found via search) on the web. Creation itself is a social act once it enables us to connect.
* Add in the social bits above: Yelp is a community tool; QR codes and visual search will let us talk about places and things and find each other and meet; Foursquare and Gowalla make local social and Google could help them.
Last night, after the Yelp report, I tweeted this: “Yelp + GoogleMaps + StreetView + PlacePages + GOOG411 + Google Goggles + Android + AdSense = Google synchronicity”. Om Malik piped in: “@jeffjarvis I love your unrelenting belief in google. I think u need to start look at world in a non-search context.” But then I said – and others agreed: “I also think Google is starting to look at the world in a non-search context (i.e., local, live, mobile)”.
I believe that’s what we’re seeing here: the start of Google’s view of itself after search. Not that search will go away but it will become less important in the shifting mix of out rings of discovery. And if search is going to stay preeminent, it had better update itself profoundly.
: See also Gina Trapani’s excellent roundup of Google’s amazing 2009 developments.
: LATER: Kara Swisher says Google is also eying real-estate search Trulia.
Tweet: A tweet paraphrased my link-economy line and showed me I’ve been saying more than I thought I have. **
In Twitter today, one @rpaskin paraphrased something I’ve been saying – and said again in my talk at Web 2.0 Expo Tuesday (generously covered in that link by Aneta Hall). My line has been that in the link economy, value comes from the creator of the content and from the creator of a public (formerly known as an audience). That is, Rupert’s wrong with he says that Google takes content; it gives attention.
Anyway, @rpaskin tweeted this: “In a link economy, there are values from creating content and linking to content. There’s no value in just reproducing content (Jeff Jarvis).”
I didn’t say that exactly but I think it better expressed what I have been trying to say. Or at least it added a perspective and raised a fundamental and important question, namely:
Is there value anymore in reproducing content? Is the six-century-long reign of Guttenberg and the industries he created really over?
Wow. Maybe so. In my discussions of the link economy, I had been concentrating on explaining and defending the side of the value equation brought by Google, aggregators, blogger, Twitter, et al rather than on the loss of value brought to those who reproduced – rather than created – content. But in looking at the entire equation, what @rpaskin says stands to reason: There is no value left over for the copiers. Indeed, online, if one copies, one is considered a thief because it’s only the thieves who copy.
The problem is, of course, that it was through the making and selling of copies that monetary value was extracted and that is why it is so upsetting to those who did so that they can’t do it anymore. It’s upsetting that they don’t see other ways to recognize value. It’s what makes folks including Murdoch say silly things that betray ignorance about the workings of our new world.
I’m sure Rupert knows exactly how the scribes Guttenberg put out of business felt.
ALSO: Speaking of speaking of Murdoch, you can hear me doing so – along with Michael Wolf and Steven Brill – on Murdoch’s tilting against Google’s energy-efficient windmills.
** Once again, I’m experimenting with using tweets about posts as subheds summarizing those posts.
Tweet: How bankruptcy can help a newspaper get theah from heah. Don’t squander it. **
I fear that Tribune Company – and other newspaper companies – will come out of bankruptcy having squandered the opportunity it presents to rebuild from the ground up.
At the New Business Models for (Local) News Summit at CUNY last week, my friend and mentor Jim Willse, late of the Star-Ledger in New Jersey, asked us to create a model for an existing news organization to morph into what we proposed as the new structure. That’d be painful and thus controversial, I said, to which Willse – never one to mince words – responded, “No shit.”
Can they get theah from heah? I’m not sure. A company that employed more than a thousand workers may end up employing just a hundred as it gets rid of printing and distribution infrastructure – the barrier to entry that became a barrier to change. Those shut-down costs are tremendous (that’s where bankruptcy helps, though). The cultural shift for people who remain is huge (I have spoken with many newspaper and magazine folks lately who – like me – held out hope that it was possible … until they gave up and quit). The need to reinvent business methods and models is urgent. And in the end, if it all works, the new company will be much smaller, a fraction of its former size, which is hard for executives, analysts, and shareholders to swallow – but it’s profitable and thus sustainable and that has to be the ultimate goal.
To make this volcanic transformation, I say a newspaper must start by getting out of the printing business (as Dave Morgan argued at our CUNY conference last year). Oh, it may still print a product as long as enough advertisers and readers stick with it to make it profitable and as long as it is valuable to promote the the digital brand of the future. But print can no longer drive the business; it’s just not sustainable.
When the Ann Arbor News folded this summer and was replaced by its owners with an online, community-based site, they chose to continue publishing twice a week to continue distributing coupons, circulars, and ads; it is printed by another paper in the company. [Disclosure: I consulted on the project.] Similarly, in the UK, the Birmingham Post went online and went weekly in print. My reputation aside, I’m not religiously opposed to paper. But maintaining a printing business is no longer an advantage; it’s a burden. So I say get out of the business and outsource whatever printing you do.
What about distribution? Well, as the circulation of the paper dwindles to naught, its value as a delivery platform also falls – to the point that coupon companies and stores like Best Buy will have to find alternative means of distribution. I think there’s a nice, if transitional business there for someone. Should it still be the newspaper company? Well, I’d give the same advice that is given to every startup: concentrate on one thing and do it well, get rid of the rest. So I’d say the paper should – as many pretty much do today – outsource its distribution.
Ad sales? That’s perhaps the toughest transition. Classifieds aside (they’re permanently lost anyway), newspapers are built to sell mass metro audiences to large advertisers. Sales staffs don’t drum up new business so much as they manage existing lists. Those folks aren’t likely to be able to sell entirely new kinds of advertising highly targeted marketing help for whole new populations of smaller merchants who couldn’t afford the newspaper before. Beside, such a staff doesn’t scale when you have to sell to so many new customers in networks. Build-it-and-they-will-come automated platforms don’t work; advertising still must be sold. This is why, in our models, we projected new sales forces – citizen sales – arising to sell at a local level. So for our transforming paper, I’d build networks of local sites and local sales and keep just enough of the old people to sell the big, old accounts that remain – if they can be re-educated.
Marketing is all but gone. If this newly constituted service isn’t sold by its public – if that public doesn’t collaborate with it and feel an ownership stake – then it will fail.
Now for editorial: I’ve written often about the new roles journalists will take on. As the marginal cost of information in a community falls to zero – as the internet and its tool enable communities to share much or most of what they know and need to know – then the question for journalists is how they add value and fill in gaps with reporting at the core as well as curation, community organization, and training. In our models, we forecast almost as many journalists as worked in the old paper newsroom, but they work for – and often own – more than a hundred companies. The core of journalists working at the new news organization is smaller.
Bankruptcy enables a newspaper company to shed its past. It can get out of contracts and leases for paper, printing plants, delivery, trucks. It can also get out of labor contracts, reducing severance costs. That is terribly painful but I fear it is as inevitable as the end of the ITU (the typesetters’ union). It offers a one-time chance to rethink, reinvent, and rebuild the company for the future. Is it better to stretch out the pain and never get anywhere? And if tough decisions and actions are not made, the likelihood that the company will die and all will be lost only increases.
The Minneapolis Star-Tribune has already come out of bankruptcy but without such a radical transformation. It, like other news companies, is taking out bricks a few at a time rather than building a new kind of company. That’s the opportunity I fear other bankrupt newspapers – Tribune Company, the Philadelphia Inquirer, the Chicago Sun-Times – are squandering. The same can be said of other industries.
To take advantage of bankruptcy, a company has to have courage and bold visions of the future. Do newspaper companies? So far, we haven’t seen evidence of it. But it is possible.
** At Craig Newmark’s good suggestion, I am going to try to summarize posts – longer ones, at least – at the top. Old fart that I was, I at first thought of this as a UK-style subhed. But then I realize that the appropriate model is to put it in a tweet. So I’ll try that.
There’s been a swine flu of stupidity spreading about the Murdoch meme of blocking Google from indexing a site’s content (to which Google always replies that you’ve always been able to do that with robots.txt – so go ahead if you want). I love that The Reach Group (TRG), a German consulting company, has quantified just how damaging that would be to Google: hardly at all.
TRG took the content of the 1,000 domains controlled by the 148 German publishers that signed the so-called Hamburg Declaration (a veiled shot at Google) and analyzed how critical they are to Google search results. TRG asked the question: “How empty would the first 10 Google search results be if one could no longer find anything from the 148 German publishers?”
It’s quite another matter if Wikipedia were not there. It appears on 13% of first-page results. That is, one entity – Wikipedia – is on the treasured first page almost three times as often as all of Germany’s top publishers. How does one say this in German? Yow.
This chart shows that sites of the Hamburg Declaration publishers have 5% share of a position on the first page of search results:
This chart shows that Wikipedia has 13% share of the No. 1 position in search results:
TRG further notes that Wikipedia represents only 0.01% of pages in the Google index – vs. 4.01% for German publishers – yet even so, Wikipedia pages clearly get more clicks and links and thus, Googlejuice.
RELATED: Jason Calicanis fantasizes about Microsoft paying The New York Times to leave Google’s index for Bing. Let me explain why that would never happen. 1. The Times is not stupid. 2. Times subsidiary About.com – the only bright spot these days in the NYTimesCo’s P&L – gets 80% of its traffic and 50% of its revenue from Google. 3. See rule No. 1.
Michael Arrington then joined in the fantasy saying that News Corp. could change the balance by shifting to Bing, but ends his post with his own reality check: MySpace – increasingly a disaster in News Corp’s P&L – is attempting to negotiate its $300 million deal with Google.
Microsoft can suck up to European publishers all it wants – even adopting their ACAP “standard,” which no one in the search industry is saluting because, as Google often points out, it addresses the desires only of a small proportion of sites and it would end up aiding spammers – but it won’t make a damned bit of difference.
As Erick Schonfeld reports, also on TechCrunch, if WSJ.com turned off Google it would lose 25% of its web traffic. He quotes Hitwise, which says 15% comes from Google search, 12% from Google News – and 7% from Drudge (aggregator), and 2% from Real Clear Politics (aggregator). From HItwise:
But so what if News Corp does withdraw from Google? So what, indeed? Will other publishers join? No, they’ll celebrate the chance to grab more juice. If I saw any publishers pull out, I’d run at the chance to create topic pages to grab the little juice they have.
SEE ALSO: This analysis from The Internet Marketing Driver showing the importance of Google, Facebook, and Yahoo in driving audience to many sties. What they then do with that audience is then up to them. According to the imperatives of the link economy, it is up to he or she who gets the links to monetize them.
[Hat tip to friend Wolfgang Blau for twittering the TRG link. If I mistranslated, please corrected me.]
I have an op-ed in today’s Welt Kompakt newspaper in Germany giving my advice to a German mediasphere that I see becoming more protectionist. It’s not online (ironically) but so you can see the play, a PDF of it is here and here. [Update: Here's the piece online.] This is my original English text:
* * *
At the Müncher Medientage, I spoke to 500 German executives from my home in New York and dared to give them some advice about their fate. I urged them to learn these lessons from watching American news companies shrivel and die: Protectionism is no strategy for the future. Every company in every industry (especially media) must be reinvented for the post-Guttenberg age—for the Google era. And the only sane response to change is to embrace it and find the opportunity in it.
I have been impressed with the innovation and openness to change I have seen in German media: Axel Springer shifted a large proportion of its revenue to digital; Bild equipped Germans with video cameras to report news; Burda invested in the networks Glam.com and Science Blogs; Holtzbrinck innovated in its incubator; WAZ created a world pioneer in DerWesten.
But when the times got tough in the financial crisis, I suddenly saw German media looking for an enemy to blame for their problems. The head of the Deutscher Journalisten-Verband called for legislation to condemn Google as a monopoly, an enemy of the press. Dr. Hubert Burda, a digital visionary I greatly admire, urged that copyright law should be expanded to protect publishers, whom he said deserve a share of search engines’ revenue. Chancellor Merkel is considering such changes in copyright. A group of publishers issued the Hamburg Declaration saying that all online content need not be free (though that has always been completely in their control).
Schade. In these pronouncements, I hear echoes of American media’s funeral hymns. I see companies resisting the new reality of the internet age by trying to preserve the old rules of their old industry. Take, for example, Rupert Murdoch vowing to put all his news properties behind pay walls just because that’s how media used to operate—when that will only reduce audience, traffic, influence, and advertising just at the moment when growth is needed most. He is even threatened to block Google. That is simply suicidal.
Though I sympathize with media’s economic nostalgia, I must say that swimming upstream against the internet is futile. The better idea is to go with the flow of the internet, to see and exploit its opportunities.
Rather than fighting Google, learn lessons from it. Google understands the new economics of media. That is why it is successful—not because it exploits old media companies. Those old companies still operate in the content economy, begun 570 years by Guttenberg, in which the owner of content profited by selling multiple copies. Online, there needs to be only one copy of content and it is the links to it that bring it value. Content without links has no value. So when search engines, aggregators, bloggers, and Twitterers link to content, they are not stealing; they are giving the gift of attention and audience. Indeed, publishers should be grateful that Google does not charge them for the value of its links.
This link economy brings three imperatives for publishers. First, it requires them to make their content public if they want to be found. That is their choice, but if they retreat behind pay walls, hidden from search and links, they will not be discovered and they only create opportunities for new, free competitors. Second, the link economy demands specialization: Do what you do best and link to the rest. This specialization also brings a new efficiency that can make publishers more profitable. Third, in the link economy, it is the recipient of links who must exploit their value. That is still the publisher’s job.
Google has earned an estimated 30 percent of online ad revenue because it serves advertisers differently—and better. Here, too, Google understands a new economy, one based on abundance rather than scarcity. Publishers, even online, still sell scarcity as if the internet were print: only so many ad positions for so many eyeballs—what the market will bear. Google instead charges for clicks; it sells performance. Thus Google takes a share of the risk and that is what motivates it to place advertising all over the internet, to create more relevant positions for ads that will perform better for both the marketer and Google. That is why advertising has shifted to Google—not because it is enemy of the media but because advertisers prefer it. We call that competition.
The most important lesson to learn from Google is that it grew huge not by trying to acquire and control content on the internet, as publishers do. Google doesn’t want to own the internet, only to organize it. So Google created a platform that enables others to succeed with technology, content, promotion, and advertising revenue. That is Glam’s model, too, creating networks of hundreds of independent sites and then helping them succeed. I believe that platforms and networks will form the basis of the future of media—and much of the next economy.
At the City University of New York Graduate School of Journalism, where I teach, I am running the New Business Models for News Project, envisioning a profitable future for news if regional newspapers covering cities die. Though national news brands—whether this publication or the Guardian or The New York Times—have a future, regional newspapers across America and Europe are in trouble and some will die. Yet I am confident that journalism in those cities will not die, because there is a market demand for news, which we believe the market can meet.
We believe that news will emerge from ecosystems made up of many players—journalists, citizen journalists, citizen salespeople, volunteers, technologists—operating under different motives and means. Today, in America, we see hyperlocal bloggers earning $100-200,000 a year in advertising; these are real businesses. We see an opportunity to help them make more money by creating local, regional, and national advertising networks. We see the opportunity for a new newsroom to continue beat and investigative reporting and to work collaboratively with these networks. Without the cost of print and distribution, these new news organizations become smaller but profitable.
If you are trying to protect old jobs in old structures of old companies in old industries, then you might see my vision of the future as a threat. But if you embrace change and innovation, then you will see opportunities to reimagine and remake journalism, to find new ways to gather and share news collaboratively, supported by new revenue, reaching profitability thanks to new efficiencies.
Publishers will not get to that bright future by urging government to protect them from innovators and competitors. No, if we want anything from government, it should be universal broadband to encourage society’s migration to a digital economy, and a lack of regulation to assure a level playing field for innovation.
I hope that once the desperation of the current economic crisis subsides, my German media friends will not try to retreat to their old models but will instead continue to invent new ways and to again become leaders in innovation. That is the only sensible path to survival and success.
LATER: I should add disclosures that are also on my disclosures page. I was paid to come speak to editors at Axel Springer (publishers of Welt Kompakt), Burda (I’ve also spoken for their DLD conference), and Holtzbrinck.
Last week, I said that the future of news is entrepreneurial (not institutional). Today, a sequel: The future of business is in ecosystems (not conglomerates or industries).
At the Foursquare conference last week, I was struck by the miss-by-a-mile worldviews held by the chiefs of big, old conglomerates and the entrepreneurs starting new, nimble companies. The conference is off the record, so I won’t quote anyone by name. And in truth, these are the same conversations I hear often elsewhere. Having these different tribes conveniently in the same room merely focused the contrast for me.
In one moment, a very successful mogully man was slack-jawed in amazement at how little money – “$50,000!” – one of three entrepreneurs had used to start another fast-growing enterprise. The big man thinks big – that’s what made him big. The small guys think small and get big by using existing platforms and depending on their users to like and market them. To the new guys, it’s so obvious.
Here was the key moment for me last week: In a discussion about the importance of distribution, some start-up guys – each the creators of new enterprises that took off like gun shots – were asked by a representative of the big, old club which company they would most want to do distribution deals with. The start-up guys cocked their heads like confused puppies. Why would we want to do that? they asked. What was unsaid: Doing a deal with one company would be so limiting. We get our distribution through customers and developers, through embedding and APIs and social connections. That’s how we grew so big so fast for so little. Don’t you see that?
No, they don’t.
This week, we see this contrast, too, in Rupert Murdoch’s threat – he thinks it’s a threat – to cut off Google. Nose. Face. Cut. Spite. Murdoch – whodoesn’t use the internet – does not see how distribution works today. He does not understand that being open to the link economy brings him free distribution, free marketing, great benefit. That’s because he, like his fellow old machers, won by taking control rather than giving it up. This new world is utterly inside-out from the world they built. It breaks all their rules and makes new ones (which is what I tried to analyze in What Would Google Do?). That’s what makes it so damned hard for them to understand it.
In our New Business Models for News at CUNY, we saw quickly that a big, old newspaper company was not going to be replaced by a big, new newspaper company but that instead, news would come more and more from ecosystems made up of scores of companies operating under different means, motives, and models, each dependent on the others to optimize their success. That is why we built in networks that enable separate sites to join, creating critical mass they can sell to advertisers. That is also why we factored in the benefit of platforms, cutting their infrastructure costs to near-zero.
And there, I believe, is the structure of the future of business in the new, post-industrial, decentralized, opened economy. Oh, sure, every economy has always been an ecosystem made up of interdependent relationships. But they were based on zero-sum arithmetic: take and control so others cannot. They work at arm’s length. They negotiate every relationship.
Sure, even in the huggy ecosystem, companies fight and compete. But in an ecosystem-based economy, companies benefit – they find efficiency and growth – by working collaboratively. As I see it, the new economy and its opportunities will be built in three layers:
1. Platforms. There’s tremendous benefit in building a platform and the more people use to succeed, the more the platform succeeds. Google, YouTube, Facebook, Twitter, Amazon, eBay – you know all the examples.
2. Entrepreneurial enterprises. Thanks to the platforms, it’s incredibly inexpensive to start new companies. It’s also a helluva lot cheaper to fail (and try again). This is why I believe that the future of news – and many other industries – is entrepreneurial: because it can be. It’s not just media and its bits. It’s manufacturing (because you can use others’ factories and distribution channels and your own customers as your platforms).
3. Networks. It is still necessary to gather the smalls together into bigs: audience brought together so advertisers can buy access to them more easily; purchasing brought together to get better prices. So there is business in creating and serving these networks.
For the sake a PowerPoint, a diagram of the three layers of an ecosystem-based economy:
In our New Business Models for News Project, this is how I (crudely) drew the ecosystem for news.
How do you draw the conglomerate-based industry? With boxes, each separate, with arrows pointing to each other at a distance. Simplistic? Sure, but the change in the worldview of the new economy looks that basic when you hear the two tribes trying to understand each other.
We just got a glimpse of Howard Stern’s next life, I think. I was running errands today listening to a repeat of the show from this week when I heard Stern talk with a caller about what he could do on the internet. Thanks to my handy Sirius Satellite radio, I was able to – Tivo-like – back and up repeat what he’d just said and I wrote it down:
Tomorrow I could go on the internet and start my own channel with my own subscribers. You’d be able to click and watch us on TV, watch us in the studio live, streaming. You’d be able to listen to us streaming. You’d be able to get us on your iPhone. You’d be able to do everything right at the click of the internet. I wouldn’t even need to work for a company. I’d be my own company… So true it’s ridiculous.
Sounds like more than idle admiration of technology to me. Stern has a year left on his contract on satellite. He’s so valuable to Sirius, they surely will make him an offer it would be hard to refuse. But I suspect that much of his last reported $500 million contract came in stock and that stock is now worth $0.59 (I know all too well, because I own some), so continuing with satellite would still be a gamble. Besides, he has plenty of money and no divorce settlement to pay off (or so it would certainly appear). This week, he was lambasting Rush Limbaugh for ripping off his listeners selling them T-shirt; in response to a question from Gary Dell’Abate, Stern said even an extra $1 million wasn’t worth that. Could he be rationalizing a cut in pay?
On the internet, Stern would get the complete freedom he has long lusted after. He would share his revenue and value with no one but his staff. Now that we can listen to radio over the internet – on our internet-enabled phones – we can listen to him anywhere (is this why he has refused to allow Sirius to put him on the iPhone? I’m still unhappy about that). He would have direct relationships with his fans. He could charge them (and, yes, I would pay for it; he’s why I subscribe to satellite now … see, I am not a pay bigot). He could sell advertising in new ways. Fans could get him anywhere, anytime. If he’s smart – and he is – he could open up enough tidbits to go viral, letting his audience market him for free.
I wrote about Stern as a pioneer in my book. He rethought radio networks and built his own. He brought satellite radio to critical mass. But satellite radio was always a transitional technology, waiting for ubiquitous connectivity that would enable on-demand programming anywhere. (I tried to warn Sirius’ president, Mel Karmazin, here.) Now our phones can give us radio and soon Stern will be ready for them; they will make him portable.
There’s a larger trend at work here: Entertainers (radio, music, comedy, books, columnists, even filmmakers) will have direct relationships with their audiences. Like Stern, they won’t have to work for companies or go through them for distribution. That’s already happening, of course, on the web for creation, distribution, and monetization. That idea is even extending to funding. Look at Kickstarter – a Spot.US for creativity – where your most loyal fans who most want you to make something can fund or invest in it, maybe for nothing more than the privilege of helping you (this is the Wikipedia ethic). It returns to the age of patronage, only now the kings don’t fund the artists, the public does and less money is wasted on middlemen.
Maybe this is all wishful thinking. I’ve been dreading Stern’s retirement (but I think so is he). So I’m hoping that he makes the leap to the next generation and that others will follow his example. Am I reading too much into his conjecture about the internet? If I am, I’ll bet Karmazin is, too.
: Tim Windsor adds in the comments: “Sounds like Howard needs to make a pilgrimage to Leo Laporte’s TWiT Cottage to see how this can be done professionally for surprisingly little money.”
Right. Leo shows it all: how to do live video with chat and also distribute across many platforms.
(Note: I’m going to link to the Financial Times three times in this post. You’re allowed two views a month at FT.com before being forced to register. If you’re conserving, I suggest you read the second two FT links.)
The Financial Times’ John Gapper gave my book a bad review because he refused to go along with its organizing premise and principal: that our economy and society are undergoing fundamental shifts as we move past the industrial age and that Google is a worthy totem to use to understand that change. Gapper instead treated the premise with surprising literalness (for a Brit) and decreed that Google is not a good example for business; Apple is.
I got some insight into Gapper’s worldview in a good piece he wrote last week on the death of Bertelsmann mogul Reinhard Mohn and, with him, the media moguls of his generation. Gapper does acknowledge fundamental change but he still explains it in the old, expired terms of the old economy, in terms of control.
The challenge of the internet is that it blows up the control of distribution, ensuring that all content owners – from Rupert Murdoch to the lowliest blogger – compete on equal terms. Moguls can no longer exploit its scarcity by buying television spectrum or by owning printing presses.
That is why media moguls have been pushed on to the defensive by a new breed of technology moguls such as Steve Jobs of Apple and Sergey Brin and Larry Page, co-founders of Google. Control of distribution has passed to people who make the software through which content passes.
He’s half right. Control of distribution was how the old moguls prevailed. But that is not replaced, one-to-one, with new control of distribution. The internet makes us all distributors. That is why you want to be open and part of the conversation so the people formerly known as the audience distribute you.
Google is not a distributor. Indeed, its greatest misstep to date, the book settlement, came in part because it uncharacteristically was going to control and distribute content (that it didn’t own). Google doesn’t distribute. It organizes. It links. Google is not in the software business. It is in the platform business (advertising being its primary platform). Apple, too, isn’t in the software business. It’s in the hardware business and that is what gives it control of distribution: we, the cult, buy its great products and take Apple’s control as the price. That, I realized, is why Gapper admires it, because it still has control, like the old media moguls. He defines and measures value in their old media terms.
Gapper is hardly alone. I’m using him as a convenient totem for media’s insistence on viewing the world through old media lenses. Both media and the world around it have changed in many more ways that I tried to outline in WWGD? That’s what I wrote in this post the other day about media’s blind spots to the realities of the new-media economy:
Now here’s the bigger question: How does this willful worldview affect the business analysis performed by business journalists? Gapper’s boss, FT editor Lionel Barber, predicted that “almost all” news organizations will charge for content within a year. That was in July. The clock’s ticking. I snarked at the time that if this same analysis were applied to GM, Barber would predict that the car company would simply raise its prices just because its cars cost more to make. There are no simple solutions to such fundamental change. Every industry has to remake itself under the new realities of the new economy. That is the story business media should be covering. But if media people refuse to – if, like the moguls Gapper eulogizes, they insist on holding onto their old ways – how good will they be at analyzing and predicting the future?
That speaks to the key recommendation in the good Luke Johnson FT column Gapper quotes in his Mohn piece. Johnson argues that lamenting change in media is futile and that media companies need to hire the digital natives who understand the new age.
The only answer is to hire as many bright young things as you can afford and hope their dynamism will counteract the inevitable conservatism of an existing institution. The media trade could learn from the technology industry, which is subject to wrenching structural upheaval at regular intervals.
Right. And Johnson also says that’s why the legacy companies are the least likely to see and build for the new world.
Unfortunately, a chief executive only a few years from retirement is hardly motivated to sack loyal colleagues to bring on board lots of teenagers to turn their company upside down. Psychologically, we are congenitally opposed to tearing down what we have helped create in order to build anew. Hence the status quo prevails, even if it is the demoralising task of managing decline with no salvation in sight. And so all efforts are applied to preservation in spite of a realisation that the economic model is broken – because no one is forcing the company in a new direction.
Right again. On this week’s On the Media, Ava Seave, coauthor of The Curse of the Mogul, told Bob Garfield that the media businesses that media reporters love to cover are and long have been bad businesses. But we don’t hear that – because, one assumes, they don’t want to hear that.
So how well equipped are reporters in legacy media companies to analyze the upheaval in the industries they cover? Where are their bright young things who see the world in new ways? Who is the Google of financial reporting?
Shocking news this morning that Gourmet, the Talmud of food, is closing – less shocking that Condé Nast is also folding Cookie, Modern Bride, and Elegant Bride, all apparently a case of the other Monolo dropping after McKinsey dug into Condé’s closets.
(Disclosures: I worked in Condé for bits of a dozen years as a corporate online guy. I was privileged to be there when Epicurious was started around Gourmet and the surviving Bon Appetit. When the company bought Modern Bride, I twice worked on its digital presence and strategy. Oh, well.)
When Condé folded Portfolio, I said it didn’t yet presage the death of magazines, only of magazine launches. Well, that “yet” has arrived and now magazines are going to start dropping like newspapers – faster, even, for there’s more direct competition among the slicks.
We will see at least one business magazine go after BusinessWeek is sold. One or even all three of the general-interest news magazines is toast. There’ll be death among women’s magazines. Men’s magazines are already sinking. Showbiz magazines will have more and trouble competing with online (I fear for my baby, Entertainment Weekly). Watch for blood in the trade publishing business as blogs beat B-to-B magazines in service and efficiency.
Magazines as a medium won’t die and when ads come back – or at least stop falling – the survivors will get a gulp of oxygen (AdAge reports that magazine revenue fell 6.9% last year). But it still won’t be pretty. The valuable FitchRatings media report, which I received just today, decrees:
Fitch remains skeptical about the ability of magazines to profitably make the digital transition. Fitch believes the larger players will seek to rationalize available print advertising inventory through consolidation and closing down titles. The remaining players will have scale through portfolios of top brands in demographics that are attractive to advertisers, but sustainable profitability remains uncertain as advertiser sentiment is likely to continue to shift away from print mediums.
Fitch is prescient about Condé: It is closing multiple magazines in a category and keeping the strongest. Bon Appetit is the winner, I’d imagine, because its demographic is younger and its cost lower. Brides is the better brand in that category. When Condé bought Modern Bride, it thought it owned the category but was shocked to see that in the meantime, the No. 1 brand among brides – a market that is replaced every 18 months – has become The Knot. That’s how fast a venerable brand can sink from preeminence.
I used to buy magazines by the ton (especially when I had an expense account to support the habit). I loved rifling through them. I loved working on them. But now I have all but stopped reading them in print. I still read magazine stories now and then but, like everything else in my media day, I come to them through links, from peers and aggregators. Just as other media have been disaggregated – the atomic unit is no longer the album but the song, the equivalent in news was the publication or the section or the article and now is the post – so is the essential element of the magazine no longer the publication but now the article, at least for now. So what separates a magazine article now from a newspaper article or a blog post except, perhaps, length (and online, length is often seen as a liability)?
Packaging used to be a key value of magazines: the great editor selecting the interesting topics and good writers and cooking a meal out of it. But in the era of media unbundling, the magazine becomes an instant anachronism. Reading the New Yorker or Economist or Vanity Fair becomes an act of living nostalgia, at least for those who can remember them. For the next generation reading magazines and newspapers and buying albums is – haven’t we learned this yet? – an alien experience, a media oddity.
So go to the newsstand today and look around. You’ll never see so many magazines again. One by one, like the trees they used to kill, they will fall. Some will remain standing, stronger because they’re not competing for sunlight and nutrition. But magazines as a medium and an industry will only shrink.
As a former magazine man, am I sad about that? What’s the point of emotions? It’s economics. As I’ve been saying about my cancer:It is what it is. There are new and wonderful ways to tell stories and to curate good and interesting work and so the value of the magazine can continue even if the form cannot.
I spent yesterday marking the dangers around Sidewiki. Today, I’ll say what I think Google should do with it: close the toolbar app, open it up to the entire conversation, and turn it purely into an API. And probably buy Technorati.
I read a great deal of the discussion about Sidewiki yesterday: much of it in the comments on my blog post, much found through search in Technorati and Google News, much through trackbacks, much on Twitter, much through links on sites I read, and a tiny bit on Sidewiki itself (sorry, can’t find a URL to link to that).
Some of the comments said the conversation is already fractured and my trail would seem to prove the point. That was the common word – fractured. But I’d quibble with the choice and argue that the conversation isn’t broken; that it is occurring just where it should be: in the cloud, where it is controlled by no one.
I did complain about bifurcating the conversation on my own site and that’s because Google presents a second opportunity to comment from a site with comments and I do not see how that adds value there; it separates people. We should be doing the opposite.
I also complained about losing control of the comments and some folks, not surprisingly, thought they had me in a gotcha moment: “Hey, Jarvis, you tell newspapers to get over it and give up control but when it comes to you … heh, heh, heh.” OK. I, too, chose the wrong word. I should have complained instead that Sidewiki robs sites of the responsibility for comments. Many of the people who joined in my crusade yesterday said they work hard on the conversations on their sites to make sure they retain civility and quality – as good sites do – but now they can’t exercise that responsibility with Sidwiki comments that will appear essentially on their sites. Google promises an algorithm. Algorithms may be good at killing spam – albeit with syncopated delays – but they will not be good at policing the subtleties of trolls, prejudice, unfair competition, grudges, pettiness, and hate; those are human sins and it takes humans (and perhaps God) to see them.
The Guardian spends a great deal of resource on Comment is Free doing just that and when the conversation is about the Mideast, it knows from sour experience that it has to add extra precautions. There were no open comments on its Blogging the Koran. But now, with Sidewiki, there will be. Let’s say the Guardian gets too restrictive. Then there’s always the cloud. You can go to one of its competitors or create your own site and complain about what’s said on CiF and no one – except your hosts there – can stop you. That’s the essence of free speech on the internet.
It’s perhaps inconvenient that the conversation is distributed but wherever there’s such a problem, the wise see opportunities. Technorati saw that years ago and tried to bring the conversation together not by creating the ultimate conversation site but by adding organization and thus value to the conversation across the blogosphere. That was very Googley.
Google’s mission is to organize the world’s information and make it accessible – not take it over and centralize it. That’s what so many fear about Google book search: that is it not just linking to books but serving and thus controlling them (I still believe the settlement can cope with that). That is what I fear about Sidewiki: that it is not adding value to the conversation by organizing it but instead trying to hijack it. I’m surprised how tonedead [a happy typo I'm holding onto] Google is in this case. David Sleight called Sidewiki “a failure of empathy.” Or as a father says to a little kid: “What were you thinking?” One more metaphor: Google thinks its Snuffleupagus – big but cuddly and good – and just doesn’t realize that some people see it as a potential bully and so it has to act accordingly. With size comes responsibility.
So I think Google saw a problem where there wasn’t one: The conversation is not broken and doesn’t need fixing. It saw an opportunity to enable people to comment on sites that do not have comments – and to gain more beloved metadata from us about those sites – but it bigfooted the entire conversation trying to solve that; it went for a fly but put its fist through the wall. It wasn’t Googley.
Now I suggest that Google stand back and have that don’t-be-evil conversation about its mission and how it can add value to the conversation and to our collected knowledge about sites and entities without trying to take it over. Start by following Dave Winer into the cloud.
Google could try to organize – but not hijack – the entire conversation; no one has really done that yet. It could analyze comments on sites and understand them better and perhaps even try to find quality in them and their authors. It could use Friend Connect and Facebook’s APIs, as it has started to do, to enable those authors to establish and collect – on their own, via APIs – and burnish their identities across the web. It could bring together conversation about sites, whether those are blogs or companies’, as Technorati has done with blogs (that’s why I think buying it and putting it out of its strategic and technology misery would be the neighborly thing to do). It could then release an API (as it has done for Sidewiki) that doesn’t draw the conversation into one place but enables anyone to put up the conversation. So rather than starting another conversation, Google organizes it.
So I could finally put the broader conversation about the ideas in Buzzmachine on Buzzmachine, adding functionality that let my readers follow links and authors. So I could create a consumer site tracking what people are saying, good and bad, about, say, computer makers. So I could use apps to track conversations about topics that mattered to me. So I could track authors and what they comment about across the web.
Google would add value to the conversation – as I firmly believe it adds value to news – without competing with its creators. That is what I argue to news creators: that Google doesn’t want to become one of them but instead wants to succeed by helping them succeed. It’s a great argument, so long as it stays true. Books bring the same opportunity and challenge for Google.
In a sense, Google thought too big, bigfooting the conversation everywhere. But the real problem, ironically, is that it thought way too small, creating a new conversation instead of trying to organize the conversation that is the internet itself. That would have been so much Googlier, don’t you think?
: LATER: I neglected to cover the question of the toolbar app itself. If Google doesn’t create a separate conversation, then there would be no means to add comments via the toolbar. I’d suggest that a toolbar app could display content about a site or its topics; there’s nothing to stop Google or any toolbar or browser plug-in maker from doing that. This still means that malicious content could be associated with a site but Google wouldn’t be in the position of enabling and hosting it, only displaying it. I would suggest, however, that anyone who thinks they can use this to display advertising associated with a site atop that site should look up the Gator link in my post below: danger and lawyers await.
