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August 18 2011

Leaky paywalls and ads: What publishers can learn from the New York Times

This post originally appeared on Joe Wikert's Publishing 2020 Blog ("Porous Paywalls and Book Publishing"). It's republished with permission.


Felix Salmon recently wrote an article talking about how the New York Times paywall is working because it's porous. He contrasts that to other paywalled sites that haven't enjoyed the same success as the Times. As I read Salmon's article I was thinking less about porous vs. rigid paywalls and more about DRM'd vs. DRM-free books.

There are definitely some similarities here. At O'Reilly we believe in a DRM-free world because we trust our customers and we believe they value our content enough to pay for it rather than steal it. It would be naive of us to think this philosophy totally eliminates the illegal sharing of content though. We just happen to believe those situations shouldn't cause you to penalize all your customers. Shoplifting happens from time to time at your local grocery store but that doesn't mean the store manager should put everything under lock and key.

But it was only when I read Fred Wilson's follow-up post to Salmon's article that I realized what other connection this has to book publishing: advertising, sponsorship and other revenue streams. As Fred points out, the Times doesn't necessarily have to charge for each online page view since they run ads on every page served.

I'm not suggesting we can suddenly give away book content and make the exact same amount of revenue with advertisements. But what I am saying is that advertising and its close cousin, sponsorship (e.g., "This book brought to you in part by..."), can and will play a role in the future of book publishing. Every publisher won't necessarily experiment with that model, but many will.

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24symbols is a great example of how this can work. The company offers both freemium (free, ad-supported content accessible only while online) and premium (for-pay, without ads and can be read offline) models. The customer decides which option they prefer. That last point is critical. 24symbols isn't just serving up free content and hoping that alone will somehow create a successful business model. They're also offering an ad-free offline option that some number of users will upgrade to. They key is to make the premium service feature set compelling enough that customers want to pay for the it.

Kindle with special offersWill 24symbols be successful? It's too early to say (although I'm a huge fan of Justo Hidalgo and what he's doing with 24symbols; if you missed it, check out his presentation at our TOC Sneak Peek from earlier this year). But I'm convinced the future will bring more advertising-based book publishing experiments, not fewer. And as I've said before, I can see a future where Amazon offers two versions of many (if not all) Kindle titles: an ad-free version with pricing similar to today's models and a second one with ads but at a lower price. Amazon has taken the first step with the hardware itself by offering the lower-priced "Kindle with Special Offers." As Jeff Bezos mentioned in the seventh paragraph of Amazon's most recent earnings announcement, "Kindle 3G with Special Offers has quickly become our bestselling Kindle."

Customers are already voting with their wallets and overwhelmingly choosing the advertising-subsidized version of the device itself. These results will undoubtedly encourage Amazon to start experimenting with ad-subsidized content as well.

Services like 24symbols and the Kindle platform are one thing, but the next logical step after that is for publishers to expose more of their content to the major search engines. How long will it be before some of the current New York Times bestsellers are fully and freely readable online with ads? If the stories are good enough and the premium alternative offers a significantly better reading experience (e.g., no ads, can be read offline, includes other features/services, etc.), some number of customers will upgrade, just like they're doing with Times subscriptions.

Associated photo on home and category pages: Black Mountains, Wales: rock wall by markhillary, on Flickr

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December 16 2010

Strata Week: Shop 'til you drop

Need a break from the holiday madness? You're not alone. Check out these items of interest from the land of data and see why even the big consumers face tough choices.

Does this place accept returns?

On Monday, Stack Overflow announced that they have moved the Stack Exchange Data Explorer (SEDE) off of the Windows Azure platform and onto in-house hardware.

data-explorer-screenshot.png

SEDE is an open source, web-based tool for querying the monthly data dump of Creative Commons data from its four main Q&A sites (Stack Overflow, Server Fault, Super User, and Meta) as well as other sites in the Stack Exchange family. The primary reason given (within a polite write-up by Jeff Atwood and SEDE lead Sam Saffron), was the desire to have fine-tuned control over the platform.

When you are using a [Platform-as-a-Service] you are giving up a lot of control to the service provider. The service provider chooses which applications you can run and imposes a series of restrictions. ... It was disorienting moving to a platform where we had no idea what kind of hardware was running our app. Giving up control of basic tools and processes we use to tune our environment was extremely painful.

While the support that comes with Platform-as-a-Service was acknowledged, it seems that the ability to better automate, adjust, and perpetuate processes and systems with more fine-grained control won out as a bigger convenience.



Where did you get that lovely platform?


Strata 2011Of course, one company's headache is another's dream. Netflix, a company known for playing with big data and crowdsourcing solutions "before it was cool," posted on Tuesday the four reasons they've chosen to use Amazon Web Services (AWS) as their platform and have moved onto it over the last year.

Laudably, the company states that it viewed its tremendous recent growth (in terms of both members and streaming devices) as a license to question everything in the necessary process of re-architecting. Instead of building out their own data centers, etc., they decided to answer that set of questions by paying someone else to worry about it.

Also to their credit, Netflix has enough self-awareness to know what they are and aren't good at. Building top-notch recommendation systems and providing entertainment? You betcha. Predicting customer growth and device engagement? Not so much.

How many subscribers would you guess used our Wii application the week it launched? How many would you guess will use it next month? We have to ask ourselves these questions for each device we launch because our software systems need to scale to the size of the business, every time.

Self-awareness is in fact the primary lesson in both Netflix's and Stack Exchange's platform decisions. If you feel your attention is better spent elsewhere, write a check. If you've got the time and expertise to hone your hardware, roll your own.

[Of course, Netflix doesn't go for the pre-packaged solutions every time. They also posted recently about why they love open source software, and listed among the projects they make use of and contribute back to: Hadoop, Hive, HBase, Honu, Ant, Tomcat, Hudson, Ivy, Cassandra, etc.]

With what shall we shop?

The New York Times this week released a cool group of interactive maps based on data collected in the Census Bureau's American Community Survey (ACS) from 2005 to 2009. Data is compared against the 2000 census to uncover rates of change.

[While similar to the census, the ACS is conducted every year instead of every 10 years. The ACS includes only a sampling of addresses instead of a comprehensive inventory. It covers much of the same ground on population (age, race, disability status, family relationships), but it also asks for information that is used to help make funding distribution decisions about community services and institutions.]

The Times maps explore education levels; rent, mortgage rates, and home values; household income; and racial distribution. Viewers can select among 22 maps in these four categories, and then pan and zoom to view national, state, or local trends down to the level of individual census tracts.

Above is the national view of the map that looks at change in median household income. The ACS website itself provides some maps displaying the survey numbers from the 2000 census and the 2005-2009 survey, as well as a listing of data tables.

The Times map shows the uneven way in which these numbers have gone up or down in various parts of the country, with some surprising results that are worth exploring. Note that the blue regions are places where income has dropped, and the yellow regions are places where it has increased. (No wonder a lot of us are getting creative with holiday shopping.)

If this kind of research floats your boat, check out Social Explorer, the mapping tool used to create the New York Times maps.

Even markets like to buy things

The emerging landscape of custom data markets is already shifting as Infochimps recently announced the acquisition of Data Marketplace, a start-up incubated at Y Combinator.

While Stewart Brand may be right in thinking information wants to be free, there's also enormous value to be added by aggregating, structuring, and packaging data, as well as in matching up buyers with sellers. That's the main service Data Marketplace aims to provide, particularly in the field of financial data.

At Infochimps, information is offered a la carte, and many of the site's datasets are offered for free. These include sets as diverse as "Word List - 100,000+ official crossword words (Excel readable)", "Measuring Worth: Interest Rates - US & UK 1790-2000", and "Retrosheet: Game Logs (play-by-play) for Major League Baseball Games." Data Marketplace is a bit different, in that it allows users to enter requests for data (with a deadline and budget, if desired) and then matches up would-be buyers with data providers.

Infochimps has said that Data Marketplace, which is less than a year old, will continue to operate as a standalone site, although its founders Steve DeWald and Matt Hodan will depart for new projects.

If you're interested in the burgeoning business of aggregated datasets, be sure to check out the Data Marketplaces panel I'll be moderating at Strata in February.

Not yet signed up for Strata? Register now and save 30% with the code STR11RAD.

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