Linking LocalThe wikiDOMO Blog

Open Marketplace Manifesto

Well, it's been a couple of months since we last posted to the Linking Local blog. That's not to say that we haven't been busy. A lot has been happening in the background, we've released a number of new features to the http://www.wikiDOMO.com alpha site and more features and bug fixes will be released by the end of September. We've also been doing community outreach and have a couple of exciting partners to share with you. But, more about that in a future posts.

This post is about Open Marketplace, something we've been working on for some time. As we developed wikiDOMO.com from the original concept,  we kept encountering more and more concerns with the media, marketing and advertising industries - the industries we call the Marketing-Industrial Complex. We realized that the impact of what we were doing was much bigger than just a tech start-up - it was something that had the potential to change how marketing works - to change the marketplace.

We knew we needed to develop a broader model that allowed anyone to engage in its development and most importantly benefit from it. So, we started to work on the model, at first we called it "open marketing" and then after a lot of meetings and feedback we decided Open Marketplace was more accurate. After a few months of work we now have something that we can share with the world:

Open Marketplace Manifesto

The media, marketing and advertising industries are a massive marketing-industrial complex. The mass marketing options that once worked for marketers and consumers are no longer effective. They worked before, in part because there was no viable alternative. In the post Internet age consumers and businesses alike are abandoning the complex and attempting to replace it with the Internet.

However, the Internet by itself is not a solution. We're looking to social media for answers, but it's not meant to address this problem. We must develop a new model that allows us to transition away from the marketing-industrial complex. A model that truly addresses marketplace needs by providing efficient and low cost production, distribution and consumption of marketplace information. A model that avoids the inherent duplication and fragmentation carried over from the complex.

The future marketplace must be open. An open, non-proprietary model can help consolidate and direct innovation to the needs of both the providers and consumers. Only then, can the Internet deliver its true potential: free and open access to the information that empowers our lives.

Open Marketplace is a future where everyone has access, a voice, and shared responsibility over marketplace information to make better consumer choices. 

It's about a future:

    where everyone has free and equal access to promote anything;

    where local, national, and international marketplaces' are equally empowered;

    where relevant, reliable, timely information is freely available to the marketplace;

    where providers and consumers have equal ability to voice their opinions;

    where everyone is able to collaborate and engage in open conversation; 

    where the production and distribution of information is a cooperative effort;

    where we all benefit from a new sustainable, efficient and effective marketplace; and

    where the end game for marketplace participants is increased information quality.

To achieve the future Open Marketplace, we must be guided by these core principles:

 

1. The commons is where all marketplace information belongs.
2. Competing is good - sharing is better, because we all win.
3. Duplication and fragmentation are the enemy - aggregation is essential.
4. The marketplace must set standards, and most importantly follow them.
5. Transparency of information is the air that sustains the open marketplace.
6. An identification system for everything, and everything with an ID.
7. Every bit of information linking to the physical world.
8. Information without engagement is futile.

For more background info visit: Open Marketplace Manifesto Background

We Want Feedback & Co-Conspirators

We want to see the Open Marketplace future come to pass and we have taken it upon ourselves to make it happen. But, we can't do it alone. At the very least we need encouragement, we need to know if you think we're on the right track. Better yet, we need your help! We've created a public Open Marketplace Google Group. The group is a work space where you can learn more about the project, provide input and add your name to the Open Marketplace co-conspirators list.

If you have feedback of any kind on the Open Marketplace Manifesto please add a comment below or start a discussion on the Google group.

By Jose Leal

TV, Radio and Newspaper Revenues are Down, Down, Down

Television revenues a cliff-hanger

In both an Olympic and presidential election year, U.S. television revenues are still projected to drop 7% according to BIA Advisory Services.  This represents a loss of over $3 billion. Subtract the $1 billion that NBC generated with the Olympics and the more than $2 billion spent by the political parties on TV and it all adds up to a $6 billion (-14%) shortfall when compared to 2007 revenues. 2009 looks to be even worse – cliff-hanger indeed.

Radio revenues continue to skid

U.S. radio revenues have just experienced the largest year over year drop in one month. The Radio Advertising Bureau just released the November numbers and they’re down-right scary. A 22% drop in national and local ad revenues. When you look at November over two years (2008 vs. 2006), it’s a 29% drop. Radio has not had a year over year revenue increase since April 2007, and that was only 1%.

Newspapers not delivering

According to the NAA, U.S. newspapers lost $15 billion, in the first three quarters of 2008, compared to 2007. In the third quarter, they dropped over 19%. Classifieds continue to be the hardest hit with a nearly 31% drop. The category has been hit hard for years. In 2000 Classifieds accounted for over $5 billion in revenues, this year it will barely crack $2 billion.

It’s not just the economy stupid.

Mass media advertising is heading for a world of hurt. 

What will happen to the advertising industry? I have a few thoughts, but they will make for future posts. 

As I have written before, the newspaper industry is dead. If you didn’t think so then, how do you feel about it now that the second largest newspaper company, Tribune Company, has filed for chapter 11? Add to that the fact that the New York Times (the nation’s largest metro newspaper) has been forced to put its office tower up as collateral for a $225 million loan and we have the beginning of the end.

There is no doubt that 2009 will bring a lot of change to the advertising landscape.  

We live in interesting times…

Why I think newspapers will die: Part Five - Distribution

As I mentioned in the previous post (Part Four), flyer distribution has taken on a large part of the retail advertising market and there’s no going back.  Today, major retailers all over North America use flyers as their primary means of marketing.  Flyer distribution has become a key part of the newspaper revenue mix, and without them, most community newspapers would not be profitable.

What’s a flyer? A flyer is sometimes referred to as a circular or insert.  They’re those wonderful standalone ads that bulk-up most newspapers in North America.  Things are a little different in each part of the continent, but here in Toronto our weekly newspaper is about 10% news and 90% ads – with the vast majority of that being flyers.

What follows is a brief look at flyers, what they mean to consumers and more importantly what they mean to the newspaper industry:

1 - Timeliness

The flyer distribution business is less about timeliness in the sense of speed and much more about reach and repeatability.  Getting flyers delivered every week to as many homes as possible is the key. It’s much harder than it looks and generally newspapers do it best.

Because newspapers have a regular delivery schedule they’re good at flyer distribution. Some of the best flyer delivery newspapers are the free community weeklies.  This is because they tend to be total market coverage products - meaning that they are delivered to most homes in a geographic area - this offers their customers the broadest reach.

Since many community weeklies are delivered once a week, they have built strong consumer expectations and reading habits.  That’s to say, many consumers now expect to see retail flyers delivered on a specific day of the week. This turns out to be both a blessing and a curse for the industry.  Though a number of papers have tried to add additional days (for a number of reasons - the biggest being to grow volume), both the readers and the advertisers’ have resisted these changes.  This makes the model limited by consumer/client habits, not to mention the physical limitations of the number of flyers a paper can hold.

As business requirements change and retailers need more flexibility the newspapers and their rigid flyer delivery model will become an increasing liability.

Do you think newspapers will be able to adjust their models in time?

2 - Efficiency

In the world of flyers, efficiency is measured by the percentage of the population you reach – and by that measurement newspaper flyers have been very efficient.  Though they’re good at delivering flyers, they do have limitations.  As most paid papers circulation declines, they’re reaching a smaller segment of the market, greatly diminishing their efficiency.

Even the free papers are running into reach issues because newspapers can’t easily deliver to apartment/condo buildings. As major metropolitan markets continue to increase residential densities the percentage of households that don’t receive free newspapers will grow.

As the newspaper industry has changed, so too has the demand on the distribution channel. In the past, if a community paper wasn’t delivered the only thing that a newspaper had to worry about was the call from an annoyed resident. Now that advertisers are paying for each thousand delivered, newspapers are being audited and penalized for papers/flyers that are not delivered.

Will advertisers be willing to absorb increased costs?

3 - Costs

The majority of flyers go unread. From an advertiser’s perspective that hasn’t been all bad since so many are still read. But that’s changing.  As newsprint costs continue to go up and delivery costs increase due to labour and fuel prices, advertisers are putting pressure on newspapers.

Newspapers are facing the daunting task of delivering more flyers to a decreasing readership for less. Sooner or later there will be a tipping point, the point at which paper, printing and distribution costs will outstrip the returns. That time is coming sooner than most retailers and newspapers realize.

When do you think we will reach the tipping point?

In Conclusion

Beyond the financial costs, though still most important today, society’s move to reduce waste and the impact on the environment will play an increasing role in the death of print flyers and the subsequent death of newspapers. The amount of waste the industry produces is astronomical. As with the move to reduce bulk mail (Canada, US), when consumers demand no delivery of vast amounts of paper, the flyer industry will be in crisis and a large number of papers will fail.

In my next post, the last in the series, we will look at the newspaper industry through the eyes of the reader.  Stay tuned for the last post:

Part Six – The Reader

By Jose Leal

Why I think newspapers will die: Part Four - Display Advertising

I just got back from San Francisco and while traveling I was struck by the number of free newspapers. Get on a plane - get a free paper; stay at a hotel – get a free paper; buy a coffee - get a free paper….WOW, I wonder what this says about the state of the industry? And they say that their circulation is growing…hummm!

Anyway, this is my fourth of six posts and it isn’t about circulation, it’s about display advertising. If you don’t know what display advertising is, just open up a newspaper - the majority of the ads that you see are display ads.  They come in all shapes and sizes, but the biggest distinguishing factor is that they are a blend of images and text and they run throughout the paper, unlike classified advertising (Part Three).

Display advertising in newspapers has hardly been impacted, but because it represents about 70% of the average newspaper’s ad revenues, once the erosion starts newspapers stand to hemorrhage revenues. By looking at the strengths and weaknesses of this part of the newspaper business, I hope to provide an insight into some possible risks and how these risks will impact the future of newspapers.

1 – Timeliness

Interestingly enough the Internet is currently at a disadvantage when it comes to display advertising.  It actually can take longer and is more difficult to run a banner campaign online than it is to run a display ad in a paper.  Online sales people will disagree with me, but it is what it is. The complexities of placement, targeting and available impressions make it more difficult to buy and this has helped newspapers maintain display revenues (NAA). This is especially true for retail display ads.

Not only is it often simpler to run a newspaper ad, the fact that many newspapers produce the creative (art-work) at no additional cost benefits local retailers tremendously.  Dealing with the newspaper for both the rapid production of ad creative and the running of the ads makes for a very convenient solution for retailers.

Do you think online display advertising will be able to compete with newspapers?

2 – Efficiency

When it comes to advertising in general, efficiency comes down to the number of interested customers an advertiser reaches with their ad. When I was working on my previous start-up, Autonet.ca, I made an interesting observation about automotive consumers. They were buying newspapers primarily for the auto ads.  For example, here in Toronto, if you were looking to buy a new domestic car you would pick-up the Toronto Sun.  If you were looking for a Mercedes, you would pick-up The Globe and Mail or The Toronto Star.  This type of consumer habit has historically helped create efficiency for the newspapers.

However, these habits have started to change. Many people are now more likely to do a search on Google for the information they seek rather than picking-up a newspaper. I think this is in part supported by the recent news that search is approaching email as the number one daily function on the Internet. The change in consumer offline and online habits along with the decline of newspapers’ “real” circulation has made the number of consumers looking to a newspaper as a primary source of retail product information greatly shrink. And, this is sure to continue.

How much longer do you think advertisers will continue to pay for decreasing results?

3 – Cost

Most local retailers effectively cannot afford to advertise in newspapers, and for those that can, the return on their investment simply continues to decrease.  For decades newspapers have raised their ad rates year after year even though the vast majority have been loosing readership. Buying an ad in a newspaper that is distributed to an ever smaller readership obviously becomes less and less cost efficient. 

The means by which display advertising is sold by newspapers is one of biggest issues. They generally have highly paid sales teams. Sales costs make up a large part of the cost of the product and are extremely difficult to adjust without a tremendous impact on sales. Some papers have made attempts to reduce their sales costs - few have successfully done it without negative impact to their revenues.

Newspapers are already overpriced and they can’t easily reduce their costs.  They’re caught in their old business model and they can’t break out of it. As ad rates continue to increase and the number of retailers advertising in newspapers continues to decrease there’s an opportunity for other media to offer much more cost effective solutions.

Do you think newspapers will be able to compete in the cost game?

In Conclusion

Display adverting is what has kept newspapers afloat in recent years. They’re at great risk if they’re unable to maintain their hold on retail advertising. 

The reality is there is a lot less retail advertising in newspapers today.  Over the last 30 years, much of the display advertising has moved to the flyer/circular. In many ways, print fliers have served to change the habits of consumers more than anything else. In my next post, I will cover that part of the newspaper business and its impact on the industry.

Stay tuned for the for more posts:

Part Five – Distribution
Part Six – The Reader

By Jose Leal

Why I Think Newspapers Will Die: Part Three - Classified Advertising

In Part Two of this series of posts, I reviewed the issues impacting editorial content in newspapers and how they’re contributing to the death of newspapers. This post is about yet another contributing factor – classified advertising – a much more direct contributor in the demise of newspapers.

For years now print classifieds have been under assault by a number of online players. Traditionally, print classifieds have accounted for about 30% of the average newspaper’s revenue (checkout how the US classified revenues are to pre 1996 levels). In recent years, Craigslist alone has displaced hundreds of millions of dollars annually from print classified revenues across North America. As online classified services continue to capture market-share, newspapers may be forced to give up the space all together. Classifieds may well be the first print section to disappear out of newspapers. Here are some of the more clear-cut reasons why this may happen very soon:

1 – Timeliness

In the world of print classifieds, you’re usually sold a package through a call-centre. A representative walks you through the ad buying process and at the end provides you with a price. The process is generally not that difficult, but it can take a bit of time, and the earliest your ad will appear in the paper is the next day – sometimes a number of days. That doesn’t seem so bad – until you consider the speed of publishing an online classified ad.

Classifies ads are the perfect product for online. Their traditional size and simplicity make them one of best candidates for the self-service model. Placing an ad and having it published instantaneously is a tremendous benefit to the advertiser. No need to talk to a representative or wait for the ad to appear. Though some newspapers now support the self-serve model, the complexity of print fee calculations based on words or print lines makes for a difficult implementation and more complexity for users.

Can you imagine classified call-centres lasting much longer?

2 – Efficiency

Newspapers have made large investments in traditional classified software, both call-centre and pre-press systems. These systems are fairly complex and difficult to implement. Because they were designed to meet the needs of the print products, their online functionality is limited or non-existent. These systems put the print classifieds at a huge disadvantage when it comes to the ability to promote products and services along with multiple pictures and lengthier descriptions.

Again, some papers have attempted to compete in the online space, but connecting print and online classifieds has proven to be more difficult then anyone expected. The outright efficiency of online classifieds is proven and unless the newspapers are willing to give up the print component, they will never be able compete. Print newspapers would need to out perform the online systems and that’s just not possible in the classified space.

How long do you think until newspapers will be forced to abandon print classifieds?

3 – Cost

Though timeliness and efficiency are very compelling reasons for the success of online classifieds and the certain death of print classifieds, it’s the cost that will really bring print classifieds to their knees. Many online services are offering classified listings for free. That’s a very difficult price point for newspapers to compete at.

Though some have tried to test the free model, the risks to their business are too great and many have pulled back. Accelerating the revenue loss is not an option for most newspaper companies, even if it could mean retaining some market share.

How long will people continue to pay for classified ads, when they can get them for free?

Stay tuned for the for more posts of “Why I think Newspapers Will Die.”:

Part Four – Display Advertising
Part Five – Distribution
Part Six – The Reader

By Jose Leal

Why I Think Newspapers Will Die: Part Two - Editorial Content

This is my second post (Part One) in an effort to offer my views on why I think newspapers will die.

For nearly a decade now editorial departments in newspapers have been trying to figure out how to adapt to the Internet.  In some ways the Internet has helped newspapers by breeding some life into their editorial departments - blogs and social media have created a number of opportunities - but it has also helped shine the light on some weaknesses.  Whether they like it or not, newspapers must publish online and with that comes a myriad of issues. What follows is a look at a few of them.

1 - Timeliness

The issue of competing on timeliness is not new to newspapers.  Radio and television have both been competing on timeliness for years - it’s always been the case that radio could break a news story before tomorrow’s paper arrives.  The key is that you have to be listening to the radio when the story is aired.  Whereas the newspaper had the advantage of being consumed at your leisure, the broadcast media has the advantage of speed. The Internet brings these together, delivering the story fast and making available 24/7.

 

None of this is news to anyone in the online media space, but for the newspaper industry it’s a huge shift in how they work.  For decades, if not centuries, they’ve worked to a daily deadline.  With the Internet, every second is a deadline in order to be competitive.  The issue of online publishing is a double edged sword. If newspapers don’t publish online early, they can’t compete.  If they do, they compete with themselves by making tomorrow’s print story old news.  Every day across North America these decisions are being made by publishers and editors. Because of this, breaking news will not remain the domain of the printed newspaper much longer.

• Is a newspaper really a newspaper if it no longer breaks the news?

2 - Efficiency

The Internet has significantly helped the efficiency of editorial departments, as it has helped many other businesses.  The risk comes from the way the newspapers have to operate.  From a liability perspective, newspapers are ticking time bombs - libel is a constant concern.  In a rush to publish online, newspapers run a greater risk of publishing erroneous information.  Because newspapers are held to a higher standard, the costs involved in online publishing are greater than those of non-traditional media.  I don’t think this is necessarily a good thing, but it’s a reality.

• Can newspapers maintain their high standards and still compete online?

3 - Cost

Newsrooms across North America have been shrinking for over a decade now.  As the cost cutting pressures continue, they’re being forced into doing more with less.  This means centralization and removal of perceived duplication.  Many of these measures can only be taken by the larger media conglomerates, creating even more pressure for mergers. 

By cutting costs, they are being taken further away from what their readers want.  Centralized bureaus producing national or regional content can’t be sufficiently local, nor can they speak to the reader in a tone that they’ve come to expect from their local newspaper.  In many ways, it’s the cost cutting that’s reducing newspapers ability to be competitive.

• Can newspapers continue to reduce investment and still survive?

Stay tuned for the for more posts of “Why I think newspapers will die.”:

Part Three - Classified Advertising
Part Four – Display Advertising
Part Five – Distribution
Part Six – The Reader

By Jose Leal

Why I Think Newspapers Will Die: Part One of a Six Part Post

First of all in response to both Shel Holtz and Jay Moonah, I don’t make the statement that newspapers will die lightly.  Also, my motivation for saying it has nothing to do with hating or even mildly disliking newspapers.  Based on our having worked together at Canoe and Sun Media, Jay knows that I’m a strong proponent of helping newspapers to adapt. Why else would we have traipsed all over Canada including Grande Prairie, Alberta, where we saw a sign on Main street pointing to Alaska (now that’s north)?

Over the last five years, I’ve worked very closely with a large number of newspapers and I’ve come to a couple of realizations.  They, as an industry, have waited too long to start adapting. And more critically, their corporate structures and business models won’t allow them to change without breaking. The way I see it, newspapers have a number of weaknesses. Broadly speaking they’re split into timeliness, efficiency and cost.

Each of the four basic functions of a newspaper - content, classified advertising, display advertising and distribution are impacted by these weaknesses. That’s not to say that newspapers don’t have strengths; but those strengths, in my mind don’t outweigh the weaknesses.

Over the next few days, I will outline my views on these weaknesses and how they are impacting the industry. In addition, I’ll take a look at it from readers’ perspective. Both Jay and Shel have done a very good job of describing how the ergonomics and convenience of newspapers will keep us reading them for years to come. In my last post in the series, I hope to be able to give some justifications as to why I think readers will want to move away from newspapers.

Stay tuned for the next five posts of “Why I Think Newspapers Will Die.”:

Part Two – Editorial Content
Part Three - Classified Advertising
Part Four – Display Advertising
Part Five – Distribution
Part Six – The Reader

By Jose Leal

Why do we want newspapers to survive?

Having worked for a media company, I regularly read and comment on articles and blog posts about the future of newspapers.  This morning I was about to rebut a comment by my friend Jay Moonah on a post titled “Google Not Optimistic About The Future Of Newspapers” by Mitch Joel on his blog Six Degrees of Separation, when I started to consider the value of the question.  Why do we ask ourselves if newspapers will die?  Why do we care?

I think most of us ask that question because of our society’s intrinsic affinity for newspapers.  We grew up believing that the press is the guardian of democracy.  That principle is deeply ingrained in us and for many of us it is embodied by newspapers.

What if this long lived belief is no longer well founded?  This line of thinking, led me to a great interview with Bill Moyers, Chairman of the Schumann Center for Media and Democracy by the magazine The Christian Century.  These are some of Bill’s comments on the state of journalism in the United States:

“There's some world-class journalism being done in our country by journalists committed to getting as close as possible to the verifiable truth. Unfortunately, a few huge corporations now dominate the media landscape. And the news business is at war with journalism. Virtually everything the average person sees or hears outside of her own personal communications is determined by the interests of private, unaccountable executives and investors whose primary goal is increasing profits and raising the company's share price. One of the best newspaper groups, Knight Ridder—whose reporters were on to the truth about Iraq early on—was recently sold and broken up because a tiny handful of investors wanted more per share than they were getting.”

Other than the fact that Bill is much more eloquent than I could ever be, I completely echo his comments.  The situation in Canada is no different, most likely, even worse.  The vast majority of newspapers in Canada are owned by three media conglomerates.  I worked for one of them nearly 10 years and little mattered more than the shareholders.

Do we want newspapers to survive, or just the journalistic principles that offer us the protection we so dearly desire?

By: Jose Leal