Andreessen's Advice To Old Media: "Burn The Boats" (Erick Schonfeld/TechCrunch)

[Bill Densmore]

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Andreessen's Advice To Old Media: "Burn The Boats" (Erick Schonfeld/TechCrunch)

Erick Schonfeld / TechCrunch:

Andreessen's Advice To Old Media: “Burn The Boats”  —  Legend has it that when Cortes landed in Mexico in the 1500s, he ordered his men to burn the ships that had brought them there to remove the possibility of doing anything other than going forward into the unknown.

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[Ross Williams]

With all due respect, that advice is idiotic. Newspapers are in the
still highly profitable print advertising business. That business is
likely to be profitable for a very long time. While that market will
shrink, they have little, if any, competition for those advertising
dollars.

The real solution is for newspapers and traditional media to stop
treating the internet as an extension of their current business.
Instead, if they want to launch a web business, they need to see it
as an entirely new endeavor. They need to figure out a business model
that takes advantage of their current expertise in advertising and
news. But the model that people are going to browse a web site like a
newspaper and be exposed to the advertising isn't going to work.

The analogy I use is the middle ages before printing presses. Luther
posted his treatices and people had to go read them. That's the way
all news worked. Then came the printing press, and people got news
delivered to them. That is what is happening with the web. Web sites
are the only town square where people had to go to see the news. The
new models are going to deliver the news to people whether that is
facebook, an rss feed or a phone application.

The problem many newspapers now face is that their web site is
cannabilizing their print advertising audience. This is the reason our
local newspaper has set up a paywall where a web-only subscription is
more expensive than a print subscription with full web access. The
idea that they should abandon print advertising with its high profit
margin in favor of a low margin web advertising business is
ridiculous.

--
Ross Williams
Advocacy Technologies
twitter.com/rosscwilliams
www.northerncommunityinternet.org
www.grandrapidscommunityinternet.org

[Tracy Record, WSB Editor]

And I spiritedly disagree with you.

I don't know how they got away with print advertising for crazy rates all these years.

You look at the paper once (IF you still pick up the hard copy - we are both 50+ and dropped our subscription years ago), it goes into recycling.

You look at a website that you visit frequently, you see an ad over and over and over and over again. The branding burns in. Yes, even small ads like ours (although we at least run 160 x 160s as opposed to the IAB standard of 125x125!). And this isn't our "wishful thinking," it's what we hear from both sponsors and readers alike. Web advertising is NOT about clickthroughs in cases like ours - it's about display, but in a format of repeated exposure, UNLIKE a newspaper!

I would posit cheerily that people only paid through the nose for those ridiculously inefficient PRINT ads over the years because they had no options! No more captive audience, so that is all now ebbing. Time for them to stop frantically trying to hold onto all that and putting so much energy into it that they're not thinking of more ways to serve the online/connected reader/participant/etc. With great content - and with ways for businesses to reach customers, whether you're serving a geographic area or an interest area.

Totally agree with you on mobile etc. of course - the web "site" in the meantime is definitely ultimately a transitional model. It's all about the content and how you can get it to people the way they want it, not the packaging, so don't waste a kajillion dollars designing a fancy site, make sure you've got great content that people can get via mobile, via social networking mobile or fixed, etc.

TR in WS

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[Chris O'Brien]

Please give me a call when Marc Andreessen starts a company that manages to become profitable. So far, he's 0-3. (Netscape had one year of profit, back when they were still charging us for Navigator. $29.99 as I recall). Otherwise, he has no idea about business models for the digital age. I'm always amazed, though, at the reverence with which his opinion is treated when it comes to media models. I'd definitely hire him to advise me how to improve my Web strategy. But my business? No thanks. 

chris o'brien

San Jose Mercury News

--

[Aldon Hynes]

I'm curious about what others on this list think.

Are newspapers in the print advertising business? Or are they really in
some other business?

Is the print advertising business highly profitable? Will it continue to be
so for a very long time?

Perhaps most importantly, is it a good idea to keep print advertising
separate from online advertising?

There is an old saying, people don't buy shampoo, they buy clean and
manageable hair. Likewise, I suspect that companies don't by quarter pages
in newspapers or banners on websites, they buy increased visibility for
their products, increased brand loyalty, or ultimately, increased sales.

If I were buying visibility for my products, I would like to be able to by
an integrated visibility campaign, one that ties together online, print, and
other media.

So, I'm not sure that Andreessen's advice is as idiotic as some might think.
However, I might approach it a little differently. It is overkill to burn
the boats. However, tearing apart the boats and using them to build a
something new and better just might be a good idea.

Aldon

-----Original Message-----
From: jtm...@googlegroups.com [mailto:jtm...@googlegroups.com]On
Behalf Of Ross Williams
Sent: Sunday, March 07, 2010 2:57 PM
To: Bill Densmore
Cc: rji-f...@googlegroups.com; jtm...@googlegroups.com
Subject: Re: {JTM} Andreessen's Advice To Old Media: "Burn The Boats"
(Erick Schonfeld/TechCrunch)

--

[Ross Williams]

" is it a good idea to keep print advertising separate from online advertising?"

No more than it is a good idea to keep print advertising separate from TV, radio, direct mail or any other form of advertising. One reason newspapers have web sites is that they generate more advertising revenue than the marginal costs to put their content online. In some cases, they can use their established relationships with advertisers to get a share of their web advertising dollars in much the same way they use their established relationship with readers to build their web audience. The problem they face is that online presence is starting to cannibalize the print product which generates far more revenue.

The New York Times paywall description sounds like it is designed to solve that problem by preventing people from using the web site in lieu of subscribing to the newspaper, while still allowing fairly easy use by people who use links and other web-oriented access. They are not only not "burning their boats", they are managing their web presence to preserve the more profitable print business.

Ross Williams
Advocacy Technologies
twitter.com/rosscwilliams
www.northerncommunityinternet.org
www.grandrapidscommunityinternet.org

[Martin Langeveld, CircLabs]

"The New York Times paywall description sounds like it is designed to solve that problem by preventing people from using the web site in lieu of subscribing to the newspaper,"

I doubt if anyone at the Times would agree with that. Did Verizon and AT&T price their cellphone plans so as to keep customers on their more profitable landline business (with per-minute charges)? The issue is that for at least 15 years, very few retailers, marketers and agencies have been looking for ways to spend more money in print. For the most part, they're looking to spend less in print and more in digital formats.

This is confirmed by the disconnect between newspaper ad revenue and GDP: we are in the third quarter of economic expansion since the recession, but newspaper revenue will shrink again in Q1 (for the 15th consecutive quarter, and probably by double digits).  

So you can work hard to keep readers in print, but the print product will continue to be less profitable. It makes sense to milk it for whatever profitability remains in it, but at the same time, the continual cost-cutting needed to maintain that profitability kills the capability to do innovation on the digital side.

If "burn the boats" gets your hackles up, translate it to "become a digital enterprise". This means a lot more than updating your web site once or twice during the day, or putting a few salespeople on web-only sales. It means: realize that your business is still organized around a single daily event, presstime. Most daily newspapers, if they analyze what people do, will find that 90% of daily routines are organized around that single point in the day.

A newspaper that "burns its boats" or "becomes a digital enterprise" would aim to reverse that, maybe not overnight, but over the next year or two. They would create content ONLY for digital platforms. Their printed products would become niche products, sidelines, produced with repurposed digital content by a small team of people. Print production, printing and distribution would be outsourced. That big unnecessary building would be sold and the operation would move into leased office space or a storefront. All capital investment would go to digital infrastructure.
_________________________
Martin C. Langeveld
CIRCLABS INC.
802-254-2407  Cell: 802-380-0226
mar...@circlabs.com
131 Woodland Rd., Vernon VT  05354
WWW.CIRCLABS.COM

[Josh Wilson]

Journalists have no choice but to burn the boats. In fact, the boats
have been burned to ashes without any of them having to strike a
match. Working journalists are out of the picture, at the corporate
level they don't get to design or build boats, or any new vehicles for
their work, unless they've ascended the hierarchy; and in order to do
that, they have to swap the urgent basics of journalism as a civic
service with the reality of the news industry's commerce-focused needs.

It's time for journalists to build their own boats, all-terrain
vehicles, hovercraft --whatever it takes to get it out there in a
sustainable and responsible manner.

Obviously, the abundance of "journopreneurs" indicates this is already
happening, but they're too disconnected. News media as we know it has
been dis-aggregated, and now the individual producers need to re-
aggregate in a more egalitarian form.

My take is that a producer's co-op model is the best way to do this.
Here's a short video outlining what that could look like:

Your Local Newsdesk
http://newsdesk.org/2009/12/your-local-newsdesk-presentation-draft/

If you want to get involved, drop me a line!

jw

[Ross Williams]

"I doubt if anyone at the Times would agree with that."

I doubt anyone at the Times would disagree with it. In fact, cannabilization of subscribers has been a major concern for newspapers. Our local newspaper charges more for digital access than for receiving the newspaper with free digital access. The reason for that is obvious, print subscribers are still more valuable than digital users because print advertising is more lucrative. We will see what the NYT does with pricing, but I would not be surprised if combined print/digital access was cheaper than digital only.

"Did Verizon and AT&T price their cellphone plans so as to keep customers on their more profitable landline business "

The New York Times customers are its advertisers. The readers are the product they sell to those advertisers. The business models are entirely different. Rural phone companies all require that you get a landline along with your internet service. The reason is that we have subsidies for universal phone access, but not internet access.

"This is confirmed by the disconnect between newspaper ad revenue and GDP:"

Not really. Newspapers have had fewer readers to sell. The readers they have are becoming an older, less desirable, market. And, while online competition has certainly offered alternatives to advertisers, they have plenty of other competition. And they are a long way from zeroing out. Newspapers ought to be focused on how to deliver print advertising to a younger demographic. I don't think better news coverage is likely to accomplish that. 

"They would create content ONLY for digital platforms. "

The New York Times is already doing this. So are many other mainstream media. But online media is a different business in which their advantages do not guarantee success and whatever revenue it generates is unlikely to support the journalism profession. It will be interesting whether the NYT thinks they can charge print subscribers a premium for accessing that unique digital content or if it is included along with other digital content in the print subscription price.

I am not arguing that legacy media can't build a digital business based on their brand. But the business model is different. And suggesting they abandon a profitable business to recreate themselves in what is likely to be a less profitable business is plain silly.

"the continual cost-cutting needed to maintain that profitability kills the capability to do innovation on the digital side."

No, I don't think it does. The cost-cutting is getting rid of expenses that don't generate sufficient revenue. If anything, that leaves more resources for investment in innovation on the digital side. The real problem is that they are competing with thousands of very low cost operations who are doing digital innovation. The established media have some advantages, but once you get away from institutions like the New York Times, those advantages become increasingly marginal. And even for the New York Times, they don't guarantee success. 

There are several smaller newspapers who have gone all-digital. I don't think any of them did it by choice, their boats were already rotting away and they struck out on their digital adventure by necessity, not choice.

The question for journalism is can it survive without institutional support. 

Ross Williams
Advocacy Technologies
twitter.com/rosscwilliams
www.northerncommunityinternet.org
www.grandrapidscommunityinternet.org

[Martin Langeveld, CircLabs]

Ross: The New York Times paywall description sounds like it is designed to solve that problem by preventing people from using the web site in lieu of subscribing to the newspaper,"

Martin: I doubt if anyone at the Times would agree with that.

Ross: I doubt anyone at the Times would disagree with it. In fact, cannabilization of subscribers has been a major concern for newspapers.

But if that were driving the thinking at the Times, the paywall would go up a lot sooner and be a lot less porous. The paywall is being design to maximize online revenue, not to preserve print revenue. From coverage of the Times paywall announcement:

Guardian:

However, the New York Times doesn't plan to lose its position as the top global newspaper website. Its executives made it very clear that the metered model gives them a chance to balance different interests – revenue, advertising and reach. "The purpose of the meter is to maintain that reach," said the senior vice-president of digital operations, Martin Nisenholtz.
The paper's website does not aim to discourage new users – it will not charge them unless they become heavy readers of its articles. "We are not trying to take ourselves out of the digital ecosystem," said Sulzberger.

 

_________________________
Martin C. Langeveld
CIRCLABS INC.
802-254-2407  Cell: 802-380-0226
mar...@circlabs.com
131 Woodland Rd., Vernon VT  05354
WWW.CIRCLABS.COM

[Ross Williams]

"But if that were driving the thinking at the Times, the paywall would go up a lot sooner and be a lot less porous. "

Why? If they wanted to abandon the digital business entirely they could just shut down their website. But they would be leaving significant revenue on the table. On the other hand, they don't appear to be worried about people accessing their online content for free. That is the reason for the "porous" paywall.

What they are worried about is users who go their web site instead of subscribing to the newspaper. Which is why they are going to start charging that audience of regular users.

Ross Williams
Advocacy Technologies
twitter.com/rosscwilliams
www.northerncommunityinternet.org
www.grandrapidscommunityinternet.org

[Martin Langeveld, CircLabs]

We're just going to disagree on this.
There's nothing in the public record indicating that the Times paywall is motivated by a desire to stem the drift from print to Web. In fact, they have raised the paywall on print much more in the last few years, which is in line with my point about print becoming a niche product.

_________________________
Martin C. Langeveld
CIRCLABS INC.
802-254-2407  Cell: 802-380-0226
mar...@circlabs.com
131 Woodland Rd., Vernon VT  05354
WWW.CIRCLABS.COM

[Ross Williams]

"In fact, they have raised the paywall on print much more in the last few years"

If by "paywall" you mean the subscription price, that is largely because the cost of newsprint and distribution went up. In fact, I don't think the increased price has actually covered those cost increases. In other words, they have been increasing the "subsidy" from advertising for the print edition.

"There's nothing in the public record indicating that the Times paywall is motivated by a desire to stem the drift from print to Web"

I think there is. They are going to provide free access to all online content for subscribers. You don't think that is an indication they are trying to preserve print subscribers? Its obviously a LOT cheaper to provide content online than delivering it to someone's door. Why do you think they are encouraging people to subscribe to the print edition when they have to subsidize the delivery out of advertising revenue?

Ross Williams
Advocacy Technologies
twitter.com/rosscwilliams
www.northerncommunityinternet.org
www.grandrapidscommunityinternet.org

[Erik Sundelof]

All,

It was quite interesting to read this conversation. Mostly because the focus seems a bit skewed and off track. Not the first time I see this though. The paywall is most definitely focused on the struggling business model for online news outlets. If you look at some real numbers here for advertising the most struggling fact for online advertising for NEWS media. The main aspects there are lack of page views, few page views per session and poor CPM. I will not here go into the reasons for that as it is a completely separate topic yet very interesting.

First of all let us once and for all separate print and web businesses. They are very different entities and fulfill different needs for the end consumer. The distribution channels are very different, so are the markets,  customers, cost models and monetization models.

The key here is the market as in the people using the media i.e. market. They will dictate this and they will decide. We should focus on them. It is a very clear and indisputable fact that the advertising business is moving towards the web, and hence the "traditional" media is with the changing media landscape eager to see what they can do in this space. The reasons are very easy to understand and can be summarized as increased possibilities for distribution and then also less costs for the organization on its whole.

Will this mean that print is out? Certainly not but it will reshape into something more fruitful for its arena and cost effective.

I think it is very important to focus on one thing: Where are your customers? How do you address their needs? How do you best serve them? How do you find a model to compensate for you services?

The questions are simple but they should always, always be considered out of that point of view. Like the music industry here has slumbered and got caught in their sleep as the music industry did when file sharing did. (Read all the glory details on that here: The Ever Changing Media Landscape: It Is What It Should Be…) Only here it is the massive link sharing that has caused a shaking, shattering business model for news media in particularly online. 

Let us not also forget that the lucrative classified advertising that has been the money engine for print media and news media is successively getting a massive competition from outlets such as craigslist and other sites if we look outside the US. I am not sure where you see the numbers showing that print media is successful but to my knowledge they are far from it, yet locally they still will be successful. Also I assume you only talk about US now and the situation in different parts of this world is very different. For instance think of the street news paper in Liberia that has a massive success, and that in places where you have bad internet connectivity and/or cellphone coverage this will be different. The development there of media will be very different to that here in the US.

"The question for journalism is can it survive without institutional support. "

Yes it will and I think it should. Institutional support is certainly not the way to go for a branch of business which also serves as a democratic component. 

So how you do it?

To name two possible solutions proven successful in different shapes:

- Spot.us - Provides an awesome alternative to find funds for investigative reporters (the first thing you would cut as the circulation is the same as for breaking stories but cost more) 

- Allvoices.com - Provides a space for anyone to publish any type of media, get compensated for what they write and also a way to provide automatic credibility ratings for such reports. The biggest citizen media portal of today which is easy to check in Alexa. :-)

(Disclaimer: I am the co-founder of Allvoices.com and currently the CTO of Spot.us.)

I think it is time for us to embrace the change and see the possibilities and also put the focus back on the community that the journalism should serve. This will require us to raise our vision and look out for new solutions. The right change is to make it more user centric and this why the internet has in many ways started to gain the interest together with lowered costs for distribution and publishing. This does not mean that print doesn't work or it will not survive. It means that it will change and fighting it is like fighting windmills. It makes very little to no sense. 

The solution is there and being shaped if we just open us up to embrace the new times and find the new media which is more user centric and less top down driven. It is the place of open dialogue and interaction and the journalistic principles live there yet in a different shape. Embracing it is what makes sense.

Bests,

Erik Sundelof

--------------------------
www.sundelof.com
www.inthefieldonline.net/blog