Sunday, June 28, 2009

What's that line about to a hammer ev... (UPDATEDx2)

This is in response to Connie Schultz's article Tighter copyright law could save newspapers:
David Marburger is a First Amendment lawyer at Baker Hostetler who has represented newspapers, including The Plain Dealer, for nearly 30 years. Daniel is an economics professor at Arkansas State University.

A panel discussion about newspapers' future sparked David's idea on how to save them.

"I heard [Plain Dealer Editor] Susan Goldberg talking about how revenue from online advertising is pathetically low and newspapers can't recoup their investment. As soon as she said it, the wheels started turning. You have all these free riders like Daily Beast and Newser and local television stations aggregating your stories online while diverting readers and advertisers from your site. And they're doing it for a fraction of the cost of the newspapers that generated the original copy. "And it hit me: All those theories out there on how to prop up newspapers -- why isn't anyone saying this? Why aren't we talking about how this free-riding by aggregators affects the market rate for everyone?"
What's that line about to a hammer everything looks like a nail? If the solution to your business model is funding an army of lawyers than it's time to write a new business model. And the last person I would be asking business advice from would be an economist. Open any business section on the planet for my reason why.

This is the same tactic that the record industry tried with file sharing. It was also the tactic used by the old UNIX vendors against the modern open source Linux operating system. It turned their customers into their enemies. You can guess how well that's worked for them. Technology savvy bands such as Nine Inch Nails discovered that they could make more money by working within this new dynamic instead against it. Eventually record companies retooled their relationship with technology and learned how to profit off of it through commercial download sites such as iTunes and ring-tones.

It was easy for record company executives to blame technology as they funded an endless army of boy bands and Britney Spears clones. "Why oh why aren't people buying our records? It's those damned file sharers." The fault was not in their stars, but who ever figures that out?

The money in modern media is metadata. Google makes its millions by trying to find as much information as possible about the people viewing content so that they can create targeted marketing. One of the all time best sources for that information is newspaper portals. I would bet you a Graeter's sundae that if you talked to anyone in that industry and they would tell you that newspapers are barely scratching the surface of leveraging the amount of information that sails through their server logs every time someone clicks a link on their sites.

One of the things that I discovered back when I was blogging was that by pooling together logs from other allied sites we could find out geometrically greater information about who was visiting our collective sites. It was how we discovered who was anonymously posting threats on our sites during a certain Senate race that you might remember. Newspapers, thanks to their intense reader loyalty and their strong bonds to local communities, are one of the greatest metadata assets on the planet. If I was them I would be funding an effort to maximize leveraging those relationships instead of pursuing legal or political solutions.

Google and every other marketing entity is all about finding information about the people viewing their content. There is no better source for that metadata than the readers of newspapers.

In the future everyone is a parasitic aggregator. (Ideas are parasites. They feed off of the brains of the living.) A prime example of this is Facebook, where I found this article since Connie posted it there. With a click of a button I could share this article with all of my friends.

The thing is that the technology is already being developed to make aggregate portals obsolete. By the time you've figured out how to profit out of their exploitation of your work they will already have been replaced by the next version of new media; the circle of life, as they say.

Media is all about parasitic leaching, as you call it. For instance Sy Hersh leaching off of Woodward and Bernstein's hard work on Watergate. Ask any political blogger and if they're worth their salt they can tell you a story of how a newspaper "leached" their hard work without even giving them credit. I created my Ohio 2nd blog specifically to take advantage of that dynamic. Rather than complain about it I used it to my advantage. I wanted people to "leach" my ideas and thus cause the political landscape in Southern Ohio to actually consider progressive politics. It cracks me up when bloggers complain about it. It makes me sad when newspaper reporters do. I love newspapers too much and the fact that they don't get it really worries me.

The web is an aggregator. Google is. Linking is. Facebook is. It's all "parasitic".

Language is a virus. - William S Burroughs.

Here are some more links on the story: