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The Newspaper Industry is Changing

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Martin Langeveld has written a post proclaiming the impossibility of charging for online news. While I think his fundamental conclusion is correct, I think that his analysis is both incomplete and misleading.

His initial premise is controversial. Namely, that charging for access to online news has price sensitivity; or, that demand is elastic according to price. Mr. Langeveld presents some numbers which he says “come from the top of my head” and concludes that newspapers can never match current
online advertising revenue with subscription revenue.

I don’t know how accurate his estimates are. There may even be a much larger drop than he predicts given any charge at all. Economically, the conclusion would follow from an assumption of moral hazard; as people consuming news currently don’t have to pay, they’re likely to over-consume news. If you start charging at all, they will stop “over-consuming” to that degree. Of course, perhaps we want citizens of a democracy to “over-consume” on news, so that they are informed – but that’s a philosophical & normative debate.

And, as some commentators have pointed out, his estimates of advertising revenue may be flawed. There may also be greater leeway for premium content, micro-fees, etc one people are signed up and you have their credit card information. Cross-selling and up-selling, in other words.

Regardless, it’s less important that the systematic shifts in “news media”.

First of all, the costs of (1) publication, and (2) distribution have dropped to “effectively zero” for small publishers. This means, basically, that newspapers have dramatically more competition – they are no longer the only game in town.

Secondly, the role of newspapers is the modern age is unclear. Their role pre-internet was clear; that is, they did three things. They (i) aggregated news [local, industry specific], (ii) published news, (iii) distributed news to people interested, and (iv) connected advertisers to an audience.

The problem is that on the internet, there is no value add from (ii) and (iii) [publication and distribution], then that leave only aggregation as a value-add. However, modern technologies have (arguably) “solved” the aggregation problem, and in a much more elegant way than newspapers (who acted as gatekeepers). Online aggregation, based on search technologies, can locate and present related content after it’s been published – from multiple sources, and arranged via topic.

Newspapers lose their gatekeeper power. They devolve into brands – filters, really, who guarantee a certain minimum quality – as well as content production companies. It’s easy for newspapers to pair a photo with a story, because they employ both photographers and writers.

But that’s a much weaker position than their previous one. It’s also one with lower barriers to entry, and thereby more competition. The low cost of publication and distribution means that anyone can set up a blog and start writing; and with Google Adwords and similar technology, the advantage of (iv) – selling advertising – is also much reduced, so anyone can make money.

And, when all your competition is free (or advertising supported), it’s hard to charge for your content. Most industries have learned that it’s hard to fight the “laws” of supply and demand – the newspapers are no exception.

When is a disadvantage not really a disadvantage?

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Answer: when you’re giving an interview.

Are there disadvantages to continuous analytics?

The main disadvantage of stream-based continuous analytics is the incorrect perception that stream processing is solely for real-time applications, rather than the more general — and much larger — problems facing data analytics today.

I cam across this gem when reading up on Truviso’s Continuous Analytics Platform, a tool which does pretty much what you expect it to, which is the analyze just incoming data. There are advantages to this; for instance, a pretty common task in data analysis is to look at how are things changing? You can look at a trend graph on-demand, which would involve querying a lot of data and take a long time, or you can perform the same query multiple on small batches of incoming data and store the results.

As far as I can see, that’s all Truviso is really doing. They have an efficient, and fast, add-in to a SQL-based server that will perform a set of pre-defined queries on an incoming batch of data. Looks useful for certain cases – mainly when either your queries are really expensive so you don’t run them often, or you need to be sensitive to changes.

Truviso seems to be targeting the former situation in the section of the interview I quoted. The answer, however, is both entertaining and downright wrong: he’s addressing a misconception about what Continuous Analytics is capable of, and not an actual disadvantage (or limitation) of Continuous Analytics. 

In other words, he’s sidestepping the question and answering the question he really wanted to answer – one that shows Truviso in a positive light.

It’s also classical “job interview” technique.

Shoddy Journalism

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My God, more shoddy journalism in the tech industry. Randall Kennedy writes that Microsoft may drop Internet Explorer – after IE8 – in favor of a new rendering engine like WebKit (which Safari and Chrome use) or Gecko (Firefox). This sounds reasonable – or at least not outright absurd – unless you either know anything about Internet Explorer or are capable of using Google; in which case, a simple search (for “ie8 new rendering engine”) will lead one to a post on the IEBlog (which itself references a post on A List Apart). Both posts make it very clear that Microsoft embarked on writing a new rendering engine for IE8. In other words, Microsoft already has its “new rendering engine” and has no need to adopt something like Gecko or Webkit – not to mention the support nightmare that would inspire. Given how easy it is to dismiss the premise for Mr. Kennedy’s article, it’s difficult to take it seriously – or see it as anything more than mere shoddy journalism.