Shifting from a newspaper company to a digital-media company (with a broad, data-collection and dissemination, mandate) would, of course, impact the fundamental nature of the business. In order to portray this as an opportunity, Newspaper Next 2.0 draws a powerful, historical analogy from legal publishing.

Less than 15 years ago the traditional [legal publishing] model had publishers cranking out print texts, looseleaf services and reference works. Lawyers paid substantial sums of money to keep libraries current. Research showed that most of these publications were never opened. For the publishers it was a truly wonderful business model – ongoing subscription business to wealthy professionals, often with most of the money paid in advance. Profit margins were spectacular.

Today the model has been inverted. Facing the near-elimination of barriers to entry for new online competitors, these same publishers now manage huge databases, with a range of subscription arrangements that mostly operate on a “just in time” as opposed to the old “just in case” basis. They have eliminated all of the costs of printing and distribution. Their revenues have declined, but with drastically lower costs, once they’d figured out how to run an online business, investment and working capital are down, and margins are up. Law books do still get printed, but the owners of these companies saw what was happening, and made the changes needed to survive. There is no reason newspaper companies cannot reinvent themselves as media companies, and operate multiple business streams to capture a wide swath of advertising.*

*Newspaper Next 2.0: Making the Leap Beyond “Newspaper Companies,” American Press Institute, February 2008, 107.

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Next: Embracing the Opportunity

The Information Center, in Gannett strategy, is conceptualized in journalistic terms as the “newsroom of the future.” It implements a more flexible, broad-based approach to the traditional, information-gathering process. Moreover, it is platform agnostic. News and information are delivered via newspapers, online, mobile and video. Customers decide which they prefer.

The Information Center was nurtured and developed in the Newspaper Division with pilot projects taking place in 11 locations. Three—Des Moines, Sioux Falls and Brevard—were full scale implementations of an Information Center while other sites tested different aspects of information gathering such as “crowd sourcing”  and multimedia.

Although Gannett championed a journalistic focus, they recognized that their customers were interested in more than news. So, while news remains the preeminent mission, other information—especially local information—is increasingly top of mind. Within the Information Center framework, rich databases of broad, local content were used to power calendars, recommendations, lifestyle services as well as neighborhood-level stories across multiple platforms.

The process of creating and managing structured data beyond news articles made some journalists question the overall impact of this project. They expressed concerns about how the broad, “information” focus might affect the quality of in-depth reporting—in other words, they worried about the impact on traditional, newspaper story-telling. Regardless of these concerns, the project moved forward.

Next: Newspaper Next 2.0

For newspaper companies, the “end game” has always been filling the next print edition with traditional, content types (e.g., news articles, news photos, classifieds and ROP advertising), with little thought given to maintaining (current and historical) databases of broader data (e.g., school ratings, property values, demographic data and business listings), or tagging and localizing (e.g., geocoding) data in ways that can be related to the location or interests of local, online users. Even where there exist vast quantities of digital data in high demand (e.g., death notices and obituaries), newspaper companies have often failed to maintain the data in a consistent, accessible manner. There is little recognition that databases are the key to a media company’s future as a digital-service provider. There are some signs, however, that steps are being made towards a database model of information aggregation and dissemination.

Later This Week: Gannett’s “Information Center”

Forrester Research predicts that that money will start to flow in a few years. It forecasted that ad spending on “emerging channels,” which includes social media and widgets, will grow to more than $10.6 billion by 2012, one-sixth of the overall $61 billion spent on interactive marketing by that time. That’s up from about $2.1 billion it expects in 2008.

Within emerging channels, the research firm forecasts that social media will drive most of the ad spending. In 2012, it expects ad sales to social media sites will be $6.9 billion, up from $1.5 billion this year and $600 million last year. Regarding widget development, the trend is clear. The fun-and-games widget will be a long shot. The next phase is about utility–if it takes up space, it has to be useful!

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The W3C’s technical definition of “widget” is as follows: A widget is an end-user’s conceptualization of an interactive single purpose application for displaying and/or updating local data or data on the Web, packaged in a way to allow a single download and installation on a user’s machine or mobile device. A widget may run as a stand-alone application (meaning it can run outside of a Web browser), or may be embedded into a Web document. The runtime environment on which a widget is run is referred to as a widget “user agent” and a running widget is referred to as an “instantiated widget.” Prior to instantiation, a widget exists as a “widget resource.”

Generally speaking, widget user agents are either directly built on, or provide similar functionality to a Web browser. An increasing number are actually built directly on top of Web browsers so they are able to process/render HTML documents, while others incorporate Web browser components like ECMAScript interpreters. Widget user agents are built for many different software platforms and devices, including Microsoft’s Windows, Apple’s MacOS, Symbian, Linux, and so on; and some widget user agents, such as Yahoo and Opera Widgets, run on multiple platforms.

Secondly, widgets promise to combine the power of advertising with interactive content and transactions. Quality widgets, with integrated advertising, are perceived differently than pure advertising, because they deliver utility. For example, a Random House widget lets users search through the contents of a book and read preview pages. With utility at the forefront, users don’t mind the Random House branding and commercial messages. They see the widget as a useful tool.

Thirdly, especially when offered within a social-network environment, widgets are extremely viral. Not only are they easy to install, they are also easy to recommend to friends. When one recalls that social networks attract almost 600 million unique users worldwide, the viral potential becomes clear. (Of course, the maximum opportunity is realized only when a widget is compatible with desktops, blogs and personalized start pages as well as SNSs.)

Several widget-management platforms, such as Clearspring, Sniperoo, Spring Widgets, and Nokia’s mobile-enabled Widsets have launched to support the publication and management of widgets across desktop, web and mobile platforms. Clearspring, focusing on widget developers and widget syndication, offers a developer API that wraps widgets in a container supporting usage tracking, handles installation and offers a viral “Grab this” button. Clearspring lets developers decide how and where to offer the widget to users. Clearspring has announced a few deals with media companies, including one with NBC.

In addition to the supportive work of widget development and management companies, the W3C, a web standards organization, recently published a draft of the first widget specification. The goal of this effort is to standardize how widgets are scripted, digitally signed, secured, packaged and deployed in a way that is device independent and interoperable with existing user agents. The spec is raw, and mostly based on desktop widgets, but it is already showing the direction where many experts think widgets should evolve. Indeed, there is growing recognition that documenting and standardizing widget specifications is a big step towards interoperability.

Google is also working toward interoperability among widget hosts (with numerous partners) by launching their OpenSocial API. Google’s focus is on the social networking space. Google understands that there is much more value to be gained from a shared ecosystem and from the “long tail” of distributed communities, than from a “walled garden,” even if it’s big. The key opportunity for users, developers and businesses is to integrate with existing SNSs and their communities of users.

So here we have it: A “widget paradigm” for distributing applications, branding, and content (including targeted advertising) across multiple, third-party platforms. This paradigm has significant ability to expand the current model of driving traffic to a single web destination. In fact, in some cases, publishers will likely enjoy more success through syndicated widgets than through their own sites.

The earliest form of portable application, known as a “widget” (W3C) or “gadget” (Google), dates back to the early 1980s with the introduction of the Macintosh OS with Desk Accessories.  These were simple desktop applications that ran in their own windows (e.g., calculator, calendar, clock notepad, etc.). In the mid-90s, MyYahoo introduced customizable “start pages” with components featuring dynamic news, weather and sports scores.

Today, widgets have taken the place of many traditional, single-purpose applications. Typical examples of widgets range from simple clocks, CPU gauges, post-it notes, games and battery-life indicators, to more sophisticated web-enabled applications like weather forecasters, news readers, email checkers, photo albums and currency converters.

The growth of widgets was caused by several factors including the adoption of RSS, the expansion of “the blogosphere,”  introduction of social networks, fashion of self-expression and the democratization of the web at large. Originally, the goal of widgets was to deliver a miniaturized version of a specific piece of content outside of the primary web site. A classic widget is the Flickr “badge,” which allowed users to show a preview of their photos.  Clicking on the badge would take one to the user’s profile page displaying all his/her photos.

Badges are similar to affiliate links, but instead of the “payoff” being a lead/sale, the badge owner receives an ego boost whenever people see and comment on his or her profile. The combination of the social dimension, the “cool factor” and self-expression empowered badge widgets to spread quickly on blogs and social network profiles.

Beyond badges, widgets have become ubiquitous, appearing in “start pages” like iGoogle, Netvibes and Pageflakes, desktop hosts like the Windows Vista Sidebar, Google Desktop dock, and Yahoo’s widget engine (formally Konfabulator), video environments like Joost, and (as noted above), within SNSs (initially Facebook, and now most others). In addition, widgets are gaining traction on mobile devices. However, it is within the web-browser environment where they have had the greatest impact.

Next post…the significance of widgets, gadgets and APIs as enabling technologies.

By encouraging, facilitating and mapping social connections, SNSs achieve an unsurpassed ability to drive both membership and participation. On this point, SNSs are typically not used for connecting with strangers (like dating sites, for example). Rather, they are most often used to extend connections that exist (or have existed) in the real world. These connections range from immediate friends and family to otherwise “lost” relationships. Two very popular uses of Facebook are to extend family relationships and reconnect with old, high-school friends.

Inside SNSs, social connections function as spokes on a wheel. At the centre of this wheel is the personal profile. Personal profiles are identity devices that facilitate the sharing of personal information and media. Personal information includes name, address, sexual orientation, marital status, professional history, academic history, family information, entertainment tastes and activity interests. Because creating and sharing identity rests at the core of the social experience, most members are willing to share personal information. (Of course, not all members share all information.) Shared information allows the system to identify contextual relationships between members, and deliver personalized content.

To understand the ability of social networks to build membership rapidly and maintain high levels of participation, we need only to describe a typical interaction with an SNS site. Unlike the one-to-one, publishing model used by newspaper sites, SNS sites leverage personal networks and, consequently, a one-to-many model. For example, as part of the sign-up process, an SNS site integrates with popular email programs, allowing one to invite stored personal contacts easily. This simple cross-application integration results in rapid promotion. (This process repeats itself with each new signup!)

This one-to-many model is enriched through real-time updates displaying the immediate activity of friends within one’s network (e.g., “John is listening to music at the cottage.”). Members are notified when a friend posts photos, has a birthday, starts a game, shares a movie review, recommends a mutual friend or sends a text message (among other things). Moreover, each member is given ample opportunity to recommend an application, review, photo or another item to their entire network. Each member is also encouraged to recommend their friends to other friends. This happens frequently where real-life, social networks overlap.

As each member becomes an active participant in the digital lives of friends, the SNS grows to become a vital part of the day-to-day lives of members. For many, SNSs meet profound, social needs in a manner that real life cannot provide, and keeps them coming back for more. This helps explains why SNS sites have become such a massive global phenomenon with a worldwide audience of almost 600 million users.

If SNS sites excel at growing audience, they also provide an accessible platform for third-party, publishers and service providers to embed content and services. In fact, SNS are evolving into robust containers (or hosts) for all sorts of content and applications (known generically as “widgets”) created by others. Like start pages, and desktop containers (e.g., Windows Vista Sidebar), SNSs are helping to revolutionize how businesses build audience for products and services. They provide a tremendous opportunity to reach consumers where they habitually congregate without having to move them to another web site!

In the end, SNSs have displayed a profound ability to address aspects of all five opportunities outlined in a previous post. They provide mechanisms for rapid member development via one-to-many, sharing and email functionality. They provide a rich technical infrastructure that allows third-party content to be pushed to their members. They provide support for highly personalized commercial and non-commercial content.  And, finally, their potential for utility extends well beyond news and classifieds (although they can certainly provide rich support for this content as well).

From 1997 to the present day, SNSs have evolved, merged and multiplied to the point where there are dozens of popular SNSs throughout the world. Wikipedia lists well over 100 major SNSs worldwide. No one SNS has achieved global domination. Rather, numerous sites have acquired significant audiences in different parts of the world. In North America, Facebook and MySpace currently dominate with Canadian Alexa rankings of two and thirteen, and American rankings of five and three.

MySpace was launched in 2003 and, according to Boyd and Ellison, achieved success by: 1) capitalizing on Friendster’s missteps, 2) fostering relationships between bands and their fans, 3) allowing significant customization of personal profiles, thus encouraging creative, self expression, and 4) staying in tune with user demands. (For example, rather than reject underage users, MySpace changed its policy to allow minors!)

In July 2005, News Corporation purchased MySpace for $580 million, attracting media attention. The site was quickly implicated in a series of sexual interactions between adults and minors, and moral panic ensued, especially in the news media, where it made a good story. Further inquiry, however, rightly observed that concerns were exaggerated.

Facebook evolved along a different path. It began in 2004 as a resource designed for college students at Harvard. Facebook then moved to other college campuses, and in September 2005, expanded to high school students, professionals and eventually, the world. Unlike other SNSs, Facebook implemented a privacy system that prohibited strangers from seeing full profiles of all users. Only those in one’s network could have access to personal information. Another innovative feature that set Facebook apart was its support for embedded, third-party applications. This allowed anyone to extend the core functionality of Facebook in ways limited only by one’s imagination.

Given Facebook’s international popularity, it would be useful to understand its penetration within smaller, suburban areas. As a example, let’s take a single community. Durham Region, lies immediately east of Toronto, Canada and encompasses an area of approximately 2,590 square kilometers (1,000 square miles). The area is characterized by a series of major lakeshore urban communities contrasted with small towns, villages, hamlets and farms which lie immediately inland. The small cities in Durham Region include Oshawa, Whitby, Ajax and Pickering. According to Statistics Canada, Durham Region’s total population was 561,258 in 2006 with 194,670 private households.

Facebook uses “Toronto” as a generic location for those living in Durham Region. Therefore, it’s not easy to establish an accurate picture of its local penetration. However, Facebook allows one to count the number of members who graduated from a high school in the region. This provides us with a mechanism (albeit an imperfect one) for approximating Facebook’s penetration among local residents. (Indeed, given Facebook’s primary demographic, a large percentage of local users are still in high school or college! ) Using this method, we estimate that Durham Region contributes 30,000 to 50,000 registered members—a significant degree of local penetration. This is all the more significant when one considers that even the most successful newspaper site in the area registered only a small fraction of this total, and gathered little data beyond name and email address.

1.    Audience development is extremely challenging owing to poor site models and over-reliance on self-contained web sites.

2.    News and classifieds are over emphasized as primary content and advertising categories. Little focus exists on meeting broader, local needs.

3.    Share functionality, which has proven benefit for fast-tracking audience generation and increasing “stickiness,” is commonly misunderstood and ignored.

4.    There is great difficulty offering personalized content and targeted advertising.

5.    Non-commercial and commercial content are generally not integrated in “natural” ways.

Restated as five opportunities, we seek to develop a digital-business paradigm that will:

1.    Grow audience faster by creating less reliance on sites as destinations and more reliance on “push” technologies.

2.    Extend beyond news and classifieds to address the broader live needs of a community.

3.    Increase speed of audience development and depth of user interaction by implementing rich Share functionality.

4.    Support personal targeting of content (including advertising) in order to provide greater opportunity to advertisers.

5.    Integrate personal and commercial data in natural and personalized ways, thus lending commercial messages greater efficacy.

That video appeals to multiple senses and has tremendous power is obvious. Video advertising, in particular, can be extremely compelling as any watcher of the Super Bowl is aware. As video migrates from the traditional TV screen to internet-connected, digital devices, new forms of interactive video (which, for example, could allow viewers to click hot spots to view related information) become possible. The future is bright for video technologies.

Unfortunately, challenges abound with the manner in which many suburban media companies conceptualize and use video. There is a tendency to oversell the efficacy of the medium and undersell the importance of compelling content. Super Bowl commercials are not compelling because they are video—we’ve all seen plenty of bad video—they are compelling because of the clever content and overall production value. A bad movie is still a bad movie, even when it plays in digital 3D or glorious IMAX theatres!

When one seeks to deliver production value, cost becomes an issue. Amateur videographers and students, working at student rates, can hack together a client testimonial or place a camera in front of a store owner. It takes talented specialists to develop compelling marketing messages and concept pieces. One can debate the degree to which production value is important in smaller markets. But one thing is clear: most suburban newspaper companies have not recruited the talent required to produce compelling video.

Another challenge is the lack of tracking data available to clients running video commercials. To date, delivering data regarding viewer engagement has been difficult. Typical viewing times and drop-off patterns have not been established. What has been established is that video poorly created and presented does not generate more views than static ads. (In many cases, it produces substantially less!) Moreover, because of their multisensory nature, poorly produced video ads cause greater user frustration than poorly created banners.

Digital Consulting, Custom Promotions and Bundling. Most local advertisers are now seeking to build an online consumer base for their products and services. However, they require assistance with the process of matching their needs with fresh, digital opportunities. Although classified opportunities abound and video has “sizzle,” advertisers get really excited by the opportunity to “connect with new audiences in new ways.” In practical terms, this means something different to every advertiser. In general, however, it means providing an extremely knowledgeable, consultative service that leverages skilled specialists and an agile implementation team.

The most aggressive suburban media companies are working to meet the demand by cultivating teams of highly trained, Interactive salespeople who leverage standardized inventory, but also have the ability to create custom campaigns. These campaigns might include SEO, run-of-site, targeted, promotional, contest, video, advertorial and direct-feedback elements.

Challenges Common to All Revenue Generation Techniques

Current challenges faced by Interactive departments include: keeping training current, creating aggressive incentive programs to motivate salespeople, effectively managing the cost of sale, and developing efficient workflows to support consultative, custom campaigns.

A second major challenge involves integrating commercial and non-commercial content in “natural” ways, and targeting content to specific individuals. With current technologies, most suburban, media companies still conceptualize online advertising like print advertising. Messages are cast broadly because systems for intelligent targeting and contextual association are lacking.