von Redaktion Carta, 6.11.09
We think it was the media economy keynote of the year. Carta is proud to present a transcript of Jeff Jarvis’ keynote to the Printgipfel (29-10-2009; Medientage München) together with a vimeo-video of for everyone to include.
Here is the transcript:
“Danke, es tur mir sehr leid, dass mein Deutsch so schlimm ist. Also muss ich Englisch sprechen.
I’m very sorry that I am not in Munich with you, I couldn’t be, I explained that I had surgery a few weeks ago. You can read far more detail than you would like on my blog about that.
Every time I go to Germany, I have seen in the past a lot to learn and a lot of development going on. A lot of new ideas that work there, differently from here. The fact that Burda has invested in Glam I think is something that American media companies didn’t get. Holtzbrinck has its laboratory, Axel Springer has an impressive amount of its revenue now in digital, which American companies don’t have. Kai Diekmann has not only his …. but his blog. WAZ has things in local that beat anything in the U.S. There’s a great amount of innovation happening in Germany.
However, if I may be so bold, I will also say that I am worried about the talk that I hear from the German media world. I am worried about the effort to protect the old model. I am worried about treating Google as an enemy. I am worried that this means, perhaps, the market doesn’t understand what is really going on and the opportunities that exist.
I would argue that Google is not an enemy, Google is a model for how we should use the Internet. That might sound like an advertisement for my book “Was würde Google tun”, and in a sense it is, because that’s where that book idea started.
I was talking to a room of media people such as you, just saying: “Rather than viewing aggregators and Google as an enemy, we really should be trying to see how they’re succeeding so well and to follow their model. ”
There is very simply an entirely new business reality to media: Efforts to protect the old model will not work.
And I think that what I’m seeing now is that financial crisis has come around the world and the media, and in Europe and in Germany, I see a lot of this kind of talk and it worries me, because I think that starts to affect the innovation and the entrepreneurship that’s gonna go on there. We have an entirely new structure of media and here’s how I like to look at.
We had a content economy when we could obviously sell many copies of anything we created. Now we have a link economy, where there is the need for only one copy of anything online. It is the links to that content that give it value. On the Internet, content with no links has no value. It gains value as it gains links. And thus, I argue, Google and other aggregators like it (I work with one called Daylife), plus blogs, plus twitter streams, all add value to content when they send links to it.
There are a few imperatives, a few requirements of this link economy.
The first is that you have to have your content open to the world. If you’re not searchable, you will not be found. So talk of going behind pay walls I think is dangerous because you potentially lose audience, you lose discovery. And you have unlimited competitors out there that will be free.
The link economy also requires that you take advantage of a new kind of efficiency. You have to specialize. Do what you do best and link to the rest. Media companies cannot be all things to all people anymore. We have to specialize and find out how we target business in this media world. It is a smaller business. But is a targeted, efficient, effective, and profitable business.
Finally, the third rule of the link economy is that he or she who gets the links is the one who has to monetize them. So all this talk about saying to Google “You owe us money, because you use our content.” – Well, I disagree with that. Google is sending you links, and that is the value you get. Once you get those links, once you get that audience, what you do with them is your responsibility. And so the question really becomes, how you take advantage of that.
So I’m troubled to hear Angela Merkel talking about new copyright laws. Same thing we have here in the US. I think that attempts to protect an old model in a new structure of media.
At the City University of New York, where I teach, we’re in the middle of a big project on new business models for news. And the markets, of course, are different in the U.S. and in Germany, but I think there are some similarities. We found that hyperlocal sites, sites covering a small town – fifty thousand people – were bringing in between $ 100.000 and $ 200.000 advertising revenue. And these were journalists who frankly are not good at business and don’t know how to sell ads. Even so, they we’re getting a real business.
As we looked at what happens in this market, we imagined the worst happening. We imagined a metropolitan paper, a regional paper dying. We don’t want to kill it, but everyone says: “What happens if this paper dies?” So we looked at that, we picked a market, the size of Boston in the U.S., five million people. We saw that if you had these successful blogs of 50.000 people each earning money, let’s say there’s a hundred of them in the market place we asked how you can improve their value.
Well, one thing you can do is to improve the services they sell to their local advertisers. The other thing you can do is to create networks like Glam that enable those sites to get regional advertising and then higly local advertising. Four or five towns or just football fans or something like that. We believe that these blogs could bring in as much as $ 300.000 a year, with the right structure.
We then did see the opportunity for a news organization in these markets. But it’s much smaller and it has new rules. It still has reporting and journalism, but now it must work collaboratively, with this network of sites and with their audience. It must find the efficiency that online brings to reduce the cost structure.
We saw a need to create networks, but in the end the big lesson was that the future of media is not going to be one company or another company, a bad company to a good company, only one product. It’s going to be an ecosystem of many different players operating under many different models that together become a new structure of media.
So in that new structure, the opportunity we have is not to own everything anymore, the opportunity we have is not to have to pay for everyone anymore and the cost that comes with that.
The opportunity is to work as a platform like Google and the networks like Glam, that bring together value in far more efficient ways. So we have to rethink what we are as media companies and that is very hard, because the future is a bunch of very small companies. And we have used to be very big. And I am not sure if it’s possible to go from big to small. It’s very painful. There’s a lot of jobs lost in that process. But there’s also opportunities I think to find ways to invest in this new structure.
We also have to think in very distributed terms. There was a college student who said to a researcher here in the U.S., in the New York Times, a year ago: “If the news is that important, it will find me.” And that’s kind of frightening for us in media, I think, because we were used to the customers coming to us, the readers came to us, instead we now have to go to them. And we have to think in different ways “What would we do?” and of course we do this now, we have RSS feeds, we have some of our writers who are on twitter, but I think we have to look at the future of an entirely new structure of the Internet.
If what we are going through so far is new and scary, we haven’t seen anything yet. It’s going to get newer and scarier.
When we presented our project on new business models for news at the Aspen Institute in July, Marissa Mayer, who is the head of search and user interface at Google, said “Oh, this is very interesting that you talk at hyperlocal content, Jeff, but I think the future is instead hyperpersonal news streams.” We have seen bits of that with Google Wave and now Mozilla’s Raindrop. The idea is that I pull in individually all of my content. My RSS feeds, my email, my twittter, all this stuff together, it’s a mess.
What companies like Google are looking at is: How do we help with algorithms, with computers, prioritize that for you, make more sense out of that. Put the most important emails on to the top. If you’ve read this story over the last few days, put the latest news for you on top.
The question now for us in our business is: How do we insinuate ourselves into someone’s stream. To wait for them to come to our site? Well, we want that, we need that, that’s why links are beneficial, but even as I argue for the link economy, there’s something that’s new coming along.
So the structure of the media business, I think changes in more profound ways. And our challenge is to figure out not how to protect our old structure but how to exploit the new structure.
And I think that’s gonna happen with entrepreneurs. Just today I see the news that an entrepreneur in Germany is starting The European, Robert Maxwell’s old brand there. In The U.S., yesterday, the Washington Post finds it has a new competitor in Politico. Politico has been running a national political site, like The European, and is now starting a local site for Washington, with the former editor of washingtonpost.com.
The big question for us is: Where is the business future of media? It’s likely that it is not in institutions, it’s in entrepreneurs. The entrepreneurs are gonna be building the future of media. And as we look at our own businesses and at government policy, we have to look how to encourage and support that entrepreneurship.
I run a course at City University of New York where I teach an entrepreneurial journalism. I have students who received seed money and are now out starting their own businesses. We are seeing in the U.S. a lot of not-for-profit efforts to start local journalism and reporting. We’re seeing national efforts like Politico. We’re seeing all kings of new combinations coming up. And I think the real question is: How do we support that kind of entrepreneurship to build the future?
Protection alone is not enough. In our business, we have many challenges we need to invest in. I proposed recently the notion of an “X Prize” (?), trying to solve one of our biggest problems.
Among those, one of the bigger problems we have is engagement. I don’t know what the numbers are for sites in Germany, but in the U.S. most news sites get about 12 page views per user per month. That is criminally low. Facebook gets 12 page views per user per day. It gets thirty times the engagement of a news site. And if a news site thinks it is truly part of the community, I don’ think it is.
Part of engagement is rethinking what we do. The notion that all we do is turn out a product every day, I think it becomes outmoded. We don’t really work in a product world, we only did because we had printing presses and broadcast times.
We really are about process. Journalism and news is a process that doesn’t begin and that doesn’t end. When you think like that, I think you open up your world to collaboration. One of the lessons from Google is that it always puts out new products as a beta. And it says: “This is unfinished, it’s imperfect, help us finish it!”
The next generation of interactivity, I think, is not what we have now, which is you are allowed to comment on our articles, the next generation is collaboration. How do we work with the public to create acts of journalism and media and things. Wikipedia calculated the value of the edits, just the edits on Wikipedia, and they put a small per-hour-rate to that. They found that the people were giving Wikipedia labor worth hundreds of millions of dollars a year. That creates huge value. So how do engage our audience in ways that they’re more than audience?
The second problem we have is effectiveness for a whole new range of advertising.
The third problem, I think, we have is how to find efficiency. Rather than trying to own and do anything on ourselves, I think that we have to find ways to work collaboratively, so we can work more efficient. Our new business models for news project found one company replaced by more than a hundred companies. We found, yes, much less revenue, but also much less cost. It returned journalism to a profitable state, a sustainable state. So that it can continue to live and keep going. What we need to look at here is: Where to grow news and journalism?
Throughout the years I’ve come to Germany to do business since the nineties, when I invested in a company called “Cassiopeia”. It is no more, we made a few mistakes. I came back, as I say, at Burda and Axel Springer and Holtzbrinck and WAZ and other places, I think there is incredible innovation, and invention that’s going on in German media, but I think that right now it is a very frightening time, as we see as Dr. Burda said: “Our dollars turn into lousy dimes or lousy pennies”, as he said at DLD last year.
Yes, that’s true about our old business models and trying to maintain what we had before is going to be impossible. It can’t work. We have to see what the future is, we have to face it bravely. We have to build that future, and the way to build that future is to think as entrepreneurs.
Frank Thomsen: Jeff, I hope you could hear the applause, it was a warm applause. Thank you so far, this is the print summit, so, you were talking about how to deal with the online future, but how to deal with print? Do you believe in the print business?
I think that we have to stop to defining ourselves by our medium. And print still has value, will still work in some ways. But I think if we define ourselves by print, that’s not how the public defines us, they define us by our value. So I would argue that we would have to get past that idea of thinking in print. Print brings with it an incredible cost structure. Yes, it brings higher revenue today, and yes, advertisers still pay more for print, and yes it’s hard to give that up. But I think we will not have to look at individual revenue lines, but instead at the entire profit and loss statement of the business.
I get accused of trying to kill print. I don’t. But I think that we have to face harsh questions about print and see whether or not it really is a sustainable business. I’m not sure it is. I think it is temporarily. And we have to drive our business, our audience and our advertisers into the future and that future is online.
Thomsen: People even say, you dance on the graveyards of print …
There is cause and effect problem here, right? It’s about killing the messengers we say. I’m not causing print to die, nor do I want print to die, but I think we see it happening before our very eyes.
Forty years ago, the Internet was created, right? We probably didn’t realize the implications forty years ago. But fifteen years ago, the first commercial browser came out on the Internet. Everyone at that moment in the world was pretty impressed. Everyone. And that fundamentally changed our business. And I don’t think we did a good job of changing. I include myself in that. I worked at a print company. I didn’t do a good enough job. And I think that we have lost a lot of time and a lot of effort.
Now, the market is different in Germany than in the U.S. But I think you should look at the U.S., as we say auf Englisch, as the canary in the coalmine – the early warning of what is to come. We are seeing paper companies here go bankrupt right and left. We are seeing papers die. But we are seeing new things rise from those ashes. So no, I don’t dance on the grave, but I do think it’s time to be harsh and blunt and honest about this – and to stop being polite.
Thomsen: How important is technology for media companies these days and in the future?
It is the future. There can be nothing more important than technology and the awareness that all we have to learn is change.
I teach journalism, I believe in journalism, I believe in media, I teach journalism, and who would have thought that two years ago, I would teach twitter. How silly is that? Who would have thought a few years ago that we would be talking about hyperpersonal news streams. I think the more we use that the technology, the more we understand that technology, the more we find the opportunity in it and find the efficiency in it, the better off we’re going to be as companies.
Thomsen: You’re praising your book on Google and Google is just a big monopoly. Why do you praise a monopoly?
I don’t think they’re a monopoly that was raised because they used unfair competition. Google is just damned smart. They saw opportunities we did not see. In media we still sell advertising as scarcity. There’s only so much space and there are only so many eye balls. Google didn’t do that. Google won the ads market because it came in and assumed part of the risk, shared the risk, and they sold performance. Google could have come in and used our model. They could have said: “Only so many people in a day search on the word ‘München’ for travel” and we’ll charge what the market can bare.” They didn’t do that. They instead said: “We will charge you only on the clicks, if we perform.”
So Google was motivated to create better and better relevance. It was motivated to create an abundance of advertising with Adsense. Google saw a different world and acted differently. We still see the world that we know and in this new world we’re trying to act as we always did. Google is a model. I think we’re trying too hard to look for enemies to blame for what is our fault.
We have had fifteen years to update media and we didn’t do it and it’s time to accept the responsibility.
It’s not Google’s fault. Google is smarter, Google sees the world differently, that’s why I wrote the book. Because I wanted to understand how they see the world. I’m not sure they even know how they see the world, because they are younger and they operate differently. And we have to hire those young people to see the world differently and to beat us up.
And I tell young people now when they go to work for a company, it used to be that “youth” was something you had to get over, you had to get older, right? Youth is now an asset, because young people see and operate differently, they don’t buy print, they get their news differently, they share news differently, that’s what we have to do.
First I think we have to learn from Google. Second, we have to see the opportunities to use Google. How do we use those links we get from Google. How do we get more links, how do use their advertising. How do we work together to create platforms that make it very cheap for us to publish? I think there are opportunities there, and Google is not a monopoly, Google is model. (…)”
Carta would like to thank Jeff Jarvis and the BDZV very much for the right to host this video and transcript of the keynote. This transcript is work in progress. Should you find a mistake, please let us know in the comments. Jeff Jarvis blogs at Buzzmachine.com. He is author of “What Would Google do?” available in a bookstore near you.