We exchange email yesterday with my CircLabs Inc. colleague, Jeff Vander Clute, about a blog post written by venture capitalist Bill Gurley. Gurley’s post (LINK) argues that Google is giving away the Android operating system — and many things around it — because no one can compete with free and the mass adoption of these free services is making Google’s advertising business unassailable.
Vander Clute remarked about Gurley’s thesis:
Fascinating points leading up to the legal destruction of wealth. It stands to reason that the marginal cost of software development going to zero in the long run means upside going to zero. Entrenched players for whom software > development is cheap or a byproduct can choose to give away a version of *your* product for free or less than free.
Right. So one begins to realize this essential truth — Google is neither a technology company, nor a search company. It has become a marketing company. Currently its business is the selling of advertising. It didn’t start out that way. It started out intending the organize the world’s information and make it useful and accessible. But now Wall Street expects it to feed its advertising juggernaut first.
For the advertising to remain effective, Google is going to have to learn more and more about us. The looming battle: On what terms does it learn about us and operate in what I’ve begun to call the “advisor-tising” space? For Google the engineering and software — Android, maps, apps, wallets — is now focused on drawing more and more of us in, and learning more and more about us, so that we can be better and better packaged and presented to people who want to sell us something.
At least in the world I come from, there is the intention to provide a service — civic information — that rides atop advertising and is served by it rather than vice versa. At least that’s been an aspiration for the news industry and the continuing focus of its best thinkers.
The good news: Gradually, Google — and Facebook — are going to figure out that being the “infovalet” requires a new kind of trust relationship with the user if you want to remain their most-favored agent. And that will involve providing something of value beyond a lot of free, ad-supported services. How about news? Google has for now one of the must trusted and recognized brands in the world. It will need to adopt the role of infovalet to keep that enviable position.
Figuring out that relationship is the next phase of the web and what fascinates me and why I crafted our RJI white paper as “Paper to Persona.” And it’s a playing field where news organizations have strength — if they can just learn to use technology as adroitly and innovatively as do Facebook, Google and Amazon.
Posted in information valet, ita
Tagged advertising, advisortising, Android, apps, Facebook, google, infovalet, journalism, marketing, paper, persona, search, wallet
I was asked today to provide one key thought about te future economics of journalism. Here’s what I said:
The future economic supports for journalism will have to be multifaceted, because no single stream will do it. There will be direct support from users — subscriptions, per-click, patronage, donations. And there will be indirect support — advertising. But I think the advertising piece will be vastly smaller than than it is today because the big marketplaces are going away. Advertising in the future will be one-to-one, practically, so the application of news as a driver/draw will just not be there. Journalism will have to stand on its own. And that means we will have to make the case for its relevance to citizens and to democracy every day. There will be a real divergence between entertainment journalism — which will be supported by third-party sponsors who are trying to sell a product or service — and accountability journalism, which will be supported by third-party sponsors who are selling ideas and change.
– Bill Densmore
More than 40 newspaper-industry executives, researchers and advisors are gathered at the American Press Institute in Reston, Va. today for the two-day convening, “Newsmedia Economic Action Plan Conference.” The event follows the May release of the API report: “Newspaper Economic Action Plan.” The idea of organizers is to use an open-space style event to consider what newspapers can do to sustain journalism and their business.
Click Here To Watch the CoverItLive running blog discussion (and participate)
At 9:30 a.m. EASTERN today, two experts on newspaper website analytics will be unveiling an initial tranche of research on some 100 sites. Gregory Harmon of Belden Interactive and Greg Swanson of ITZ Publishing will make
the case that newspapers can move to selectively charge for content without losing the majority of their online advertising revenue.
The event was by-invitation only, but organizers have invited live blogging of the Harmon/Swanson session as a service to the news industry. You can follow the participants’ blogging by going to this link:
http://tinyurl.com/ps38bc at or after 9:30 a.m. EASTERN.
Some people may post or comment on the blogstream via Twitter using the
And this temporary URL will carry informational updates about the event through the day and until it’s conclusion at mid-day on Tuesday: http://www.journalismtrust.org
EVENT HOME PAGE
WIKI BACKGROUND PAGE
API’s Mary Glick says she and colleague Mary Peskin framed the conference around API’s NEAP White Paper, an integrated five-point plan to guide the news industry through the current disruptions and position itself for the future by:
- Establishing a true value for news content online and generating revenue from it.
- Maintaining the free flow of content and monetizing it equitably.
- Thwarting unauthorized re-use of content that originates in newspapers.
- Investing in technologies that enhance the user experience and provide content-based e-commerce, data sharing and other revenue solutions.
- Adapting revenue strategies from those focused on advertisers to those focused on consumers.
Google Inc. CEO Eric Schmidt delivered the closing address on Tuesday (April 7) to the Newspaper Association of America convention in San Diego. The talk was sponsored by the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. Click on the link below to go to and launch the audio, or download an MP3 podcast for offline listening. (54 minutes, 13MB) (The sound of keyboard clicking stops after the first few minutes)
CLICK HERE TO LAUNCH STREAMING AUDIO
The Poynter Institute website published a transcript of the Q&A portion of his appearance:
And here’s the script of the Cover-It-Live real-time blogging of his talk:
The first question in San Diego at the NAA closing to Google CEO Eric Schmidt was asked by RJI’s Roger Gafke. Here is the exchange:
ROGER GAFKE: You have mentioned the importance of advertising as the future but in your opening remarks you mentioned a bit about micropayments and subscriptions. Would you elaborate a bit on each of those other potentials?
ERIC SCHMIDT: I think you are going to end up with all three. An analogy I would offer is television — there is free over-the-air-television, there’s cable television and then there’s pay television. And they have smaller markets as you go from free to more highly paid. And that structure looks to use like roughly the structure of all of these businesses. Today there are very effective subscription-based models, but there are not very good micropayment systems, micropayments meaning 1-cent, 3-cent kinds of systems. They clearly need to be developed by the industry. So I think from your perspective you should assume that your information, if there is a category of information that you all produce that you’ll want to distribute free – freely – there’s a category of information that you’ll want to distribute on a per-click basis and then there’s some of it you’ll want subscription for. The reality [is] that in this new model, the vast majority of people will only deal with the free model and so you.ll be forced whether we like it or not, to have a significant advertising component as well as a micropayment and a traditional payment system. The technology around micropayments is getting to be possible now. The transaction costs were so high before that you couldn’t do the one-cent, three-cent kind of a model. It looks like the new technologies around aggregation will allow that at the payment level.
This week’s Monday Note offers data and insight about the trajectory of Google AdSense and AdWords, explaining how Google is contributing to the decline in advertising CPMs and revenues for news-based enterprises.
One notion of InfoValet is the creation of an interest-based ecosystem where you are more likely to see (perhaps at times ultimately **only** see) ads for things you have voluntarily profiled yourself as interested
in. A user-controlled system in which you can dial up or down the amount of advertising you see, how you are compensated for your attention, and whether you, at times, choose not to see ads at all. This ends the notion of “publishing” really — it’s a new world in which your InfoValet, rather than creating a mass marketplace and selling access to the bazaar, is helping you to find and “speak” directly with the vendor at his place of business. The InfoValet gets a commission for making the connection and the vendor gets the sale, or at least the user’s attention.
In such a network, the notions of advertising and news are remixed. If you find your way to a Ford Motor site, and Ford pays you 50 cents (directly or via your InfoValet) because you downloaded a brochure about a new hybrid Ford; or you find your way to Consumer Reports, and **you pay** to download a report on that hybrid Ford; what is the functional difference? Each represents a value exchange. The system must enable both. The integrity and ethics of these exchanges will be mediated by folks such as Newstrust.net, and perhaps by the system participants. This is why we need to teach news/media literacy in schools, and elsewhere.
Greg Schermer, vp-interactive for Lee Enterprises, opens the first day of the two-day Blueprinting the Information Valet Economy, summit at the Donald W. Reynolds Journalism Institute, Missouri School of Journalism, Columbia, Mo. Then the 40 participants work to frame the opportunities and risks for online information commerce and try to define the term InfoValet.
After framing the issues in the first hour, participants in “Blueprinting the Information Valet Economy” seek in discussion to reach consensus on what problem will be solved by the Information Valet Service, its key values to consumers and how it might be owned and organization. Conversation took place Thurs., Dec.3 at the Donald W. Reynolds Journalism Institute, Missouri School of Journalism, Columbia, Mo.
Participants in “Blueprinting the Information Valet Economy” define the purposes, participants and values of the InfoValet Service during a session Fri., Dec. 5, 2008, in the Smith Forum at the Donald W. Reynolds Journalism Institute, Missouri School of Journalism, Columbia, Mo. Moderator is RJI fellow Bill Denmsore. Details: http://www.ivpblueprint.org. Speakers include Greg Schermer, Steve Mott, Randy Picht, Martin Langeveld, Elizabeth Osder and others.
Participants craft a development plan for the InfoValet Service during “Blueprinting the Information Valet Economy” summit at the Donald W. Reynolds Journalism Institute, Missouri School of Journalism, Columbia, Mo. This segment occurred Friday morning, Dec. 5, 2008 in the Smith Forum. Details: http://www.ivpblueprint.org
Business strategist Tom Malone and ABCNews.com columnist Michael S. Malone co-authored a piece on the Nov. 29 op/ed page of the Wall Street Journal, “Marketing in the World of the Web.” They assert there are five “Marketing 3.0″ concepts that are upending the business of advertising and customer service. They are: From loyalty to attention, from crowds to clouds, from places to spaces, from memes to bemes and from silos to simultaneity. All five are food for discussion during “Blueprint.” The most relevant may be “from loyalty to attention.”
“Before you can win consumer loyalty, you have to capture and reward consumer attention,” the authors write, adding: “The shrewd brands will create elaborate attention rewards programs, and incentives that break through the noise and make that critical initial connection.”
So an important objective of the Information Valet Service may be to provide a platform for advertisers and publishers of sponsored content to be able to reward an individual consumer for their attention.