Washington Post Managing Editor Explains Why Focusing On Direct Revenue From Consumers Is Short-Sighted
from the free-is-expensive,-but-it-can-pay-off dept
From the title of this article in Forbes, by Raju Narisetti, the managing editor of the Washington Post, you might think it was going to be another rant against "free" online and talk up the wonders of paywalls. After all, the article is called "Why Free is Very Expensive." But, the article actually is much more nuanced, and effectively explains why folks at The Washington Post think that a paywall doesn't really make much sense:
Here is why revenue from readers is unlikely to be our salvation.
-- A metered model makes your business susceptible to the will of a few readers--those who consume the most articles/pages. Often, less than 5% of these kinds of visitors account for nearly 50% of your page views. And they have very little barriers to exit.
-- Aggregators, like Huffington Post, will still find ways to deliver your content for free and often with more engaging technologies since they don't have to invest much in content creation.
-- The infrastructure for payment systems, data security, customer service, reader acquisition and retention for digital subscriptions costs a bundle to build and run, yet your consumer price points need to be low, making the return on investment a clear challenge.
-- Our Web sites were to be trusted safe havens protecting, informing and entertaining you amid a deluge of digital content. And when you came to us, we would make money off you. But that was before your friends became your trusted sources. There are 600 million of you on Facebook and we know we need to be there too with our content. We haven't even begun to fathom that monetization challenge. So, we could up end an expensive drawbridge around Web sites that are already losing their value?
-- Scrolling on Web sites has always been a poor experience for consuming news. Now, just as new devices and digital experiences--none invented by major news brands--create richer engagement outside our sites, we are talking about charging readers for sub-optimal Web site consumption.
He does point out, as everyone agrees, that it is costly to run a major modern news operation, and that the digital business models for large publications like the one he works for haven't kept pace. But, thankfully, unlike some of his competitors, he wants to look forward and not backwards. He's looking at the ways large successful internet companies are making more and more money by increasing convenience and building more value for users:
I, for one, think that the golden age of targeted digital advertising is yet to come. Do we really want to trade that larger opportunity for the much smaller and unreliable pursuit of consumer dollars? I also wonder if we aren't better off redeploying our newsroom resources to create new revenue streams and more engaging digital platforms than trying to make the traditional Web experience better and charge for it....
Free is indeed very expensive. But, what the prolonged and knee-jerk debate about free vs. paid inside our news organizations shows is that we still have what led us here in the first place: An imagination deficit. Rather than apply an �all or nothing' approach focused, perhaps wrongly, on just our Web sites, we should be willing to make creative bets on our business model. We continue to make what is being consumed--in large quantities. It is time we figured out how to make it easier, more engaging and useful. Despite their soaring valuations, Facebook, LinkedIn and Twitter don't create much, if anything at all, by way of original content. And, for that matter, neither do Google or YouTube. They simply make it easy, useful and engaging to their audiences. These are incredibly disruptive times and one thing is clear to me: There isn't time or room for incrementalism at major news organizations.
It's nice to finally see someone at a major publication recognize this point that many of us have been making for a while. For all the talk of paywalls, there's been very little done to actually increase the value of the online experience for users at these newspaper sites. There's been very little effort to build and support community. It's nice to see that at least one major paper is hopefully moving in that direction.
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If the numbers shared by Gigaom in this infographic are any indication, Venture funding has stormed back to where it was before the financial collapse in 2008. The amount of capital invested is on the rise, and the current climate is providing an excellent opportunity for startups looking to raise money. GRP Partner Mark Suster confirmed as much at his talk at the Founder Institute this week, in which he urged startups to raise in the current “frothy market” — especially ahead of a potential bubble burst.
Though the market is indeed frothy: Venture funding in the Web grew by over $1 billion from the first quarter last year, of all the digital areas in which startups are raising the most money, health and medical-related investment is on the low end — receiving only 3 percent of venture funding over the last year. (Compared to social commerce which led at 22 percent and advertising, sales, and marketing, which came in at 14 percent.)
A new seed accelerator that launched earlier this year called Rock Health, is hoping to break that trend in favor of health-related mobile and web startups. Though health care only continues to advance thanks to technology, human health remains on the decline and related health costs are increasing. In fact, Americans spent $2.4 trillion on health care in 2008, despite having lower patient outcomes than comparable nations.
Thus, Rock Health has designed a program, not unlike Y Combinator, Tech Stars, and those before it, that accepts applications from startups during a month-long period, before undergoing evaluation by a panel of health experts and investors. The panel than selects 10 startups to enter into a five-month program that includes a $20K grant, office space in San Francisco, medical, branding, communications, and legal support — as well as mentoring and workshops given by experts in the industry.
Rock Health’s mentors include Path CEO and early member of the Facebook team Dave Morin, co-founder and EVP at RedOctane Charles Huang, and former FDA Deputy Commissioner Scott Gottlieb. And the program’s advisors include, among others, Twitter VP of Engineering Michael Abbott, co-founder of 23andMe Linda Avey, and founder and CEO of HealthTap and former founder and CEO of Wellsphere Ron Gutman. Besides an impressive list of advisors and mentors, Rock Health has also partnered with leading hospitals, like the Mayo Clinic, Harvard Medical School and Cincinnati Children’s Hospital in an attempt to give its startups a leg up in building their businesses — and a better shot at funding down the road.
On June 20, the program’s inaugural batch of ten will begin the program. Below is a brief introduction to the eight of these cool health startups ready for preview. Check ‘em out, and please chime in to let us know what you think.
BrainBot helps individuals monitor and learn from their brain activity. Powered by state-of-the-art technology designed by Harvard and MIT trained researchers, BrainBot makes it easy to improve mental performance — from stress management skills, better focused attention, or increased meditation benefits.
CellScope builds systems for at-home disease diagnosis using smartphone cameras connected to a web platform. The company is piloting a smartphone attachment for at-home diagnosis of pediatric ear infections, which cause 30 million doctor visits annually in the US.
Genomera seeks to heal the world through personal health collaboration, connecting communities of people solving similar problems. The first product is a platform for crowd-sourced health science, enabling consumers to operate open health studies.
By creating the first transparent marketplace for healthcare, HealthInReach is making quality care more affordable and accessible. Patients who pay out-ofpocket medical costs can learn about doctors and dentists based on experience, reputation and procedure prices, and schedule in confidence at pre-negotiated group discount rates.
Omada Health will be among the first to apply the principles of social networking to the legitimate clinical treatment of a disease. Recently spun out of IDEO, we are creating a type 2 diabetes prevention solution that emphasizes community, education, and metrics. Progress will be tracked using novel connected-health technologies that will serve both as motivation for patients and as validation of outcomes.
Pipette allows doctors to monitor and educate patients throughout the course of their care using smartphones and tablets, helping to improve recovery and outcomes, and identify opportunities for proactive and preventative care. Pipette’s easy-to-read reports automatically identify patterns and outliers that can be critical to improving a patient’s health.
Skimble powers the mobile health & fitness movement through a platform of fun and interactive applications. Two top free Healthcare & Fitness titles that help motivate people to get and stay active are Workout Trainer (for iPhone/iPad), providing follow along multimedia workouts lead by real & virtual trainers, and GPS Sports Tracker (for iPhone and Android), enabling people to track & share over 45 different activities.
WeSprout is exploring the connection between health data and community. Soon, parents will be able to find relevant resources faster than ever and make better choices for their children’s health, supported by a community of parents who have been there before.
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