Category Archives: Publishing

Paywalls go up – Staff numbers go down: a tipping point for Australian news media?

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Ownership concentration dominates Australia’s Mass Media

The past 12 months have been a pivotal time for Australia’s mainstream news media. Having seen off controversial regulatory reforms that would have relaxed some cross-ownership controls (but also introduced more onerous oversight of press standards), harsh business truths and painful economic reality have returned, in the form of cost-cutting, new digital subscription models, and foreign competition.

The failed regulatory reforms generated public, industry and political debate around ownership concentration and the lack of media diversity; cross-ownership and the impact of media convergence; the need for revised rules around mergers and acquisitions; and calls for more control over media standards.

What does Australia’s Fourth Estate currently look like?

There are two daily national newspapers, and 10 daily capital city newspapers; all but one of these 12 titles are owned by just two companies: News Limited, and Fairfax Media. Only Sydney and Melbourne have more than one daily local newspaper. Together, News and Fairfax account for about 88% of print media. Both companies have significant interests in broadcast media. The sole “independent” daily newspaper is owned by Seven West Media, itself a major TV broadcaster. As further evidence of Australia’s concentrated content ownership, Seven West has a joint digital venture with Yahoo!, while its rival network broadcaster, Nine Entertainment has a similar joint venture with Microsoft. Prominent in the ownership mix are the names of Rupert Murdoch (News Limited), James Packer (Consolidated Press Holdings) and Kerry Stokes (Seven West Media) – each of whose companies have various interests in Australian pay TV. Meanwhile mining magnate and Australia’s richest person, Gina Rinehart has been buying into both Fairfax (along with John Singleton, a key figure in Australia’s advertising and radio industries) and Network Ten (along with James Packer and Lachlan Murdoch).

Another layer of complex media cross-ownership comes in the form of Australia’s regional TV networks. The main regional networks (WIN, Southern Cross and Prime) each have content affiliation agreements with one or other of the three metropolitan networks (Seven, Nine and Ten), and each have separate interests in radio. Just to confuse things even further, the owner of WIN, Bruce Gordon is a major shareholder in Network Ten, and in the past week it has been reported that he is open to merging WIN with either Nine or Ten. Not only would such a merger lead to further concentration (subject to regulatory approval), it would also see a re-alignment of the metropolitan and regional content agreements; and given past criticism of of reduced local and regional TV news content (and the closure or consolidation of local TV news rooms), I would imagine that without suitable regulatory provisions, local news content will be even further reduced.

What are the news media doing in response to current market challenges?

First, both News and Fairfax have announced staff cuts in an effort to offset declining circulation and advertising revenues from their print editions. The overall results have seen: departures by high-profile journalists; centralized news-gathering operations; outsourced sub-editing; re-alignment of print and on-line assets; and the closure of some local and regional titles. Most recently, Australian Associated Press (AAP) announced that newswire staff numbers are being reduced by 10%. AAP (whose largest shareholders are News and Fairfax) is a major provider of news content and sub-editing services to the mainstream media. The staff reductions among in-house editors and journalists have raised concerns about quality and diversity in Australia’s highly concentrated news media. Partly in response to this perceived decline in editorial standards, The Conversation (a not-for-profit venture, backed by a consortium of universities) was launched in 2011 as a platform for in-depth, objective and authoritative news analysis and commentary.

Second, both News and Fairfax are in the process of building subscription paywalls around their digital content. Fairfax has operated a paywall around its business title, the  Financial Review, for several years; but like News it is introducing freemium models for broader on-line news content. In their latest investor briefings, News and Fairfax have outlined a renewed strategic focus on digital platforms, although neither have given definitive timelines for sun-setting their print editions. Personally, I am somewhat confused by the different subscription models on offer (print, on-line and tablet editions) and what I can access as a subscriber to one or other platform (and as a domestic or overseas reader).

Third, UK publisher Guardian News and Media has launched an Australian edition of its online newspaper. Free to readers, the site is funded by local advertising, and supported by a combined UK/Australia editorial, production and commercial team. As with News and Fairfax, I’m confused by the commercial model for digital content – is there a dedicated Australian subscription within the tablet edition? – and I doubt whether the Guardian Australia can compete effectively with domestic news coverage. The Guardian claims that Australia is one of its largest markets outside the UK, but I wonder if that readership mostly comprises British backpackers wanting to check the latest results from the English Premier League… The Guardian Australia, along with The Conversation has benefited from the staff downsizing at News and Fairfax to co-opt some leading journalists and editors to its cause. Meanwhile, The Conversation has launched a beta site for the UK.

And the rest?

Elsewhere, News, Fairfax and other smaller publishers are building specialist digital content, particularly in business, finance, politics, property, motoring, careers and sport. Most of these assets are funded by advertising and sponsorship, or underwritten by cross-media promotion. A number of these outlets appear to source their content from unpaid bloggers and commentators, as a way of offering free marketing and audience exposure to their writers.

Despite the latest failed attempts at regulatory reform, I expect to see plenty of activity within Australia’s news media (once we get past the forthcoming federal election), fuelled by renewed debates over ownership concentration; the realignment of cross-media interests (especially among Australia’s media barons and billionaires); and the re-positioning of print vs online vs mobile.

Disclosure: the author does not hold a financial interest in, or have a commercial arrangement with any of the publishers mentioned in this article..

6 Melbourne Start-Ups to Watch…

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LogoRecently, I blogged about Audiobus, and the success of its collaborative approach to app development. So last week, I attended a very entertaining “pitch’n’pizza” evening for start-ups, to see what other interesting things are going on in app and content development. The event was organised by Lean Startup Melbourne and hosted by inspire9. Other support came from BlueChilli, General Assembly, Startup Leadership, PlayFi and Kussowski Brothers.

The idea was a mix of Open Mic Night, and “Dragons’ Den” – 6 start-ups presented their pitch to a panel of VC’s and angel investors, in front of an audience of 300+ friends, colleagues, hangers-on and curious onlookers all fuelled by free beer and pizza.

Melbourne is something of a “Silicon Laneway” – not quite a valley, but more of an alley, given the city’s landscape of back streets and converted warehouses that are fostering a culture of start-ups, digital creatives and social media entrepreneurs.

On the night, the 6 hopefuls that presented were:

  • Tablo – a self-publishing platform for authors – sort of Bandcamp for books, but with even better content distribution
  • PetHomeStay – an on-line booking system for pet owners who want to leave their animals with a trusted pet lover while they are on holiday
  • CareMonkey – an app that shares childrens’ health care needs with relatives, schools and sporting clubs, so that teachers, coaches and carers have relevant support information at their fingertips
  • CoinJar – a platform that enables consumers and merchants to transact with Bitcoin
  • Fairshare – an app designed to take the hassle out of shared living (but not to be confused with FairShare….?)
  • SwatchMate – a combined app and smart phone device for matching colours, primarily for painting and decorating

Each presentation was of a very high quality, although some were more polished and rehearsed than others, and only a couple really shone through in terms of having both a great idea and a great commercial offering.

The questions asked by the panel of experts provided some helpful insights on what makes a successful or engaging pitch:

  1. Why? Having a personal experience resonates, and can avoid the awkward “is this a solution in search of a problem?”
  2. Competitors? What makes you different – smarter? cheaper? quicker? Are you truly disruptive or innovative? Or have you just designed a better mousetrap?
  3. Commercialisation? Show me the money! What’s the business model? Where is the revenue coming from? (“Simple is not always best, but best is always simple”)
  4. Customers vs Users? If the paying customer is actually different to the end-user, then make sure this is clear and you have a strategy to connect the dots and to monetize the key part of the transaction
  5. Real world vs On-line? Are you replicating something which already happens in the real world? Can real world transactions easily dis-intermediate your on-line business model?
  6. App or Website? Is it a dedicated app, or is it a website that works well on mobile devices? Going for a well-designed website may be cheaper, and lead to greater/faster customer adoption.

And in keeping with the spirit of this blog, I would add that the essence of all of these new businesses is having interesting content and a meaningful way for people to engage and transact with it.

At the end of the presentations, the panel selected their favourite pitch (the winner getting the chance of a meeting with the VC of their choice), while the audience voted for the people’s choice. Not surprisingly, the panel went with CoinJar, while the people went for Tablo (which also got my vote).

Disclosure: The author does not have any connection to or commercial relationship with the presenters or sponsors mentioned in this blog. He didn’t even get there in time for a free slice of pizza or bottle of beer.

Geo-blocking: the last digital frontier?

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Last month, senior executives from Adobe, Apple and Microsoft were summoned to appear before an Australian Parliamentary inquiry into IT pricing policies. It was alleged that Australian consumers can pay up to 70% more for comparable products and services sold in other markets.

Leaving aside the additional costs of distributing and shipping physical goods to Australia, at the heart of the pricing disparity is the practice of “geo-blocking” whereby customers in one location cannot purchase digital or physical products direct from vendors outside their country of residence. It’s the sort of industry practice that prevents Australian consumers buying some print books and CD’s from Amazon.com or Amazon.co.uk (and neither store sells MP3’s to Australian customers).

When asked to explain the apparent disparity in market pricing, the tech execs responded with comments such as, “the inclusion of Australian sales tax in the retail price is confusing”, “it’s a reflection of the cost of doing business in Australia” and “it’s all because of the content owners’ and copyright holders’ archaic territorial licensing practices”.

Their answers were variously described as “evasive“, “unbelievable” and “failed to impress“. The suggestion by one CEO that Australian consumers should fly to the USA to buy cheaper products overseas, was frankly ludicrous, especially as sales warranties given in America would likely be invalid once the goods were brought back to Australia.

When it can be cheaper to buy a CD copy of an album from an on-line music retailer in the UK rather than download the MP3 version from a vendor in Australia, clearly there is something wrong with this picture.

“Parallel imports” and “grey goods” are terms used in the fashion, cosmetic and other retail sectors to describe situations where wholesalers and distributors import branded goods that are technically subject to strict territorial sales and distribution licenses held by third parties. Alternatively, consumers in one country purchase goods direct from a retailer or distributor located in another country, who does not have the rights to sell or export the products to the consumer’s country of residence. The license holders can seek to block these unauthorized imports/exports, but in cases where the license holder has chosen not to distribute those specific goods, these “grey” imports could possibly be deemed legitimate (under the “use it or lose it” principle).

Whatever the legal interpretation of territorial licensing, when it comes to digital content, is geo-blocking still appropriate? Let me offer an illustration:

Imagine you are an Australian traveller on a business trip to New York. You visit a local book shop, to pick up a copy of the latest novel by your favourite author.

Unfortunately, the salesperson tells you the book is not in stock, because the publisher does not distribute that particular title to independent stores; instead, you have to go to the mega book store across town.

After making your way to the mega store, you find out that before you can make any purchase, you have to open an account, submit your credit card details and other personal information (and sign a contract that says things like “you must always keep books bought from our store in our proprietary and specially designed book shelves”).

Just as you are about to make your purchase, the shop assistant asks you for your passport. “Oh, I’m sorry, we don’t sell our books to people from Australia. You have to go to our mega store in Sydney.”

On the way back to your hotel, you phone the publisher (whose office is on your route) to see if you can buy a copy direct from their sales department. The conversation goes something like this:

“You sound Australian. Sorry, but we can’t sell it to you. You have to buy it from our Australian distributor.”

“OK, can you tell me who the Australian distributor is, or which shops stock your titles?”

“I’m not sure. I think it depends on who the author is. Or whether it’s the hardback or paperback edition. Or whether our distributor is importing that particular title. Maybe we only sell it through the Australian branch of the mega book store that wouldn’t sell you it to you while you were in town. Have a nice day.”

Great. With nothing to read on the 20-hour flight back to Australia, you catch up on a lot of episodes of “Bored to Death”, because you don’t expect them to be shown on Australian TV for at least a year. (But that’s another industry scenario…)

Back home in Australia, you visit the Sydney branch of the mega book store. “I’m sorry, we don’t have that title in stock, because we haven’t had enough customer requests to justify importing any copies…..”

Is it any wonder, with these sorts of restrictive commercial practices common in the software and digital content industries, that Australia has the highest level of illegal music downloading by capita, not because all Australian consumers are unwilling to pay for content, but often because customers cannot legitimately buy it.