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April 14, 2011, noon

The newsonomics of the digital cafeteria

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

Here’s how newspapers sell what they do to would-be readers.

You can get the whole paper, now sometimes including digital access. We’ll sell you Sunday only, or the weekend, or 7-day, but you have to take our whole paper. That’s what we sell; that’s our one-size-fits-all product. It fit your grandparents and your parents, so why shouldn’t it fit you?

If newspapers were in the restaurant business, they’d be out of business quite quickly. That’s not much of a menu. There’s practically no à la carte, other than single copy, which is again the whole thing, but just once. It’s prix fixe, with early-bird specials for introductory signups.

That longstanding (with the prices going up as the product largely declines) menu is about to change. We’re moving — maybe smoothly, but my guess is fitfully, just like the newspaper industry does everything else — to a cafeteria approach. It’s a digital cafeteria, of course, making use of the infinite flexibility of digital production and marketing.

In early 2011, we see the first moves into supplying the new news and information cafeteria. These have been largely propelled by the Kindle (“The newsonomics of Kindle Singles“), but soon we’ll see a cascade of iPad products as well, resplendent with links, photos, and videos that the Kindle products largely lack.

Though we’ve seen new works trickle into the marketplace so far, I’ve heard of a number more in the pipeline. They will redefine once again the nature of digital journalism and, I strongly believe, of pay models overall. While we focus on the huge question of the day — will digital news subscriptions succeed or fail as a business model? — my guess is that by 2015, more than 20 percent of news companies’ “digital circulation” income will derive from one-off products. We’re talking tens, and then hundreds, of millions of dollars. It’s time to start thinking about the newsonomics of this digital cafeteria, the obstacles to its grand opening and how they’ll be surmounted.

The early action has been on the Kindle, mostly through a compilation approach, repurposing content with some added narrative. The New York Times, which assembled its WikiLeaks coverage into ebook form, selling thousands, got the Times thinking and it’s now “actively exploring” more ebook projects, says the Times’ Jim Schachter. Expect more one-offs from the Times, especially as it figures out how to make the Kindle model workable for the iPad (more on that below).

As ProPublica has published three ebooks, it’s learning how to anticipate what makes a distinct ebook product — and increasingly thinks earlier about e-book potentials as it churns out high-quality investigative work. Its latest stats: 6,000 copies sold of its 99-cent-a-copy “Pakistan and the Mumbai Attacks: The Untold Story,” which as ProPublica’s Dick Tofel rightly notes, “in book terms, 6,000 copies is pretty good.” Two other projects, both made free due to Amazon’s evolving if-free-on-the-web-free-as-an-eBook policy, have generated impressive downloads, 30,000 in total.

Newsweek and Time are among others getting into the business as well, as The Cutline’s Joe Pompeo points out in his good ebook overview.

While ebooks are the early rage, other early innovators are reviving the art of that old newspaper staple, the special section, reinvented and spiffed up for the glory of the iPad.

The Austrian Press Association, or APA — that country’s AP — is known as a leading wire service innovator worldwide, supporting its 16 daily newspaper clients with advanced technologies and products, as it moves away from its dependence on the old content feed business. So it’s not surprising that APA is in early in figuring out new mobile-friendly journalistic products.

Its first one is an eye-opener. Opera Ball 2011 captures, in full interactive and video detail the social event of the Vienna social season. APA spent about 10,000 euro ($14,400) to produce its Opera Ball “special,” says APA editor-in-chief Michael Lang. It’s a kind of demo project of how new technologies can alter the way we produce and consume journalism. Nineteen videos take readers (watchers, listeners?) behind the scenes, through such useful topics as to how the event is catered, where to find the sausage stands around the opera house, and how to get in (and out) of a tuxedo. Interactive elements include floorplans, area maps, menus and — vitally — dancing classes, as Lang notes, “Viennese waltz left and right)”.

Seven Austrian newspaper companies used the initial product, four on their new iPad products (the iPad launched in Austria last summer; maybe as many as 30,000 have been sold) and three on their websites. With that first prototype done, APA’s cracked a new code and is planning roughly monthly, HTML5-based tablet specials to be offered to members, who will largely sell their own advertising.

Among the topics: sports events (especially skiing in Austria), leisure, travel, health, and other social events. In other words: the range of what newspapers traditionally cover in feature sections, but with the content and presentation thought out with a magazine approach. That’s why iPad specials or singles should be big, whether produced by newspaper or magazine companies. Some American publishers are already thinking about home and garden, sports commemoratives, personal finance, and travel.

Which brings us back to the edge here. What will the newsonomics of this new category of products look like, and how will it get jumpstarted? Let’s look at four factors, to start:

Content: Yes, these are topics that newspapers and magazines cover. We’re not talking about single articles though, but packages assembled with key target readers — by interest, of course, but also by age, gender, relative affluence, and more — in clear mind. For local publishers, their opportunity is mainly around local content knowledge, whether that’s the key sports teams, knowledge of the local wedding industry, or what makes home and garden different in Miami than Montreal.

While today we see only nascent activity in the new cafeteria, soon the app stores will be full of the stuff, and like digital information content overall, only the best will be paid for by readers and create new winning franchises.

Form and format: At this point, we’re all fumbling for words. An “ebook” defines these new digital products by their old world analogs, much as e-newspapers did in the ’90s (and e-editions struggle to do today). Yes, there are words, and there will increasingly be pictures, data, video, and touchscreen interactivity only now being invented. So it’s long-form narrative, it’s more-than-bits-and-bites journalism, and even “manifestos,” as The Domino Project’s Seth Godin calls his revolutionize-the-book industry imprint products. Godin’s Amazon-powered project is a big one to watch, bearing lots of model-busting and model-making meaning for the news industry (see my companion piece, laying those out in “Six Lessons for News Publishers from Seth Godin“). Let’s toss in the innovation of The Atavist, which David Carr rightly described as breakthrough thinking, as three guys in Brooklyn reinvent paid “long-form journalism” in mobile reading form.

One reason we see the Kindle format ascendant first: the company defined the new new here, when it announced Kindle Singles way back last October, telling us that the tyranny of package definitions — “compelling ideas expressed at their natural length” — no longer held in the modern age. We don’t yet have “iPad singles”, though publishers have been selling single magazine issues, including specials from American Media Inc., publisher of the National Enquirer and Star. Early on, it saw the potential, creating three custom-to-the-tablet products around fitness and health.

Another factor in format: cost. ProPublica’s Dick Tofel says it might take an “hour or so” to create an ebook given the easy repurposing technology. iPad single development, well done, will be costlier, but as in APA’s example, doable and scalable.

Dealing with Amazon’s and Apple’s policies: Lots of nuance here, but increasingly publishers will find ways to create new works (maybe derivative works in the old copyright sense) that take stuff that was available free on the web, add to it, segment it, and package it in ways that distinguish from repurposed web stuff. That should satisfy paying readers — most importantly — and Amazon and Apple, as they eagerly take their 30 cents of every dollar.

Sponsorship will drive revenue here as much as reader payment: Seth Godin’s second Domino book just picked up GE as a sponsor — and is making the book free to readerson April 20. Sponsors got in early on the iPad, propelling much unbudgeted (!) revenue for news companies in 2010. Big brand advertisers like associating with hot, new — and whole — products. It’s an identity thing, and should have legs as a business model. Importantly, here, two legs of revenue: reader and advertiser.

All of this is just the next mind-turning stage of the digital news revolution. Disaggregation by portals and search combines. Re-aggregation of “whole” products, courtesy of Amazon and Apple. And, then, disaggregation, again, segmenting a wide range of products — first dozens, then hundreds — for lots of audiences. One size won’t fit all.

It forces us to reconsider: What’s journalism? What’s a book? How much does it matter? Journalism, as expressed in newspaper, magazine and book form is jumping the old boundaries, in search of new territories and hungry readers, perhaps hungry and willing to pay for great, useful and timely-to-them content.

Image by Steve Bowbrick used under a Creative Commons license.

POSTED     April 14, 2011, noon
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