Thoughts on the Future of News

Many of you have noticed the substantial changes on this blog, mainly around the content. I wanted to highlight a few of those exciting enhancements:

1) The top banner of the blog is now a dynamically updated wall of news images based on the trending news topics of the day. These photos reflect the overall coverage of news in real time and is an exciting Zeitgeist that we put together using our back-end news platform.

2) Each post comes with additional features when you click through the post detail page. For example, take a look at this page about the Newsday paywall. You’ll notice some new elements in the right hand sidebar, starting off with “Related Topics.” This is again a real-time view of contextually relevant news topics, generated dynamically based on the blog title and content. The list of topics change over time, so if you refresh the page in a month, you might get different results if there have been new developments in the Newsday story. (As an example, this blog post talks about our blog, the news industry, paywalls etc, so take a look at the releated topics just here on the right ->).

3) Immediately underneath the related topics is a section called “Related Articles from the Web.” This does exactly as it sounds – pulls in contextually relevant news from mainstream sources as well as established blogs. This is not just keyword driven – it’s based on the entire corpus of text, and incorporates some advanced semantic technology. As you can see,  the results are quite impressive!

All of this technology is powered by the same back end as our newly relaunched consumer web site at NewsCred.com. We’ll be unveiling that remarkable piece of technology soon, but for now you can take a sneak peak at the NewsCred Platform here. Interested in how this might be used on your blog or website? Publishers of all sizes can get in touch with me directly any time: shafqat at newscred dot com.

Look forward to your comments!

Since it’s the weekend, I thought I’d share this extremely funny (but fairly realistic) clip from Charlie Brooker – how to make a television news report. It’s startling how familiar most of this clip is – perhaps there are opportunities for innovation in television news as well?

This is a fantastic video from SEOMoz, the authority on all things SEO. Rand talks with Marshall Simmonds, who is the Chief Strategist for topic pages and SEO at the New York Times Company. He is responsible for the NY Time’s fantastic topic pages and shares his thoughts on the concept of topic pages, link journalism and the technology required to build these pages.

A few highlights from the video:

-”The Bowtie effect: Google puts you in two buckets – either a resource or a hub. A start point or a jumping off point. However, a topic pages let you be both.”
-”Link Journalism: If there is an appropriate page or resource that is better or more appropriate, absolutely link out. You must also link to competitors.”
-”If you link out, you look better to search engines.”
-”Matt Cutts (Google’s head of Search Quality/SEO) mentioned it is beneficial from an SEO perspective to link out.”
-”By participating in the web’s link graph, you are more likely to earn links back.”
-”The content has to be valuable and these pages have to be curated and updated.”
-”You need the technology and people to scale these pages.”
-”This is not cheap to do. You need great contextualization technology.”
-”Internal links – creates a good user experience.”
-”Great for advertisers – more clicks, more engagement, more time on site, more stickiness”

What better way to inaugurate the new theme of this blog (”thoughts on the Future of News”) than a quick look at the New York Times Company announcement this morning. They’ve confirmed widespread speculation that they will be implementing a new paid content model, similar to that of the Financial Times. It will be metered, although the price and number of free articles per month offered has not yet been decided. Furthermore, they will build the entire technology stack in-house, and will not launch before January 2011 at the earliest.

Those are the facts, so let the speculation begin. There will surely be an enormous amount of commentary on the web, but here are my quick takes:

1) If there’s any newspaper who has the brand power to do this, it is the New York Times. No doubt in my mind.

2) The question is not about brand, it is about brand loyalty. This leaves me very skeptical. I am a big fan of the Gray Lady, and am impressed with their quality, integrity (most of the time) and also the breadth of coverage they provide. However, I cannot think of any situation where I would be on a NY Times article page that is blocked, and be so compelled as to take out my credit card and pay. Absolutely no situation.

3) The reason why I think the metered or pay-wall model works for FT and Wall Street Journal is twofold. One, they provide extremely niche content in a vertical (business) that helps their readers make money. Paying money to make money is a fairly well-documented model. Second, a large percentage of FT and WSJ readers charge their subscriptions on their expense cards, something I don’t think will happen with the Times.

4) Will they be successful? Despite my skepticism, I’m sure they will get an initial surge of signups and might be able to get up to the levels of their previous failed foray into this space (TimesSelect). My bet is around three hundred thousands paying subscribers at best (this fits in nicely with the startup view that ‘freemium’ conversion rates are 2-3% of total visitors). Also, keep in mind that TimesSelect had 210,000 subscribers at $50. I think the metered model will cost less to readers, so the Times would get more subscribers than TimesSelect. This would be offset by a lower propensity to pay as readers have gotten more used to free content, and the number of high quality, free competitors has gone up. Either way,  my gut feel is that there is no way the metered subscription numbers will sustain the business or provide a significant enough upside given the risks. Let’s look at the numbers.

5) The risks are obvious – huge decline in traffic, loss of ad inventory and a decline of ad revenue. If the monthly fee for the metered subscription is $10 (pure speculation), and 300,000 people sign up (more speculation), that’s $3M in new revenue per month, or $9M per quarter. To put that in perspective, the New York Times group made around $90 million in online ad revenues in Q4 2009. Granted, that is the entire group, but the New York Times usually makes up approximately 70% of that. So let’s say the Times is making $50-60M in online ad revenues per quarter. Once they put up the metered system, let’s assume they lose 30% of traffic. These are similar numbers reported by other new members of the paywall club.

So losing 30% of the $50-$60M is about $15-18 millions dollars, which is how much they would potentially give up in online ad revenues per quarter. Now my math may be speculative and very back-of-the-envelope (and inaccurate so please correct me), but giving up $10-$15M to make $9M does not make sound economic sense.

There are a number of variables here that the Times can play with. But for this experiment to be successful, they will either have to;

a) Charge more as their monthly fee.
b) Keep more of the site free, so as the minimize the decline in ad revenue. This would make a) more difficult.
c) Make a more uniquely differentiated, niche product that is economically scarce and will convince more readers to pay for it.

While I don’t envy their position, I have to wish them the best of luck. It’s better to try and fail then not try at all. I just hope there’s a second chance here.

Edit: One final thought – there seems to be some talk of the Times building an automated system that adjusts the radio of free-to-paid aritcles in real-time, based on demand and usage. That could potentially be a game-changer, and a very interesting technology solution. I’d love to hear more about this.