Expert-based Content: Encyclopaedia Britannica, Encarta and Wikipedia

I was interested to read here recently in the Boston Globe that Britannica is coming out with a new business model, offering on-line content and new pricing models. From the article, it appears that they have thought clearly about their core competencies and unique value. They assert (and I think they are right), that there is still room for content developed and reviewed by experts. Their core market is schools and libraries. Their in-depth to complex subjects means that they will never cover the number of subjects offered by Wikipedia. They don’t need to.

At the same time, Microsoft announced that they are closing down their encyclopedia business, Encarta. Here’s an interesting discussion here on this from Neil Wilkof about the “innovator’s dilemma” and the “tragedy of the anti-commons.” Read more

Newspapers and Railroads – What’s Their IC?

This Boston Globe article states that if the paper were online only, its cost base would be 10% of its present base, which includes the physical cost of printing the newspaper and distributing it across a broad geography every day. Today, newspapers are effectively in the publishing and advertising business. That’s the way they get paid for their news communication business. Their intellectual capital contains several distinct competencies: publishing, advertising and journalism. And the cost base of the physical publishing process is holding them back from remaining relevant as journalists. Read more

Alternate Newspaper Business Models

I have been collecting a list of alternative business models that are emerging to deploy the journalistic competencies of newspaper intellectual capital–without the bricks and mortar expense of printing an physical version of the paper.

Here’s a story in the New York Times on ‘hyperlocal’ sites that focus on local issues without using professional journalists. These business models are still in process but the belief is that the focus on a specific audience will make them more attractive to advertisers.

The Intangibles blog had a post featuring a site called Tyee that plans to take donations for the British Columbia election campaign–with the idea that donors will help guide the focus of the reporting.

On the News Hour the other night (the story is on their website now), MinnPost.com was featured. It is creating a non-profit model based on ads, sponsorships and memberships (not unlike NPR and PBS).

The other guest was a for-profit entrepreneur from Patch.com that is described as “a for-profit company that aims to present online news and information to towns of up to 50,000.” The CEO, Jon Brod, explained the opportunity:

I think there are two things going on. First is that this is an incredibly low-cost model. When you take out the ink, the distribution, the circulation, the print costs, and the significant overhead, and you compare, you know, Patch.com to a like-sized daily newspaper, you’re looking at roughly 4.5 percent to 4.7 percent of the cost.

And the second thing is that as eyeballs and advertising dollars migrate from offline to online, we are very confident that we can secure significant revenues to create a very profitable business over time.

If his figures are right, there is room in the business model. What if the money that I pay to subscribe to the Globe all went to an on-line model. I don’t pay for on-line access now but if the physical paper went away, I would have to get my local news somewhere. And I would not want to rely completely on “citizen journalists.” I have a degree of faith in the work that journalists do to synthesize issues.

Last night  Jim Lehrer was on on Emily Rooney’s show, Greater Boston. When discussing the newspaper dilemma, he quoted Thomas Jefferson as saying that a democracy needs an informed electorate.

We need to take the newspapers’ troubles seriously. But we cannot subsidize the old model. New models can be more efficient and maybe even more effective. Lots more to discuss over time. Please share if you see new models emerging.

The Boston Globe Caught by Disruptive Innovation

The announcement a couple weeks ago by the New York Times that they were considering closing down the Boston Globe was just another chapter in the story of the troubled newspaper industry. I’ve written about this and related troubles in content-creation businesses a lot lately but here are a few new angles.

Disruptive innovation is hardest on the incumbent. There was a story in the Globe this weekend explaining that, in 1995, the founder of Monster.com, the huge job search site approached the Globe. He offered an equity share for $1 million. At the time, the Globe’s job classifieds generated $100 million per year. The Globe didn’t even have a website then and they couldn’t see why they should compete with themselves. Fast forward to 2009. Monster’s revenues exceeded $1.3 billion last year and the Globe is losing $50 million. Read more

Hulu and the Value of Professionally-Developed Content

Neil Wilkof provides a great discussion at the IP finance blog here of the business models of video production.

For those of you not familiar with Hulu, it is an on-line site that broadcasts a lot of current and old television shows on a small screen in your browser. I found out about it last fall when a writer friend of mine declared proudly in one moment that she doesn’t own a TV and a little while later she updated me on Jon Stewart quips from his latest shows…

Anyway, Neil contrasts Hulu with the limits of the YouTube model. The lack of consistency of user-generated content makes it harder to get advertisers on YouTube. Hulu is only presenting “professionally-developed” content. This makes it easier to get advertising.

His presentation adds a lot to my recent musings about Hollywood and newspapers. Both of these industries are professionals at creating content. Yet both are having problems with their business models. No easy answers.  But I remain convinced that the right answers will come from moving from a perspective just based on the content and looking at the intellectual capital elements–and re-assembling them in a new model.

The Newspaper Question

I have been thinking about the newspaper question ever since a NY Times writer engaged me in a conversation about a new business model for the industry.

I thought of her questions when I found this graph in PBS’ The First Measured Century that shows that newspaper circulation peaked in 1947.

This decline seems to have accelerated in recent months. It seems especially ironic because content is more highly valued than ever. But the media is changing. Can newspapers shift from being newspaper to being content providers?

Read more