How Web Writers Get Held Responsible for the Lawyers, the Sales Guys and Even the Coffeemaker

Christopher Conklin provides a relatively clear introduction to the math involved in CPM-based online advertising sales, in the context of trying to settle an argument between Henry Blodget and Felix Salmon.

How Web Writers Get Held Responsible for the Lawyers, the Sales Guys and Even the Coffeemaker

Street by street, block by block

Back in the early days of grad school, when questions about the future of online advertising came up, I was bullish about the future of location-based mobile advertising that would by contextually relevant to the content you were viewing and the place you were sitting.

I was wrong about a big piece of how this would work: I envisioned free wireless access blanketing the world, so that you could be sitting on a bench in downtown Santa Cruz with your laptop and find out, while reading a story in the Santa Cruz Sentinel’s food section, that Lulu Carpenter’s had a deal on day-old pastries right now.

This was pre-iPhone, and the most “super” mobile device I had at hand was a bottom of the line half-sausage sized thing from Verizon.

Now, that next step for local advertisers looking to capture walk-in business from real live human beings in their neighborhood is becoming far more clear.

Foursquare and Gowalla, location-based services you should be well aware of by now, are already getting into this business, opening up the market.

Here’s the “anatomy of a Foursquare special” as broken down by Cory Bergman at Lost Remote:

“Clicking over to the special reveals a useful offer for a free drink with a $20 purchase — if you show that you’ve checked in from the restaurant.”

Keep in mind, a note about a “nearby special” shows up in Foursquare next to the name of the business when you’re casually browsing nearby places, or checking in at the competition across the street.

Over at VentureBeat, a look at iPromote, a company building a mobile ad network to allow local businesses to advertise to anyone who happens to walk by:

“For a minimum of $5 per day, iPromote will serve ads to mobile phones near an advertiser’s place of business. The company serves both display ads, for which clicks aren’t counted, and cost-per-click ads where the advertiser only pays when a user clicks through an ad to their site.”

Sounds like a healthy model.

Of course, there’s a disruptive elephant-sized gorilla in the room named Google.

Push a button on your phone and Google tells you what’s nearby. As in, local businesses, restaurants, etc. How long before they start selling featured listings based on geography? Want to be the featured one-dollar-sign, four-star restaurant within a fixed square mile? That’ll cost ya…

Here’s the short list of location-based mobile apps on my iPhone right now:

  • Foursquare – Mostly using this these days when I’m at a restaurant or otherwise non-routine location. Especially useful when I was in New York City over New Year’s.
  • Gowalla – Trying it out. It’s cuter than Foursquare, but I don’t see how it’s any more or less useful yet.
  • Yelp – I still use Yelp on my phone whenever I’m in a strange city and just want to know where the nearest Thai, Vegetarian, or Burrito  joint can be found.
  • UrbanSpoon – Cute slot machine interface, but nothing special.
  • Brightkite – I used to check in here socially, as I way to declare when I arrived in a new town for a conference. More for social check-ins than local business action, and I haven’t checked it in months.
  • EveryBlock – Might be fun to check the restaurant inspections, Flickr photos, or crime reports here while walking down a block, but I haven’t.
  • Honorable mentions on my phone for Redfin and Zillow — both real estate apps extremely useful when househunting, especially when you just want to know what’s for sale near your current location, while you’re cruising around checking out neighborhoods.

Have any favorite location apps that I’m missing? Are any local news organizations selling their own location-based mobile ads, or just buying into larger networks?

Carnival of Journalism: Are we asking the right questions about online revenue models?

As is my habit, I’m running behind on my Carnival of Journalism post this month, set to the timely and tuneful whistles and bangs of talk about whether a newspaper’s online revenue could support the newsroom, how long the newspaper of record will keep the press running, and what a major metro in a failed JOA can do to survive online.

So, the question, posed by Paul Bradshaw (and be sure to check out the Seesmic thread as well) is as follows:

“How do you financially support journalism online?”

Of course, as is my habit, I’m going to have to sharpen that question up a bit, lest I fall prey to the temptation to speculate wildly about the future of major metro newspapers and their finances, as I’m sure I’ve done in the past.

So let’s get specific.

Here’s what I’m not interested in talking about:

Whether the current online revenue of a giant newspaper could support its newsroom staff.  I think that’s an apples/oranges problem.  Shutting down the press is not a hydraulic maneuver — it does not occur in a vacuum — it affects brand and upsell revenue and staffing and all sorts of parts move and grind against each other when you flip that switch on a large scale.  So, looking at two columns in a spreadsheet and saying “oh, they match” is a bit simplistic for my taste.

Great, so, moving on.

Well, wait, not yet.  One more thing to get out of the way:

I’m not (that) interested (today) in trying to figure out what revenue, then, will support major metro newspapers online.  When a major city loses its last print edition, it will be because it has already been replaced, in terms of reporting, advertising, commentary, and yes, journalism, by (mostly) smaller organizations.

And by definition, I expect a newspaper.com in a no-print city to look and feel infinitely different than it does now, to be a distributed news service, the sum of dozens of tiny parts, a portal to a wide variety of platforms where bits of news pushed out and pulled in.

(Right, so again, these are all the things I’m not going to talk about today. Right. Sure.)

My question, then, is how to support a small, agile, online-only news organization.

And that’s a much easier question to answer, isn’t it?

Let’s start with three obvious ways:

  1. Local Advertising. What?  You thought online advertising couldn’t support online journalism?  Well, it all depends on scale.  If you’re building a community news site for a 10-square-mile area, you’re likely to find a set of local businesses that have never had an advertisement online before, and certainly not running on a news source that exclusively covers the area in which their most likely customers live.  A combination of banner ads sold at reasonable rates, business listings, and sponsorships should bring in a portion of your revenue.
  2. Freemium Classifieds. What?  You thought craigslist killed every possible opportunity for local classified ad sales?  No.  Not in hundreds (thousands?) of markets in between major cities, and maybe not at the neighborhood-level.  Either way, you’re going to make money off classifieds without turning away one-time customers who aren’t interesting in paying to sell that old tricycle.  Here’s how:  Offer new customers five free ads.  After that, they pay.  Businesses always pay.  Real estate brokers and car dealerships pay a premium, especially to add video to their ads.  The key to this?  A simple self-service system.  Keep the interface basic and friendly, and tailor it to your community.
  3. Community-Funded Reporting. What? You’re worried that you won’t be able to pay for long-form investigative reporting on a small community site budget? The simple answer is that the community will pay for the stories that would otherwise be missed by a larger, slower, all-encompassing news organization with a broad coverage area. See the Spot.Us project for live examples of enterprise reporting that were funded, a few dollars at a time, by community members and other interested parties (like me) who don’t live in the area anymore, but still take an interest in local issues.

After that, there are less obvious ways to keep a small organization financially afloat, but they’ll vary based on your skills, staffing, and neighborhood.

Does that local business need a Web site to go with their banner ad?  I hear there are these new things called “blogs” that might be easy for them to maintain once you set them up with one, handling the hosting, domain management, and upgrades for a fee.

Other moving parts to keep an eye on:

  • Ethan Zuckerman asks if ad-support journalism is viable, using the example of a 25k print circulation newspaper as a point of reference for his thoughtful analysis of the logic behind CPM ad pricing online.
  • VentureBeat on changes at Federated Media, a display advertising network for technology blogs and news sites.  The changes seem to focus on getting away from straight-ahead banner advertising.
  • No News Is Bad News, a group in Seattle trying to figure out what to do next with the Post-Intelligencer, which is likely to fold as a print newspaper around 50 days from now after not finding a buyer.

Dealing with the elephant: Cutting ties to the legacy albatross

[Some time ago, I wrote a series of posts that attempted to address some of the revenue-related issues facing traditional news organizations and suggested some possible solutions to making incremental (and larger) changes that might help them stay profitable. For no good reason, I’m going to carry on the ill-advised, barely meaningful elephant metaphor (or is it a metaphor piggybacking on a cliché?) every now and then when I write something about the changing business models for news production and consumption.]

Zac Echola has posted an essay (it’s really longer and far more in-depth than the average blog post, although that’s par for Zac’s eloquent course) called “Cutting the cords, bridging the gap.”  It’s mostly about making serious changes to your news business to keep up, increase online revenue, and (crucial part here) decrease what I’d call your legacy expenses.  As in, print.  As in, outdated systems and vendors that aren’t geared toward

Here’s a long clip from early in the essay:

“Media companies must sever the bindings that drag business in the long run. Market fluidity, the key to the successes of the few that weather the coming storm, will only come through agility and unyielding focus on the future. Mammals didn’t inherit the Earth because the dinosaurs died. The dinosaurs’ extinction was a product of an outside force that lead to a more hospitable environment for mammals. Yes the majority of revenue comes from the ‘core’ print product, the ‘core’ broadcast product. But we aren’t in the ‘newspaper’ business. We aren’t in the ‘broadcast’ business. We are, by definition through ownership of web domains, in the information business. We’re in the advertising business. The medium is just that—a medium for passing information and advertising, connecting audience in search of information to business in search of audience. The Web is best suited to show measurable results to advertisers looking for ways to not spend advertising during a recession.”

Now, that’s the hook.  Zac goes on to explain — in far more detail than I have, with a lot of knowledge of precisely the sort of legacy systems, vendors, and thinking that forces the hands of news organizations and their corporate parents — some of the particular advertising-related problems facing the news business online and suggests a number of good solutions.

The hitch, because there always is one, is that doing the job right often requires doing it yourself.  At the scale of one newspaper that can logically pay a developer instead of three vendors, great, no problem. Done. But at the scale of a consolidated newspaper or broadcast company, perhaps it is more difficult to rationalize that change, depending greatly on the resources available, and the scale of the company.

Read Zac’s post and add your comments there, especially if you’re someone in a position to make changes like this in your organization.

Depressing bonus link: Alan Mutter details the financial problems of a newspaper company, answering common questions about stock prices, bankruptcy, and debt.  See also: Steve Yelvington calls it an “ownership crisis.”

Inspiring bonus link: Mark Glaser’s recent MediaShift post rounds up alternative and innovative business models for news.

Dealing with the elephant, elsewhere

Paul Bradshaw comes up with a list of 10 ways that ad sales people can save newspapers:

“…how about a slot against the ‘most popular’ story of that minute (if it helps, think of it as the equivalent as the front page ad), second most popular, and so on (you could even auction these slots in the same way as Google does with AdWords).”

Daniel Victor calls for online news workers to stop playing the Underpants Gnome game:

“Basically, Web-savvy reporters right now are the Underpant Gnomes. We’re getting better at gathering the underpants, but we don’t know how to turn them into profit yet. That Web content is providing very little revenue now, and we don’t know how it’ll produce more revenue in the future.”

A few weeks ago at Idealab, MIT professor Chris Csikszentmihályi questioned the wisdom of looking for a “business model” at all:

“While the model in which a firm produces a product is common and viable, some of the biggest product success stories in recent history don’t actually come from businesses. That’s not to say that no one is making money from these products; there is plenty of green in these fields. But there isn’t a one-to-one mapping between business (in the sense of a firm) and product. These new products are generated under the alternate organization of knowledge, labor, and capital called the free software model.”

When the term “open-source news” has been thrown around in the past, it usually was related to what became a logic (if not exactly a movement) called Citizen Journalism. But what about the idea that the business of a news organization could be open-sourced? What does that even look like, organizationally speaking. And financially?

Things to continue to think about:

  1. Practical, iterative ways to work within today’s organizational structure to increase online advertising revenue.
  2. Getting the Webbiest brains in the newsroom to think about monetizing their work.
  3. What does a news business look like after we throw out the existing model and start fresh?