So what really happened to newspapers – in data?

The Age Printing press in Tullamarine

We know that newspapers are in decline. We know that we are shifting where we get our news, both in channel and in provider. Gone are the days when we have a few local TV stations, radio and newspapers to get our news from. News is more fragmented than any industry I can think of. But the truth is that we’ve never read more and watched more news per person than we do today. We just do it in different places and more of them. But how far have the printed version of newspapers really declined? Will they even exist in a few years or will they join the record stores and CD’s?

Let’s have a look at some numbers from the Australian market. (source IBIS World)

Screen Shot 2014-12-21 at 12.56.28 pm

It is fair to say that a major disruption has occurred. In 10 years the best part of half of their business has gone. And these numbers do not include the fact that both the Sydney Morning Herald and The Age have moved to a tabloid format which has one third less space. And while some of the readers have gone to the same provider but online, the revenue streams have not. The online version of a newspaper can no longer pretend X number of readers saw the advertisement, no less than they can pretend that Y number of people clicked on it. The problem with such dramatic declines is that it is rare that being half the size can provide half the profit. When critical mass is lost, the business model itself starts to crumble. It would for example be hard to believe that The Age can deliver hard edged investigative journalism with half the reporting staff. It does seem that our BuzzFeed encroached world now rewards speed, rather than depth.

The biggest reminder for me as to how fast things can change is every time I drive to Melbourne airport. I go past the image at the top of this blog entry. It is a new printing facility built by Fairfax to print The Age newspapers. It was built in 2004 at a cost of $220 million. A few short years before the smart phone arrived, which fundamentally changed how we get our news. Today they are now trying to sell it for a little over $30 million – a $190 million loss.

We want doesn’t really change that much, but how we get it sometimes does. And while it’s clear this is a revolution, that thing that is changing is not so much human desires, and more so the infrastructure which delivers them.

New book – The Great Fragmentation – out now!

Little Data – Insurance, finance and digital footprints

data

General Thesis:

Cheap technology is changing everything. There’s a deluge of data being created by all economic participants. But, this time buyers, sellers and employers all participate and have access. It’s no longer just top down business infrastructure, but quickly becoming horizontal. Access is now greater than ownership. This means that in a data driven economy, areas that previously did not affect insurance and finance industries are starting to. Their biggest competitors in 5 years is more likely to come from outside their industry, as is of course any new revenue opportunities. The world in 20/20 will be one which is open source, built by crowd dynamics, collaborative, and all about the leverage of new data points created by businesses and their customers.

Specifically these changes are framed by (but not limited to) the following technologies:

Internet of Things: A world filled with traceable devices, which are added to all products and services experiences, because the technology costs are so low, they are cheaper than the packaging they come in (a few cents). By 20/20 18 billion consumer goods will be connected to the internet of things which dwarfs the internets current 3 billion human connections. This will allow insurers and consumers to de-risk and reduce cost of helping each other in a quantifiable world.

Quantified Self Movement & Gamification: Consumer are starting to use smart devices to track their human behaviour and gamify their lives to a more healthy and abundant lifestyle. Brands who participate and facilitate this movement will become indispensable partners in improved living standards in our post consumption, experiential economy.

Data Driven Insurance: Real Data versus Actuarial Estimations will change the approach to costing all forms of finance and insurance. Traditional actuarial models will be disrupted as real data replaces traditional demographic profiling of risk.

Big data & Little Data: People are starting to realise the power and economic value of their personal ‘little data’.  Entrepreneurial innovators will assist the ‘everyman’ to take control of the digital footprint and help them leverage it as an economic currency, just like we do today with our social media followings. Little data will become our personal asset and the panacea the our current privacy concerns.

Crowd Powered Finance: How powered low cost technology is empowering entrepreneurs and consumers to innovate outside of the traditional finance system. We are quickly entering Sans Nation State financial services era – that is, monetary systems without a global or national control. Innovations like Crytpo Currencies, Peer to Peer lending, the Crowd Funding will be in full force by 20/20 with disruptive potential for the traditional financial systems. A fast forward repeat of what we have seen in the media industry as the move towards a decentralised economy continues.

All these innovations are yet to be dominated by an single player, in one sense, it is the start of the start as we move beyond the social era of the internet economy, to the connection era where technology envelopes itself in every industry, not just industries whose output lives on a screen. The game is open, and future is bright for those who embrace the change. And as always, it’s not about being a technologist, but understanding how the tech can be used. And then organising and collaborating with others to make it happen.

How to price yourself as a freelancer

kids writing

As the friction of employment is being removed, many people are taking the opportunity to freelance out their skills. The independent digital craftspeople are arriving thick and fast, but one of the trickiest parts of doing such work is knowing how to price it. Getting it wrong seems scary, as it can be the difference between getting paid this month or not. So the inclination is to take a conservative approach, price low and ensure we get the business. But all is not as it seems. So here are some hacks to remember in order to get your freelance pricing right.

General rule of thumb:

Charge yourself out at least double the rate you would earn in full time employment doing the same work. 

So if you would earn $50 an hour, then charge yourself at a minimum of $100 an hour. If you’d earn $100k a year, then your rate should be based on $200K per annum. Divide $200K by 52 weeks and that’s the rate to charge out for a days work. And if you think you were getting under paid in previous gigs as an employee, then you should double the rate you think you should have been getting paid.

We need to remember that being independent has a lot of added costs, and we need to take them into account in our price. Even in a digital world we still have real costs like office materials, electricity and equipment. And there is no one providing us with paid leave, health care or a superannuation / 401k.

But there is also more to it than that. What we must do is put ourselves in the shoes of those who need the skills we can provide. We need to remember the costs of the alternatives and the mindset of the end customer. When we do this, the ‘double the price’ concept won’t seem nearly as aggressive.

Here’s a few things things to remember:

– It usually costs around 50% more than a persons wage to employ them. Office costs, management, administration, payroll taxes, annual leave payments, public holidays and the like really add up. This is inside the calculation of those who need people. They always consider the substitutes and make their own calculations on full time employees, so the premium on your rate is not nearly as high as it seems.

– We also need to remember that it is quite likely they only need your skills temporarily. Short term resources always come at a premium – just think of the price of renting a hotel room, versus leasing an equivalent place for a year – we pay a premium.

– Chances are the ‘buyer’ can’t afford you all year, and while your cost per day might be much more than it would be per day for an employee, you are most likely still a much cheaper option overall. You will be saving them money.

– It must also be said that smart employers know that much of an employees time is eaten by ‘the office paradigm’. Freelancers much less so. In this way, freelancers are usually far more effective in output per hour.

– Price is a perception game – in all products. The natural and automatic perception of all products is that higher priced goods are of better quality. Pricing sends a signal to potential buyers more than anything else in purchasing decisions. And counter to what we might believe, pricing ourselves too low has as much potential to lose work as pricing too high does.

– It’s easier to find people who will pay the correct rate than it is to make a living working for half of what you’re actually worth. It’s better to hunt a little harder to find a premium customer. They also tend to appreciate your work more than cheapskates, and take they advice they are buying seriously.

Finally, we need to embrace the idea that price is an experiment. It is the easiest thing to change in our offer. And we can do it without notice. Over the years of catalogues, discounts and sales, people are groomed to expect prices of all things to vary. Why should a freelancer be any different? So you can play with your prices. In the end it is about finding the right balance of demand with the personal supply of hours you have available.

The Uber attitude & surge pricing

Travis from Uber

Today the ride share service Uber, did more again of what it seems to be good at – acting like jerks. During the Sydney Siege they conducted a price surge and put prices up to reflect the demand for transport at a time of serious civil disturbance. But the most disturbing thing, isn’t the price, it’s really the attitude.

This is one time when industry disrupters can take an important lesson from their industrial era counterparts. Let’s take legacy airlines. Our national carrier Qantas has on many occasions diverted flights at no cost to pull people out of countries which present an immediate danger to Australian travellers.

While Uber later countered their original decision with a ‘Oh, and we’ll pay the fares’ tweet – below – it was clearly an afterthought when the rightfully astounded community reacted.

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It turns out our natural intentions are revealed by how we behave before we get feedback.

New book – The Great Fragmentation – out now!

So what really happened to the music industry – in data?

broken LP record

We all know the story of the music industry decline, but what do the numbers really tell us? Is the financial disruption as bad as we imagine? It seems there’s never been a time when more music has been consumed. Well, it turns out that downloads and streaming isn’t doing much to reclaim lost revenue from the vinyl and CD sales. Here’s some mind blowing data as to how heavy the industry loses have been over the past 10 years. (source RIAA).

10 years ago Now
Recorded music sales $16 billion

$6.9 billion

All streaming sales Nil

$1.5 billion

Download sales $250 million

$2.8 billion

CD sales $15 billion

$2.5 billion

The numbers show total revenues have more than halved. And it is also clear the revenue gap is not being filled by new low cost distribution methods of music. It seems as though the glory days of the ‘recorded music’ business shall never return.

We may even re-enter an age of Medieval Minstrels – where musicians all need to sing for the their supper, and the recorded version is the sample of a high paid live performance. But most of all, some industries, just like plants are seasonal, and not perennials. They have a brief moment of blossoming brilliance which will never be repeated. It pays to recognise when we might be in a such an industry.

New book – The Great Fragmentation – out now!

The reality of the screen

Old Abandoned Drive in Cinema

The reality is that all screens are created equal now. Every screen can serve up the same content. Every screen is connected to the same world. Every screen doesn’t care whose eyes and ears are at the other end of it. Every screen can deliver the same data, on the same day, globally. There is no such thing as TV anymore. And so it then begs the following question:

Why do people who profit from screens treat them as different entities?

It seems the people who work in TV still think their screens are different. It seems the people who make movies think their cinemas are different. And pretty much anyone else who created content for the screen pre-broadband era thinks the new screen reality does not apply to them. And while the screens don’t care what they show, the people also don’t care which screen they view it on. In fact, they’d much prefer to have the choice over which screen they can use. I’m pretty sure many of these people, like me, would possibly a premium for such a convenience. And yet, in 2014, decades into this shift, the powers that be, sorry the powers that ‘were’, are still avoiding their potential revenue. And here’s why:

They love their infrastructure more than they love their customers.

Or more correctly, they believe their ultimate success is decided by their supply chain and not by the end consumer. Serving business partners at the expense of the ultimate paying customer down the line is a strategy fraught with danger. Especially when we are now in a phase where the middle man is quickly evaporating. Many of those business who could go direct to the end user choose not to, as they may ‘offend their existing trade partners’.

I like movies: I love seeing new release movies. A night out at the cinema is a fun and reasonably inexpensive night out. But now that I have very young children, getting out of the house to grab a movie is more difficult than it used to be. And so my wife and I just don’t go very often. But here’s the kicker – I’d pay a premium for the right to be able to watch a new release at home. $30 for a stream via Apple TV? – I’d pay that. It’d still be cheaper than paying for parking, ice creams, inflated corn and everything else at the cinema. And to this day I still can’t do it. No doubt I’m not alone. No doubt, this entices piracy. And I know what those in the movie business would retort with. They’d say the cinema chains would cry foul and stop distributing their films. And when they both claim this, they’d both not be understanding the true reason we go to the cinema – The night out. The movie is only part of the deal and the real competition is not watching a movie at home, but going to a pizza a restaurant, or a bowling alley. They’re also forgetting the margin enhancement opportunities of low cost digital distribution.

Here’s some simple advice for every screen business: If you have the opportunity to serve a customer directly, then without delay consider releasing all content in all forums simultaneously. Not only will it create a new direct relationship with those who actually pay for the product, it might just stop another startup eating your lunch.

New book – The Great Fragmentation – out now!

My smart phone killer app is…

Screen Shot 2014-11-21 at 12.16.40 pm

…One which was already installed on my phone when I got it. It isn’t weather. It isn’t the web browser. It isn’t stocks, music, phone, mail or messages. But after paying attention for more than a week to which function I used most often on my phone, it surprised me to find out I use this the most.

The clock.

Yep, I take the phone out of my pocket to check what the time is. I use this more often than any other function on my phone. So for me, it is the killer app. And here is what is killer about it. When I do this, I unfortunately feel compelled to check out some other stuff while I’m looking at it:

“Has anyone tweeted me?”

“Are there any missed calls while it was silent?”

“What’s happening on my instagram feed?”

“What’s the surf like this weekend?”

Checking the time is a habit I formed even before the personal computer revolution…it takes me way back to grade school. It’s an old habit with a new solution. But what it does, it opens up related revenue streams and usage occasions. It’s another perfect reminder that we are far more likely to succeed when we leverage existing behaviour.

New book – The Great Fragmentation – out now!