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Oct. 10, 2013, 12:08 p.m.
LINK: peakads.org  ➚   |   Posted by: Joshua Benton   |   October 10, 2013

You may be familiar with the concept of peak oil, but Tim Hwang and Adi Kamdar (both former affiliates of the Berkman Center here at Harvard) are pushing the idea of peak advertising. (Tim is best known for cofounding ROFLcon; Adi is now an activist at the Electronic Frontier Foundation.) The highlights of their working paper:

Key indicators for online advertising effectiveness have declined since the launch of the first banner advertisement in 1994. These declines are increasingly placing pressure on even the most established businesses in the space.

These developments suggest important (and potentially painful) implications for market structure, privacy, and authenticity online.

Existing alternatives appear at present to be insufficient to replace lost revenue from near-future declines in the value of display, search, and mobile advertising.

Ultimately, the economics of the web will necessitate pivotal decisions about the financial underpinnings of the Internet in the decades to come.

Here’s the full PDF. Tim and Adi have made up some fanciful titles for themselves — they’re at the “Advertising Subduction Observatory” and “Cyber Tectonics Research Initiative” of the “Nesson Center for Internet Geophysics,” respectively — but the facts they’re writing up are very real. So are some of the implications:

To that end, Peak Advertising will drive the formation of highly monopolistic or oligopolistic market structures for advertising, since only the largest companies will have the scale of advertising inventory necessary to remain profitable. Smaller companies that are especially reliant on advertising will have difficulty remaining profitable and will face incentives to sell to companies with larger aggregate volume to sell…

We may very well reach and pass the point of Peak Advertising without any significant innovation emerging to maintain and grow the flow of revenue supporting the Internet. What will be left with is a stagnant and ever eroding flow of revenue from the primary sources of advertising, and the inadequate substitution of new forms of advertising in its place. Of the few players that remain, they will produce a web experience that engineers the erosion of user privacy and the blurring of the line between real content and advertising.

The future we end up with is partially a matter of technological innovation, but also a matter of human choice. To those designing platforms and using those platforms, the issue is: what kind of Internet do we want to have?

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LINK: stratechery.com  ➚   |   Posted by: Joshua Benton   |   October 1, 2014

Ello is the new anti-Facebook social network du jour (remember Crabgrass? Diaspora?) that’s attracting attention for its strong stance against advertising and advertising-related data harvesting as a business model. Will it actually be a success? Ben Thompson says no and, in the process of explaining his argument for why not, outlines some Business Model 101 that also applies to news and news-y startups:

I like companies that are incentivized to make and keep me happy:

— My favorite business model is a subscription: I pay every month for a piece of software or a service, which means the software or service provider is always under pressure to earn my money

— Advertising is actually not far off from a subscription-style service: while in a very narrow view the adage “you’re the product that’s being bought and sold” is certainly true, the reality is that the Google and Facebooks of the world are arguably even more incentivized to make sure the user experience is great. After all, the value they offer has to be sufficient to overcome the negative effects of advertising (and in some case, particularly Google search, there are times when advertising is actually additive to the user experience)

Up-front payments can go either way:

— I’m a fan of up-front payments if the developer has plans to release new versions of the software that require me to pay to upgrade. This sort of business is similar to high-margin hardware: not only must this developer offer something very compelling to earn my up-front payment, they must also deliver something of quality to ensure I’m willing to pay for versions two, three, and four
On the other hand, if the developer will never charge for upgrades, then I think this business model isn’t consumer friendly at all. A developer of such an app is incentivized to garner as many up-front payments as possible with no regard for existing customers

— “Unlock”-type schemes are the worse. These can be products where you need to pay for features or assistance to accomplish some given task (free-to-play definitely falls in this category). Developers who use these schemes are incentivized to make the experience of their product frustrating so that I might be willing to pay to avoid the frustration. But, once I pay, there is no incentive to keep me happy

News companies are, generally speaking, both blessed and cursed with the first two models Thompson outlines — blessed because of the promise of ongoing revenue and an alignment of incentives between user and producer; cursed because it means that, unlike most other people playing in the modern app economy, they have to keep earning users’ business every day, with all the cost structure issues that implies.

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LINK: medium.com  ➚   |   Posted by: Joseph Lichterman   |   September 30, 2014

Today De Correspondent, the crowdfunded Dutch news site, celebrates its one-year anniversary. (We’ve covered De Correspondent a few times since the site began fundraising last year.) Ernst-Jan Pfauth, the site’s publisher, published a piece on Medium sharing what they’ve accomplished and some lessons they’ve learned since they published their first stories a year ago today.

A subscription to De Correspondent costs €60 ($76) annually, and Pfauth wrote that about 60 percent of the site’s original 18,933 funders have already renewed their subscriptions. As of Sept. 23, De Correspondent had 37,057 members — multiply that by the €60 cost of a membership and you get €2.2 million ($2.77 million). It says it’s received 4.5 million unique visitors in its first year. (Including two from North Korea!)

DeCorrespondentMembership

To try and incentivize members to renew their subscriptions, De Correspondent put together two reports detailing the site’s finances and also the impact of its journalism in the past year. (They’re both in Dutch.)

DeCorrespondentChart

About 53 percent of every €60 membership was spent on salaries for De Correspondent’s 15 full-time staffers and its network of freelancers. The next largest expenditure: taxes, accounting for 17.4 percent of its costs.

The level of detail De Correspondent provides its members in explaining how it spends their money and the projects it undertakes — one of the site’s journalists, for example, wrote a book that originated with stories written for the site and that De Correspondent published — is part of its philosophy for what a crowdfunded news organization should look like. Pfauth summarized that philosophy on Medium:

1. Explain how you spend your members’ money;
2. Encourage journalists to work together with members;
3. Your members are your best ambassadors;
4. Reach out to people who already like you;
5. Think beyond your platform when it comes to publishing your stories.

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LINK: next.theguardian.com  ➚   |   Posted by: Joshua Benton   |   September 29, 2014

The Guardian has a new setup for its liveblogs that aims to fix some of their eternal problems — chief among them that they’re great for in-the-moment following along, but cryptic and unnavigable after the fact:

Paul Owen, who is responsible for the Guardian’s UK live blogs, said: “Once live blogs have been going for more than an hour or two, it becomes difficult for a new reader to start reading; by that point the live blog has often become rather long and unwieldy.

“For a while we have asked the live bloggers to periodically add bullet-point summaries of key events – say at the beginning of the blog, half way through the day, and when wrapping up. But these only really help if the new reader starts reading the blog soon after a summary has been published.

“So we hope pulling up key events into a clickable list at the top or top left of each live blog will now help readers navigate through a live blog at whatever point they choose to join it. Summaries will remain too, though.”

You can see an example of the new look here. I rather like it; the commenters under that post don’t.

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Capital New York give us a look at The New York Times’ native advertising business in a profile of Meredith Kopit Levien, its executive vice president for advertising, and it appears to be growing. Since launching earlier this year, it’s struck deals with 32 different brands — from Netflix to Thomson Reuters — to create ads that cost from $25,000 to more than $200,000 just to create.

And the Times’ in-house content studio, T Brand Studio, is up to a staff of 16 — up from nine when my colleague Justin Ellis wrote about the Times’ approach native advertising in June.

The build up of the Times’ native advertising capacity is part of a larger overhaul of its advertising department that began when Levien took over as the executive vice president for advertising in July 2013. She’s replaced about one-third of the current staff with new hires, bringing on more than 80 staffers. Of those who left, about half were offered buyouts or early retirement, “a move that some interpreted as a way of nudging older employees out the door,” Capital writes.

Print continues to generate most of the Times’ advertising revenue, but with its continued emphasis on native and digital advertising, especially video, Levian said she’s optimistic: “We’re certainly not going to put up a victory banner yet, but we are beginning to find our way into what feels like a sustainable path toward growing the digital business.”

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LINK: speakerdeck.com  ➚   |   Posted by: Joshua Benton   |   September 23, 2014

Page speed is an underrated part of user experience. A fast website is a website readers will return to more often and feel better about using. (Add WPO to SEO and SMO in your mental acronym storage case.)

We’ve shared before about efforts at The Guardian and The New York Times to get faster, and now we’ve got a new slide deck from Times developer Eitan Koningsburg on the sometimes counterintuitive things they’ve done to speed up NYTimes.com (including the earlier [thanks, Allen] strange-sounding-to-me use of an intentional blocking script to load ads better):

The current mantra in performance thinking is “Tools not Rules.” The premise is simple: The path to faster websites is not only about fast requests, but how they interact with paints, animations, and script execution. But tools are only part of the solution. What The New York Times discovered is that performance is about truly understanding your product and users, and the sum total of your site. Following this approach can lead to surprising results.

The New York Times underwent a major redesign that involved a rewrite of the entire technology stack. The Product team not only bought into the idea that performance should be a goal, but mandated that it be part of the product’s success. While we implemented many of the community’s best practices, our biggest wins were a little surprising, and at first glance, counter to community best practices. Front-end software architect Eitan Koningsburg covers those changes, what worked, what didn’t, and how we got there.

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