EXPOSED!!! Local News Fights Back

We haven't done an episode of Morning Don't for while. We've actually filmed several but no one (ahem, me) has had the time to produce them. So it's with much excitement I bring you the long-awaited episode 20. I've written a lot of harsh things about traditional media lately. But clearly, one local news channel has found a way to fight Web 2.0 and Google. Watch and learn.

Morning Don't Ep. 20 from sarah lacy on Vimeo.

UGC: Just a Loss Leader in the End?

Back in the late 1990s, dot coms were all about the land grab. The idea was the more eyeballs and shoppers you got- POOF!- the more valuable you were. Never mind, the advertising market wasn't quite there yet and you were selling bags of dog food at a loss. The common wisdom has been that this was irresponsible, and truth be told, none of these companies had any business being publicly traded. But, more than half of the companies started during this time, actually stayed in business-- incredibly high odds for startups. To many, that proves that the problem wasn't that too many companies were started and nor was it their unfounded business models. It was that too much money was wasted on each one, and that it was never a game the public markets should have been playing.

There was, of course, one very important benefit to that land grab and wasted millions in investment capital: All those free services and cheap bags of dog food did bring a ton of people online. And they stayed online, even as many of the companies that did survive did so by charging realistic prices and shipping if they were in ecommerce, or switching to premium services and subscription fees if they were in content or entertainment. In fact, throughout the post 2000s, nearly every Web startup pitching venture capitalists or reporters were all talking up their premium services and subscription fees. You can still see vestiges of it with The Wall Street Journal's stubborn resistance to giving away content for free and early Web 2.0 companies like LinkedIn that didn't wait for an ad market to develop, but rather charged fees for things like job posting and "InMail."

As the wet blanket of recession has settled around the Valley and startups have come under pressure to monetize what they've built, I've wondered when we'd see the same flight to subscriptions and fees. Instead we're starting to see something similar but with a Web 2.0 twist: The rejection of user generated content in favor of professional content that's more consistent, reliable and palatable to advertisers.

This is bold shift, as the whole Web 2.0 movement was predicated on user generated content and the engineer-centric idea that you could build an easy to use platform, everyday people would create content for free, and other everyday people would navigate it, consume it and push the very best up to the top. It was rooted in the conviction that you didn't need the kind of doomed content partnerships of the past between New York, Los Angeles and Silicon Valley, because Web 2.0 was democratizing media and entertainment and ultimately that platform was the future, not the content gatekeepers.

This was clearly the most pronounced on YouTube, where the viral sensations like the Evolution of the Dance and the Grape Lady (ow! ow! owwwwww!) became the lexicon of an entire generation and the myth sprung up that everyday stars of viral videos would become household names with their own movies and HBO shows. (They never did.)  Sure there were whispered claims that as much as 50% of YouTube's views were actually of copyrighted material. Still, the company never would have sold to Google for $1.65 billion without UGC.

In other words, user generated content was to Web 2.0 what free-bags-of-dog-food was to ecommerce.  But flash-forward to 2009, and there's still no clear way to monetize user generated content, either from the sites themselves or the would-be stars.

Guess what? The Web has evolved to the point where you can monetize professional content. And that's why you see most of the smarter members of the Web 2.0 elite doing the very content deals they would have rejected a year ago. First, there was YouTube's rumored deal with the William Morris Agency, and now Slide has teamed up with the Valley-addict Ashton Kutcher and his company Katalyst Media. Katalyst also launched its site The Blah Girls at TechCrunch50 and produced 24-hours-at-Sundance with Kevin Rose last month, to mixed reviews.

Under the deal, Slide's FunSpace application on Facebook will be the exclusive distributor for Katalyst's reality show about its own company, KatalystHQ. Cheetos will sponsor the show. (What's that? ACTUAL REVENUES!? Between Cheetos and BlahGirls' sponsor Vitamin Water, Ashton's poor fans are going to need gym memberships, stat.)

Liz Gannes over at NewTeeVee questioned the logic in limiting distribution to an application within a site, even if it is the highly popular FunSpace on the highly popular Facebook. That was my first question too. But, Ashton's approach to all things Silicon Valley is very hat-in-hand, you-guys-are-the-experts, teach-me-your-techy-ways. He wants to learn what works as much as he wants to make each particular project a raging success. I think that's smart. And Max, with his metrics-watching obsession, knows what works online.

I talked to Ashton and Max yesterday, and while they noted the shift from UGC to professional partnerships was real, both said "loss leader" was too harsh a term for User Generated Content. They were both careful to extol UGC's virtues. Max talked it up as an unparalleled way for sites to get a volume of cheap and frequently highly viral content, and Ashton said that professional content had learned a lot from more on-the-fly lifecasting and the interactivity of user generated video. Indeed, the content of KatalystHQ is little more than Ashton's receptionist shooting video of life around the office.

But the inconsistency and unpredictability makes UGC nearly impossible to monetize. Said Max, "It's a much easier ad sale to do product placement in professional video where advertisers can control how they want it to be. They don't really want to rely on thirty second clips of people slamming into trees."  So UGC is a tool for bringing in users and content, but not very monetizable. Hmm...Sounds like the very definition of a loss leader to me...

But I grant their point that the shift hardly means that the move to democratize content is over. It's very possible there is still a genius way to monetize UGC, we just haven't found it yet. Remember how long it took the industry to come up with paid search ads? Back when Google was founded, many VCs deemed it too late to an already mature market with no good business model. It's also very possible a huge star does arise from YouTube and actually does cross-over to traditional media. But just like in the post-March-2000-era, companies need to focus on where advertisers want to spend money now, versus trying to sell them on the future. The future, simply put, will still be there when the economic crisis is over.

But why should we believe ties between Hollywood and the Valley will finally bear all that much-promised fruit? Max pointed to nearly every broadcaster voluntarily making content available online, the surprising success of Hulu, and viewers increasingly choosing the Web as the place to consume even long-form content. "A year ago, I think (Slide's sassy head of business development) Keith (Rabois) would have spit in the face of anyone suggesting a content deal with us," Max said. "Now you can't argue against it." The wake up call for Ashton? Five years ago, if you made people chose to get rid of their TVs or computers, most of the ones he knows would have said computers. "Now, you ask the same question and hands down everyone would get rid of the TV. You don't need it anymore."

When I teased Ashton about his third splashy Valley press tour in just a few months, he added, "By the way, I'm not going away so people can brace themselves for that."

Is a deal with Twitter next?

Michael Lewis: Sounds Like a Jerk, Makes a Good Point

I have some love/hate issues with Michael Lewis as a writer. He's clearly insanely talented at finding and telling a great story. On a structural level, I heavily borrowed from Moneyball to organize Once You're Lucky, Twice You're Good. If you look closely-- and I don't know why anyone ever would-- Max Levchin = Billy Beane as the spine of the book. The different various entrepreneurs rotate into the narrative the way, individual A's players rotate in to Moneyball. The philosophy of Web 2.0 provides the narrative glue, the way the philosophy of A's baseball provides the narrative glue of Moneyball. It's really borderline shameless.

But one thing I do not borrow from Lewis is his love of putting himself in his books. Ever since Liar's Poker I've found it incredibly self-congratulatory. I know people think I love to promote myself, but note there are about four occurrences of first person in my entire book and each is a passing reference making a bigger point about one of the subjects. Bottom line: If you come to a blog called SarahLacy.com, expect to read about me. If you pick up a book about entrepreneurs, expect to read about them.

So it's not surprising I had mixed feelings about Lewis' recent interview in The Atlantic. (Which, BTW, I'm subscribing to, because I keep getting linked to awesome Atlantic pieces.) The delightfully sassy reporter asked Lewis about the magazine industry, a timely topic, give that ad pages were horrific in the fourth quarter. Lewis smugly responded that he was faring just fine. Exact words below, the reporter in bold:

"And so I wonder what you think about that industry changing over the next couple of years. Especially since you're a guy who does long-form journalism and books, and those are arguably things that translate less well to the internet.

Well my personal experience has been very nice. The market for me has only gotten better!

[Laughs] That's not terribly helpful.

Well it makes it a little hard for me to prophesize doom. And I hate spinning theories to which I'm an exception. So my sense is, there'll always be a hunger for long-form journalism, and that it's just a question of how it's packaged. And that people will always figure out how to make it sort of viable. It's never going to be a hugely profitable business: it's more like the movie business or the car business in that there are all sorts of good non-economic reasons to be involved in it. The economic returns will always probably be driven down by too many people wanting to be in it.
 
But I don't feel gloomy about the magazine business at all.

Well that's nice! I feel pretty gloomy.

It's always inherently in a state of turmoil of one form or another. But let me put it this way: when I write a long magazine piece that gets attention I feel like it's more widely read now than it was ten years ago, by a long way. In fact, it feels excessively well read. Twenty years ago I might get a couple of notes in the mail and I'd hear about it maybe at a dinner party. And that would be the end of it, and it would go away very quickly. Ten years ago it would get passed around by email, and it would seem to have a life to me that would go on a little longer. Now the blogosphere picks it up and it becomes almost like a book: it lives for months. I'm getting responses to it for months. And I don't think the journalism has gotten any better. It's just the environment you publish it in is more able to rapidly get it to the people who are or might be interested in it. They're more likely to see it. So the demand side of things is not a problem. People really want to read this stuff. The question is how you monetize that."

Oh, it's just how to monetize it? Phew, I thought the industry had a real problem. Here's the thing: Lewis isn't wrong about his career; he's wrong to think it in any way reflects what media is facing in the aggregate. Yes, he is doing well and his pieces are more widely read, but that's because Lewis is one of the top writers in his field, and his fame just happens to parallel the increasing media calamity of the past few decades. Business being good for him is a reality, but it has zero to do with the state of media. 

So it comes across as incredibly smug to shrug off the widespread problems that almost all journalists who don't happen to be Michael Lewis are facing. Yes, even incredibly talented and successful ones.

That said, there's an important lesson in what he says: Even in the bleakest economic times, people at the top of their game still do well. While good times lift all boats, the inverse isn't true. It's a reminder to me to stop looking around at the broader economic collapse and panic. Rather, focus on content, content, content and pretend I'm living in my own Michael-Lewis-like bubble, until my income tells me otherwise. It's that fine line between letting panic hobble you and uttering famous last words you'll come to regret.

Now for My Next Trick, I'll Turn Brand into Cash

Back in May 2008, I was on top of the world. Viewers were soaring for my newly launched Yahoo show, TechTicker, my book was about to come out and was boasting a beautifully low three-digit Amazon rank, several of my BusinessWeek columns had been among the most read stories on the site, and traffic on this blog was doubling month-over-month. (Sure it had only been open two months, but details like that don't matter when you're on top of the world.)

I was also in New York doing a slew of press interviews for the launch of my book. Not even a torrent of rain and a wind storm that eviscerated my umbrella could dampen my spirits as I Mary Tyler Moore'd all over Manhattan in a DVF dress feeling like I'd turned the world on with my ability to tell a great story and enviable access to people whose stories actually mattered. And let's be clear: No one had handed me all this. I had worked evenings, sleepless nights, sacrificed relationships and any kind of work/life balance for nearly a decade to get here. And, I thought, all the hard work had finally paid off.

But more than that, the synergy was paying off. The idea was that I'd become a "brand"-- and there was no paucity of data to back that up. There was also no shortage of media outlets willing to pay me to be that brand. As late in 2007 I carefully picked between them, I thought a lot about synergy. I didn't want just one platform, and I didn't want competing platforms. Rather, I picked platforms that would cross promote and jobs that would play to different strengths I had as a reporter, and alternatively challenge me more. As a journalist who has watched synergy rarely pay off when promised, the fact that I believed it would be so easy in boosting the next phase of my own career should have been a red flag.

We've Been in Idiot Land a While Now, Scoble. Get Comfortable.

Robert Scoble has a heartfelt post today that sums up his frustration with noise becoming more important than substance. Well, welcome to journalism in the Internet age. Actually, welcome to journalism period. It's just more pronounced in an age when we can measure how stories do and tend to place value on them solely for that reason. And it's in no way limited to Tech. If it were, CNN wouldn't be reporting on Paris Hilton.

This was a huge personal frustration when I was at BusinessWeek covering startups before they were hot again and important, but unsexy, technology trends like open source software. I would spend months breaking a story with huge impact, only to be dwarfed by traffic for a story that just rehashed the latest Apple rumor. To BusinessWeek's great credit, they still run those unsexy stories prominently, because the BusinessWeek brand of delivering all the news business people need is just as important as sheer page views. (Ahem, they also renewed my columnist contract for another year. Thanks, John Byrne!)

But is this the same in the blog world? Where the whole business is predicated on page views?

I Only Need 8 Jillion More Page Views to Make Rent. Call Your Friends!

In my continuing rant on how most of us are going about blogging monetization all wrong, we get this gem from AdAge.com this week. The headline trumpets that News-Oriented Websites Have a Future. First reaction: Oh thank God, my profession is saved.

We all know traditional media is hopelessly screwed, right? Right. And most of us know that online arms of traditional media agencies aren't really picking up the slack, creating a pretty worrying scenario. Especially because the last few years for media have already been looking like Fall 2008 looked for Wall Street, and now we're entering an undoubtedly horrible year for advertising with no Olympics, no election, no good one-time catalyst to give us a boost.

There is a future for media. There is a business model there. But I think I speak for most journalists when I say we're starting to feel like Moses's people wandering in the desert for 40-years. So was this headline from AdAge a coming attraction of the promised land? Hardly.

Bad News for the Valley and Media (Ok, Worse News)

Henry Blodget has a frightening-- but I think right on-- post about display advertising online. His take: Wake up! It's going down. Why? The economy, yes. But more important, I don't think display advertising has yet managed to make itself an indispensable part of the ad mix the way paid search has.

There's a debate subtly raging about whether we've really nailed display advertising on the Web to date. Some people, Henry included, say "Duh, it works." But "it works" isn't the same thing as having nailed a new and unique method of advertising consummate with the uniqueness of content and audience on the Web. Online should be something different, the same way print publications should be doing more than just putting the same words on a digital page. Floating ads? Pop-up? Pop-unders? Roll overs? Isn't it all just a quick gimmick until we find ways to block it? I can't remember a time I clicked on a banner ad and those automatically loading video and audio ads just enrage me to the point I don't have a positive brand-association.

Anecdotally, I keep hearing about no-brainer opportunities for brand advertising online to unique, highly desirable, mass demographics that are not selling. Not even at comparatively cheap rates! (It's all been off the record, so I can't cite examples. It's off the record for obvious reasons as blabbing about it doesn't exactly help the selling process.) This says one of three things to me:

• There is a lack of qualified ad sales people working in the online space
• Advertisers don't yet value this market
• To quote LOLcats: UR DOING IT WRONG INTERNETZ!

Yes, I realize display advertising is a multi-billion industry and it's sustained sites like Yahoo-- my part-time employer-- not to mention offered a new revenue stream for dying print media (albeit an apparently anemic one). But if you consider the demographics and time spent on a lot of these sites there's clearly money being left on the table.

It's not too crazy to draw an analogy to Facebook's situation. (Bear with me, here.) Facebook is generating hundreds of millions in revenue this year. Clearly Facebook has ad inventory people want. But Facebook considers itself in the first inning of figuring out a must-have revenue answer for its unique inventory.

In short, for years now proponents of display advertising have been saying-- and blindly believing-- it's all growth until the percentage of time spent online catches up to the percentage of the ad budget spent online. Maybe we need to assume there's a deeper problem and the hungry company that wants to survive needs to work harder to fix it.

"Ommmmm..."

That kept getting chanted around TechTicker headquarters yesterday morning. No, we weren't particularly into meditation, although you'd think looking at Yahoo's stock lately, Mr. Yang would offer some new zen program for all those stock-laden employees. (Bonus Prize: One-thousand of you may be also getting pink slips soon!)

Rather, Om Malik was our guest. Remember when the early GigaOm tagline had something to do with "...just close your eyes and say 'Ommmmm'"? That was, of course, back in the day when blogging was Om's sideline job, not his empire in the making.

He's so busy that yesterday was Om's TechTicker debut, and even though he was late to the nice SF studio we booked him so he could avoid a 50 minute drive to Sunnyvale, he was a lovely guest. I look forward to having him back soon! One reason I like Om? He has strong opinions and doesn't mince words. He gets slightly more rabid as these clips go on too. Enjoy!

Om and I on Gartner's strangely rosy IT spending projections:

Om and I on why newspapers are now losing money ONLINE too:

Om and I on Jeff Bezos, aka the new Steve Jobs/Bill Gates (I gotta say, Om is right here and WTF Seattle gets ANOTHER one? Step it up, Valley!)

Om and I on, well, GigaOm and all that funding amid an ad crisis [UPDATE: THERE'S AN EMBED CODE PROBLEM HERE THAT'S PULLING THE WRONG CLIP. WILL POST THE RIGHT ONE ONCE IT'S SORTED. SHAME BECAUSE IT WAS MY FAVORITE OF THE FOUR!]:

Um, Gym Time Anyone?

I went on Flickr to find a picture of me giving a keynote for the speaker tab I'm about to add to the blog. (Yes, having conquered all that keynote angst, I am for hire!) Apparently, I've never searched my name on Flickr and was stunned to see so many pictures from the book tour that I'd never seen. It was actually a nice walk down memory lane. We're so nostalgic, Olivia is going to pull a few for a post later today.

I also came across this one by Thomas Hawk and suddenly, viscerally remembered how much MORE I worked and stressed out when I was on staff at BusinessWeek. This was right after my Digg cover that sucked up six grueling months of my life--including weekends and evenings-- and almost didn't even run. When it did run, it was my first big controversy, and I had no idea how to handle it. All I wanted to do was hide under a bed. It was just before the book deal that changed my life. It was a period when I wasn't eating (clearly!) or sleeping and actually started running to stay sane. I was barely in my 30s, depressed about the state of magazines and trying to figure out what the hell to do with the rest of my career. I honestly didn't know if I could even be a reporter still and be happy or if all those jobs were just gone.

It reminded me of Jason's now much written about (and somewhat mocked) Startup Depression post. This was my period where my ass was getting kicked-- the point when it was, as he says and the awful cliche goes, darkest before the dawn. It was the time I could have just given up and, I don't know, gone into PR or had some babies. (Stop laughing, Olivia.) There was no way for me to know how much my life would change in just two years. I should remember this time every time I feel overworked, because I'm really amazingly lucky. (Or maybe good...? Groan, sorry.) I don't know many reporters who have as great of a life as I do right now.

Also, um, I know it's a wide angle lens and an artsy shot, but I don't remember ever being that skinny!
I'm going to the gym now. (Such a girl, I know.) After the gym, less sap. Really.

How Can Print Not Get It?

This is pretty alarming. Jeff Jarvis said most of it here. Basically the Philadelphia Inquirer has now issued an executive order for all staffers to jump in their Deloreans and go back a few decades. If there's a sudden run on Deloreans, staffers are ordered to stick their heads in the sand. From the memo:

"Colleagues – Beginning today, we are adopting an Inquirer first policy for our signature investigative reporting, enterprise, trend stories, news features, and reviews of all sorts. What that means is that we won't post those stories online until they're in print. We'll cooperate with philly.com, as we do now, in preparing extensive online packages to accompany our enterprising work. But we'll make the decision to press the button on the online packages only when readers are able to pick up The Inquirer on their doorstep or on the newsstand.

For our bloggers, especially, this may require a bit of an adjustment. Some of you like to try out ideas that end up as subjects of stories or columns in print first. If in doubt, consult your editor. Or me or Chris Krewson."

Memo to the Inquirer: Those aren't blogs. Blogs are vehicles for emerging stories and a direct line from a reporter to an audience-- no editors in between. The best bloggers are efficient at breaking news because they throw things out there and use the responses they get to dig further. Many of my best stories evolve from a blog post or the comments I get on one. Blogs aren't dumping grounds for news that's not important enough for the paper, nor are they your vehicle to simply promote stories from the paper. As Ted Stevens says: "The Internet is NOT a dump truck."

Jarvis advised that Inquirer staffers "get out now." Yeah, cause it's that easy?