The X Prizes for news (and media)

Posted on 25. Sep, 2009 by in Hyperlocal, News Ecosystem, Revenue

A conversation with our Knight Foundation friends at Aspen inspired me to think through what an X Prize for news could accomplish. Then this week’s report in the New York Times about the awarding of the NetFlix X Prize – and the far greater value it created, not just for NetFlix, but for its participants and others – inspired me to buckle down and open that conversation here (and at my blog).

I’m not asking idly. With the right structure, I’d seek funding to administer such a prize at CUNY and we can hope that smart companies, organizations, and patrons will see that an X Prize could be a way to innovate aggressively and openly. Or is it?

We must start with a question: What is the core problem the prize is trying to solve? It can’t be just about getting more revenue for existing companies or thinking of another way to tell a story or, Lord knows, making something cool. The best expression of the problem will yield solutions that must be groundbreaking and new, quantum leaps undertaken on daring, hope, and hubris. Innovation won’t come from incremental changes to an existing structure. We know that too well.

Another key question is how success is measured – tangibly, metrically, from a distance, not emotionally. In something as amorphous as news, that’s going to be hard.

Next, we have to define news carefully – that is, broadly. News shouldn’t be defined as we do today, for the winners of the prize may create something we haven’t seen yet. Our definition of news is probably just about a community informing itself – better informed individuals and society (“better” as defined by them).

Finally, we have to recognize that the problems to solve are centered more on business issues than product issues – on sustainability – but that is not to say that the product should not be radically rethought as part of this process.

I see three key problems to solve for news (which I’ll make conveniently alliterative):

1. Engagement. In our most recent phase of the New Business Models for News at CUNY (funded by Knight), we used the sinfully low industry standard for engagement with newspaper sites: 12 pageviews per user per month. Facebook users have that much interaction with the service every day. Time spent online in social sites and blogs accounted for 17% of time overall – vs. 0.5% for newspaper sites, according to separate estimates (and advertising on social sites doubled while it plummeted for newspapers). For God’s sake, if news services were truly of their communities, they would have many times more interaction with many times more people in those communities and interaction would go far beyond reading.

Engagement is a core business problem. If you plug in higher numbers into our NewBizNews models – and we will, in our blow-out cases – you’d see much better businesses able to support much more news. You’d see news as a very profitable industry again.

So let’s say the first challenge is to multiply a community’s engagement with news. How is that to be done? Surprise me. Shock me. Invent entirely new ways, new platforms, means, and media to gather and share news.

How do we measure engagement? I would not measure by pageviews – in great part because I do not want contestants to just assume that it’s a site they’re inventing. See one more time Marissa Mayer on hyperpersonal news streams and me on hyperdistribution. News has to go where the community is and we no longer expect the community to come to it. It has to be of and among the community. Time is a slightly better measure of engagement but it, too, is shallow and can be manipulated with tricks.

No, engagement is more about ownership: people believing that and acting as if they owned this thing. It’s theirs – as Wikipedia’s and craigslist’s communities believe they own those properties and as each of us believes we own our Facebook pages or Twitter feeds or blogs. But an opposite danger lies there as well. One shouldn’t measure engagement by contribution (as many of us did in the early days of the web). Go to Wikipedia’s 1 percent rule.

So I’d say the measurement has to be made by a combination of metrics – say, time combined and attitudes: Take a baseline a survey of users of news sites today against certain beliefs – “My newspaper.com makes me part of the community of news”; “Newspaper.com is a member of my community of news just as I am”; “I feel a stake of ownership in newspaper.com”; “I feel a measure of control over newspaper.com”; “I feel a responsibility for newspaper.com”; “I am better informed with newspaper.com”. Then require that the new thing multiple some index of these factors by an impressive amount. If Facebook is 30 times more engaging than a newspaper site, then how about 10 times, even five times – that would make a huge difference in the business of news.

2. Effectiveness. This is effectiveness for media’s other customers, its paying customers: advertisers, or perhaps we should say marketers (to include ecommerce and not limit the business relationship).

News sites – like most media sites – are still selling what they used to sell in their old media: space, time, eyeballs, scarcity. Google won business away from them by selling something else: performance. Google thus takes on risk on behalf of advertisers – if Google doesn’t deliver relevance and you don’t click, it doesn’t get paid – and so its interests are now aligned with its advertisers’. And because Google created an auction marketplace that takes advantage of abundance – there is no scarcity on the internet – then prices are lower. For an advertiser, what’s not to love? That’s why I roll my eyes when old media people complain that Google stole their money. No, Google competed and saved advertisers their money.

At the same time, I believe that news and media will be supported primarily by advertising and so they had best figure out new ways to serve advertisers – even as advertising shrinks. For purposes of sustaining news, I think it’s best to concentrate on local advertising, because – in the U.S., at least – most journalistic resource is expended locally, much of government is local, there is opportunity to grow there, and the crisis in the news industry is primarily local.

The solution cannot be about increasing clickthroughs to banners. That merely extends the bullshit online media are selling. No, it has to be about much richer ways to measurably improve merchants’ businesses: to add value.

Ah, but measuring it is the tough part for that itself sets the shape of the invention: Is it more people to a web site, more people to a door, more sales of particular merchandise, better brand awareness, better relationships? Help! What do you think?

At CUNY, with additonal funding, we soon hope to do more research with local merchants for NewBizNews to get a better sense of their needs. But then again, they may not know it until they see it. I’ve spoken with advertisers who still don’t understand why a customer’s Google search matters to them.

So for the sake of discussion, let’s say that one could take a test group of merchants and used the methods and means created by a contestant to utilize a relationship with online media of some form (that is, advertising) to improve their sales by N percent over N period with at least an N return on investment. In the end, it’s simply about improving their businesses, isn’t it?

Any multiple of this effectiveness would also have a profound impact on the sustainability and profitability of news (so long as it’s a news entity that makes it possible). In our New Business Models for News, we used what we believed – though some disagree – was a conservative $12 CPM ad rate. It was also conservative to presume old ad models: i.e., banners. But then Google’s Marissa Mayer turned around and talked about hyperpersonal news streams, emphasizing the business potential: If you know that much about people to be hyperpersonal and if you are incredible good at targeting – at discerning intent and delivering relevance – then the efficiency, effectiveness, and value of marketing there would skyrocket. An X Prize winner would think this way.

3. Efficiency. This is to say cost. What does it cost to produce news, to gather and share what a community knows? The closer that marginal cost can be brought to zero, the more news we can afford. That’s good for society.

That may not sound good for professional journalists, I know. And employment of journalists has been the default measurement of the health of news. (This is why I have quibbled with BusinessWeek’s Michael Mandel’s analysis, here and here.) But I’m not suggesting that there are necessarily fewer reporters (there will be fewer production people). Indeed, in our New Business Models for News, we ended up with a equivalent number of people doing journalism in our hypothetical market, only they weren’t all in a single newsroom. Most worked in entrepreneurial ventures that many of them owned, and they as a group devoted far more of their time to reporting. The net result, we believe is more journalism because it is more efficient journalism.

So I’m suggesting that journalists be made as efficient as possible and the way to do that is to make them highly collaborative and to take advantage of the work people are willing to do just because they care – the hundreds of millions of dollars people contribute to Wikipedia, adding value to it and making it both supremely efficient and incredibly valuable.

So I suggest this prize start with the goal of maximizing the journalism, finding the best ways to get the most relevant news to the most people at the lowest cost: the best way to make the most people feel well-informed from a sustainable venture. Once again, we must be cautious about the definition of news, not limiting it to the broccoli served cold currently. What do people want to know and need to know and how can we get that? What is the news that isn’t shared that has to be reported and investigated and why and how do we get that? So I might start by finding communities and having them define news and what it means to be informed, what they need to run themselves. Of course, we also need to define quality. This needs to be reliable and useful information.

How do you make a measurable contest out of that? I’m not sure. Perhaps we find a community and find out how many people want to know about, say, their school board and town board and tow events and then measure what they want to know now. Then the winners made their community better informed by the greatest margin at the lowest cost while still not losing money.

In the end, if we can find new and daring solutions to these problems of engagement (formerly known as audience), effectiveness (advertising), and efficiency (operations), we can improve news as a product (and process), its relationship with its public, its value to its customers, and its sustainability. That’s the goal. It’s going to take new thinking and experimentation to get there. An X Prize is one way to get that.

What do you think?

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6 Responses to “The X Prizes for news (and media)”

  1. Rosenblum

    25. Sep, 2009

    Jeff,
    I think the problem is not with the journalism.
    We have an over abundance of journalism, and more is being made every day.
    The problem is on the monetization side.
    The whole model of ‘selling’ advertising is what now has to be changed, just as we have already successfully changed the content producing side. Time to stop screwing with the content production and start paying attention to the money. In fact, I would say, follow the money.

    The answer I think is to do to advertising and monetization what we have already done so successfully with content -open the platform and monetize it.

    At the moment advertising is still done by strange people in the back room – the ‘ad sales’ guys. Because we came from editorial, we tended to give them a wide berth. Wrong!

    Instead, break out the revenue side and turn it over to the people. Create a free market for ads.

    What do I mean?

    Instead of the ad sales people selling ad space in the New York Times dot com, allow anyone who can sell space. Let them make the ads. Let some creative 23 year old on the Lower East Side with a video camera go out an shoot a few really creative spots in Bloomingdales and then auction them back to The Times. Give the kid 30% of whatever he gets. In other words, attach value to the ads and open the process up to anyone and everyone.

    Would the public at large be able to make and sell spots. I think so. Would the Time take the revenue from the never ending auction? I think so. Would Bloomingdales participate in the process? I think so. I think it would be a lot cheaper than hiring Saatchi to make the stuff.

    Enough with the content! And enough tinkering with the old model.

    Time to rethink the revenue side.

    Like the Good Book Says: Follow The Money!

    Reply to this comment
  2. Hungry Gardener

    25. Sep, 2009

    Love idea of X price for new news platform. However, something that mystifies me regarding analysis of new news is best demonstrated by the question — Did wikipedia create jobs (or opportunities) for (reference) librarians? Not sure why people in news business believe new news platforms will create jobs for journalists?

    Reply to this comment
  3. Katie Delahaye Paine

    27. Sep, 2009

    As someone who was born with printers ink (diluted with martinis and manhattans of course) in my veins, I think this is brilliant. My father, the former publisher of Fortune, told me that by the year 2000 Time Inc would no longer be printing magazines. He died before he could find out how wrong his predicition was, but I always wondered whether he might have been forecasting the merger with AOL.
    As it happens, after following in my parents footsteps (mom was editor-in-chief at Harpers Bazaar) for awhile, I got into the marketing research and PR end of the business and have been measuring engagement for the past three years. http://kdpaine.blogs.com/themeasurementstandard/2007/11/measuring-custo.html
    With P&G’s announcement this week that they would ONLY pay for engagement, I think the problem of defining engagement will be solved before you get your x-prize off the ground. But how to monetize that engagement is key. If we could figure out how to get people like me to pay the media news outlets for the stuff I can’t live without the problem would be solved. I routinely pay $20 or more for Hotel internet just so I can read Maureen Dowd and listen to my local NPR station on the road — but barely give that much to NPR when they ask for it. Is ther e a way to monitize the fact that I follow WMUR on Twitter not for the news, but because they ask for story ideas every morning and I therefore feel connected to the news process? I’m sure there is, and that’s why I LOVE the idea of this prize.

    Reply to this comment
    • Jeff Jarvis

      27. Sep, 2009

      Katie,
      Wonderful comment. Thanks.
      Good point on P&G; I should have linked to that and so now I will.
      Your father won’t end up being that far off, I think….

      Reply to this comment
  4. murmur

    24. Oct, 2009

    The media should function as the “fourth estate” as much as possible.

    WIKIPEDIA: Novelist Jeffrey Archer in his work The Fourth Estate made the observation: “In May 1789, Louis XVI summoned to Versailles a full meeting of the ‘Estates General’. The First Estate consisted of three hundred clergy. The Second Estate, three hundred nobles. The Third Estate, six hundred commoners. Some years later, after the French Revolution, Edmund Burke, looking up at the Press Gallery of the House of Commons, said, ‘Yonder sits the Fourth Estate, and they are more important than them all.’”

    Those with power, influence and money need to be continually held accountable if their actions impact others in some specific way. Investigative journalism is still needed today and will continue to be needed in the future.

    The new media can be used to elicit topics and specific information for investigations. Funding should not come from advertisers or readers, but from a pool of money obtained from large corporations or organizations. Once a corporation reached a certain size or had a certain profit profile, they would contribute a small percentage of their earnings to the pool. Independent news organizations could compete for the best investigative reporting “prize” in different topic categories.

    Reply to this comment

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