Monthly Archives: May, 2012

Twitter staying private

Twitter CEO Dick Costolo told the audience at Wired’s Disruptive by Design conference on May 1st that Twitter will not be going public any time soon, and that a ‘pro’ version may be available to individual users eventually.

On the idea of Costolo missing out on an “IPO window” and the inevitability of going public, Costolo had this to say:

The business is working so well and we financed the growth of the company the way we wanted to finance it last year that we don’t see the need to think about that stuff right now.

There’s no window, that’s silly short-sighted thinking. Google went public on its own terms. If you have a great business, then you can be a public company whenever you want to be a public company. You’re not beholden to a window.

Despite Facebook’s recent IPO announcements, I think staying private is probably the smartest move for Twitter.  When the public has access to most of your financials and has significant voting power (unless you structure your stocks like Zuckerberg, and maintain majority voting control), things tend to get messy.  Eventually, assuming Twitter continues to grow, they will hit a ceiling where private equity can no longer support their growth, and they’ll be left with a tough decision: stabilize growth intentionally, or publicly finance and deal with all the hassle that comes with being a public company.  My suggestion? Stay private.  Too many tech companies have crashed recently, and I would hate to see another one fall into the depths of public financing and government oversight.

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World Press Freedom Day

In celebration of World Press Freedom Day on May 3, SavetheNews.org published an article about the need for protecting recording rights.  In the digital media landscape and the 24/7 news cycle, recorded video of events has become paramount in a number of high-profile news stories (Trayvon Martin 911 recordings, videos of the Syria massacres, etc.).  Police have arrested dozens of journalists for doing their job, and World Press Freedom Day is a proper time to bright to the public’s attention the injustice that has been done to them.

Stearns, the author of the article, stated it perfectly:

People using iPhones, Androids and other mobile devices are changing the way we record and share breaking news. In return, police have targeted, harassed — and in many cases, arrested — those trying to capture images and video of public events.

After the outbreak of the Occupy Wall Street protests, the USA’s Global Press Freedom ranking has dropped to historic lows.  Many journalists were unjustly arrested for recording public events, resulting in the drop in the press freedom rankings.

Recording is becoming available to almost everyone, and in an age where stories are often spun by the media, raw footage or audio of an event is refreshing.  Sadly, it seems that many of those in power don’t hold the same ideals as most journalists.

How much should digital media companies charge for content?

A recent Nieman Lab article analyzes the ‘newsonomics of pricing’ in the digital landscape.  There are a number of data points the author analyzes that are particularly interesting:

The basic principle: People won’t pay for things if you don’t make them pay for things.

Emerging data points:

33-45 percent of consumers who pay for digital subscriptions click to buy before they ever run into a paywall

If print readers are charged something extra for digital access, then non-print subscribers are more likely to buy a digital-only sub.

You can reverse the river, or at least channel it.

New products create new markets.

The all-access bundle must contain multiple consumer hooks. 

While pageviews may drop 10-15 percent with a paywall, unique visitors remain fairly constant.

Archives find new life.

News media is probably underpriced. 

Bundle or unbundle — what’s the right way? 

 

I think the biggest problem was one that is mentioned in the article: Buffet’s ‘Pandora’s Box’ analogy: you can’t give content away for free and then try to sell it.  Pricing is incredibly difficult and meticulous, and requires companies to measure consumer behavior or long periods of time.  If you give products away for free, you’re eliminating the possibility of gaining any insight on consumer habits and responses to pricing changes.  

 

 

facebook announces IPO

Facebook has officially announced its initial public offering (IPO) after months of rumor and speculation.  Facebook stock will begin trading May 18.  

Here is some of the basic information:

Facebook will begin pricing its shares May 17, the day before the shares are traded live.

Stock will be traded on the NASDAQ under the symbol ‘FB’

Facebook will issue 337.4 million shares, and is asking for a stock price around $28-35.

It’s nice to finally know that they will officially trade in a few weeks.  While the $100 billion valuation had been rumored, it seems that Facebook is more likely to be valued between $80-$92 billion according to their range of expected stock prices and potential outstanding shares.  While the IPO is certainly important, the biggest news will come whether Facebook can remain profitable after going public, after many other tech companies, like Groupon, have floundered after its IPO.

Huxley vs. Orwell: Who has it right?

I know this isn’t directly related to the business of journalism, but I figured I’d be allowed to write one off-topic post.  Actually, it does have something to do with the business of journalism, it’s just not directly correlated.  I’m blabbing.

I’m not sure how many of you have read both 1984 by George Orwell and Brave New World by Aldous Huxley, but they are both works of fiction that describe a dystopian future.  More people are familiar with Orwell’s boot-in-your-face, Thought Police (police can read your thoughts), Newspeak (oppressive language that limits variety in vocabulary); less, though, are familiar with Huxley’s dystopia.  His dystopia is a lot less outwardly oppressive.  Citizens are given a wealth of entertainment and distractions and are kept happy via Soma, a pharmaceutical drug that has similar effects to opiates.  

After reading an article by Bill Moyers on the topic, he firmly cemented my beliefs that, while both have valid points, Huxley’s dystopia is more feasible than Orwells.  Essentially, happiness is the key to control.  People want to stay happy, and it’s much easier to control a happy populace than it is an angry one.  You can only control a population if you have the will of the people on your side; in Orwell’s 1984, the people are forced to submit their will to the government; in Huxley’s dystopia, people are voluntarily submitting their wills.  

Huxley also makes a very interesting statement about the mass communications industry:
 

Mass commu­nication, in a word, is neither good nor bad; it is simply a force and, like any other force, it can be used either well or ill. Used in one way, the press, the radio and the cinema are indispensable to the survival of democracy. Used in another way, they are among the most powerful weapons in the dictator’s armory. In the field of mass communications as in almost every other field of enterprise, technological progress has hurt the Little Man and helped the Big Man…

 In regard to propaganda the early advocates of uni­versal literacy and a free press envisaged only two possibilities: the propaganda might be true, or it might be false. They did not foresee what in fact has happened, above all in our Western capitalist democra­cies — the development of a vast mass communications industry, concerned in the main neither with the true nor the false, but with the unreal, the more or less totally irrelevant. In a word, they failed to take into account man’s almost infinite appetite for distractions.

 

Aldous Huxley is so underrated. Our downfall will not come from an outwardly oppressive government, it will come from within. We’ll have the truth at our fingertips, but we’ll be drowned in triviality and irrelevance; information overload, if you will. Orwell is a great writer, but Huxley’s dystopia of unabashed, almost-willful ignorance seems a lot more plausible than Orwell’s boot-in-your-face, Thought Police dystopia.

Newspapers: For Information or Profit?

A recent GigaOM article by Mathew Ingram posed an age-old question: what is the purpose of a newspaper?  It seems simple enough, but it is a question that doesn’t seem to have a clear answer.  There are two main obligations a newspaper must meet: to inform the public and make a profit.  The problem is not in figuring out a newspapers obligations; rather, the problem is deciding which obligation comes first.

The New York Times recently contemplated giving early release of some news to customers for a fee.  This idea generated criticism from a variety of people, including Ingram.  Most critics argued that the NYT would be sacrificing their obligation to readers and the integrity of their company in order to boost revenue.  This led Ingram to question whether, especially in these it-still-feels-like-we’re-in-a-recession-to-me times, the New York Times’ primary obligation was to its revenue streams or its news operations.

While Ingram didn’t explicitly state his opinion on whether newspapers’ primary obligation, it seems clear: a newspaper can survive without quality news, but it cannot survive without profit.  With that in mind, the primary obligation of a newspaper MUST be its revenue streams; those who believe otherwise are naive to the reality of business.  A profitable operation can certainly distribute quality news, but it can only distribute quality news because it is profitable.  

Essentially, how many quality news operations are there in existence that are consistently unprofitable, and how many biased, junk-news operations are there in existence that are consistently profitable?  Something like the National Inquirer comes to mind when I think of the latter, and, oddly enough, I can’t really think of anything when it comes to the former.