Update on Content Wants To Be Free

My post last week on content wants to be free has already been "contradicted" in a great post by Scott Karp on Reinventing The Economics of News.

"What I realized is that, actually, it’s NOT free. To read the New York Times or any other newspaper online, I have to be connected to the internet — and that, in most cases, is definitely NOT free.

Broadband internet access at home is still in the $40-50 range. I pay Verizon extra to access the internet on my Blackberry. I pay extra to use my Blackberry as a tethered modem. Traveling to the New York the other day, I paid for WiFi access in TWO different hot spots because my tethered modem kept dropping the connection (not a coincidence I think). Companies pay for high speed lines for their employees. And we of course pay a lot for the computers and handheld devices that we use to access the Internet (e.g., iPhone).

I realized as I kept pulling out my credit card for public WiFi access that it’s the ISPs who now wield much of the monopoly power once enjoyed by newspapers. I read the New York Times everyday — and I still pay for the privilege. It’s just that I’m not paying the New York Times.

This is the fundamental flaw in the thinking about the future of news — the assumption is that newspaper subscribers used to PAY for NEWS, and online they get it for free.

But the reality is that newspaper subscribers didn’t pay for just for news — they paid for DISTRIBUTION. They paid for a highly useful package of information to show up on their doorsteps every morning…which was the ONLY way to get access to that information. That package included news, and many subscribers valued that part of the package, but they also valued:"

Now I realize part of what stands behind my earlier post, content needs to be free so I do not pay twice! An entrepreneur tried to convince me yesterday why his subscription business was going to succeed against free models because of the value of the content (financial). I might have been 10% convinced until I saw Scott's post. Now I am 100% sure he is wrong.

How Not To Say I Am Sorry Before Yom Kippur

Pre-Rosh Hashana (Jewish New Year) I was inundated by email greeting cards wishing me all sorts of cliche'd and canned health, sweetness and happiness for the new year. It is highly impersonal and in fact feels like spam (the notion of the porkish spam for the Jewish New Year is in itself quite disconcerting). Well wishers send mass produced ecards to their entire contact list and flood inboxes until you are bleary eyed and your finger hurts from the delete button or from "same to you emails"

This year brought a new innovation: The Facebook Wall Shana Tova (Happy New Year). Tons of well wishers are spreading digital wishes on Facebook walls and following the friend trail to expand their sweetness to friends on friends. The old 20 cent stamp is no longer a barrier to really focus in on wishing your real friends a heartfelt happy and healthy new year. So you send it to everyone. Therefore, I am not a big fan and of the mass reproduced Shana Tova. Hence, despite my Facebook account and healthy email contact database, I picked up the phone to my close friends. It was a great time to catch up.

As much as digital wishes don't appeal to me before Rosh Hashana, as Yom Kippur, the Day of Atonement approaches, a digital "I am sorry" just doesn't cut it. Asking forgiveness from your friends necessarily requires the discomfort of doing it in person. Otherwise, it is not heartfelt and sincere. You need to emotional pain of saying the words I am sorry to truly repair ruptures in relationships due to gossip, misspoken words or deeds.

So as Yom Kippur is almost upon us, if I any of you an apology, drop me your phone # and I will try to call. It would be fun to catch up anyway. Shana Tova!

The New York Times Watershed

The announcement by the NY Times that it will be rolling back Times Select, their paid subscription product, and opening their vaunted archives is a watershed event in the history of the internet and the history of information. The most important newspaper and news source on the planet has just admitted that the paid subscription model is under threat from ad models. That proprietary information is a relic of an old era. This is something we people of the internet era have long known but now the first big media company is getting religion on this topic.

Here is the Money Quote from Paidcontent.org:

"Schiller insisted, as she and other NYT execs have said before that TimesSelect was on plan, was bringing in $10 million in subscription revenue and was successful: “This is what is really important—it did work. It’s just a matter of as compared to what.”

In this case the “what” is the result of traffic increases from search-engine optimization (SEO) and the NYT’s belief that by opening millions of pages to search engines, that traffic growth will continue and with it, ad revenue growth. (American Express has signed on as the first advertiser for the newly accessible Opinions and Archives areas on NYTimes.com.) The SEO dates back to NYTCo’s acquisition of About.com. Since About.com’s SEO technology and expertise was applied, NYTimes.com has experienced triple-digit growth in unique visitors. From July 2005 to July 2006, internal logs showed an 87-percent increase in unique visitors compared with 21 percent the previous year over year. From July 2006 to July 2007, uniques increased another 23 percent on the larger base. The total increase in uniques during roughly the same two years that TimesSelect was in effect: 131 percent.

Following the first year of growth, “we started to do the modeling.” Asked why they didn’t move then, Schiller said they wanted to see if the growth was sustained: “This was not a decision we took lightly. It’s been in the works for several months. We took our time to do the modeling; we considered several different factors.”

The change is because of what’s happened in the internet in the past two years—particularly the power of search.” She added later: “Think about this recipe—millions and millions of new documents, all seo’d, double-digit advertising growth.” The Times expects “the scale and the power of the revenue that would come from that over time” to replace the subscriptions revenue and then some."

Follow this bouncing ball. This is the model employed by Seeking Alpha (Benchmark company). It has widely searched open archives used by financial professionals and retail investors alike for analyzing stocks. What does Seeking Alpha mean for the Wall Street Journal or the paid newsletter business. Seeking Alpha also provides free conference call transcripts on hundreds of stocks. Transcripts are also currently a subscription business that Thompson Media runs and a few other providers as well. Now Seeking Alpha is reporting that the Wall Street Journal may be headed in that direction as well.

This is what Zillow (Benchmark company) has done in the Real Estate Market. It has unleashed a colossal amount of high value data and information on the real estate market and put an ad model behind it. This is obviously a threat to subscription models for real estate information.

AOL has figured this out as well. It is why AOL moved to a free ad supported model and is now, after numerous ad network acquisitions, talking about becoming a network company and not a portal company. Read: ad network.

Information wants to be free. Consumers want it that way. Build a great consumer service that has a lasting information and consumers and advertisers will beat a path to your door. What do you think is the next subscription market that will succumb to ad supported model?

Covert Operation in Syria: Thank God Amir Peretz Is No Longer Defense Minister

Mum is still the word on Israel's covert operation in Syria with theories ranging from nuclear to conventional weapons supplies to Hizbullah. I have nothing to add to the guess work on what was blown up. However, I think we only got to this point because we have a new defense minister at the helm. My views on Amir Peretz (here as well) and the damage he did to Israel both in Gaza and the Second Lebanon war are well known. Is there anyone who could imagine former Defense Minister Amir Peretz pulling the trigger on this operation and commanding it from on high? It would have devolved into an ego war or union protest. Thank God Ehud Barak is now sitting in that seat now.

Yahoo's Woes

Henry Blodget posted a follow up piece on Seeking Alpha to Bill Morrison's analysis of Yahoo's comscore data. Here are the stats:

"Yahoo attracted total worldwide users of 476 million in July, down 1% annually. Pageviews declined 7% in the period, and minutes spent were down 1%. Annual usage at Yahoo Mail declined by 9%, at Yahoo Games by 47%, at Yahoo News by 6%, and Yahoo Sports by 11%. On the positive side, Yahoo Messenger grew by 36%...Yahoo Answers by an astounding 332%, and Flickr by 198%. While [this is] promising...these areas are typically monetized at a fraction of the rate of Yahoo!'s premium content areas."

The one striking stat to me is the Yahoo Mail statistic. Yahoo has been the king of webmail for years. However, I think I can offer one comment in addition to the growth of Gmail that might help pinpoint the reason: Spam. I have a Yahoo Mail account. Over the last 3 months, the level of spam penetrating the Yahoo filters has been steadily increasing. I am getting about one a day into my inbox whereas in the past I received none. I am a very very light user of Yahoo Mail so I can only imagine how heavy users feel about this and how much spam they must be getting. Anyone else having the same experience?

So much to say, so little time

I have wanted to get out a bunch of posts in the last couple of weeks but with Rosh Hashana and work overload I have not had any sleep-time left to give to the blog. I hope to get out a bunch fo posts over the next couple of days on a range of topics. In the meantime, shana tova and a happy and especially healthy new year to all.

My Travel Week: Great to Worst

I flew El Al’s new 777 Sderot plane on saturday night of this week. It was my first trip on the new 777 and I have to say that it was the best flight I ever had. The plane is incredibly well appointed and the seats are more comfortable (if you are heavy you may not think that as they are somewhat narrower). More importantly, El Al clearly did something with the lighting and ambience to make the plane feel for more pleasant. El Al has been improving dramatically over the last few years (competition and privatization tend to have that effect). The in flight service has been upgraded over the last few years and is now outstanding, the lounges have been upgraded (I was at the opening of the new JFK lounge earlier today) although they are still short on seats. I continue to be a loyal flyer but now they have truly earned it.

On my trip home, I had a miserable experience with TSA at JFK. I waited one hour on a security line that snaked all the way back a hundred feet past the elevators in JFK terminal 4. I am used to long lines at JFK which is the worst TSA experience of any airport I go through in the US but this went even beyond the normal bad experience. The wait was absolutely interminable but what was intolerable was the rudeness of TSA personnel. They neither knew the line procedures nor talked nicely to the frustrated passengers (Omar who opened my bag was one shining exception with his kind demeanor and nice smile – thanks!). In addition, the area that the Airport authority provides for security clearance is completely insufficient. The snaking lines are cramped and feel like cattle cars. Once you get to the conveyor belts and x ray machines the lines turn into mush with people jockeying for positions. The TSA personally were rudely yelling at people not to go to certain lines or block the way through to lines at the far end when there was nowhere else to stand. I fly through a lot of airports and am very patient with security because it is better safe than sorry. However, JFK is the worst and this was an absolutely miserable experience in need of a remedy.