Mar 8, 2010

Science Blogging as a Public Outreach Tool — Unfulfilled Potential or Unrealistic Expectation?

Posted by David Crotty under Authors, Controversial Topics, Education, Research, Social Media, Social Role, Tools, World of Tomorrow | Tags: , , , , , , , , , |
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University of California, Berkeley
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Science blogs are a heterogeneous lot, ranging from personal diaries of life in the lab to sites offering technical tips and professional advice, with many stops in between on the hot-button science issues of the day.  Different blogs serve different purposes, but one common justification for science blogging is that it can serve as a way for scientists to speak directly with the public, as a tool for engaging non-scientists, keeping them up to date with current discoveries and promoting the enormous value of research.

A recent study in the Journal of Science Communication, however, points out that science blogs are failing to provide this useful service (link found via A.J. Cann, thanks)

Is this really a failure or is it an unrealistic expectation?

Inna Kouper, a graduate student in library and information science at Indiana University, put together an attempt to “initiate a scholarly evidence-based  discussion about the role of science blogs in promoting public engagement with science.”  To do so, she selected 11 science blogs and tracked their activity during the summer of 2008.  A series of quantitative and qualitative analyses were applied to both the posts on the blogs and the comments.  While Kouper points out that science blogs are so varied that it’s impossible to pin down “stabilized genre conventions,” she concludes that, in general, they are highly insular to the world of science:

. . . those readers who engage in commenting are almost always associated with science in one way or another.  They are graduate students, postdoctoral associates, faculty members and researchers. . . . science blogs are virtual water coolers, where fellow scientists and researchers can virtually get together and talk about “what’s interesting in research topics, what’s up with funding, looking for trends and needs.

There’s nothing wrong with providing an outlet for communication within the scientific community, but, as Kouper notes, there’s a potential here for providing “informed expert and citizen commentary” that is not being realized.

Kouper admits that she’s missing out on non-scientist lurkers, who read but don’t comment, so perhaps more education is happening than she concludes, though that leaves blogs as a one-way medium, rather than as a socially interactive place for conversation between scientists and the lay public.

I’d argue that the insular nature of most science blogging creates barriers that go beyond those mentioned in Kouper’s study that keep non-scientists out, and that they’re likely keeping out a good number of scientists as well.  Science Blogs is often referred to as something like a “high school clique.“  The Nature Network is regularly seen as a small private club:

Bloggers from this or other platforms comment on other bloggers’ posts, get to “know” one another both online and IRL [In Real Life] in many cases, and in the end, conversing often with a cordial tone. It leads to a club atmosphere . . .

Human nature compels us to seek out like-minded individuals, to bond and form communities.  These can be very valuable for scientists, both as a source for information and as an outlet to blow off steam.  But it’s likely slowing the growth of science blogging as it cements the image of science blogging as a niche activity.  And the in-jokes and snark based on the personalities of the regular clientele sitting around the bar of a blog (or blogging platform) that are impenetrable to all but regular readers are certainly preventing the lofty goal proposed by Nature — that science blogs would fill the void left by science journalism’s decline.

Is that even a reasonable goal?  To increase public engagement, Kouper suggests:

Science bloggers need to become more aware of their audience, welcome non-scientists, and focus on explanatory, interpretive, and critical modes of communication, rather than on reporting and opinionating.

In the abstract, this makes sense, but is it realistic?  Writing about complex scientific concepts for a lay audience in an entertaining and understandable manner is a rare skill.  Having done book acquisitions for a science publishing house for the last decade, I’ve seen a steady stream of well-meaning authors proposing books about their research aimed at a non-science audience.  Very few have been able to pull it off.  Scientist-authors seem to either assume their readers have an unreasonably high level of background knowledge or they get bogged down in explaining the most basic concepts, taking a tortuous path to get to the actual research they want to discuss  (and sometimes both things happen in the same chapter).  Writing for a lay audience is not something that’s taught in most Ph.D. programs.  Skills can certainly be acquired, but this takes time and practice.  It should come as no surprise that many of the science bloggers most skilled at writing for the general public are professional writers, not scientists (see Carl Zimmer or Jen Ouelette as examples).

More importantly, would shoehorning science blogging into an outreach/educational role ruin science blogging? One thing we’ve learned from the development of social media tools is that once created, you can never dictate how those tools are going to be used in the real world.  Twitter was originally conceived as a mobile status update service.  Its users, however, decided to do something completely different with it, turning it into a far more interesting and useful tool.  Science bloggers are doing much the same thing, they’re taking a tool and adapting it to their needs, doing what they want with it rather than forcing their activities to follow someone’s plan for the medium.

The best blogs (not just science blogs) are written with passion and personality.  Take away those strongly held opinions and you take away a lot of the fun of reading and writing a blog.

Let’s think of a theoretical world where the wishful thinking of science Web 2.0 advocates has come true, and blogging is now both a required task and something that’s evaluated as part of career advancement.  Science bloggers:  would knowing that your thesis committee, your tenure committee, your funding agency, and your department chair were reading your blog and factoring this into your professional advancement and continued rate of funding change the way you write your blog?  If that career credit were based on the quantity of content aimed solely at education and public outreach, would you enjoy blogging as much as you do now?  Would you even want to blog at all under such conditions?

Does institutionalizing a highly personal form of expression destroy its value?

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Feb 25, 2010

The Internet’s Extended Cultural Memory — Is It Sapping Our Creativity?

Posted by David Crotty under Controversial Topics, Historical, Nostalgia, Social Media, Social Role, Sociology, Technology, Tools, World of Tomorrow | Tags: , , , , , , , , |
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Back to the Future
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Recently, while reading a movie review, I came across something that was really frightening:

Here’s a thought that will fester for all of you folks out there slowly aging as you read this: recently a friend noted that if Universal greenlit and released a remake of BACK TO THE FUTURE today and Marty McFly traveled back the same amount of time as in the original, he would land smack dab in the middle of 1980. Let that sink in for a moment. That’s how BACK TO THE FUTURE looked to our parents.

Yikes. Digging a little deeper, it would seem that the author’s “friend” probably found this idea in Chuck Klosterman’s recent book, “Eating the Dinosaur.“

A contributing editor for Esquire magazine, Klosterman is best known for his columns and books analyzing popular culture, with a particular focus on music. I’ve always enjoyed Klosterman’s writing, but I’ve almost always completely disagreed with his tastes. His inherent contrariness is what makes him entertaining because he spends “an inordinate amount of time searching for the underrated value in ostensibly stupid things.”

“Eating the Dinosaur“ is a step up for Klosterman. While still as contrary as ever, he seems to have matured to a point at which he doesn’t need to force his tastes on the reader. This frees him up to dig deeper into questioning why we do the things we do.

While the Back To The Future factoid provides a compelling lede for a movie review — and it certainly made me feel terribly, terribly old — the review’s author misses out on the deeper point Klosterman makes:

Before [Michael J.] Fox plays “Johnny B. Goode” at the high school dance, he tells his audience, “This is an oldie . . . well, this is an oldie where I come from.” Chuck Berry recorded “Johnny B. Goode” in 1958. Back to the Future was made in 1985, so the gap is twenty-seven years. I’m writing this essay in 2009, which means the gap between 1985 and today is twenty-four years. That’s almost the same amount of time. Yet nobody would refer to Back to the Future as an “oldie,” even if he or she was born in the 1990s. What seems to be happening is a dramatic increase in cultural memory: As culture accelerates, the distance between historical events feels smaller. The gap between 2010 and 2000 will seem far smaller than the gap between 1980 and 1970, which already seemed far smaller than the gap between 1950 and 1940.

Though Klosterman leaves it at that, the Internet is an obvious driving force behind this expansion of cultural memory, and it’s interesting how often mention of “new media” creeps into Klosterman’s trademark in-depth analyses of subjects like ABBA or the wildcat offense in football. Though our society is changing more and more rapidly, we no longer leave anything behind. If you want to explain the term “jumping the shark” to someone, you pull up a YouTube clip of Fonzie from Happy Days. The sorts of things that would live on only in our memories (and get mythologized and embellished due to nostalgia and our faulty recall) are all readily available for scrutiny. There’s something about this that bonds us all together, that allows for a common frame of reference and understanding.

Common bonds aside, is this a good thing? As Kent noted in his recent review of Jaron Lanier’s new book on open networked culture:

Lanier talks about the extended neoteny our rich culture is allowing, and how this extended childhood is exerting an oddly conservative force on our culture — teens today don’t ever lose touch with friends, so don’t reinvent themselves as dramatically as people who could break cleanly from their pasts multiple times over their lifetimes

The same could be said about the cultural relics of our childhood. Instead of leaving behind Rocky and Bullwinkle and expanding our horizons, we can instead stay locked into nostalgia on the flying squirrel and moose’s very own Hulu page.

It’s fascinating to see how Lanier and Klosterman, two very different individuals with very different backgrounds, address very different topics but end up at the same point. Even more interesting is where they coincide with the subject of Klosterman’s final essay in “Eating The Dinosaur” — Ted Kaczynski, the Unabomber.

While Lanier decries the “hive mind” which makes it impossible for our young to develop as “fierce individuals,” Klosterman, in typical contrarian fashion, calls out the Unabomber as a damaged and deranged individual, but notes that much of his manifesto reflects the toll that increased media exposure has taken on our freedom of thought. He presents the premise that Homo sapiens have existed for at least 130,000 years, and for more than 129,900 of those years, any moving image a human saw was . . .

. . . actually real. . . . we were conditioned to understand that seeing something in motion had a specific meaning. But that understanding no longer exists; today we constantly “see things” that aren’t actually there. . . . Is there any possible way that 129,900 years of psychological evolution can be altered within the span of a single century?

This biological inability to cope with the pace of technology, Klosterman (and Kaczynski by proxy) argues, robs us of our “freedom to think whatever we want.” Citing Jerry Mander’s 1978 tome, “Four Arguments for the Elimination of Television,” Klosterman asks the reader to picture a variety of scenarios:

  • life in an Eskimo village
  • a pre-operation conversation among doctors
  • the flight of Amelia Earhart
  • the Old West
  • a basketball game

After you’ve done this, Mander asks the following:

It is extremely likely that you have experienced no more than one or two of [these situations] personally. Obviously, these images [inside your head] were either out of your own imagination or else they were from the media. Can you identify which was which?

The argument is that this pre-programming of our imaginations with stock images and ideas from movies, television, and the Internet takes away the freedom of creating our own visions, of using our own imaginations. As our technology becomes more and more futuristic, the paradox is that it’s burying us in our cultural past.

I don’t buy Klosterman’s (and Kaczynski’s) conclusion — that technology is ultimately bad for civilization — and I don’t think Lanier would agree either. But it does raise interesting questions about the difficulty of originality and creativity in a time of so much media inundation, and how this is affecting our culture.

While the Internet may indeed be making us smarter, is it also making us less interesting and original?

Technology has greatly democratized access to media and the tools of creation, but has this resulted in a revolutionary creative era? Have the past 10 years yielded an new major movements in art, fiction, film, dance, music, etc.? It’s certainly debatable. More people can create and be seen and heard, but has this meant more innovation?

The biggest trends I can see in music in recent years are a garage-rock revival and a re-hashing of “progressive rock“, a style so dreadful that punk rock was invented as an antidote to its overblown sense of self-worth. The wildly original and innovative use of sampling has now degraded into a shortcut for having to write your own melody. The “mash-up” fad speaks for itself: clever, to be sure, but brilliantly original?  Not so much. Perhaps there is value in having to re-invent the wheel every now and again, rather than relying on already existing building blocks.

Once one accepts the loss of freedom of thought, Klosterman gives the reader two ways to react. Kaczynski abandoned society and went off to the wilderness, losing his mind to the point where he saw killing and maiming as legitimate publicity tools to get his message out. Klosterman instead surrenders:

The Internet is not improving our lives. It’s making things (slightly) worse. But because I’m not free–because I’m a slave to my own weakness — I can no longer imagine life without it. I love the internet . . . but I cannot be saved.

I’m not as pessimistic as Klosterman. I do think originality and creative thought can thrive, but as a species, we’re generally lazy and prefer to take the path of least resistance. This age of abundance gives us more of those easy stepping stones rather than forcing us to blaze our own trails. I’d like to think of this as an era of transition, a period where we are still trying to comprehend and move beyond what technology hath wrought.

The challenge, as the pace of technological change increases, is to adapt before the next paradigm buries us in a new set of issues.

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Feb 12, 2010

A Technology Reality Check — The Fable of the Facebook Login

Posted by David Crotty under Social Media, Technology, Tools, World of Tomorrow | Tags: , , , , |
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Image representing Facebook as depicted in Cru...
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We tend to talk a lot about new technologies here on the Scholarly Kitchen — new devices, new services, thoughts about often complex tools to create new ways to present information.  And then, something like this comes along, a stark (if hilarious) reminder that for many, things are already too complex, and the tools we take for granted have not yet been mastered.

Yesterday, ReadWriteWeb posted an article discussing Facebook’s new partnership with AOL and how it connected various popular services.  The problem is that, at least briefly, the article became the top result if you typed “Facebook login” into a Google search.  Why is that a problem?  Well, believe it or not, there are still lots and lots of people out there who haven’t quite figured out how a web browser works.  They don’t understand bookmarking, or even how to type a URL like “facebook.com” into the address bar.  Instead, they go to Google, type in what they are looking for, and click on the first result.  And so, the comments on this innocent ReadWriteWeb article are filled with angry complaints mistaking the blog for Facebook, wanting to know why the design has changed so much, and why it won’t let them login to their accounts.

Really.

It’s a good reminder of the insularity of online communities, and how we tend to take things for granted because everyone we interact with in our small online world thinks about things on the same level.  While we spent days arguing over the shortcomings of the iPad (No multitasking!  No Flash support!), John Gruber notes that we may be barking up the wrong tree:

All this argument over whether the iPad is too simple — if anything it’s probably still too complex.

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Feb 8, 2010

Science and Web 2.0: Talking About Science vs. Doing Science

Posted by David Crotty under Controversial Topics, Education, Experimentation, Research, Social Media, Technology, Tools, World of Tomorrow | Tags: , , , , , , , , , |
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A tag cloud with terms related to Web 2.
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Science Online 2010, the annual meeting for cutting edge users of Web 2.0 technologies in science, was held last month. It filled the science blogosphere with coverage and allowed far-flung colleagues to meet in person. Bora Zivkovic, one of the organizers, has written a summary of the meeting, and his perception is that one of the overarching themes was examining media and journalism. But what’s perhaps more telling is what wasn’t a major theme of the conference, as pointed out by attendee Deepak Singh:

There are far too many sessions on journalism and policy, and far too little on doing science . . .

That may explain why so many of the high-profile attempts at adapting Web 2.0 technologies for scientists have failed to catch on, why we haven’t yet come upon the “killer app” that integrates social media into the mainstream of science. Nearly all of the more visible attempts so far have focused on talking about science, rather than tools for actually doing science.

Tools for communication are the low-hanging fruit, the obvious things to build based on Web 2.0 ventures that have worked in other areas, but so far they’ve failed to capture the interest of most scientists.  Tools for doing science are much harder to envision and build.  But these sorts of tools are much more likely to see uptake and use by the community, simply because scientists are more interested in doing science than they are in talking about science.

Discovery, doing research, gathering and interpreting results, that’s the very nature of being a scientist.  There are people whose main focus is talking about science, but we have different names for them — teachers, journalists, editors, and publishers. Talking about science, communicating experimental results, teaching scientific concepts, and reaching out to educate non-scientists are incredibly valuable practices. Communication is an important part of being a scientist.  It is not, however,  the top priority for most.  Nobel Prizes are given for achievements, not for writing entertaining blog entries or clever tweets. Being a good teacher is appreciated, but not as important to a career as uncovering groundbreaking results and securing funding.

Even without new online technologies, scientists already spend a substantial portion of their time communicating.   They share results with peers, plan future experiments with collaborators, give talks, write papers, teach, etc.  New social media endeavors ask scientists to devote even more time to communication, but it’s unclear where participants are supposed to find that time.  Every second spent blogging, chatting on FriendFeed, or leaving comments on a PLoS paper is a second taken away from other activities.  Those other activities have direct rewards towards advancement.  It’s hard to justify dropping them for activities backed by vague promises that “you will be one of the early adopters and will be recognized and respected for this in the future.”  That’s a tough gamble for most to take, and scientists are unlikely to risk current status for a leg up in the event that sweeping societal changes occur in how we fund, employ, and judge scientific achievement.

Self-serving predictions like this about the future are a dime a dozen.  Remember that social media shares a lot in common with pyramid schemes.  Pyramid schemes and social networks work better with more participants.  If you’re involved in a pyramid scheme or a social network, it’s in your best interest to recruit others to join in.  So there’s a nearly constant barrage of exhortations to participate, including unrealistic promises of future rewards.  Are scientists in the future really going to be given tenure and funding for leaving good comments on the results of others, rather than discovering their own results?

Scientists are no different than other humans. Most people don’t blog. It’s not something they’re interested in doing. Blogging tends to attract those with a strong interest in communication, writing, and teaching, along with activists who are championing a personal cause (that’s why the online science world is dominated by discussions of causes like open access, open science, creationism vs. evolution, and climate change). What you see online reflects this small portion of scientists and may not be all that relevant to the greater community as a whole.

ScienceBlogs has around 80 regular bloggers. The Nature Network has around 40 blogs that have been updated in the last month (this figure seems to have dropped by 20% since I last checked). David Bradley lists 600-plus “science type” users of Twitter. Even if these numbers are just the tip of the iceberg, and there are 1,000 times that number of scientists involved, you’re still talking about a very small percentage of the tens of millions of working scientists in the world.  Science blogging is a tremendously insular world, and frequently an inwardly-gazing one.  It’s often noted that the most common topic covered by science blogs is science blogging.

Tools like blogging can be effective and useful, but they’re for talking about science, and that’s very different from tools built for actually doing science. The success and high visibility of things like Facebook, Twitter, and blogs has driven much of the development of Web 2.0 tools for scientists.  These things worked in other arenas, why not here?  It’s low-hanging fruit though, trying to shoehorn pre-conceived ideas into different communities rather than coming up with more ambitious new ideas developed directly for that community.

In the age of the sequenced genome and systems biology, scientists are more and more often dealing with enormous data sets. Experiments require collaboration on a scale never seen before. Though they’re just in their infancy, tools to store, process, and interact with data are more likely to draw scientific users than blogging platforms.  These are much harder to conceive and develop than yet another “Facebook for scientists.”

Databases like HapMap and Chemspider are increasingly useful. Community-built resources like WormBase/WormBook/WormAtlas are great examples of projects that have drawn researchers into donating their valuable time and efforts. All of these take principles of Web 2.0 — from crowdsourcing to remixing of previously available data — to build new tools that create efficiencies. Information is aggregated and can be processed in one step, rather than having to gather and try to tie together data from disparate sources.  It’s still the early days for these types of resources, and likely the really useful groundbreaking ones are still ahead of us.

Science publishers are deeply interested in new web technologies and have been behind many of the higher-profile attempts at social networking for scientists. Perhaps we need to change our thinking on the subject, and divide our efforts into separate paths:

  1. Communication: Web 2.0 technologies provide superb ways to help us do our jobs better, and publishers should be employing them regularly. Editors and writers should blog and tweet to spread the word about the useful results we’re publishing. If our job is to facilitate the communication of knowledge discovered by our authors, we need to go beyond the published paper. While we’ll be joined in this effort by a small band of scientist-communicators, it’s probably unlikely that we’ll see much participation beyond that. Investing in platforms to provide these tools for something most readers don’t want to do is not an efficient use of our funds or time.
  2. Tools for Work: Every journal is looking for a leg up on the competition, looking for offerings that make them more attractive than other journals. Instead of offering yet another suite of communication tools likely to be ignored, we need to instead focus on the priorities and needs of our readers. Can we create new resources that support communities or that aggregate information in valuable ways? Can we open up our journals and let others tinker with our content and data to create something new (think along the lines of the Guardian’s open API)? Can we create new efficiencies for scientists, ways to make them more productive rather than tools that ask them to take time away from their research? Can we develop tools for doing science, rather than tools for talking about science?

Creating new resources and experimenting with new technologies is often an expensive and time-consuming endeavor. We need to stop wasting our efforts copycatting ideas that may work for other situations and instead focus on the communities we serve. Communication tools can be put to great use, but we shouldn’t settle for them just because they’re obvious and easy to build. Finding ways to help scientists spend more time at the bench and to get more out of that time will succeed where the current crop of peripheral distracting tools have failed.

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Feb 1, 2010

Who Controls Publisher Prices? Amazon Fires the First Shot, Then Forges a Bitter Truce

Posted by David Crotty under Authors, Books, Business Models, Commerce, Controversial Topics, Experimentation, Newspapers, Reading, Research, Technology, World of Tomorrow | Tags: , , , , , , , , , , , , , , |
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Image representing Amazon as depicted in Crunc...
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“Begun the e-book wars have.”
Yoda, Star Wars: Attack Of the Clones, slight paraphrase

Book shoppers going to Amazon on Friday were met with some puzzling results.  All books published by MacMillan had been pulled from the site. Apparently, Amazon and MacMillan reached something of stalemate regarding terms for e-book pricing.

Late Sunday afternoon, Amazon blinked, but did so through a relatively charged post in its Kindle Community forum. It’s clear this won’t be the last shot fired in this skirmish.

Most in the publishing industry watched warily as Apple asserted control over the music industry, wondering whether a similar third party would try to do the same for e-books.  As one of the largest media retailers in the US, Amazon was an obvious candidate for such a move, and their Kindle strategy goes way beyond asserting control over the nascent e-book market.  Author Charlie Stross explains:

They’re trying to in-source the publisher by asserting contractual terms that mean the publisher isn’t merely selling them books wholesale, but is sublicencing the works to be republished via the Kindle publishing platform. Publishers sublicensing rights is SOP in the industry, but not normally handled this way — and it allows Amazon to grab another chunk of the supply chain if they get away with it, turning the traditional publishers into vestigial editing/marketing appendages.

These sorts of power struggles are going to be the dominant issue for content creators in the digital age.  Is the content the valuable thing? Or does the networked retailer who makes the content visible/sells the content get to call the shots?  Are music companies bigger than iTunes?  Does Google need newspapers more than newspapers need Google?

In this case, the question was: Can publishers afford to do without Amazon?

Apparently, for now, they can.

MacMillan issued their own statement on what was happening. MacMillan is one of the companies that has signed on with Apple for the iBookstore, and has offered Amazon the same terms as Apple (the “agency model,” in which the publisher sets the price and the seller takes a 30% cut), or offered to continue the current Amazon wholesale pricing deal, whereby Amazon pays the publisher 50% of the hardcover’s retail price and then sells it at whatever price they want, but with e-book versions delayed by months :

In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.

Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.

The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.

Amazon publicly offered publishers and authors terms that cede a great amount of control to Amazon, particularly when it comes to pricing one’s own product.  Not surprisingly, publishers are unhappy with someone else trying to control their business.  John Scalzi has weighed in with an author’s perspective that the market should decide, not Amazon:

Do I think Macmillan (or anyone else) will be able to sell $15 ebooks? They could; after all, they sell $25 hardcovers (and similar amounts for ebooks, depending on the retailer). Now, some people won’t spend that much for a book, so they pick up the book later when it’s an $8 paperback. That’s fine, too. Likewise, I think it’s fine to attempt to charge $15 (or more) for an ebook for a brand-spankin’ new release to service the folks who just can’t wait, drop it to a lower price point (say, $10) later on in the run, and then drop it again to $8 or so when the paperback hits. That’s how I would do it, in any event. Would it work? Hell if I know. But that’s not to say it (or some other pricing scheme) is not in a publisher’s interest to try.

And to be blunt about it, it’s in my interest as an author as well, because, you know what? My royalty is a percentage of the sale price. . . . It’s not unreasonable to test the market and see what it will bear.

Variable pricing is incredibly important for publishers, and author Tobias Buckell has a lengthy post explaining the economics and the reasoning behind pricing a book high at its initial release, and gradually lowering the price over time (as so many other industries do as well).  Theresa Nielsen Hayden predicts that with fixed pricing, “the result would be fewer and less diverse titles overall, published less well than they are now.”  This is particularly crucial for scholarly and STM publishers, who often serve small academic communities.  Having prices fixed at an artificially low point that’s unsustainable will mean that those communities are no longer served.

Publishers in this fight have advantages that their music and newspaper brethren lack in their struggles:

  1. The music industry was (and still is) fighting off a vibrant filesharing community that makes all of their products readily, if illegally, available for free.  Boycotts, and taking their products off of the market, meant driving more customers toward filesharing.  For the book industry, while piracy does exist, it is not yet at the level of music filesharing, where illegal downloads vastly outnumber legal sales.  Refusing to make a Kindle version of a book available will certainly drive some to create their own unauthorized versions which they will distribute.  But now is the time to make this move, as e-books only make up a small percentage of the market.  Sacrificing those few percent of sales may be worth it in the long run.
  2. Unlike newspapers, publishers have unique content that isn’t easily replaceable.  If you want to read about today’s top news story, you can get that information from a nearly infinite number of sources. If you want to read “The DaVinci Code,” you can’t readily substitute in another book to recreate that experience.
  3. There are plenty of other outlets for MacMillan’s books, both print and electronic.  If you’re trying to buy book X from Amazon and they don’t have it, most people will head over to Barnes & Noble or Borders or countless other online booksellers to buy the same book (not to mention Apple’s upcoming e-bookstore).  This is likely why Amazon blinked (and it would have been a great time for B&N to start a new “Not Available on Amazon” campaign with MacMillan).

Because of these factors, MacMillan seems to have made their move at the right time. We’ll have to see if other major publishing houses concur, but it’s important — unless publishers are willing to live under the thumb of the likes of Amazon, Google, and Apple. Remember that without products to sell, Amazon is just a bunch of empty warehouses, and the iBookstore is a blank website.

Amazon may be right — $9.99 may be the correct price for e-books. But that figure should be discovered by testing the market, not by decree.  In their clearly angry and somewhat bizarre surrender notice (apparently monopolies are bad when it comes to MacMillan’s products, but good when it comes to the Kindle), Amazon assumes all MacMillan books will be $14.99, but I’m willing to bet this will not be the case, at least not over the entire course of the book’s lifespan.

This will certainly not be the last standoff between a content creator and a content retailer. Early confrontations like this will set the tone for how far the publishing industry is willing to go to remain independent and in control of its own business, and thanks to MacMillan, Amazon’s sweeping power play has for the moment failed.  Other publishers will likely follow MacMillan’s lead and demand agency model deals.

These battles are far from over, but for now it seems publishers have the upper hand.

(10:51 AM, Edited to correct Amazon’s ranking as a bookseller, which was previously incorrectly stated, see comments below)

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Jan 28, 2010

The iPad: First Impressions of Its Importance to Publishers

Posted by David Crotty under Books, Technology, Tools, World of Tomorrow | Tags: , , , , , , , , , , , , , , |
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Apple iPad
Image by marketingfacts via Flickr

Unless you live in a cave (and a cave without a wireless connection at that), you’re probably aware that Apple announced their long-awaited, much-hyped tablet computer yesterday, officially dubbed the “iPad.”   Full technical specs and details are available from Apple, and ArsTechnica has a good summary.

Some initial impressions are below, and I’m hoping this post will serve as a conversation space for our readers to post their thoughts in the comments.

First, I think that the vast majority of the tech press and online commenters seem to be completely missing the point.  There’s persistent lamentation about this or that laptop feature that the iPad is missing.  If you need the full features of a laptop, the iPad is not for you.  This is a different product, meant to fill a different niche.  The question Jobs asked during his presentation was, “Is there room for a third category of device in the middle? Something that’s between a laptop and smartphone.”

Right now that category is being filled by netbooks, which, as Jobs notes, are just really cheap, crappy notebooks.  They aren’t specialized for this niche — they just do the same things as notebooks, only more slowly and not as well.  There are certainly people who need notebooks and instead buy netbooks because they cost less and this makes up for the drawbacks of cheap tech.  But there’s a huge market buying netbooks because they just want an inexpensive device to do simple tasks like answer e-mail, browse the internet, update their Facebook pages, and watch video.

That’s the target audience for the iPad.

For about the minimum price for a decent laptop, you can soon (the iPad should be selling in March) get a device that’s designed for those needs and provides an allegedly better user experience.  It’s not meant to replace laptops — it’s meant to create a new level somewhere below a laptop for those with lesser needs.

That said, I can’t justify buying one. I’m one of those people mentioned above who needs the power of a full-fledged laptop.  If I’m in a situation where the laptop isn’t usable, then my iPhone will suffice until I can get to a more powerful machine, and because my iPhone’s so small, I always have it with me for my real basic computing activities.  Essentially, my needs are either too advanced or too primitive for this device.

Since this is a publishing blog, the real big news may actually be Apple’s new iBookstore. Details on the store are sparse so far, which makes it hard to comment.  What’s the DRM situation? What’s the actual file format (Jobs did say it uses ePub, but is it some modified version)?  How easy will it be to convert XML, PDF, or Quark files?  What is the business arrangement?  How much control over pricing do publishers have?  Will the iBookstore and products be available for iPhones and iPod Touch’s as well (77 million of these in the wild, by the way)?  Will there be a Google Books app? These questions need to be answered before we can discuss much further.

But this does seem to be a nail in Kindle’s coffin.  Why spend $489 on a Kindle DX when you can spend $10 more and get so much more functionality in an iPad?  And what of Amazon’s Kindle app?  Assuming it will translate to the iPad, Amazon then becomes just another bookstore selling e-books for a variety of devices, and this certainly takes a lot of the wind out of their sails as far as dictating terms to publishers (particularly because the Kindle app is so far behind many other e-reader apps).

Take note that even though Amazon sells the same music downloads as Apple, and usually offers them at a better price, they still only make up about 8% of the market to Apple’s 70%.  This shows the power of having the content store built-in to your device, and the reason Amazon tried so hard to create their own lock-in for the Kindle.

As an editor for a niche publisher of scientific manuals, textbooks, and monographs, we’re likely to be better served by an e-book store that doesn’t penalize us for having to price our books higher than $9.99.  We sell to a small market, and our books require heavy editing.  There’s no way we could survive at that price point because our audience simply isn’t big enough to make up for it with increased sales.  If Amazon is going to keep the vast majority of the revenue on books that sell for more than $9.99, then there’s no point offering our books through the Kindle Store.  If Apple’s iBookstore works the same way their App Store does, they’ll be price agnostic, offering the same terms regardless, which makes it a much more attractive prospect.

One other potential loser here is Microsoft Office.  Between the free Google Docs and Apple’s new version of iWorks priced at $10 per app, how many people are going to need an expensive, full-fledged Office suite?  Okay, probably a lot, but there’s also a large number of people who buy it because it’s the market standard and don’t use 95% of its functionality.  As these simpler, cheaper alternatives see more use, Microsoft stands to see one of their main economic pillars begin to erode away.

More as more details become available, please share your thoughts below.

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Jan 13, 2010

Going Legit: The Difficult Path from Piracy to Partnership

Posted by David Crotty under Business Models, Commerce, Controversial Topics, Copyright, Research, Social Media, Technology, Tools, World of Tomorrow | Tags: , , , , , , , , , , , , , , , , , , , , |
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Rally in Stockholm, Sweden, in support of file...
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Although social networking websites continue to proliferate, turning them into sustainable, revenue-generating businesses remains a difficult prospect. This process of legitimacy — becoming an actual business rather than a challenge to be faced somewhere down the line — is doubly difficult for sites based on filesharing.

Building a network based on filesharing is a quick way to gain a large population of users. People like getting things for free. The legal issues surrounding the redistribution of copyrighted material are often ignored during the network building process — the focus is on providing functionality for the user. But when the network is ready to move up to the big leagues, to start partnering with and generating revenue from deep-pocketed companies and institutions, a lack of adherence to copyright law can be a major barrier to success.

Music sharing networks are the poster children for these sorts of difficulties. Way back in the stone age of 2000, media giant Bertelsmann invested in the granddaddy of all fileswapping networks, Napster. The plan was to turn it into a legitimate subscription service that would allow users to continue swapping files, but to ensure compensation to copyright holders. But this act of lying down with infringers led to an expensive case of fleas for Bertelsmann.  They ended up having to pay out massive settlements to copyright holders due to its financial support of an illegal network. Bertelsmann gave up on their plans for Napster at that point, and its assets were sold off at auction.  Napster became a wholly different beast that merely sold files without any sharing, lost the bulk of its users to newer filesharing networks, and subsequently changed hands several times without any significant impact on the market. Bertelsmann’s legal troubles point out the danger in partnering with companies that are violating copyright law.

Contrast that with recent developments at Scribd. With some 50 million users, Scribd was long seen as the scourge of the print content industry. Last year though, Scribd announced partnerships with a series of major publishing houses, including Random House, Simon & Schuster, Workman Publishing Co., Berrett-Koehler, Thomas Nelson, and Manning Publications. The goal was to use Scribd as part of viral marketing campaigns. Shortly thereafter, ScribD opened their “Scribd Store”, which sells view and download access to documents and books.

Why was Scribd successful in taking on corporate partners where Napster failed? Ars Technica explains:

The fact that Scribd is offering the publishers this level of control over their content is part of the appeal. . . . Another part of the appeal is undoubtedly the fact that Scribd takes its potential use for copyright infringement seriously. The company hosts a copy of a legally valid DMCA takedown notice in its support section, and it provides a mechanism for users to contest these claims. Any text that is removed as a response to the takedown notice gets processed into a digital fingerprint that is then used for comparison whenever any new content is uploaded. Clearly, publishers are more likely to look more favorably on Scribd than the music labels did on Napster.

Rather than waiting for a book to be pirated, Scribd has implemented a system where copyright holders can upload copies of their material into Scribd’s reference database, and illegal material is prevented from appearing on the site. The system is far from perfect (a search today turned up some 26 copyrighted documents from my employer, prompting another round of DMCA takedown notices). But Scribd responds rapidly and is eager to work with publishers on these issues. And that seems to go a long way in transforming their image from a den of piracy to a valuable partner.

Which brings us to Mendeley, the current market leader for potential filesharing of scholarly papers and materials. Mendeley offers an excellent system for reference management for researchers, with both local desktop and online components. In many ways, they’ve taken the best aspects of programs like Papers and websites like Connotea and combined them into a powerful whole. The problem is that they’ve built filesharing into their system with little to no oversight over copyright infringement. Since Mendeley claims it has 8 million research papers uploaded to its site, if you’re a scholarly publisher, it’s likely that your copyrighted material is already hosted on their servers.

I first met with representatives from Mendeley back in late 2008, and was fairly stunned at their apparent naïveté towards copyright law and the legal precedents that had been set in cases involving music sites (particularly since one of their major backers is the founder of Last.FM). Their FAQ and terms of service at the time were clearly offering the sorts of infringement inducements that got Grokster in so much legal trouble, and after some correspondence with Victor Henning, Mendeley changed the language on these pages to better reflect copyright law and leave the company some hope of a safe harbor defense. The big problem they still haven’t resolved is the fact that all uploading and downloading takes place through the company’s servers. In the Napster case, all infringing activities ran through the company’s servers and that was the smoking gun in the determination of contributory infringement. That’s why things like BitTorrent were created, to let users connect directly to one another, leaving no guilty middleman. Mendeley not only connects users through their servers but actually hosts and redistributes the potentially infringing files.

Representatives from Mendeley have also variously made the argument that because the sharing is limited to small groups (10 at a time, though each of those 10 can share with 10 more, etc.), it falls under the rubric of fair use. Then again, if I start a website that allows you to upload Beatles’ songs and then redistribute them to just 10 other people at a time, odds are Paul MacCartney’s lawyers would be calling soon. Remember that Jammie Thomas was found liable for $1.92 million for sharing a mere 24 files one time each.  Correspondence from one of Mendeley’s founders also suggests that “fair use allows limited use of copyrighted material without requiring permission from the rights holders, such as use for scholarship or review exemption”. This is undoubtedly true, but I’m not sure it covers a third-party facilitating the exchange, and more importantly, one of the main determinants of fair use is:

The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes

This may hold for the user’s liability, but with Mendeley’s latest announcement, the nonprofit nature, along with any limits on sharing, are no longer part of the picture. They now plan to offer “premium packages”:

. . . shared collections – which are currently limited to ten people – we quickly found requests rolling in for collections of a much larger size, mainly for departments and labs. So, we will raise the number of people who can access a shared collection as part of a premium package and in turn make the limits flexible.

The announcement also notes a paid feature to increase the amount of storage space online for uploading material. You can see where Mendeley wants to go with this. Universities and other institutions are struggling with setting up and maintaining repositories for the distribution of publications from their faculty. That makes great sense, and Mendeley could be an ideal outsourcing partner for such services. But frankly, I can’t see any major institution taking the risk of being tied to a service that’s so ripe for a costly lawsuit. I’ve been surprised that no publisher has challenged the legality of what Mendeley has done in the past, particularly commercial houses that have products directly competing with Mendeley (MacMillan owns Connotea and Elsevier owns 2Collab). Perhaps the lawyers are just waiting for the involvement of someone with deeper pockets (like a university with a large endowment) to make the lawsuit more rewarding.

If University X signs up with Mendeley for their unlimited uploading and filesharing service, what’s to stop the students from using it as a new Napster? Clearly nothing — as a test, I set up two Mendeley accounts yesterday, uploaded an mp3 song file to one (I used a Creative Commons licensed file to avoid breaking the law myself) and then shared it with the other account. If you’re Harvard, given the size of your endowment, do you really want to set yourself up to be Jammie Thomas or Joel Tenenbaum on a massive scale?

The good news for Mendeley is that given the nature of their system, which is based on automated identification of uploaded files and compiling detailed statistical reports on user activity, it should be within their power to do a reasonably good job of screening out infringing material. As they grow from a revenue-less startup to a legitimate business, it will be interesting to see if their policies toward redistributing infringing materials change to fit their new role. The “information wants to be free” crowd has served them well for building a following and getting noticed, but it’s not a community well-known for generating revenue.

There’s huge potential here for partnerships with publishers (I have several projects I’d love to propose) and major research institutions, but these are going to require reasonable activities on Mendeley’s part to obey copyright laws and safeguard those partners from liability. It’s not as sexy a path as being a Jolly Roger-hoisting rebel, but no one ever said that growing up was easy.

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Jan 6, 2010

Doing the Kindle Math — Does Amazon’s Opacity Conceal a Shameful Truth?

Posted by David Crotty under Books, Business Models, Newspapers, Reading, Research, Technology, Tools, World of Tomorrow | Tags: , , , , , , |
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Yes, maths
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He said that Apple doesn’t see e-books as a big market at this point, and pointed out that Amazon.com, for example, doesn’t ever say how many Kindles it sells. “Usually, if they sell a lot of something, you want to tell everybody.”–Steve Jobs on the Kindle

While the publishing industry has been rightfully focused on e-books and the impact of new technologies, very few have seen fit to question the actual success of the current market leader, Amazon’s Kindle.  That may be changing, as Amazon’s steadfast refusal to release sales figures and reliance on convoluted statistics is wearing thin.  Blogger Mike Cane has gone so far as to  call the Kindle “an outright fraud”:

It’s well past time for Amazon to put up or shut up.
Honest companies don’t continue to hide something like this.
Honest companies show transparency.
Honest companies understand that real numbers are related to real shareholder value.
What is Amazon’s game here?

Cane has called on publishers to start releasing e-book sales numbers, and suggests we’re going to be shocked at how low they are.  Two anonymous commenters on his blog post, claiming to work at major publishing houses (take with a grain of salt), are in agreement.

Given the lack of data, why is there a presumption of success here?  Certainly the passion of the Kindlenistas is a factor, and their enthusiasm for the device perhaps even surpasses that of the long-suffering Mac fanboy.  But there are three main datapoints most people use as evidence of the Kindle’s success:

  • Amazon’s announcement that the Kindle is the “#1 bestselling product across all product categories on Amazon.”
  • Amazon’s announcement that “On Christmas Day, for the first time ever, customers purchased more Kindle books than physical books.”
  • Jeff Bezos’ statement in the New York Times that, “For every 100 copies of a physical book we sell, where we have the Kindle edition, we will sell 48 copies of the Kindle edition.”

Taken at face value, those all seem impressive.  But what does each factoid really mean?

  • The #1 bestselling product across all product categories on Amazon

This one is fairly easy to see through, as Gizmodo did shortly after the “breathless” press release came out:

When Amazon tells you that the Kindle is the highest-selling product on Amazon, you’re supposed to think of it as you’d think of anything else: as a strong, reliable metric in gauging how well a product is doing in general. The thing is, there is no “in general” for the Kindle. There is only Amazon. Anyone who wants a Kindle and doesn’t normally shop at Amazon has to make an exception. Anyone who wants a Kindle and doesn’t normally shop online has to make an exception. The Kindle didn’t outsell the iPod Touch—not even close.

Simply put, since Amazon is the sole source for the Kindle, it’s not surprising that they sell more units than other products where they are merely one of a near infinite number of sources.  This tells us absolutely nothing about the device’s success or market penetrance.

  • On Christmas Day, for the first time ever, customers purchased more Kindle books than physical books

Also, not terribly surprising.  How many people go bookshopping on Christmas day?  Compare that with the number of people who received Kindles, iPod Touch’s, iPhones, PC’s, Macs, and any other device with Kindle software available.  Odds are, a lot of them went online and downloaded a book to try out their new toys, so no big deal.  The tricky part (see more below) is that there’s no mention of how many of these “purchases” were free books.

  • For every 100 copies of a physical book we sell, where we have the Kindle edition, we will sell 48 copies of the Kindle edition

This is the most convoluted of the statistics offered, and due to the prevalence of free books, probably the most meaningless.  Take a look at the Kindle best sellers list.  As of this writing, 16 of the top 20 books are free downloads (and one is a 99 cent manual for using the Kindle itself).  Fifteen of those 16 free Kindle books is also available in print.  The Kindle version of “The Adventures of Sherlock Holmes” ranks at #6, while the $5.99 paperback has a sales ranking of 512,641 in books.  Could these free offerings be skewing the numbers somewhat?  Should they really count as “purchases,” as signs of the platform’s success? Really, the only thing surprising here is that Bezos’ 100:48 ratio isn’t better, given the wide range of statistical tricks that can be encompassed under their vague announcements.

Is the Kindle a success?  Honestly, it’s impossible to tell given the flawed and biased data we’ve been given.  I’m waiting to see our final year-end numbers for Kindle book sales from my employer, but as of November, they were not impressive and came nowhere near Bezos’ suggested 2:1 ratio for print:Kindle sales. While I have no doubt that electronic reading will grow to dominate in the future, I have strong doubts about the potential success of dedicated e-reading devices, and Amazon’s word games and statistical chicanery make me even more skeptical.  This may come as a bit of a shock to those of us whose lives revolve around publishing for readers, but our customer numbers are not all that impressive, as Steve Jobs famously pointed out.  In particular, I think we need to temper our enthusiasm for the upcoming Apple announcement later this month.  If the mythical Apple Tablet (rumored to be powered by unicorn tears) does come into existence, book and periodical reading will not be it’s main focus. John Gruber (who, along with John Siracusa has written some of the more well-reasoned and believable tablet speculation) puts it this way:

Not enough people read to make it worth creating a dedicated device that is to reading what the original iPod was to music. (Everyone, for practical definitions of “everyone”, listens to music.) But e-reading as one aspect among several for a general-purpose computing device — well, that’s something else entirely.

Given the real world actual numbers that Apple regularly releases proving the power of its platform, that would be a welcome development for publishers, so don’t be disappointed if we’re not the raison d’etre for the device.  The dedicated e-reader is a niche product at best.  And if Amazon has the numbers to prove otherwise, perhaps they’re sealing the Kindle’s fate by not releasing them.

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Dec 21, 2009

The Unstoppable Corporate Force Meets the Immovable Social Network

Posted by David Crotty under Business Models, Commerce, Controversial Topics, Research, Social Media, Social Role, Technology, Tools, World of Tomorrow | Tags: , , , , , , , , , , , |
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Electronic Frontier Foundation
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The  general consensus is that the future of media lies in increased social participation and mobile access to that media.  Yet events of the last few weeks have given signs that progress toward that future is not going to be smooth.  We’re seeing more conflicts between companies that need to find workable business models, major corporations mired in obsolete ways of doing business, and users who insist on controlling the products they use while refusing to pay for them.

As any Internet service catches on, the people behind it come under increasing pressure to monetize their product.  Increased usage means increased costs, investors want a return, and the creators of any successful enterprise expect to be rewarded for their ingenuity and hard work.  This seems fairly straightforward until you get into the realm of social networks and social media, where the users are vital contributors to success. Social media ventures are dependent upon the participation and goodwill of the users, who like to feel that they’re in a partnership with the toolmakers. At the same time, those “partner”-users generally refuse to contribute revenue, something all companies need once the VC funding wears out. The day you charge users for a Facebook account is the day Facebook stops being relevant, and the day all those users switch to the next big thing that’s still free.

In order to keep these ventures alive, the companies behind them have to some way other than subscription fees to generate revenue.  One obvious way is to mine the activity and private details of your users for lots and lots of information that can be sold to the highest bidder.  Some of this is fairly innocent, anonymized data covering overall trends (though some would argue there’s no such thing as anonymous data).  But we’re entering into an age of specific targeting, where your individual details are going to be sold to advertisers and open and available to many other third parties, something that’s starting to raise red flags for many. If you’re working for a biotech startup in a highly competitive area, do you want your competitors to know what literature you’ve been reading, what protocols you’ve accessed, what reagents you’ve ordered?  Would you be bothered by an ad pitch that included specific details about your children, their daily schedule, their likes and dislikes?

Many companies are finding it increasingly difficult to align their goals in this space, as the open paths toward monetization are often in conflict with the desires of the users on whom they depend. It becomes even more difficult in a world where users have easy access to tools to organize and loudly and publicly voice their complaints. It comes as a rude awakening to the Twitter user when the friendly floating whale turns out to be a corporation more intent on making money than on making him happy, and it’s just as annoying to the executive when a freeloading user who refuses to pay for a service thinks he should be in control of running the company.

Privacy issues are coming to the forefront with the recent revisions to Facebook, and  an offhand comment from Google CEO Eric Schmidt:

If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.

This is wrong on so many levels, particularly coming from a company that blackballed CNET reporters who used Google to dig up and publish private details on Schmidt himself.  Security expert Bruce Schneier responds eloquently:

Privacy protects us from abuses by those in power, even if we’re doing nothing wrong at the time of surveillance.

We do nothing wrong when we make love or go to the bathroom. We are not deliberately hiding anything when we seek out private places for reflection or conversation. We keep private journals, sing in the privacy of the shower, and write letters to secret lovers and then burn them. Privacy is a basic human need.

The problem is that your basic human need often opposes the needs of corporations and gets in the way of revenue generation.

Facebook has recently taken the first step toward making more and more of your information public.  The Electronic Frontier Foundation (EFF) details the problems with the changes, and Danny Sullivan shows the exhausting level of detail one needs to go through Facebook’s new privacy settings.  This is part of Facebook’s ambitious plan to become the backbone of the Internet, to essentially out-Google Google. It’s interesting to watch the give-and-take here, and the question is whether these intrusions are enough to push users away from a particular platform.  Facebook has backtracked on some of their changes, and the situation in some ways mirrors that seen at Twitter, where every time the company tries to make any change in the system, the users revolt. It’s a difficult balance to maintain.

I recently met with David Kremers, the artist at Caltech (and the fact that Caltech has a conceptual artist on their payroll should tell you something about why they’re so far ahead of most other scientific institutions).  Kremers lives a little further in the future than most people I’ve met, and he explained to me that “privacy is the new luxury.”  Think of it this way — most people aren’t willing to pay for online services, so they’re going to have to put up with things that make them unhappy, or that work against their own best interests.  Those who can afford it will instead pay for services better tailored to their needs and without all the potentially harmful exposure of personal data.  You pay more to drive your fancy car to work rather than riding the bus because it’s a less annoying way to do something you have to do.  If companies see selling your data to third parties as a way to monetize their sites, then you can be sure that they’d be just as willing to sell you the right to keep it private. Done poorly this will come off as extortion–pay us or we’ll tell the Gap what size pants you wear.  Done right it becomes a true partnership between a service and its users, as the company is getting revenue from looking after the best interests of its customers.  Perhaps this is the answer to making the “freemium” business model work — free access for all, but you’ll have to pay if you want any degree of control or privacy.  It may seem far-fetched now, but as abuses and annoyances pile up, it will become increasingly attractive.

In the mobile arena, we’re seeing a different set of problems.  Mobile access is largely controlled by cellular phone companies, who have well-established business models in place and seem reluctant to do much beyond them.  They’re used to providing a barely adequate level of service for their customers.  To quote an old “Saturday Night Live” skit, “We don’t care. We don’t have to. We’re the phone company.”

The overwhelming success of the iPhone is proving particularly difficult for AT&T to handle.  Revenue is up more than 80% on wireless data since the introduction of the iPhone.  AT&T has an incredibly enthusiastic customer base that they can build out into even more revenue, but their network is having issues handling the added capacity.  Their response to this growth opportunity?  Reducing spending on network construction every quarter, and trying to convince iPhone users to use their services less.  As usual, Fake Steve Jobs gets right to the heart of the matter with this imaginary conversation with an imaginary AT&T executive:

Fake Steve:  “Yes, 3% of your users are taking up 40% of your bandwidth. You see this as a bad thing. It’s not. It’s a good thing. It’s a blessing. It’s an indication that people love what we’re doing, which means you now have a reason to go out and double or triple or quadruple your damn network capacity…You’re in the business of selling bandwidth. That pipe is what you sell. Right now what the market is telling you is that you can sell even more! Lots more! Good Lord. The world is changing, and you’re right in the sweet spot…Does any of that make sense?”

Fake AT&T Executive: “Yeah, but we’re still not going to do it. See, when you run the numbers what you find is that we’re actually better off running a s***ty network than making the investment to build a good one. It’s just numbers, Steve. You can’t charge enough to get a return on the investment.”

The “numbers” are then explained in a follow-up posting. There’s no return on investment for making customers happy.  In fact, customers don’t matter — all that matters is making investors happy, and that’s done by driving up the stock price.  Instead of recognizing a great opportunity for long-term growth and the creation of loyal repeat customers, AT&T execs seem to be more interested in the short-term.

This type of thinking is very often directly in opposition to what customers want, and it can destroy any chance of building long-term health for these companies, but few seem to care.  Executives make lots of immediate revenue, but lose customer trust and participation.

As we move into an era of social media and participation, that’s a death sentence. Business as usual will not work, and we’re seeing more and more company/customer conflicts because of it.  In the past, AT&T would have received some bad press here, then the whole thing would have blown over.  Now you’ve got thousands of customers organizing and looking for active ways to express their displeasure, no matter how ill-conceived and ineffective those activities may be (these sorts of protests are just going to get better and more frequently done). This has gone from a minor gaffe covered only by the tech/business press to a major embarrassment reaching widespread awareness.  AT&T have virtually guaranteed abandonment from an already angry Apple and from their iPhone customers once exclusive availability expires.

So the question for companies looking to thrive in the new media arena is not just how to monetize activity, but how to do so in a way that serves both your own interests and those of your users. That’s the key to long-term success in a socially networked world and as many companies are finding, it’s not an easy riddle to solve.

 

Dec 2, 2009

When Less Is More: The Upside of Paywalls and Delisting from Google

Posted by David Crotty under Advertising, Business Models, Commerce, Controversial Topics, Experimentation, Newspapers, Research, World of Tomorrow | Tags: , , , , , , , , |
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Rupert Murdoch - World Economic Forum Annual M...
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Rupert Murdoch, never one to shy away from controversy, has stirred up the Internet in recent weeks with his declaration that he’s planning to move all his online properties behind a subscription paywall, and that he’s considering blocking Google’s access to the sites. Of course, this is unheard of in an era where we’ve constantly had it drilled into our heads that visibility is paramount, that traffic equals revenue, and Google is the lifeblood of any publishing venture. Not surprisingly, when the news broke, the usual new media pundits reacted with outrage, portraying Murdoch as a crazy old dinosaur who just doesn’t get it:

Rupert Murdoch has it backwards. You don’t charge the search engines to send people to articles on your site, you pay them.

This one is impressive as well:

Rupert isn’t a technophobic loon who will send his media empire to the bottom of the ocean while waging war on search engines. Instead, he’s an out-of-touch moustache-twirler who’s set his sights on remaking the web as a toll booth (with him in the collector’s seat)

Once the furor from the “information wants to be free” crowd died down, and once word leaked out that Microsoft was in discussions with Murdoch about making Bing the exclusive search engine allowed to spider his content, he wasn’t looking quite so backwards after all. Other publishers are starting to show interest in the same sorts of deal. Erik Sherman took a look at the numbers and concluded the following:

Too many are sustaining themselves on wishful thinking, not real analysis. . . . It’s a case of where much popular opinion is based on a vague sense of how things “should” work in the new world. But as happened during the tech bubble, the value of new economic and business models may have been over-sold, and the insight of cold fact under-appreciated.

Despite what you’ve been told, traffic does not equal revenue. Sherman notes that for as little as $100 million (pocket change to Microsoft), they could completely subsidize all of the ad revenue Google sends to the top 50 news publishers. As Murdoch himself notes:

The fact is there’s not enough advertising in the world to go around to make all the Web sites profitable. And we’d rather have fewer people coming to our Web site, but paying.

This is really the key here. Having lots and lots of traffic does you no good if you can’t monetize it. It’s just extra bandwidth costs. Having a massive drop in readership can actually help save a publication, and here’s a case where that was exactly what happened:

Web traffic plummeted from about 15,000 views a month to about 8,000. . . . It was a success because the Hobbs News Sun’s website went from losing money—it generated no revenue and occupied employees for hours each day—to making enough money to sustain itself.

The author of the post notes that their strategy only works in particular situations:

To succeed with paywalls, then, publishers need not only an established monopoly on something valuable (local news, scoops, reporting quality) but also a plan to translate that into advertiser interest. Paywalls alone, unless they are ridiculously expensive, just won’t be enough.

The question, then, is whether search engine subsidies would be enough to allow a major publisher to overcome these hurdles. Mark Cuban (sometimes it takes a crazy billionaire to understand another one) notes that newspapers have very little to lose here, and that there’s a strong potential for gain for both Bing and groups like AP and Reuters.

Thinking in terms of scholarly publishing, most journals do indeed have an established monopoly on something valuable, and our paywalls have succeeded (some would argue that this is because they are ridiculously expensive, as so far online advertising is failing to pay the bills). But I’m surprised we haven’t seen more interest in dealmaking like this from the open access (OA) crowd, nor from the creators of community database resources. It seems like there should be some common interests here. OA-supporting researchers and publishers want to find ways to make their publications freely available. Search engines thrive on giving away products for free and using them to sell advertising. Currently, many important community resources are in danger of disappearing due to lack of funds. The author-pays business model has not shown itself to be sustainable for low-volume, high-editorial-oversight publications.

Could an exclusivity deal with a search engine or an advertiser be the missing link here to making these things viable?   It’s an interesting possibility. We’ve seen many contenders trying to become the search engine for scientists. Are any of them well-heeled enough to subsidize exclusive content?

There are the obvious worries about independence and conflicts of interest.  It’s also unclear if traffic to science journal articles and database entries would generate enough advertising revenue to make a subsidy profitable for a search engine.   Even Google seems to have admitted that there are some areas where advertising can’t cover the costs of content acquisition.  It seems like blocking access to particular search engines would be anathema to the philosophy behind OA. And, since a journal must attract authors, having limited visibility might make for a tough sell. But it’s important for publishers of all types to think about alternative business models in such revolutionary times.

And as Murdoch’s moves are proving, challenging the common wisdom might not be so crazy after all.

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