The New Newspapers

Free newspapers are distributed outside a metro station in central Madrid. ©

A week does not seem to go by in which the New York Times does not begrudge the demise of newspapers, with the most recent discussion debating the effect of micopayments on journalism. In the meanwhile, I can not help but notice the new newspapers that are emerging from the woodwork. I can spot at least three different types of new newspaper.

Newspapers That Selling Something
The premise of the Free business model is that when certain types of goods become widely available, you need to start looking at what else there is in the offering that becomes scarce and chargeable. ClearAdmit and similar admissions consultants show how publishing MBA news markets their MBA admissions consulting services. ClearAdmit maintains a blog updated at least once a day. The blog covers news from the MBA schools - sometimes from the schools' own press releases, but also from direct sources, such as interviews with schools admissions staff. For ClearAdmit, and other similar consultants, maintaining such a blog attracts regular visitors to their site more effectively than an informational website would. The blog also allows ClearAdmit to demonstrate a level of credibility for the admissions consulting services that they sell. ClearAdmit is not unique in publishing news to sell other things. The blogs at harvardbusiness.org are intended to attract readers to long form articles in the printed Harvard Business Review and even longer form text in the form of Harvard Business School Publishing's books. Tescos Magazine consists of lifesyle articles with suggestions in side panels of related products that can be bought.

Hyper-local new sites that feature user contributed stories.
TribLocal and MyCape are hyper-local sites that allow local residents to submit their own stories. The promise of sites such as these is substanitally low overheads - there is no need for a print edition or even paid journalists. Even the New York Times seems to agree that there could be promise in this model: on Monday 2nd March they are launching their own hyperlocal blogs with contributions open to local residents. An obvious revenue generator for such hyper-local publications is hyper-local advertising. If you are the biggest grocery store in Brooklyn, you are not going to advertise on the internet using Google Adwords (the monoploy internet advertising platform). If you were to do so, your ad would be displayed to any person randomly searching for Brooklyn or grocery related subjects on the internet. The conversion rate for ads displayed to actual goods sold would be low. However, on a web site where the vast number of readers are from Brooklyn, such as a hyper-local news site, the grocery store can be sure that an ad's coversion rate is as high as it can be. Hyper-local news sites open up internet advertising to small to medium sized location based businesses. [Update: CUNY's involvement in NY Time's hyperlocal blogs].

Free Printed Newspapers
With the availability of free news on the Internet, London has seen the arrival of free printed publications. Metro started in 1999, but in recent years has been joined by The London Paper, London Lite and Sport, an infrequent sports magazine. As though from a Clayton Christensen case study, this "free newspaper" disruption even has a different distribution mechanism to the incumbant paid-for newspapers: these papers are typically handed out at London Underground train stations. The rise of free newspapers has been phenomenal and not a local phenomenon. In Madrid, free newspapers are more popular than paid newspapers. The Guardian describes the financials for a mainstream newspaper to go free, and indeed even suggests that most mainstream newspapers should go free so that they can drive traffic to the newspaper's online site and fully embrace the internet phenomenon. A study into free newspapers describes the differences between distribution driven (i.e. free) newspapers and content driven (i.e. paid) newspapers. The study suggests that free "distribution driven" papers are targetting the specific needs of the people in the distribution channel, i.e. the needs of commuters - typically a younger audience in search of short articles to be read on the go. These free newspapers are successful in running off a predominantly advertising only revenue model.

In conclusion, traditional newspapers may be dying, but journalism is thriving. New kinds of newspapers are emerging to more closely meet our needs than that which the traditional newspaper, sold from a newspaper shop or stand, has typically served.

Television, but not as we know it.

This billboard ad gives a taste of the competition between Sky and Virgin Media. ©.

In the distant past, all television in the UK came through a terrestrial TV receiver. The big competition was between the BBC, iTV and Channel 4 – the big TV channel operators. Yet now, in this day and age, these same broadcasters are forming tight-knit partnerships that mean they will share resources ranging from technology to news reporting facilities. These same broadcasters are also the major partners that constitute Freeview, the venture that owns the digital terrestrial television platform. Has the basis for competition shifted? Rather competing TV channels, are we entering a world of competing TV platforms?

Two big pillars have emerged in the UK broadcasting landscape over the last 20 years. Struggling as independent satellite television operators, in November 1990 Rupert Murdoch's Sky Television and the BSB merged to form BSkyB. By February 2007, a series of mergers of numerous independent cable television companies starting as far back as in 1997 led to the formation of a single cable television operator, Virgin Media.

Currently iTV, Channel 4 and Channel 5, the commercial terrestrial television broadcasters in the UK, are starved of advertising revenue and struggling in stay afloat. The BBC is funded by a compulsory television license fee that the British public pay. Already a small portion of this license fee goes to the commercial terrestrial broadcasters. Facing bankruptcy, these broadcasters are now asking for a larger slice of the license fee. In response, the BBC has instead proposed a Public Service Broadcasting partnership between the terrestrial broadcasters. This partnership is designed to exploit the BBC's vast scale, providing the other broadcasters with some of its technology, television making facilities and other resources. However, is this the first step in the eventual merger between all the terrestrial television broadcasters?

In the same way that the UK has a dominant satellite television operator in BSkyB and a dominant cable television operator in Virgin Media, are we now seeing the emergence of a single dominant terrestrial television operator? The groundwork for such a merger is already in place. Following analogue switchoff, the terrestrial television platform will be entirely digital and entirely dominated by Freeview. The Freeview partnership consists of the BBC, iTV, Channel 4 as well as Sky and Crown Castle. Already the BBC, iTV and BT are working on developing the Freeview platform to exploit integration with the internet. This integration will make the Freeview platform competitive with BSkyB's satellite platform and Virgin Media's cable plaform.

The next five years promise to be interesting for the television landscape in the UK. Long gone are the days of competition on the single terrestrial platform between the BBC, iTV and Channel 4. The value chain for television broadcasting is changing. The competitive pressure in the chain is moving from the channels to the television platforms.

Updated, 2nd March: 

• A useful link: Bonfire Of The Broadcasters: ITV, Five Cuts Expected; C4/BT Vision Merger Mooted [paidcontent.co.uk]
  

Zeroing The Cost

Tim Draper is known for breaking out into song with The RiskMaster.

I was fortunate enough to attend the Kellogg 2009 Private Equity and Venture Capital Conference. The conference's keynote was given by Tim Draper, a founder member of the prestigious venture capital firm Draper Fisher Jurvetson.

What I found most interesting in Tim's presentation was the three things that he looked for in companies that he invests in:

1. Zeros a typical cost in the business model. e.g. Hotmail removed cost of delivering post, Amazon removed cost of inventory.
   
2. Revolutionises some existing business. e.g. Hotmail revolutionised postal mail, Amazon revolutionised bookshops.
3. Solves a problem.

While the second and third points are not extraordinary, I did think the first point to be fascinating. The reason that the Internet has become the powerful force that it has is because it is zeroing costs found elsewhere. You no longer need to have physical copies of music in the form of CDs etc. The same is true for newspapers, the contents of which can easily be read online. In the meanwhile, Facebook zeros the cost of keeping in touch with people - you no longer need to email or phone someone to see what they have been up to; they update their profile and you can respond as and when you want. eBay zeros the cost of the finding someone to buy your goods. Wikipedia zeros the cost of assimilating vast amounts of information on any topic.

It makes you wonder: how can you take any traditional business and zero its cost in the new media world?