Ad-dition

Total advertising spending in the United States is projected to increase 5.1 percent in 2005. Growth in the Internet sector expected to be 11.2 percent, according to a forecast from TNS Media Intelligence Service, relayed by the Center for Media Research.

The projection expects ad spending to total $278.5 billion in the U.S. Online spending is expected to be about $11.5 billion, or 4.1 percent of the total. In 2004, according to these same estimates, online sites garnered $9.5 billion, or 3.6 percent of the $264.2 billion spent on all forms of advertising. These projections put year-over-year Internet advertising growth at 21 percent.

In a related development, Direct Marketing News had a piece touting the launch of ReachLocal, which “provides local businesses with prominent placement in local search results” within geographic areas. An item from SocalTech.com says ReachLocal is backed by VantagePoint Venture Partners and is headed by Zorik Gordon.

Getting local advertisers in the habit of advertising online would surely grow the slice of the ad pie going online. I would expect there are other comparable services but as yet I haven’t stumbled across them.

Finally, I had a moment of self reflection after yesterday’s post in which I suggested that specialized links would complement the usefulness of blogs. Like, hullo, Tom, have you taken your own advice? Obviously, not yet, but I will as soon as I can manage the time to start compiling links. The harder part will be coding the display to present the links alongside the text. Normally I would dedicate some weekend hours to such a task, but this weekend I’m heading up to our family retreat in Humboldt County. My spiritual battery is weak. A couple of days in the Redwoods is just what I need to recharge. See you Tuesday!

Tom Abate MiniMediaGuy Cause if you ain’t Mass Media, you’re Mini Media

Media R A Team Sport

The other day I stumbled on Andilinks, a hobby page crammed with links chosen around topics of interest to linkmaker Andrea Silver. I put this notion of specialized links together with a comment by blog-entrepreneur Jason Calacanis -- “blog + database + research reports = big business, blog plus nothing = a hobby.” Specialized links plus updated content may be the basic formula for Mini Media publication. There will be other ingredients (i.e. reader feedback) but links plus content seem like the minimum.

Interestingly, I recently visited the home page of long-time PC writer John Dvorak, whose personal portal is dedicated to, you guessed it, links. It seems logical, in retrospect, that making a page useful to visitors in numerous ways encourages repeat visits.

A while back I came across the futuristic notion of the newsmaster, a compiler, distiller and focuser of online content. Newsmasters are the stars of a though-provoking video clip called Googlezon that you can view or read in transcript.

Perhaps there will be a future specialized craft called linkmakers (linkmasters being the name of some wireless firm). A quick search turned up this comment from a blog named Kombinat, "Blessed are the Linkmakers for they shall be called the children of Blog."

Speaking of which, Andrea Silver, aka Adilinks, says: “Google and other engines have their place and are best for most searches. But if you are investigating a category in depth, or need an exhaustive list of a specific kind of site you will find Andilinks valuable.” She also has a blog, which she explains in one post is not really a blog.

Just for fun I drilled down into Andilinks and found a site called Android World that seems to be a how-to guide. Interesting, but not for me. I’m already worried about my job being outsourced, the last thing I want is Stepford Writers. Next I measured my personal impact on the planet’s resources by taking an Ecological Footprint Quiz and found that I required 11 acres of land to support my lifestyle – less than the 24 acres for my peer group, but still about 2.4 times what the planet could sustain if everyone lived like me. So that was fun, but I usually don’t just visit websites to kill time. It gets back to the usefulness comment I made above. If we want to encourage traffic to the sites we build then perhaps linkmakers will need newsmasters and vice versa. Media is a plural word and, I think, inherently a team sport. Yes, we now have tools to do more than ever by ourselves. And we should use them to express our interests. But one mind can only bring a limited perspective to any task. One of the many challenges I see ahead is making it possible and culturally desirable for online creators to combine their talents to produce wholes that are greater than the sum of their parts. For instance, what if the Andilinks robotics links were combined with insightful writings on the field? I do not want to appear critical of an effort that I admire and could not imagine replicating myself. So I’ll say here what I said in a comment on Andrea’s non-blog blog – You go girl! But maybe you -- and the rest of us solo content-makers adrift in cyberspace – shouldn’t assume we have to go it alone. Tom Abate MiniMediaGuy Cause if you ain’t Mass Media, you’re Mini Media.

Will Blog 4 Food?

Guardian Newsblogger Jane Perrone alerts us that A-list bloggers Jason Kottke and Chris Locke are turning their writing passions into full-time and/or paid gigs. Though the circumstances are dissimilar, these hobby-to-job shifts demonstrate the power of voice in an era of ubiquitous publishing – and suggest that prominent bloggers may be the columnists of new media publishing models.

Kottke is a web designer whose quirky and eclectic blog has, among other virtues, the enviable attraction of fine organization and navigation. Locke is a co-author of the Cluetrain Manifesto, the epigrams-turned-book that PR guru John Dvorak has called cultish but which nevertheless makes shrewd observations about how the Web changes markets and companies.

Kottke recently wrote a lovely essayexplaining why he quit his web design job and how he hopes to make “one third to one half of my former yearly salary” by turning kottke.org into his full-time jpb. He rejects advertising as a model, however. “There are currently two parties involved with kottke.org: me and the collective you. Advertising introduces a third party. In my experience, the third wheel of advertising often works to unbalance the relationship.” Instead, Kottke would like to adapt the concept of artistic patronage to the Internet era, enabling many small givers to support causes of interest. He poses this micropatronage as an alternative to "waiting around for the MacArthur Foundation or Cosimo de Medici to do it.”

Locke, a professional self-promoter (and I mean that in an admiring way) writes that he has become chief blogging officer for a search site called Highbeam. He is the mascot or the magnet meant to draw independent writers to Highbeam where, they may discover as did I, that they can register for free searches of Highbeam’s database of articles and other sources, but get far more for paid subscriptions of $20 per month or $100 per year.

The unifying factor in these two cases is the assumption, which I hope proves correct, that voice is king (or queen) at least in the word branch of new media. We are in the midst of a giant experiment in intellectual cross-pollinization. Getting attention is a prerequisite to getting ideas picked up and disseminated. Given that people are busy bees, the concise phrase may be the pheromone of the Web.

This is nothing new. Newspapers used voice to build audiences when they advanced Jimmy Breslin or Mike Royko or Herb Caen to speak to and for their cities. Syndication allowed some of these columnists to expand beyond the confines of their towns. In the post-paper world, the prime province isn’t the city but the community of interested folk. Crossover columnists like humorist Dave Barry – and non-traditional voices like Kottke and Locke -- are showing us all how to find audiences in a webbed world.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Grants & Things

The Institute for Interactive Journalism is soliciting applications for grants to “seed innovative community news ventures in the United States.” The grant program is called New Voices. Applications are due March 17. Applicants must be from or for non-profit groups. “Over the next two years, New Voices will help fund the start-up of 20 micro-local, news projects with $12,000 grants; support them with an educational Web site, and help foster their sustainability through $5,000 second-year, matching grants.”

The Institute which is coordinating the grant process also administers the Batten Awards (named for a former chairman of Knight Ridder newspapers) prizes geared toward multimedia and non-traditional daily journalism. The Institute’s advisory board includes Lee Rainie, director of the Pew Internet & American Life project, whose studies I have referenced in several blog entries and Jan Schaffer, executive director of the Institute. In contrast to the Batten Awards, the New Voices grants appear to reach beyond existing media to promote nonprofit startups. Guidelines and applications are available online.

Switching gears, I came across Unearthit.net, a searchable database that allows artists to post and sell works online, or promote events anywhere in the world. It was started in the United Kingdom and appears to be an outgrowth of a local government arts council in a London suburb. “Your work is edited by you and any item or work sold, or shared, by you does not incur any commission,” according to Unearthit. “Currently the site makes a small yearly nominal charge for administration of 10 pounds sterling or the equivalent in any other currency, World Pay does all the currency conversions, and this is for displaying up to ten items in your own interactive gallery. You can place unlimited numbers of events, workshops or happenings on the site free of charge.”

A while back I mentioned Lulu, an online storefront for creative works that seems similar but less artsy. I am interested in this phenomenon of online storefronts for creative works and will look for more. Meanwhile, in looking for mentions of Unearthit, I came across a lovely index of arts sites called Zeroland and simply want to pass it on.

Tom Abate MiniMediaGuy If you ain’t Mass Media, you’re MiniMedia

TV on the Web

Television is coming to the Web, in streaming gobs from big producers, in smaller bubbles from grassroots creators, and we’ll sort it all out – including how small producers get paid – eventually. That was my takeaway from a Cybersalon in Berkeley last night that I attended with my eldest son, Julius.

Panelist Bradley Horowitz, director of media and desktop search for Yahoo, talked about his firm thinking and behaving like a media company, striking deals with TV producers large and small to channel content to whatever audience may find it of interest. He referenced the Long Tail concept popularized in a Wired magazine article and ongoing blog. “We talk about the Long Tail because that’s really what’s of interest to us,” he said. He mentioned a deal Yahoo struck with the Santa Monica animation studio JibJab as an example of how small producers can expand their distribution. He emphasized the importance of metadata, tagging video files so their content can be found. Tagging plus Mini Media content plus distribution (as in Yahoo) equals new business model. “There may be a better way to way to reach micro audiences who care about your content,” he said

Horowitz was joined by Kim Spencer, executive director of LinkTV, a San Francisco operation that serves up documentaries and foreign news broadcasts through satellite TV and streaming video over the Web. This is tail-end of the tail content, political and public affairs material with a political bent. Kim said 21 million homes get LinkTV via satellite and “5 million Americans watch more than an hour a week.” From what I gleaned Link TV is foundation and donation supported, and I think Kim said it actually has to pay the satellite vendors for carriage.

When I asked about how producers, meaning small producers, will get paid for TV over the Web, the panelists mentioned advertising, donations, and direct payment through subscription or pay-per-view, presumably some form of micropayment.

Interactivity didn’t come up much, and it would have been good to discuss since it seems to me what is novel about the Web is the feedback loop, but time was short and we never got there.

There were three other speakers. I would summarize their remarks thus: Co-host Jeff Ubois talked about the copyrights that hamstring producers who would like to use, re-release, or merely archive TV and movie footage, using the Civil Rights documentary, Eyes on the Prize, as a poster child for the problem. Electronic Frontier Foundation lawyer Wendy Seltzer argued against the requirement, soon to take effect, that digital TV broadcasts include a broadcast flag as some sort of anti-piracy measure. And a woman with a consultant firm (Perspective Media Group?) talked about the trouble big media have in merely knowing, much less licensing what’s in their archives, but shame on me I failed to get her name.

Cybersalon co-host Sylvia Paull asked my soon-to-be sixteen year old son Julius what he though of TV rushing to the Web, and he drew applause when he said it was a bad idea that would only keep people glued to the tube instead of having conversations. I’ll have to remember that next time I find him locked in his room with the monitor aglow.

Tom Abate MiniMediaGuy If you ain’t Mass Media, you’re Mini Media.

Hearing Voices

More than 11 percent of American adults now have iPODs or MP3 devices. A new studio has opened to produce podcasts. And at least one network has already deployed to insert advertisements in these audio files. Does this sound like a market being born?

What’s podcasting? According to Podcasting News it "is delivering audio content to iPods and other portable media players on demand.” The term was “popularized by media entrepreneur and former MTV VJ Adam Curry” who expanded on work done by Northern California programmer Dave Winer.

MediaPost pointed me to the 11 percent number, which was drawn from a Pew Internet telephone survey. The survey suggests that 22 million Americans over age 18 (teens not included!) have audio download and playback devices. The summary posted by Pew Internet project director Lee Rainie notes that the distribution of devices skews upward with income: “Fully a quarter (24%) of those who live in households earning more than $75,000 have them.”

PaidContent editor Staci Kramer noted the opening of a new (small?) podcast production shop called PaleGroove Studios outside Chicago. Staci says, “The founder is Kristopher Smith, a freelance multimedia producer . . . (whose) services include in-studio production starting at $75 per show and house calls in a three-mile radius.”

In the same post Staci also noted that “Australian podcasters Cameron Reilly and Mick Stanic” have launched The Podcast Network “selling 5-10 second interstitials or 30-second spots” (presumably for insertion into the podcasts.) Staci sounds leery about their plans to create "advertorial" offerings, in which “advertisers can pay for product placement on "blog-like" sites associated with podcasts.” She adds: “Unless they do this carefully they're ambitious plans could end up muddying the waters.” The folks who operate the network have their own blog for those who want to continue the discussion in greater detail.

I want to go elsewhere. In these developments I see many opportunities to create a Tivo-like system for shifting print content to audio intake. Think books on tape goes digital, or newspapers for your ears. I’m not a big music fan, and I think music consumption decreases with age. But income increases and so does the need, and/or desire, to learn – but not the time to sit and scan a page.

I will spend 6 hours next weekend driving from San Francisco to my place in Humboldt County, and six hours driving back. I often get books on tape for such drives. An iPOD would be lighter and easier to handle. I see this delivery system as a perfect opportunity for incumbent publishers trying to monetize their backlists, along the lines of Chris Anderson’s concept of the Long Tail. There should also be opportunities for small publishers to create new audio info products for sale because there is a strong value here -- delivering convenience. I’ll think some more on this later. I’m jazzed.

Tom Abate MiniMediaGuy If you ain’t Mass Media, you’re Mini Media

Mixed Messages

After spam, pop-ups and spyware may be the most hated Web advertising tools. Today I will suggest that we’ll never be able to cram enough advertising through viewers’ eyeballs while they’re online and that we ought to look at mixed-media advertising packages as a way to underwrite new media publishing costs.

Antipathy to pop-ups and spyware was a theme of Bill Gates’ presentation at the recent RSA Conference. “The first thing we see here are pop-ups telling me I can win big, telling me my credit score, and lose 50 pounds. The next thing we see here is a home page I don't recognize. I have reason to believe that my home page has been hijacked,” said Zachary Gutt, the Microsoft product manager who assisted Gates during the talk.

Others can debate whether MSFT is doing too little or enough in this regard. My point is that advertising will continue to find ways to intrude on our consciousness because that is its job. Publishers, on the other hand, though dependent on ad sales and eager to please both their sales forces and their customers, must consider whether too much distraction will harm their readability.

Consider what Web design guru Jakob Nielsen said in a 1999 interview: “Web advertising is doomed, not because of poor banners, but because it is a fundamental mismatch with the way people use the Web. Users go online to get things done, to find something, to read something. Whatever: the key fact is that they are goal-driven. They are not going to take the time to click elsewhere.”

The remark is dated but our own experiences as Web users should tell us that the observation remains sound. More importantly, the most successful Web advertising product being deployed today are those little text ads that come up on search pages. Nielsen speculates this may be a temporary artifact of their novelty. I don’t know.

My gut tells me the only useful ad is one that shows a consumer something of interest -- which means contextual placement will be a key technology going forward.

But I think perhaps we ought to look backwards as well, to the older technology of direct mail. In brief, what if we imagine that Web publishing is a vehicle for reader acquisition, interaction and, yes, information delivery. But not necessarily our total advertising support platform. Instead, what if we ask readers for their real world addresses and send them periodic print an/or multimedia advertorials.

I can’t take much more time this morning to develop what is, admittedly just a thought. The baby just woke up and she demands (and deserves) attention. But this tactic should work for big-ticket items like cars and TVs, which have features people like to study and compare. As chance would have it, the Center for Media Research just put out a brief on automotive direct mail that suggests, among other things, that young consumers in particular are likely to respond to a direct mail solicitation by visiting the vendor’s website. Could Web publishers get paid to reverse the trick and get viewers to click on the box that causes the glossy brochure to be sent to them at home?

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Public Self-Pedagogy

So if I say this post is an exercise in public self-pedagogy (don’t try this in red states) then I needn’t be too embarrassed to riff off Rafat Ali’s recent item about Weblogs, Inc. being featured at Google’s analyst day. “Described as the largest publisher of professional blogs . . . Weblogs is averaging $600 a day in AdSense revenue and made $45,000 in the first four months.”

I traced the thread back to the personal site of Weblogs’ co-guru Jason Calacanis but that only raised the question, who is Jason?

“For those who do not remember or know of Jason: nobody was a bigger mover or shaker in the New York City Internet doings (once called Silicon Alley) than Jason,’’ Alan Meckler, chief executive of Jupitermedia wrote not long ago. Meckler alludes to Jason’s crash during the dot debacle but says he “is back big time with 73 blogs under (the Weblogs) umbrella and offices in Santa Monica, California and New York City. Daily traffic and advertising is strong.”

Wow, quite a deal. Wonder what Jason is like?

“Jason Calacanis . . . is the single most competitive person I’ve ever met,” Jeff Jarvis wrote recently on Buzzmachine. I came across Jeff’s comment via a post by New York writer Felix Salmon, who includes a lovely link in which Jason describes his life-long study of the “brutal martial art” of Tae Kwan Do.

Okay, so if I ever meet Jason, be polite. But what does Jason say about new media business models?

“In my mind blogs have killed the newsletter business,” Jason comments in response to a writeup about the sale of one of his previous businesses, adding, “blog + database + research reports = big business, blog plus nothing = a hobby.”

In another posting Jason says, “Bloggers who reach critical mass—say 250,000 pages a month—can easily monetize that at a $2-5 CPM (or $500 to $2,500 a month) . . . If you get less then 250,000 pages guess what? You’ve either got more work to do or you need to look at your blog like the hobby or labor of love it is.”

Getting two bucks for every thousand eyeballs that see your page seems like a hard way to make a living, but maybe that's the point.

That left one more curiosity to explore. There was a comment posted on the weblog entry in which Jason mentioned the Google presentation about his site earning $600 a day from AdSense. “That's not a great CPM there Jason, looks to be under a buck,” commented Jon Gales. For those who, like me, ask, who is Jon? He’s the guy who told Business 2.0 about a year ago that he made $55,000 putting out the MobileTracker ezine. By the way, it’s not too late to wish Jon a happy birthday. He turned 20 on Sunday.

Tom Abate MiniMediaGuy "Cause if you ain't Mass Media, you're Mini Media."

Fond Farewell

The New York Times wrote the swan song when Salon co-founder David Talbot stepped down last week as editor-in-chief of the fabled Net mag. “Salon lived up to some of the journalistic hype, but it has had a tortured business history,” according to the article, which I retrieved via CNet.

I should reveal my bias. I worked with Salon’s founding crew at the San Francisco Examiner in the 1990s, and have long admired their accomplishments and awards. I was closest to another Salon co-founder, Scott Rosenberg, who has taken a leave to write a book on software development but posts a blog on the Salon website.

While I am predisposed toward admiration for Salon’s journalistic achievements, its business model has been shaky at best. Therein lies the lesson for all old media dogs trying to learn new tricks. The new media are relentlessly Darwinian compared to the environment in which paid writers now exist. (See Clay Shirky’s Fame vs. Fortune essay which posits that creative people will write for free). On the web, as in print, the critical skills of advertising sales and cost controls trump editorial flair, which Salon certainly had. Lone wolf operations may thrive (more on those later). But Salon's experience (and the fate of Slate) suggest it will be tough to create web media enterprises of any size.

Along these lines I recently showed a friend with an advertising and finance background a new media business plan that I’ve been developing. He poked it full of holes (which, is, I suppose what friends are for), then said even if the plan were successful, the person who sold the ads would end up holding the keys. Deflating, perhaps, but all the more so because it may be true.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, your’re Mini Media.”

Community and/or Content

Community-building rather than content-delivery may be the new killer app. That’s what I extracted from the bit of circumlocution that Ross Mayfield wrote in response to the The Long Tail presentation that Chris Anderson made at a conference last week:

"In a world of abundance, you can't understate new capacities to produce. I think Chris' talk must be fascinating for larger companies with under leveraged assets. But if they focus only on the low hanging fruit of monetizing archives, you end up with an unblogged WSJ (its kind of like producing RSS feeds as your sole investment into Social Media, which doesn't necessarily open conversations or engage the energies of your constituents) . . ."

Thanks to Media Center for excerpting Ross’s comments and pointing to their entirety. I imagine Ross minced words to avoid offending Chris or appearing self-promotional. I hope that I am not judged guilty on either account for saying there may be many reasons why content delivery is not and should not be an end in itself. Rather I am beginning to envision how its more critical role might be serving as the magnet that draws people together for some subsequent purpose – and that subsequent purpose may be the business. I’ll think more about this later.

Meanwhile, apropos of Ross's remark about RSS, a piece in Online Media Daily talks about newspapers experimenting with this delivery system. “For now, less than 5 percent of Internet users currently employ RSS readers . . . But analysts say that RSS could quickly shed its niche status if consumers realize they . . . (can) pull in headlines and text continually, allowing users to create customized content from publishers, blogs, and search engines.”

Finally, in the better-late-than-never department, I should have pointed to PaidContent’s continuing coverage of micropayments when I blogged about that topic last week.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Get What You Pay For

Wednesday I discussed a report on paid content. Thursday I offered a glimpse of (some of?) the vendors trying to popularize micropayments. Today I will summarize the debate that’s rippled through the blogosphere about whether or not micropayments will catch on this time – my own wishful-thinking take being they must and therefore I hope they will.

Author, adjunct professor and entrepreneur Clay Shirky articulated the nay side of the micropayment debate in an essay entitled Fame vs. Fortune. He says creative people crave attention so much that they will use the cheap tools for global self-expression and pump out so much free content that giveaway sites will crush any that attempt to charge even fractional amounts. He likens the preferences for different content to the choice between Coke or Pepsi, saying: “If Instapundit and Samizdata are both equally easy to get to, the relative traffic to the sites will always match audience preference. But were Instapundit to become less easy to get to (by creating even the slight barrier of micropayment) Samizdata would become a more palatable substitute.”

Comic book artist and online business innovator Scott McCloud retorted with a posting entitled Misunderstanding Micropayments. He rejected Shirky’s Coke-Pepsi suggestion, arguing that content was not a fungible commodity. He used the example of paid music downloads to show that Web consumers are already willing to pay for what they want. “If you want Hail to the Thief and the whole album could be downloaded for $5.99, what difference would it make that there’s a free album from Hootie and the Blowfish somewhere else.”

Shirky’s attack was four printed pages (my middle-aged eyes prefer hard copy) and McCloud’s riposte more than twice as long. So realize that I am cutting to the quick when I side with McCloud, while freely admitting that I can only hope Shirky is wrong.

Because if he’s right, then Web publishing will remain the hobby of PWDJs (people with day jobs). I think it can and must become more, but the proof is in performance and not in the volume of words. In any event I must finish this post and get to work to earn the macropayment (plus health plan and other bennies) that allows me to share my thoughts so freely with those who have neither solicited them, nor may even care.

SPECIAL BONUS CONTENT OFFER! To increase this blog’s value-add, let me point you to SFist editor Jackson West’s report from Yahoo headquarters as part of the Emerging Technology conference I mentioned earlier this week.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Pennies from Heaven

In yesterday’s post about paid content I noted that buying monthly rather than annual subscriptions was the frequency preferred by most of the 17 million consumers who purchased info wares during the survey period. Couple that with the runaway success of under-a-buck music downloads, and I wonder whether the time is right for a revival of the micropayment phenomenon that crashed and burned during the dot.com era.

There is a sad story there that I cannot reprise here. Nor can I hope to fully describe the new micropayment vendors. But today I'll identify several of them and also some market analysts as a starting point for further research. Tomorrow I’ll think out loud about why micropayments may or may not succeed this time around.

First, the players.

A 2004 article by a colleague at the San Francisco Chronicle (where I currently report on economics) focused on Bitpass, a Stanford startup, while mentioning several others. A subsequent search turned up a piece in ecommerce-guide.com that briefly encapsulated what PayPal, the MIT startup Peppercoin, and San Francisco-based Yaga are doing in this category. A piece in MIT Review, though focused mainly on Peppercoin, pointed me to Vancouver’s Paystone Technologies, and cited Avivah Litan, an analyst with Gartner, and Andrew Whinston, who directs the Center for Research in Electronic Commerce at the University of Texas at Austin.

Comparing and contrasting these vendors and their technologies is more than I can bite off in one blog post. But two comments in the ecommerce-guide.com article seem worth repeating. The piece quotes Gartner’s Litan as saying “The credit card companies have first dibs (on micropayments), and if they don’t want it or it’s not enough volume, then there’s room for these other players.” That's conventional wisdom. We all have charge cards. There is no learning curve. Earlier, the piece notes that PayPal has (or then had) 40 million users. So they already have the relationships with consumers that the startups have to build.

Of course, startups do break through or are acquired by big players who finally see the market and need the enabling technology to go after it. Either way I hope the micropayment vendors prosper, because small Web publishers need them. But whether micropayment succeed depends on consumer acceptance. Tomorrow I'll look at the flip side of the coin.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Pay Per Who?

A search for “paid content” turned up an item in ClickZ News that led to a report by the Online Publishers Association. It suggests paid content growth is slowing and shifting and becoming more solidly based on monthly subscriptions. The report, which covers Q1 and Q2 2004, came out in November. It can be downloaded for free. Here is my summary and spin.

Consumers paid $853 million for content in the first half of 2004, a 14 percent year-over-year increase, which the association called down but “relatively robust for a maturing market.” Wow. I hope that doesn’t mean paid content is peaking!

Personals and dating continue to dominate purchases but their growth rate is down to 6.4 percent. (People-to-people connections have always been the killer Internet app ever since email, a lesson publishers must surely heed.) Music downloads drove the entertainment spending, which is surely good news for Web publishers because it suggests consumers will buy stuff when we make it easy and cool – as with the iPod.

The report contains many other nuggets on sales growth (or decline) by category of content, but the only other point I would highlight is how those who buy like to pay. A record 90 percent of the 16.8 million consumers whose behavior is reflected in the survey paid by subscription – and more than half of these are monthly as opposed to annual.

I wonder whether the sampling methodology misses or understates single purchase decisions. I’ll snoop around in this direction later because I thinkWeb publishing resembles magazines, in terms of targeting niche interests. Thus online publishers need impulse purchase options to warm up consumers to make that monthly or annual plunge.

Addendum: Monday I mentioned the Emerging Technology conference in Palo Alto. One attendee, Socialtext co-founder Ross Mayfield, offered a précis of the presentation by Bloglines chief executive Mark Fletcher in the wake of his outfit’s acquisition by AskJeeves.

“Bloglines is where users meet RSS: search, subscribe, share and publish,’’ Mayfield blogs, adding. “Future developments: Convergence with web search, Mutimedia, functional RSS feeds for more than just news, Richer blogging tools, more sharing and social networking features.”

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Missing: Middle Ground?

As I search for profitable business models for new media, I recognize that most Web content, even for larger sites like the tech-centric Slashdot, is created by volunteers. Today I want to look at the Independent Media Center, or Indymedia, a loosely affiliated network of leftist and anti-global news sites with volunteer offices in more than 120 cities worldwide.

Most of this posting is either condensed or directly quoted from a 2003 article in the Columbia Journalism Review by author Gal Beckerman, along with bits from an earlier piece in Salon.

According to CJR, “Indymedia first went online amid the tear gas and tumult of the Seattle World Trade Organization protests in 1999.” Its founders included Seattle-area activist Sheri Herndon and technical guru Evan Henshaw-Plath, who also blogs and helps maintain a worldwide protest calendar.

The impetus for the rise and proliferation of Indymedia was dissatisfaction with mainstream media coverage. “The sites all have a similar format and feature a newswire that employs a technology called open publishing,’’ Beckerman writes. “This allows a writer to post a story directly to the newswire.” Many Indymedia sites are multimedia, offering video and audio clips in addition to articles and photos.

CJR chose one anecdote to exemplify the challenges of running a volunteer network on consensus. Beckerman reports that when global Indymedia got a $50,000 Ford Foundation grant in 2002, it touched off a debate over whether to accept the money, and led ultimately to the creation of a separate fund-raising arm, the Tactical Media Fund.

Indymedia was in the news in late 2004 after police seized and then returned some disk drives “from the London offices of a San Antonio-based company called rackspace that hosts the Indymedia sites,’’ according to BBC online. The Electronic Frontier Foundation has filed legal protests in connection with the incident.

It is not my purpose to comment on Indymedia’s mission or politics but rather to note its relevance to my goal of finding and sharing business models for people who want to make living through independent journalism or Web media. These Mini Media publishers, as I call them, are overshadowed by Mass Media. At the same time volunteers of all political stripes – like the libertarian-sounding Lexington League, a Web-based anti-government video outfit – will arise to deliver free, point-of-view content.

If this observation is correct, then the media ecosystem may come to resemble a Redwood forest, with its tall and imposing canopy providing shade for some ferns and mosses below. And every spring the Trillium will briefly bloom. But there’s not much in the way of growth in between these two extremes, and therefore not much nourishment closer to ground level, unless, of course, you're a bananna slug. Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, You’re Mini Media.”

Talking about ads

Two New Media conferences are coming to the San Francisco Bay Area.

Tomorrow afternoon the Media Center kicks off a conclave in Palo Alto entitled “Emerging Technology, Business and Policy for Senior Executives.” Next Thursday, Berkeley will be the cite of an Interactive Media Conference.

Both events will focus on business, but the Palo Alto event seems heavier on the journalism while the Berkeley affair is more about advertising. The registration fees put both beyond my (non-existent) budget, but not perhaps beyond yours. In any event the speaker’s lists and conference topics are a who’s who and what’s what, and scanning them is free. Bloggers Dan Gillmor and Susan Mernit are featured at the Palo event and may have nuggets to share.

Switching gears, Online Media Daily had an item last week about search term prices. To wit, the cost-per-click of wireless has falled while refinancing keywords are bullish. (Reading the original may require free registration.) A chart showing price-per-click for a series of industry categories seems worth reading whether you’re on the sell or the buy side of search.

Finally, Media Post encapsulates a Merrill Lynch report predicting that overall Internet advertising spending will continue to rise while the share of dollars going to search falls. Other formats (not specified) will grab an increasing share of the spending.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

Think Globally, Publish Locally?

In postings yesterday and Tuesday, I suggested that small, relatively-unknown web publishers will have difficulty getting the most desirable advertising support – branding campaigns sponsored by big advertisers. And if small sites pin their revenue hopes on collecting a share of click-thru transactions, they may be disappointed because many buyers make purchases off-line. So what's a Mini Media publisher to do? Of course that’s what I’m trying to puzzle out, and today I want to focus on one potential strategy – going local and creating a web publishing venue that fills a need in your own backyard. This thought is inspired by a recent item from MediaPost. It cites a new report predicting “that businesses will spend $3.9 billion in local online advertising this year--representing an increase of 49 percent from the $2.7 billion spent in local online ads in 2004. By contrast, overall Internet ad spending will increase by 33 percent.” The report was prepared by the local media consulting firm Borrell Associates which, I am delighted to say, offers a free, 4-page executive summary to people who register and provide an email address. The summary reveals that most of these dollars are expected to go to web sites sponsored by newspapers, TV and radio stations (which have trusted brands and trained sales forces). The summary includes a spreadsheet that shows the projected dollar take and growth rate for 210 metropolitan areas. My neighborhood, the San Francisco Bay Area, is expected to have one of the largest takes (above $90 million) but a below-par growth rate of 21 percent. I noticed that the Chico-Redding area in north-central California is expected to jump 44.6 percent, albeit to just $3.77 million. But that captured my imagination. Chico is a hip little college town that might be a great spot for a web entrepreneur to cook up a dream. Of course others would probably have the same idea, and there are incumbent local media with an inside track on those ad dollars. There's no escaping the fact that the marketplace of ideas is a tough competitive venue. There’s much more to say about going local – for instance, how – and I’ll look for examples and lessons along those lines in future posts. Meanwhile, I'm just glad to end this week. I've had a hellish spell of computer annoyances and I may need to dash off a post this the weekend just to

Assumptions: Make an Ass of U and Me?

It is broadly assumed that advertising is the financial underpinning for Web 2.0 business, and while that strikes me as true in general, web publishers, especially Mini Media types, may have oversold themselves on this notion, and may need to adjust their business models accordingly. The exuberant expectations for online ad growth are encapsulated by this item which predicts “a train wreck of a week for New York City” because of the scheduling of three competing conferences presumably aimed at the same folks. Similar overcrowding must be occurring in every media niche, as ambitious folks aim at similar opportunities, assuming they will survive and their competitors will become extinct. But what if the web ecosystem is not quite what we assume? A recent speech by Lincoln Millstein, director of digital media for Hearst Interactive, suggests some changes of concern to web publishers, especially the little ones. “We are not in a huge audience growth space like we were five years ago,” Millstein says. He discusses how advertisers with branding campaigns “want to know where (their) ads are going.” (Sound familiar?) He relates hearing a marketing exec from Weight Watchers say the firm could not get the “reach” to hit its target audience online and “had to resort to buying TV.” Millstein notes that branded web sites, citing Yahoo, are starting to get concerned about having the “inventory” to handle future demands for ad space. Here’s what I read into these remarks: what’s going on is a flight to quality. There may be more ad money flooding onto the web, but perhaps it’s all trying to buy the same stuff. It seems likely that an ad spender experimenting with online will be more likely to go with branded sites they know and trust. If this thinking is correct, it could complicate prospects for small publishers who are hoping to tap into ad spending by signing up with affiliate networks. Millstein notes that direct sellers – click on this to buy whatever – may not care where their ads go. But as I’ve don't buy online even though online ads may have instigated their eventual purchase. The upshot is that small web publishers may get hit with a double whammy: big ad spenders may avoid their sites, and consumers may not support them by pursuing click-thru opportunities at the point of impulse. I’ll have some thoughts tomorrow on how Mini Media publishers might adapt to this, but first let me disclose that, as a reporter for the San Francisco Chronicle, I am also a Hearst employee. However, this blog and its conclusions are my own and I chanced on Millstein’s comments by scouring the web. Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

The Business Model as a Story

I call this blog a discussion of new media business models. Today I hope to define “business model” by summarizing an excellent article by Joan Magretta, a former editor-at-large for the Harvard Business Review. The paper is available for sale in PDF form, but otherwise not accessible online, so I will quote from it the old-fashioned way. Joan begins by rescuing business model from the ignominy of the dot.com era, when the term was bandied about but not necessarily applied with any rigor. A good business model, Joan writes, tells a story, about what sort of customers one is trying to attract, what they value and how the enterprise will make money by selling to or servicing them. They are useful narratives that also pass the numbers test. In other words they pencil out. The dogs will not only eat the dog food. They will pay for the dog food. Joan also defines another essential concept, called competitive strategy, which “explains how you will do better than your rivals.” Having established this template, Joan makes her points with examples. The American Express Traveler’s Check was born of a vacation in 1892, when banker J.C. Fargo had a hard time turning letters of credit into cash. The story of the Traveler’s Check was peace of mind and international liquidity. It penciled out because customers were willing to pay a small fee. (Nowadays, ATM cards may tell a more compelling story, but who can fault a yarn that’s worked for a century!) EuroDisney was a business narrative based on what turned out to be the wrong assumption that Europeans would behave like Americans, when it came to spending out-of-pocket and noshing at snack bars. Neither proved correct. Europeans spent less and ate differently, causing long lines when they sat down to enjoy their meals en masse. To illustrate the power of strategy she cites WalMart, which faced large retail competitors when it was founded in1962. Its success is at least partially explained, she writes, by quoting Sam Walton’s decision “to put good-sized stores into little one-horse towns which everybody else was ignoring.’’ WalMart aggregated many small markets into a mega-company (sounds like the Internet!). Other factors played a role in its rise, and the company is not universally admired, but there is no denying the success of its strategy. With Dell Computer, Joan unifies the concepts of business model and strategy. Michael Dell’s business model was direct-selling and build-to-order. His competitive strategy was to focus on corporations rather than consumers. The combination of model and strategy worked. In addition to defining how an enterprise relates to its customers and competitors, these concepts can unify and motivate employees. “Because a business model tells a good story, it can be used to get everyone in the organization aligned around the kind of value the company wants to create,’’ Joan writes. “They help individuals to see their own jobs within the larger context.” In searching for comments on Joan’s paper, I found this thought from Rajesh Jain, a public relations executive in Bhopal, India: “Telling a story is what a web log helps to do well. . . . I am actually thinking aloud the business model . . . It would be good if more entrepreneurs actually did this. It will allow us to learn from each other. It allows us to look back at our decisions and why we made them and then reflect on whether we did the right thing or not. It’s like a real-time case study!” Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

A Fight for Love and Glory

Yesterday I bounced off a capsule review of the Bloggies to mention plans by blog entrepreneur Nick Denton to add two new, sponsor-supported sites. Today I ping off Susan Mernit, who writes about plans by MediaBistro's Elizabeth Spiers to launch a New York media trade blog called FishBowlNY. Mernit cites the New York Times as her source, saying the paper “is pitching it as clash of the titans, with Gawker publisher Nick Denton and former employee Spiers going head to head.” Denton's early foray into the blogosphere has earned him gobs of exposure. Less has been written about MediaBistro, the New York-operation founded by Laurel Touby. She is a former magazine writer who started organizing cocktail parties for freelancers around 1993. Circa 1997 she created a web site. In 2000 she got $1 million from the Gotham Partners hedge fund and New Republic owner Martin Peretz. Her idea was to create an online freelance marketplace in which MediaBistro would intermediate between editors looking to outsource articles and freelancers seeking assignments. MediaBistro also organizes cocktail parties in various cities, including my town of San Francisco, where media types gather to gossip, job prospect, sip wine and flirt. Denton’s Gawker recently took a shot at Touby, suggesting one of her photos was perhaps a tad too décolletage. A casual search, however, turned up a post by Mike Stone wondering why Denton would launch the girly-blog site Fleshbot. Stone’s post included another swipe by Jason Calcanis. I noticed yesterday that Nick critiqued one of Jason’s business plans. Personally, I would be shocked, shocked to think that there was backbiting in cyberspace. In any event, I felt obliged to visit Fleshbot, not because I’m a married, middle-aged man consumed by unrequited lust, but out of a sense of journalistic duty. Having been there I can see why Denton launched the site. It probably draws traffic. I, of course, only read the articles. In closing, let me point out that Susan Mernit, whose posting spurred this exercise, was nominated for a Bloggie in the “best-kept-secret” category – a point which I mention not so much as a plug for Susan, but rather to suggest there may be a circular method to the MiniMediaGuy’s madness. Tom Abate MiniMediaGuy “Cause if you ain’t mass media, you’re mini media.”