Newssift Technical Plumbing
March 23, 2009
Thanks to the readers who sent me information about the new “test version” of the Financial Times’s news service. I hope it revives the Financial Times as an online financial news source. I know that the FT has a solid brand and great potential.
Some of the information about vendors pointed back to TechCrunch; other readers just made statements which I will pass along for additional comment / correction. Here’s the line up:
- Endeca–the guided navigation company
- Nstein–content management (started life as a content processing company but changed and now reports record revenues)
- Lexalytics–the new entity formed with the merger / fusion of Lexalytics (sentiment analysis) and Infonic (information management)
- ReelTwo–search, data analysis, and “custom portals”.
My take on this use of multiple technologies:
First, the Financial Times’s beta makes clear that no single search and content processing system can meet the needs of a client like the Financial Times.
Second, the Financial Times implemented a try try try strategy before taking a clear sheet of paper and figuring out how to make its content more accessible to its target user group. I don’t think I can estimate the cost of the present system because it makes clear that earlier efforts at search failed. Those “sunk” and “opportunity” costs are wiped away, but a full accounting of the total cost of making FT information available to its users is more than today’s chief financial officer wants to put on his / her books for an ROI calculation. The same multi year investment in search plagues another European publishing company as well. The problem is not unique to the FT, and that’s important. The shift from traditional publishing business models and methods to Internet models is neither easy nor obvious.
The main FT.com splash page with a welcome screen that obscures the news I wanted to view.
Third, who is the intended user? The site offers a number of powerful functions. The folks who want these types of online operations may already have them available without charge from such places as http://finance.google.com, http://finance.yahoo.com, or (hold your breath) American Online here. As a side note, the AOL service (linked to via Google Finance) runs on the potent Relegence platform here.
The America Online splash page for business and financial information. Note: the information is not obscured by a pop up greeting. Remember. This is the deeply challenged America Online and it is handling business information with its own technology, not a collection of four discrete systems.
Fourth, I think the FT is late to the party. Maybe too late? The company has knuckled down to create Newssift, but the window of time for making big traffic gains has closed. Financial information and analytic tools are available to investors with online brokers such as Fidelity and TDWaterhouse. Business news is available from high traffic outfits like Yahoo News and lower profile services such as Newsflashr.
Fifth, one wonders if the price tag for integrating the various technologies has been tallied. What happens when one of the three or four vendors makes a change? I don’t have sufficient data to estimate these costs. Perhaps the costs are trivial? Somehow I doubt it.
In short, the FT is trying again. Like other companies shifting from dead tree business models to the crunchier online variety of business model, the timing is not optimal. I wish the FT and its vendors good luck and fair weather. My weather charts predict stormy seas ahead followed by a flood of red ink rushing from different points on the compass.
Stephen Arnold, March 23, 2009
Online Advertising: Cruisin for a Bruisin Says Wharton Prof
March 22, 2009
A happy quack to the reader who went me a link to the guest write up called “Why Advertising Is Failing On The Internet” by Wharton professor Eric Clemons. You can read his dense, interesting exegesis here. His bio is here. If you are not familiar with the context of a business education at Wharton, you may find this 2005 article interesting as well.
Dr. Clemons argues:
My basic premise is that the internet is not replacing advertising but shattering it, and all the king’s horses, all the king’s men, and all the creative talent of Madison Avenue cannot put it together again.
His analysis touches on a number of issues. The one of interest to me was his discussion of monetization options. Three of his points jumped at me. I am not comfortable quoting a large chunk of his text. I will, therefore, reference three points and urge you to read his discussion of each. The three points were:
- Content providers can charge for information
- A Web site can sell “experience and participation” in a virtual community
- Developers can sell “accessories for virtual communities”.
Instead of delivering advertisements, other monetization options exist.
I understand his arguments. I do not have a degree from a business school. I admit that I am not very good in business; otherwise, why would I be writing a free Web log, using the persona of an addled goose, and living next to a mine run off pond in rural Kentucky?
My observations:
- Monetizing online information is quite difficult. It is easy to get some money. It is tough to get lots of money. There are exceptions, and these dynamics need close scrutiny. Since the late 1960s, many executives have tried to create an online revenue stream that covers costs, pleases stakeholders, and leaves customers happy. Few have pulled this off. In my experience, subscriptions can work. I am not as confident that selling participation and accessories for a virtual community will do the job.
- Advertising in print is old, well understood, and appropriate for mass markets. These markets exist but are no longer organized by the traditional media companies. As a result, traditional business analyses don’t work. The reality of the present online sector is that advertising works from Googzilla and to a lesser extent for other companies. In the present online world, the cost of infrastructure means that in addition to technical savvy and a good idea, quite a bit of cash is needed.
- Consumers of online information have made it clear to me that free beats for fee any day. As the economic noose tightens, the demand for subsidized information access will increase. When money is tight, clever people will find ways to obtain access to high value content. I think the threat of peer to peer data transfer is significant, but I am not sure that short of a UK or Australia style data filtering program, peer to peer transfers of high value content can be stopped. The evil doers are probably the children of lawyers, publishers, and academics.
In the back of my mind is a small voice reminding me that the present economic crisis, Enron, Tyco, and some other interesting events were a result of MBA think. I would, therefore, suggest you follow my standard practice of keeping a salt shaker handy when pondering MBA type pronouncements. I worked at Booz, Allen & Hamilton in its salad days, and I experienced first hand when reasoned arguments don’t work in the real world.
Advertising online sort of works. Will it fail? Sure, but I think it has some legs. What’s the option? A local newspaper. Late night cable TV pushing Sham Wow? Snail mail letters with business reply cards? Broadcast radio spots? Door knob hangers with free samples? Product placements in motion pictures that go direct to DVD and then to non US distribution channels?
And, there is the issue of Google. I don’t think the company will shrivel like the Seattle Post Intelligencer, the Financial Times, the New York Times, or the Hearst papers. Google is not selling its assets to pay its debt; the New York Times is and the Boston Red Sox share too boot. I am just an addled goose, delighted to know that I can build a business selling virtual accessories. I always wanted a pair of virtual Web feet.
Stephen Arnold, March 22, 2009
Internet People Versus Content People
March 22, 2009
I enjoyed Mark Cuban’s “Why Do Internet People Think Content People Are Stupid?” here. To be fair, I also like Boxee’s CEO (Avner Ronen) and his compatriots view of content people. The trigger for this dust up is Hulu’s decision to block the Boxee service from Hulu content. You can get a refresher on this issue in Peter Kafka’s “Boxee CEO Avner Ronen Gets a Crash Course in the TV Business” here.
Mr. Cuban’s article sets the stage for the battle. He wrote:
…it would make absolutely zero sense for legit content providers to compete with the most consistent and largest source of revenue they have.
He is correct. In my opinion, his key point was:
If al a Carte is the way of the future, then it should apply to the Internet as well, right ?No one wants to pay the cost of the Web sites they don’t use, or the bandwidth they don’t consume, right ? Bring on Al a carte Internet. Make those who want 1mm Web sites available pay for it !
I can understand his argument, and it makes sense to those with a good understanding of the traditional media businesses and their methods.
Is the Boxee CEO wrong? I can understand his viewpoint because he like many other companies innovating in the datasphere come at content from a different angle. Mr. Ronen’s arguments make sense, particularly to those comfortable with the current digital information environment.
The challenge is time. The content people have to win over those who support the “Internet people” side of the argument. Time is running out because traditional media and some content people are marginalizing newspapers. I am not sure if the people who rely on YouTube.com or even Hulu.com will be subject to behavior modification. I run into more Internet people today than I did two years ago. I also don’t run into as many content people today as I did a couple of years ago.
I write for some traditional publishers, and I know that money is tight. Subscribers are drifting away. The managers are entertaining advertorials, inserts, and massive award programs to create revenue opportunities. None of these is what my former employer Barry Bingham Jr. would have called “content.”
Both sides of this argument are valid. In the present economic climate, this battle will be won by those younger than me moving through their careers. I don’t think the traditional media business models will have much traction unless significant, compelling progress is made quickly.
I remember when I got my first transistor radio when I was in grade school in the late 1950s. My mother asked, “Why do you want to carry a radio around with you?” I recall clearly that I was able to listen to the radio at night via an earphone. When I had to clean up the garage, I could tune my radio to a station playing rock and roll. I understood the convenience and discovered new uses for that aqua and white museum piece.
My generation set the stage for the Walkman, then the iPod. But those younger than me cannot envision a world without an iPhone and pervasive connectivity. My mother (may she rest in peace) clearly articulated her generation’s view of a portable radio. Now the clunker radio I had is a museum piece or a collectors’ item.
My hunch is that the business models that made broadcast radio work in the 1950s is destined for the same fate. Time is indeed running out. I don’t think there’s much doubt in my mind about which competitor will win. The question is, “When?”
For content people, their enemy is their own children. That’s what makes this battle interesting. King Lear writ in binary. Remember how that turned out?
Stephen Arnold, March 22, 2009
Non Profit News Reports about For Fee News
March 22, 2009
I read this National Public Radio story and experienced a mental dislocation. I don’t know much about NPR except that it runs really annoying fund raising events and sells ads to outfits who provide $100 DVDs to some folks. NPR has struggled when it received US government funding, and it continues to arm wrestle with accountants since it became whatever it is today.
The article that jarred me was “Newspapers Wade Into An Online-Only Future” by David Folkenflik. You must read it here unless you heard it on NPR, an activity that seems to be losing traction here in the Harrod’s Creek mine run off pond.
The story reported that newspapers have some problems with their centuries old business model. Newsprint, inks, union contracts, disinterested customers, and vanished advertisers–you know the litany of woes.
For me the most interesting comment was:
The online-only plan for newspapers remains an unproven financial model; there are great savings by scrapping printing and delivery costs, but even greater lost revenues, since advertisers pay far more money for print ads than online ads.
I relished the term “unproven.” I think it is the wrong term, and I think that any newspaper looking for online riches by charging for news that I can get on Twitter or a Web log is out of step with the young at heart.
These issues are small pommes frites, however. The real issue for me is that failing subsidized news outfits are writing about failing traditional print news outfits.
Now that’s a solid foundation for analyzing and resolving some fundamental problems in online.
Maybe the Beyond Search team will Tweet this post as an example of irony as the US embraces the consequences of the financial tailspin now underway.
Stephen Arnold, March 22, 2009
Evri: Semantic Smack Down
March 21, 2009
I don’t know much about Evri. Semantic technologies intrigued me a few years ago, but the shift is toward real time content processing. Semantics are important but in my mind plumbing that operates as a contributory component. I did write about the company’s deal with the Washington Post here. The Washington Post needs every (no pun intended) advantage it can get. Ad revenues are down. The Treasury is printing money like one of those fake countries in South American pot boilers. Even upscale restaurants’ business is down in the ultimate Power Lunch town.
I was surprised, maybe shocked, that Evri was shedding staff. Venture Beat here published “Semantic Search Engine Evri Cuts Staff by 25 Percent.” My impression was that Evri was going like a Harrod’s Creek mine worker on his way to the local watering hole. The most interesting comment in the article was:
Even so, Roseman [the president] says the company is pleased with its traction and progress, drawing more than 20 million monthly users.
Google AdSense on 20 million uniques should generate big money for Evri if properly monetized courtesy of Mother Google. Plus, Evri has received about $8 million from a Seattle investor. With strong uptake and big traffic, I wonder if staff cutbacks are a sign of the times or a signal that semantic search may be suffering in a down market for publishers such as those Evri has nailed as customers.
Stephen Arnold, March 21, 2009
Google and Microsoft: Core Competencies
March 20, 2009
One of my readers sent me a couple of links to remarks by Steve Ballmer, Microsoft’s top gun, this morning. The news story contained one revealing observation here attributed to Mr. Ballmer:
I’ll tell you the search business has been harder for me and for other senior people to learn than most businesses…
Interesting because Microsoft has invested in search and watched as its market share in Web search has declined. The company has not fared well in the enterprise arena either. The $1.2 billion investment in Fast Search & Transfer has yielded since April 2008 when the deal concluded:
- One Norwegian police action
- A Web part
- A roadmap.
But Google’s YouTube.com executive quoted in Mediaweek’s “YouTube Exec: Google Not Good at Content” here reveals a similar incompetency. Kevin Yen, director of strategic partnerships at Google allegedly said:
We’re not good at content… We create platforms that allow other people to succeed.
After investing in multiple content-related businesses, creating a legal stewpot with copyright hawk Viacom, and launching Knol (yep, I know. What’s a Knol?)–Google admits that it is not too good in content.
Step back.
What do these quotes reveal about two of the most influential companies in software, electronic information, and systems?
My thoughts:
- Competence in one area does not transfer competence to another area
- Believing one is able to solve every problem does not mean that one can actually solve those problems
- Technology does not equip Google and Microsoft with magic wands.
Just my opinion about two influential companies with reservoirs of confidence in their abilities to climb every mountain.
Stephen Arnold, March 20, 2009
Subsidies: One Way to Save Dead Tree Outfits
March 17, 2009
Patricians deserve subsidies. After centuries as patrons and arbiter of taste, now publishers have hit upon a sure fire way to generate revenues–subsidies. The TechDirt article “Content Companies Demand Subsidies from ISPs… While ISPs Demand Subsidies from Content Companies” caught my attention. You must read the story here. The point is that content companies want those in the digital food chain to pay them. Those in the digital food chain want the content companies to pay them. Is this a stalemate. I found this comment interesting:
The ISPs think that it’s the network that is the most important thing, and the content providers should be paying their way to use it. Meanwhile, the content companies think that it’s their content that makes the networks valuable, so the ISPs should be paying extra to offer their content. In reality, they’re both wrong.
I am not sure Internet service providers are off base. If I put my content on a third party system, I expect to pay for that service. I am a publishers of the lowest order, but I pay a couple of ISPs. I don’t have a problem with that. The notion that an ISP should pay a content provider to provide a service for the content provider rubs me the wrong way. When I pay, I have control. Subsidies for content providers are little more than vanity plays in my opinion. If I pay someone who writes for me, I own the content. I don’t expect anyone to subsidize me. Third parties can buy my time or pay me for a report, but I am not comfortable with a subsidy and those who want subsidies strike me as an order of entitlement diptera.
Stephen Arnold,
New York Times: Groping for Cash, Heading for a Crash
March 15, 2009
Here we go again. I read “New York Times Mulls Online Subscription Fee” in Silicon Alley Insider” here. Mr.. Blodget offers some ideas. In than rolling out what did not work before, the Times needs new ideas. The financial crisis has not passed. I am subscriber, and I see the paper becoming a secondary source for me. I rely on Amazon for book reviews. The stories in the paper turn up in my newsreader 24 hours before my hard copy arrives. I no longer pay much attention to the magazine section. The wacky design annoys me. Mr.. Blodget was correct when he wrote:
An incremental $50-$75 million a year will buy the company more time to sell assets, restructure its business, and pacify its creditors, but it won’t save the place. The only way to do that, in our opinion, is to radically cut costs.
Nuclear winter arrives and settles in.
Stephen Arnold, March 15, 2009
Dead Trees Outfits Try Digital Dugouts
March 13, 2009
I found the article “10 Ways Newspapers are Using Social Media to Save the Industry” pretty darned amazing. If you like newspapers in the morning, you will want to read the original here. Woody Lewis presents a list of 10 uses of social media that will save the newspaper industry. I did not know if this was serious or more like the stuff the addled goose writes. In my opinion, the dead tree crowd, newspaper and tabloid variety, are in a world of hurt. When papers publish a few times a week and nuke talented journalists, you don’t have to be much of an MBA type to figure out there is trouble in journalism land. Social media is an extension of analog communication. Improved communication is generally a positive; however, I have yet to see solid evidence that social media can reverse the problems of the newspaper industry in general or a single paper like the Louisville Courier Journal. The author Woody Lewis is to be commended for making lemon whip from a bumper crop of lemons. My mother made lemon whip: sugar, egg whites, one tiny lemon, and quite a bit of elbow grease. Hated the stuff, didn’t you? In my opinion, a newspaper finding financial salvation in social media is like hunting for a sunken ship off the coast of Albania when the treasure seekers work out of a traditional library, have no boat, and lack the expertise to find Albania on a Google Map.
Do you know how I know? Check out the 27 publishers who are going to shove supersized banners in my face. Now that’s traditional publishing embracing the spirit of online in 2009. Link here.
Stephen Arnold, March 13, 2009
Dead Trees Form an Ad Forest of Seedlings
March 11, 2009
Nicholas Carlson’s “27 Huge Publishers Join to Replace the Banner” caught my eye. The story explains that well known publishing outfits are cooperating to generate revenue. For me the most interesting comment in the write up was:
27 publishers with a reach of about 109 million unique visitors per month — that’s 66% of the total U.S. Internet audience — have agreed to try one of three new online ad formats…
I think this is a good idea, just a bit late to the party. The flaw in the effort is traffic. Publishers’ Web sites get traffic from other places. I no longer navigate to a specific site like Forbes.com. The site is too annoying. I look at headlines and then decide whether I am willing to put up with the wacky intrusions that that publication thinks will catch my attention.
Mr. Carlson’s article goes into great detail about the way my eyeballs traverse a Web site, which makes the fatal assumption that I go to a publisher’s Web site to see what’s on offer. You may find the diagrams useful. I did.
I think the publishers may want to revisit their traffic assumptions. Some Web search engine vendors might want those ad revenues to be invested in the Web search engines’ ad systems. Ads that stumble over a technical hurdle might cost the site some traffic. The assumptions collapse. Traffic, not the publishers’ brand, is the secret to making ads do more than a trickle of revenue when a flood is needed–and quickly. I wonder if this group will figure out a way to do mobile and Twitter ads next?
Stephen Arnold, March 11, 2009
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