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Via a riff on John Battelle's analysis of Viacom's acquisition strategy, Fred Wilson aptly characterizes the forces that give rise to new ventures like ours (and the great ones, too):
John calls it the gorgeous arrogance of media companies.
Well everyday I wake up and applaud the gorgeous arrogance of all big companies.
Because that is what great entreprenuers feed on.
Hugh MacLeod transforms a French train ticket.
Fred Wilson nicely sums up the recent shift in Apple's market image.
The mainstream media reeks of "they."
Conceptually, we're starting our business as a "we" business. The most crucial thing for us will be to keep it always in the realm of "wedia."
In a follow-up to the "Points" debate on Dallas' amenability to intelligentsia, Jerome Weeks inadvertently makes a case for the sort of media enterprise we propose:
But it's costly, labor-intensive journalism that's needed, in part, for an intelligentsia to thrive, journalism that blogs can't do. We're talking about dependable, one-stop, across-the-board reporting and reviewing of area theater, dance, TV, music, books, opera, museums. Only newspapers do this. Not radio, not TV, not blogs.
If a blog does, it'll cease to be a blog. It'll be a full-fledged news outfit. It'll have a staff.
We certainly don't share Weeks' condescension towards blogs as a reliable source -- but it's the consistency and completeness, particularly on local topics, that they inherently lack -- and that's part of their beauty. Citizen Journalists provide incredible insight and depth on myriad topics, but unless someone's daily bread depends on delivering local news and information, an awful lot can fall through the cracks. Until RSS (or something of its ilk) becomes mainstream (which it's not), there's not a replacement for the editor. And local, in particular, can't be covered completely by unpaid journalists. That's not for a lack of ability, per se -- it's a lack of resource.
Of course, we've pretty much beaten the dead horse of the MSM's various endemic weaknesses into the ground. The point is this: There is a third way. Some mainstream players see that. But until these new ideas infect the industry -- not just geographically, but to the point that they bleed over from the newsroom into the boardroom -- there's an unmet need in the marketplace.
UPDATE 3/19: Turns out CBS is a little better this year. They do un-blackout the games on DirectTV when the local affliliate switches. However, that solution only serves a small percentage of the viewership. They also certainly didn't publicize the change in policy or make any reference to it on their website.
We spend a lot of time on this blog decrying perceived inefficiencies in the news business, but I hate to see them in any medium -- particularly when I, as a customer, feel abused.
CBS has exclusive rights to televise the Men's NCAA Basketball Tournament. During the early rounds, there are usually four games taking place at any given time. Affiliates carry games based upon regional interest or, if there's no locals in the fight, national interest. Makes sense so far.
They also offer games on DirectTV and online for a fee, so avid fans can pay to see their team play. That makes sense too.
Here's the first hitch: you can't get the game your local affiliate is airing on satellite or online. I could endorse that, if it weren't for one huge problem: CBS makes decisions to switch games on the fly.
So, say you're watching the Duke/Delaware State game on the DFW affilliate. Another game is closer, so they switch to it, never returning to the original contest.
But, even with satellite or online access, you can't get the game. Because the local affiliate started with that game, it's blacked out.
I'll confess that I'm not nearly as well-versed in the technology behind broadcast as that driving newspapers. But, I can't imagine that it is that technologiclally difficult to un-blackout a broadcast when a programming switch is made.
With a closer look, the whole blackout thing doesn't really make sense anyway -- there haven't been many (maybe not any) local ads in the broadcast. So, if CBS made all the games available on satellite and online (with a subscription fee, mind you), and apportioned the revenue to the various affiliates based on overall market viewership, wouldn't everyone be happier? The avid fans get to watch their teams. The casual fans get to watch the most exciting games. The affiliates still get their cut. There are more eyeballs watching the ads (as some fans walk away when its clear that their game is offline.) And CBS would make more money in subscription fees.
Absent any data to the contrary, I'm left to assume that the only reasonable answer is the laziness of a monopoly. They don't deserve to have an exclusive license to the world's most exciting sports championship tourney.
Unfortunately, it's a closed game, unlike the market we're going to face. The big boys may have more resources, but they don't have an exclusive license.
Which begs the question: Does modern technology enable an economic model that makes it feasible for the NCAA (or any sports league) to abandon network relationships; to disintermediate?
There has to be. Any business strategy that involves witholding content from the marketplace is wrongheaded and outdated.
At Pegasus News, we're all about giving back to our readers. Even prelaunch. I've got 50 gmail accounts up for grabs. Want one? Lemme know. First come, first-served.
The Newspaper Association of America is holding its big shindig here in Dallas this week. We won't be there for pretty much the same reasons as Vin Crosbie. We will be meeting up with some of our friends in town for the festivities, and we'll take note of the conference moblog.
Crosbie's post hints at an interesting parallel:
I don't mind an association conference that charge non-members 1.5 or 2 times higher registration rates. But 4 times the member's rate!...
If the NAA truly wants to increase it membership, it should charge non-member registration fees that aren't extortionate...
That bad marketing, particularly for a conference whose focus is on marketing and whose number of membership is no longer at its peak.
Not a surprising strategy -- sounds like it came right from a meeting of major market daily circulation executives.
Anyway, if there's anyone in town for the conference that wants to talk hyperlocal "wedia" we'll be holding audience at several bars around town o'er the weekend. Drop us a line.
One of the things that has struck me lately is that for all of the talk about how technology is changing the demands and needs of journalism, what a lot of us are talking about is using technology to enable a return to certain old-school methodologies and standards.
Maybe I'm too much of a romantic, but I think there's something to be said for the "old days" when local news was the end-all-be-all for local newspapers. Where one group of reporters worked geographic beats and had to report in daily come hell or high water.
Sure, there's a fair amount of technobabble in our business plan. But we aren't a technology business. We just happen to see some intriguing tools that will enable us to cost-effectively do what newspapers used to do -- things they've been cutting back on because of the economic constraints of the old business model and the public finance market.
Newspapers are cutting back on staff in the newsroom to produce original local content -- we say use technology, open-source journalism and clearer focus to produce more.
Ol' Bender (above, with apologies to Matt Groening) may be a good symbol for us -- old-school technogeeks. And like the stereotypical reporter of old, Bender can put away the hooch.
Aside from our vision of news, I intuit a cyclical peak in societal hunger for a connection to ideas and styles of yore (even if it's not your father's yore.) As the "electronic fedora" concept gelled in my mind, I ran across this Camel ad in Entertainment Weekly. What it says to me in my "when you need a hammer everything looks like a hammer" mindset is that we want our bluetooth AND our bell bottoms (and maybe some "pleasure to burn").
Technology is doing many wonderful things for us. The Internet, in particular, is bringing the world closer together.
But what's it done for your neighborhood? What should it do for your neighborhood?
I'd suggest that it will do very little, unless content comes from within the community. Google, Yahoo and AOL are all "going local." But, like much of the internet, there are no feet on the street. And others are trying to generate local content, but I can't think of anyone who'd ever made a scalable local run purely depending on the kindness of readers. (Better yet, the "engagement" of readers.) There's nothing that's more of a deal-killer than a user-generated content site with no content.
So what to do? Is there a way to leverage technology in such a way that you can afford professionals to enable journalism at the community level? And is there a way to then monetize the community engagement that results?
Stay tuned...
Our rants about the newsroom engaging in public debate about the future of news, while the businessfolk sit largely silent in the boardroom are well-documented.
Via Romenesko (who finally has an RSS feed), comes a voice in the wilderness, albeit a retired one:
From LOU ALEXANDER, "Former Retail Manager, Classified Manager, Display Director and Advertising Operations Director at the San Jose Mercury News, 1983 to 2003. Retired July 2003":...
One of the essential facts that newspaper ad people never talk about is the inherent inefficiency in newspaper advertising and that this inefficiency is what drives profitability. In fact, not only did we try to keep this a secret, the old Newspaper Advertising Bureau created a clever marketing name for the phenomenon -- The Thin Market Concept -- and tried to use it to get customers to buy ads on more days.
Let me try an example using a make-believe newspaper with 250,000 circulation, equal to 50% penetration, in a market of 500,000 homes, to illustrate:
The Thin Market Concept held that on any given day about 3% of the households in a market needed/wanted to buy a new refrigerator. If the newspaper charges $6,000 for a full-page ad for refrigerators, the costs of reaching each household is about 2.4 cents. But the cost of reaching the homes that are in the market for a refrigerator is much higher. There are 15,000 homes in the market for a refrigerator and the newspaper reaches half -- 7,500 -- at a cost of about 80 cents per view by households ready to buy. (And the newspaper missed the other 7,500 homes in the market for a refrigerator, but that’s another conversation.)
Fortunately for newspapers no one knows which households are ready to buy so appliance dealers have no choice but to pay the newspaper $6,000 for ads.
The web world turns the model on its head. Almost no rational person looks at online ads for refrigerators unless they are planning to buy one so very little money gets wasted delivering ads to households which are not in the market. Even if the cost per view is many times that of newspapers the total revenue is much less than that generated by the newspaper ad...
Although there is a great deal more to be said on this whole issue let me make one additional point. My make-believe newspaper above has 250,000 circulation and the local appliance dealer could be reasonable assured that almost all of the readers of the newspaper live in driving distance of his store. That is not the case with the eyeballs that look at a newspaper’s web site each day. I live San Jose, CA and I read one print newspaper a day -- the Mercury News -- but I have 14 daily newspapers in 9 states and two countries bookmarked in my web browser. I look at many of these newspaper sites daily. Although these newspapers are probably glad I use their web sites I am generally useless to their advertisers.
Finally, there may have been a time when, as Jeffrey Weiss put it, circulation revenue paid the costs of “producing the actual dead-tree paper -- presses, newsprint, ink, etc -- and getting it to them -- the circ depts, trucks, kids on bikes, whatever.” Unfortunately that is rarely the case any longer. The escalating costs of circulation operations -- and especially the costs of circulation marketing -- mean that in many instances circulation revenue barely covers the circulation department budget.
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