What's the Big Idea?

Capsule: The news has lost faith with its followers despite growing religious fervor in some news brands.  As newspaper and TV "institutions" evolve through the science of internet distribution, has news content changed its requirements?  With all of the "new news" science, what's happened to the basics of ethics and economics?

State of the Media


Some new thinkers think that "the news" is becoming a "news-ecosystem."  Why the news would evolve from a noun to a compound noun is tough to get.  We love the one-and-only news for its simplicity and its majestic, flawed arrogance in believing in its own ability to be objective.  Once, the news was our portal to the world.  The news was a believers' institution offering context for our moral and intellectual growth.  


In contrast, a news-ecosystem could turn out to be a priority-less Dr. Hyde of video and internet constellations with inflamed opinions their only atmosphere.  It will be harder to love and learn from a news-ecosystem--like a late-in-life conversion from God to science.  We may prefer religion; even though we're likely better off with what we create based on what we actually know.


The new news, the ecosystem, will attempt to generate revenue through a combination of public and private payments, subscriptions and grants alongside new and traditional advertising streams.  Micro-local news-related businesses are expected to make their contributions, as will the advertising revenue generated by internet bloggers and other major and minor news advocacy-as-entertainment sources.  Like science, the news-ecosystem will be complex and varied and will require specialists and guides.


To complete our conversion, it would help if some of the new news specialists ponied up a clear explanation of how the ecosystem will feed itself.  We can see glimmers of revenue opportunity in our changed habits.  Instead of reading a daily newspaper, we screen-read headlines, summaries and articles from multiple sources.  Couldn't we generate a bunch of small revenue streams--kind of like a trail of breadcrumbs between location and destination--each time we engage with a source?  This is a tough idea to take on faith.  We're sure someone will make money from all of the cookies we take and drop during our internet journeys, but so far, no one is making a lot on the news.


No one, it seems, but Fox.  The Fox News Channel hit an all-time high after the 2008 US Presidential election and its advertising revenues are only constrained by the weak quality of the ad business itself.  Fox remembers what its competitors forgot: news opinion, the more inflammatory the better, can earn loyalty.  Long generations of print newsmen, including Fox owner and founder Rupert Murdoch, have known this well.  William Randolph Hearst was celebrated for his devotion to commercial success fed by opinion-led journalism, lacing his news with a combination of his own occasionally liberal views and the conservative, sensational views that touched his readers directly on the heart.  


If it's true that taking power requires pettiness, it's no wonder that Fox News is thriving, even as the Fox-owned Wall Street Journal struggles along with its accomplished newspaper brethren.  Content and distribution have hit a perfect resonance in the emotional mastery of Fox's Roger Ailes.  Everyone on Fox seems powerful and petty--committed to the right, angry at the left and peevish about everything in between.  Why is print news less of an emotional powerhouse these days?  We seem to have lost God in print as we've taken up science on the internet.  With all of our many news-reading choices, can we doubt the complex evolution that got us here?


If TV news is the new emotional powerhouse, what's happened to CNN?  Once a perfect fusion of the emotional power of TV and the intellectual requirements of 24-hour global coverage, CNN today is really all over the place.  CNN "twitters."  It celebrates gadget wizardry in its layered multimedia showmanship.  It brings its most narcissistic audience members into the news with internet feeds from "average" viewers.  It celebrates contradictory emotions with the fascinating anti-immigration pro-birther-movement Lou Dobbs, who channels repressed aggression like a blonde, senior, ultraconservative Kevin Spacey.  (You don't want to make Kevin mad.)


There's a big difference between the emotional displays at Fox and the emotional displays at CNN.  Fox throws punches with a clear consistent aim.  CNN pulls punches seeming to fear they might connect.  With now-declining ratings, CNN may have left its brand origins as the originator of all cable news for an ecosystem brand--America's most trusted news source--accepting the presence of all comers while yearning for a less crowded field.  


Yearning isn't enough.  CNN was once the fiercest of media competitors, beating back five different early cable news alternatives to be trusted and watched.  But the CNN brand today seems undone by the complexity of the news ecosystem.  It earnestly tries to get the news right, but its budgets have been so sorely cut--along with the rest of the new news--that the efficient marketing of technical wizardry and twitter are inevitable.  


CNN's once liberal-leaning news bona fides have been challenged by everything from comedy segments on The Daily Show to MSNBC, promoting left-side emotions with unqualified zeal.  To appear balanced, MSNBC even has a right-side morning view--everyone knows the right rises early--with the gifted Joe Scarborough.  Telegenic and intellectually fluent, Scarborough makes the conservatives look like they have a more studied view than is often the case.  If only MSNBC and its ultra-right-wing business news-ish sibling CNBC could pay the bills without spending their late nights and weekends showing completely unrelated criminal reality shows and infomercials.  Shown a more integrated soul, we might really believe news was their business. 


As riveting as endless emotional displays can be, it's hard to absorb this new news complexity without getting bored.  In order to believe that new news models will work, we have to understand them.  We get the TV ratings system. We are willingly exploited as TV news whips up our emotions in cheap studio segments instead of engaging us intellectually by taking us to where the news is made.  It seems like the news ecosystem has tried to respond to our intellectual demands for alternatives, as well as to our emotional and religious preferences. But there is still this issue about how an ecosystem can make money as well as the news.  


Eventually, we will give some news sources new revenue lifelines by paying fees and clicking-through ads.  With our own money on the line, we'll be asked to substitute the unsure for the sure: in this case, the trust we invest in The New York Times will expand into faith in a supporting ecosystem that gets the news right through continuous re-examination and debate.


For the news enthusiast with an aggressive appetite, multiple content sources across multiple distribution media should teach more and better than a single trusted brand or anchor personality.  But the more news sources we consider, the less our appetites are engaged, especially when we have to research many of the facts for ourselves.  Our eyes are bigger than our news stomachs: we want to order everything on the menu and feel as if we've used our power of choice by acknowledging that choice is there.  


The truth is that we're fitting news-reading, listening and watching into increasingly smaller, pressured portions of our days made smaller and more pressured because of the quantity of content and the paucity of good news distribution models.  A new news network distribution system--like the traditional broadcast and newspaper systems--has yet to be developed to support our evolutionary needs.  


It's idealistic and insufficient to claim that the multitude of internet and video news sources in our new universe are accessible and capable of improving our lives on the merits of content alone.  This love of news content--no matter how it gets to us and no matter where it comes from--is even more devout and illogical than our love of singular news authorities and brands used to be.  When we were worshipping Walter Cronkite or Edward R. Murrow, we were grown up enough to understand that these same anchors had to interview celebrities and sell cigarettes and soap or there was no news.  There was real distribution muscle behind the news business and we were grown up enough to admit it even if we disliked it.  How else were we going to change it?


What's the big idea behind the new news-ecosystem?  Will a Cisco-like international network eventually merge with the great content minds of an NBC or a Time Warner to create new internet and video navigation making broad news sources digestible and therefore profitable?  What combination of science and religion will we have to accept in order to grow into our new news capacities?  In order for today's internet news sources to survive as something more than a quaint experiment, we're going to have to accept the primacy of profit.  We're also going to have to be petty enough to command our news ecosystem, weeding out news sources that don't deliver enough science to justify faith.

For Sale

Capsule: Are TV, broadband and phone service distributors defeating their business models in order to win a crowded field?  Does dysfunctional discounting inevitably reduce a product's lifespan when distributors accept too large a gap between what they charge and what customers actually pay?

Sample Sale



There's a difference between what customers pay for tv, broadband and phone service and the published rates.  There's also a difference between what customers pay today and what they'll be willing to pay in a year.  The smartest content and distribution businesses are anticipating these differences in shrewd terms.  As we enter the next global economic round of "Survivor", the winners will have to transform their economics with some new products that can hold their pricing power for longer than a day.

The smartest consumers in every product category know to shop for sales, referred to in the subscription business as "offers."  In very competitive situations--like now, when the economy is weak and the competitive field strong--customers shop for offer pricing constantly, including by threatening to downgrade or disconnect service. 

Distributors react to increasing competition and consumer demands by increasing their offer discounts--initially with offer rules and restrictions reserving the best prices for certain types of service for certain types of customers at certain times of the year--hoping to retain business and stimulate additional product sales.  As the market matures and add-on sales opportunity declines, distributors inevitably reach the point where the economic effect of their actions is to destroy their own value.    The power of offer discounting is temporary.  Eventually, the market soil is exhausted.  Just like in retail since December, 2007, paying full price for anything feels like a rip-off.  And, the more prices fall, the less we feel like buying anything at all.

Dysfunctional discounting in media is about to have a head-on collision with product obsolescence.  The smart money is on the distributors who recognize the declining value perceptions offer discounting has created and the explosive acceleration of pricing inelasticity amongst subscription products that are closing in on the end of their useful lives.

Take phone service.  Some estimates claim that the New York DMA has already lost one third of its fixed line "home phone" service to cord-cutters relying solely on wireless.  The value of wired home phones has deteriorated because of cheaper wired alternatives: once Skype entered the market, however ineffectively at first, with free internet voice, the end was clear. 

But the biggest deterioration of the wired consumer phone business occurred because cell phone service improved and coverage increased with increased competition.  The phone companies competed with themselves and lost; in order to win more and more valuable cell customers across traditional regional wireline territories, Verizon and AT&T made their cell products better than their wired products on price and product features, making it increasingly senseless to pay the same providers for both kinds of phone service at once.

There's still a lot of revenue in the fixed wireline business, but its subscriber numbers and its profitability have declined significantly because of cell phone competition and offer discounts.   These declines have begun to turn subscription bundling into slow-acting poison, counter to the best instincts and experiences of most subscription marketers.   The most commonly bundled telecom products are wired voice and broadband (high speed internet) service, with pricing economics so tight that customers can almost pay more for one service in the combination than they pay for two.  When a distributor reaches this type of offer pricing aggression--the kind of offer pricing that makes you call your own sanity to account--you know the business will fail, nudged by the exploitation of some internal frailty or an encounter with a superior competitor--at an accelerated rate.

Where does regulation enter this picture to protect consumers and the businesses on which employees as well as customers rely?  Where do legal controls help or hurt?  Appropriately, as long as distributors don't price below their wholesale costs--in this case, the largest cost being the cost of completing a voice or internet connection or the cost of TV sports and entertainment content--pricing and offer discounting are largely unexamined and undisturbed.  Here's a reason for TV distributors to love content rate increases even as they rail against them.  The complexity of the pricing relationships between TV content producers and pay TV distributors is sufficiently tremendous to accommodate a wide range of annual rate increases as well as complementary-until-they're-contradictory offer discounting.

As the rate gaps between full-priced subscription packages and their skinny, seductively attractive offer-priced twins get bigger, aggressive offer pricing forces more and higher rate increases as subsidy.  And as full-priced packages cost more than competitive offer-priced alternatives, the price-value relationship for the distributor's "best"--here meaning "longest tenured"--customers is destroyed.  The likelihood of the "best"--here meaning "highest paying"--customer either cancelling the distributor's service or threatening to cancel in order to negotiate lower rates is increased and the destructive cycle is complete.

Triple Play TV, broadband and voice bundles face special pricing and product challenges in this cycle.  Like mature adults who have survived their wildly successful youths, mature Triple Play bundles are suffering a value deterioration related to their great success when they were first put up for sale.  As the value of wireline voice deteriorates, the weight of its piece of the bundled price-value relationship weakens, adding to the price-value deterioration of the Triple Play bundle and destroying some of the value its broadband and TV products must sustain.

Tougher still for major Triple Play distributors may be solving for the transfer in price-value elasticity between broadband and TV service.  Broadband products are supremely profitable--the smartest players in the distribution menu--while wired TV service continues to carry the greatest weight for the content and distribution businesses, including content costs and related rate increases.

As a potential fourth player in the media distribution bundle, wireless data (as distinguished from cell phone calling and texting) is coming to the market with high hopes for its likely product value and its related ability to sustain the perception of an a la carte price.  If wireless data can complement wired distribution and itself birth a new product family with multiplier-economics, the currently healthy Triple Play distribution business can continue to grow. 

Alternatively, new products and related economics may take their place.   Either way, serious public and private attention should be paid to the inter-dependencies amongst media alternatives as they develop.  We should all want to avoid an intensified media industry weakening brought on by a perfect storm.  The sale of GM forced tremendous value and job destruction resulting from a bad balance between pricing aggression and product weakness.   Continued media industry consolidation will put even more pressure on the sustainability of the right balance and its requirement that the products we sell continue to increase in value relative to the prices they command.

You Will

Capsule:  Can telecommunications distributors afford to flirt with the next global meltdown by weakening their business models in the name of competition?  Who pays when phone companies have so many financial obligations, so few products and so little time?

AT&T You Will Campaign


AT&T's 1993 "You Will" ad campaign promised the world at the end of a phone line.  


Tom Selleck's voice-over--paraphrased here 16 years later--asked: Have you ever seen an EZ-Pass system that could take you through toll plazas at warp speed?  How about a video conference that helped you put your baby to bed through an airport pay phone? Or, an advanced medical imaging network that could connect an injured football player still on the field with a doctor who could read his x-rays remotely through a wireless unit as small as a cell phone?  How about an instant hospital admission through a swiped smart-card with all of your insurance information and your health records, past x-rays and immunization detail?  (Knowing what we know now, try not to smile.)


In this 1993 commercial about this brave new world, Tom Selleck reassured you, as certainly as he'd just thrilled you. "You will."  And, of course, AT&T would be the agent of this telecommunications revolution. 


Today--according to its most recent 10Q filing--AT&T has almost 80 million wireless customers, an incredible evolutionary  and M&A feat since "You Will" first framed the future.  At the same time, AT&T's wired access lines and customers have declined; its broadband connections have increased; and, its nascent video business has just under 4 million connections (a multiple of customers.)


Verizon Communications, AT&T's wireless competitor, has 88 million wireless customers, built originally by a business owned with international wireless giant Vodaphone.   According to its most recent 10Q filing, Verizon's fixed line phone business is facing line and customer losses; while its broadband connections continue to increase (although at a dimensionally lower rate than US broadband adoption has risen;) and, its nascent video business has 2.5 million TV subscribers (meaning some multiple more than 2.5 million connections.)


The growth in these amazing and still profitable telecom businesses has been mostly in wireless.  AT&T was prescient about the central importance of wireless inside of its You Will vision with its remote X-ray readers and EZ-Pass dashboard card-swipers and vast information storage capacities built inside of fantasy medical ID cards.  But it also showed a working mom dialing up her baby daughter's perfect face through a wired pay phone--an odd image looking back from today's wireless world to 1993.


A recent Business column in The Economist tallies US phone customers as  abandoning landlines at a rate of 700,000 per month and includes a current estimate that 25% of America's households rely entirely on wireless phones (August, 2009.)  No matter how profitable wireless telecom is or can be made to be, the decline of the business that "brung" it--the original fixed line, circuit-switched, five-nines, Ma Bell, US infrastructure telephone system--has far-ranging negative implications that rival the decline and crash of the US auto business.


As we've learned with the global economic crisis of the last 18 months, the disabilities we take on in the US are mirrored elsewhere.  BT--formerly British Telecom--earned an essay in an August, 2009 Economist that worried about BT's and the British government's ability to fund the telecom giant's pension obligations.  BT spun off its wireless business in 2002 in the midst of a debt crisis and now relies on a less-than-profitable enterprise government and institutional telecom market for revenue growth against its fixed line consumer declines. 


BT, like Verizon and AT&T individually, employs over 100,000 people--all requiring some level of retirement benefit funding.  Unlike Verizon and AT&T, BT does not hold comparable health insurance obligations for its employees, relying on the UK's NHS along with the rest of the country.  All of which puts our US telecom businesses and the US economy into worse shape than the UK.  The story gets uglier when we factor in America's reliance on the fixed line business for taxes and the distribution of its huge architectural costs--spanning a vast US geography--over a declining number of wired customers.


US telecom competitors--the cable and satellite industries--can fill in some of the  tax burden but not willingly or easily.  The cable business already faces heavy franchise taxes on its core business.  Both the cable and satellite businesses require platform maintenance and upgrades as well as expansion costs that reduce rate elasticity when passed back to the customer as equipment charges. 


Cable in particular is looking healthier today than it might in some interdependent re-regulated future view because of its amazing rate of free cash flow generation.  The temptation for US government regulators to dip into cable cash while looking for solutions for fixed line telecom's ill health may be significant.  And, as the health care reform debate wears on without resolution, the likelihood increases that the hundreds of thousands of telecom employees now insured by the fixed line side of the telecom business will need a new health plan with government subsidy.


If we don't embark on an intelligent road of US media expansion that accommodates some growth opportunity for each of the telecom players--wireless, wireline, cable and satellite--another American industry bill will soon come due.  While we mull over the specifics of stimulus strategies that dip into public funds for broadband expansion--a great idea for a different time, perhaps--we should also think about the telecom storm clouds gathering.  


Just as in 1993, a great potential exists for the future of wireless communication and commerce, beyond cellphones and texting.  Future services will likely be brought to you by the same media and telecom players serving us today, along with a few new and familiar distribution majors, capitalizing on expanded consumer and business markets.  But the economics of these new wireless services will require special attention to ensure that they're not adding to some of the burdensome interdependencies we're already struggling to survive.  


A few new wireless products have just entered the marketplace, but their providers, focused on competition inside a currently tight field, are offering wireless for "free."  This is a dangerous idea.  Without an economic foundation for the expansion of media distribution businesses, there's only one answer for the question of who will pay for public and private grandiosity about the future.  You will.

Is Ad Singularity Near?

Capsule: Do ads work anymore?  Can we ensure the sustainability of the advertising business through a better alignment of distribution and content with our evolving economics?

Ray Kurzweil on Artificial Intelligence

Technology futurist, inventor and evolutionary thinker Ray Kurzweil believes that humans are transcending biology with technology more quickly, expansively and interdependently than our imaginations allow. If such miracles are possible, why can't we figure out the advertising business? Beyond Google et al, nothing new is happening in the ad world and our anemic economics are calling for a revolution (or at least, a transformation.)


Kurzweil believes we have incorporated our intelligent tools--computational analysis, processing, molecular biology, chemistry, engineering and physics--into our physical evolution as a fusion of mind and machine, aided by the exponential growth of technology, its products and artifacts. The best adjunct capacities for thought and analysis we've built into our computing machines have already become part of how our minds work. Kurzweil believes that the explosive rate of technological development begun in the 20th and 21st centures has already transformed the human and the distributed societal "mind" with its mind-blowing evolution. The exponential growth in the rate of technological development and resulting human evolution Kurzweil refers to as "singularity." He quotes McLuhan: "First we build the tools, then they build us."


If Kurzweil is right, when will we reach ad singularity? When can we expect to fuse what our brains believe ads should deliver with what ad units produce? We've got more ads on tv, online, in print and on air than ever before; and, our ad ecology is suffering. Instead of producing new sustainable ad environments, the ad business seems to have exhausted its atmosphere. Ad currency hasn't transformed itself along with explosive unit growth. Ads continue to be valued by traditional media CPM's--the cost to reach 1,000 viewers--or digital CPC's--the cost to get customers to click on and, assumably, read an ad. If CPM's and CPC's are delivering reasonable proxies for ad value, why is so much ad-supported media falling apart?


It may be that ads have lost their effectiveness because their content has evolved, but their distribution hasn't. Magazine ads look as enticing and intelligent as ever and they meld with careful relevance into magazine content. Linear TV ads continue to use their talents to build brands that complement their TV hosts and, as direct-response, they do no harm. Radio ads blend with the personalities of their content as they push messages through car and office radios.


But digital advertising carries a heavier load, requiring its ad units to complement new forms of distribution as well as to complement content. Search advertising fills the bill: it's completely about distribution, bringing customers and products together quickly and efficiently. Search ads are so powerful that the ads bring the customers to the content, rather than the other way around. How common is it to look something up online only to end up shopping the online ads, rather than research content, rewarded by the utility of the experience?


Looking at newspapers and their sandy ad foundations, could new online ad forms help? When newspapers moved their content online, they created two distinct ad universes, each of which required sales attention to survive and neither of which comfortably related to the other. At the same time, newspapers mostly threw subscription revenue under the bus, putting even more pressure on online ad generation, which they knew very little about.


When they moved their content online, newspapers took the support of online display ads as their new revenue base just like every other online site, without any special attention paid to the form of these new ads and how they failed to complement the new digital content and distribution of the news. Historically, the major news advertising categories in print included: autos and homes; job listings; entertainment; and, local retail. Newspaper ad sales staffs knew how to push these categories and the print content teams knew how to complement the ads. But online advertising carried its own requirements--including a vicious search-enabled scale requirement--that very few newspaper sales staffs understood.


In their current state, newspapers online should consider broad experiments with national and local retailers linking promotional ads with in-store and online fulfillment. Newspaper sales staffs know how to sell the wares of local businesses, including the local outlets of national chains. If online retail newspaper ads could complement print by enabling shoppers to click through and buy specially priced merchandise, we'd all have a reason to read the ads and, maybe, the content. We'd also begin to associate the local news in our favorite news brands with local shopping, favoring where we live by supporting where we shop. Why couldn't we reserve delivery of a Chevy Volt through our local auto dealer by clicking on a geo-targeted ad in the online Autos section of The New York Times?


For TV and online content brands where grand scale and efficiency make the most sense--which of course is mostly everywhere--the Amazons and eBays of the digital world could become perfect advertising partners for the most aggressive news and entertainment businesses. Why shouldn't Amazon be one of several major digital advertising partners (and ad aggregators) for Time Warner's cable and satellite networks? Why not click on a CNN ad for something you'd like to buy, knowing that Amazon will ensure quality fulfillment? If big content relies on the major digital aggregators of merchandizing and fulfillment as their new ad sales force and clients, the tv and online ad unit will be transformed. The focus of most ad units will be on direct sales and the supply chains driving large scale fulfillment will likely be redesigned for greater environmental efficiency and sustainability along the lines of local and regional media markets.


How would big distribution gain from this new ad model? Given the enormous, unharvested data-base wealth that major distributors share and can use through an opt-in model--inferred if a customer is choosing to make a purchase, pay for it through a credit card or COD and pick it up or have it shipped to his home--distribution economics are sure to improve; as will big distribution's share of and respect for advertising.


Right now, subscription revenue is king amongst the major distributors. These are the guys who are linking media technology with what they think we want, building our future news, information and entertainment products. A new healthy advertising business could do a better job of pointing to what customers want than surveys. And a healthy balance between advertising and subscription revenue could release some of the pressure on rates and costly subscription growth schemes. Maybe, with the right respect for content and distribution, the ad as a tool we built could help rebuild the media business.

Taking It to the Street

Capsule:  Digital out of home distribution promises to be an explosive growth industry for content and advertising as our cities' infrastructure is rebuilt.  As America becomes increasingly urban, how natural and profitable can links between individuals and the physical digital marketplace become?

PQMedia


Hapless "Hero" Homer Simpson says "DOH!" when he realizes he's lost--it's one of those frustrated exclamations that goes with a smack to your forehead from the palm of your hand. We've all had our share of DOH moments over the last 18 months, mostly when we've realized we've made some wrong turns on the way to mouth-watering opportunities. For some of us, DOH moments lead to opportunity, as wrong turns turn right.


DOH--Digital Out of Home Media--is also a multi-billion dollar distribution industry with explosive potential if guided by a functioning GPS over the next few years. The largest Out of Home advertising businesses in the US still operate on simple signage. They don't yet employ sophisticated media management systems, nor are most of their outdoor signs electronic or digital--the exceptions being in places like New York's Times Square and a host of burgeoning Asian and South Asian locations. Tomorrow's big DOH companies can include today's signage giants--Clear Channel Outdoor, CBS Outdoor, the giant French JCDecaux Group, Lamar Advertising Company, Pattison Outdoor Advertising, China's Focus Media Holdings and others--if they rethink their business.


The evolution of outdoor advertising into true DOH will require strategic shifts. Rethinking the locations of ad signage from alongside highways and on the sides of buildings to a mix of internal and external retail, institutional and private real estate will require B2B partnerships and revenue-sharing opportunities that transform wholesale and retail economics. Translating digital signage from linear pictorial design with a single ad message to a multi-purpose digital screen design that can be used for IP video as well as advertising will engage big content and big distribution; both should want to look at DOH as an interactive product extension of their in-home and wireless networks. Broad experimentation with a variety of distributed power and content sources should make DOH sustainable, efficient and capable of leveraging what works through a network of retail and institutional partnerships reaching millions of screens. Finally, interactive capabilities will give customers walking by DOH displays an inducement to watch and buy, building on wireless partnerships that promise to generate healthy stand-alone businesses with strong network support


A group of trade associations and service bureaus, including the Outdoor Advertising Association of America, the Out-of-Home Advertising Bureau and POPAI, are trying to establish quality control standards for broad and deep DOH deployments for their US member companies and ad clients. But, as with most trade associations, the most active members are firmly entrenched in their original businesses with little appetite for the risks of true conversion.


Cisco, AT&T and a few other high tech product and distribution masters have shown their conversion appetite with some new DOH distribution products. Both companies have developed digital media systems that manage and network thousands of screens, including digital screens on site, in stores, in branches, on campuses and on the desktop. The products inside include Enterprise TV, enabling major office facilities to be networked into media systems with a combination of traditional news and information content and company-produced reports for employees. Desktop Video products display on-demand videos pre-selected by businesses or hand-picked from collaborative industry sources and interspersed with live webcasts for big meetings and small demonstrations. Major government and private enterprise facilities as well as colleges, universities and libraries are just beginning to use digital media systems and digital signage to redistribute pre-selected content that includes personalized messages for their audiences. However, big money isn't part of Enterprise DOH. It's a cost-savings product that could take years to carry its technology weight.


In the US, the new distribution sources for DOH are not yet talking about building on the true heritage of outdoor advertising: the display of huge, powerful ads to catch every eye in a crowd. For outdoor advertising up until now, the ad has been the only thing, the only content worth displaying, and its creative artisans have been highly specialized and well-rewarded. Their art gives us ideas when a larger-than-life sign dwarfs the events of our day and makes us take notice.


There may be two important things missing from this very broad range of opportunities circling DOH media development. The first is an original product and the second is an economic system that will initially support the product and then produce from it a strong financial return.


DOH used for enterprise-and-branch business videos, messages and reports can be an efficient distribution channel. It will save but it won't make money serving its clients from the inside. To become a big business, like Bloomberg, it has to go outside. Bloomberg, Reuters, Thomson and WSJ/Barron's offer examples of closed network distribution systems that sell specialized data and messaging for clients who need access to in-time financial results, predictive models and international headlines. Ambitious new DOH distributors can add value to these already established businesses with product extensions built on authenticated interactivity. New smart screen systems that both count and identify their viewers have the potential to drive revenue by targeting messages to mobile devices, when audiences are "sniffed" as they pass by a smart DOH screen ad.


Wholesalers and retailers can make broad use of DOH with technology-enabled direct marketing and commerce. First, actual products must be built that integrate targeted marketing, sales, couponing and fulfillment from the store floor to an opt-in network of hundreds of thousands of mobile devices. Customers will treat their favorite retailers like clubs, trusted advisors and purveyors of valued merchandise. Amazon, Apple and eBay have integrated every piece of their fulfillment chains into their online and device businesses, but most DOH advertisers have yet to build place-based links to locations where groups of people pass ads and get ideas. Apple retail stores come close, but they're only stores. In the end, stores take up too much space and require too much distraction and effort from the retailer and the customer to be friction-less and sustainable.


What other new business models are DOH-inevitable? Theatrical distribution of new releases are due for another evolutionary leap, following their cost-saving move to digital. Theaters and arenas have great marketing and commerce advantages. They aggregate audiences of like interests around the joy of entertainment.


Smart DOH screens and systems will be able to display films, concerts and sports alongside the real events, making group entertainment better than virtual reality. Theaters are also prime real estate for highly creative advertising forms. Sparingly displayed, relevant sponsors will be able to interact with audiences simultaneously on big screens and on handheld mobile devices. What if your new theater was a cell-phone friendly place, with a managed digital screen that communicated with your mobile and you could see the movie in both places at once? Before you left the theater, your mobile would be loaded with relevant video and special offers for the next syndications steps, including VOD and DVD sales. On the road to a whole new set of entertainment values, arena and theater owners--distribution--and the artists themselves--content--will invest in original, revenue-generating digital experiences.


In order for this mature DOH universe to take shape, priority must be established amongst the likeliest revenue drivers. New product families must be developed--likely by today's distribution powerhouses--celebrating targeted content and thriving on being in more than one place at one time. Advertisers already understand that their impact depends on multi-dimensional reinforcement: on TV, at home, in print, on an electronic reader, on the train, on mobile phones and on the digital signage in stores and on the streets. In order to afford all of this media dimensionality, US and international businesses will have to force bundled economics that bring media combinations into newly efficient packages. The desired outcome: reestablished media values and a new advertising market that spends at least some of its time on the street.

iWatch

Capsule:  TV Everywhere can lead everywhere or nowhere depending on big distribution's and big content's appetites for building a managed data marketplace for customers that actually works. It may also be time for an economically viable version of video a la carte.

TV Everywhere


Big content and big distribution are working together to bring us TV Everywhere. The concept was named by Time Warner's CEO Jeff Bewkes and outlined by Comcast's CEO Brian Roberts in preparation for a debut as part of Comcast's On Demand Online. TV Everywhere is a digital rights management solution that will verify cable and satellite customers' pay subscription bona fides when they want to watch their favorite programs off road (in this case, online.)

At first, TV Everywhere will interconnect devices with subscriptions. This should bring a real benefit to cable MSO's: forced linking on their account management and billing systems of every digital device in the home. Right now, cable account management focuses on linking billing codes--the meat and potatoes of account authorization and payment--without sure IT links amongst all of the modem-powered digital devices that enable digital tv, broadband and broadband voice subscriptions.

Knowing the "address" of every device in the home will enable cable MSO's to "pass" content from one device to another--and from one screen to another--authorizing a la carte content for customers who have the key. The customer who subscribes to the TV Everywhere service could help MSO's by verifying their device addresses at the point of the authentication that initiates subscription. If a customer takes HBO--should HBO participate in this way--on his digital tv set-top boxes and then chooses to take TV Everywhere, he might also be authorized to watch selected HBO series, programs, promotions, and special content through his broadband modem on his PC screen. This is a very sticky application.

By linking every device with every service in the home, cable MSO's will be able to construct virtual portraits of their customers. Right now, MSO's know customers only broadly, based on their billed subscription habits and, where applicable, service records. Marketing segmentation is done through overlays and predictive modeling. The basis of the cable billing database is the physical address of a current, former or non-customer's house or apartment. The actual name of a customer--as opposed to his physical address--is only as good as what's on the cable bill and could be inaccurate if the customer doesn't care or deliberately doesn't want to correct it. The viewing habits of customers are vaguely available but not used because of the technology, platform and system bandwidth "lifting" required to collect them and the heavy privacy restrictions that obscure them according to federal cable regulation.

With TV Everywhere, customers will "opt in" to sending their subscriptions all over the house, first sending MSO's their self-portraits along with new segmentation capabilities. The more sophisticated the authentication process, the more the MSO and, as negotiated, the content companies will be able (theoretically) to know about the predilections of their customers. The future opportunities of driving and managing a database like this inside the biggest US markets are vast and reach beyond cable subscriptions to commerce and advertising partnerships enabled by smart "opt in" marketing and sales capabilities that could help revolutionize retail.

TV Everywhere may also be a master stroke for content providers. It can potentially deliver an economic structure for content companies who like the idea of "free" for timely programming that won't stand up to repeat showings--think Glenn Beck on Fox or The Daily Show on Comedy Central--but who can't legally give away the farm when it comes to theatrical and selected sports distribution. It's a fair bet that content providers don't want to give away the farm even in areas where they may have the right to do so, because of their profound, clear-eyed and celebrated respect for digital rights as the money tree that keeps on giving.

Content providers will also be able to parse their monthly subscription packages for online viewing according to what gets negotiated in TV Everywhere's development. A la carte pricing has long been feared by programmers and most MSO's alike--meaning the ability to buy cable or satellite programming one network at a time. By moving content to online distribution through cable broadband, both content and distribution companies are willingly entering a world where a la carte is the prevalent viewing model. In exchange for linking a la carte content choices online with monthly subscriptions on TV, content and distribution can seek new economic models--like per program online views and earlier viewing windows--with their feet on the brakes. At least it will feel that way, unless they realize that inhibiting all movement in the a la carte direction will mean stalled products and economics.

What's in TV Everywhere for the media customer? Everything or very little, depending on the ingenuity of the economic, product and marketing models. If customers gain the ability to watch their favorite shows on more TV sets and PC monitors throughout the home, they gain a big pick-up in convenience. Every cable or satellite-connected device can become an additional TV anywhere.

If enabled, customers could also have a new ability to view sports and movies on multiple "sets" simultaneously with PC--stop, pause, fast forward, rewind--controls. They could break through some of the limitations of their set-top boxes, provided their online TV Everywhere service doesn't appreciably outshine their wired TV service.

Here's where one of the most important friction points will be erected: if the TV Everywhere service is so attractive, fun and easy to use that nobody fires up the set-top box anymore, cable MSO's will have entered a dangerously pressured price-value atmosphere where the monthly cable bill will "feel" like it's going entirely towards online service. In a Triple Play world where customers pay over $100--in the best markets, well over $100--for digital tv, broadband and voice, will that same $100 look right if it's going primarily towards online? The value of wired voice has been deteriorating since cable MSO's entered the market, partly because of their entry and partly because of the phone companies' own wireless businesses. The value of digital TV must be preserved at least for some period of time. From a product standpoint, the risks will look like those faced by bundled print-and-online-subscription businesses: as the value of print dropped, the value of the online part of the bill got shopped against numerous free online facsimiles. We know and should want to avoid what happened.

TV Everywhere will place cable and satellite content and distribution smack in the middle of the competitive playing field. In this respect, it could be the bold move that leads to real iWatch product innovation. If this is cable and satellite's intention, their prescience should contribute greatly to their future. Just as the growing field of mobile and wireless competitors try to fractionalize the cable and satellite revenue streams in order to split off pieces for themselves, content and distribution may introduce a surprise just-in-time game-changer. Or, they may stick to their profitable knitting and place huge restrictions on TV Everywhere, making it little more than a new cable add-set plan. In order to get to iWatch quality and sustainability, this new media play needs a lot of conservative money-making strength undergirding creative risk-taking brilliance. Content and distribution can either prove their future or help destroy it.

Save Yourself

Capsule: Will giving customers greater control over TV choices through well-designed network storage lead to money-making media GPS?  It depends on who "gets it."

Wikipedia

A major cable distribution and content company recently scored a victory when the Supreme Court declined to hear a complaint that could have limited the development of the future of TV navigation.


An impressive group of content majors sued the cable MSO over its plan to build a network DVR. The content companies believed they had the right to give or decline permission to the MSO for their programming to be stored on the MSO's network on behalf of the MSO's customers. Big content saw the storage of a network DVR as different from the storage customers already order up from their cable company's supplied-and-serviced, network-connected DVR device. Now, big content and big distribution are trying to work together to develop an accommodation that will set a value for the network DVR for which cable customers will ultimately pay. Let's hope their accomodation comes with a saving grace.


Why content companies would want to limit how and how many times their audiences store and watch their favorite TV shows is easy to get, but hard to explain without a lawyer. Digital rights have powered the TV network and syndication system since broadcasting began. Each piece of the money road between a TV program's creation and its many subsequent showings--on its owner's distribution system, the distribution systems of its major investors, the distribution systems of its favorite affiliates and syndicators and the distribution systems of foreign industries and lands--pays the bills. Letting go of those controls would wreak havoc on a system that's already being tested severely in a few foreign lands and on the internet.


What is the problem the distributors are trying to solve with a network DVR? The DVR devices now resold through cable and satellite operators and at retail by software companies like Tivo offer a fairly wide range of storage and replay options. In fact, the capabilities of DVR devices--as with most consumer electronics--aren't completely tapped by consumers. Most of us like to learn a few DVR tricks and stop learning once we've found the way to record our favorite series and watch it on demand. It's the rare consumer who is playing network programmer, tailoring his favorite content to his every scheduling need and whim.


Would a network DVR where the consumer could program his viewing through the cable system rather than through a device connected to that system be materially better? Maybe. Devices fail. There's built-in obsolescence as well as real vulnerability when you're relying on equipment. But it's hard to imagine that too many consumers are saving their football games and Daily Shows and Dancing with the Stars episodes for posterity. If their DVR devices break, their cable operator will replace them. Alternative models--like satellite's equipment replacement charges and the issues invited by OEM distribution--can be costly, but the majority of DVR users are on the cable plan.


There are also questions about how efficient a network DVR's design would have to be to make economic sense. The question of scalability should consumers want to throw out their DVR devices and use the network system en masse is challenging. But, pricing has always been an effective means of gating demand and the major cable distributors know how to phase-in new product introductions, having already enjoyed tremendous success with digital tv, broadband and cable voice.


Is it possible that all of this commotion has nothing to do with making TV better; that it's really about how to enrich an already rich business partnership between content and distribution? It's always wise and often necessary to follow the money to understand how things work. But there are a few important benefits to the consumer that could be realized through a network DVR if distributors and content providers figure out how to do something better than split the baby in half.


Take VOD. The part of VOD that works for consumers is new releases (and maybe adult, but that's a different blog.) A value has been established on the digital rights money road and an a la carte price per viewing has been agreed upon by content, distribution and the consumer. The amount of the typical cable MSO's VOD architecture used to support new releases is huge. Movies are popular and long, requiring a lot of storage and playback room on the VOD server system. There's a rate and there's a cost. Both are understood and can be audited and so the system works.


But most of the money road serving cable distribution winds around and past the VOD system. The value of cable service includes an enormous amount of programming that never makes it to VOD, as well as broadband and voice. Cable distribution companies who have demanded access to large caches of VOD programming have often done so for free--meaning no charge to the consumer. Establishing a price for a VOD viewing of an individual network TV program would be tough, especially since the horses have left that barn via the DVR device that seems to charge the consumer nothing for the pleasure.


Why not put everything on cable on VOD? There's a simple answer with a complicated name: navigation. In the consumer electronics world of mobile devices, navigation means something wonderful--GPS, a value addition to which we're all becoming accustomed. In the cable and satellite distribution world, navigation is the limitation we face when we want to find something to watch on TV.


Geniuses have put their minds to the development of TV navigation for the last two decades. Tivo's software design is widely regarded as one of the best. After Tivo, there's a big range running from decent--"I can see most of what I might want to watch within a short enough time for me not to turn the set off"--to poor--"I can see only what the system wants me to watch and I'd like to blow the set up." This last impulse may fuel more online use during prime time than most major media companies want to admit. But the issue must be dealt with, if only because there's a gold mine waiting for the content and distribution partnership that figures out how to get those viewers back by giving them TV GPS.


How does navigation relate to the concept of a network DVR? It has to do with the subtle line between navigation and storage that can be moved toward the consumer if network distribution systems start distributing DVR capabilities. Tivo understands that navigation and storage are inseparable executions that compound each other's value. Imagine watching TV and seeing a promotional spot for a show you've heard about with interest but haven't yet watched. Imagine that your cable operator has embedded an icon inside the promo that invites you to click on it and send the show to your TV library. Holy tasting menu! It's impulse watching that may be a lot better than letting the little Tivo man recommend a bunch of programs that you then have to weed through like TV spam.


An enormous amount of cable and satellite TV advertising is devoted to promotion, but without passion (almost out of habit.) Following the broadcast model built to promote each individual network's programs over the course of a viewing week, promotional spots now advertise programs and series over 500 channels and VOD choices. These promotional spots are really TV spam: it's not that they're promoting stuff we don't want; it's that our minds, particularly our armchair minds that need rest after a busy day, can't take in all of the information. The content--here's something you might like--and the form--passive programmed placement inside breaks in the TV show you're watching now--are at war.


Somehow knowing this, the content and distribution sides of the TV business have stopped investing in program promotion, at least on the basis of investment per promo spot viewed. Add to the problem the fact that DVR devices let you skip all breaks and you can see why nobody loves the promo anymore. Rather than engaging the viewer with the magic of story-telling, promos are becoming the waste that's clogging the arteries of an otherwise decent system.


It may be time for content to let distribution do some magic with storage and navigation. The same cable system, advanced server and software technology that will program direct retail TV ads that sell and fulfill like an iPod will be able to invite you to watch and store TV shows without having to climb through the current navigation of your cable DVR device.


The content players can really save themselves from a collapsing viewership model if they pay more attention to how their programming is getting delivered to the consumer. There's a larger concern than whether content travels over closed TV systems or the internet (which itself is most often traveling over a closed cable system if you're looking for quality of service.) Until internet TV becomes common enough to be relevant to those distribution geniuses who can use it to introduce new content choices and economics, the navigation and storage problem is one that can be solved in the near term. All that's required is a system that lets the consumer save himself.

Click

Capsule:  Does the US economy get stronger if we require the advertising business to make money for its customers in addition to itself?  Is it finally time for ads to do more than look pretty?  Should they sell and fulfill with Google-inspired efficiency and better shared economics?

Clickable

What's ailing the advertising business? Structural default. (Oh no; not again....)

Why should we care? Because advertising is part of a commercial fulfillment chain that feeds the US economy with billions of dollars each year. If you take ads away from commerce, you'll stop making sense. Your sales productivity will be crippled. And, you'll destroy an incredible amount of commercial value, the replacement of which will be painful, with long and costly development cycles, and over-arching effects on other industries, jobs and our quality of life. As consumers, even though it's tempting to wish ads away, we're invested in their success. It's their form that challenges us because of its intrusion on other media. Sadly, advertising's repetitive form factors are suffering from a lack of imagination.

The advertising business assembles three parts: media (distribution,) creative (content) and marketing. Media pays the bills. Creative makes the brand. Marketing is an ancillary revenue-enabler for ad agencies when media placement revenue gets soft. Today, media rates are very soft. Marketing as an art and a science has to carry its weight and this most subjective of agency services in terms of campaign measurement can get carved out of clients' purchases entirely. The structure needs a new structure.

Media rates--what advertisers pay to reach units of 1,000 potential customers-- have fallen in the aggregate, although money-makers that can deliver big audience numbers, like national and international sports and TV entertainment series, can still set a high water mark. Media experts blame the decline of classified advertising and the auto business for falling media values, but the fault also sits inside an advertising business that failed to see the declines coming and failed to secure revenue alternatives while things fell apart.

Advertising agencies didn't see their obsolescence coming in a new virtual media universe because they didn't understand the universe. The alternative competitive structure for advertising today has become search. And because technological efficiency eats up its own atmosphere almost as quickly as it grows, even the search businesses are starting to get soft, leading Google, Microsoft/Yahoo and AOL to attempt colonial outposts in display advertising, as well as a new passion for product development.

In some ways, the new universe already seems old and familiar: it's a handful of companies driving the online search business, alongside the TV network distribution and syndication model that drives broadcast and cable advertising. What's new-ish is advertising's re-consolidation around marketing sciences and distribution without clear, winning product and content models. Beyond ratings systems, advertising's most successful product is becoming search algorithms and its currency is search numbers, eclipsing and threatening to close out creative as the heart-and-soul of the ad business. Without a soul, can advertising survive?

With the ingenious passion of a wartime General, online search has taken the creative hill. Its forces are organic, redefining the landscape through ingenious media cell-division. Impressively, Google, the most efficient network search engine, runs the advertising tables. But is search really advertising with so little ad content? Google lays claim to much of advertising's blood-supply--media rates as distribution currency--but what does its soul look like? It probably looks like the soul of a mostly-well-intentioned highly-efficient direct response advertiser. While some ads use a rare alchemy that transforms imagination into gold when public attitudes are changed, most ads are less ambitious, staying close to the consumer by giving people what they want--clear direction, basic products, money-saving offers, retail therapy. Google excels at creating these ads through a content formula as efficient as its distribution but far more basic.

Google's tremendous respect for distribution, marketing sciences and stripped-down ad content have been rewarded with financial success and market dominance. Even so, it can't last forever because what ails American advertisers ails Google. If the advertising business that now includes Google doesn't take on a new way of thinking about markets with fertile soil for future products, an entirely re-invented industry will grab the opportunity. Interactive commerce--direct retail--is already on the march.

Amazon, eBay and Apple are reinventing advertising as shopping. By collapsing the marketing-to-sales fulfillment cycle into a single experience online and on mobile devices, these three companies are profiting from the next big thing. And, their success is replicable. Many companies and industries can play a role, giving this new advertising form a chance to change, replace and expand media revenue streams. As basic as commerce is, these three brands have done new work to differentiate themselves in difficult businesses--book-selling, the used-product marketplace and music--before expanding into everything else. Their brand definitions are their ad content--they've changed our attitudes about online products, marketing and sales--and, like Google, their respect for distribution is profound.

Amazon, eBay and Apple distribute themselves as online retail destinations. They've pulled in the friction-filled apparatus of fulfillment--shipping us the things we buy so we don't have to leave home; letting us send things to the people we love; putting us in touch with new products through communities of area sellers (the new classifieds); and, perfecting elegant design by letting us download IP for a price almost wherever we are. Because these businesses were costly to build--in terms of operating capital, engineering advances and brainy lawyers guarding IP--they now enjoy a few helpful moats around their concepts that will make it hard to be completely overtaken by imitators.

But the best news for the advertising business is that there's expansion opportunity beyond the online world. Online search and online retail both require work on the part of the consumer: you have to point before you click. You have to have an idea of what you're looking for. You don't open a search page without knowing roughly what you want to find. The browsing part of the equation requires pre-meditation. It's time-consuming and asks that we come to search or shopping in an active frame of mind. How in this highly transactional environment that rewards the hunter/shopper for the energy put into the hunt will we introduce new products that excite the consumer imagination and create new appetites?

TV advertising is one of the most effective ways to sell an idea as a story that opens the imagination. If powerful TV campaigns can include spots that are themselves retail destinations--that let you buy new branded merchandise from the programs or games you're watching as well as a new iPod or Kindle or Playstation or Wii or DVD with the click of your TV remote--the advertising business will reinvent itself. It will create a new set of media forms that can introduce and sell new products at the same time and with greater power than conventional advertising, leveraging immediate gratification like Apple's iTunes and Kindle's book-selling for people who already know they want music or books.

Will people buy new products on impulse? It depends on the product, the quality of the ad and the quality of the fulfillment experience. As an unexplored area, direct retail TV needs to be thought through by companies that are passionate about TV content and advertising who can also effect the means of distribution, making it a likely future success for cable or possibly a satellite partnership.

Direct retail TV will also require retail minds that know how to operationalize fulfillment. The difficulty will be getting these three sensibilities into one execution. The advertising business should become the catalyst for this new media form, but it's unlikely to be its sole creator for at least two reasons: the efficiency that direct retail TV will create will replace value for traditional TV ads, eating some of the agencies' and old media's lunch while setting a new table. Also, agencies lack significant strategic and operating competencies beyond their core business. Strategic thinking based on competitive alternatives and a passion for understanding why and how things work are the two core elements of product development. They have not yet been integrated into the content or distribution sides of advertising thought.

Still, many companies from all over the media landscape, including some agency thinkers, are talking about direct retail TV or "clickable" retail. Some of the planned benefits of green merchandising that can reduce our dependence on big box retailing can be factored into a long-term ROI, but only if benefits to the retailer are included in the financial model. New operating models that focus on fulfillment that conserves energy and money will be another benefit. Only through an advertising and retail partnership can this benefit be realized.

In the near-term, before these benefits can be realized and we can shop from our armchairs as well as from our desks, advertising agencies and their media content and distribution partners have to start thinking like VC-funded start-ups, looking to leverage and exploit partnerships with other companies. The advertising business must find ways to see its world as a broader, more interconnected and more vulnerable place. In order to generate the right level of passionate support for clickable retail, along with other new advertising forms, a few new schools of thought and a lot of new media integration have to be brought together. Think of Madison Avenue in Palo Alto; or, Madison Avenue sitting inside the sales-and-distribution chain for GM's new line of battery-operated cars. By participating in the reconstruction of its biggest clients--auto and retail--advertising might lead the media landscape into a new prosperity. Until, of course, the next big thing.

Read and Green

Capsule: News failed to get a big-enough advertising audience to match their lost subscription revenue; but have they finally realized they're not Google?  Audience size for newspapers is limited by distribution.  Audience size for online news is limited by brand identity, brand values and the personality of news content.  So is profit. 

The Daily Show



Two months ago, The Daily Show satirized the newspaper business with explosives and a sharp knife. In a segment called "End Times," Jason Jones interviewed the editors and business staff of one of the most important newspapers in the world. Jones lobbed hard-edged comical criticism at the newspaper's product and business model failures. The jokes exploded like grenades when they hit the wall between the comedian and the newspaper. The earnest, highly admirable editorial team seemed lost behind a force-field of virtuous self-examination without a strong view of the outside world.


The segment ends when Jones asks the elegant accomplished executive editor: "What's black and white and read all over?" You remember the joke; it relies on the listener confusing the word "red" with "read." The movie-star-handsome editor, thinking he can finally get off the defense by playing along, responds, mocking the joke's obviousness: "A newspaper." The Daily Show's retort: "No. Your balance sheets." The camera lingers on the editor and we newspaper groupies share his discomfort.


Newspapers ran into the alluring arms of internet distribution, seeing a chance to measure themselves on popularity--unique and repeat visitors, page views--rather than on the commercial transactions forced by subscription. They ran from their historical and business limitations: expensive and technologically limited printing presses; union contracts built on antiquated economics and social thought; newsprint, its cost, occasional volatility and its resulting waste; and print publishing's archaic distribution mechanisms, trucked to depots and distributed to newsstands and subscribers through expensive, highly operational syndicated delivery.


While liberating the newspaper business from its limitations in the near term, online distribution permanently diminished the newspaper as a product. The most successful publications compete against themselves--their paper products compete for time and attention with online. And, the newspapers have stacked the deck, choosing a favorite son in the race. They've removed all friction from their online editions: they're free (although they may pretend not to be through elaborate "premium value" packaging for customers who take their print products; what better "premium value" could there be once you've thrown "free" on the table?)


Online distribution has also helped the major newspapers become national and international, escaping the local markets that once defined them. The attraction of endless expansion is familiar. This new media colonialism bites even the most virtuous amongst us and may hit the best-intentioned with a hallucinatory whallop. Why shouldn't the best and brightest share their mostly impartial reporting, their new and vigorously re-examined ideas and their important partisan opinion?


Even though free distribution to a universal audience whose internet literacy has exploded over the last decade once promised explosive growth for newspapers online, things change. Sometimes, things fall apart. The most successful newspapers have just hit another wall on growth. By going friction-free--no cost to the digital consumer, few costs to the digital publisher--newspapers have gone native, and are now trying to colonize a wild digital media environment where there are few capital impediments to starting a new competitive "religion" or lemonade stand.


The idea of erecting a fee structure in the middle of this amazon of opportunity seems wrong-headed, but it isn't. Pushed by their financial failures and by the lack of a bail-out opportunity, newspapers are looking for ways to put a few commercial walls around their internet products. Whether it's micro-payments or stand-alone daily or bundled monthly and annual subscriptions, newspapers will charge for their content online because they have to find a floor. This new payment structure will save them, provided they learn how to market themselves in a new commercial world where they're no longer free and competition is huge and includes new distribution as well as alternative content. They're up against the most experienced, successful and largest brands in the world, from Apple to Google to Microsoft/Yahoo to all of the major tv and broadband players to every niche entrepreneurial media venture everywhere in the world.


Raising money for guns and butter, newspapers are coming home to their subscription-based roots. They've learned important lessons, including new adaptive behaviors that make subscriptions easier, more friction-less, more attractive to the consumer. But the allure of friction-less expansion through "free" will have to be put aside, like all distractions, until the newspapers that will survive have a survival basis.


Part of that basis should be investments in sustainability. Can newspapers reinvent themselves as new media enterprises? Can they get clean, converting from using global resources from paper to trucks to returning global resources by focusing on green distribution? A carefully orchestrated plan for going green, beyond just being online, may lead to more revenue and better economics as well as more readers and brand loyalty.


Kindle me this: why aren't more media businesses adding their own dimension to portable screen-reading devices that promise a green relationship with publishing? All of the major publishers publish onto screen-readers, but in doing so, they accept Amazon and Sony and Apple as the landscape designers and themselves as the plants. There is no differentiation amongst brands on these reading devices just as differentiation amongst websites is still sadly limited. There are ways of embracing the incredible access, comfort, speed and green attractiveness that these devices offer without just doing enough to fit into their distribution schema.


Can The New York Times or The Wall Street Journal find a way to drive commerce through these new digital distribution partners? Can they work with digital distributors to enhance their partners' returns as well as their own? They can. A place to start is through an entrepreneurial, product-and-economics-driven alliance with the equally ailing advertising business, starving on a lack of imagination--which is odd given the creative resources at their disposal. Still, it's probably no stranger than newspapers starving on a lack of ideas.


If newspapers invested in their digital brands as products, they could become digital distribution powerhouses. Newspapers' extraordinary brand strength can be leveraged over many revenue-bearing digital products. In order for that to happen, newspapers will need to think of themselves as distribution as well as content. And they will have to love their distribution identities, the way that Amazon and Apple do. This will be tough, given the historic separation between the business (distribution) and editorial (content) sides.


Distributors understand products and technology. They work with technology partners to develop entrepreneurial products that let them escape the ceilings on their revenue and customer growth models. Distributors invest in technology platforms, taking partial ownership in a collective effort to advance digital media. Distributors have product teams devoted to what's new the way newspapers have editorial teams and reporting bureaus bringing back what's new in the world.


Even though they've built their content worlds around the news, newspapers stopped being relevant in their print form when they stopped distributing the news in its best form. Newspapers have a chance to re-engage on digital product and distribution to ensure they don't fall into the same crater now.


The Daily Show's "End Times" segment includes comedian Jones interviewing an assistant editor, stumping him when challenged to find an event that happened "today" on his front page. The editor surrenders, adding that there are a lot of stories on the front page that "didn't happen yesterday." This segment is worth a view on You Tube and a permanent place on the screens of all of us who care deeply about the future of our newspaper brands.