Joe Wikert's DisruptorFest

Newspaper industry realities

I recently marked the 3-month mark in my new job at Olive Software. It's a terrific place to work, btw, and I couldn't ask for a more interesting opportunity -- we've got a great team, both here in the U.S. as well as in Israel.

I'm still fairly new, of course, but I've been fortunate to learn a lot in a very short period of time. Some of the issues facing our biggest channel, newspapers, are similar to the ones faced in all content industries. Others are a bit more unique to newspapers. I thought I'd take a few minutes to summarize the key challenges I see as well as some of the solutions I believe are required to address them.

Demographics

For the last several years of my work in the technology book industry I used to say that our customers are getting older...and dying. We weren't catering to the younger audience. That is, of course, also true in the newspaper world. The under-30 crowd grew up with the Internet and largely believes content is and should be freely accessible. Part of the solution here is finding ways to monetize via advertising, which is easier to do in the news world than in the book world. Either way, In both cases though I believe the future leaders will be the ones who figure out how to get the most out of smaller revenue bases. That means the entrenched leaders have even more cutting to do while the startups, who aren't struggling with The Innovator's Dilemma, have plenty of opportunities ahead.

Replica vs. Dynamic UI

Your local paper probably offers a digital version and it probably looks just like the print edition. That replica version is nice but certainly not the end game in digital news. Related to the demographics item above, replica editions are largely favored by the older crowd and not so much by the younger reader. Most newspapers still rely largely on that older audience to drive the majority of their revenue, so they certainly can't afford to abandon replica. The winners here though will be the ones who figure out they need to offer two digital options: replica and a more dynamic version. The latter needs to have a born digital feel to it, one where 20-somethings don't look at it and say, "that's the product my parents and grandparents read, but it's not for me."

Content Sources

Crowdsourcing isn't the long-term solution here but neither is the newsroom, on-staff writer/editor model. The future leaders in the news content space will leverage something in between. Yes, there will be some staff members but far fewer than ever before. Freelancers will become much more important as the papers continue focusing on reducing their fixed costs. And beware the columnist or other contributor who feels they are the brand. This is true in some cases where the author has established a highly unique style and voice in the market. Those are few and far between though...more rare than previously thought. If you don't believe me, just ask Walt Mossberg and Kara Swisher; they're quickly learning that Dow Jones, at least, feels the AllThingsD brand is much bigger than either of their personal brands.

Extending the Brand

Speaking of brands, newspapers need to wake up before it's too late and focus on how they can extend their brands. What comes to mind when you think about the world's most popular newspapers? Quality? Trusted source? Politically leaning to the left or right? All of these characteristics have life beyond a print paper or its digital replica. Papers have been so focused trying to save their advertising income and reigniting their subscriber base that they really haven't given enough thought to how they should extend their core brand name before it's value is extinguished forever. These trusted brands need to venture into new channels with their content.

Local vs. National vs. Global News

Most papers are struggling to find their identity in the new, digital-first world. Are they focused mostly on local? More on national with a bit of local? What about global coverage? My local paper is going through this problem right now. Their solution seems to be "add more content." I don't think that's the long-term answer. This strikes me as something that's too little, too late. They need to instead focus on extending their brand with new types of products and dominating the market with some unique coverage. Instead they're planning to serve up more syndicated content from USA Today. Again, not exactly an inspired solution for today's challenges.

USA Today 2.0

Like many others in this industry, I'm curious to see what Jeff Bezos does with The Washington Post. As I said earlier, I think you can count on him doing some very innovative things at WaPo. And one thing we know for sure, Bezos always takes the long view on the market, so the industry should brace itself for some very aggressive tactics, even if it means losing a bunch of money in the short term. I liken it to the same impact USA Today had when it launched in the early 1980's, only more cut-throat. :-) Bezos has a long history of making markets more efficient and hastening the demise of the competition. Look for more of that as he disrupts yet another industry.

The "more content is better" myth

Despite what some people think, content is not a commodity where the more you have of it the better off you are. In fact, the opposite is often the case; we're all swimming in content and unable to keep up with the constant flow of new articles, books, etc. So why do some publishers still think more is better?

I'm reminded of this flawed "more is better" logic by my local paper, The Indianapolis Star. The Star has spent the last week or so hyping the fact that their daily edition will start getting larger next month. More local coverage. More state coverage. More sports coverage. More of just about everything. Pretty much every newspaper has been shrinking over the years, so on the surface this might sound like good news. I often joke that Tuesday's and Wednesday's editions of the Star are nothing more than brochures, so you'd think I'd be on board with this move.

While I do believe this strategy might help slow the short-term drop in circulation, it's definitely not a long-term solution. All they're really playing to is the die-hard print newspaper fan, probably in the older demographic and getting older every year. Meanwhile, the younger demographic, most of which have never subscribed to a paper, won't find anything appealing here.

I don't want more content from my local newspaper. I want more better targeted content from them. I want content that fits my particular interests, not just more content in general.

This is why I, like millions and millions of others, tend to spend more time getting my news from sources like Google News, Flipboard, Pulse, Zite, et al, than I do from my local paper. These services let us tailor our content feed, so even though they start with infinitely more content than the local paper, the results are customized to match our needs and interests.

Yes, local papers allow customization like this, but they're starting with a base of content that's a fraction of the size served up via Flipboard, Pulse, etc.

Publishers, rather than trying to wow us with the breadth and depth of your content, please give more thought to the services you're really competing with (e.g., Google, Zite, etc.) and what level of personalization you'll offer your customers.

In search of a better search

Imagine Google's search results with no sophisticated algorithm behind them. Rather, when you type in your search phrase and press Enter, Google simply shows you a list of websites where that phrase can be found. No indication of relevance. No ranking mechanism. It's just a list of the sites that contain the phrase. Maybe the list is arranged in chronological order, where the older sites containing your phrase appear first.

Pretty worthless, right? So why do we accept that as our search solution in every major ebook reader app? Open an ebook, search for a phrase and the results merely list each occurrence of it, arranged from page 1 through the end of the book.

You might think a sophisticated search would only be useful for specialty products like textbooks and other reference materials. I disagree. I could see something like this being quite useful in novels, for example. Let's say you forgot who a minor character is and you'd like to quickly learn more about them. Sure, you could do a simple text search and see where the character first appears, but wouldn't you prefer results that provide some context? Maybe it's really the fourth occurrence of that character's name where you'll get the real details on their role in the story. That wouldn't be easy to figure out with today's ebook search capabilities.

And yes, I'm aware of at least two specialty ebook platforms that offer better search results. That's because they have editors who spend hours and hours parsing the content to build this feature manually. I have one word for them: scale. Their solution simply doesn't scale...more on that in a moment.

Here's another use case for a smarter ebook search feature: catalog-wide search. I challenge you to go to Amazon or a publisher's website and use their site search feature to tell you which book has the most in-depth coverage of a particular topic. Let's say you're looking for a book about creating websites. You want one that provides thorough coverage of HTML but also offers a solid introduction to JavaScript. You can't use site search on Amazon or a publisher's site to figure this out. You'll have to look at each book's table of contents and determine the answer yourself, one book a time. A better solution is one where the results show you exactly how deep the JavaScript coverage is in each book, arranged where the books having the most in-depth coverage appear first.

Now back to the scale problem... The key here is to enable these richer search results without requiring a bunch of manual labor. Book publishers are trying to reduce staff and cut costs, not add more of either. So the only way to deliver this service is through a software solution where the content is analyzed and a rich, context-sensitive index is created.

Does that sound far-fetched to you? I don't think so, In fact, I believe we'll see a service like this very soon. I know I'll get a lot of use out of it and I bet you will too.

The most surprising aspect of Kindle MatchBook

The publishing industry has been buzzing lately about Amazon's latest announcement, Kindle MatchBook. MatchBook, which launches in October, offers consumers extremely low-priced ebook version of print books they've already bought (or will buy).

My first reaction to the announcement was, "great for consumers, not so much for publishers and authors." MatchBook is consistent with Amazon's overarching goal of offering the world's lowest prices. So as a reader I'm thrilled about MatchBook, but I have to admit it's yet another reason why I'm kind of happy to no longer be in the book publishing business.

MatchBook will only help erode the perceived value of ebooks. When the original Kindle launched in 2007 Amazon convinced us that ebooks should be $9.99 or less. MatchBook will now cause consumers to look at ebooks as a $2.99 (or less) throw-in or afterthought when you buy the print book. Publishers are already struggling to grow their ebook revenue fast enough to make up for their ongoing print revenue decline. What happens when there's even more downward price pressure like this, even as a bundle?

Publishers have had plenty of opportunities to take more control over their destiny up to now though. What I'm talking about is the need to create direct channels to their customers. Since most don't bother with that, they've simply handed the keys to the kingdom over to Amazon and they have no one to blame but themselves if they're unhappy with a program like MatchBook.

Btw, reports I've read indicate publishers need to opt in to MatchBook. So if a publisher doesn't like the concept, they can sit on the sidelines. But even if they don't participate, there's no stopping the perceived value Amazon is creating around ebooks with this program.

The MatchBox offer doesn't surprise me and neither does a lack of broad publisher participation. What I am surprised about though is that Amazon is actually giving publishers the option to participate in MatchBook.

Publishers never had the option to stop Amazon from selling ebooks at a loss for $9.99. (The agency model was supposed to address that, but the DOJ believes Apple's tiny ebook market share has penalized consumers, so the agency model has officially been neutered.) Since Amazon is free to assign whatever price they deem appropriate on an ebook, why can't they do the same for the price on ebooks that are bundled with print books?

Is Jeff Bezos turning soft? I'm stunned that Amazon didn't just march forward and say, "MatchBook lets you buy the ebook version of any print book you've bought from Amazon, all for $2.99 or less." They'd pay the publisher their portion of the full digital list price, which means every bundle sale would be made at a loss.

Here's what I think will happen: Amazon initially gave publishers the option to participate in MatchBook. Most didn't. Amazon moves forward with the MatchBook launch next month and they'll closely monitor the numbers. If the results shows Amazon could open this up to all ebooks without adding significantly to the company's overall quarterly financial loss, they'll announce a much broader version of MatchBook down the road, with our without publisher approval.

Rediscovering Zite

I first wrote about Zite a couple of years ago when I did this interview with their CEO, Mark Johnson. If you're not familiar with Zite, it's a news-gathering and reading app that learns what you like and feeds you additional related content. (More on that last point in a moment.) Within a year of that interview Flipboard made it to Android, my preferred platform, and I started using Zite less and less. Why?

The Android version of Zite always felt like an afterthought. The UI was clunky at best and didn't offer the sizzle of Flipboard's UI. Yes, I admit it...I was won over by the shiny object that is Flipboard. I even went to the trouble of creating my own Flipboard magazine.

About a week ago I noticed Zite had an upgrade to their Android app and I thought I'd take another look at it. I'm glad I did.

Zite finally got things right with this latest Android version. It still doesn't have the fit and finish of Flipboard but it's lightyears ahead of the prior version.

More importantly, Zite's key feature that attracted me in the first place still makes it a unique product: Zite does a nice job finding new content I'm interested in. Although Zite's algorithm could easily lead to life in an echo chamber, I've never found that to be the case. I originally configured Zite with my favorite topics and I'm often presented with new articles in those areas from people I never would have discovered without Zite.

So if you haven't explored Zite up to now, or if you were like me and lost interest for a bit, now is the time to revisit this terrific app.