MediaFile

The irrational imitation of the online news industry

All across Europe, journalistic online startups are launching, aiming to produce and disseminate news in new ways. In our brave new world, the nimble startups of tomorrow were supposed to be overtaking the lumbering dinosaurs of yesterday online. But nearly all of these startups, even the most impressive and innovative sites, are struggling to survive because they face structural and strategic challenges that are not always recognized upfront. To succeed, European journalistic startups need to recognize these challenges, move beyond simply imitating others and find their own paths ahead.

The structural challenges for European journalistic startups have to do with the competition they face in content and advertising.

Startups are trying to establish themselves in a market for online news that is dominated by legacy media like newspapers and broadcasters. New journalistic ventures, such as Netzeitung, Rue89 and Il Post, are competing not only with other startups but also with the popular online offerings of news organizations like Spiegel, Le Monde and La Reppublica. These incumbents, and others like them, have built their digital strategy around their well-known brands and content from their existing newsrooms. They fund them with profits from their (generally declining) offline operations. Together with a handful of aggregators and portals, such legacy players dominate online news provision in most European countries.

As European news startups compete with established news media on the content side, they are also trying to carve out a position in a market for online advertising. That market is already dominated by U.S.-based giants like Google (and increasingly Facebook). A few large players attract most of the advertising, while innumerable smaller websites with display advertising keep down rates (so-called CPMs, cost per thousand impressions), eroding the value of the audience that each journalistic venture manages to attract.

Those are the structural challenges. The strategic challenges, meanwhile, concern the tendency toward irrational imitation. Startups across Europe need to break with two kinds of imitation in particular to develop sustainable funding models for the future.

Friday media highlights

Here are some of the day’s top stories in the media industry:

TV Networks Fight Drug-Ad Measure (WSJ)
“Advertising costs are deductible to any company as a business expense. The plan being considered by Rep. Rangel’s Ways and Means committee would eliminate the deduction with respect to prescription drug advertising,” writes Martin Vaughan.

Big media seek 21st century business models (Reuters)
“Media moguls at this week’s Sun Valley conference have spent as much time discussing how to reconfigure business models disrupted by the Web as they have worrying about the weak economy,” reports Yinka Adegoke.

Zucker Says Marketplace Has Reached Bottom (B&C)
Ben Grossman writes: “NBC Universal chief Jeff Zucker said Thursday that while the overall marketplace is still challenged, he thinks it may have bottomed out. ‘It’s still quite uncertain and we don’t really see the full recovery we are all hoping for,’ he said.  ’It’s still tough out there, but I think we have seen a bottom.’”

Google’s Mayer on how to write online news

Just about everyone has thrown a thought or two by now into the great bubbling pot of stew that is the future of journalism. Latest in line is Marissa Mayer, Google’s vice president of search products and user experience.Mayer, one of Google’s earliest employees who gets reams of newsprint in Silicon Valley for her cupcake spreadsheets and love of Oscar de la Renta, spoke before a Senate subcommittee on a future of journalism hearing on Wednesday.Apart from defending Google, which has come under attack from the news industry — most notably the Associated Press — for profiting from content, Mayer gave some tips on how journalists should write their stories.Mayer talked about something she called the “atomic unit of consumption” — a news article rather than an entire newspaper, much like one song downloaded digitally instead of buying an entire album. Here’s an excerpt from her prepared testimony:

The atomic unit of consumption for existing media is almost always disrupted by emerging media. For example, digital music caused consumers to think about their purchases as individual songs rather than as full albums. Digital and on-demand video has caused people to view variable-length clips when it is convenient for them, rather than fixed-length programs on a fixed broadcast schedule.Similarly, the structure of the Web has caused the atomic unit of consumption for news to migrate from the full newspaper to the individual article. As with music and video, many people still consume physical newspapers in their original full-length format. But with online news, a reader is much more likely to arrive at a single article. While these individual articles could be accessed from a newspaper’s homepage, readers often click directly to a particular article via a search engine or another Website.

Mayer then went on to suggest that reporters and editors need to think differently about how they write for online:

Treating the article as the atomic unit of consumption online has several powerful consequences. When producing an article for online news, the publisher must assume that a reader may be viewing this article on its own, independent of the rest of the publication.To make an article effective in a standalone setting requires providing sufficient context for first-time readers, while clearly calling out the latest information for those following a story over time. It also requires a different approach to monetization: each individual article should be self-sustaining. These types of changes will require innovation and experimentation in how news is delivered online, and how advertising can support it.

So wait, now the big bad wolf is counseling Little Red Riding Hood before gobbling her up for dinner? Maybe Google and news publishers can be friends… or at least frenemies. Read Mayer’s full testimony here.Keep an eye on:

    Online video site Hulu signs its first international TV content deals. (Financial Times) Former CNBC host lands at MSNBC. (Associated Press) Hear it once and for all: Twitter is not for sale. (Reuters)

(Photo: Actress Brooke Shields portrays Little Red Riding Hood at a charity fundraiser/Reuters)

Pay old-media execs to help you charge for new media

Three of the traditional media world’s brightest stars have a bright idea: Start a consultancy to help old-media companies charge for their content online. (And announce the venture in an old-media publication.)

From The Wall Street Journal’s website on Tuesday afternoon:

A trio of media executives is starting a firm to guide efforts by newspapers and other publishers to charge for content posted on their Web sites as advertising revenue tumbles.

The venture, Journalism Online LLC, is being led by Steven Brill, the founder of the American Lawyer magazine and Court TV; Gordon Crovitz, a former publisher of The Wall Street Journal; and cable-television veteran Leo Hindery.

NewsCred: You rank the credibility of news

newspapers.jpgDigg gained plenty of press because it let its users determine the popularity of various news articles. A new website, NewsCred, is taking a different approach: it lets readers rank the credibility of the news itself.

The site has been up since May in a private “alpha” mode  and on Tuesday launches into an official “beta” version — Web terminology for something that’s live for the public, but not necessarily in its final form.

To find out more about NewsCred, I spoke to Shafqat Islam, 27, who was born in Bangladesh but lives in Geneva, and is one of the two chiefs who runs the site. Islam is a former project manager for financial systems at Merrill Lynch (he built systems there for traders and private bankers) who runs the site with Iraj Islam (no relation), 24, and a resident of Stockholm.