InfoInnovation

Holding On to a Dream

The SIIA hosted another stimulating “brown bag” seminar in Manhattan yesterday, with former WSJ publisher Gordon Crovitz, Thomson Reuters’ head of consumer publishing Alisa Bowen, and Chris Kenneally of Copyright Clearance Center, moderated by the indispensable John Blossom of Shore Communications. Nominally, the subject was “how to leverage hot content delivery platforms,” but not surprisingly the real focus was on business models that transcended particular platforms and technology trends.

 Alisa Bowen described how Thomson Reuters is moving toward a freemium strategy for “prosumers” on the iPhone and Blackberry (interestingly, each of these represents about half of the initial downloads of the company’s News Pro app), with a currently un-monetized service expected to evolve toward subscription services. Chris Keneally described how CCC’s services have evolved with new platforms (photocopiers to digital media) and noted its most recent new offering, the Ozmo.com service designed to help  manage rights related to user-generated content.

The centerpiece presentation, though, was that of Gordon Crovitz, in his new role as co-founder of Journalism Online, the new venture that is seeking to provide the newspaper industry with a common platform, and in effect to catalyze a “movement” to add online subscriptions to that struggling industry’s revenue base. Crovitz noted some of the user-experience problems of the current model, in which, for example a Wall Street Journal print and online subscriber still has to pay separately for a Kindle subscription or an iPhone App. And he mooted a number of interesting concepts, such as subscription bundles of “all you can read” on a single topic from multiple publishers, and the negotiation of industry-level wholesale licensing and royalty fees with intermediaries such as Google. I wish him and the new venture well, as must anyone who values daily journalism and the community-binding value of local newspapers. Unfortunately, I found much of his presentation unpersuasive.

Among the most startling pieces of evidence he presented were the findings of a Penn, Schoen & Berland survey released at the recent All Things D conference, purporting to show that 92% of American consumers would be willing to pay something for online news – an average of $25 / month. This suggests that the American news industry is leaving well upwards of $50 billion on the table – which would be wonderful news, if it were credible. (It wasn’t that long ago that Penn, Schoen principal Mark Penn embarrassed himself with a Wall Street Journal piece arguing that almost 2 million American bloggers were getting paid for their work, with 452,000 using blogging as their primary source of income. These figures were quickly debunked and shown to be drawn from a remarkably sloppy amalgam of sources, and heavily skewed by a few outliers. Whatever one thinks of Penn’s contribution to the Clinton campaign, his reputation isn’t riding too high in the digital media world.) Journalism Online is using a more conservative percentage of 10%, which Crovitz notes would generate on the order of $100 million a year for a large newspaper. This still flies in the face of the experience to date of not only newspapers, but nearly all consumer publishers, with the exception of WSJ.com, Consumerreports.com and very few others.

Crovitz also presented two “myths” about consumer-paid online news: 1) that it is an either/or proposition (i.e., the WSJ has used a hybrid model, paid subscribers draw higher CPMs) and 2) that ‘it’s only about online revenue” (i.e., online can support the value proposition of print, reduce acquisition/retention costs, etc.). These struck me as particularly fragile straw-men from the vantage point of anyone who has observed the digital arena over the past years and decades – which, make no mistake, includes a good number of intelligent newspaper executives.

A number of good questions were asked by the audience:  How does the consumer experience change in a multi-newspaper service?  Where does the consumer branding expertise come from?  What about structural approaches to cost control?  Again, I wish the venture well – but if I were to invest, I would need considerably more reason to believe. 

Science Publishers Stepping Up Online Community Initiatives

In a challenging market environment, some of the leading publishers of professional and scholarly information are stepping up their use of social media to gain competitive advantage and address the needs of audiences in the R&D community.

From at least 2005, when Nature Publishing Group launched its Connotea social bookmarking service, through Elsevier’s recent integration of its 2Collab collaboration tools with its flagship ScienceDirect and Scopus databases, publishers have been bringing researchers more broadly and openly into the science publishing conversation. 

Two recent announcements show that social networking in this marketplace now is evolving toward more formal and ambitious efforts.  Elsevier, with the help of private online communities-builder Communispace, last week officially launched Innovation Explorers, an online community of 300 researchers from 69 countries.  The stated goal is to gain better insight into issues, challenges and unmet needs within the research community; Elsevier is also inviting its direct customers in libraries to join the community and interact with the expert “Explorers.”  

The use of online communities of researchers to generate and test new ideas is in itself not new.  For example, BioInformatics LLC has operated its Science Advisory Board for over 10 years, a community now numbering over 40,000 life science researchers and physicians who participate in syndicated and customized market research studies provided by BioInformatics.   The Innovation Explorers initiative signals that publishers are recognizing both (a) the potential competitive advantages to be gained by nurturing their own branded communities, and (b) the value of the kind of specialized expertise and experience that a dedicated community builder like Communispace (which has built other branded communities for companies such Kraft, HP, Charles Schwab, and Hilton Hotels) can provide.

A potentially more far-reaching intersection of science publishing and online communities was the announcement this month of a new partnership between Nature Publishing Group (NPG) and InnoCentive, Inc.  The latter company, founded in 2001, has built a successful open marketplace for innovation that enables companies, government agencies and other organizations (e.g., Procter & Gamble, Eli Lilly, SAP and the Rockefeller Foundation) to post “challenges.”  These “Seekers” offer over 170,000 engineers, scientists, inventors, business people and research organizations (“Solvers”) financial rewards ranging up to $1 million for their solution.   Examples of past challenges have ranged from a food company offering $40,000 for a “Reduced Fat Chocolate-Flavored Compound Coating” to a research foundation offering $1 million for a “Biomarker for measuring disease progression in Amyotrophic Lateral Sclerosis.”  

As "How We Decide" author Jonah Lehrer has noted, a study of InnoCentive led by researchers at Harvard Business School found that nearly 33 percent of problems posted on the site were solved within the specified time frame.  In making their announcement, both NPG and InnoCentive emphasized the growing importance of open innovation for achieving cost savings and accelerating development in a period with R&D budgets are under pressure. 

The agreement by NPG and InnoCentive to launch a new, joint platform exemplifies the power that publishers still wield in concentrating high quality audiences whose value can be further enhanced within online community frameworks.  And it will be interesting to see if, how, and when the latest developments in social bookmarking, such as Twine, and the approaches to monetization being more fully developed in consumer and "horizontal" b2b markets, will also be fine-tuned by publishers in more focused domains.

Alacra's new Pulse platform: mining expert opinion on the real-time Web

Alacra, Inc., an established, independent content aggregator, has over the past decade quietly established itself in some of the most lucrative niches of the information business.   Yesterday, the company launched a new product, Street Pulse, the first of several planned companion products based on a new “Pulse” platform oriented to mining and organizing selected real-time Web content. 

Alacra has a history of competing successfully against much larger business information providers through innovative use of technology, and understanding the needs of information-insatiable professionals in financial services and management consulting.  Pulse continues that tradition by capitalizing on the reality that important news about companies now appears on the Web first, with the gap created by the shrinking cadre of sell-side analysts being filled by independent analysts and opinion leaders in the blogosphere.  Another critical enabler is ubiquity of RSS, the XML-based circulatory system of the blogosphere and, increasingly the larger Web. 

Street Pulse draws upon 2000 or so selected feeds of real-time news, opinion and analysis on publicly-traded companies.  It applies Alacra’s semantic analysis technology to automatically organize and cross-link the articles and posts by company, analyst and analyst firm.  On one side of the screen are the most recent stories corresponding to a given company, analyst or firm; on the other side, a continuously updated “ticker” of new analyst and blogger commentary.  Clicking on a company, analyst or firm link (e.g., the Google links in a commentary or news item about that company) produces the most recent posts by or (in this example) about that entity – which I find makes for very intuitive browsing.  It also draws on “social” input such as suggestions of additional analyst sources.  Other applications to be launched on the new platform include Deal Pulse (M&A), Weak Pulse (news about distressed companies), Credit Pulse (comments by rating agency and other credit analysts) and Legal Pulse (covering mentions of law firms).

The Pulse platform is using a “freemium” pricing model.  That is, it is available as a free service on the Web (with expected revenue from advertising, and e-commerce sales of content from the Alacra Store).  For professional users such as the traditional Alacra customers, there is a premium version that will provide mobile and desktop alerting, the ability to create watchlists, tools for sharing results, and integration with subscription content.  It will be priced on a per seat basis like Alacra’s other professional products, with a single “slice” (e.g. Street Pulse, or one of the other applications) generating between $60,000 and $90,000 from the largest firms. 

I seldom write about the information content services I actually use personally.  But not only is Street Pulse innovative and newsworthy, it’s also a tool I easily could see fitting into my regular diet of information.  In addition to routinely tracking information industry companies as part of my consulting practice, I’m a moderately active individual investor (that is, I subscribe to the theory that selective stock-picking by non-professionals makes sense in this environment).  As such, I use Yahoo Finance as my main dashboard for tracking stocks and seeing articles of general financial interest.  And Street Pulse offers what seems to be an excellent complement to Yahoo Finance, CNNMoney.com, AOL Money, CNBC.com, and other financial sites geared to non-professionals.

Pulse continues a trend of mining free information on the Web that began with people-tracking services like Zoominfo, spread to news aggregators like Google News, Digg, the Huffington Post and Newser, and is now moving into more specialized realms.  We’ll see a lot more of this type of service; in the meantime, Alacra has grabbed an early-mover position in the valuable realm of market-moving opinion and analysis “for the rest of us.”

 

Blodget's synthesis: an evolutionary view of online news brands and business models

Henry Blodget’s re-emergence (and at least partial redemption from his role in the previous era of Wall Street scandals) as co-founder, CEO and editor-in-chief of Silicon Alley Insider, and specifically his second-day keynote, provided a reasonably compelling vision of where business models for online news are really headed.  He began by describing the characteristics of the new model of online journalism: aggregation of many other, primary news sources; high velocity production (e.g. broadcast text to Blackberries); a conversational, interactive approach; “snackable” editorial packaging; and omni-media formats (e.g. Gawker.com runs 8 Tivos constantly to capture any video that may prove useful). 

As examples of “who is doing well” he included his own enterprise (whose flagship is in the process of being re-branded as “Business Insider”), claimed to be the fastest growing business site on the Web, currently with 2 million monthly visitors; the Huffington Post, now bigger online than bostonpost.com with almost 5 million visitors monthly; and Gawker.com, driving twice the online traffic of the LA Times, using 80 editorial staff in comparison to 700.  He also praised the Wall Street Journal’s hybrid subscription / free model (similar to the FT’s) and its diversification into ad-supported business news with the successful Marketwatch.com acquisition of a few years ago.

Blodget’s formula for saving the New York Times: cut costs 40% (no matter what, online revenues won’t cover the print cost structure, and print revenues are disappearing fast); raise the print price; charge online subscription fees; and, in so doing, buy time for the transition to online-only.  Calling the journalism-is-dying meme “self-serving nonsense,” he noted that the Internet has created more journalists, and that “1 billion online readers = 1 billion fact checkers.”  Predictions: more newspapers will be sold, folded, and bankrupted [a pretty safe call]; online journalism will become more professionalized; some “old media” journalists will adapt successfully [others clearly not]; “creative destruction” leads to a new and better future.

In response to an audience question from former WSJ publisher (and Blodget investor) Gordon Crovitz, Blodget noted that Business Insider was already starting to achieve the market-moving “scoops” that print brands have long dominated: “as people understand that we will treat them fairly, we are getting more and more contacts from people who want to talk.”

Business models for online news - thesis/antithesis

How to make money from news, in all its formats, was another theme running throughout the sessions, with implications for many categories of traditionally user-paid content business models represented among the Information Industry Summit registrants.  The first day set up a sort of thesis-antithesis:  as previously noted, Michael Wolff reliably staked out a position at one end of the spectrum – “the primary strategic question is how we can pay less or nothing for content.”  Google has established an absolutely new model.  Not only that, but: traditional news organizations, he asserted, are “finished,” whether in a year or 18 months “at the outside.” 

Not surprisingly, Vivek Shah, who heads Time Inc.’s digital news business, took a contrary view.  Acknowledging that “newsgathering as a way of driving revenue is being undermined,” he argued that the result is a greater emphasis on voice, personality, and point of view, and asserted that the original Time was “a version of the Internet” – that is, a way to digest the information plethora of a different era (“28 daily newspapers in Chicago”).  Scale matters, he said, in the ability to address specific audiences.  As evidence, he stated that [according to at least some measurements] the top 10 news sites on the Web are all traditional brands, including Time, Inc. properties with a combined 26 million monthly visitors. 

From the “high end” of the news business, Dow Jones Newswires SVP and managing editor Neal Lipshutz insisted on the endurance of a paid model for high-value content, including news, and argued for a return to subscription pricing by the leading daily newspapers [other than the WSJ and FT, whose business/financial focus adds another dimension to the perceived conversion value of their information]: “You have to put the genie back in the bottle.”  Steve Lohr of the New York Times mused about the notion of the “top 5 papers” jointly agreeing to charge for online subscriptions, and later noted that for the online-print advertising revenue crossover model to work, “you need a lot more numbers” in the audience.

Robert Merry, president and editor-in-chief of Congressional Quarterly, also insisted that newspapers had “missed the boat” by ceding the circulation fight to their readers.  But he cast a skeptical eye on lamentations about end of professional journalism, noting that the familiar model of “objective” journalistic brands has been a relatively short-lived phenomenon.  We may be returning to the kind of environment he saw from his recent writing about the 1840s, when all US newspapers were clearly – and usually fiercely – partisan; and readers were, as today, free to form their opinions from multiple sources, or have them confirmed by particular, reliably partisan, voices.

More signs of B2B integration of social media

The emergence of legitimate social media business models in the professional and b2b markets has been rather halting, especially if excluding pure plays like LinkedIn or “mere” extensions of online advertising inventory in B2B media.   (This was brought home to me in the process of organizing last year’s social networking panel at this conference.)  So another theme deserving note emerged in signs of more fundamental integration of user generated content and social networking with high value information services.

Robert Barber, CEO of Environmental Data Resources, described how that company is using social media to add “an asset with defensive value and monetization potential.”  EDR’s core user group, environmental professionals hired by banks and real estate investors to assess potential environmental hazards, can now comment on what they found – enhancing “official” (and publicly) available data with current, expert intelligence that (assuming its lead benefits from typical “network effects”) current and future (e.g. Google) competitors will find difficult to match.

In a more purely defensive vein, McGraw-Hill’s Glenn Goldberg noted how his division’s J.D. Power & Associates business unit had acquired Umbria Inc., a social media-specialized marketing intelligence provider, to buttress J.D. Powers’ annual syndicated surveys in an era of vastly-more democratized product ratings and real-time brand management.  Similarly, Jon Gibbs, VP of media analytics for Nielsen online, described how Nielsen is integrating its early acquisition of social-media-mining pioneer BuzzMetrics into “’on the fly’ customer projects combining BuzzMetrics, surveys, and traffic measure to help define the most relevant answers to advertisers’ needs for better insights into audiences and markets.

Pearson's Scardino: New educational publishing opportunities "across the board"

Pearson CEO Marjorie Scardino pointed to opportunities, whether in information or software, for new services and products that: are aligned with changing behaviors, new technologies, and the needs of teachers; help to train new workforce needs for the 21^st century, including “jobs we haven’t thought of yet”; and reflect the “more mature ideas” emerging 10 years after the bubble. 

New learning offerings, Scardino asserted, will be enabled by mobile devices (in, for example, foreign language and music applications); smart objects (e.g., equipped with sensors); semantically enabled software (such as Pearson Education is already using to grade essay exams in the US); geo-tagging of media; and cloud computing.  She also mentioned the new ultra-thin and flexible “electrophoretic” screen technology just reported on in the Economist.

One other comment drew some amused attention and comparison with Ralph Lauren among the Twitterati:  when the subscription price of the Financial Times was raised recently (by 20-30%), the result was to send circulation UP “in every market.” [ Warning: unless you serve an elite audience, you may not want to try this right away in your own business…]

SIIA: Thoughts at week's end

In the next few posts I’ll try to draw out a handful of key themes from the past week’s SIIA Information Industry Summit, substantially incorporating the “micro-scripts” identified in the Day 1 Morning post (which, on reflection, might more truly be “micro-“ characterized as “21st-century learning,” “no-cost content,” and “measurable benchmarks.”). 

A focus on new and emerging opportunities in the information industry (in the SIIA context, primarily business- and professional publishing markets for digital information content) pervaded the program as well the atmospherics inside Cipriani 42^nd St. –  in contrast to the economic fear and loathing in much of the surrounding environment.

For example, there was hardly a mention of “right-sizing” or other such micro-concepts usually associated with business downturns.   The “creative destruction” and “disruptive technologies” memes made appearances, but no more than usual in similar contexts, and mainly emphasizing paths to successful adaptation. A discussion of providing customers with better means of measuring information content usage (and value) in the context of budget reductions simply underscored an established trend.

Discussions of new innovation-led opportunities were various and plentiful…

SIIA Information Industry Summit: Morning of Day 1

First day luncheon keynoter Mark Walsh, who personifies the intersection of politics and the information business, provided a convenient frame for summarizing the rest of the morning’s program.  He predicted that “micro-scripts” – a new term for the sound bites and bumper stickers that play all too large a role in what often passes for political discourse – will be increasingly important to business messaging as well in the overflowing media environment.  At the same time, he forecast that the more thoughtful political style of the new president will help shift the political (and business?) culture toward more transparency, accountability, and forethought, resulting in better decisions and analysis.  (However, when I asked him what near-term events we might look to as evidence this is happening, he answered a different question…which – as he acknowledged – is more representative of the discourse we know.)

So, what were the most effective micro-scripts of the preceding morning?  The morning's opening speaker, Pearson CEO Marjorie Scardino, offered that education is what Pearson is about in all of its businesses, not just Pearson Education; she declared that learning needs throughout society will provide opportunities for information companies of many stripes.

The core of the subsequent panel, entitled “Sink or Swim?  How Can You Grow an Information Business Now?" was provocateur Michael Wolff’s observation that the low margins associated with direct marketing have always precluded much investment in quality original content; and with the Internet (read: Google) following the direct model, it is no wonder that now “the primary strategic question is ‘how can we pay less or nothing for content?’”  The other panelists (from Time Digital, Congressional Quarterly, and various professional information businesses), all representing different aspects of the business of original content creation, found this premise hard to rebut convincingly.  So when all general news and consumer content costs nothing, who will fund, for example, professional journalists in Baghdad and Kabul?  Could it be left to the “public trust” i.e. private philanthropy or (heaven forfend) the US taxpayer?

Glenn Goldberg, president of the Information & Media Services segment at McGraw-Hill, (interviewed very effectively by Hal Espo) provided a succinct rule of thumb for identifying attractive information businesses:  are there industry benchmarks and quality standards that can be measured, analyzed, and imbedded in workflow?  This may be as close to a “golden rule” of high-value business information as I’ve heard. 

Looking ahead in 2009

A goal this year is to achieve a better balance of paid and unpaid thinking and writing, work and play, business and (other forms of) self-expression.  The focus here will continue to be, as described in my first (2007) post, on the industry comprised of “organizations large and small who source, package, distribute, and/or apply information content products and services that are specially valued by particular groups of users and their sponsors, whether business and professional enterprises, advertisers (esp. B2B), academic and research institutions, or individual users.” 

More specifically, some of the themes likely to be of special interest to me in the coming year include:  The increasingly “real-time” web and its implications;Thematic and functional content (and other) strategies for the “downturn”; Social media business models; Google’s evolving relationship with the rest of the information industry, and the latter’s responses; “Post-print” tactics and strategies of traditional publishers more generally; the next stages in the evolution of information content user empowerment (from disintermediation to self-publishing to…?)

In the meantime, one of the blogger’s best friends is a substantive conference program (the content comes to you, packaged and ready for comment!).   Even better when one has participated in the program planning, and that’s the case with two upcoming events:  the SIIA’s Information Industry Summit, and the NFAIS Annual Conference (where I’ll be a moderating one of the panels).   Thanks for your attention; stay tuned.