The decision by News Corp. to dump MySpace once again reveals the risks of over exuberance toward digital companies that do not have a proven business model or long-term customer loyalty.
There are plenty of digital investments that meet those requirements, but a number of the most hyped firms moving toward IPOs and acquisitions do not. They need to be considered with hard headed pragmatism.
MySpace was launched 2003 and rapidly became the toast of the digital world as a social networking site and “the place” for musical stars and fans to connect. By 2005 it was the fifth most visited site on the Internet.
New Corp., which was anxious to benefit from growth in digital media, jumped at the opportunity to acquire the service and paid $580 million in 2005. It was an enormous price for a company with an unclear revenue potential.
Within two years MySpace had grown to be the world’s number one social networking site and was receiving 100 million unique monthly visitors. But it still had revenue problems; its visitors weren't paying customers and advertising wasn't paying its costs.
Despite landing a $900 million ad deal with Google, MySpace reported just one period of profitability. On top of that, it lost its cache with users and its leading position was soon eclipsed by Facebook.
Overall, it is estimated that the MySpace lost at least $1.5 billion under News Corp. and those losses dragged down the News Corp.’s overall earnings. The extent of its losses has never been completely clear because its results were not transparently presented in News Corp. financial reports.
After desperately trying to revive MySpace, News Corp. put it up for sale with an asking price was $100 million. It was sold in June to the online advertising network Specific Media for $35 million (about 6% of what News Corp paid for it), but the company was really just giving it away to get it off its books. As part of the deal, News Corp. took a minority equity stake in Specific Media.
Investing in emerging industries is always more risky than investing in established ones, so it requires a good deal of realism and clear headedness about the opportunities and their potential. It is not good enough merely to throw money on the table in hopes of drawing a winning hand or because the crowd is encouraging you on. A solid business plan that it is already working and producing financial growth and a user model based on more than popularity and status are required unless you investing high-risk capital you can afford to lose, as well as other opportunities it might have funded.
Monday, July 4, 2011
Wednesday, June 22, 2011
What Makes Good Journalism?
Journalists and others concerned about the status of the news industry in North America and Europe keep arguing that we are getting poorer journalism because of the economic state of the industry. But when you ask them “what makes good journalism?” they find it nearly impossible to articulate the concept.
Those trying to articulate the elements good journalism tend to use comforting and immeasurable platitudes and to describe it through attributes based on professional practices: pursuit of truth, fairness, completeness, accuracy, verification, and coherence. These are not a definition of quality, but a listing of contributors to or elements of quality practices. Each attribute alone is not sufficient for good journalism and degree to which each contributes is unclear.
In practice, most of us settle on identifying journalistic quality by its absence or by its comparison to poor or average quality journalism. Thus we know it when we don’t see it or we describe by giving examples of excellent journalism.
Other industries are far better in establishing their definitions of quality. If you ask what is quality in washing machines, the answer is that it quality machines clean clothing more effectively, operate quietly, are safe, and are durable and reliable. All of those can be measured by specific indicators of dirt and stain removal, water and energy use, noise decibels generate, user injury rates, and breakdown rates. A quality manufacturer strives for better performance on those measures, provides effective support and service, handles feedback and complaints well, and strives for high customer satisfaction.
The reason quality journalism is difficult to describe is because it involves a body of practices and the mental activity that goes into those practices. Good journalism results from the information gathering and processing activities, PLUS the knowledge and mental processes applied to it.
It is thus labor intensive; it involves collecting, analysing, structuring and presenting information. The best journalism comes from knowledgeable and critical individuals determining what information is significant, backgrounding and contextualizing it, and thinking about and explaining its meaning. It is a creative and cognitive activity. It is difficult to articulate what makes good creative and cognitive activity and nearly impossible to measure these mental processes. Thus, we are forced to use surrogate measures of quality journalism.
Good journalism involves engaging language and fluid prose, but it is not merely a well written and good story; it is not necessarily evident in stories that make the most popular list of stories or are most shared on social media. Good journalism involves stories that have import, impact, and elements of exclusivity and uniqueness; it wrestles with issues of the day, elucidates social conditions, facilitates society in finding solutions to challenges, and is independent of all forms of power. Good journalism is rational and critical; it is infused with scepticism, but not cynicism.
Although it is difficult to effectively measure such attributes of quality journalism, it should be much easier to define and identify quality journalism providers. There are some surrogate and attribute measures available to rate them, such as the percentage of total costs devoted to editorial costs, the amount of serious news content, the percentage of content originated rather than acquired, the amount and handling of errors, levels of reader satisfaction, and brand reputation.
In the end, however, the question of what makes good journalism has to be answered by answering the queries: Good or valuable to WHOM? Good or valuable for WHAT? Only then can one begin to establish direct measures that determine the effectiveness of journalism in achieving those objectives.
Those trying to articulate the elements good journalism tend to use comforting and immeasurable platitudes and to describe it through attributes based on professional practices: pursuit of truth, fairness, completeness, accuracy, verification, and coherence. These are not a definition of quality, but a listing of contributors to or elements of quality practices. Each attribute alone is not sufficient for good journalism and degree to which each contributes is unclear.
In practice, most of us settle on identifying journalistic quality by its absence or by its comparison to poor or average quality journalism. Thus we know it when we don’t see it or we describe by giving examples of excellent journalism.
Other industries are far better in establishing their definitions of quality. If you ask what is quality in washing machines, the answer is that it quality machines clean clothing more effectively, operate quietly, are safe, and are durable and reliable. All of those can be measured by specific indicators of dirt and stain removal, water and energy use, noise decibels generate, user injury rates, and breakdown rates. A quality manufacturer strives for better performance on those measures, provides effective support and service, handles feedback and complaints well, and strives for high customer satisfaction.
The reason quality journalism is difficult to describe is because it involves a body of practices and the mental activity that goes into those practices. Good journalism results from the information gathering and processing activities, PLUS the knowledge and mental processes applied to it.
It is thus labor intensive; it involves collecting, analysing, structuring and presenting information. The best journalism comes from knowledgeable and critical individuals determining what information is significant, backgrounding and contextualizing it, and thinking about and explaining its meaning. It is a creative and cognitive activity. It is difficult to articulate what makes good creative and cognitive activity and nearly impossible to measure these mental processes. Thus, we are forced to use surrogate measures of quality journalism.
Good journalism involves engaging language and fluid prose, but it is not merely a well written and good story; it is not necessarily evident in stories that make the most popular list of stories or are most shared on social media. Good journalism involves stories that have import, impact, and elements of exclusivity and uniqueness; it wrestles with issues of the day, elucidates social conditions, facilitates society in finding solutions to challenges, and is independent of all forms of power. Good journalism is rational and critical; it is infused with scepticism, but not cynicism.
Although it is difficult to effectively measure such attributes of quality journalism, it should be much easier to define and identify quality journalism providers. There are some surrogate and attribute measures available to rate them, such as the percentage of total costs devoted to editorial costs, the amount of serious news content, the percentage of content originated rather than acquired, the amount and handling of errors, levels of reader satisfaction, and brand reputation.
In the end, however, the question of what makes good journalism has to be answered by answering the queries: Good or valuable to WHOM? Good or valuable for WHAT? Only then can one begin to establish direct measures that determine the effectiveness of journalism in achieving those objectives.
Sunday, May 29, 2011
Google, Newspaper Archives, and the Business of Cultural Heritage
Google announced this month that it is ending its ambitious project to digitally archive newspapers. The project to scan the archives of the nation’s newspapers and make them available online as a searchable historical record was announced in 2008 with the level of hubris only found in online enterprises.
"Our objective is to bring all the world's historical newspaper information online,” said Adam Smith, director of product management at Google, announcing the project. Those lofty aims were echoed by Punit Soni, manager of the newspaper initiative: “As we work with more and more publishers, we'll move closer towards our goal of making those billions of pages of newsprint from around the world searchable, discoverable, and accessible online…."Over time, as we scan more articles and our index grows, we'll also start blending these archives into our main search results so that when you search Google.com, you'll be searching the full text of these newspapers as well.”
After scanning about 60 million pages and beginning to make them available as full page shots--because costs of disaggregating and indexing were too high and copyright clearances were difficult to obtain for older material—the company announced that it will quit scanning pages, but continue offering the existing pages available on it Google News Archive site. It said it would not invest any new effort to improve indexing or add tools to better search and manage the archive.
The project may have been well-intentioned, but it was not well thought out. It was a free service designed to use the search traffic at the site to raise revenue through advertising Google would put on the site. The scale of the project was enormous and requiring finding, scanning, and indexing thousands of daily and weekly newspapers--many no longer in existence. It would require a long-term commitment of funds, personnel and server capacity to catalogue and scan the material and provide and maintain search functions. The project ultimately incorporated on a fraction of the papers it had hoped to scan, did so spottily in many cases, and its usability was poor because it never mastered the problems of handling so much content. Worse yet, it discovered that history was not a money making business.
The exit announcement is not a surprise and is another sign that players the virtual world are stopping deluding themselves that they are replacing the entire world and that the laws of economics and finance to not apply to them.
As laudable the preservation of newspaper archives might be, expecting it to be completed and maintained by a commercial firm defied sense and historical experience. For centuries, the most important historical records, books, art have been maintain in governmentally and charitably funded collections because commercial enterprises were either unwilling to bear the costs or to allow the large scale efforts required to preserve, catalogue, index, and make available cultural heritage materials distract them from their business activities.
Why would anyone expect Google to act otherwise?
As Google increasingly acts as a mature business it will increasingly shed activities that were launched as goodwill gestures because the costs of their operations reduces the company’s financial performance and will diminish the value of its stock compared to other tech firms. Over time it will be harder for the firm to maintain the stance that it is not self-interested and motivated only by the opportunities to improve the lives of the public by providing access to all the world’s information.
The tentacles of its operations that have reached out into to many fields will increasingly be pulled back if they do not yield financial results. And fears that Google will rule the world will diminish. Google, Microsoft, Amazon and other big players of the digital world all have limits, just as did the handful of firms that once controlled steel, oil, and shipping through cartels. At some point even mammoth, wealthy companies do not have the resources and capabilities to keep expanding endlessly and their performance declines, leading shareholders to rein them in and competitors to find opportunities.
"Our objective is to bring all the world's historical newspaper information online,” said Adam Smith, director of product management at Google, announcing the project. Those lofty aims were echoed by Punit Soni, manager of the newspaper initiative: “As we work with more and more publishers, we'll move closer towards our goal of making those billions of pages of newsprint from around the world searchable, discoverable, and accessible online…."Over time, as we scan more articles and our index grows, we'll also start blending these archives into our main search results so that when you search Google.com, you'll be searching the full text of these newspapers as well.”
After scanning about 60 million pages and beginning to make them available as full page shots--because costs of disaggregating and indexing were too high and copyright clearances were difficult to obtain for older material—the company announced that it will quit scanning pages, but continue offering the existing pages available on it Google News Archive site. It said it would not invest any new effort to improve indexing or add tools to better search and manage the archive.
The project may have been well-intentioned, but it was not well thought out. It was a free service designed to use the search traffic at the site to raise revenue through advertising Google would put on the site. The scale of the project was enormous and requiring finding, scanning, and indexing thousands of daily and weekly newspapers--many no longer in existence. It would require a long-term commitment of funds, personnel and server capacity to catalogue and scan the material and provide and maintain search functions. The project ultimately incorporated on a fraction of the papers it had hoped to scan, did so spottily in many cases, and its usability was poor because it never mastered the problems of handling so much content. Worse yet, it discovered that history was not a money making business.
The exit announcement is not a surprise and is another sign that players the virtual world are stopping deluding themselves that they are replacing the entire world and that the laws of economics and finance to not apply to them.
As laudable the preservation of newspaper archives might be, expecting it to be completed and maintained by a commercial firm defied sense and historical experience. For centuries, the most important historical records, books, art have been maintain in governmentally and charitably funded collections because commercial enterprises were either unwilling to bear the costs or to allow the large scale efforts required to preserve, catalogue, index, and make available cultural heritage materials distract them from their business activities.
Why would anyone expect Google to act otherwise?
As Google increasingly acts as a mature business it will increasingly shed activities that were launched as goodwill gestures because the costs of their operations reduces the company’s financial performance and will diminish the value of its stock compared to other tech firms. Over time it will be harder for the firm to maintain the stance that it is not self-interested and motivated only by the opportunities to improve the lives of the public by providing access to all the world’s information.
The tentacles of its operations that have reached out into to many fields will increasingly be pulled back if they do not yield financial results. And fears that Google will rule the world will diminish. Google, Microsoft, Amazon and other big players of the digital world all have limits, just as did the handful of firms that once controlled steel, oil, and shipping through cartels. At some point even mammoth, wealthy companies do not have the resources and capabilities to keep expanding endlessly and their performance declines, leading shareholders to rein them in and competitors to find opportunities.
Subscribe to:
Posts (Atom)