Innovation, technology and the danger of ‘Shiny Things Syndrome’

Julie Posetti has conducted some fascinating research into the effects of ‘Shiny Things Syndrome’ on the news industry. ‘Shiny Things Syndrome’ can be understood as the news media’s obsessive pursuit of new forms of technology, without long term or strategic planning in place to support it.

Posetti warns that this kind of attitude could be detrimental to implementing genuinely sustainable change for the news industry. That doesn’t mean that the news industry should stop innovating, though: it desperately needs to evolve if it wants to survive. But, she argues, technological change needs to be accompanied by clear and research-informed strategies to ensure its efficacy, and its efficiency.

Posetti’s report warns against journalism being driven by technology, advocating instead for a returned focus on journalism’s purpose: good storytelling, and a consistent focus on their users. And Posetti is right: the news industry’s development shouldn’t be driven by technology. But there are ways in which technology can support it.

Technological innovation doesn’t have to be at odds with a sustainable business model for the news industry. There’s no need to implement massively complicated technology, or to involve obscure crypto currencies and blockchain. The news industry has had a sustainable business model in the past; it just needs to adapt that model to the digital age.

News publishers have always been supported by a combination of revenue streams, including direct payment from its readers. Re-enabling that revenue stream for a wide variety of news (and other) publishers is the challenge the industry faces. Subscription and membership work for some, but neither reflect the casual relationship which most people have with most media.

Agate was set up to solve this. It's a technology, of course - a digital wallet system. But it's not the technology that changes things; it's the incentives and opportunities it unlocks. Agate updates the media business model to suit the needs and habits of digital consumers: rather than paying with cash for a newspaper in a shop, you simply pay using your Agate wallet. Giving you something you want is still the central challenge for publishers, as it ever was.

Agate isn’t another technology fad, capitalising on new tech trends. Our aim is to go further than simply ‘stopping the rot’; we want to create a genuinely sustainable, growing and profitable future for journalism. The more publishers that use Agate, the bigger the network becomes and the bigger the market can grow. Unlike subscription models, there’s no cap on the value of a user, and no limits on the potential for the market.

It’s might be easier and quicker for the news industry to become profitable again than they think. Two decades and more of trying to adapt to the internet has left everyone exhausted and unsure. But sometimes you can't see the solution until it's right in front of you. Agate provides the tools for publishers, old and new, to re-establish their revenue streams. Technology itself can’t drive change, but it can provide the foundations and incentives to support it. So why wait?

You can read Julie Posetti’s report for RISJ here. You can get in touch with Agate here.


The Internet isn't broken, but its payment systems are

Imagine a world of cash only spending, but where the smallest unit of currency is a £10 note. And in this world, pricing hasn’t adjusted to that: if you want something cheap, you either need to buy a lot of it or pay too much for it.

Nonsensical, right?

That’s the world of the Internet for news publications.

The traditional newspaper form has become fractured online. Now, news articles stand independent from one another, rather than grouped together in one physical edition. One benefit of that development is that online readers tend to enjoy a casual relationship with news sites online, reading widely and across various sites.

But digital news sites aren’t adapting to meet the needs of their readers’ fluid behaviour. Instead, they ask their readers to pay a subscription: a commitment to recurring payment, for a set price. A subscription works wonderfully for some people; for others, it’s simply too high a price to pay.

As it stands, digital news sites can’t charge the right price for their products. So, they’re left to choose between charging the relatively few people who committed enough to subscribe, or to give their product away for free.

The isn't resulting in enough people paying for their online news – and as ad revenues continue to collapse, the news industry desperately needs consumer revenue streams if they want to survive in the long run. The problem is the way they’re making them pay. If someone wanted to buy a coffee, we’d never force them to pay for an entire month’s worth of coffees, with the expectation they’ll keep doing that for the rest of the year. It just doesn’t make sense.

Now, imagine a world where you pay for online content like you pay for your coffee: when you want it, at a price that’s reasonable, and in a way that’s convenient for you. That would make a bit more sense, wouldn’t it?

That’s what we’re doing with Agate. With an Agate wallet, you simply pay for only the content you read online, and no more. It's simply a payment - not a "micropayment" - of the right price. No commitment, and no hassle. Registration is quick and easy, and there’s no need to keep inputting your details - Agate works seamlessly across multiple sites. And here’s the best part: it’s here, and it’s available to use now. You can try it now on Popbitch, Reaction or The New European.


Is a sustainable future possible for local news?

The news industry is facing a crisis, and it has hit local and regional newspapers particularly hard. Print numbers are dropping, and online content isn’t making up the difference with digital advertising revenue. The figures look bleak: in the U.K, 198 local U.K. newspapers closed down between 2005 and 2016, with 40 going under in the last year alone. In the U.S., a shocking 1800 newspapers have closed in the last 15 years. Without the scale and reach of larger or national newspapers, many local news sources are struggling to generate enough revenue to scrape by.

Local news isn’t suffering because it’s not useful or relevant. While its content can sometimes seem small scale in relation to the tumultuous politics of national news, local news plays a vitally important role in a democratic society. It directly serves the community it covers, and is a valuable, non-commoditised resource. Local journalism also plays a crucial role in holding power to account: earlier this year, local newspaper The Bristol Cable ran a campaign which prompted the Bristol council to take action in response. A study conducted in the U.K. discusses the potential for a ‘democratic deficit’ in areas where local newspapers have closed down.

Similarly, one U.S. study found that local authority borrowing increased in areas where newspapers had closed down, resulting in huge extra costs for the taxpayer. Without local journalists investigating their projects and plans for spending, local authorities’ actions went unchecked.

Some organisations, like the Lenfest Institute and Knight Foundation’s $20 million fund in Philadelphia, or the BBC’s licence-fee funded local journalism scheme, have organised charitable funding to prop up local journalism. It’s a well-intentioned idea, and it might work as a short-term fix. But propping up regional newspapers with charitable funding won’t enable a genuinely sustainable future for the industry.

Local news needs to be self-sufficient to thrive in the long term. The move away from print editions to digital delivery has meant that local newspapers have lost a key source of revenue: their cover price. Reader revenue is a vital and mostly untapped potential income for online content, and could offer one solution to this crisis. Local news offers valuable content that readers are willing to pay for; they just need a way to pay for that content in a way that suits their needs as consumers.

For local news, this ‘chicken and egg’ problem is particularly acute. People won’t be willing to pay for low quality content, but high quality content requires resources to produce. Local papers, fighting for their lives, have reduced their staff drastically, and the quality of their output and the reach of their reporting has suffered as a result. It’s going to require a careful application of resources to reverse that trend.

If local news has a simple, seamless way to collected reader revenue at their disposal then that investment in product will not only be justified, but will also be their best chance at a long and successful future.


The language of micropayments

It took a long time for the news industry to really embrace the reality that they need consumer revenues to survive and thrive. Having reached it, though, a new pessimism seems to be growing. The initiatives that have been widely implemented aren’t working well enough.

If we look at the language we’re using to describe those initiatives, it might give some us clues as to why. Publishers often talk about ‘paywalls’ as the solution. But walls are barriers: they keep people out. They protect what’s behind them, yes – and we should be protecting premium content, rather than making it freely available – but at the cost of keeping it hidden. This kind of language suggests a hostility towards the very people it’s meant to be encouraging.

It’s a strange way to think of your business model, and hardly surprising that it’s not working as well as it should.

Publishers also talk about ‘subscription’. A subscription demands a commitment from users, who we know enjoy the casual nature of their relationship with multiple brands online, and who naturally prefer to form habits rather than make formal commitments.

I mention language not to castigate any publishers trying to make an income for themselves, but to highlight how important it is to think about business strategy from the point of view of the consumer and not just the business.

So let’s look at the current situation in more positive terms. What the news media – and all media – needs is payments. What consumers need is the ability to continue to access whatever they want to, at a price they find acceptable, without the need to make commitments they aren’t ready to make.

And what we definitely don’t need is to fall into the same trap of negative language to describe that simple solution. Direct payment systems that allow consumers to pay for only the content they read, on a per-article basis, are often referred to as ‘micropayments’. But micropayments are just payments, dressed up in a daunting buzzword: we didn’t call payments “micro” when they were people handing 25p over in a shop for a printed newspaper. There’s simply no need to use such negative, alienating language to describe a system that people are already familiar with.

The language doesn’t need to change around payment, but attitudes do. Studies have shown that people are becoming increasingly habituated to paying for online content, and will soon be replicating that habit with their news sources. Publishers need to capitalise on that willingness with a simple, easy to use system that works for them and for their readers. That’s why we’ve invented Agate: to meet that need, and to offer a more positive and sustainable future for online media.


Q&A: Agate takes micropayments one step forward

This Q&A originally appeared on What's New in Publishing, on 06/11/2018. You can read it here

Based in London, Agate Systems was founded in 2017 by Dominic Young to help enable better business models for media companies. His previous positions include heading up Strategy at News UK, International MD for Digital of News Corp, as well as numerous industry positions and initiatives. WNIP caught up with Dominic to learn more about Agate’s unique micropayments model.

What business problem is your company addressing?

Agate solves the news media’s pressing need for revenue streams direct from their consumers. Digital advertising revenue is falling, for a number of reasons: Google and Facebook’s duopoly on digital advertising sales, an increasing use of ad-blockers, changes to data laws, and a reliance on fickle social media platforms for site traffic. Subscriptions have not been successful enough to supplement this revenue loss.

Some publications have subscription models to generate direct consumer revenue, with a few achieving real success. However, subscriptions can prove too much of a commitment for casual readers. Converting more than a few percent of audience to a subscription is hard, even for the most successful titles.

What is your core product addressing this problem?

Agate addresses these challenges by providing publishers with a direct source of consumer revenue, and by giving readers a way to effortlessly pay for online content without commitment.

Agate is a centralised digital wallet system that lets readers pay on an article-by-article basis. Users upload money to their Agate wallet and can spend it across Agate-enabled sites. Registration is minimised to an easy, one-time process, and users don’t need to download a separate app – Agate automatically appears on the site. Pricing includes a ‘free point’: a maximum price (or number of articles) that a user reaches before being given unlimited access for the rest of a given period.

Agate works for publishers because it facilitates a more sustainable business model for them: it gives them a predictable and reliable connection between the popularity of their content, and their income. It doesn’t impose limits on market size, giving publishers reasons to encourage maximum consumption across participating sites. It works for readers because it gives them a way to access online content at low cost and without commitment, without the hassle of managing multiple subscriptions.

 

Can you give some examples of publishers successfully using your product/solution? 

Agate is currently live on PopbitchThe New European and Reaction. We are under NDA with dozens more in various territories with more launches imminent.

Pricing?

With Agate, publishers have full control over the prices of their product. They set the price of an article, the price cap for the ‘free point’ and the time frame of the ‘free point’ (a day, a week etc). Article prices typically range between 10p and 30p, with ‘free points’ varying with each publication. Agate’s model is revenue share – there are no up-front costs for publishers to enable it and integration is quick and simple.

What are other people doing in the space?

This is a pretty new space and we are approaching it in an innovative way.

There are some companies looking to achieve scale of customers by aggregating news articles from a range of publishers into a separate app, for which users pay a single subscription fee; others offer an ad-free viewing experience for a price; and others provide access to news using micropayments.

What makes Agate different is that its experience is centred around the desires of the consumer, and its business model is centred around the needs of the publisher.

Subscription based, bundled digital products limit the amount of revenue available to be shared between producers: the monthly price paid by the subscriber, times by the highest number of subscribers. Agate’s business model grows the available market in revenue terms every time someone consumes something, as well as encouraging innovation and investment in content producers, which grows the size of the entire industry. It motivates publishers to be ambitious by removing limits on success.

How you do view the future?

Agate’s vision for the future of journalism goes further than simply ‘stopping the rot’. With Agate, we want to create a more substantial, competitive and sustainable future market for the news industry.

Something else to note: Agate’s system is not aimed specifically at news content. It can be applied to any online content that deserves to be paid for. We will launch across a broader range of subjects and media types, including magazines, video, podcasts and potentially even music in the next few months.


How innovative technology could further the potential for micropayments

This article originally appeared on What's New In Publishing, on 26/10/2018. You can read it here.

Micropayments hold a tantalisingly simple and practical solution for the crisis faced by the news publishing industry today. The only thing that’s been preventing them so far is that there hasn’t been innovative enough technology – and an informed enough business model – to unlock their potential.

The challenge news publishers are facing today is – simply put – that they aren’t generating enough revenue to support their journalism. Decreasing revenue has seen cut backs in newsrooms, a net loss of jobs and has had a particularly devastating effect on local newspapers.

This isn’t a new problem: the news industry has been in decline for the last two decades. The growth of the Internet and mass digitalisation of news has led to a decline in print sales, and an increasing reliance on digital advertising as news’ primary source of income. But digital advertising has proved to be an unsustainable sole source of income for publishers: while the market continues to grow, advertising revenue for publishers is falling year on year.

This can be in part attributed to the digital duopoly that Google and Facebook hold over digital advertising sales, which saw the two giants take around 80% of total global online advertising spend last year. An unstable reliance on social media platforms for exposure also plays its part; changes to platform algorithmsearlier this year have been blamed for reducing traffic to news sites. Other threats to publishers’ revenue include the increasing use of ad-blockers online and changes to data laws reducing the ability to target ads.

Many publications have turned to subscriptions to supplement advertising revenue, some with real success. But converting more than a few percent of audience to a subscription has proven difficult, even for the most successful titles. A recent study by the Lenfest Institute has revealed that the majority of news publishers’ readership is formed by one-time and occasional readers, with regular readers making up only 3-6% of readership. Research by Monday Note’s Matt Lindsay places that rate at a similar 7%.

Subscriptions pose a number of barriers to that casual majority of readers. People now tend to source their news fluidly across a range of publications and platforms; an ongoing financial commitment to a particular title goes against the grain of those consumption habits. Even those who are inclined to pay can’t always afford a full subscription for every product they use, or don’t want to pay a full subscription for something they only partially use.

These barriers could explain why subscriptions haven’t been as successful as publishers had hoped. Sign up rates remain low for most publishers, and churn rates can be high – and costly.

But the future of the news industry doesn’t have to be as bleak as its current state. There’s an opportunity here to fix it, if we learn from our mistakes.

We need a business model that equally meets the needs of consumers and publishers, and doesn’t rely on second-party platforms for its income. We need to think innovatively about how to build a system that works better in the long term: one that will grow, rather than limit, the market.

Publishers need a sustainable, effective way to generate revenue direct from their consumers. Consumers need to be able to access whatever content they want to, at a price they find acceptable, without the need to make commitments they aren’t ready to make. New micropayment systems coming onto the market offer that solution to both readers and publishers alike.

The term ‘micropayment’ has taken on a certain set of negative connotations in the publishing industry. It’s not enough to support high-quality journalism, people claim. But micropayments are just payments, dressed up in a daunting buzzword – it wasn’t deemed a ‘micropayment’ when people were handing over 25p in a shop for a printed newspaper. It’s also a far more positive rhetoric than ‘paywall’, which suggests a daunting barrier to potential customers.

And, as Esther Kezia Thorpe points out in a recent WNIP feature, micropayments don’t have to be so micro. They just have to be the right price, one that is appropriate for the product. With the next generation of micropayment systems, publishers decide how much to charge. They’re given full control over their product, and aren’t subject to imposed rules that don’t suit them – as they often are with aggregator and bundled systems.

Bundled and aggregator systems – a ‘Spotify for news’ – could actually place more limits on the industry than a direct (micro)payment system. Even if we leave aside the fundamental problem that the economic life and investment cycle of news is completely different to music and other media, it simply isn’t an ambitious or profitable enough business model.

With a bundled system, there will always be an upper limit on potential revenue for publishers: the number of subscribers, multiplied by the maximum amount you can charge them. In a world where users are increasingly willing to part with small amounts of money for media they value, every time they spend some the market will get a little bit bigger.

Agate’s system, as just one example of this next generation of micropayment solutions, works because it reflects the needs of readers and publishers.  Users don’t need to commit to regular payments: they pay per article they read. To make sure it doesn’t become more expensive than a subscription, readers can only ever pay a maximum amount in a certain period for a given product. After that, they’re given unlimited access for the rest of the time period.

It works for publishers, not only because they’re given a way to monetise that casual majority of readers, but because it encourages engagement with their product. Giving readers unlimited access after a certain spend encourages casual readers to establish a deeper relationship with the product, rather than with individual pieces of content. Some of those readers will become more likely to upgrade and become subscribers; but those who don’t will still generate significant revenue opportunities.

If we can make content pay, we can re-establish the vital link between popularity and revenue that once made publishing such a profitable business. And when popularity pays, the incentives for readers and publishers align: publishers are encouraged to produce premium content that people will pay for, and readers become more willing to pay for that high-quality content. The market, in response, will only expand.


Solving the newspaper conundrum: some thoughts for Mrs May

It is great that the government is going to conduct a review into the travails of the press. They may well find that the issue is simpler than it first appears.

The problem the press suffers from, put simply, is that it can't make enough money. This isn't, on the whole, because it is less relevant. More people read newspapers online than ever read them in print.

The problem is that being more popular doesn't make them more money. When this happens it's a sign of a basic problem in a market. Generally speaking, being more popular - selling more - is the key to success in any business.

So the challenge the press faces is how to convert their popularity into revenue. As long as they depend on advertising revenue this will continue to be a challenge and it will be a hard one for the government to intervene in.

None of the interventions proposed to date, here or elsewhere, really do much to solve the problem either. Most of them amount to a proposal to force the big platforms to pay money to the newspapers, or variations on that theme. But the deeper you dive into these, and especially if you understand the complexities of copyright and compulsory licensing, the less attractive they look and the more obvious the risk of perverse outcomes becomes.

The real answer to making news pay is to get customers to pay. The tragedy of the news industry is that such a simple and uncontroversial suggestion sounds, to many, like a mad fantasy.

But put that aside and imagine for a moment that it became true, people were willing to pay for their news.

What would they be willing to pay for? It would have to be something they really liked and valued. It would matter to most readers that they could trust it - fake news would hugely damaging to that. It would need to be habit forming and it would have to reflect their values.

The newspaper market would start to resemble the one we used to know - diverse, competitive and heavily invested in content production.

What would happen to their relationship with the platforms? Well, if every time someone came to read something, and the newspaper made money, they would probably take a very different view of how the platforms accessed and promoted their content. They might even want to encourage and invest in it because it would be a form of marketing.

What would happen to the competitive landscape? If anyone who could launch a media product could make money from it in direct proportion to how popular it was, lots of people would try. Some would succeed. Investors would be attracted to a sector which was capable of generating significant returns.

We would have a thriving market, in other words - not just for news, but for all kinds of media.

But how could it happen? How can we ever persuade consumers to start paying for the content they love? Subscriptions put off all but the most avid fans whereas most media consumption is quite casual and uncommitted.

The answer to that has just been launched. Try it for yourself, on Popbitch, and see. Set up a wallet, put a little bit of money into it. Soon you'll be able to take that wallet and spend it on an increasing range of sites. Anyone who can attract you can charge you as low as 1p, or as high as they think they can persuade you to pay.

Look at that and think again about whether or not consumers will pay for news. If the price is right, and it's simple enough that becomes a question of how good you can make your product.

Get it right and there's a lot to play for.


Who, why and what we are

Hello World!

Agate is a new thing so I thought I'd give you a quick introduction to who we are and what we're about.

I set up Agate after working for a long time in newspapers and other so-called "traditional" media. I was around when one of our newspapers was on the internet BEFORE the invention of the World Wide Web. It was a gopher site. Anyone remember those? Not many of you.

So I had a pretty close-up view of the internet as it built and developed, and of the ways in which the news media tackled it.

That story is pretty long, so I'll save most of it for now (it's also pretty interesting so I'll get around to it at some point). The thread running through it has been that the news media has never really known how to make money from the internet.

That didn't matter for quite a while, because the old ways of making money were still working. Selling actual newspapers, mainly. So as the internet evolved, the media products evolved with it and the justifications used for continuing with an activity which didn't make money evolved alongside. At the start it was all R&D, just experimentation. Then it was building an audience which would later become valuable. Then it was traffic that mattered, and the ad revenues which would eventually take off. Then it was all about data and gathering more of it.

What DIDN'T evolve was any answer to reliably making money from these online products. Which has, as it turns out, become a rather important thing. The old products can no longer be relied on to make money because fewer people want them and the ad revenues have collapsed. Online ad revenues are pretty good if you're Google or Facebook but not really if you're anybody else. Content, however, is still as expensive to produce as it ever was.

Where the news media have led, other media have followed. It's incredibly hard for anyone to make money reliably from creating popular content for the internet.

Agate sets out to solve this dilemma. At it's heart is a simple idea, which is that things work much better if your consumers are also your customers. If the people who read, or watch, or listen to, or play with your creative content are also paying for it. This idea is hardly new, or controversial, even on the internet. Subscription based products have been taking off in recent years - whether "mega-bundle" products like Netflix, Spotify for Amazon Prime, or narrower offerings like The Timeses (London and New York), the Washington Post and others.

But there's nothing in the middle ground, the place where people casually browse from one thing to another, driven there by social links or whimsical interest or passing interest. Yet this is where most of the actual consumption on the internet happens. No great commitment, no specific plan to come back and consume more, no desire to pay money every month. Until this kind of activity is addressed, the opportunity remains unaddressed.

Agate addresses it - in a way which works fantastically well for consumers as well as creators of all kinds of content - new and old, big and small, prolific or infrequent.

In further blog posts I'll explain how, why it matters for the next phase of the internet and why paying for content is a liberating and rewarding thing for consumers as well as publishers and creators.