Friday, 12 December 2008 23:00

The Future of Main Stream Media, pt 3

Reggie Middleton on the Marginalization of Mainstream Media, pt 3

This following is a reply from the MSM official referred to in part 2 of this series. Since it is about a week or two old (I’ve been a bit busy), I recommend you refresh your memory so we can pick up from where we left off.

MSM official comment:

I think the structure of your proposed model makes sense. Here's the 'but'. Who is going to pay to evaluate the blogger provided information to make sure it checks out before posting, linking to or printing it? As you know, when I found BBB (that’s BoomBustblog.com) on the Internet I was impressed but didn't blindly accept it. I took my own time and used my own independent contacts to establish a sense of whether RM was providing credible information or whether he was just some random guy. It wasn't easy, as RM (that’s Reggie Middleton) has an extremely low profile. But it had to be done before I would be willing to pass along the info to my employer's customers. The cost of my time was paid for by my employer who acquired it from rack sales, subscriptions and advertising revenue from previous editions. Fortunately, blogger RM checked out and the information was useful in my employer's product which, in theory, means that quality information will have generated eyeballs, ad dollars and sales that will support future information evaluation.

I can see his point here, but this vetting process only has to be done once. Now, that RM has proven to be worthy source of deep information and opinion, his content can be used repetitively without the same vetting process.


Also, as good as the info was, blogger RM can be quite verbose and arcane with terminology. In order to make the material accessible to a general audience, somebody has to be able to evaluate and understand the info and have the ability to synthesize it into words that apply to a non-expert audience, which takes more time and, by definition, money.

Essentially,
it takes time to track down the definition of expert-only words and
skill, or at least a decent vocabulary, to translate those words into
something easy-to-understand.

Someone
also has to tease out the information that is relevant to readers in a
given community where the paper is published so the readers know why it
is important to them, which also takes time and knowledge of the
community.

I
understand his point here as well, but with a specific request I can
convert the content into layman’s language. See this complement I
received from a journalist
: “It
was great working with you on the XXXXX story – believe me, I talked to
a lot of so-called experts on that ISDA Master Agreement before I
finally found the right person (you!) who could make sense of it and
convert it into a plain English for me, which of course was what I
needed to convert it into plan English for XXXXXX readers. Look forward
to meeting you on that yacht -- or anywhere else for that matter. Best,
XXXXX”

So
even great info like that on BoomBustBlog takes some massaging to make
it fit for a large audience, and BBB is the best case scenario in which
the info is reliable, relevant and newsworthy.

In
many cases, if not most, professional reporters chase down info from
bloggers only to learn it doesn't pan out, the source was compromised,
the info was wrong or unsubstantiated, it doesn't apply to a broader
audience or isn't relevant to the community the MSM professional serves.

The
result there is just lost time -- and money -- that the newspaper eats
as part of an important and ultimately valuable service of sifting and
winnowing in order to make the reader feel he or she got their 75 cents
worth out of the daily product.

This
is unavoidable, the first time around. As I stated earlier though, this
vetting process is only necessary once per content source and is not
different than interviewing a new reporter or editor for a job, or
procuring any other asset.


Now,
I'm not saying there aren't myriad problems of conflict, structure,
credibility, access, relevance and even corruption in the MSM. There
are. Those situations are wrong and a disservice to customers,
advertisers and the public as a whole.
I'm
just saying somebody needs to figure out a way to combine the
impressive ability of the blogosphere to churn up data with the
difficult job of MSM professionals who read, evaluate, double-check,
simplify and contextualize the information. And they have to find a way
to make that process profitable without government subsidy if the goal
is to provide private, independently operated, professional sources of
information that are critical to the health of our nation.

Your
model is a step in the right direction, but there are holes that need
to be filled to make it work on a national and international scale.

Yeah,
well it is was something that just popped into my head and I threw into
a post at 3am. I am working on filling the holes now. As a matter of
fact, there are a lot of holes in my head that I need to fill as well
J

This is a follow up email from the same MSM professional:

I've
been thinking a lot lately about the market-forced transitions
occurring in the MSM in light of our discussion and I think there is
strong merit to a model similar to what you suggested, if some big
wrinkles can be smoothed out.
I've already listed some concerns, but this is a new one.
It seems there's already a crude version of your pay-per-source model already in use in the cable news industry. Currently,
cable news shows hire "experts" in fields such as medicine, the
military, politics etc., to be on retainer and comment on issues raised
in stories.
The
original idea was to ensure the networks had a stable of qualified
experts who would be beholden to the news agency when they comment,
which in theory would increase the credibility of the reports. The
first issue is once you have somebody who is “beholden” to an
institution, you have already injected an inherent potential conflict
of interest.
The problem is the model was quickly corrupted
by both sides. Media companies became infatuated with certain experts
not b/c they provided the highest-quality content, but b/c they were
perceived as good for ratings. This
could only happen when the “experts” appealed to the generalist market.
The specialist market should, most likely would reject the opinions of
the popular crowd. Take James Cramer, for instance. The average Joe
investor seems to look up to him, but he really doesn’t have a strong
following in the hedge fund manager community, now does he?
The
"professional sources" quickly realized they could leverage their
newfound notoriety into lucrative consulting contracts, speaking tours,
etc., and, unencumbered by the rules journalists follow to prevent
conflicts of interest, didn't disclose their own conflicts, even
conflicts strong enough to clearly corrupt their integrity as news
sources.
This can be solved by
contractually requiring all conflicts and reasonably derived potential
conflicts to be declared by all pundits.

Media
companies looked the other way b/c they realized it was cheaper to take
a couple press releases and pay some dueling "experts" to yammer than
it was to hire professional journalists and pay for their time to
research issues and report on the results.

Spend one hour watching Fox, CNN and MSNBC to witness the results. I’m sorry, but I refuse to watch Fox, and I may be offended if you request such againJ Spend another hour researching their finances to see how it is a system that produces diminishing returns.
Your
model, without some tweaking, would pave the way for bloggers to simply
wade further into the "professional source" business. It would
certainly be a good way to make blogging more lucrative, but if I were
running a news organization I would have serious doubts about how it
served my customers.
See my conflicts disclaimer comment above.
This
is the long way of saying that if we want to protect whatever integrity
exists in professional journalism, any new models need to account for
the cost of maintaining a wall between advertising and content, time to
independently verify information and disclosure or regulation of
relationships sources may have with subjects in the news that are
pertinent to the coverage.

And,
if we intend to maintain independence from the government, the model
can't ask for the government to regulate disclosure. It would have to
be a system that pays for itself via the marketplace, most likely
through a combination of advertising and subscriptions.

It would be a difficult, but incredibly fascinating, exercise to found a news service based on a new model.

For
financial analysis and investors, meritorious selection is very easy.
Everybody should be evaluated based upon their track record. The better
you have done (in absolute terms, not relative terms) and the longer
you have done it, the more credible you are. Plain and simple! If you
actually put a percentage gain/loss figure in that little streaming
ticker that I see under everybody’s talking head on CNBC, the viewers
would look at many of them in a totally different light. A Totally
Different Light!. The same goes for bank analysts, management
consultants and so-called institutional investors. It doesn’t matter if
you are totally unknown or Warren Buffet. This is why I have decided to
publish periodic and comparative performance reports for my work. See past performance.

The
following is an update to the initial blogger licensing model that I
posted (I’m shocked nobody picked up the typo in the original one). It
is one of several scenarios of MSM leveraging the blogosphere for gain.

Scenario for the world's best red velvet cake recipe article

Larger audience, but likely less price elasticity

MSM unique viewers (not impressions, but users)

1,500,000

x Blogger fee per unique viewer

$0.0005

x Days content is run

7

Fee to blogger for the article

$5,250.00

Contractual commitment days for blogger

84

Annual content fees

$63,000.00

Added
value in reader interaction via comments, bringing additional and
significant credibility and stickiness to the content and MSM site (MSM
site must allow blogger to cross promote his own site as well) to be
negotiated if added value is measureable and tangible

An ad revenue split would be a prime example of a win, win situation here.

At
first blush, I can see the MSM management looking at these numbers
saying, you must be out of your damn mind. Why would I pay $5k for a
cake recipe. That mentality is why I feel many in the MSM will
eventually get ran over by the Web 2.0 paradigm. Anybody who feels
compelled to ask that question just doesn’t understand that you are not
paying $5k for a cake recipe, you are paying $5k for instant
credibility, more credibility than a general reporter can ever garner,
on the topic, and near guaranteed, concentrated stickiness. You are
also paying for a depth of knowledge that is impossible for a layperson
to posses; even a layperson who job it is to seek such expertise. The
average MSM executive wouldn’t even wince at paying $5k for
conventional advertising and may even consider it a bargain depending
on the impressions purchased per dollar. I believe we have progressed
passed the days of impressions and eyeballs, and we are not entering
the realm of deep interests and interaction.

In the example above, the best possible Red Velvet cake available is made by my personal friend, Cakeman Raven, and anybody who has had the occasion to taste his product will not disagree. He is also quite the marketable personality. Customer
testimonials, and simply eating his cake, is what establishes
credibility, and his knowledge of the subject is deep and broad
.
The social interaction capable in having him produce and stand behind
the specialized content portends stickiness, micro subscription fees
via premium content and social media networking
(Facebook/LinkedIn/Twitter/discussion Group/interactive comment style)
that is worth far more than the $5k in total. Every dollar over $5,250
is incremental value, assuming all costs were taken into consideration.

You see, the major asset of the MSM is
eyeballs and volume. The value (and money) to be extracted out of that
asset is segregating and extracting the specialist’s interests out of
that mass volume and delivering them specifically what they want. They
will be willing to pay MUCH more and spend MUCH more time in the medium
if their button is hit. Thus, the
key is to transform the MSM from a large generalist outlet to an
intelligent, dynamic congregation of diverse yet DEEP specialist
content.

Scenario for finding the next multi-$billion REIT, bank or insurer to collapse

Smaller audience, but likely greater price elasticity

MSM unique viewers (not impressions, but users)

500,000

x Blogger fee per unique viewer

$0.0100

x Days content is run

7

Fee to blogger for the article

$35,000.00

Contractual commitment days for blogger

42

Annual content fees

$210,000.00

Added
value in reader interaction via comments, bringing additional and
significant credibility and stickiness to the content and MSM site (MSM
site must allow blogger to cross promote his own site as well) to be
negotiated if added value is measureable and tangible

An ad revenue split would be a prime example of a win, win situation here.

Using
my blog as an example, I don’t appeal to everyone. As a matter of fact
I probably don’t appeal to most which makes my content for the extreme
minority, but those who do have an interest have an extreme interest.
Users spend 40 and 50 minutes at a time on the site. They sign in or
view nearly every day, and I am able to charge a significant multiple
of what the MSM financial rags charge. The key is to take this
specialist content and open it up to the masses, 5% of which will have
aligned specialist interests. You take that 5%, and instead of
targeting a few hundred thousand as I may do, you funnel it through the
existing MSM infrastructure to target 10 million. 5% of 10 million is a
lot, particularly when you can get 100% of that 10 million by finding
the best producers of that 5% content and stringing them together to
produce what I alluded to above – a diverse community deep specialist
interests content. With the social networking technology freely
available through open source code and the instantaneous search
abilities of media tech titans such as Google (whose technology should
be replicated, not licensed, to avoid concentrating too much power or
influence in one company), this is NOT hard to do. It can be ran
alongside the generalist media rag, but I feel in a relatively short
period of time it will come to dominate. Just imagine as one deep
specialist content category is hyperlinked to another, which is then
linked to another creating a daisy chain of knowledge and expertise
that will draw in viewers who thought they had no interest whatsoever
in a particular topic, only to be sucked in through the curiosity of
how arcane industry “A” affects their favorite cottage industry, hobby
or interest “B”. A perfect example of how this could have been set up
with the correct infrastructure was the GGP article (and GGP: Requiem) regarding Las Vegas casinos (gaming industry people sucked into learning more about REIT valuation and development) or the Giants of Wall Street
article where football fans could be sucked into learning more about
derivatives. I know the reporters behind both of these stories did an
above average job in ferreting out the info for the stories, but just
imagine if the infrastructure that I recommended were in place…

Costs

Part
of the problems of the MSM paper outlest is cost. They are paying too
much to support an infrastructure that is generating too little. You
would think that as large as some of them are, the economies of scale
would give them an advantage over what I may be able to create. Well,
if you thought that you are wrong. The MSM, in general, just don't know
what they are doing when it comes to new media. They should have, 10
year ago, bought out those young upstarts that are now taking their
business. Like it or not, bloggers are competing successfully with MSM
outlets. As an entrepeneur, my first call to action would be to
jettison those things that a) I suck at, and b) are too expensive to
profitably maintain.

That means making the AP
the not-for-profit distributor for more than just pictures and news
stories. The AP should be a standardized techonology distribution
platform from which the newspapers "blog" as some could say. Google
does it (and does it for free with great success, may I add) with Blogger.com. Six Degrees does it with Typepad.com
(with great success, and for free may I add). The AP should do it for
NY Times, Dailey News, Washington Post, etc. They pay XXXX nominal
dollars into the tech pool and get a standardized platform out of it
from which to launch theie platform. Then, if they want to
differentiate themselves with customized technology widgets, they can
feel free to do so. I think their resources woudl be better served
putting that time and money into their content, but who am I to judge.

Here
we have, diminished costs with a standardized outsourced tech platform
without leaving too much influence to for profit companies such as
Google, who, if they decided to get into the proprietary content
business, would litereally crush much of what's left of the MSM. With
the freed up monies and resources outsourcing tech, they could focus
much more on investigative journalism, blogger co-ventures, and all
types of creative news content, not to mention streamlining by focusing
on core competencies.

As usual, questions, queries, comments and (polite) criticisms are quite welcome.

Last modified on Friday, 12 December 2008 23:00