Mapping Strategy

The Sun Never Sets... on the Orange County Register

The English language has, arguably speaking, been one of Great Britain's most prolific and resilient exports. Now it has become the basis for a new kind of international trade. That, along with cost pressures and reliable networks made the following virtually inevitable.

An Indian company will take over copy editing duties for some stories published in The Orange County Register and will handle page layout for a community newspaper at the company that owns the Pulitzer Prize-winning daily, the newspaper confirmed Tuesday.

Orange County Register Communications Inc. will begin a one-month trial with Mindworks Global Media at the end of June, said John Fabris, a deputy editor at the Register.

Mindworks' Web site says the company is based outside New Delhi and provides "high-quality editorial and design services to global media firms ... using top-end journalistic and design talent in India."

Substituting 'z's for the new copy editors' instinctual 's's in words like 'institutionalized' won't be enough. As the saying goes: Britain and America are two countries separated by a common language. Perhaps more so with the other former colonies.

It will be interesting to see how they separate pure copy editing from tasks like fact-checking, local context, style and cultural nuance -- a lesson Dell and others learned the hard way, as faraway call center personnel (perfectly nice and perfectly competent) just didn't 'click' with their U.S. callers for a host of subtle reasons.

One demographic irony: in the not-so-distant future, the Indians may lose out to the Mexicans for the OC's outsourcing contract.

Whither Print Advertising? Whither Newspapers?

I note this new data from the Newspaper Association of America

...total print advertising revenue in 2007 plunged 9.4% to $42 billion compared to 2006 -- the most severe percent decline since the association started measuring advertising expenditures in 1950.

The drop-off points to an economic slowdown on top of the secular challenges faced by the industry. The second worst decline in advertising revenue occurred in 2001 when it fell 9.0%.

Total advertising revenue in 2007 -- including online revenue -- decreased 7.9% to $45.3 billion compared to the prior year.

There are signs that online revenue is beginning to slow as well. Internet ad revenue in 2007 grew 18.8% to $3.2 billion compared to 2006. In 2006, online ad revenue had soared 31.4% to $2.6 billion. In 2005, it jumped 31.4% to $2 billion.

What's neglected here is the basic idea that advertising -- as it has traditionally been conceived -- is merely one of many possible direct and indirect elements in the complex and constantly changing process of convincing customers to buy what you have to sell for more than it cost you to make it.

To the degree that print advertising -- on paper, in electronic form or otherwise -- is less-than-effective compared to the alternatives (mascots, blimps, billboards, word-of-mouth, guerrilla tactics, etc.) it will fade. And as with any such sea-change transition -- long anticipated but still somehow shocking when it finally arrives -- it is much easier to say what is going away and to eulogize it than to say exactly why that is so or what (usually plural) is most likely displace it.

In a related vein, this piece, "Out of Print: The death and life of the American newspaper" in The New Yorker's March 31st edition is also worth perusing though perhaps not for those faithful stockholders with a tendency towards melancholy:

...trends in circulation and advertising––the rise of the Internet, which has made the daily newspaper look slow and unresponsive; the advent of Craigslist, which is wiping out classified advertising––have created a palpable sense of doom. Independent, publicly traded American newspapers have lost forty-two per cent of their market value in the past three years, according to the media entrepreneur Alan Mutter. Few corporations have been punished on Wall Street the way those who dare to invest in the newspaper business have. The McClatchy Company, which was the only company to bid on the Knight Ridder chain when, in 2005, it was put on the auction block, has surrendered more than eighty per cent of its stock value since making the $6.5-billion purchase. Lee Enterprises’ stock is down by three-quarters since it bought out the Pulitzer chain, the same year. America’s most prized journalistic possessions are suddenly looking like corporate millstones. Rather than compete in an era of merciless transformation, the families that owned the Los Angeles Times and the Wall Street Journal sold off the majority of their holdings. The New York Times Company has seen its stock decline by fifty-four per cent since the end of 2004, with much of the loss coming in the past year; in late February, an analyst at Deutsche Bank recommended that clients sell off their Times stock. The Washington Post Company has avoided a similar fate only by rebranding itself an “education and media company”; its testing and prep company, Kaplan, now brings in at least half the company’s revenue.

Yes, that appeared as a single paragraph in the New Yorker piece -- more than a bit ironic for a publication pontificating over the doom of its peers as a generation of multi-tasking, ADD-addled information consumers come up.

Forward Into the Past! (A Tale of How Not to Listen to Your Customers)

Jason Fry's 'Real Time' column in today's WSJ is worth checking out (subscription required).  He writes:

Earlier this month, Nielsen Soundscan released 2007 data painting yet another portrait of a music industry struggling to make the transition to a more-uncertain, less-profitable business model. For the year, overall units sold rose 14% -- and sales of digital tracks rose 45%. But not all units are created equal: Total album sales fell 15%, and that blow was softened by a 53% rise in sales of digital albums. Subtract digital-album sales, and physical-album sales declined 19%, to 450.5 million in 2007 from 555.6 million in 2006. (Dig into the numbers yourself here¹.)

Or, if you prefer, take this arresting anecdote from the Economist² (found via Nate Anderson's interesting read³, in the always-great Ars Technica): In 2006 EMI honchos invited some London teens to the label's headquarters to discuss their listening habits. By way of thanks, the kids were offered whatever they wanted from a big pile of CDs. Offered free CDs, the kids took … nothing.

[Bold added; links and italics in the original.]

And why should they take anything? The perceived price of zero isn't even the issue, as more folks fall into line and eschew P2P sharing networks in favor of obeying the law. My daughter's latest iPod is the size of a cookie (and not those super-sized ones they sell in airports, or even Oreos, but more like a thin Chips Ahoy). Continuing to sell CDs into this climate is like selling 78s when I was young.

Next They'll Ban Thinking...

I find this item in today's WSJ both puzzling and ridiculous
[emphasis added]:

Television's late-night talk-show hosts are set to return to the airwaves next week, but their jokes will pretty much have to write themselves.

After sitting out the first two months of the Hollywood writers' strike, the hosts have agreed, under pressure from their network bosses, to go back to work. But members of the Writers Guild of America -- including the folks who supply the hosts with most of their laugh lines -- are still out on picket lines this week, and no new rounds of negotiations are scheduled...

The guild's strike rules are extremely broad and vague, prohibiting the late-night talk-show hosts, most of whom are guild members, from doing anything that constitutes "writing services." That means the hosts are technically forbidden from writing and performing the traditional opening monologue, plotting out sketches in advance, or creating fictional characters that would perform on the shows...

With all due respect to writers trying to make a living (and I can empathize because, in another sphere of my life, I am one) this is silly beyond comprehension. 

In the brave new Internet world of tens of millions of bloggers toiling for free (some of them reasonably clever, informative and funny) there's little to stop a late-night host from initiating an open contest for the best monologue or character for each night's show.

If no money changes hands, is it the same as crossing the picket line and hiring 'scabs'? What if a third party did the same thing and the host just happened to browse the website? Is finding and printing a volunteer monologue the same as writing? And what is writing, anyway, if not thinking? On what basis do they propose to control that? (Much less justifying their attempts to do so.)

There's nothing like trying to restrict the fundamentally unrestrictable to show how little power the Guild -- and other fluid, information- and creativity-based enterprises -- wield in this new paradigm. The article continues:

anything traditionally written by writers -- David Letterman's "Top Ten List," for example... [would be] unacceptable...

When a rule implies that replacing "anything traditionally done by [fill-in-the-blank*] would be unacceptable", we have approached the very definition of reactionary anti-innovation.

*E.g., as a though exercise, try substituting "typists", "file clerks", "telephone switchboard operators", "blacksmiths" or "horse-and-buggy drivers". Does the following sound Orwellian to anyone else?

Since much of the "writing" on these shows consists of generating ideas for skits and segments, which are loosely scripted and then partially improvised on air, producers say it is unclear how much forethought is technically permissible. [!!]

Then again, maybe someone 'gets it' after all:

Other ideas being batted around by producers that they believe don't violate strike rules include man-on-the street and audience interviews [and] clips from YouTube and other video Web sites...

Better be careful lest the YouTube characters display written words... that would be writing.

Whither the 'Music' Business?

Check out David Byrne, making plenty of sense in the December issue of Wired:

I have seen this business from both sides. I've made money, and I've been ripped off... What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that's not bad news for music, and it's certainly not bad news for musicians...

H/T: Kaushik Krishnan and Ajay Shah at the latter's blog

Recursive PMs: Using the Crowd for Cover

In the middle of May I speculated--reasoning from first principles only and with no inside information--about how prediction markets might help the book industry pick winners:

"For some types of books (and authors) prediction markets might be appropriate."

That sparked a note from a reader, tipping me off that:

"Confidentially, something's about to launch very soon in this area."

Sure enough, MediaPredict launched a week later, eliciting this highly positive piece in the 5/21 NYTimes: "Publisher to Let the Public Have a Vote on Book Projects".

Media Predict is soliciting book proposals from agents and the public, and posting pages of them on the site. Traders, who are given $5,000 in fantasy cash, can buy shares based on their guess about whether a particular book proposal is likely to get a deal, or whether Touchstone Books, an imprint of Simon & Schuster, will select it as a finalist in a contest called Project Publish. If either happens within a four-month period, the value of the shares go to $100 apiece; if not, the share price falls to zero.

The devil as they say, is in the details. Traders are voting not on how popular a work could become with the book-buying public but with the binary, intermediated and likely recursive question of whether the editors at Simon and Schuster will select it.

In other words, S&S editors are going to be breathing their own exhaust--now with more butt-covering camouflage. (Which reminds me a little of this.) It's the kind of conversation I've seen some couples get into:

Man (off-handedly and with a smile): What would you like for dinner, honey?
Woman: Oh, whatever you'd prefer is just fine with me!
Man (thinking burgers and beers with the guys): I'd prefer what pleases you, dear.
Woman: Well I don't know. What were you thinking?
Man: I was thinking I'd like to know what you're thinking.

And 'round and 'round and 'round it goes. That's an imperfect and terribly stereotyped analogy, and no, it's not my happy marriage. Well, OK sometimes maybe it is. But let's move on, shall we?   :)

The more abstract version of that analysis is this: The system S&S has set up with MediaPredict has no outside, arbitrating reference point--such as how many copies a particular book would actually sell.

Hey, now there's an idea: ask the market directly about its spending enthusiasm for a given title. (Print-on-demand technology, not to mention digital rights management, render completely moot the objection that only a few select books can be produced. The hurdle revolves around marketing and a legacy business model of annointing a few winners.)

Unfortunately, S&S's Touchstone Books does not appear to take that important dis-intermediating step. I doubt it's MediaPredict's fault. I suspect (without any proof except my experience with how Fortune 500 executives think and in particular how publishing executives think) that the use of prediction markets may have been de-clawed in this case to avoid dis-enfranchising S&S editors. Think about it:

The PM predicts Bestseller status for a book the editors decide to pass up. It gets picked up by another publisher, fulfilling the PM's expectations and making bundles of money for an S&S competitor. At that point, S&S editors not only have egg on their face, but the S&S board (and shareholders) are emboldened to ask: Tell us why exactly we need you if all you're going to do is to second-guess and stand in the way of this smart little prediction market thingy we've set up over here to perform the same function?

Justin Wolfers (respected PM guru at Wharton) notes the same basic flaw, though you'd have to read to the end of the article to find his critique.

[Wolfers] said that if Simon & Schuster relies on the traders' judgments to select a book, it could skew the bets themselves.

"If they say we find it really persuasive that everyone bet on book A, they're just looking at a book that everyone bet that everyone else bet that everyone else thinks is the best book," Mr. Wolfers said. "So you don't end up with the wisdom of crowds, but the infinite reflection of crowds looking at crowds."

This is at least the second time I've noticed a major media outlet burying what should have been the lead on a prediction markets story--and with it, Wolfers' critique. If I were him, I'd be a little peeved. Last fall, the Washington Post carried a piece ("The Top Pickers vs. The Pack") that completely mashed two irreconcilable ideas, as I noted in "WaPo Misguided on 'Experts' vs. The Swarm":

The article takes the academically and empirically well-proven notion of collective intelligence (aka the wisdom of crowds), and presumptively twists it into the more comforting and familiar (if statistically invalid) notion that "father-knows-best"--only we haven't done a good enough job of finding the right "father" up until now.

I don't know why the media's treatment of prediction markets is missing the mark, but they need to get smart faster. PMs are not going away. Not taking seriously the critiques of Wolfers and others isn't helping. The NYTimes digs itself further into a hole by taking a flawed comparison at face value:

Media Predict is modeled after other so-called prediction markets like the Hollywood Stock Exchange, which allows traders to bet on the four-week North American box office receipts of movies, or the Iowa Electronic Markets, which allow people to bet on election results...

The glaring difference: the HSX and the IEM ask traders to vote on highly distributed end-result questions. As I've observed many times (e.g., here, here, here and here) prediction markets--while very cool indeed, and applicable to many more things than those to which they are being applied today--are just plain lousy at calling things like Papal elections or the nomination of judges where information is closely held by a select group. I suspect it's even worse when that group has sponsored the market and each is trying to predict the actions and preferences of the other.

If the same principle were to be applied to American Idol, voters would weigh in with their opinions not on which singer(s) they liked best, but on which one(s) they thought Simon Cowell was going to like. That's not entirely without its entertainment value, but it adds little to what Mr. Cowell was going to say anyway. Simon (& Schuster) could take a lesson from what the other Simon (Cowell) lacks: humility. The crowd is often right. If they're paying, they're even more right.

As for MediaPredict itself, I'm reserving judgment. At this stage of market development, more new players trying more approaches, covering more questions and attracting more corporate attention is a good thing--and entirely expected. As the MP folks write on their blog: "Love us or hate us, we’re here…" That may be a little extreme. How about: I love that you're here.

Business or Casino? Is Publishing Really a Crapshoot?

Interesting piece in yesterday's NYTimes (H/T: AT) about what goes into making a best-seller. Answer: nobody really knows. Whether they could if they thought harder about the problem is the question the article takes on.

Eric Simonoff, a literary agent at Janklow & Nesbit Associates, said that whenever he discusses the book industry with people in other industries, “they’re stunned because it’s so unpredictable, because the profit margins are so small, the cycles are so incredibly long, and because of the almost total lack of market research.”...

Calculating the advance accurately would be a prized skill, but no editors claim to have a scientific handle on how a book will sell. Instead, they emphasize the role of intuition and say that while big unexpected losses and gains do happen, somehow it all works out...

Individuals quoted in the article make comparisons between the industry's methods, gambling and lightning strikes, noting that the fundamental business model of the book publishing industry hasn't changed in centuries.

The comparison to gambling probably isn't accurate unless they're referring to the gamblers themselves--and casual ones at that. The casino industry not only knows a tremendous amount about its customers (especially the best ones) but also employs some of the most sophisticated methods known for staying in touch with them and catering to their needs. Here's the "well duh" quote:

Some experts wonder if book publishers might uncover more [winners] if they tried harder to find out more about their buyers and what they want.

The question, of course, is how. For some types of books (and authors) prediction markets might be appropriate. I'm also thinking conjoint analysis... or some combination of the two.

“The Newspaper Association of America has a staggering amount of data on people who read newspapers. The book business has, basically, nothing,” said [Al Greco, a professor of marketing at Fordham University]. “They’re not going into the marketplace and doing mall intercepts and asking people, as they leave the bookstore, ‘What did you buy? Did you find what you’re looking for? What motivated you to choose that book?’ ”

... Most publishers... continue to gather data on sales and not much else, though past performance is certainly no guarantee of future results, even from the same author.

One thing conspicuously absent from the piece is any mention of Amazon. The entire thing appears to have been researched by talking to publishers, editors and academics. I.e., a story requiring only subway fare.

Methinks that had someone from the New York Times bothered buying a plane ticket to Seattle to talk to Jeff Bezos they might have had a different take. Amazon's suggestions for me can sometimes be bizarre, but over time, they've gotten better and better. I can't help but imagine that they work as well in reverse: predicting the type of book--if not the specific title--I might buy more of.

And there's the rub, isn't it? Predicting in absolute terms the success or failure of tens of thousands of different items is a far far more difficult task than predicting (say) the success of one among a dozen brands of paper towels.