Tom Peters said a great thing at a seminar I attended a couple weeks ago.
“The problem is never the problem. The response to the problem invariably ends up being the real problem.”
This puts me in mind of the state of the media industry. In a week when Newsday announced it will begin charging for content, the managing editor of the WSJ declared that Google encourages digital disloyalty, and Bill Keller told his digital staff that learning the web side of the business was like taking a graduate level course without the undergraduate prerequisites, AOL CEO Tim Armstrong revealed that his staff of journalists has grown from 500 to 3,000 in the past 6 months.
Much has been said about the newspaper industry’s financial challenges. They are not alone, as AOL has been experiencing many of the same difficulties. PC World reports that in the first quarter, AOL’s advertising revenue fell 20%, overall revenue fell 23% and operating income fell 47%.
It seems however, that AOL is going to have a very different response to those difficulties.
Time Warner hired an online expert and ex-Googler to run their online business who has in turn re-organized not once, but twice to form the team he needs for AOL’s transformation.
Very soon, AOL will be spun-off from parent mainstream media
company Time Warner to form a completely separate entity leaving the AOL team
free of the concerns of a mainstream media company as they seek to grow and
Very soon, AOL will be spun-off from parent mainstream media company Time Warner to form a completely separate entity leaving the AOL team free of the concerns of a mainstream media company as they seek to grow and innovate.
And grow and innovate they shall. Tim Armstrong and the leadership at AOL understand that “fragmentation is our friend”. The MediaGlow publishing division consists of a mix of 84 branded and standalone vertical sites like Engadget and TMZ that combined have a total of 70 million UV’s and over 7 billion PV’s per month.
also seems to be a priority at AOL.
In hiring those 2,500 new journalists, attention was paid to the
audience those writers attracted.
“You’re not just hiring the person, you’re hiring the community they
Community also seems to be a priority at AOL. In hiring those 2,500 new journalists, attention was paid to the audience those writers attracted. “You’re not just hiring the person, you’re hiring the community they come with.”
This is a smart strategy. In a world where only 16% of Internet users click on a
banner ad and 8% of Internet users account for 85% of banner ad clicks, mindless
mass reach is becoming less attractive to advertisers.
This is a smart strategy. In a world where only 16% of Internet users click on a banner ad and 8% of Internet users account for 85% of banner ad clicks, mindless mass reach is becoming less attractive to advertisers.
Content and community are the new critical factors for site monetization.
Quality content is more likely to create engagement, which leads to community activity on the site, which leads to even more engagement. Engagement leads to more time on site, and the likelihood of more interest in the ads targeted to the site, which leads to ROI for advertisers. ROI for advertisers leads to site monetization, profit and the ability to further invest in quality.
Makes sense. In Armstrong’s words “…how do we get shareholder value? I think it comes from customer value”.
Armstrong encourages a culture of innovation at AOL and understands that sometimes you have to fail in order to learn and grow. "If you're not going to take risks and you don't think the future is bright," he said, "the Internet is probably not the right place for you."
And they are putting their money where their mouths are. Hyper-local experiment Patch.com continues to ramp-up. AOL will soon launch a new content management system that will allow for easier sharing of content across the verticals. It will also bring in more outside writers by enabling tracking that will make it easier to pay freelancers for the ad impressions generated by their content. Why that’s starting to sound a lot like the very successful and very smart Glam.com model.
Newspaper organizations are not led by digital experts. In fact, newspaper organizations are not spinning-off their digital divisions, but rather, are going in the opposite direction with a focus on integrating the print and web operations. They are in effect asking their managers and employees to do two part-time jobs. Create the exciting new digital future while managing the accelerating print decline.
Bill Keller illustrated the difficulty of this strategy when he lamented that he, unlike his digital strategy predecessor Jon “stop Jayson from writing” Landman does not have the “luxury of mostly detaching himself from a lot of the other problems in the newsroom. Little things like the print editions and the non-digital budget…” and therefore he won’t “master the intricacies of digital the way Jon did”.
For all their talk about the importance of content, most newspaper companies have not created a wide range of content verticals targeting multiple niche audiences. Sure they have created classified verticals and even mommy forums and a few pet sites, but few of those sites have editorial content.
Why haven’t newspaper companies created national vertical content sites like those of AOL? My guess is that these companies have never had a product culture. New features or sections are created by editorial or advertising, rarely both, and never by a person actually trained and skilled at product development.
I find the failure to create content strategies almost more troubling than the attempts at integrated structures. Clay Shirky says that one of the 3 non-economically based reasons that most newspapers will eventually fail is that the bundle of information they present online is “incoherent”. That is to say that the mix, of say, crossword puzzles, sports scores and international news was made necessary by the scarcity of printing presses. Newspapers produced the mix of content that would appeal to the broadest audience possible. As the web allows for narrower and narrower niches of content, maintaining the old bundle cannot work.
As for community, although more and more newspapers are recognizing it’s importance in the form of commenting and social media, their primary discussions are actually about how to stop it from happening by erecting pay walls.
In their book, The Three Laws of Performance, Dave Logan and Steve Zaffron make the case that “as people see the world, so they behave”.
Well, in most newspapers, the mood is like death. A place where people are worried about losing their jobs during the worst recession in 70 years with little hope of working again in their chosen profession is probably not the best environment in which to encourage risk-taking and innovation.
So let me ask you. Who’s got the better response to the problem?
Which looks like the better place to invest - an online media company that is led by Internet veterans and is growing and innovating, or one that is cutting, retrenching and retreating behind a pay wall?
Where would you want to advertise - an online media company that is focused on creating ROI through quality, community or engagement created by vertical sites or one that still bundles content for the masses and relies on the declining click-through rates of banner ads to provide results?
If you were a talented, passionate journalist, marketer, ad sales person or product manager, where would you rather work - a media company that is growing, hiring, innovating and encouraging risk taking or one that is shrinking, fearful and stuck?
Newspaper executives aren’t stupid, in fact quite the opposite. So why are they not doing what needs to be done?
I think the real question is why are they not allowing their companies to do what needs to be done?
I can only imagine that it is the very unpleasant reality that to affect the real change that will enable media companies to survive, there must be a massive power shift.
From old guard, to new guard. From print publisher to digital leader. From editor-in-chief to product developer.