Advertising in a Sustainable Not-for-Profit Model

We’ve been getting a lot of great feedback to our models, both online and out in Aspen, since we made them public yesterday. Some of the best comments have come from Jim Barnett, who questioned some of the results in our not-for-profit model both in the comments and later in a piece on theNieman Lab site.

He asks whether our model for the growth of advertising revenues–to 49% of all revenues by year three from 18% in year one–is possible or desirable at a lean not-for-profit new organization. First, to determine whether such growth is possible we looked to Joel Kramer, CEO at MinnPost.com. Kramer told David Westphal in a piece at OJR in October that he hopes 70% of MinnPost’s revenues will come from advertising by 2011.

Here’s the paragraph from the OJR piece:

Q. What was your hope, what is your hope on the mix of advertising and contributed revenue?

A. When we started we said our hope was, by 2011, 70 percent advertising, 30 percent membership. Right now it’s running about 50-50, maybe a little higher on the membership side. It’s pure guesswork because it’s a new model. The key is to get to a sustainable model by 2011. There are a lot of reasons to become optimistic, but the advertising side really needs to get better.

Kramer has since been hard at work developing display ad business (MinnPost was charging a $15 cpm earlier this summer) and new advertising units, including a Twitter-like service that he thinks could be a new form of classifieds for local news.

Our model only has 49% of revenues coming from advertising in the third year. Still, it’s a fair point to wonder whether not-for-profits should join the scramble for advertising and sponsorships when for-profits are having such a hard time of it themselves. Kramer himself comments on Barnett’s post to say our model appears to overestimate potential advertising and underestimate membership revenues. He also does a good job of answering Barnett on the pressures such a lean organization faces in separating business from editorial.

Again, we’d love to play that scenario out in our Google doc to see if those differences amount to a wash.

RIM Is Fastest-Growing U.S.-Listed Company, Fortune Says

The iPhone may have all the buzz, but BlackBerry-maker Research In Motion is growing at a much faster clip. In fact, RIM’s growth rates are the fastest of any U.S.-listed company according to Fortune Magazine. Apple (NSDQ: AAPL) is well down the list, at No. 39. The magazine ranked companies based on a combination of their revenue growth, earnings-per-share growth and a three-year annualized return to investors.

In an accompanying article, Fortune compares Apple’s Steve Jobs to RIM’s Co-CEOs Jim Balsillie and Mike Lazaridis, and asks does the pair stand a chance against the black, turtle neck-wearing savant? “For the moment, at least, they’re more than holding their own.” Indeed, over the past decade, RIM (NSDQ: RIMM) has sold 65 million phones, and today still has about one-third of those as subscribers. It owns 56 percent of the smartphone market, and so far this year, the BlackBerry Curve outsold the iPhone.

Surprisingly, big name handset-makers, like Motorola (NYSE: MOT) and Nokia (NYSE: NOK), didnt even make the list. For comparison, Google (NSDQ: GOOG) ranks 68th and Amazon.com (NSDQ: AMZN) ranks 52nd. To have a handset-maker like RIM top the list of companies—which spans a bunch of industries—provides a new sense of perspective in an industry, where hype can certainly overshadow reality.

Clearly, the BlackBerry is making a graceful transition from the business world to being a serious contender in the consumer market. But whether it will be able to keep up the growth, especially with increased competition is the question. As the fastest-growing company, Fortune says RIM has a three-year average earnings per share growth of 84 percent and revenue growth at 77 percent. The company’s stock has a three-year annualized return of 45 percent (and that’s including the economic meltdown). That’s pretty hard to maintain.


Greg Mitchell: Robert Novak’s Final Words on Plame Case? “The Hell With You!”

Ailing from his fourth battle with cancer last autumn, famed columnist Robert Novak -- who died today at 78 -- was interviewed at length for one of the final times by The Washingtonian's Barbara Matusow. The magazine published on its web site the full Q & A, which concluded with perhaps Novak's final published assessment, or re-assessment, of his role in helping to out CIA operative Valerie Plame Wilson.

It shows that near the end he had reversed his partial feelings of regret and, angered by liberal critics, went back into attack mode. Here are the passages on the CIA leak case.

Let's talk about the Valerie Plame affair, which caused you so much grief. If you had it to do over again, would you reveal who she was?


If you read my book, you find a certain ambivalence there. Journalistically, I thought it was an important story because it explained why the CIA would send Joe Wilson--a former Clinton White House aide with no track record in intelligence and no experience in Niger--on a fact-finding mission to Africa. From a personal point of view, I said in the book I probably should have ignored what I'd been told about Mrs. Wilson.

Now I'm much less ambivalent. I'd go full speed ahead because of the hateful and beastly way in which my left-wing critics in the press and Congress tried to make a political affair out of it and tried to ruin me. My response now is this: The hell with you. They didn't ruin me. I have my faith, my family, and a good life. A lot of people love me--or like me. So they failed. I would do the same thing over again because I don't think I hurt Valerie Plame whatsoever.

You saw up close what it's like to be the subject of so many news stories. Has this changed the way you view the journalistic profession?

I thought the journalistic community was terrible to me -- even members of the Gridiron Club, which is supposed to be a band of brothers and sisters. I thought one of the worst columns written on the Plame affair was by William Safire. He wrote a stupid column saying I should reveal the name of my source. He wanted to get his colleague at the New York Times, Judy Miller, off the hook with the prosecutors. He didn't know, as I knew, that my source, Richard Armitage, had long before identified himself to the FBI and the Justice Department. But my attorneys advised me to keep silent about the whole affair.

Having thrown a lot of darts throughout your career and then being on the receiving end, did you ever stop to think how your columns might have made other people feel?

No. [Laughs.] That's not my nature.

Greg Mitchell's latest book is "Why Obama Won." He is editor of Editor & Publisher and has written widely about the Plame case.


How Do You Define Hyperlocal?

When the MSNBC acquisition of EveryBlock popped Monday, just about everyone—paidContent included—quickly added “hyperlocal” as the key description. But it’s a term founder and new MSNBC employee Adrian Holovaty has actively disavowed in the past—and one the MSNBC announcement avoided, opting instead for “innovative local site” that “goes to the block level.” Yes, that does sound pretty hyperlocal so why wouldn’t it be? Here’s Holovaty’s explanation from Dec. 4, 2008 about why he prefers “microlocal” (In a nice twist, he was explaining why EveryBlock and the Washington Post’s Loudoun Extra don’t belong in the same category; the same day the EveryBlock sale went public, WaPo admitted it is closing the hyperlocal site in September.):

“At EveryBlock, we don’t use the term ‘hyperlocal’ to refer to our site, because, frankly, it sells our site short. There’s a profound difference between something like the Washington Post’s Loudoun Extra — deemed ‘hyperlocal’ because it covers only a single, 521-square-mile county (!) instead of the entire Washington, DC, metro area — and EveryBlock DC, which provides a distinct page of news for every city block in the city of Washington.

That’s in no way a slight against Loudoun Extra; it’s a solid site that I’m sure I would find useful if I lived in Loudoun County, Virginia. I’m just saying county-level news and address-level news are fundamentally different products — and stretching the term ‘hyperlocal’ to fit both is more confusing than helpful.

So that’s why we shy away from calling EveryBlock ‘hyperlocal.’ But people love their buzz words, and I do appreciate the value in being able to communicate a concept in as few words as possible—particularly because our brand of local news is the first of its kind and can be tricky to explain. That’s why we’ve started calling EveryBlock something else: Microlocal.”

How did Holovaty, who lived in Chicago when he worked for washingtonpost.com, define “microlocal”? “Micro implies intense focus, incredibly small scale and rich depth — all of which describe EveryBlock’s general take on things. Best of all, people I’ve talked to seem to understand the term implicitly, as isn’t the case with the much more vague ‘hyperlocal.’”

Does it matter? Not nearly as much as the definition of success. No matter what you call any of the drill-down news projects, what will really matter is whether they make money (beyond being acquired), gain or keep readers, deliver for advertisers, become an intrinsic party of users’ lives and really change the face of journalism, not just the dictionary.

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Vid-Biz: TV Everywhere, Discovery, Sex Tape

CBS’ Smith on Authentication: Not Anytime Soon; says “TV Everywhere” won’t get mass adoption until 2014 because of different distributor technologies, legal issues and metrics. (paidContent)

Discovery Launches iPhone App; features clips from Mythbusters, Man vs. Wild, Dirty Jobs and more. (emailed release)

“How do I keep my sex tape off the Internet?” As the Eric Dane/Rebecca Gayheart’s nudie tape hits the web, their lawyer provides some tips on how to keep yours private. (THR, Esq.)

Koldcast TV Launches Original Studio; company hires Marti Resteghini to head up Koldcast Studios, which will create programming for the network. (emailed release)

Blockbuster Putting Movies on Motorola Phones; “thousands” of films to be available on select mobile phones. (The Associated Press)

Samsung, Rovi Sign Licensing Deal; CE manufacturer will include Rovi’s on-screen guide in its products. (Video Business)


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Stephen C. Rose: How Obama’s Enemies Right and Left Will Help Him Win The Public Option

So much smoke is coming out of both sides of the health care debate that we might simply say that the opposition to Obama is thoroughly bipartisan. The funny thing is that both the antics of Keith Olbermann and Ed on MSNBC (bloviating on the left) and the usual FOX suspects on the right is taking on the character of what the President has aptly called silliness and drama.

At the end of the day, there is one thing going for the President that none of these characters seem to credit. That would be the American people. Not all the American people, just the 70 percent or so who think what comes out of the mouths of left and right has nothing to do with achieving the ends they affirm.

The ends affirmed by this majority include the public option, a move to fiscal responsibility in the face of runaway government expense and a health care program that does not take away from those who are already OK with it.

To the extent that the President can effectively stand for these things, he wins and the people win.

All the bloviating I have mentioned seems to center down on the independents and their attitude to the town hall processes underway. It becomes cause for Olbermann apoplexy if independents think it is OK to raise hell with politicians. What, pray tell, was the Obama campaign all about? Merely because independents are OK with some conflict does not mean they will not ultimately favor a solution that fundamentally extends the benefits of medicare to all.

Olbermann and Hannity will agree that the President has feet of clay, will ask if he is becoming another Carter, will essentially deny his power to fight effectively. Of course their job is to fill up time. If I was filling up time I would tell folk what's in the bills. That is actually what I do, but few read it. Instead, they ask the same people time after time to make the same statements time after time so we can be misinformed about the actual future time after time.

The election of Obama was a case in point. Everyone, including even Paul Krugman and Bob Herbert (not to mention all of HC's supporters), threw him under the bus every other day. On the other days, they speculated that all was not lost. A perfect storm of ambivalence.

We should watch the daily drama for silliness. For consistent snideness. For bombast -- that would be Ed in particular.

When all is said and done, if we have to go to reconciliation, we will do so to get the public option. But then people will have a very good idea why. And they will reward the perps who try to defeat it accordingly.

In 2010 the laws of the past may well change. The voters will reward those who hung in with the man they elected in 2008.

The only way the public option will be defeated is if the majority of Americans do not want it. That is democracy in action. It's a logic even congress can understand. I think the majority for the public option will hold.

A positive bill with the public option in place will leave the media rubbing their collective heads, just as they did when Obama won Iowa, the nomination and the election.

And for all the liars can do to fake out the voters, the media manage to do in the silliness and drama departments, Everyone will finally help the President to prevail. So bloviate on Keith, Ed, Sean and all you others. You are all helping the cause.

Read my blog here and my online novel Panflick here.


Apple’s iTunes Increases Its Lead In The Music Market

A year-and-a-half after surpassing Wal-Mart (NYSE: WMT) as the biggest music retailer in the United States, Apple’s iTunes now accounts for a quarter of all music sales in the country when measured by unit-sales volume, up from 21 percent a year ago, according to the NPD Group. And it likely has lots of room to grow, considering that digital music sales accounted for only 35 of all music sold during the first half of the year. NPD is projecting that digital music sales will “nearly equal” CD sales by the end of 2010.

In the digital music market, iTunes accounted for a commanding 69 percent of sales, up slightly compared to the same period a year ago. Amazon’s rival MP3 store, however, did manage to increase its share to 7.6 percent, up from 5.1 percent (Via MediaMemo).

There have been other signs too that consumers are willing to try out iTunes competitors, such as Amazon (NSDQ: AMZN) MP3. For instance, an NPD study from earlier this year indicated that 16 percent of digital-music buyers in the U.S. had used Amazon MP3 to purchase tracks.

That’s a good sign for iLike, which launched its own download store last week, under the assumption that consumers using its music app might also be willing to use it to make an impulse purchase.

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