German Media: Merkel Syndrom

Exploring the idea that the German media landscape has the Merkel Syndrom: Powerful, yet refusing to lead; profitable, yet only on defense.

NBC Universal invests 200 Million into Vox Media and 250 Million into Buzzfeed (still unconfirmed, but it’s a done deal). Valuing Vox at about 1 Billion and Buzzfeed at 1.5 Billion. The combined value of those two companies is now 2.5 Billion. Which is more than the Market Cap of The New York Times.

We’ve been asked by a client, who has been invited to attend the Blattkritik at Der Spiegel, to comment on the current issue, give examples of great journalistic work – especially in reporting about the technology market, as well as provide a general assessment of the current state of affairs in the media business. A Blattkritik is basically a sit down with the editorial team to discuss what could’ve been better in the previous issue. They invite previous contributors and outside experts to those meetings to get a broader perspective on their work. The client asked us to help them shape some of the topic points they can take to that meeting.

It turned out to be somewhat of a conundrum for us. While we do read German media, we have currently no subscription to a German daily or weekly. Neither Johannes nor I have picked up Der Spiegel in a while unless someone recommended us a specific article. In those cases, we end up reading only that specific article without paying much attention to the rest of the magazine. The question is: why?

We have currently two subscriptions at the office: The Economist and Bloomberg Businessweek. We read them both as carbon copy, despite the fact that our subscription give us access to all of the digital properties of both publications. Johannes is sometimes using The Economist’s feature where one can create a personalized podcast. Basically an audio version of the print magazine. Both The Economist and Bloomberg Businessweek provide a perspective on global affairs. They have overlapping audiences, but cater to them differently. While both magazines pride themselves being opinionated, probably no publication currently can claim to have such a clear voice as much as The Economist.

The question remains: why are two founders of a business consultancy based in Berlin, with a majority of clients in Germany not reading a German outlet, specifically the weekly with the largest circulation? And whenever we would need to pick one, we would still not end up picking Der Spiegel. Both of us agreed that it would either be Die Zeit or the weekend edition of Süddeutsche Zeitung (which Johannes used to subscribe to).

There are a couple of observation that I wanted to document in that context:

German Media in the era of Merkel

If there is one characteristic that can be applied to the German chancellor, it is the lack of leadership, the tendency only to act as a reaction. All opportunism, no courage. With approval ratings high, that behavior can not be easily discarded. It’s a reflection of Germany and it feels often times as if it applies to the German media as well.

On the business model side, we see very few things happening and the ones that do are mostly small, incremental changes that are based on the best cases that usually have been developed outside of Germany a while ago. Slow adaptation isn’t wrong per se, but the current pace surely can not compensate for the decline in print circulation.

But that alone isn’t the qualifier why German media doesn’t capture our attention as much as international outlets. It’s the content.

One aspect about The Economist and Bloomberg that came up in our conversation is that they attempt, at every step of the way, to help their readers navigate a complex, interwoven, networked world while German media, and specifically Der Siegel, often end up attempting to simplify complexity. Those are substantially different attempts to see the world and the former is one that is at the core of what Third Wave as a company attempts to do. We can not, we will not succeed figuring out some of the most drastic problems that humanity has faced with the Merkel way of leadership and with a media landscape that follows suit. An informed citizenry with the ability to deliberate and in a democratic process is what we need and neither our political parties nor many of this nation’s journalists seem to be capable of providing this.

This, certainly, is not a unique problem of Der Spiegel, it happens across the board. But being the market leader usually means that one would attempt to hold and / or expand that position. Now, I want to be honest, from a business perspective it probably makes sense to cater to only what the audience wants to hear. Der Spiegel doesn’t seem to pick topics based on their significants, it picks topics based on what they want to say to their large (yet shrinking) audience. This seems to mostly work out fine for them. Courage, experimentation, diving into complexity and challenging the national conversation can be both exhaustive and expensive. As so many before, market leaders tend to lose their edge and their lust for their new and rely on a strategy that is mostly about defense.

Introducing a Digital Framework for Media Companies

We have collected our insights on the media landscape into a new model.

This is a revised version of the framework that we released on March, 19. Check the change notes at the end of the article.

Since releasing our Future of News Publishing report last year and since actually putting it together about two years ago, we have been observing the news publishing industry continually. Collecting weak signals, we were trying to spot the behaviors that seem to be helping publishers not only to survive but to move forward. Taking a step back, we saw similar patterns emerging again and again. So it was time to put them into a framework.

The purpose of this framework is to put the most important aspects of a publishing company in the digital world into a model1. It’s not a how-to guide for building a news publishing product. It’s a mental model how to think about and develop core parts of the business.

The Key Components

audience product business infrastructure

The model itself is simple. It’s a triangle that connects the three main areas of a media company from our (current) perspective and puts the audience in the middle.

1. Audience

Every media company needs to start with and evolve around its audience: the readers, viewers, listeners, commentators, community etc.

2. Product

This is not only all the content that is written, produced, recorded, filmed or created in any way. The editorial strategy and the “voice” (as in tonality) are part of this, too. It’s also the talent: the writers, the journalists, the photographers, the film crews, the fact checkers and researchers. Also the formats: articles, slideshows, listicles, quizzes, clips, interviews, op-eds etc.

We also include the frontend here – how the audience perceives the content: websites, apps, email newsletters, magazines, newspapers, PDFs, ebook readers, etc – the user experience. From our observation, it’s almost impossible to create a digital media product while distinguishing to strongly between the content and its delivery.

3. Business

All the ways that the company makes money. We’ve touched on a lot of the new possibilities and business models for media businesses to make money in the Future of News Publishing report. From advertising and sales to events to consulting and much more.

4. Infrastructure

These are the server, tools and systems that keep the company running. But it’s also where the content is created: the content management systems, the databases, the communications channels, the analytics dashboard, the tools and gadgets for reporting, writing, recording, maintaining and distributing.

The Key Insights

So far, nothing new. Most media businesses have always consisted of these aspects. So what’s the difference in a digital world? Here are the two main insights:

1. Collaboration

All three areas of the company and their connected departments must be not only constantly in contact but actually collaborating. The days when the product development was cut off from the newsroom and journalists never spent a thought on where their salary came from are gone.

Much has been said and written about the wall between the journalism side and the business side of news publishing entities also known as the divide between church and state. And we’re most certainly endorsing a transparent approach to native advertising and the likes. But in a time when fresh ideas are in desperate need, we think that too much is lost by people from the different departments not thinking and working together.

We think that one of the best ways to set up a media business for the digital world is to not separate the three aspects into different departments but to hire people who feel comfortable in two or more areas. The best way to avoid silos is to have them breached by individuals who have clear goals that span more than one area.

All three areas also need to be perpetually connected to the audience. Product needs to know what they are interested in, what’s their take on things and what’s helping them in their day/work/life. Business needs to know where the audience’s money is going, what they are willing to spend and how they value the content. Infrastructure needs to continuously update its understanding of the audience’s consumption behavior, their favorite tools and devices and how they prefer to pay.

Some of this means being in a continuous conversation with the audience. For other insights, it means looking a studies, reports and conducting individual research. A lot of it means just prototyping and testing.

2. Iteration

iteration of product, business, infrastructure

The complexity and rapid progression of the digital world makes it hard to just plan, implement and then run with a finished product. One of the core principles of the digital context is to have a small idea, test it, improve it, test it again, improve it again and so on. It’s all about perpetual iteration.

This insight is the biggest change of how media companies are working in the digital world. It’s also the part that current media companies and even a lot of the ones “born digital” struggle with.

Some media companies iterate their content. They try out new formats, writing styles, video story lines etc. Others are experimenting with new business models like opening up an event space, releasing special purpose apps or starting an agency business. But only very few media companies iterate in their infrastructure development like continuously working on making their websites work better and optimizing the CMS and the publishing process.

We think that to be successful as a publisher in the future, a company needs to iterate in all three areas of our model all the time. And it shouldn’t keep the iteration loops inside each area. Every iteration in one area should be shared with the other areas to inspire the iterations there. The result is a constant renewal of the whole company.

constant iteration

An example: A company comes up with a new idea for a content format. It will prototype it and test the idea with its audience. The audience feedback might also inform new ideas for business models that might go along with this format. If the company doesn’t have an in-house design-and-development team, this prototyping would be difficult and expensive. But if the project team consists of members who are connected to all three areas, they can iterate towards a viable new outcome rapidly.

That’s why we see a lot of good initial ideas fail. The technological development is outsourced and only involved until the launch. And we think that it is impossible to create a successful digital media product without iterating it constantly.

What’s next?

That is the basic concept of our framework for digital media companies. So what can you do with it right now?

  • Use it to analyze different media companies and see how they cover the different areas…or not.
  • Check the viability of your own (media) company and discover blind spots that you hadn’t thought about in this context yet.
  • Investigate the core digital paradigm of constant iteration and ask yourself what that means for your company and team structures, your processes, your project planning and your business model(s).

This introduction to the framework has only been one step for us. Next up is collecting lots of feedback and, of course, iterating the model. And we are writing more in-depth articles about all the different aspects of the framework.

If you have questions about or feedback for the framework, please get in contact.

Added on June, 24 2015

We’ve written an extended version of this articles with a lot more examples for the Tinius Trust Annual Report. Check it out over here: A framework for building media companies in the digital world

Change Notes v1.1 – March, 24 2015

It is a core principle of this model that the three areas are very closely connected and thus certainlty overlap in a lot of places. We took a first shot sorting aspects into the different areas. But Florian Steglich gave us some great feedback on how to rearrange a couple of things. Here’s his redrawing of our model.

  • We changed Content to Product and added all the frontend/user experience elements to this area.
  • We changed Product to Infrastructure.

Here is an in-between version that Johannes drew in a hotel room in Barcelona for his talk at the IAM 2015 conference. It said “technology” where it now says “infrastructure.” We changed it to infrastructure because we think that technology is an essential part of all three areas.

  1. We’re not talking about digital companies per se as in companies, which have a digital product. When we talk about the “digital world,” we mean a world that is heavily influenced by the characteristics of “the digital.” A media company might only sell a print product. But it still has to deal with “digital aspects” like growing complexity, shorter attention span, internal communications based on email and much more. In the digital world, every company is also a tech company. 

Week 178

On the effects – or lack thereof – of a classic media mention.

Look, Mum, I’m in a newspaper.

It wasn’t the first time I could say that, but at this point I both have a better understanding of what that means and how I value a mention by a classic media outlet like the Berliner Morgenpost.

How did the story came about?

It’s one of those things that don’t make sense until they happen.

My post on startups and Berlin wasn’t just well received by the tech community. A friend of mine who worked at that time for the World Economic Forum saw it too and asked me, if I would contribute something along those lines for their blog post. It took some time, but a few days before the rich and mighty gathered in Davos, my post went online.

A few days later, as we are watching with interest how one of our themes is being discussed at the Forum, a journalist asked about an interview, assuming I was in Davos. After clearing that up, she surprisingly remained interested. The journalist in question, Viktoria Solms, said that she looked at our site and developed an interest portraying us for the local business section of the Morgenpost.

Flattered, but also curious as to what had made her want to talk to us, I agreed. A few days later, Johannes and I sat down with her at our office and talked for 90 minutes. The result: a big, splashy portray by a daily Berlin newspaper.

Expectation management

Now, while everybody decrying the death of print and classic news publishers, there is something ingrained into our cultural DNA that makes people’s mind pop when they see either themselves or people they know in a newspaper. Nobody cares at that point how many people have seen and read the whole thing. It’s in a newspaper and that still means something.

It does mean something, but usually not what most people expect or think.

Let’s start with what is usually not happening after a media mention from our experience:

  • Nobody will call you and tell you that they saw a report on you in the newspaper and now they want to give you money to do some amazing project. Media mentions do not generate direct leads.
  • You will also most likely not see a spike in traffic on your website or a rush of new followers on twitter. That applies both to a mention in print and online.1
  • You will not learn what people think about that article unless you promote the existence of the article in your network.

Which brings us to what an article like that usually does for you.

  • Such an article is a nice, sharable object. It’s easy to share, people like to see and interact with it. You usually score a significant amount of likes for it on your Facebook or LinkedIn profile.
  • It is a fantastic way get back into the attention, refresh everybody’s memory about your work and / or projects.
  • Usually it’s also helpful to reconnect with some older acquaintances and looser part of your network. They tend to react to media mentions in a fairly strong way.

Now you know what it means when you tell your mother that her kid is mentioned in a newspaper.

(To be honest, I didn’t even mentioned it to my mum. She just liked our companies Facebook page and saw our post in her news stream.)

So, if you like that article and know someone who could be interested in our work, please consider sending them a link to the online version or the pdf.

  1. Newspapers and journalists design their product in a way that prevents you from wanting to know more beyond what the article or the outlets provide on that topic. The assumption is that it’s the sole responsibility of those outlets to inform the people. That’s a logical flaw and one that hinders publishers significantly

Jonah Peretti at Changing Media Summit 2013

Notes, insights and learning from Jonah Peretti’s keynote at Guardian’s Changing Media Summit 2013.

peretti Buzzfeed’s Jonah Peretti on how ideas travel on the social web – video

Well, that came in handy. While Johannes and I are spending this weekend on researching as much as possible about the publishing industry, we stumbled upon this fantastic keynote by Jonah Peretti at Guardian’s Changing Media Summit. If you are not familiar with the name, Jonah is the CEO of Buzzfeed and is hailed – quite possibly rightly so – as the wunderkind of the publishing industry. Buzzfeed is not his first success. He was instrumental to the rise of the famous Huffington Post before that.

We took some notes and thought that some of you might find them useful as well. So here it is, the video and our rather unfiltered notes (mostly just sentences he said).

A little side anecdote as to the creation of this blog post: I created the initial notes by writing them down in iA Writer, transferring them into Draft and sharing them with Johannes. There, Johannes added his notes and I had the chance to approve them. Draft is an amazing tool for collaborative writing. It’s a bit like github for writing.

Notes, Insights & Learnings

  • Over 40+ Mio unique visitors per month
  • Primarily from social
  • Mostly 18-34
  • Over 40% from mobile
  • Shift from Portals -> Search -> Social
  • HuffPo was grown rapidly through search, BuzzFeed through social.
  • “Bored-At-Work”-Network = Collectively larger than the audience BBC or CNN reaches
  • Literally hundreds of millions of people
  • Weren’t initially aware that they are part of a network
  • If your mobile doesn’t work on mobile, it doesn’t spread
  • Mobile and Social have converged.
  • Make something that ordinary people want to share
  • “Biggest misconception is that you need to focus on quality for things to go viral.”
  • Quality helps, but it’s not necessary
  • Idea matters, but as important is the mechanism for spreading the idea
  • You should spend an equal amount of time on how to spread an idea as you spend time on the idea itself.
  • BuzzFeed combines Art & Science, which is the creativity/the idea and the data-driven approach to spreading it.
  • R = ßz (the equation for epidemiology = how effective diseases spread)
  • Viral Rank = measures the “social production rate” of media and is measurement metric that exists in real-time
  • Maximization of Content Spread = we starve content that isn’t getting traction, and fuel the content that is taking off
  • BuzzFeed also uses machine learning to predict social hits so they know
  • Twitter has a half-life of about an hour
  • Facebook has a half-life of about a day
  • Pinterest has a half-life of about a week
  • “Our technology is made for social.” Measuring the social lift.
  • BuzzFeed uses dashboards to help editors train their intuition of what might work.
  • We behave very differently depending on the context. Content spreads differently on different platforms.
  • Google is very informational (about the information), Facebook is about connecting people (through information?), Facebook is much more emotional
  • “Humor is inherently social.” When you meet people and somebody jokes, nobody remembers the joke the next day, only that they laughed hard
  • BuzzFeed has buttons for emotions. *I think it actually helps them to channel their emotion and become more aware, thus more willing to share. “If I LOLed so hard, I should send it to my friends.”
  • Once people are reacting, they are much more likely to share -> make simple to react
  • Good news for journalism: “Aggregation worked for search, but Scoops & Quality Reporting work for Social” -> Google can’t tell the difference between the rewrite and the original scoop, but on Twitter people can tell which one is the original. They will retweet the original scoop.
  • Publishing is now a Paris Café (!!!) – You can read the Le Mond, you can pet a dog, because its cute and you can flirt with somebody. Buzzfeed tries to serve all our emotional needs.
  • Lets embrace ALL the things that make us human.
  • “Edit was first, but now the big shift to social is coming to advertising”
  • At Buzzfeed, 100% of revenue is social content marketing
  • No banner ads on BuzzFeed.
  • Brands are held to a higher bar where they must have content that people actually want to click on and read
  • It all works through the same CMS
  • Editors never touch brand content, but brands have to learn how to work as publishers / editors
  • Brands get a dashboard that shows how much earned media they are getting
  • Social can make ads great again. In the Mad Men era advertising didn’t need to cram ads into a banner, they had a whole page
  • Social can hold advertising to a new bar
  • It’s better to think long-term
  • Have a heart, having emotional is important
  • Identity: People share stuff because it’s about them
  • Something that everybody like a little gets shared less than something that only a small percentage like a lot.
  • If you can publish into the zeitgeist, you can publish into what people are talking about and you can capture the moment …
  • Nostalgia is also very social
  • Porn only works for search, not for social.
  • “The banner ad was a historical accident and we are moving past it.”
  • EQ is as important as IQ.

What we read this week (27 Jan)

This week’s five top articles feature Youtube’s TV revolution, social media brands, 3D printing piracy, collaborative design and thoughts on ad agencies.

Culture is the environment in which your strategy and your brand thrives or dies a slow death.

Shawn Parr

The future is where our wishes and fears converge.

Leila Johnston

  • The New Yorker: Will Robert Kyncl and YouTube Revolutionize Television?
    It’s not a secret that Google wants Youtube to become even more then it is today. What their plans are and how they want to achieve them? It’s all in this long and very good article.
  • What do consumers want from social?
    A study from the CMO Council of 1300 looked at the difference of what consumers expect from brands in social media and what marketers think they want. We Are Social has the skinny.
  • The Pirate Bay: Evolution
    The Pirate Bay goes physical, announces to also share blueprints for 3D models: “We believe that the next step in copying will be made from digital form into physical form. It will be physical objects. Or as we decided to call them: Physibles.” Expect to print your own knock-off Legos soon.
  • Co.Design: Could A Change In Business Model Win Designers A Place In The C-Suite?
    Fuseproject does its design work mostly for equity in startups and is most interested in long-term relationships with the founders to produce better design. Very interesting, alternative business model. A design consultancy that works more like a VC firm.
  • What Do Advertising Agencies Do?
    Faris Yakob explores the real value of advertising agencies and where they’re headed.

Quantified Self in the German media

Ever since we started our series on the Quantified Self, we’ve been getting quite a bit of media interest. In fact, life tracking has been all over the German media recently. We’re excited to be part of that discourse.

Ever since we started our series on the Quantified Self, we’ve been getting quite a bit of media interest. In fact, life tracking has been all over the German media recently.

For, we wrote two articles that just went online:

In addition, Deutschlandradio Kultur interviewed Johannes and me for a feature on QS, and another journalist just wrapped up another interview for a feature that hasn’t aired yet. (Watch our media page for updates.)

It’s good to see the discourse on this topic and all the implications from privacy to ownership to societal change gather steam in Germany. And we’re excited to be part of that discourse, hoping that we can contribute useful analysis and direction.

What we read this week (6 Jan)

Lots of great articles this week. Read about a Somali terrorist group’s social media strategy, the internet as a human right (or not), networked science, the way copyright is broken and plenty more.

Quotes of the week

The best way to predict the future is to hang out with some of the outliers already living it. We don’t make ‘predictions,’ but instead tell stories about the people and products that are exciting us before they’ve gone mainstream.

David Rowan

Internet Access Is Not a Human Right.

Vint Cerf

Articles of the week

  • Slate: Twitter of Terror
    A Somali militant group unveils a new social media strategy for terrorists.
  • Duke University: What Could Have Entered the Public Domain on January 1, 2012?
    The copyright system is pretty badly broken. Duke University’s Center for the Study of the Public Domain shows a few of the cultural works that would have entered the Public Domain – allowing you to reproduce, remix, and share them – under the copyright law in its 1978 version. That is, before copyright was extended from 28 years after publication to last ridiculously long, namely for 70 years after the author’s death. There is a whole treasure trove of culture, locked away and in many cases inaccessible.
  • mobiThinking: Global mobile statistics 2011
    A comprehensive, massive overview of mobile stats for 2011.
  • anideo: Harmony
    Apple’s overall success is being mostly attributed to their superiority in design. While there is no argument about their excellence in this field, it is much more then just the design that leads to such success.
  • The Atlantic: To Know, but Not Understand
    The Berkman Center’s David Weinberger, internet theorist and author of seminal books like The Cluetrain Manifesto and Small Pieces Loosely Joined, tackles a new subject: Big Data, and how to deal with it. This article offers an abstract of Weinberger’s new book.
  • heise online: Sparkassen führen NFC-Payment ein
    (Article in German) It is somewhat of a surprise to see the German Sparkassen Group implement NFC chips into their normal banking cards starting 2012. Nevertheless, we are curious how both consumers and retail will react to it and how the conversation will be shaped by this announcement.
  • The Next Web: Amazon’s e-book tax loophole could mean lower European prices, but that’s bad for UK competition
    Without making much fuss, Luxembourg cut the VAT, and in effect ebook prices for consumers. Ebooks, unlike paper books, are subject to full VAT across the EU. So this could change market dynamics quite a bit: Both Amazon and Apple sell their ebooks from Luxembourg, and might now be able to undercut local book prices. Here’s the German perspective (in German).
  • New York Times: Internet Access is Not a Human Right. As an elder of information technology and Chief Internet Evangelist at Google, Vint Cerf says the internet should not be a human right. Sounds outrageous? The point Cerf makes is an excellent one, actually: It’s important not to protect the tool, but rather its empowering qualities. A must read.
  • ReadWriteWeb: Google+ Is Going To Mess Up The Internet
    Jon Mitchell, one of the regular authors at RWW, documents his frustration with Google+. An interesting read with some very well placed arguments. The problem with Google+ right now is that nobody really can figure out what Google wants it to become and as soon people stumble into new insights around it, it becomes all very overdramatized and hectic. Google needs to take charge of the communication around its favorite product. But then again, Google was never good at that.
  • brand eins: Das digitale Urheberrecht steht am Abgrund
    Brand Eins, certainly one of the best business magazines in Germany, inquires into the way copyright works – or fails to work – in a digital context. It’s a long, in-depth interview in German. Well worth reading.
  • Clay Shirky: Newspapers, Paywalls and Core Users
    Newspapers have been experimenting with paid vs free content for a number of years, sometimes more, often less successfully. Clay Shirky thinks that 2012 might be the year where newspaper economics could start working out. That is, they might work out once newspapers stop treating all news as a product and all readers as customers.
  • GigaOM: You are what you curate: Why Pinterest is hawt
    A nice overview of a trend that’s been surging for awhile now, and is still gathering steam: Online content curation. Focusing on Pinterest, GigaOM explains why curation services are so successful and why we can expect a wave of services that make curation even more streamlined and structured.
  • CNN: Digital music sales top physical sales
    Digital music purchases accounted for 50.3% of music sales in 2011. That’s a first, and proves beyond any doubt that consumers are willing to pay for online content, and that the CD won’t be missed for long. Now the big question is: Will we see music purchases rise further, or see on demand streaming take over? In other words, is it ownership or access to music that consumers are willing to pay for?
  • Forbes: The Seven Habits of Spectacularly Unsuccessful Executives
    Sydney Finkelstein, a professor of management, did intensive research on some of the biggest corporate fails in recent history (Enron, Tyco, WorldCom etc.). Some years ago, he published the 7 habits that the senior executives at these companies all had in common. Eric Jackson has revisited them for Forbes. Recommended reading for anyone in executive positions.
  • Do Designers Actually Exploit The Poor While Trying To Do Good?
    A very interesting discussion with Jan Chipchase about design research and the work of big corporations in third world countries.