The Changing Face of Media Brands

Having spent almost thirty years in the media business, I feel some sadness when once-marquee brands are passed around the investment community like an unwanted Christmas pudding.  I’ve had many friends at Newsweek and have had occasion to visit a number of their international editions.  In some respects, the magazine seems now to have more cachet outside the country than in—but not by much.

Though I had no inside information, I never had much confidence in the Daily Beast/Newsweek marriage.  The editor, Tina Brown, seemed to be still paying too much attention to the “buzz” factor, which was the operative word that described her failed Talk magazine.  I joined Hachette just in time to review the Talk business plan that Ms. Brown was shopping.  As an investment vehicle the plan made little sense to me, so I recommended Hachette pass, which they did.  Hearst and Miramax stepped in and funded the short, unhappy life of Talk. 

This closure of Talk got outsized attention because of Ms. Brown’s celebrity and her successes at Vanity Fair and The New Yorker.   Even though by Talk’s launch in 1999 digital was decidedly in the air, most publishers considered it a curiosity and not seismic disruptor.  David Carr wrote in The New York Times on the tenth anniversary of the launch part that the “Talk party was the end of an era, a literal fin de siècle.  Flush with cash from the go-go ‘90s and engorged by spending from the dot com era, mainstream media companies seemed poised on the brink of something extraordinary.  But the brink ended up being a cliff.”  Ms. Brown recalled, “It seemed like that happened in the 18^th century.”

Newsweek has been sold to International Business Times for an undisclosed sum that was likely pocket change.  IBT is a digital media company with 200 employees.  Christianity Today and The New York Observer have linked IBT to controversial Korean Christian preacher David Jang, who has been hailed by his followers as the Second Coming Christ.    

On the heels of the Newsweek sale came the announcement that The Boston Globe had been sold for $70 million to the owner of the Boston Red Sox and The Washington Post was sold to Amazon’s Jeff Bezos in a personal transaction for $250 million.  You can do the math.   The New York Times purchased The Boston Globe in 1993 for $1.1 billion.  The Washington Post was worth more than that a decade ago. 

James Fallows at The Atlantic online captured the moment, describing the Newsweek sale as a tremor and the Washington Post sale as an earthquake.  Understandably, there is a great deal of nostalgia around this transaction.  Perhaps The Post had its finest hour forty-two years ago when the Supreme Court ruled for the paper and the publication of the Pentagon Papers changed the course of American history.  More recently, of course, The Post, along with The Guardian, published a trove of NSA documents.

That said, The Post was failing as a business—it reportedly lost $50 million in the first half of 2013.   For all of its journalistic “firsts,” The Post has become something of the company paper in the company town of Washington, DC.  Please read Frank Rich’s article, “The Stench of the Potomac” in the current issue of New York Magazine for his acerbic take on the media’s role in cultivating a political plutocracy where the dominant color is green, as in greenback.   Rich takes some of the wind out of the nostalgia sails.

Naturally, there’s a lot of chatter about Bezos’ purchase of The Post, with some claiming that this is a personal philanthropic move and others suggesting that this is a way to get in the middle of the Washington discussion about taxes, patents, and anti-trust, and monopolistic practices.  Henry Blodget, CEO of The Business Insider, where Bezos is also an investor, suggests that this is a straight business move, even though the transaction is separate from Amazon.  But the business model is implicitly there.  After all, Amazon is in the content production and distribution business.  It’s also in the subscription business with the Amazon Prime offering.  And Amazon is in a position to do what few companies have managed to do at scale:  integrate content and e-commerce.  There is every reason to think that The Post will have a robust digital future.

When I learned that Newsweek had been sold yet again, I reminded myself that magazines and newspapers of all stripes have been coming and going for a hundred years or more and the pace of this change has only been speeded up by digital disruption.  Tastes, psychologies, cultural fixes, collectibles, entertainment, vicissitudes, and the-next-big-thing change and change again.  Most magazines don’t live long enough to become brands.     

George Magazine, with John F. Kennedy on the masthead as publisher, should have been a sure thing, positioned as the intersection of politics and celebrity.  I joined Hachette after the publisher became a partner with Kennedy.  I found the editorial soft and mushy and could not identify the business rationale.  Hachette tried to keep it going after Kennedy’s tragic death, but was forced to shut it down in 2001.  The French fantasy about Camelot kept the magazine going longer than it should have.

Sometimes a magazine’s market position and reason-for-being simply changes or disappears.  Mademoiselle, launched in 1935, was a classy title that couldn’t shift its editorial enough to match the changing sensibility of a new generation of readers.  It also closed in 2001.

Or magazines just run their course, as was the case with McCall’s magazine, launched in 1873.  Some of America’s greatest writers, including F. Scott Fitzgerald and Willa Cather, wrote for the title.  Changing the title to Rosie in 2000, with a very loud Rosie O’Donnell as editorial director, didn’t help and it was shuttered in 2002.   The women’s category, long-called the Seven Sisters, has suffered the most disruption.

Prodded by the Newsweek story, I looked at hundreds of magazines that have closed in the US in the last few decades.  In a way this period was a wonderful time for magazine launches.  The economy was good, especially in the 1990's.  Consumers were becoming much more interested in special-interest magazines that focused on sports, crafts, and hobbies.  “Zines” were all the rage.  And print advertising was strong.  So why not The Glam Eye that focused on the music scene around Toledo, Ohio; New York Dog that was designed to sit alongside Vogue and Cosmopolitan on the newsstand; Psychoanalysis, a comic book that featured three patients in analysis; Sassy, a teen magazine focused on sex, love, and rock & roll; Syrian World, about that country’s high culture; and Greed Magazine, another way to consume music.  Those were the good old days.

Even if the Second Coming Christ is not a secret investor in the business, Newsweek is probably better off with IBF, even though this digital-only company is reportedly flirting with the idea of a print edition of the magazine.   Likewise, The Washington Post will surely be much better off with Bezos at the helm.

I don’t know how much we should infer from the fact that The Washington Post owned Newsweek from 1961 to 2010, selling to stereo equipment magnate Sidney Harmon for $1 and some liabilities.  He then entered a JV with IAC; thus the short-lived marriage with The Daily Beast.   

At the very least, it was time for new money, new management and new thinking to enter this game of brands.

Or to borrow lines from poet W.H. Auden:

“Harrow the houses of the dead; look shining at

New styles of architecture, a change of heart.”

www.digitalfirstmediany.com

www.jamescmccullagh.com

Timely Taps, Digital Wraps, and Business Going Native

Over drinks in his apartment in NYC, Felix Dennis, Chairman of Dennis Publishing, would brag that he brought Maxim magazine to the States to make a ton of money and leave before anyone became the wiser.  For a man who claimed to have spent $100 million on booze and women, this didn’t seem to be such a remarkable claim (he also claimed to have murdered some unlikely chap, but pulled back from that claim).  That was a decade ago, but I can imagine the chairman LOL on learning that the magazine he sold to Quadrangle Capital Partners LP in 2007 for $250 million (sale included Blender and Stuff) is reported by Bloomberg to fetch bids of about $20 million.  Dennis’ main regret about Maxim was that he didn’t sell it before the lad magazine sector started to lose readers and advertisers.

Launched in 1995, Maxim enjoyed a spectacular rise with a strong assist from its unabashed emphasis on sex, babes and beer, with a little fitness thrown in.  I was in the UK at the time, heading the launch of Men’s Health, and while impressed with Maxim’s brash and noisy launch, I knew somehow that health coverage, while less sexy, would win out in the end.  On its face, Maxim still looks like a very successful magazine with a paid circulation of 2.5 million.   However, an examination of its subscription offers suggests that this is very unprofitable circulation.  This, coupled with a precipitous decline in advertising pages, might have sealed Maxim’s fate.   The lack of a robust digital strategy didn’t help.

With the advent of digital at scale, magazines at risk seem to have fewer second chances these days and fewer takers.  Newsweek’s tablet edition is looking for a buyer, but owner Barry Diller now calls the original purchase a fool’s errand.  And he got it for $1 and subscription liabilities.  That’s the same price that TV Guide was sold for in 2008.   Business Week was sold to Bloomberg in 2009 for between $2-5 million.  I should add that at this writing Jay Penske, the auto racer and publisher of Deadline Hollywood, is reported to be driving into the Newsweek interest lane.

For more than a decade, the media business has been arguing whether we are going through a sustained period of disruption or transformation.  As usual, it’s in the eye of the beholder.  I note MPA, the magazine association and where I used to hang my hat, describes its annual October 2013 conference as a place to examine these “transformational times.”  The television executive who complained during the 2008 Olympics that the networks were exchanging “analog dollars for digital dimes” was certainly talking about disruption.  With digital revenues for magazines coming in on average at 5% or so of total revenues, we might conclude that that executive was on to something.

By now, there are enough digital markers around to decorate Route 66.  When the International Data Group (IDG) announced in 2007 that it had finally crossed the Rubicon, generating as much revenue from digital as from print, that date seemed an important digital marker.  IDG has continued nicely down that well-paved, digital highway.  When the company announced recently that PC World magazine would be exiting print to focus on its digital edition and web site, there wasn’t much of a fuss.  The decision was inevitable because the magazine had lost most of its readership and its reason for existing in that form.  And now we have TechCrunch, Endgadget, Ars Technica, ZDNet and other sites that seem to fill any gap left by the closing of the print title.

The link between print and digital editions can be complicated, as Future Publishing discovered with TECH, an iPad magazine for technology enthusiasts.  This seemed like a very good idea.  I have worked with Future over the years and have enormous respect for the company.   And why not?  They were early into the computer, technology and gaming space.  They had a few stumbles in the States but recovered and seemed quite adept with their digital strategy.  They did not cling to print magazines that were no longer performing.  In fact, with TECH, they decided to launch an iPad magazine without the benefit of a print legacy.  Of course the technology space was already over-populated, but not having a print brand to build upon likely was a contributing factor for the demise of this title.   Sometimes you’re damned when you do and damned when you don’t.

We saw a lot of well-earned high-fives when Hearst announced in May that it had sold more than 1 million new, paid digital subscriptions.  That number also seems like an important industry marker.  I have commented in an earlier post that this focus on new digital customers is really a breath of fresh air and a reasoned bet on the younger and more affluent demographics of a native digital audience.

But at the end of the day, it’s all about the money.  Josh Steinberg in Digiday asks whether publishers are still too print-centric in their strategies, at the expense of future options, such as the iPad.  He writes that “Many publishers include iPad inventory for free as an extension of print packages.  For example, Hearst’s Esquire and Conde Nast’s Wired view print and the iPad as interchangeable products; you can’t advertise in the July edition of Wired’s tablet app unless you advertising in the print magazine.”

Steinberg notes that The Economist sells digital editions separately from print, but charges the same for print and iPad ads.  Print revenues are down, but iPad ad revenues are up 67% YOY.  The Atlantic’s President Scott Havens argues that “Folks are selling iPad editions as if they are similar products;  that’s not good for the industry or those brands.”  In a way, this transition to separate iPad magazine editions is likely just a matter of time and scale.  Steinberg reports that Esquire, which doesn’t sell iPad-only ad pages, has 65,000 iPad subscribers compared to 800,000 print subscribers.  The game would be different if the numbers were reversed.

It’s not entirely clear where the big revenues are to come from if consumer magazines are to reach the point where an appreciable chunk (say 30-40%) of their business is from digital.  Presumably, if and when Hearst reaches 10 million new, paid digital consumers, which could represent 25% of the total circulation file, that would be would constitute a memorable digital marker, though it would likely not be reached for a decade or so.

Some publishers, including The Atlantic and Forbes, are placing bets on what is generally called native advertising.  In another lifetime, this was called an advertorial, and generations of top editors stood at the bulwarks making sure that there would be no confusion between editorial and advertising content.  I was one of those enforcers, lined up on the holy side of the Church vs. State scrum.  Yes, the good old days.

Now, content is everywhere.  You are content, I am content, and Facebook and Twitter are media companies.  Back in the day, though tempers flared, it was relatively easy for consumers to identify ads masquerading as editorial content.  Today, not so much.  Of course, in the past, the FTC has played a role when editorial and advertising lines have become blurred, but we’re currently facing a little more than the threat from sleazy infomercials.  We are becoming inundated with content.  And some of this is by design.

Content is no longer just the handiwork of journalists and other pedigree.  While some see this trend the way Freud saw the threat of unconscious forces sweeping across Europe—the end of civilization, others see the proliferation of content as a business opportunity. IDG discovered more than a decade ago that their consumers often knew as much or more about technical developments as the paid staff.  I think that has become a pervasive truth across many of the top content verticals from cycling to knitting to running.   And the big consumer brands are not exempt from gaining this expertise in content.  Sears, one of the largest distributors of fitness equipment, also generates a lot of content about fitness.  To the list add most of the top twenty consumer brands.  Consumer brands call this activity “content marketing.”

I’ve admired the work Forbes, and especially Lewis DVorkin, Chief Product Officer, has done in bringing clarity, muscle and cover to native advertising and figuring out ways that enable “journalists and marketers, each transparently identified and clearly labeled, to publish content side-by-side in a credible news environment.”  In providing digital real estate on its site for content producers, including its own journalists, consumer brands, readers and bloggers, Forbes has gone a long way to define and embrace the rich content possibilities of our digital age with its BrandVoice offering.  In short, Forbes has created an “ethical framework” for branded content.

But this is not about the romance of content; it’s about business.  DVorkin nails the strategic issue with his prediction:  “The $10 billion digital advertising business is clearly in for disruption.”  He notes that the quarter trillion banner and rectangular ads served up quarterly have become little more than wallpaper to consumers and in the process are driving down advertising CPM.

Forbes’ strategy is to treat content as content, “meaning both editorial and brand content should rise or fall on its merits.”  Media companies are getting pretty good at building content frameworks that serve their diverse publishing platforms.  They are adding metadata or “structure” to content early in the workflow so it can be more valuable and ubiquitous downstream.  That is an essential technical development.

What Forbes is doing is more difficult in the sense that it requires a cultural and imaginative shift, asking publishers to turn structures and historical verities on their head while maintaining that ethical framework around content use.

Native advertising remains a very contentious issue but Forbes has laid down an important digital marker.

How I Ended Up on the Kindle

Amazon’s stock topped $300 a share for a short time yesterday before slipping back to $299.60.   You can be sure that this good showing was due to Apple losing the anti-trust suit over e-book pricing and not to the fact that I launched my first e-book on the Kindle.  More about that later.

I recall chatting with an Amazon executive after the Kindle was launched and asked him whether they were thinking about magazines.  He replied that “they are not yet on our radar.”  And the Kindle was decidedly not then on the radar of magazine publishers.  After all, why play in that black-and-white sandbox when the iPad offered the dream resolution for four-color magazines. 

For me, Amazon was a disruptor to be sure but also the behemoth that was putting my neighborhood bookstores out of business.  And the big guys too.  In the past during quieter times, I’ve roamed cities with bookstores serving loosely as my navigation points.  This is getting more difficult, certainly in New York.  Borders left town.  B&N is harder to find and could very well disappear too, following the Nook out the door.  But Amazon can’t be blamed for B&N’s incompetence and getting into the device game without a clear strategy.   The ruling that Apple conspired with other publishers to fix e-book prices clearly plays into Amazon’s strategy.  The price of e-books is going down.

I have written and edited more than a dozen books for a variety of publishers, including Dell, Warner, Rodale and a handful of small presses that are now out of business.  I have published hundreds of poems in a variety of journals from The Sewanee Review to something called Twig.  Most of these publications are no longer in print.  Those that survive have  outsourced much of their business operations.  Many poets and writers I know support financially various titles just to keep them going.  That Poetry magazine got something like a $100 million endowment a few years ago is the exception rather than the rule.  Most operate on a shoestring.     

Disruption in the book business started long before Amazon.  Over the last twenty years, book publishers have been taking less risks with mid-list books and requiring that authors that they do publish do much more of the work, including marketing.  At one time, I was sent on a 15-city media tour by Warner to promote a health and fitness book.  Sure it meant going to Cleveland, Detroit, and Green Bay but it was planned, paid for and generally successful.  I was talking to a book agent friend recently and he said that publishers require even well-known authors to submit detailed marketing plans with their book proposals.  This outsourcing is likely to continue.

The recent merger of Random House and Penguin is likely to exacerbate this situation as it brings the number of major book houses down to five.  The Atlantic Wire suggests that the net effect will be fewer editors editing few books; lower advances; and less diversity in subject matter.  As with Hollywood, we will likely see much more emphasis on the blockbusters.  I know from experience that it will mean fewer book agents taking queries from authors, even those with substantial publishing and media experience.  Since the business has been experiencing lower advances for authors, this means a lower cut for agents, who are already hurting because authors are going the self-publishing route.

But self-publishing is not for the faint-of-heart.  Authors have to do literally everything.  The contemporary rule-of-thumb is that for every hour you spend writing a book, you should spend another hour marketing the book.  Interesting, but this is practically impossible for most writers.  I haven’t handed out book flyers outside Grand Central Station in New York City yet, but I’ll have to think about it.

I’ve published two novels (Limey Down, The Sirens of Vulture Creek) and two volumes of poetry (Set Pieces of the Feminine, and In the Shadow of the DMZ) with Amazon, on-demand services.   You can find details about these titles at http://www.jamescmccullagh.com.  The most recent is The Archetype of the Gun, an e-book.

Ever since the Newtown school massacre, I have been thinking about the gun and gun violence in America in its broadest context.  I published a blog earlier this year (February 12, 2013) about the subject on this site.   Soon after the shootings, the conversation quickly got back to “us” vs. “them” and nothing happened.  The Senate failed to pass what most Americans considered reasonable legislation about background checks.  I suspect that nothing happened because the gun has such a powerful hold on the American imagination.  It is a Big Idea, what the Jungians would call an archetype.

In that spirit, I decided to write an epic poem—in structure--and explore in image and metaphor the psychological, religious, and mythological aspects of the gun, weaving in my military experience, my service during the Vietnam War, conversations with veterans and family members who served, and the growing examples of “militarism” at home and abroad.  This is not about guns but about “gun-running.” 

The WSJ reminded us this year in May, which is poetry month, that no one reads poetry any more.  Perhaps so, but we keep trying.  Now back to the business of books.

I decided to publish this as a Kindle e-book because the poem’s format works well on the screen size, the data sharing, and market distribution.  I like Kindle’s lending library program and other promotions.  And you can take it to the beach.  I priced the book at $3.99, which is considered the consumer sweet spot.   I’ll consider a print version if the response warrants.

Please find a link to the book, including a description and summary pages: http://ow.ly/mJkGP

Please share.

Thanks.

Flip-Flops, Kinky Boots, and Dreaming of Invention

A friend explained over lunch how his son and friends came across the idea of imbedding messages on the soles of flip flops so beach goers could leave messages behind them in the sand, perhaps including the inevitable end- of-summer lament:  “She loves me, she loves me not,” though that would require a lot of shoe leather.  The flip flop project was a modest dorm room affair until a stripper learned of the business and posted her approval on Twitter.  The rest is history and a nice uptick in cheeky sales.   Just to make sure my remarks are not apocryphal, please visit the site at www.Flipsidez.com.

I wanted to record this mix of intuition and luck before the sea comes in and wipes out the one or two-word #hashtag endearments on the remaining beaches where sand is not yet a luxury.  No word if some version of this will be used by sure-footed sky divers and sky walkers who, like their beach brethren, insist on being ephemeral and disappearing into the sunset.

If you think these observations have nothing to do with digital, you might be right or you might be wrong.  My friend had just come from a meeting in which a cross-section of publishers lamented, in spite of all the headlines and fuss, the challenges they face with digital publishing and how little impact digital revenues have on the bottom line.  After all, publishers are lucky to derive 5% of their total revenues from digital.  We are all looking for that huge digital hockey stick to appear on our Balance Sheets.

We are both survivors of the Dot Com boom and were wondering out aloud whether that kind of vapor was seeping into the marketplace again.  I don’t think so and argued over lunch that the digital sophistication in the media ranks these days is quite high, and, anyway, we got over our flirtation with banner ads a long time ago.  I suggested, however, that it might take another twenty years before digital revenues routinely represent 30-40% of total revenues of the average media business.  But who knows.   I heard the same forecast from CEOs in 1998.  I’ve yet to hear a digital prediction that has come true.

Nonetheless, the urban legends around the digital space are simply delicious.  Is it really true that you are 116 times more likely to survive a rattlesnake bite than intentionally click on a mobile banner ad?  For a thorough unpacking of dubious mobile stats, please go to www.digiday.com.

My friend remains convinced that we are experiencing a period of digital “froth,” citing some evidence that the interest in digital editions is sagging and consumers are tiring of the billion app App Store.  There was a note of nostalgia in his voice.  He mentioned an associate in the auto supply business who markets online parts for vintage Mustangs.  His business philosophy is simple:  If there a niche product he can put in a box and market via the internet, then there’s a business.  The auto guy just sold his share of the business for $17 million and promises to live happily ever after.

The psychologist James Hillman wrote that we’re probably better off having a drink with a friend than going to psychotherapy.  There was no booze at this lunch and no therapy that I noticed.  But Hillman has a point.  He also advised a generation to keep an eye on their dreams and wait for moments of invention.

I did, and as if on cue, an enterprise dream landed in my lap.  You can trace the incubation right back to the flip-flop guys.  The central dream image was of wooden toy train engines with red and yellow “noses,” that were converted for use as shoes for a particular young, fashion-conscious set.  There was a hint that a local football team was also interested, proving that fashion’s crossover appeal is a universal archetype.  The androgynous guys were strutting with purpose across my dream stage, a wonderful, uplifting set.

I have yet to ask my friend whether this dream might suggest a business.  I’m still on the digital fence, but plan to see the Tony Award-winning “Kinky Boots” that had, I understand, a similar, inauspicious beginning.  That is, once it discovered an essential truth:  the sex is in the heel.

How Magazine Publishers Can Think “Inside the Box”

When I’m unsure about what to do with a cardboard box, I give it to a child.  She in turn puts it on her head, sits in it, and uses it as a rocket, slide, pillow and weapon, in no particular order.  And after her nap, she reinvents the game all over again, this time with video.

I’m sure I’m not the only one who cringes when invited into the boardroom with other acolytes to participate in a strategic planning session which will require “out of the box thinking.”  I learned my lesson early in my career when I suggested that the owner’s wife, who loved medieval, cultist things, be brought on board as the resident astrologer.  I mean, she read a mean horoscope and wore gypsy skirts and headbands.  I was following orders and thought, I thought, outside the box, but the blowback I received from the corporate powers was that I had somehow slandered her.  But, in a sense, none of this mattered because most strategic comments fall to the cutting room floor to be swept up curtly latter on by the janitor who knows what to do with trash.

Most of us have our merry tales of crawling around meeting rooms trying to sound like an unreconstructed lion or some other beast that might upset the status quo.  And then there are those “brainstorming” sessions.  I recall during a retreat with a New York publisher spending too much time listening to suggestions from men and women to either put the toilet seat up or down, depending on aim and strategic intent.  I won’t bore you with the list of deadly atmospheric metaphors that would make an eighth-grader blush.

In a delicious article that makes a grand case for plucking “brainstorming” from the executive quiver, the WSJ makes a case for behavioral science and why we should with pride and aplomb find our way back into the box.  The Journal published an adaption from Inside the Box: A Proven System of Creativity for Breakthrough Results (Simon & Schuster), by Professors Drew Boyd and Jacob Goldenberg, at the University of Cincinnati and the Hebrew University of Jerusalem, respectively.   

The authors suggest that advocates of “out of the box thinking” have it all wrong and actually have it backwards.  “Would-be innovators are told ‘to think outside the box,’” and go wild making analogies that have nothing to do with the essential product.  They suggest that playing word association games or chasing grand abstractions at a company retreat are pretty much a waste of time.  Their approach is to think about the essential business differently.  So get inside the box, deep inside the box.

They offer five techniques for doing this:  subtraction, task unification multiplication, division, and attribute dependency.  The technique of subtraction would mean removing essential elements.  The authors provide the examples of contact lenses, an exercise bike, a package of powdered soup, and an ATM.  The question: what do they have in common?  The answer: they all have something subtracted.  The contact lenses are without the frame.  The exercise bike is without a rear wheel.  Extract water from soup and you have the powdered form.  And so on.

The authors note that companies have discovered new product lines using these techniques.  Philips Electronics removed functions from the bulky DVD player and placed them in a handheld device.  This led to a new design standard not only for the DVD, but for the home-electronics market.

The professors offer Samsonite as an example of a company that used task unification to create new products, redesigning the college backpack so it was better designed to provide comfort for the students under a heavy load of books and electronics.  The heavier the contents, the more stress relief for the wearer.

Multiplication suggests copying a component, then altering it.   Though this technique has been used with razors, light bulbs and photography, it can also be used in services.  For example, the College Board, which designs the SAT, adds about 25 minutes of experimental, un-scored questions during the 225-minute test to test appropriateness of including them in later exams.

Division is a technique by which you separate the components of a product or service and then rearrange them.  “Instances of this technique abound, from airline check-in procedures that now have you print your boarding pass at home to the TV remote control whose functions used to be attached to the box itself.”

According to the authors, an excellent example of attribute dependency “is eyewear with transition lenses, which change from light to dark in the sunlight.  So, too, are windshield wipers that speed up as it rains harder.”  

I haven’t heard whether publishers and media companies are using this kind of approach to innovation.  If not, they should consider it.  Too often, the strategic conversation shuffles between the urge to centralize or decentralize the organization, with digital developments making this conversation all the more severe.  Wired magazine just celebrated its twentieth anniversary and that means we’ve been struggling with digital issues for at least that long.  I can’t think of any of the publishers I’ve worked with who got digital right early or even later on.  One reason for this, I’m sure, concerns asking the right questions.  And a willingness to get back inside the box!

Ken Doctor, writing in the Nieman Journalism Lab, provides a quiz:  The era of paying for digital access is about: 1. Getting more money out of core subscribers; 2. Getting new money out of new subscribers; or 3. Getting money any way you can.  Doctor acknowledges #3 is a “gimme,” but #1 and #2 are very different strategies.  “While most newspaper publishers are leaning heavily on their long-time core bases by promising and delivering all-access, Hearst Magazines is taking a contrarian turn in the market.  It’s a strategy that is largely at odds with peers Conde Nast, Time Inc. and Meredith, as well as most newspaper publishers.  It’s betting on almost wholly on new customers.”(www.niemanlab.org/2013/06/the-newsonomics-of-hearst-magazines-one-million-new-customers/).

Unlike its competitors, Hearst is not focused on bundling print and digital products, although that may be an option in the future.  Rather, as Doctor notes, the company is seeking out and attracting consumers who want to read in the digital format.  And the proof seems to be in the pudding.  Recently, President David Carey announced that Hearst Magazines had reached one million paid digital subscribers.  While this number is about 4% of Hearst’s total subscription, I wouldn’t bet against Hearst reaching the desired 10% mark by 2016.  It’s a start.

In Doctor’s opinion, “Hearst’s strategy is the one to watch.”  I agree.  This strategy is consistent with demographic changes, tablet adoption, decline in retail magazine sales, and the necessity of breaking through the “analog dollars for digital dimes” syndrome.  Hearst is demonstrating that consumers will pay full price for magazine tablet editions.  If this trend continues, it would be a huge finding for publishers who have been trying to generate digital revenue through bundling and pay-walls with inconsistent results.  Hearst is demonstrating there is another way.   

Perhaps Hearst has used a version of the “subtraction technique” suggested by our professors; removing seemingly essential elements to get at some core strategic issues.  For the last decade, the magazine industry’s narrative was necessarily anchored in print because that is where the revenues were and are.  Digital was there, of course, made more sexy and promising by the iPad.  But the print and digital dance continued, sometimes featuring ungainly partners with vastly different footwork.

Perhaps Hearst has also done the industry a huge favor by demonstrating that a company can chart a new, bold and scalable digital magazine business centered specifically on the tablet that Doctor refers to as the linchpin, with 98% of digital magazine reading taking place on the tablet.  “For many, the tablet is truly becoming a replacement for the print magazine.” And the good news continues. Ad Age just reported that iPad magazine ad units are up 24% in the first quarter of 2013 compared to the same period last year.  

If our professors were in the room, they might also suggest Hearst executives could be wittingly or unwittingly invoking the “attribute dependency” technique, “making the attributes of a product change in response to changes in the environment or in the surrounding environment.”  The tablet has been with us since 2009 and although companies, including Time Inc. and Conde Nast, have had some success in this space, Hearst has shown us emphatically that consumers will pay a pretty penny for magazine content on tablet devices; on average, 30% more than the print edition.  It’s a start.

By keeping the bundling of print and digital in the background, developing ways to get new revenue from new subscribers and focusing on the tablet magazine edition as a distinct business and editorial entity, Hearst seems freer to respond, unhindered, to changing marketplace exigencies.

That’s good news for them and the rest of the industry.  Perhaps the professors are right.  The solutions are closer than we think. 

The Navy Abandons All-Capital Letters, Semaphore, and Morse Code

The Navy Times reports that the senior service will discontinue use of all-capital letters in official communication, a policy that has been in place since 1850, apparently due to the inability of the early telecomm systems to accommodate lower-case letters.  That wireless telegraphy has permitted use of lower-case since 1932 was not addressed.  After all, what are eighty-one years to a centuries-old institution?   And don’t GENADMINS (general administration) and MOVREPS (movement report) suggest a certain historical weightiness and grandeur that is not held by their lower-case cousins that have infected social media and non-seagoing brains?

One reason given for this change is that younger sailors think the All-CAPS policy suggests heavy-handedness and sounds as if the entire command structure was shouting at the fleet.  I don’t want to disparage this logic, but that is exactly what the command structure intended.  All-CAPS represented a loosely disguised Pavlovian signal to stand up and salute.  After all, ATTENTION ON DECK worked for me every time. 

Navy brass must be familiar with the Buddhist notion that “you can’t move small enough.”  Or slow enough.  To their credit, Morse code was put on the dustbin of history as far back as 1999.  Though I place myself in the vanguard of progress, I feel a tinge of sadness and regret because I had to learn that alchemical language when I served and am not pleased that others in my specialty aren’t required to master this arcane art.  I can’t tell you how many pleasurable discussions, via flashing light and Morse code, I had with strangers on other ships in the early morning hours in the Gulf of Tonkin about whether it was practical or even desirable to collect a bucket of water line.  To be able to render in Morse, across countless sea miles, to another ship on station, the code ZWC, meaning a personal message to follow, was almost worth the price of enlistment.

Sometimes we were more serious.  It was not uncommon when the ship was “running dark,” especially when we were in joint exercises with other vessels for turn signals, such as “Turn 270 degrees,” to be executed via Morse code delivered on the masthead lights.  I have racked my brain but can’t remember any collisions of note.

Those who refer to Morse code as a “language of distress” must have heard an overweight Steven Segal beating out a desperate SOS on the steel cage of his own making.  But even the critics of this horse and cart technology will acknowledge that a one-hundred-and-sixty-year run was not bad for this 1939 invention. The French Navy, full of Gaelic pomp, said farewell to the code with these immortal words, getting very close to a Hallmark moment: “Calling all.  This is our last cry before our eternal silence.”

In its own, historically-efficient way, the Navy has gradually deep-sixed the technologies and practices that seemed radically old-fashioned, even though it was precisely these practices that made Mister Roberts, Away All Boats, and The Caine Mutiny so popular to another generation.  One of the last vestiges of that romantic past is semaphore, the use of hand flags held in precise positions that represent letters of the alphabet to deliver messages, usually at close quarters, between ships.  This discipline was especially useful during replenishments at sea where close, visual communication is essential.  The first semaphore message was sent in 1867.  I have heard reports that semaphore is still being used during replenishments, but it is also a dying art.  Flags appear now as bunting and ceremonial art, especially when COMSERVPAC comes aboard.  Sorry, Commander Pacific Services.

But there is at least one lining in this cloud.  In 2007, the Semaphore Flag Signaling System (SFSS) was introduced, a proposal to carry Internet Protocol (IP) by semaphore flags.  Sadly, this proposal was made public on April Fool’s Day.  I’m not LOL.

But I’m not fooling.  I have completed and will have in the market by this fall a novel that captures the original ALL-CAP Navy grandeur, based on my service during the Vietnam period.  The Navy is proudly coming back in ALL-CAPS in USS BUNKER KILLS: A SEA STORY.

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http://jamescmccullagh.com

Product Placement: Between the Lines in Iron Man 3 and the Chinese Sequel

It is becoming increasingly clear that we are what we wear, carry, breathe, advertise, post, boast and declare in the willing public ear.   

I embraced this lusty ethos some time ago when I was editor and publisher of Bicycling Magazine.  When appearing on the Today Show, Good Morning America and CBS This Morning, I must have looked like an advertiser’s wet dream with my Trek carbon fiber bicycle, Bell helmet, Specialized cleats, Louis Garneau jersey, Cannondale shades and just a hint of rain gear from Gore-Tex.  I had a handler who made sure my minor case of color blindness did not cause any fashion missteps under the harsh light of morning television. With delicacy and British understatement, I dropped these labels into the 8 am segment of the American imagination without losing a step.  In the vernacular, I was right on the money.  Subliminal, more or less, sells.

Those heady days seem such a long time ago.  I was playing in a sandbox with few tools and restricted movement.  These days the entire shoreline is fair game.  The traditional separation between Church (editorial) and State (business) seems to be breaking down and media companies are aggressively pursuing initiatives such as content marketing, brand journalism, and native advertising.  I just read that the New York Stock Exchange launched a project called The Big Stage, developed by Digitas, intended to highlight corporations in a photo-rich setting.  For example, “Animal Pharm” recounts the efforts of drug company Zoetis to fight animal diseases.  The actual content was produced by Time Inc. Content Solutions, which is outside the Time and Fortune Magazine operations.  Content Solutions are paid by companies to produce brand journalism.

To their credit, media companies are working hard to define these new content categories and make sure they are labeled clearly so consumers won’t be confused.  Forbes and The Atlantic deserve particular credit for this effort.  And given the pressing need for increased digital advertising revenues, there is no reason to think the push into brand journalism or content marketing will slow anytime soon.

But if you want to experience the crème-de-la-crème of product placement, go to the movies.  I saw Iron Man 3 over the weekend and, due to exposure to what seemed like hundreds of products, some of which barely related to the narrative line, I will have to see the movie again to get a fuller sense of the rise, fall and rise again of these Marvel comic book archetypes.  Or maybe not.

I recall attending movies as a kid in North London and looking forward to the newsreels, the obligatory pre-roll where we learned of the British Empire’s grace and foresight in giving up large swaths of the African continent.  At my multiplex, the obligatory pre-roll of coming attractions lasted almost thirty minutes, during which we were mainly bombarded with large images of a 67-ounce Coke bottle and that new, partially crushed, bowtie-shaped Budweiser beer can designed primarily for party animals with thin waists.  The bombardment was so focused, intense and relentless that I had to excuse myself and buy an $8 tub of buttered popcorn.

By the time Iron Man 3 showed its face, we were sufficiently schooled in the art of product placement that classical concerns such as the narrative thread and the all-important denouement seemed like yesterday’s news.  That our heroes drive an Audi R8 and S7 should come as no surprise.  Or that they wear Matsuda Eyewear and Aviator glasses and Fred Perry shirts; stay in touch through TCL mobile phones; drink Budweiser; read Forbes magazine; and exploit the technology in a limited edition Dora the Explorer watch.  It is not as if the director decided first on the products to be placed; then built the story around these branded items.

The poet T.S. Eliot reminded us a hundred years ago about the importance of a willing suspension of disbelief.  He was talking about readers immersing themselves in literature, though he might as well have been talking about product placement.  With Eliot in mind, we will accept in Iron Man 3 the branded gardening tools, Bloom’s Special Fertilizer, and the Green Light Fire Ant Control.  We will stay with the poetic logic and assume these products will contribute to the pyrotechnics and the overall quality of the film.  We will accept the presence of the IRB 120, an ABB Industrial Robot.  After all, there’s a lot of heavy stuff to move around in this film, and one more robot will hardly be noticed.  

But we will have to stand tall with those online voices, some mocking in the extreme, who find the placement of the Oracle Exadata Server, including a close-up of the actual server model number, to be decidedly over-the-top.  After all, this product is used for data warehousing and online transaction processing.  It’s not likely to be found in a panel truck in Anywhere, Tennessee.  As products go, this baby is no lightweight placement.

At this point, I can express gratitude that we were not watching this film in China, where they added four minutes to the ending so the producer could drop in a plug for Duo Li Duo, a Chinese milk product from a dairy in Inner Mongolia that apparently gave the Iron Man his power.  Even the People’s Daily, the official Communist Party paper, called the Chinese version pointless.  Perhaps this is also because no one, not even the Communist Party, could believe that our Iron Man hero would go to China for a life-saving medical procedure.  

Now that is over the top!

But I am worried when the one voice of sanity in this product placement circus is the mouthpiece of the Chinese Communist Party.

Perhaps we should feel blessed that a purported movie sex tape of Gwyneth Paltrow/Pepper that was to be broadcast in a fictional Home Depot, in proper product placement mode, courtesy of the villain, with presumably all the appropriate handy tool references, was left on the cutting room floor.   This fan-fiction is courtesy of Complex Media.

Thank goodness the director had the foresight to forego the sex and keep us numbingly amused with wall-to-wall product placements.  At the very least, the movie theater is still safe for our children.

www.digitalfirstmediany.com

http://jamescmccullagh.com