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October 2011 Media Industry Social Leaderboard: Facebook Traffic To Publishers Down 13%

20 Dec
2011

by Ben Elowitz

Back by popular demand is an updated ranking of the Media Industry Social Leaderboard.  As a reminder, my company and I are obsessively focused on data about the social web – so much so, that we decided to track and publish not only our own results, but those of the top 50 media companies.  This is all captured in the chart below which profiles the top 50 web publishers’ effectiveness at driving traffic from social media.

For the inquisitive among us, you’ll note that we determine the top 50 relevant web publishers; then, using data from Compete.com, we determine and chart how much of their traffic is from Facebook and Twitter.

One important note is that Facebook’s changes in its algorithms launched at F8 impacted nearly all publishers in this ranking – more on that in a moment.

But first, let’s get to the results:


Facebook Traffic Down by 13%.

The first thing you’ll notice is that the bars are lower this month. In fact, over 90% of the top 50 web publishers saw a decreased percentage of their visits coming from Facebook and Twitter in October, with the bars shortening on average by 50 basis points.

In terms of aggregate performance, if you sum the total Facebook visits for all properties, they’re down 7.1% October vs. September, and 12.8% comparing October vs. the pre-F8 August highs.  We believe this trend is the direct result of the F8 algorithm changes made in mid-September.  Savvy social publishers (ourselves included) have been battling to reclaim previous highs since the F8 changes; but by October few had recovered.  The chart below highlights the reduction in referrals from Facebook to publishers over the course of their algorithmic change.


Winners and Losers:  CBS down; People, MTV, Wetpaint up

CBS has continued to fall in social traffic composition (-3.7% September-over-August, -5.5% Octocber-over-September), moving from the top rank on the Media Industry Social Leaderboard to number 4.  Unclear what has caused this decline although one hypothesis could be an increase in either SEO or paid audience acquisition.  If you have any insight here, shoot me a note.

Closer to home, People, MTV, and Wetpaint maintained their relative rankings and have moved to the top 3 spots.  At Wetpaint, we credit our climb up the ladder to our relentless A/B testing that has allowed us to understand what our audience desires in a deep way, and inform our editors with this insight.  The result is that we are creating, packaging, and distributing the right content, at the right time and our audience has voted with clicks, likes, and shares.

Introducing the Social Leaderboard

5 Oct
2011

by Ben Elowitz

As I have shared previously, our goal at Wetpaint is to be the leader in building media properties on the social Web.  That’s because I am seeing the web’s nature fundamentally change to become fully social. The Web Is Shrinking - Elowitz/Wetpaint

It’s not just theory – it’s data.

As I shared recently at AllThingsD.com, the social Web is capturing a dramatically increasing share of users’ attention – with internet users collectively increasing the amount of time they spend per month on Facebook by 69% over a one-year period – while usage for the entire rest of the Web, excluding Facebook, shrank by 9% over the same period.

Social is the most strategic medium for our industry.  And yet we haven’t established how to track our collective progress.

So, I’d like to introduce to you the first industry effort to do so.  I’ve released it this week, so that we can all compare ourselves with other top publishers and see our individual and collective progress.

Below you’ll find the “Media Industry Social Leaderboard”, a scoreboard and chart that was developed by tabulating the top 50 media publishers, based on monthly unique visitors, and then determining which were best at generating traffic from Facebook and Twitter.  Of course, I’ve included Wetpaint Entertainment on the list because we are so committed to social that we are going to make our progress public.  (And it doesn’t hurt that we are already significantly better at reaching audiences on these two key social platforms than many major media brands such as The New York Times, The Huffington Post, CNN, Fox News, TMZ and others.  My mother should finally be proud!)

This Month’s Findings

This month, we found that MTV’s website leads the pack with 14.3% of its traffic from Facebook and Twitter, indicating the shareability of their content (especially video, which is inherently more viral), and the heavily socialized audience they serve – not to mention their great execution.  In fact, MTV beat average performance by a factor of two, and were one of only four out of the top 50 that were in the double digits.  Sadly, over half of the Web’s top 50 had less than 4% of their traffic from social, making them menial performers on the medium.

 

Social Success Could Triple Your Audience’s Value

Lest you think that MTV’s 14.3% is anything to sneeze at, we dug a bit deeper to look at the true value of social.  Beyond the boost to audience attraction, we also looked at audience retention.  Measuring the visit frequency to each of the publishers (excluding the portals), we found a striking correlation to their sociability.  The performers above median in social saw an average of more than five times as many “addicts” (visitors who come 30+ times per month) as a proportion of their audience, according to data from Quantcast, compared to those below the median; and they saw a corresponding reduction in their “passers-by” (visitors who come only once) by 16 percentage points.  These patterns map overall into more than three times the visit frequency per audience member overall for these top performers.  That’s three times the value per unique.

A Leading Indicator of Long-Term Success

One thing is clear from the growth trends of the social web:  Those publishers that figure out how to capture and maintain a leadership position in social will win over the next decade.  For Wetpaint, it’s a critical strategy for us to be a leader among the media industry.  Which would make my mother very proud.

Speaking of which, in this debut month, my company Wetpaint came in #4, bested only by MTV, People, and ESPN.  Not bad for a debut… we’ll be #1 within six months.

For those interested, detailed rankings of all Top 50 are included below.

Rank Name of Publisher (Owner) URL Monthly Uniques % from Social
1 MTV mtv.com 17,101,841 14.3%
2 ESPN espn.com 33,242,207 13.7%
3 People people.com 12,671,101 13.2%
4 Wetpaint Entertainment wetpaint.com 2,532,044 12.4%
5 TMZ tmz.com 14,575,713 8.8%
6 Yahoo yahoo.com 172,269,418 8.6%
7 Patch (Aol) patch.com 10,610,327 8.6%
8 Major League Baseball mlb.com 15,552,415 7.9%
9 Aol aol.com 51,659,415 7.7%
10 Discovery Channel discovery.com 11,170,738 6.7%
11 Break Media break.com 9,166,220 6.3%
12 IGN (News Corp) ign.com 10,112,530 6.1%
13 Us Weekly usmagazine.com 10,970,162 5.9%
14 CNN cnn.com 56,595,377 5.3%
15 FOX News (News Corp) foxnews.com 26,900,038 5.0%
16 BBC News bbc.co.uk 14,863,384 4.8%
17 MSN msn.com 115,933,138 4.6%
18 Nickelodeon (MTV Networks) nick.com 10,716,354 4.6%
19 The New York Times nytimes.com 33,034,269 4.4%
20 MailOnline dailymail.co.uk 15,747,179 4.4%
21 IMDB (Amazon.com) imdb.com 39,778,499 4.4%
22 CBS Local cbslocal.com 11,039,512 4.4%
23 TIME time.com 10,024,132 4.2%
24 Cartoon Network (Turner) cartoonnetwork.com 10,794,764 4.2%
25 The Washington Post washingtonpost.com 17,818,260 4.1%
26 New York Daily News nydailynews.com 9,931,052 3.9%
27 The Guardian guardian.co.uk 10,283,648 3.8%
28 CBS News cbsnews.com 12,144,917 3.7%
29 Food Networks (Scripps) foodnetwork.com 14,324,933 3.5%
30 Allrecipes (Readers Digest) allrecipes.com 17,986,031 3.4%
31 The Huffington Post huffingtonpost.com 36,701,275 3.3%
32 TODAY / MSN (NBC/Microsoft) today.com 23,323,684 3.3%
33 Los Angeles Times (Tribune) latimes.com 18,618,265 3.2%
34 WebMD webmd.com 12,048,444 2.6%
35 The Wall Street Journal wsj.com 16,643,499 2.5%
36 Forbes forbes.com 12,356,124 2.4%
37 FOX Sports foxsports.com 18,346,185 2.2%
38 USA Today / Gannett usatoday.com 16,979,964 2.2%
39 Reuters reuters.com 12,726,776 2.2%
40 ABC News abcnews.com 19,876,129 2.1%
41 CNET (CBS Interactive) cnet.com 27,602,379 2.1%
42 Sports Illustrated (Time Inc.) si.com 9,304,012 2.1%
43 LIVESTRONG / (Demand Media) livestrong.com 9,650,128 2.0%
44 MSNBC Digital Network msnbc.com 44,198,985 1.9%
45 About.com / NY Times about.com 36,978,618 1.4%
46 Bloomberg bloomberg.com 10,592,480 1.4%
47 Mayo Clinic mayoclinic.com 10,944,436 1.1%
48 eHow (Demand Media) ehow.com 48,624,976 1.0%
49 ThePostGame thepostgame.com 12,017,913 0.9%
50 CNN Money cnnmoney.com 16,643,785 N/A

Source: Wetpaint.com analysis, comScore, Compete.com.

Are You a Media Company or a Technology Company?

2 Sep
2011

by Ben Elowitz

One of the most important questions publishers are grappling with today is whether they oversee a media company or a technology company. In the following article, which appeared originally in my Media Success newsletter and was subsequently republished at AllThingsD, I explain why every media company has to be a technology company. Then I offer several keys to success in the current digital environment, which is dominated by the rise and evolution of the new social Web. Please take a read, and let me know what you think.

Two Truths

Let’s start with two truths.

First, publishers need cutting-edge technology to hook an audience through today’s digital media channels of the Web, mobile, social, and search.

And, second, the breakthrough technology can’t just be about product design – it’s got to go beyond to create distribution advantages on the new connected Web.

One Question

Okay, now that we have the truth out of the way, let me ask you a question:

“Is your company a media company, or a technology company?”

I love getting asked this question.  And every digital media leader I know hates answering it.

Discomfort, Uneasiness, Anxiety, Fear

The uneasiness begins with the mistaken idea that the two are separable.  And they were – back in the 15th century, when Gutenberg first worked his printing magic, and up until a few years ago. But we all know digital technology has inserted itself inextricably into the guts of publishing, replacing ink with bytes and paper with pipes.  And now, over the last two years, technology has transformed the basis of publishers’ relationships with their audience, by connecting them through social operating systems, as we discussed last month.

And yet, our uneasiness escalates to anxiety when we realize we still don’t fully understand the new technology’s potential or impact on our business.

That is a scary thought. 

Technology Drives Media

I think we all need to collectively swallow our fear.  We know every media company must be a technology company today.

In the first generations of digital media, it was easy.  In AOL’s past, technology’s key role was simply to provide basic Internet access over dial-up lines. Today, while that access provides cash flow, it no longer has any strategic value in media.  Similarly, Yahoo’s early technology prowess was applied to create significant products like Yahoo Mail.  But while Mail still drives 73 percent of the audience to Yahoo’s media properties, it won’t secure Yahoo’s future ability to be a great media destination.

These two companies – as well as the rest of us – need to use technology for something more advanced than access and ancillary products. We need to put it right into the heart of media so that we can create breakthrough user experiences and new connections with audiences.

Millions of Ways to Engage

To do that, let’s start by recognizing what’s changed about the medium itself: In analog days, publishers’ products were two-dimensional; and all we had to work with was ink and some paper.  And similarly, distribution was mostly two-dimensional; a subscription list and newsstand sales was all there was to it.

But now, consumers have access to millions of sources at their fingertips, and each one can be rich and interactive, reaching us through several different digital channels.  Both our product experiences and our distribution can be much more intricate – and much more valuable.  And combining the two gives media the chance to do something it’s always aspired to do before, but never been able to.

The Future Will Be Personalized

We have recently become ready for a whole new vision for media.

And that’s giving every audience member the right content in the right place at the right time.

To do this takes a combination of data – from the social operating system – coupled with media’s greatest power, that of creating experiences and distributing them.

To achieve this, though, we need technology to do more than output HTML pages; instead, it has to chaperone customized content to every individual.

This is a big change from the original Internetization of media, which was, like generations of offline media before it: “If you publish it they will come.” That worked when directories like Yahoo and search engines like Google matched consumers to content. But that attitude was passive; and today’s social Web is anything but. So publishers now have the opportunity – and the challenge – of taking charge of their distribution.

The key is using the emerging social Web to get signals from, and connect to, the audience.  And when we do this, we are putting technology in the role of relating uniquely to every consumer in order to create the ultimate experiences they crave.

Now that’s a refreshing concept for media.

Three Ways to Get Ahead

But what does this mean, practically speaking?

I believe the role of technology in media success must embody these three things:

  • Use technology to determine the right content – The social Web offers a wealth of real-time data.  Use it to see what matters to your constituents. Tools like Newsbeat are helpful moment by moment, and article by article. But you have to go further. The great breakthrough of digital media is being able to connect to your audience as individuals, not just in aggregate. No longer do you have to create for a persona or prototypical user; instead, you can create for real users. Media companies need to develop technologies that give them a proprietary edge when it comes to understanding the specific needs of their potential audience; that way, they can serve consumers better. And the opportunities abound. At Wetpaint, my company, for example, we process Twitter, Facebook, Google, and our own site’s data, all in real-time to know what content matters – and to whom.  And yet, we can go much further, to ask and intuit feedback from each user individually. The future is a completely personalized experience from every publisher. It’s not far-fetched; in fact, it mirrors what consumers already patch together with all too much difficulty.
  • Take control of your distribution – Reach consumers with the right content at the right time and place (via Web, mobile, video, social, and search).  Don’t just have your social media team pump the same content from your Web CMS through Facebook and Twitter. Instead, use technology and research to understand the secrets of what works.  Truly engaging your potential audience can improve your results by a factor of two or more.

We’ve already seen this at Wetpaint, and the results are still getting better each week. Our database of everything we publish tracks all the distribution causes and effects, so we know what works. We also pay attention to who the influencers are, with technology that identifies them as well as who their influencers are; and now we’re building a “CRM”-like system to help us know more about these individuals and win them over.

  • Package it into the right experiences – Print is static and flat; but so are too many digital media properties. That’s why I applaud The New York Times for continually looking at how to repackage into mobile apps; and that’s why I like Flipboard, which takes a data-rich, but visually cacophonic, content feed and packages it into an immersive experience.  AOL’s riff of ultimate personalization has impressed me even more:  they’ve recognized that every consumer should get their own Edition – nailing the concept of personalization better than any media approach before. This is the opportunity for each of us now, as we connect with audience members and try to offer them more compelling experiences in return for loyal usage.

Technology Changes Businesses

Let’s circle back to the discussion of whether you’re a media or technology company.

By its very nature, digital publishing is a technical medium. But, beyond that, what makes technology interesting isn’t its ability to carry bits; it’s its ability to change businesses. And we need to change our own by updating our sense of audience, distribution, and experience creation to provide thousands of times more precision than media ever has before.

When we do that, we’re making the content thousands of times more relevant. And I believe that’s how you build a thriving digital media business in the next decade.

 

 

 

 

New Analysis: Old Media Magazines Losing Share Online Despite Their Great Brands

22 Jun
2010

by Ben Elowitz

Despite their coveted value, the great brands of old media aren’t proving out to be much of an asset online.  And to the extent old media is relying on the value of their brands to ensure a digital future, they are headed in the wrong direction.

For this new analysis for Digital Quarters, we measured audience and visits (from comScore) for sites across the major media categories, comparing the metrics of sites operated under old media brands (e.g. ABC, Entertainment Weekly) in each category to those of new upstarts.  Over the past year old media brands lost share of online audience to new media in nearly all of the traditional magazine categories (TV, entertainment, business, fashion, tech, and teens), while the offline brands in the News category grew share during that same period.    Although total visits were up 5% for old media, new media visits grew far faster — 10% — from April 2009 to April 2010, leading to share loss for old media in six out of the eight categories that we tracked.

Old Media Share Online

Overall visit growth was positive in all media categories other than TV, but despite this, old media brands experienced an absolute visit decline in Entertainment News and Teens which are rapidly shifting towards new media sources.

Conventional wisdom has held that building a brand is a momentous challenge in developed spaces such as media; and that disproportionate returns accrue to the most established brands. But my new analysis shows that legacy brands are on the defensive, far more threatened by new entrants than the other way around.  The upshot appears to be that upstarts’ execution is earning new audiences (and building their new brands), drawing audience on average away from more established players.

The reason for this shift, and the dominance of new media in categories such as Tech News is simply that the old media magazine model is ill equipped to compete with more nimble online competitors.  For the most part, weekly and monthly publications are struggling to keep up with the new pace of information exchange and social interaction demanded on the web.  Understandably, the value to consumers of days, weeks, or months-old “news” on fashion trends, celebrity gossip, and technology is far lower in the presence of up-to-the-minute coverage from new sites.

comScore April YOY Visits Growth

However, the success of offline brands in the News category offers hope for other old media brands.  Companies such as The New York Times, BBC, and ABCNews have grown their online presence and are clearly investing in digital as core to their business.    They are actively experimenting with rich media, social marketing, and engaging their audience.    But while news outlets have always operated on a fast pace, magazines are at a particular disadvantage in that they are not structured to turn information around quickly.  For old media magazine brands to maintain or grow share, they’ll need to go further by transforming their organizations, incentives, and sources and embracing the new definitions of publishing quality to provide the experiences that consumers are now seeking online.  With online share falling — in some cases dramatically — now is the time for offline legacy publishers to take action and get their brands working harder before it’s too late.

Methodology

Source: comScore panel-only visit data for April 2009, July 2009, September 2009 (panel only was unavailable for October), January 2010, and April 2010, including only properties with more than 500,000 monthly unique users.   Properties were manually categorized into old media if they originated offline, and new media if they are entirely online or originated online (e.g. TMZ and MSNBC are considered new media).  comScore category names: Business News/Research (Bus News); Entertainment – News (Ent News); Beauty/Fashion/Style (Fashion); Lifestyles;  News/Information (News); and Technology – News (Tech News); Teens; Entertainment  TV (TV).

Missed Opportunity: New York Times Losing Its Pulse Again

11 Jun
2010

by Ben Elowitz

It’s been a week of dancing for Apple and The New York Times as they played hokey pokey with an app that offers a new, fun way for consumers to experience media:  First, Steve Jobs put the acclaimed Pulse News app into his Worldwide Developers Conference talk, then took it out of  the app store, and then put it back in again, but only after the developers took The New York Times out of it.

But as fun as it is to watch them dance, I can’t help but notice that The New York Times missed the opportunity right in front of Sr. VP Martin Nisenholtz’s eyes:  the Pulse team is exactly the kind of talent that the company should be acquiring, not shunting.  The Pulse founders made an app with a great consumer experience for media,  did it in just a few weeks,  managed to get the attention of the premier technology tastemaker in the world, Steve Jobs, and even made some money.

Message to Martin:  Instead of cutting them down and pushing them into someone else’s arms, make nice and go hire (or acquire) the Pulse team. Or, as my mother once said to my older brother when he was dating someone she actually liked, “There are better men out there than you:  You better marry her before someone else does!”

Online Experience for Publishers: Innovate or Die

12 May
2010

by Ben Elowitz

We need an experience revolution.Revolution Fist

Each week, we hear of major publications and traditional broadcasters who are struggling to stay afloat in a digital age with new economics and new expectations.  Despite the promise of interactivity made with the internet revolution over the last 15 years, most publishers have done little more than replicate dead trees online, with zero innovation beyond the hyperlink, the slideshow, and an embedded video now and then.

And yet we can see from the rising successes of the last decade like Facebook, Google, Zynga, YouTube, and others that what catches audience attention is interactivity.

To earn loyal audiences today, publishers need to go beyond content creation:  they need to produce compelling experiences that distinguish them and get the consumer coming back for more.  The Pew Internet & American Life Project concluded that “when asked whether they have a favorite online news source, the majority of online news users (65%) say they do not.”  In an era where the consumer’s cost to switch is the flick of a click, publishers must offer compelling, differentiated experiences to earn loyalty.  Choices abound consumers:  there are scads of publishers online in every category; content suggestions offered constantly via social networks; and blue links proffered by search engines dozens of times per day per reader.  In an environment of choice, as brand experts have known for years, nothing builds loyalty like a great experience.

And now is the perfect time to create those breakthrough experiences.  The enabling technologies for the digital customer experience have improved considerably in recent years: we now have ubiquitous broadband, flash and other streaming video, plus HTML5 and maturing mobile application platforms.   Add to that personalization, targeting and social graph access, and there are some amazing opportunities to innovate.

It’s not just consumers that are thirsty for upgraded experiences.  Advertisers are showing that they will pay more for immersive interaction over basic display ads next to text.   Video ads during full TV episodes on ABC.com, Hulu, and others, or mid-day live sporting broadcasts command many times the CPM of typical display ads. Indeed, according to Michael Learmonth at AdAge, The Wall Street Journal’s online video content is bringing in envy-inspiring CPMs at $75 – $100.

But video is not the only way to create an immersive customer experience online.  Online sites of traditional publishers like Better Homes and Gardens are experience train wrecks (to be fair, they’re not alone in that regard).   Contrast that with the much more successful (certainly from an ad rate perspective) MarthaStewart.com which has many of the same elements – a top stories slideshow, cross-promotions for the print magazine, etc., and it’s a substantially better experience due to the focus on design and usability that is expected of the Martha Stewart Omnimedia (MSO) brand.

Even still, much more can be done with today’s technology to put the consumer’s needs and interests first.  The latest example I’ve seen of true creativity in user experience design is Microsoft’s (MSFT) Glo.    There are additional signs of greatness in the tablet demo that Time Warner (TWX) built for its Sports Illustrated brand.   And The New York Times (NYT) continues to excel in their applications and interactive graphics which enjoy significant pass around (bit.ly shows over 5,000 social media clicks to a recent budget infographic and today’s “A Moment in Time” project has already generated over 100 tweets in the first 15 hours).  But too few companies are making similar efforts to distinguish themselves.  The opportunities are there, and we need to step up.

Consumers will decide which brands deserve their loyalty and content alone won’t cut it.  We are on the brink of a total revolution of experience.  For publishers, it’s reinvent or fail.

Do you know additional examples of publishers innovating?

The New Rules For Judging ‘Quality’ In Published Content

11 May
2010

by Ben Elowitz

This article by Ben Elowitz originally appeared as a guest post on paidContentEngaging Readers Online

Last week, I explained why the traditional ways of judging “quality” in published content are useless in the digital age. Judging by readers response to that piece, those dated values (which I labeled credential, correctness, objectivity and craftsmanship) are still sacred to many people. But here’s the problem: They simply aren’t enough to win audiences, drive financial success, or, for that matter, ensure viability. The demise of institutions like Newsweek proves that—and shows that publishers that don’t move beyond these anachronistic measures of success will perish.

So this week, I’m offering part two of my take on the changing definition of quality in published content. Here are the four new rules of quality that publishers must obey to flourish. The biggest difference between the old and new definitions of quality are who’s doing the judging. In the era of Publishing 1.0, when production costs were high, alternatives low and time ample, the editor deemed something quality or not. But today, content isn’t scarce at all—in fact, it is in oversupply. And it is the audience that judges quality directly, dozens of times per day.

So, according to the audience, what is quality?  It comes down to these four characteristics:

—Relevance. Read the rest of this entry »

People StyleWatch: Print Magazine Learns Five Lessons From Digital Media

30 Apr
2010

by Ben Elowitz

People StyleWatchDespite the significant economic pressure they are under, it’s all too rare to see a print magazine let go of tradition and embrace a new model.  So I was delighted to find that at least one Time Inc. magazine is doing just that.

Stephanie Clifford’s article about People StyleWatch in the New York Times last week shows what happens when offline executives adopt a digital mindset.  Clifford points to a number of things that Susan Kaufman, People StyleWatch’s editor, is doing well, and notes the results:  8.6% circulation growth in the second half of 2009 and 130% growth in ad pages in the first quarter, easily besting a shrinking industry.

Although I wouldn’t call it top-tier journalism (does “Find Your Perfect T-Shirt Bra!” really merit an exclamation point?), People StyleWatch replaces an elitist, artistic view of its subject with a pragmatic appreciation of what their audience likes.  It’s a habit learned online and applied offline.

Here are five lessons from online media that the publication is successfully bringing to print:

  1. The text is brief.  Photo-heavy pages with short captions work.  They make for easy scanning, moreover it’s a fashion shopping magazine; ultimately readers care more about the products than a writer’s description of them.  Ironically, although the content is brief, it is resulting in 93 minutes average engagement, with each easily consumable section leading to the next.
  2. The content is advertiser-friendly.  Any web site that is ad-sponsored knows how important it is to create “context” and targeting for advertisers in order to add value and charge higher rates.   Shopping is one of those brilliant subject choices where advertising is content and vice-versa.  It is analogous to paid search online: because searchers are often looking for businesses, their click throughs and effective CPMs are far above internet average.  Moreover, People StyleWatch is open to creating pseudo-editorial sections with featured retailers (such as the recently announced JCPenney partnership).
  3. They offer exclusive discounts. Consumers love to get a deal, and coupon / discount web services (including the recently hyped group-coupon genre) are very popular with women online.   People StyleWatch goes beyond the celebrity watching and fashion trends to become part of their readers’ lives, changing the value proposition from just entertainment to a great way to get more for less.  In so doing, they are enhancing the reader’s experience.
  4. There is a clear call to action.  Most of the products include not only pricing information, but web sites, 800 numbers, and in some cases, text messaging options for buying information.   This is beneficial for both readers and advertisers.
  5. Content costs are low. Some of the most successful online properties such as Facebook, YouTube, and Yelp rely primarily on user-generated content.  Successful online publications like The Huffington Post regularly feature guest bloggers.    Traditional high-cost content is increasingly difficult to support profitably with advertising given the fragmentation of media consumption in recent years.  People StyleWatch features lower cost content, with research consisting of quick calls to publicists or product marketers, and images from paparazzi or retailers rather than expensive celebrity photo shoots.

This is more than just flexing editorial styles to meet the expectations of web-addicted younger readers.   The magazine is embracing a new business model with lower costs and more attractive content for advertisers that allows it to grow in an otherwise contracting space.  They are hitting on one of the key success factors for Publishing 2.0, namely an adaptive business model.  Time Inc. CEO Ann Moore, who has led the People brand for more than a decade in various roles, no doubt is taking notice.

Regardless of your personal opinions of the content, the results – in both readership and profitability – are hard to dispute.

Is $0.99 The Way To Change Consumer Behavior?

18 Mar
2010

by Ben Elowitz

At the 2010 Media Summit conference last week, Arthur Sulzberger and Janet Robinson talked more about their get-consumers-to-pay digital strategy.  While they didn’t reveal any major new details, they did expose a couple of wrinkles by implying that there will be more apps and value-adds that they will look to upsell consumers on.

When I asked them about training consumers to pay for content, Arthur Sulzberger initially brushed it aside saying their “loyalists” are willing to pay for their intensive usage.  I pressed further:  what about getting the mass market of consumer audiences – not just the heavy users – to start opening their wallets?  Sulzberger’s reply:  no new behaviors are required.

Sulzberger got it wrong:  getting consumers to habitually pay for content is certainly a change in behavior.  James McQuivey at Forrester recently looked back on decades of media models and called it:  “People don’t pay for content, and never have. They pay for access to content.”

But Arthur Sulzberger’s statement belied some of the actions that the New York Times is taking that are in synch with changing consumer behavior.  Early this week, Damon Kiesow at Poynter.org reported that the New York Times will be “disaggregating” their book review – in order to charge for it a la carte in appetizer-sized portions.

Which makes me wonder:  is bite-size the new way to get consumers to pay?

It has this going for it: between iPhone apps and iTunes songs, the bite-size purchase is absolutely the most successful model so far when it comes to changing consumer behavior en masse.  It’s easy, it’s fast, and it’s economical.  At about a buck, most importantly it’s stress-free and totally disposable.  It removes much of the barrier of consideration from software and media purchases that is present in other consumer-pay models.

Regardless of what its leaders are saying in public, it looks like the New York Times is betting on big changes to how people consume and pay for content: and that will come in packages big and small.

The NYT’s Metering Plan Doesn’t Go Far Enough—Here’s The Rest Of The Solution

4 Feb
2010

by Ben Elowitz

This post appeared as a guest post on PaidContent on February 4, 2010.

It’s now abundantly clear that the ad model isn’t enough to support the New York Times’ online future—the company needs consumers to help pay the bills. Thus, its recent decision to go metered. But the plan to charge some subscribers is not the end solution, it’s more like one piece of the puzzle. The company needs to take a few other big steps to help ensure the financial viability of NYTimes.com.

To be fair, let’s start with the three things the NYT got right with its decision, before we look at three things it still needs to do. You can see the upsides of the metering decision more clearly when you actually crunch the numbers on how the new system will impact existing revenues and look more deeply at the costs of implementing other types of subscriber plans.

1) Preserving advertising revenue. As a public company, the last thing the Times Company can afford to do now is shrink its existing online revenues.

A freemium model with a cap of, say, 20 articles per month lets the NYT retain up to 50 percent of its ad impressions (based on Quantcast data)—but most importantly, the company is preserving the most valuable impressions. (Light users are actually more valuable per pageview since they don’t exceed frequency caps.) By always allowing access to premium pages like the home page and section index pages, the most lucrative placements on the site will be served to every reader.

And by maintaining open access to casual users, NYTimes.com can preserve its eight-figure reach, which is critical to winning deals from top advertisers and commanding a high price premium. (Had they gone members-only, even with equivalent subscription numbers to the Wall Street Journal’s 400,000, the NYT’s rank would plunge to #2,000 as a web publisher—hardly enough reach to matter.)

Bottom line: With this approach, the NYT will likely retain 80 percent to 90 percent of current ad revenues.

2) Segmenting customers. Every marketer knows the way to maximize customer revenues is price discrimination, charging different (and the maximum tolerable) rates for each customer. Currently, the New York Times (NYSE: NYT) scores a zero here: Content is free for every user.

The ideal program charges each person exactly what he or she’d be willing to pay. A metered system isn’t perfect, but it’s far better than the TimesSelect model, which according to my analysis cost the NYTimes.com half of its online revenues while alienating readers who weren’t going to pay much, if anything, anyway.

In this way, the metering plan helps create a smart foundation: A configurable platform supporting dynamic offers that will tap those willing to pay more to get more.

3) Fine-tuning the advertising-revenue/subscription-revenue mix. A paywall that cuts off the existing online revenue stream—even just temporarily in order to build subscriptions—would mean nearly tripling the holding company’s $40 million annual operating loss (see Excel modelhere). Even if the NYT were outstanding at converting users, this public company can’t stomach the interim revenue hit. If the NYT converted 3 percent of its monthly audience (similar to WSJ ratio) over three years it would suffer a quarter-of-a-billion dollar cumulative loss—and still not be in the black.

By implementing a metering system that is flexible and tuneable, rather than a straight paywall, the NYT will be able to turn the dials as needed.  Quick test-and-iterate cycles will let them optimize the meter settings without jarring the advertising dollars they depend on. In a strict paywall, it would have to make the switch with its eyes closed and fingers crossed.

But these three accomplishments just aren’t enough. What the Times really needs to do is adopt a whole new architecture for its digital business. In particular, the goals should be to develop compelling new kinds of content, new experiences and new offers. These are the sorts of moves that will generate huge interest and huge premiums, and they result from discontinuous, not incremental, thinking.

How will we know when NYT has summoned the courage? We will be looking for these signs:

1) Acquisitions. What new products, business models, and accelerators can the Times add to its portfolio to create discontinuous innovation? Nothing says “strategic change” like M&A, and the NYT signaled its digital directive in 2005 by buying About.com for $410 million, shocking everyone at how deadly serious it was about building digital capability. Now it’s time to acquire sites like Associated Content or Mahalo to build a new, scalable sourcing model for additional non-premium content to supplement its top-tier journalism; or blog networks like Gawker to enter new vertical categories and gain experience with new labor models.

2) Product and content offering. The NYT is a premium media property. What new premium content and products can it offer to coax new consumer spending? While the NYT has explored many new ways to read and interact with the paper’s content, the desperate straits call for more dramatic action: reinventing the whole publishing model—lest otherpublishers and device manufacturers get there first. Each new and innovative experience is a chance to lead the revolution as well as a premium revenue opportunity.

3) Talent. The innovation needed at the Times is unlikely to come from inside its headquarters. What outside talent can it bring in to orchestrate major progress, beyond putting aninsider in charge of the new metered model?  Erik Jorgensen and Scott Moore helped MSN break out of its rut with a whole new home page that weaves social media into the content experience. Jimmy Pitaro at Yahoo (NSDQ: YHOO) is demonstrating that he can create bold new programmingfor users. And Bill Wilson at AOL (NYSE: AOL) has created over six-dozen content destinations—and a marketplace for content—in his MediaGlow unit. These are the types of break-the-status-quo thinkers that could help Martin Nisenholtz bring the Times to find a new way.

And one final thing. Speed.

The NYT’s approach to the radical change in its business is anything but radical. It’s careful, considered, and incremental, and it’s missing an essential ingredient: speed. Breakthrough change doesn’t happen slowly.

In this era of “launch and learn,” it is a big mistake to wait until January 2011 to launch the new approach, as the company has said it will. Sure, technology needs to be built to handle subscription database ties, but that development can and should be done fast. The goal should be to deploy the system in 90 days and then tune the dials on the fly, developing and testing multiple products and offers to increase user spend. Every month they wait, another 12,000 subscribers may flee the core print business (based on its recent six-month circulation decline).

In the end, the challenge for the New York Times is not about consumer-payment mechanisms. The real challenge is to build something so great that consumers fall in love—and their credit card will be the surest sign of their devotion.


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