New Devices, New Approaches, New Hope?

Last week, a number of articles appeared with additional entries in the search for new media business models for existing, old media companies.

Hope. Which Way? (Photo by bixentro, cc-by license, click through for details)
Hope. Which Way? (Photo by bixentro, cc-by license, click through for details)

Mass High Tech, which I still read in print, featured on its front page Richard Anderson from Village Soup and Alan Baker of the Ellsworth American. (The article is online here: Two Maine newspapers test the future of newspapers’ plans). Additionally, there were a number of articles about Amazon’s new Kindle, and how e-Readers in general might represent new hope for publishers.

Approach one: hyperlocal, shared platform, business-sponsored

Village Soup sign in Belfast, ME (Photo by Timoth Valentine, cc-by-nc-sa license, click through for details)
Village Soup sign in Belfast, ME (Photo by Timoth Valentine, cc-by-nc-sa license, click through for details)

Anderson’s model, which you can experience in a number of communities linked from, is essentially a hyperlocal model, in which a significant portion of revenue is driven by sponsored blog posts, which VillageSoup calls bizOffers:

The most distinctive component of our model are the sponsored postings . . . that businesses can buy. The posts, which run right next to the ordinary editorial content, are not controlled by us. No fetters, no filters.

In the two most mature of the four markets we serve, the sponsored blogs help generate a large portion of the online sales that collectively generate 19% of our $2.5 million in annual advertising revenues.

(You can see the bizOffers in action in the right column of the Knox County Village Soup site).

VillageSoup also received a Knight Foundation News Challenge grant in 2007 to

create an open-source version of VillageSoup’s successful community news software, combining professional journalism, blogs, citizen journalism, online advertising and “reverse publishing” from online to print.

Unfortunately, I wasn’t able to locate a meaningful update on their progress in that direction. There is some discussion of code access under the name “Village Soup Common”:

How does this model work?

VillageSoup handles the technical stuff. While a version of the platform code is available free, the installation, maintenance and improvement of the code is not. Software engineers and connectivity costs can be shared among all members of the Common. VillageSoup also allows provides the brand and its promotion. This promotion goes in two directions. To the public, we promote theSoup as a trusted source for hyper-local information around the globe. To the major product brands, we promote theSoup as a direct connection to the hyper-local residents as they head to their local retailer. Finally, a VillageSoup Common wiki provides a repository of experiences and ideas which empowers small operators to learn and advance in ways not achievable as stand-alone entities.

As one of the commentators on Anderson’s recent blog entry on making hyperlocal pay pointed out, however, that doesn’t seem likely to be what the Knight Foundation expected when it funded creation of an open source project. Perhaps we’ll hear more as the end of the grant period (June 2009) approaches?

Regardless, it stretches credulity to think of hyperlocal as a new strategy in 2009. Hyperlocal undoubtedly plays a role in the future of news publishing, but it is unclear whether it will produce the kind of revenue necessary to significantly impact the large publishers who are in trouble.

Approach two: rebuild the online paywall / make users pay for content

Not free (photo by ol slambert, cc-by license, click through for details)
Not free (photo by ol slambert, cc-by license, click through for details)

While Anderson and VillageSoup are deriving new revenue from sponsored, hyperlocal business-authored blog posts, Baker and the Ellsworth American have taken a different path, one which is frequently raised as a goal by much larger publishers: they’re charging for access to the online edition of the paper.

Users are offered, on the landing page of the Ellsworth American, a choice: go to the free limited edition of the paper, a site called FenceViewer which offers summaries of stories from the paper, or subscribe:

The full Ellsworth American is available weekly as a PDF download to those willing to pay a $32 annual subscription.

While paid subscription to online newspaper editions is something the rest of the industry has struggled with – famously only the Wall Street Journal has been able to maintain a paywall over time – the paper is hopeful in the case of this small Maine community, perhaps due to its niche presence:

The Ellsworth American’s payment strategy serves an even narrower niche. From 12 percent to 15 percent of its subscription revenue is in mail subscriptions — typically snowbirds who get the paper by mail during winter months. Problems with the postal service have taken their toll.

So far, about 100 readers have subscribed online, said Chris Crockett, the paper’s IT manager, but it’s still early in the process. There have been “some comments,” about the new model, he said, but many people have been satisfied to be pointed to the paper’s trimmed-down free site.

Is 100 readers subscribing only a sign of hope, or yet another sign that users don’t want to pay for access to content online? While it may be too early to tell for Baker and Crockett, the rest of the web seems to have pretty clearly voted on this one already, and recreating an information scarcity economy seems unlikely.

Approach three: sell content on new devices

Kindle (Photo by Brian Vallelunga, cc-by-nc-nd license, click through for details)
Kindle (Photo by Brian Vallelunga, cc-by-nc-nd license, click through for details)
There’s a common desire among many publishers for newspapers and books to find their “iPod moment” – the point at which new devices (and associated, paid content consumption models) reset consumer expectations and enable new revenue streams. People wouldn’t pay for digital music, the argument goes, until the iPod – and really iTunes – made doing so convenient, user-friendly, and even hip. (Mindy McAdams traced this meme back to 2005 but it has begun to appear with increasing frequency).

While new devices can certainly reset user expectations – look at the influence of the iPhone on mobile web applications in the U.S. – it is difficult to imagine that such devices will create a market for paid content that replaces the drastic decline in traditional subscription revenue.

Additionally, while the gadget sites and tech press have been quite excited about the new e-reader formats, it’s hard to imagine proprietary format readers ever becoming nearly as ubiquitous as mobile phones and netbooks using existing open formats. As Alan Mutter puts it:

Instead of trying to persuade consumers to adapt to an expensive, awkward and idiosyncratic gizmo like the wide-body Kindle, newspapers would be wiser to spend their time and resources optimizing their existing offerings for the interactive formats already in popular use. Netbooks are already here, growing in popularity, and much more likely to find broad acceptance than dedicated readers.

While some users will adopt, and evangelize for, e-readers of various styles, they’ll never match the audience of the web (and the mobile web). If developing for those formats requires significant investment in proprietary formats (and associated DRM technologies to enable paywall and prevent piracy), publishers risk again missing the bulk of the audience. (See also MG Siegler’s excellent Tech Crunch post “The Big Screen Kindle Hail Mary To Newspapers Will Fall Incomplete“).

Users in the assembled web expect to be able to consume (and share, and interact with) content where they are – in social networks, on community sites, and throughout the web. Content I can’t share is inherently less valuable than content I can. In other words, what makes the e-reader story so attractive to publishers – relatively closed (non-generative) platforms which enable paid content subscriptions – is exactly what makes them unattractive to most readers. (Or, to put it another way, piracy of paid content will be what makes them attractive).

Will the short-term gain (a bump up in revenue as the initial readers roll out) be worth the long-term loss of taking focus off making the web work?

No silver bullet

Ultimately, all of these strategies (hyperlocal sponsorship, paywalls for niche web content, and new devices/new formats) can contribute to the evolution of existing publishers into new media, but none of them represents a silver bullet. Publishers need to focus on reigning in costs and eliminating unnecessary duplications of effort, while at the same time generating compelling content which will attract audiences that advertisers desire, and even potentially be worth paying for.