Disruptive Innovation

Newspapers Are Social Media

29 October 2016

From The Wall Street Journal:

Digitization exposes weak links. Then it breaks them. So much so that it makes you wonder what people were thinking in the first place. According to Bharat Anand, a professor at Harvard Business School, the weakest link is between producing content and everything else. Such connections “are at the heart of what shapes any digitally touched business today.” He looks as the content assumptions behind various industries and shows the ways in which, over time, they can become an obstacle to success.

To see why, consider the news. By the end of the 20th century, the master plan for a newspaper in a major metropolitan area was something like this. Step 1: Produce great journalism. Step 2: Become a trusted news source (e.g., by winning acclaim such as Pulitzers). Step 3: Use that reputation to get subscribers. Step 4: Offer the readers up to advertisers. Step 5: Market the weekend edition to nonsubscribers. And, finally, Step 6: Use the virtuous circle (readers beget advertisers beget more advertisers) to charge high ad prices. With so many steps between content and returns, this reads like the master plan of a particularly ambitious movie villain. It worked—until it didn’t.

It’s easy for investors or observers to rail against media executives for not seeing weak links in their plan. But when the business has always emphasized steps 1 and 2 (the creation of good “content”), it is “perfectly natural,” Mr. Anand writes, that the immediate reaction to a new set of market circumstances is to shore up the severed links. The problem, as Mr. Anand points out, is that, in the process of shoring up a collapsing business model, companies often fall into the “trap” of thinking that content is all that matters. To be sure, content is important. But what matters more is the connection between that content and the rest of the master plan.

Digital technologies break the plan somewhere between steps 3 and 4. In the case of newspapers, companies that made articles free on the internet stopped the subscriber flow; then other internet sites offered advertisers other ways to reach consumers. The firms that foresaw this disruption or were never relying on the same plan in the first place fared better.

. . . .

The Content Trap” is a book filled with stories of businesses, from music companies to magazine publishers, that missed connections and could never escape the narrow views that had brought them past success. But it is also filled with stories of those who made strategic choices to strengthen the links between content and returns in their new master plans. The author shows that “winning strategies come from recognizing the context you operate in, not the content you make. . . . They come from setting priorities and saying no, rather than following the herd.”

One company Mr. Anand praises for going its own way is the publisher Random House (now Penguin Random House). When other publishers were working with Apple to try to find ways to fight Amazon’s push for lower e-book pricing, CEO Markus Dohle kept Random House out of any dealings (and thus out of the later antitrust tangles, too). To understand why, look at the old master plan for book publishing: Steps 1, 2 and 3 (creating content and finding readers) follow the newspaper model except with the goal of getting books into stores. But digitization hit the industry right between steps 3 and 4 (monetizing content) by bypassing stores and then bypassing shelves. The industry focused on Steps 1 and 2, thinking that providing books that people wanted to read would get them the rest. Often, however, books bought were not books read. They were, in part, meant to be displayed in homes or on desks as a signal that the person might have read them. For e-books, the situation is different. That’s why the romance genre flourished under the digital onslaught. Random House, it turned out, had one of its biggest print successes of recent years when it acquired “Fifty Shades of Grey,” a book that people don’t claim to have read if they haven’t.

Link to the rest at The Wall Street Journal (Link may expire)

Paying to Have and Not to Hold

26 October 2016

From Slate:

Imagine, for a moment, that you want to buy The Complete Works of Primo Levi edited by talented translator Ann Goldstein. If you were to buy a new version of the hardcover collection on Amazon, the price is $58.40. If, however, you decided that rather than adorning your shelves with Levi, you wanted to download it to your e-reader, saving yourself paper and time, you would need to pay $59.49. It would cost you more not to physically own the books.

Of course, it’s just a difference of $1.09. But spend some time on Amazon and a trend becomes clear: Many (though certainly not all) digital versions cost more than their physical counterparts. The Blu-ray Disc of the Christmas classic Love, Actually costs a very reasonable $8.68, but to download and buy the HD version on Amazon Video costs $14.99. (To download and rent it costs $3.99, while a used version is only $2.37). Download Beyoncé’s Lemonade from Apple to your iPhone for $17.99, but get the CD on Amazon for just $15.76.

Certainly this is far from the case in every instance—there are lots of examples of the digital version being cheaper than the physical. But the list will only get longer, raising the question: Why are we increasingly paying more money to notactually have the thing we’re buying? Amazon and Apple acknowledged receipt of but did not respond to requests for comment.

. . . .

For one thing, we’ve reached a point at which it’s the digital version that won’t let us down. Mark Dean, assistant professor in the Department of Economics at Columbia University, surmised in an email that while he could try to create “some clever behavioral econ explanation,” he thinks the real answer is that we are paying more to download because we are learning to trust the digital, easily available version. It used to be that to have the physical copy was to have reliability and consistency. But that isn’t true anymore, he said. The internet is now reliable, and with it Amazon and Netflix. In fact, they’re more durable than thephysical copy, as anyone who has scratched a CD or had a package get lost in the mail or misplaced a beloved book would likely agree.

. . . .

Physical formats, on the other hand, so quickly become outdated. Richard Wilks, anthropologist and co-director of Indiana University’s Food Institute, noted in a phone interview that millennials (of course it’s the millennials) have seen their parents lug VHS tapes to Goodwill. In other words, they have seen, and are currently seeing, the technologies with which they themselves grew up become obsolete. Why pay extra for the DVD when you know your next computer probably won’t have a DVD drive?

This is true, of course, true of movies and music, but not of books. What is true of all three, however, is that the digital version is often more trusted and more convenient, and that the digital is an accepted part of the way we live now.

Link to the rest at Slate and thanks to Dana for the tip.

Plummeting Newspaper Ad Revenue Sparks New Wave of Changes

21 October 2016

From The Wall Street Journal:

Newspapers are suffering an accelerating drop in print advertising, a market that already was under stress, forcing some publishers to consider significant cost cuts and dramatic changes to their print and digital products.

Global spending on newspaper print ads is expected to decline 8.7% to $52.6 billion in 2016, according to estimates from GroupM, the ad-buying firm owned by WPP PLC. That would be the biggest drop since the recession, when world-wide spending plummeted 13.7% in 2009.

That decline is hitting every major publisher, increasing pressure on them to boost digital-revenue streams even faster to make up for lost revenue and, in some cases, even reconsider the format of their print products and the types of content they publish.

. . . .

“We operate in a time of rapidly changing market conditions, especially in the world of print advertising,” Gerard Baker, editor in chief of The Wall Street Journal, wrote Wednesday in a memo to employees. “These are days of accelerating change in the newspaper business.”

In light of the steep downturn, the Journal this week announced a coming revamp of its print editions that will include the consolidation of sections and other cost reductions, moves designed to make the print newspaper more sustainable for the long haul and help accelerate the newsroom’s digital transformation. Meanwhile, the Times has been working on a strategy to significantly boost digital revenue by 2020, including shifting more resources into digital initiatives and looking at ways to revamp things such as its Metro section.

“It’s definitely been a hard year for print in the first half,” said Meredith Kopit Levien, chief revenue officer at the New York Times.

. . . .

During the past decade, marketers have fled newspapers for a variety of reasons, including declining circulation, aging readership and the need to fund their digital initiatives.

Other factors more recently have come into play, including the growing use of data and analytics in the media-planning process. Moreover, advertisers aggressively are pushing into online video, and marketers in sectors such as retail, financial services and telecommunications are reducing print spending.

“There’s been acceleration in the downturn this year” in print advertising, said John Ridding, chief executive officer of the Financial Times. “That is partly structural towards digital and mobile and the major platforms, such as Facebook and Google.”

Link to the rest at The Wall Street Journal (Link may expire)

Google Is Using Romance Novels To Build Artificial Intelligence

30 September 2016

From The Guardian:

When the writer Rebecca Forster first heard how Google was using her work, it felt like she was trapped in a science fiction novel.

“Is this any different than someone using one of my books to start a fire? I have no idea,” she says. “I have no idea what their objective is. Certainly it is not to bring me readers.”

After a 25-year writing career, during which she has published 29 novels ranging from contemporary romance to police procedurals, the first instalment of her Josie Bates series, Hostile Witness, has found a new reader: Google’s artificial intelligence.

“My imagination just didn’t go as far as it being used for something like this,” Forster says. “Perhaps that’s my failure.”

Forster’s thriller is just one of 11,000 novels that researchers including Oriol Vinyals and Andrew M Dai at Google Brain have been using to improve the technology giant’s conversational style. After feeding these books into a neural network, the system was able to generate fluent, natural-sounding sentences. According to a Google spokesman – who didn’t want to be named – products such as the Google app will be “much more useful if they can capture the nuance of language better”.

. . . .

“We could have used many different sets of data for this kind of training, and we have used many different ones for different research projects,” he adds. “But in this case, it was particularly useful to have language that frequently repeated the same ideas, so the model could learn many ways to say the same thing – the language, phrasing and grammar in fiction books tends to be much more varied and rich than in most nonfiction books.”

The only problem is that they didn’t ask. The Google paper says that the novels used in this research were taken from “the Books Corpus”, citing a 2015 paper by Ryan Kiros and others which describes how the authors “collected a corpus of 11,038 books from the web”, describing them as “free books written by [as] yet unpublished authors”. It’s a collection that has been used by other researchers working in artificial intelligence and which is currently available for download in its entirety from the University of Toronto.

Forster says that she “always appreciates an interesting use of words”, but while Hostile Witness is available to download for free, no one asked her permission to use her novel as raw material to train a computer.

“Perhaps I’m still thinking in the old way, that a reader will read my book – it didn’t even occur to me that a machine could read my book. What I found curious was that these were referred to as ‘free books written by as yet unpublished authors’ because my state is very different,” she says.

Link to the rest at The Guardian

How Long Until a Robot Wins a Pulitzer?

27 September 2016

From Literary Hub:

The internet was originally built to withstand nuclear war. It’s decentralized, so even if part of its physical workings were destroyed, there are many other parts remaining, some run by wind or solar power, some in high-security bunkers. It’s not crazy to speculate that, in the case of an apocalypse, the internet might be one of the last standing traces of human technology. Sometimes I think it would be kind of funny if the last evidence of humanity was a Twitter bot, still tweeting into the void.

The first time I was contacted by a Twitter bot was a couple years ago, after Margaret Atwood replied to a tweet I’d tagged her in. Being @-ed by a user as high profile as Atwood must have put me on some whitelist for spambots; over the next few months I received tweets that ranged from exclamations with no context (“I aint got time for it tonight!”) to punctuational gibberish (“ˆ¯ „„ „ˆ ‚   · ˆ„  ¯‚ … …„ˆ ¨ „ „…… ¨´”). Some had snippets from tweets that other usersactual humanshad tagged me in. Some were accompanied by images, from a picture of the Kansas State Wildcats mascot to a Samsung ad.

. . . .

But the tweets were also fascinating. With algorithms that drew text and photos from other accounts, they’d become a smorgasbord of cultural artifacts. One bot had created a collage from photos of Taylor Swift’s perfume, the latest iPhone model, and a selfie. They repurposed song lyrics, inspirational quotes, passages from novels, and pleas for more followers. They were like fun house mirrors, reflecting our words and photos twisted out of context, without human reason to familiarize them.

* * * *

But not all robots just regurgitate nonsensesome write poetry.



in the
lines on the



inscribed in
the depths

That was written by Janus Node, a “poetic program,” and it’s certainly better than any of the poems I wrote in high school. Janus tweets too. Her pinned tweet, fittingly, is a quote from Nietzsche’s Human, All Too Human that reads: “One can almost say that wherever there is happiness there is joy in nonsense.” I sent an email to the contact info I found on Janus Node’s website asking for more information about how she worked. Within an hour, I received a reply from Janus’s creator, Chris Westbury, a neuropsychologist and author. He explained that Janus (formerly known as “McPoet”) starts a poem with a sentence template and uses word list groups to fill them in. It sounds simple enough, but things can get complicated quickly. The rules that Janus uses to fill in the template call on other rules, which call on more rules, and so on and so forth. This method is called “rule-based computation,” and can lead to some pretty complex writing.

It’s also useful for more than poetry. When an earthquake hit Los Angeles in March of 2014, the LA Times was the first to report on it, just minutes after it happened. While human journalists were still re-shelving their fallen knickknacks, the algorithm “QuakeBot” was pulling data on the quake from the U.S. Geological Survey and plugging it into a template, ready to be published. Narrative Science has built an entire company around this idea, creating programs that “transform data into meaningful and insightful narratives people can simply read.”

Link to the rest at Literary Hub

The Guardian to make major cuts to U.S. news operation

16 September 2016

From Politico:

Executives from The Guardian said Thursday there will be cuts at the British news organization’s U.S. operation, announcing a 30 percent reduction in head count across the board.

In a meeting with newsroom staff, Guardian Media Group CEO David Pemsel called the changes a “course correction.” Eamonn Store, CEO of The Guardian’s U.S. operations, told staff that the changes were due in part to low ad sales and to revenue projections that are “not enough to maintain our current cost base.” Store said the company needs to make up for a revenue shortfall of $4.4 million over the next six months.

The company plans to offer buyouts to unionized editorial staff first and will move on to layoffs if necessary. Layoffs of business side staff will begin immediately. A source briefed on the plans said the culling would amount to a reduction of about 50 jobs across the 150-person organization. Cuts in the newsroom will be negotiated by the union that represents Guardian U.S. journalists.

In an email to staff that was sent shortly after this story was initially published, Pemsel and Guardian editor in chief Kath Viner blamed volatility in the U.S. and U.K. media industries, where publishers are struggling to achieve digital advertising growth as Facebook and Google suck up more and more of the market share.

“It is inevitable that such seismic shifts in the business model are adversely impacting our revenues despite the Guardian’s strong US brand recognition,” they wrote. “The full impact of these changes will bring Guardian US closer to its target of break even in 2017/18 and provide a clearer financial framework for Guardian US for the years up to 2021 and beyond. However, as in London, we will continue to take the necessary action to manage the cost base in a volatile market in order to protect Guardian journalism in perpetuity.”

. . . .

Guardian U.S. also has grappled with a series of leadership changes, as well as tumult back at the mothership in London, where executives have been reigning in costs and implementing cuts to make up for steep losses in recent years.

Link to the rest at Politico

We’re All Cord Cutters Now

8 September 2016

From The Wall Street Journal:

Does the internet pose a threat to established entertainment companies? Michael D. Smith and Rahul Telang lead a class at Carnegie Mellon University in which a student recently put that question to a visiting executive. He pooh-poohed the idea: “The original players in this industry have been around for the last 100 years, and there’s a reason for that.” As co-heads of CMU’s Initiative for Digital Entertainment Analytics, Messrs. Smith and Telang aim to counter this line of thought, and in “Streaming, Sharing, Stealing” they do just that, explaining gently yet firmly exactly how the internet threatens established ways and what can and cannot be done about it. Their book should be required for anyone who wishes to believe that nothing much has changed.

That such thinking still exists, at a time when Apple and Alphabet (that is, Google) are by far the world’s most valuable corporations, is testament to the power of self-delusion. Whether in music or movies or television or books, digital technology has given artists the tools to strike out on their own, enabled audiences to avoid paying for anything they don’t want to pay for and denied media companies the ability to control audience behavior. No longer can executives in New York or Los Angeles force music fans to buy an entire album instead of a single song; or movie buffs to line up at the box office for something they’d rather watch at home free; or television audiences to rush home and endure a barrage of ads in order to see their favorite shows. Remember NBC’s “Must See TV”? Not if you’re under 30.

The book opens with an emblematic story about “House of Cards,” the Netflix political drama that upended television, not just because it didn’t come from a conventional network or because the whole first season was released at once but because Netflix dispensed with the pilot process and put up $100 million to produce 26 episodes sight unseen. What looked from the outside like a stunt was a considered investment. Because Netflix has finely grained information about its subscribers—their likes, dislikes, viewing histories—the company can make determinations that television networks, which see audiences through a Nielsen lens that reduces viewers to demographic blobs, cannot.

Data gets you not just granularity but clarity. Do low-cost e-books cannibalize the sales of expensive hardcovers? No, it turns out that people who want one format were never likely to consume the other. What about piracy? Evidence suggests that it does indeed hurt music and video producers, though hardly as much as they claim. Efforts to fight piracy have been shown to cut down on illicit downloads and increase sales; so does a strategy of making more titles available legally. What doesn’t work is conducting business as usual.

Consider what happened when NBC decided to pull its shows from iTunes in a 2007 contract dispute: Not only did viewers fail to buy DVD box sets or migrate to NBC.com, as the network expected; many of them decamped for BitTorrent and started downloading pirated shows en masse—and they didn’t stop when NBC finally crawled back to iTunes nearly a year later. NBC thought it was playing hardball with Apple; in fact, it provoked its audience to learn how to pirate.

. . . .

The authors also note that, by making it easy for writers, musicians, and directors to work independently, digital technology has vastly increased the number of works available. Between 2000 and 2010, an explosion in self-publishing raised the number of new books issued per year to 3.1 million from 122,000. Predictably, the overwhelming majority of these titles went nowhere. But one that was self-published in 2011—E.L. James’s “50 Shades of Grey”—became the ultimate blockbuster, selling more than 100 million copies and spawning multiple sequels and a multi-billion-dollar movie franchise. And it’s not alone.

The authors’ point is not that the long tail is where the money is, though that can be the case. It’s that “long-tail business models,” being inherently digital, can succeed where others do not. Mass-media businesses have always depended on the economics of scarcity: experts picking a handful of likely winners to be produced with a professional sheen, released through a tightly controlled series of channels and supported by blowout ad campaigns. This, the authors make clear, is a strategy for the previous century.

Link to the rest at The Wall Street Journal (Link may expire)

The Washington Post will use robots to write stories about the Rio Olympics

8 August 2016

From recode:

The Washington Post has a big team of journalists covering the Rio Olympics.

Also covering the games for the paper: Robots.

The Post is using homegrown software to automatically produce hundreds of real-time news reports about the Olympics. Starting tomorrow morning, those items will appear, without human intervention, on the Post’s website, as well as in outside channels like its Twitter account.

The idea is to use artificial intelligence to quickly create simple but useful reports on scores, medal counts and other data-centric news bits — so that the Post’s human journalists can work on more interesting and complex work, says Jeremy Gilbert, who heads up new digital projects for the paper.

“We’re not trying to replace reporters,” he said. “We’re trying to free them up.”

Gilbert and Sam Han, the paper’s head of data science, have a team of three engineers working full-time on Heliograf, the Post’s AI software. A few more product analysts are spending about half of their time on the project, and four or five newsroom staffers are also spending time shaping the software.

. . . .

In 2012, Gilbert said, some of the Post’s election coverage was up to 16 hours behind, as a handful of humans waded through returns.

The plan is to also use the same software to look for interesting data points, like trends in voting patterns across the country, that it can flag for human reporters to build upon.

And at some point, Gilbert says, the Post wants to be able to “inject” contributions from its AI into stories its flesh-and-blood journalists are creating. Ideally, readers won’t be able to tell who made what.

Link to the rest at recode

RIP to the VCR

22 July 2016

From Slate:

This week, the Japanese company Funai Electric announced that it wouldcease production of VCRs. Since it was reportedly the last company to make the increasingly obsolete players, the news effectively rang the death knell of a technology that had survived long past its own moment. To better understand the enduring legacy of VHS, I called Caetlin Benson-Allott, an associate professor in the English department at Georgetown, where she teaches courses on film and media studies.

Benson-Allott, with whom I went to grad school, is the author of Killer Tapes and Shattered Screens, in which she explores the ways cinema reflected on and responded to home video technology. She spoke about the strange persistence of VHS technology, discussed its role in the rise of digital culture, and reflected on what she’ll miss most about it.

. . . .

Jacob Brogan: As a scholar of video technology, what was your reaction to the news that the VCR is finally dead?

Caetlin Benson-Allott: It surprised me to find out that manufacturers were still producing VCRs, because JVC—the company that invented VHS and gave us the term VCR—actually stopped producing them in 2008. The VCR itself was outmoded by the DVD player in 2001. That’s the year that people started watching more DVDs than VHS cassettes. So, while it was refreshing to see that VCRs had made it this far into the 21st century, it was interesting that it was eight years after the very inventor of the term had given up on the technology.

. . . .

Do you think that its shelf life means that VHS is going to stick around for a while after this formal end to manufacturing?

I think it means that it should, but “should” and “will” aren’t the same thing. As a university faculty member I’ve watched multiple institutions just flat out destroy or give away their VHS collections in favor of DVD. And now they’re considering getting rid of DVD in favor of subscription services.

. . . .

You argue in Shattered Screens that VHS transformed the process of making movies. Is that a legacy that will linger?

I think it has lingered! We don’t necessarily appreciate how much our use of DVD or streaming or electronic sell-through is based on videotape—Betamax and VHS. The idea of coming home and saying, “I’m in the mood for House of Cards,” or “I want to watch all of Martin Scorsese’s movies in order,” wouldn’t be possible without VHS. The expectation that our media is there when we want it—what Chuck Tryon calls on-demand culture—was born with the VCR.

Does that mean that VCR, maybe video tape more generally, trained us for the agency that we have in our contemporary media culture?

Absolutely! VHS and videotape gave us an expectation of access that—as Lucas Hilderbrand points out in his book Inherent Vice—is foundational to the way that we approach media today. If you try to think back and imagine what television and film were like before VHS, you had to wait. To see a film that wasn’t just released, you had to make a trek to your local repertory theater on the one night they decided to play it. And if you didn’t live near a repertory theater—as most Americans didn’t—you were out of luck.

. . . .

What will you miss most about VHS?

What I miss most—and I have to say I already miss this—about VHS are the video stores. I miss walking into the cornucopia that was my local Lincoln Video of Lincoln, Massachusetts, and finding out about some guy named Scorsese when I was way too young to be watching his movies. And then working back from him to other things that he liked. I miss having a relationship with a video clerk and the esoteric taste, the evolution of taste, that I got from knowing that guy or that gal.

We have that in a sense with the you-might-also-like function on Netflix, but that’s an algorithm replacing a human relationship, which is never the same thing.

Link to the rest at Slate and thanks to Matthew for the tip.

While reading the OP, it occurred to PG that he has no anticipation of obtaining ideas for his media consumption from a physical person as part of a commercial transaction – a video store clerk or a bookseller.

While PG is a reasonably social guy and enjoys face-to-face interactions with others, he receives better suggestions for media consumption from family and friends who don’t work in bookstores, online articles/discussions and Amazon than he would ever expect to receive from a Barnes & Noble employee.

He’s not trashing those who work in bookstores, but doesn’t think they have a very good idea of what he might like. (For the record, PG is reading a history of the Congo right now, not a book he would expect to see on the front table at his local B&N.)

There is also the problem that PG hasn’t purchased a physical book in years.


Internet Publishers vs. Newspapers

7 June 2016

From Business Insider:

Newspapers are dying and the internet is rising.

The Bureau of Labor Statistics recently highlighted a stark indicator that this generational shift in the nature of media is happening: Since October of last year, there have been more people employed in internet publishing than by traditional newspapers.

. . . .

According to the BLS, “In June 1990, there were nearly 458,000 people employed in the newspaper publishing industry; by March 2016, that figure had fallen to about 183,000, a decline of almost 60 percent. Over the same period, employment in Internet publishing and broadcasting rose from about 30,000 to nearly 198,000.”

Link to the rest at Business Insider

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