Category Archives: Business Models

Subcompact Publishing

Craig Mod does a much better job than I did a few posts back in articulating what is so special and revolutionary about Marco Arment’s The Magazine, which Mod cites as an exemplar of what he dubs Subcompact Publishing.

The clarity of The Magazine is exciting. It’s doubly exciting because it’s precisely the sort of app at which incumbent publishers balk. This is expected. Again, from Christensen:

Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use.

We are the new customers: The new readers, the new writers, the new publishers. The Magazine is indeed cheaper, simpler, smaller, and more convenient than most other publishing apps.

Read the whole thing here.

Mobile surges for online purchases, but Android is slipping. Why?

Horace Dediu has some interesting data today on the growth of mobile as a percentage of Black Friday online purchases. This year, mobile accounted for nearly one-quarter of all purchases. Use that datapoint this week when anyone tells you that a mobile-first approach to digital communications and commerce is still “too soon.”

Black Friday Mobile Sales: Asymco

Data from Asymco.

Digging deeper, though, another interesting behavior emerges as well: While Android’s installed base has grown immensely over the past three years, the percentage of online purchases made on Android phones vs. iPhones has actually slipped noticeably.

Horace asks the right question: Why is this?

I believe this could be a simple matter of who is buying Android phones and for what reasons.

At first, Android purchasers were a lot like iPhone purchasers in that they were seeking out the device itself. They wanted the specific computer-like behavior and many of them wanted the greater customizability that they saw in Android over iPhone.

Now, I believe, many more Android buyers are simply getting an Android as their new phone as their carrier contract renews, replacing their old feature phones as the prices for Android devices get better and the ubiquity of touch-screen devices suggests to even the most casual observer that feature phones are now old tech. It’s entirely possible that these are much more casual users who rarely if ever fully use the capabilities of their devices (and, because of this, have the most-limited data plan) because they want a phone first, and a pocket-computer as a distant second. 

Most iPhone buyers, though, still are seeking the device first, even as more of them come into the fold later, after waiting for the next cycle of their two-year contracts. Think of it this way: These new iPhone buyers could have gotten a perfectly good Android phone for a much lower cost but chose the higher-priced iPhone for specific reasons. Discounting whatever percentage of those “reasons” are status only, I would imagine that most iPhone buyers are seeking ‘pocket-computer” features and not the core phone functionality (and who could blame them — when was the last iPhone ad that showed phone use?).

Simplified: New iPhone users are still actively seeking out the device and its computer-like features while new Android users include a growing percentage of their installed base that are choosing, essentially, a more advanced feature phone.

At least that’s my hypothesis. Perhaps it could be tested if there is any information available about the size of data packages (and usage) by platform.


How one geek just outdid the entire publishing industry

Most of my friends and colleagues in journalism or the magazine world have never heard of Marco Arment. A few more may have actually used his offline article reader, Instapaper. But I’d be willing to bet that almost none of them realize that, earlier this month, Marco surprised everyone by simply doing a few things that the combined brain trust of the newspaper and magazine industry have talked about for years:

  1. He launched a new, digital publication.
  2. He charged for it.
  3. He began making a profit on it. By the second issue.

Marco Arment, a developer, small business owner, blogger and technology-focused podcaster, launched The Magazine a few weeks ago. It’s a stripped-down, gorgeous, text-only (for now) iOS Newsstand publication that gathers a biweekly collection of topics that Marco says is not limited to technology but which will “appeal to people who love technology.” After reading the first two issues, I’m thinking of it as something close to the experience of reading Harper’s in the 80s and 90s, when each issue begged to be read from cover-to-cover. Or, perhaps a very thin New Yorker, without the cartoons. Point being, this is a good solid read, albeit one you can make your way through in a couple of quick subway rides or bedtime reading sessions.

The Magazine is a lean, bi-weekly (though that could change) collection of mid-length articles that so far have tended toward the kind of personal essay that shines a pin-spot on a small slice of life that ultimately reveals something of the bigger picture. In the current issue, for example, there’s Gina Trapani’s visit to the sperm bank as she and her wife do the pre-work that goes into two women having a child, Lex Friedman’s  paean to the joys of wet-shaving and John Siracusa writing movingly about something you thought did not exist: a video game with a good heart.

The price for this and a few other pieces, every other week: two dollars a month.

Is this a bargain? Dollar-for-dollar, no, in the days when you can pick up a year of Wired or Vanity Fair for half that. But that’s not really the point. Because, if it weren’t for those two dollars, these stories would not exist. In the footsteps of similarly independent-minded Louis C.K., whom Marco invokes in his first issue, The Magazine is the result of a refreshingly single-minded purpose: to create something unique, not just as an artistic outlet, but as a business — a business, it turns out, that was given an extremely short runway.

Marco explains:

I’m starting this with a staff of one. I can develop the app, procure and edit the articles, and write occasional articles myself. There’s no venture capital funding, no corporate backer, and very little starting capital. My biggest fixed cost is the up-front design and development of the app, and my biggest recurring cost is paying writers. If it doesn’t turn a profit within two months — just four issues — I’ll shut it down.

Partially from these constraints, and partially in the spirit of Louis C.K.’s anecdote, The Magazine’s articles won’t be laid out separately for portrait and landscape orientations. Articles won’t have custom designs at all. You won’t see any infographics, slideshows, or interactive panoramas. These multimedia features can all be valuable, and they have their places in other publications, but not here.

So, it would appear, the experiment part is over. The Magazine, young as it is, is a profitable success. It has no photos. It has no massive multi-hundred megabyte downloads. Instead of taking minutes (or hours on slow hotel or departure-gate wi-fi), The Magazine downloads in seconds.

And it’s profitable.

Will people pay for content? Ask Marco.

When I started working on this in August, it was definitely a risk. And until a few hours after it launched, I didn’t know whether it was going to be successful and well-received, or a huge waste of three months and a lot of money.

In hindsight, it was obvious, but only because it succeeded. Had it been received poorly, its failure would have seemed obvious in hindsight, too.Of course that wouldn’t work.

All these years, publishers have been trying to figure out new and better ways to force people to pay for their content — whether through increasingly intrusive advertising models, selling user data or putting up paywalls and meters. And the whole time, the answer was right there:

People will pay for content.

They just have to want to.

Keep an eye on The Magazine and other independent publishing efforts. You just might learn something.


Did Craiglist just leave the door open a crack?

Ben Brooks has a great post that gets straight to the point about a business that, suddenly, is wide-open with possibilities again: Local classified ads.

I can’t be the only one that thinks Craigslist is ripe for a disruption, because there is so much wrong with it that goes beyond the hideous and user hostile design of the site…

I would remind you that no matter the size of your network, if your service becomes too douchey the users will flee for greener pastures. Primes examples: MySpace and Digg — both relics of a different time (though Digg is trying a comeback)…

By far, the most interesting of his five suggestions of what to do toward that end is the last one:

5. Charge per listing, like $2 to post an ad. This does two things: removes ads; and helps cut down on SPAM listings.

I think he’s right. The very thing that rocketed Craigslist to popularity and destroyed, utterly, an entire category of income for local newspapers – the ads are free! — is now the piece that’s getting in the way of a quality user experience. Because no matter how much you spruce up the interface (#1 on Ben’s list), when it comes to ads, content actually IS king. Charging something nominal for an ad* doesn’t just create a revenue stream, it ensures that the ad itself is real and has value.

But how to stand up such an effort quickly? How could, say, the daily newspapers in our major cities take this advice and run with it (even if Ben wasn’t necessarily thinking of newspapers when he wrote his post)?

Given that so many metro dailies have thrown in with Press+ for their paywall initiatives, perhaps this could be a good line extension (and one that, unlike the paywall, is user-friendly) for the service which has already crossed two important hurdles: It’s in widespread use but managed centrally and it is capable of completing transactions.

Your ball, newspaper people…

* This is not to say that the newspaper industry biz wouldn’t screw this up by getting greedy and charging by the word, with upcharges for “premiums” like photos, maps and video or some other such genius move. Great ideas sometimes do turn out to be Ishtar in execution.

And, now, a (welcome) word from our sponsor

Would anyone ever sit still for an ad that goes on for eleven-and-a-half minutes? Not a chance, right?

And yet, this just happened on a podcast I listen to — The Talk Show — in which John Gruber and Merlin Mann burned through almost 700 seconds talking about a new iPhone app, Launch Center Pro. It’s an ad, to be sure, but it’s a also a damned informative and entertaining chunk of audio, perfectly integrated with the programming around it:

I never once thought about reaching for the fast-forward button.

But I did click on “Buy.”

And this isn’t all that unusual. Podcasts have figured out what old-time radio and television nailed long before the internet age: Sponsorships. Not all ads are of this epic length, of course, and they do tend to vary wildly in quality depending on the hosts’ passion for and knowledge of the product itself. But I think this is exactly the right direction for advertising to go in the digital and mobile world.

“And now a word from our sponsor…” isn’t a grudging interruption — at least it shouldn’t be — but rather a shared wink between host and listener that what’s about to follow is not programming, but is worth your attention nonetheless. And it works, because the listener learns that the podcaster won’t simply start screaming “PUNCH THE MONKEY!!!” at the top of his lungs but, rather, is taking a commercial detour into an area that’s likely to be aligned with the interests of the show and its listeners.

It takes work. More work than just jamming in a sixty-second spot or reading cold-blooded copy. It means thinking about why this product might make sense to the listener and, then, telling them, without affectation or pretense, in a human voice.

I don’t have access to Gruber’s advertiser stats, of course, but I bet this works really, really well. I know it does for Leo Laporte’s TWIT network — which I profiled for Nieman Labs in 2009 — where they’ve been doing ads like this for years with great results.

Do people listen to long ads? They do if they’re relevant to their needs. Or if they’re somehow useful. Or entertaining. After all, we all claim to hate advertising, but whenever one of those bells is rung, the ad moves into another realm, where it’s something that we pay attention to. The ad becomes valuable content.

Imagine how great this same approach could be if local publishers did something similar with the advertising on their sites, if they respected their site users and site advertisers enough to try to find a way to present commercial information (advertising) in a way that worked as well for both sides of the equation as the Gruber/Mann conversation about Launch Center Pro does.

Instead, the average local site is, at best, a NASCARish nightmare of tiny, flashing competing banner ads, the vast majority of which will a) add nothing to the brand’s value and b) never be clicked.

Where’s the money in local publishing? It’s at the intersection of consumer desire and advertiser need. Sometimes just a banner screaming “SALE!!” will work, but most times, the site and its advertisers will have to work harder to present a compelling argument at that intersection.

Think of what podcasters like Gruber and Dan Benjamin and Leo Laporte are doing and get creative on behalf of your advertisers and users. Otherwise, you’re just stealing money from advertisers and missing a great opportunity to put relevant, useful and entertaining information in the hands (or ears) of your users.


Building a car-friendly news environment

A 2011 post by Steve Buttry has been gnawing a hole in my consciousness for a few weeks now. It’s called “Newspapers don’t need new ideas; here are lots of ideas for new revenue streams.”

In the post, Steve talks about some of the money-left-on-the-table scenarios in the local news publishing space, but the first one really hit home:

Develop the must-have driving app for your communityI first outlined this idea two years ago in my Blueprint for the Complete Community Connection. I am not aware that any news organization (or anyone else) has tried it yet. Mutter notes that the newspaper ad decline has been most severe in automobile advertising, falling from $5 billion in 2004 to $1.1 billion last year. Auto manufacturers and dealers have built better tools than the newspaper want ads section for selling cars.

Buying a car is a job most people need help with only every few years. It was an easy job to disrupt. But driving is a task many of us do daily, and it presents abundant opportunity. Community news organizations are well-positioned to offer one place where drivers can compare gas prices, buy insurance, find parking spaces, check the traffic, get emergency service, schedule maintenance, rent a car and download coupons for tires and service. And if you develop that app that drivers can use daily, it may also be the best vehicle for advertising auto sales.

That’s an outstanding idea, as far as it goes. But it got me thinking further. In most local communities around the U.S., the daily commute is done in a car, as Steve notes. But, while this certainly offers a great context-appropriate environment for car- and commute-related news and information, there may be an even bigger opportunity here, one which the march of mobile technology makes so much easier to pull off here in 2012 than even a year or two ago: car-friendly news delivery.

Imagine how useful this could be:

  • An app-like mobile browser experience, with larger buttons/identifying text for one-glance control of the in-car site. Safety first! (Yes, this can be an app, also. But let’s make it work first without the need to download anything.)
  • Tight integration with a traffic-alert system, customized to my commute pattern AND my current location.
  • An easy means for users to post news from their commute, in photos, video, pre-written text snippets or, for passengers in the car, free-form text. For an outstanding example of how this can be implemented, look at the Reports function in the social-traffic service, Waze.
  • Original audio programming, both live and podcast. Streaming audio is cheap to the consumer; downloaded audio is effectively free.
  • Dial-in capability for the full talk-radio experience.
  • Read-aloud versions of selected stories and the latest breaking news. Yes, this is that bad idea from the early 2000s, dressed up in new clothes simply because the quality of machine-read content is finally catching up with our aspirations. It’s not James Earl Jones, true, but it’ll do, used sparingly.
  • The ability to pin articles and related content to a user’s private space for later retrieval.
  • Here’s what it’s not: Yet another wrapper or skin for the full content of the local news service. For this to work well, it needs to be tightly curated and updated; it can’t simply be a mass regurgitation of everything that’s on the homepage of the mothership. It’s just enough news, carefully selected and presented with a mobile- and audio-first bias.

Remember: As of this year, more than half the cell phones in use in the USA are smartphones. Presenting app-like web pages, knowing a user’s location, playing audio and video — it’s all in there just waiting to be accessed intelligently by users and the local news organizations who love them.

Photo by D. Sharon Pruitt, Creative Commons License

Newspaper companies have something valuable, if they’re willing to sell

You know why newspapers have had such a hard time dealing with the Internet? It’s because, back in what seems like pre-history, before we all had near-ubiquitous access to anything and everything, wired and wireless, the daily newspaper functioned a whole lot like the Internet, only thrown onto our porches by kids on bicycles.

There was the news of the world and the local community. There were sports updates, movie reviews and calendar items and notices of business openings and comments from readers. And in the back, a database of job openings, stock quotes, and stuff for sale. The Daily Miracle, they called it, curated and edited for your approval seven times a week.

For newspapers, the Internet at the turn of the century wasn’t so much a distribution channel as a much more efficiently modeled, deeper, broader (and — this was the part that seemed so foreign to many newspapers at the time — live) re-imagining of the platform that had been honed and perfected for more than 200 years on the to-that-point most efficient and profitable delivery mechanism known: ink on paper.

For a while, merely repurposing the newspaper’s mass, general model to the new platform worked. There were plenty of people willing to suffer through uninspired designs and pop-under ads to get at the primary piece of the pre-internet newspaper world which conveyed to the wired era with enough value to make it worthwhile: lots of original reporting, edited by pros.

Now, that’s nice, but not enough. There’s plenty news online — has been for years — and little need for pre-Internet generalism packaged up in print-aping sections. And there’s especially little need for all of that behind a paywall.

Which brings us to an inspired post by Kyle Baxter, called “A Newspaper for the Web.” Baxter first looks at why we read (present-tense) and read (past-) newspapers:

I don’t think, though, that reading the day’s headlines was the newspaper’s only purpose. If that were the case, headlines with very small stories would be sufficient. The newspaper was a powerful medium because they could be a deep window into the world. They provided readers with a clear understanding of what’s going on in the world that’s worth knowing, meaningful insight to what’s important about each of those headlines, and the opportunity to learn about topics readers never would have sought out themselves. Coverage, insight, serendipity. All in one place, consistently.

Baxter then goes on to define, in detail, how that itch, scratched, could be rebuilt into a thriving 21st Century business:

Here’s what it is: an organization whose goal is to be the only place readers need to go to find out what’s going on that’s important (coverage) and what’s meaningful about news events and relevant issues (insight and context). Go deep on certain subjects (politics, technology, sports) and make their writing on it so good that anyone interested in the subject has no choice but to read it. Embrace the web, rather than resist it. General-interest articles are freely available, and verticals are gated but open to links. Publish links to terrific pieces from other sources, and do so as prominently as they do their original content.

Here’s the business model: rather than target a mass audience with advertisements and augment it with subscriptions, target audiences passionate about certain subjects with reasonable subscriptions and augment with advertising to mass audiences. Provide everyone with a collection of original reporting, in-depth reporting on topical issues, and links to must-read pieces from other sources that, together, provide coverage of news and insight into its meaning. Use the general-interest content, which is completely open to share, to build readership and funnel people toward the verticals. Allow subscribers to share articles.

There’s lots more at the link, well worth your time if you care at all about the survival of journalism.