AR&D Reinventing Local Media

Every time I’m asked to calculate online revenue potential, I run into the reality that the Web is a moving target and that “measurement metrics” is really a Media 1.0 concept. If only things would just sit still for awhile, so that we could all figure out how we’re going to make this thing serve our revenue needs!

This is why I suggest to clients and others that we must stay focused on the goal, not the process, for it is process-thinking that bogs us down in attempts to move the new media rock.

In my 2006 essay, Right Brain Renaissance, I argued that the essential problem media companies are having is in adapting to the creative juice that’s empowering true innovation:

New art forms are exploding. Whoever heard of photoshopping or other forms of digital art just a few years ago? We’re inventing whole new virtual worlds such as Second Life, and video games have taken on a life of their own. Nobody knows where it’s going. Nobody.

Who would argue that Chris Anderson’s brilliant discovery of The Long Tail and his exploration of new media economics isn’t inspired? The web empowers the long tail, so not only are we innovating new worlds but also new economies.

Institutional modernist leaders look at all of this and scratch their heads, because it’s taking place without their permission. Traditional rules and systems are being by-passed and with alarming speed, and the loss of (their) order is frightening and dangerous. It’s foolish, however, to think there is no order as the rules of the right brain world are being written.

This isn’t just true in media, either. Right brain thinkers are turning other industries around. Take the time to read this Canadian Press article about Bob Lutz of General Motors, the man who brought right brain creativity to the domestic auto industry.

“It was an overly rational approach to the business,” Lutz said of the old GM. “The feeling was, if we give them a nice car with lots of features, and we make it very roomy and very reliable and very functional, people will realize what a good, rational purchase this is and we will get great sales. And then it didn’t happen.”

I’ve provided all this background in order to get to the point of this post: that using rational measurements to judge the future value of products and services in the Media 2.0 world will halt more projects than green light them.

Bear Stearns analyst Spencer Wang falls into this trap in a new report calculating that the Wall St. Journal will have to increase traffic by a factor of 12 in order to make up for revenue lost by going free. Wang concludes that the best the WSJ can do is 6x. According to PaidContent.org,

WSJ.com revenue is currently pegged at $78 million annually, based on an estimated 989,000 subscribers paying $79/year. Including non-subscriber traffic, the company claims 122.4 million monthly page views. Based on an estimated CPM of $6 and a few other assumptions about sell-through rate and ad impressions per page, Wang arrives at the 12x conclusion.

There are a few problems with this projection, not the least of which is the attempt to calculate the future based on the past. The rational thinkers need metrics to do their magic, and the metrics Wang chooses are page views and CPM rates. These metrics continue to be used despite the fact that both Nielsen and ComScore have dropped them as a preferred metric for web advertising.

But the bigger concern in these types of calculations is that they disregard (or can’t see) the intangibles associated with moving the WSJ to a free online pub. As Chris Anderson points out this morning, the report misses the indirect benefits of going free.

For instance:

• What about the new newspaper subscriptions that a 6x increase in web traffic will generate? (Print subscribers are typically worth five times what online viewers are worth, due to the higher effective CPMs of print media.)
• What about the increased buzz and respect that the ability for bloggers everywhere to link to wsj.com stories will engender, bringing the paper back to the front of mind of media buyers and thus bringing in more ads?
• What about the fact that, in a fierce competitive battles with its cross-town rival, the the New York Times, once nytimes.com went free, wsj.com had no choice but to do the same to maintain mindshare with an audience who are increasingly shifting online?

I don’t know how to quantify any of those factors, but I know they’re all non-zero, and in the case of second, at least, could be large.

The era of bean counter dominance in our culture is being disrupted, because we can’t solve all problems with rational thinking. That statement is heresy to modernists, but that doesn’t change the reality. The more I read, the more clearly I see the dividing line, and the more I’m convinced of the necessity of creativity in the development of solutions to the disruptive attacks on the very foundation of all media.

This doesn’t mean we discard rationality; we just don’t need it to be running things at this time.

So Landmark is selling the Weather Channel for $5 billion. They’ll get it, of course.

I remember when the channel started and how friggin’ awful it was. I also remember that the consensus among colleagues was that it would never work. After all, who would want their weather from an operation in Atlanta? This is typical of the historical arrogance of many television types, who said the same thing about CNN and cable in general, and now the Weather Channel is a serious online competitor for the local weather brand.

The problem with living on a pedestal is that oxygen deprivation influences your thinking.

One of the big topics of discussion around the blogosphere this weekend was an emotional response to an Arizona RIAA lawsuit against an illegal downloader of copyrighted music. The music industry sadly continues to pursue legal remedy for its own malfeasance, and reports about various suits are commonplace discussions. Suing your customers is, after all, a highly crappy business practice.

Most of these stories are about sharing files, but this one had a twist.

According to a Washington Post story about the suit, “the industry maintains that it is illegal for someone who has legally purchased a CD to transfer that music into his computer” — that the MP3 files the defendant made on his computer from legally bought CDs are “unauthorized copies” of copyrighted recordings.

This is what got the blogosphere all riled up. How DARE they tell me what I can do with MY music! The only problem is that the story isn’t, well, precise. The assertion regarding the simple copying of a song for personal use was not a part of the lawsuit.

Blogger and new media thinker Robert Scoble jumped aboard the story and wrote that the RIAA is actually doing consumers a favor by forcing artists away from the fold.

This behavior will make sure people buy (or steal) music directly from bands. See how Radiohead did it. By doing that, the price for music will go down thanks to fewer intermediaries. RIAA is just helping us get rid of them, which is good for everyone who loves music…Radiohead put the power of setting the price in OUR hands. Brilliant.

The truth about the matter appeared in the comments of Scoble’s post and elsewhere, and the sources of the story backed off.

Three commenters to Scoble’s post, Jerry, Louis and Shelley, raised serious questions about the journalistic practices of those who spread the story and used the opportunity to criticize citizens media as a result.

JERRY: Have you actually read the briefing, or are you just basing your sarcasm on information you skimmed from other blogs? Why not read the actual briefing then make your argument?

LOUIS: It seems pretty obvious to me from these comments that none have read the actual briefing. It doesn’t say the RIAA wants to prevent is (sic) from copying music for your PERSONAL use.

SHELLEY: The summary judgment and the follow-up brief all specifically state that the law suit is based on the distribution of the files, not the ripping of the files from CD…Facts, people. I know facts aren’t fun, but can’t we try focusing on the facts? At least, from time to time?

JERRY: So much for the accuracy and reliability of “citizen journalism”. And people complain about the accuracy of the MSM?

JERRY: I guess the adage “don’t believe everything you read” applies to the blogging world, too. Too bad most bloggers don’t apply it. Most are more interested in getting linked to than getting facts straight.

With respect to Jerry, this case shows the value of citizen journalism, not its shortcomings. As I pointed out in Scoble’s comments, the Washington Post was involved in this. They may have gotten their “tip” from the bloggers, but they were involved just the same.

Before the blogosphere, before citizen journalism or citizen media, before the people formerly known as the audience had the opportunity to publish for themselves, mainstream media outlets could operate with impunity with regards to the shaping of stories. This is called setting the information agenda, in which the only spin that matters is what the media company says.

Imagine, if you will, if the Washington Post had run such a story 10 years ago. Who would’ve provided the correction? Where would it have been published? How far downstream would the story have gotten before the focus shifted?

The point is that citizen journalism doesn’t function like the mainstream press of years gone by, because comments to a blog post or story ARE A PART OF THE STORY. News is a process, not a finished product, and this is crystal clear in the world of citizen journalism. As such, the fact that Jerry and Louis and Shelley could help set the record straight makes the case FOR the practice.

They and others might argue that the incorrect story shouldn’t have ever seen the light of day in the first place, but that idealistic perspective strikes at the heart of the problem of gatekeeper journalism. Journalists are no less human than anybody else, and despite elaborate (or not) systems of vetting, mistakes are commonplace. If we accept that, then any open and transparent method of immediate correction moves journalism forward, in my judgement, and not backwards, as many in traditional media would have us believe.