The End Of Walled Gardens

The Monday Note: Time To Tear Down Some (Media) Walls

(CBS)  The Monday Note covers the intersection between media and technology and the shift of business models. It is jointly edited by Frédéric Filloux, a Paris-based journalist and Jean-Louis Gassée, a Silicon Valley veteran currently general partner for the venture capital firm Allegis Capital in Palo Alto. Their column appears on CBS News.com each Monday.

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If there is one side of Scandinavian media's strategy I find particularly convincing, it is their ability to cooperate as much as they can, and to compete on what matters most - the product, the user experience, the reader. To describe this, Americans, the world's best neologists, invented the world "coopetition," cooperation plus competition. This is exactly the kind of attitude that should prevail in these difficult times. And, to a larger extent, the burgeoning world of online media would be well advised to get rid of their antiquated close-to-the-vest thinking. Time to tear down some walls.

Many media are, or will be integrated into hybrid models - with digital and paper products blended together. Therefore, distinctions by news vectors are pointless. Let's consider four sectors where cooperation among competing entities will be critical in the coming years.

Advertising

Whether it is measured in inches, centimeters or pixels, newspapers or websites don't sell ad space in the most optimized way. Commercial brands and their surrogates, the media buying agencies, keep increasing the pressure on medias to get higher discounts; in a country such as France (which roughly reflects the global marketplace), the net revenue per page sold went down 20% in the last twelve months. Even though French papers and magazines depend less on advertising for their survival than their Anglo-Saxon counterparts do, it's a matter of concern.

There is no room for finger-pointing here. Media buying people are doing their job, which is getting the best bang for their client's buck. But media can team up and propose (or impose) advertising packages based on socio-demographic structures, for instance. To a large extent, Rolex or Mercedes-Benz don't give a damn whether they are favoring media X or Y as long as they are sure to reach the affluent people who might turn into customers. Or Nestlé's baby food brands looking for child-rearing couples.

Logistics

When I'm traveling to New York, I'm always stunned to see half-empty delivery trucks emblazoned with the name of prominent newspapers, criss-crossing the city, sometimes twice a day (early and late editions). At the same time, I feel sorry for French publishers who have to deal with a distribution system so inefficient that it ends up with one point of sale for 2,100 inhabitants versus Norway's one for 360 people (no wonder why Norway's rate of readership is four times higher than France's). Up there, cross-brands cooperation makes it economically viable to distribute newspapers in the most northern village during winter. In Paris, finding an open newsstand on a Saturday afternoon is an achievement.

Printing

I covered a large part of this issue in describing the French Figaro's strategy. From a pure industrial perspective, owning a printing cathedral doesn't make any sense (even though Le Figaro had good reasons to build its own). Again, competition has to stop once the actual product is out of the newsroom process. The rest must be left to a "coopetitive" marketplace - a European one on this side of the Atlantic - with price/quality being the main driver.

Technology

A great question for the new media cohort: How to manage technology cooperation between competing entities? Let's try this answer: tech competition stops where it no longer impacts the user's experience.
I believe mastering technology is life and death for digital media. Designing a clever Web site, a great iPhone application, doing whatever it takes to keep the reader on board as long as possible requires a great deal of tech insight. Managing databases, for instance, is fundamental.

Transforming endless streams of data into a compelling multimedia experience stands at the intersection of journalism and statistics, graphic design and pure engineering. Universities should offer a "media engineering" curriculum. And news organizations should hire such graduates (I'm pretty confident it will happen).

Having said that, the same principle should apply to technology as it does to printing and logistics: there is no point in competing for the best possible way to deliver videos for instance, that's a job for Akamaï and others; similarly, hosting, ad serving, analytical tools, payment systems should be mutualized, with clusters of media companies teaming up to get the best possible prices wherever they can.

Here in France, the government is now devising a way to manage, a posteriori, its formidable profligacy. Last winter, it committed a windfall of €600 million ($900 million), to be spread over three years, for ailing newspapers.

For now, publishers are rushing to finance new versions of websites or sophisticated iPhone applications with taxpayer's money (ouch!). French officials are consulting with guys like me to find the best way to use this money and to put an end to a subsidies addiction that cripples innovation. I basically tell them: spending €466,000 ($700,000) for each union workers' job bought off is indecent; and so is not playing hardball with press barons, not forcing them to cooperate, to eliminate inefficiencies in printing (no master plan whatsoever) and distribution (a formidable fromage for unions and a small coterie of elderly media execs). France has proportionally three times fewer newspapers readers than Sweden, but each French reader gets five times more subsidies.

Time to take care of this.