In the last few weeks, media executives and analysts in the US and Europe have become much more bullish about business models where newspapers charge readers for access to content. Some from a consumer utility perspective, others from a straight profit-and-loss argument.

Eric Schmidt of Google said simply, “I am quite sure this will happen” in an Atlantic Monthly article in May, going on to speculate that people will pay for news to be delivered to their personal devices, whether smartphones, tablet PCs or laptops. Rupert Murdoch asserts that “People will pay for news when they have no other place to go” whilst Dow Jones CEO Les Hinton calls it “madness to give away expensive and valuable journalism”.

That said, the bulk of a news organization´s costs are not editorial. The economist Harold Vogel has shown that most newspapers, burdened with print costs, only spend around 15% of their revenues on what, in a digital business, would be the main assets – editorial staff. More than 70% of a newspaper´s spending goes into the physical costs of distribution – moving newsprint around the country.

Google, carrying none of the baggage/legacy costs of a traditional media house, can afford to be bullish some would say. But perhaps they are right? Perhaps the conventional tone of doom is not the only possible outcome?

According to WAN-IFRA, paid circulation newspapers have seen sales declines in the Nordic countries of 8.8% in the last 5 years and 3.1% in the last 12 months. To compensate, Nordic newspapers have embraced digital technologies to improve their audience reach and engagement. Other innovations have also helped to slow the decline. In Europe, free newspapers experienced strong growth – a 131% increase in circulation. Only in Norway (whose Schibsted publish free titles in France and Spain) is there no free daily newspaper, presumably due to the strong postion held by paid titles. Around 80% of the Norwegian population read a newspaper on an average day. This figure has stayed surprisingly static over the last 10 years when both print and online readers are included.

Print ad sales were affected by the 2008-09 recessions, but far less so in Europe than in the US (8.8% vs 17.7% declines). Internet ad spending continued to rise and in most developed markets should overtake print advertising.

There are substantial opportunities for newspapers in a number of “niche” markets. Some of these niches are large. For example, local media websites which can deliver interactive advertising to mobile devices. Microsites on niche topics, discovered by readers through search engines. Mobile devices with larger screens, such as the iPad, create further opportunities to combine text pictures and videos in more compelling ways that can be charged for.

This new, more fragmented media opens up opportunities for smaller advertisers to reach buyers in distinctive attitudinal or behavioral segments. To be able to sell advertisers these segments, media sales houses need better quality analytics to profile and group readers. This should also be combined with predictive analytics, so that new readers can be automatically added to the correct segment according to their online behaviors. In this way, newspapers can serve the interests of a diverse readership, and a much more diverse community of smaller advertisers for whom newspapers have historically been too expensive.

A November 2009 study from the Boston Consulting Group suggests that European readers will pay between €3 and €7 per month for online news access to established newspapers. Of particular interest was local news, specialized coverage, up-to-the-minute coverage, and the convenience of having that content delivered to a device of choice.  The keyword is engagement, and how effectively newspapers can keep their readers engaged, and thereby willing to pay a fee for access.

Google may emerge as an unlikely ally to newspapers. There are signs that Google News´ strategy (currently 25,000 sources in 25 languages) is becoming increasingly coordinated. And that one of its objects is to help sustain professional news gathering. Google´s view appears to be that online readers will eventually be worth as much as print readers. The present crisis is not a death spiral. If readers can be persuaded to pay for online subscriptions, then the value of display advertising will also start to rise. As Eric Schmidt says; “Newspaper´s don´t have a demand problem, they have a business-model problem”.

Google News has been accused of being a parasite on the news industry. I don´t see this. In actuality its headline-and-2-line-links are much more likely to steer a reader to the original news site than some of the larger news blog/aggregators who summarize a story in sufficient detail that visiting the original source becomes unecessary.  Accelerating and making this process more efficient for more searchers to become larger numbers of readers is key to the Google News strategy. This could for example mean skewing searches made through Google News to favour professional news organisations.

Or, like the Fast Flip project, beta´d in 2009, Google News could give more engaging previews of articles that are more than just a link. YouTube´s source code is also freely available, enabling news organizations (or any other) to set up their own video publication platform, for example encouraging readers to upload their own videos.

Behavioral targeting – the display of ads to readers or consumers deemed most likely to be interested in the offer – is another valuable tool available to newspaper publishers. Better geographical and behavioral targeting is the key to maintaining profitable CPM levels for newspaper publishers. By joining a behavioral ad network, a publisher can define how much, and what parts of their ad inventory they would like to sell through an external BT network (for example via Specific Media, Google, Yahoo, Web Traffic) etc.

The next step is for newspapers to start developing their own behavioral profiling so that they can sell the quality of their readers directly to advertisers, for premium rates. This means starting to identify natural segments within their sites, and readership that will have a strong appeal to national/local advertisers and create a plan to cookie those segments for ad serving.

Many newspapers in Norway will need help in enhancing their segmentation capabilities. Confetti is launching a new service area for media owners. We offer a range of processes and tools designed to analyse readership and advertiser data and build clear, actionable market segments which can be used to drive advertising sales.  For further information contact Russell Lack: +94809797 or russell@confetti.no

Apple announced their new iAd advertising platform to much fanfare earlier this month. This completely new advertising platform will be a part of the 4.0 mobile operating system update.  Given the numbers of iPhone and iPad users within the total population of mobile users, the new platform will help to standardize the process of creating mobile ads. Thanks to the multitasking features of 4.0. iAd should also provide richer more engaging options to advertisers.

Most mobile advertising today consists of a shrunken banner ad. As Steve Jobs puts it ”most mobile advertising sucks” – clicking on a mobile ad triggers a new web page, which takes the user away from what they were looking at, making it impossible to return to the exact place they were before triggering the ad.  Intrusive, irritating advertising.

By embedding ads in applications, users will experience ads as part of a cohesive experience. Jobs says Apple will be serving 1 billion impressions per day im by the end of 2010.  Whilst these impressions are served, applications will continue to run in the background. Tasks will continue to execute. And so the logic goes, applications will remain cheap or free, since they will be part financed by advertising.

iAd exemplifies Apple´s drive to keep users of their hardware locked into a walled garden of iPhone and iPad applications. Its a bet on the future of the mobile web being experienced through applications, rather than through web browsers.

As with their earlier mobile operating systems, Flash (used on 85% of the top 100 websites. and 75% of web videos) will not be a part of 4.0, which will instead be based on the new HTML5 standard. Advertisers will therefore need to rework their Flash based ad inventories to access the iAd universe.

This reworking involves transcoding Adobe Flash content and translating it into a format compatible with the iPhone and iPad.  The most promising solutions so far are server-based, where websites transcode content and then push it to the mobile client which is installed on the mobile handset.  With Apple´s blocking of Flash applications, a large market opportunity is opening up for companies prepared to get in the middle of Apple´s fight with Adobe. Early leaders include mobile browser applications such as Skyfire (www.skyfire.com) and Opera Mini (www.opera.com) and transcoding specialists Ripcode (www.ripcode).

As stated, Apple has placed a bet on HTML5 over Flash as the future of (their) web content. HTML5 has proven itself as an attractive platform for ”web productivity” tools such as Google Apps, online CRM systems such as Salesforce.com and even the new online version of Microsoft Office. Many apps will leverage the strengths of both Flash and HTML5. And many HTML5 applications will leverage the strengths of Flash Player.

Yet the ”pure” HTML5 applications that Apple have mandated have not really made much progress in the area of Rich Media Applications such as games, online video and rich media advertising where Flash still clearly predominates, and will do so for many years.

Only a company with Apple´s consumer reach, market power and singular vision for technology can motivate the adoption of pure HTML5 by publishers and developers. Its a safe bet they´ll succeed sooner than expected.

Bit.ly is a NY based company launched in Aug 2007 that shortens URLs. A must-have to anyone posting regularly on Twitter and other microblogging platforms.
What´s interesting about Bit.ly as opposed to say Digg and other URL shorteners is that the process of shortening a URL using Bit.ly also generates some very interesting data on the real-time popularity of links. Unlike Digg for example, which relies on the flawed process of human voting to determine a front page article, Bit.ly is a distributed link service, so much harder to game. To generate real-time data on your link´s popularity, you can put a “+” on the end of any bit.ly URL, and see the speed at which it is being shared and clicked on by users of social networks.
Bit.ly shortens around 7m URLs per day, 2-3m of which are “new” – ie. they haven´t been previously shortened. Bit.ly Now was announced yesterday, and will open the data up to web users. There are many different ways in which this data could be applied. For example working with Bit.ly Now to produce a real time data feed of a campaign landing page´s popularity. Since Bit.ly can also track the acceleration of clicks from the social web, users can make incremental changes ot a campaign page and see how effectively they connect with users.

The ever fascinating John Hagel of EdgePerspectives has a new article out in Harvard Business Review called Shaping Strategies.

He suggests that shaping perceptions about the attractiveness of markets may be a more effective reponse to uncertainty than trying to adapt a business model.

The article explores examples of successful shaping strategies in industries as diverse as shipping, apparel, financial services and high tech.

Hagel claims that 3 key elements come together in these strategies;

1. a compelling shaping view to provide focus for investment by participants

2. a powerful shaping platform that provides economic leverage for participants

3. a set of acts and assets by the shaper to communicate conviction and capability to potential participants.

As Hegel makes clear, not everyone can be a shaper, but all companies need to make explicit choices on this front. If they choose not to be a shaper, they need to understand the shaping strategies that are in play in their relevant markets and make choices about what role to play in the shaping strategies of others.

You can download the article here

Facebook has made 2 very smart moves in the last 3 weeks.

1. Opening up to OpenID, which gives Facebook access to Google/GMail users
2. Introduction of “vanity” URLs (custom user names), which helps to lock in the vast numbers of casual web users for whom Facebook is ther dominant channel.

Facebook inherits a short term data processing headache – how to harvest and sort all those new GMail account users, but it´s made itself that much more indispensible as curator of your digital identity.