The Spin Cycle

A round-up of recent happenings in the world of PR, marketing, and other things I find interesting.

Penn State hires big-name PR firms: In the wake of the Sandusky scandal, Penn State writes a few big checks to fulfill its pledge to be more transparent. Penn State needs to change its culture. Will these firms help with that?

Netflix Stock Takes a Dive: A few weeks ago, after I heralded Netflix's recovery, a Facebook friend noted that its stock was still in the tank. So sue me. Bottom line, though, is that the lessons learned from the whole episode are still relevant.

The Disney Institute: Disney is building up quite a little side business helping companies become, well, become more like Disney. The New York Times, in reporting on The Disney Institute's growth, seems almost apologetic:

Disney, which employs 64,000 people in Orlando alone, has its own employee difficulties, of course. Union spats arise, and some cast members — Disney-speak for employees — chafe at the company’s strict rules, although it recently lifted a facial-hair ban and now allows women to forgo pantyhose. Disney’s sugary customer service can also startle visitors who aren’t used to such uniform cheerfulness. 

But vast numbers of consumers love it, and the company is routinely showcased in business books, like “The Disney Way: Harnessing the Management Secrets of Disney in Your Company,” for its hospitality and efficiency. For instance, the company has spent so much time studying its park customers — more than 120 million of them globally last year — that it places trash cans every 27 paces, the average distance a visitor carries a candy wrapper before discarding it.       

New York City journalists, perhaps you'd like to visit America sometime. It's a lovely place.   

It's the data, stupid

There's an old saying about playing poker: If you look around the table and can't tell who the sucker is, then it's probably you.

This seems appropriate as we consider Facebook, Twitter, Instagram, and all the other free-of-charge diversions that we have on our smartphones -- at least if that smartphone happens to be an iPhone or Android, as David Carr notes in his rumination on Instagram and its recent acquisition by Facebook. Carr wonders how any of these companies are going to turn a profit as they need to invest more and more of their energies into mobile, given how fleeting our attention is on our devices and how little ad space there is.

As an aside, and as one of the commentators on his post notes, Carr may not quite understand the appearl of Instagram, nor how people use it. But the broader question he poses is a legitimate one: How can free social media applications, even those that are immensely popular, survive if they can't rely on advertising, the traditional business model for low-cost or no-cost content providers?

Part of the answer, of course, is that the traditional business model for media companies is dying, as the New York Times so aptly demonstrates with its online subscription system. The challenge that traditional media companies like the Times face in exacting sufficient advertising revenues from online content also afflicts social media like Twitter -- with a crucial difference being the legacy and infrastructure costs borne by old media, which must continue to produce its own content, as opposed to sites like Twitter and Facebook, which need only provide a platform.

As this article from last week's Wall Street Journal makes clear, Facebook, its sanctioned apps, and other mobile apps are not just interested in putting ads in front of you: They are trying to glean as much data about you as possible in order to customize those ads to the highest degree possible, thus making it more likely that they will grab your attention.

A professor at Robert Morris University, where I work, researches the use of nanoparticles to treat cancer. The idea is that instead of using chemotherapy, which attacks the entire body in order to destroy cancerous cells, the nanoparticles can be injected into the body and guide themselves directly to the tumor, delivering the cancer medicine without damaging the rest of the body.


Traditional advertsing, on television, radio, and in print newspapers, is like chemotherapy. What advertisers will be able to do with the data they can glean from the information all of us share on Facebook, Twitter, Instagram, you name it, is like nanotechnology. A lot more efficient and not nearly as messy.

Now, there a host of legal and ethical question raised by this, which the Wall Street Journal tackles in its article. And even the most gargantuan of social networks needs to find a way to generate outside revenues to survive, since, as the mainstream news media has discovered, once you give something away to people online, it's not easy to get them to pay for it later on.
But to evaluate social media's prospects on mobile platforms simply in terms of the amount of physical space available to place an ad seems, I'm sorry to say, hopelessly outdated. Facebook and the like are not giving away anything. They are selling a very valuable commodity.

We have met the suckers, and they are us.

OK, so maybe it was a good idea

The New York Times's paywall seems to be yielding some success, contrary to what some people thought might happen.

Everything new is old again

I've paid far too little attention to the recent Facebook changes, given that I'm not only a regular Facebook user but a PR/marketing professional. Like a lot of people, I'm annoyed by what often appears to be change for change's sake on the part of the Facebook.

Then again, I'm not Facebook's customer, and neither is any other individual user -- just like I'm not the customer of the traditional media I consume, like The New York Times. Facebook's customers are its advertisers, and the people like you and me who use it to post pictures of our kids and let their friends know that they are watching Dancing with the Stars are the product. Facebook is selling our attention to its advertisers. Social media may seem revolutionary, but its business model -- Farmville aside -- is not really so different.

So as my boss astutely hypothesized, each of Facebook's changes, however grating to users, are likely done with an eye to increasing the site's value to advertisers. Sure, some are meant to enhance the user experience, particularly in the face of fierce competition from Google +. Facebook can't afford to lose us, but let's face it: most of us aren't walking away, at least not yet. We've simply invested too much time poking each other.

A silver lining for the Old Gray Lady

You may recall that I was a bit glass-half-empty in evaluating the New York Times' new paywall, but the numbers so far seem to show that the newspaper is holding its own now that readers must pay for unlimited access to the newspaper's digital products. As Dorian Benkoil at MediaShift notes, the drop-off in readership may be offset not only but the subscription revenue but by increasing the value of the audience to advertisers. He suggests, like I did, that the Times target its ad more narrowly now that it has more motivated and affluent readership online.

For now, it appears that the Times has a more durable and valuable brand than what skeptics like me surmised, and that the ease of reading the Times online, and without hassle, is worth the money. Probably doesn't hurt that the Times gradually restricted the free content available on its app, after users had grown accustomed to the convenience of that particular format. Now if they could just figure out how to keep it from crashing all the time on the iPhone...

Brother, can you spare 20 more articles?

I found some early data regarding the impact on site traffic of the New York Times' new paywall. Looks like both traffic and page impressions are down, which is no surprise, of course. The author notes that there is no apparent change in traffic from Google or social media sites, which allow one to access the Times without paying and without it counting against your 20-article per month limit. However, I doubt people are so highly motivated to read the times that they hunt for links to stories at these channels. One commentor makes the case that people may not aware these articles don't count against your limit, and may avoid the site as a result. The other concern I would have were I the New York Times is that some readers may have heard about the paywall but aren't aware that it doesn't kick in immediately.

Having a smaller audience isn't necessarily a bad thing, even leaving aside the revenue generated from subscriptions. A smaller readership makes it easier for the Times to tease out demographics and other audience characteristics, and can sell advertisers on tailoring content appropriately. The Times should be concerned, as at one least one commentator writes, that its content is not unique enough to maintain subscribers over time. I wonder if they've given thought to approaching advertisers about creating content specific to the Times that adds value, such as short films that can be seen only via subscription at the Times. (Or that count toward the 20-article limit, so that interested readers get a tease of what they might be missing.) If they can generate subscription dollars and increase advertising revenue by delivering readers more likely to click on sponsored content, then they can make skeptics like me look like fools.

All the News That's Fit to Pay For

I don't like to veer into media criticism at this blog; as a PR guy, it's bad for business. But I can't help but respond to snarky this Advertising Age blog post in defense of the New York Times' soon to debut paywall. The author, Simon Dumenco, argues that no one should blanche at paying for content from the New York Times because the Times is one of the few organizations left that publishes high-quality reporting and employees journalists willing to risk their lives to report important stories.

Fair enough. But as I noted recently on Twitter, this is an argument for news as philanthropy: Because the Times and similar news outlets publish something of value to society, they deserve your financial support, whether you think you derive a direct benefit or not. Or you could look at it from the NPR perspective: Because you enjoy it so much, you should feel duty-bound to pay for it. That's a reasonable assertion, but it's no defense of the Times' business model, nor is it quite the indictment of bloggers and news aggregators that Dumenco seems to think it is.

These discussions often start with a false premise: that the Internet has destroyed the mainstream media's business model by allowing people to access its content for free. But news organizations have essentially been giving away their content for decades, long before the Internet was a twinkle in Al Gore's eye. The money you pay for a subscription to a newspaper or magazine -- save those that deliberately eschew advertising -- doesn't come close to covering the true cost of producing that publication. Look at a magazine like Vanity Fair, which costs $15 a year for a subscription. It has some of the best magazine journalism out there, with a stable of the world's best writers and photographers. It also is chock full of ads for luxury products, which pay its way.

As Walter Lippmann wrote way back in 1922 in his seminal tome Public Opinion, news organizations do not sell news; they sell their audience to advertisers. No one is willing to pay for news, Lippmann wrote, and the same is largely true today. It is lamentable but it's not something that we can  blame on Google. Besides, no one forced the New York Times to give away its content. To its credit, the newspaper was one of the first to have a decent web site, but it started free out of the gate, if my faulty memory is correct. Same with a lot of newspapers. It's understandable; the web seemed so ephemeral back in those early days. How could you charge for something you couldn't hold in your hands?

But what these news organizations did was implicitly affirm that their product was not worth paying for. Look at the music industry. We can all agree that technology has turned it upside down, but not without one hell of a fight. Record companies took anyone to court it could get an IP address for to stop them from illegally downloading music. The result was innovations like iTunes and Amazon's MP3 music store, which satisfies consumer demand for easily downloadable music without turning them into criminals.

What the Internet has really destroyed for news organizations is their advertising model. A print publication can base its ad rates on the number of paid subscribers it can claim. But an advertiser has no guarantee that all those people will actually pay attention to their ad. On the Internet, the eyeballs mean little, it's the clicks that matter, and there is only so much you can do to game those. So by charging for its online content, news organizations are trying to get its audience to make up for the loss of ad revenues that result when you can only charge by the click.

All that said, I certainly hope that news organizations like the Times survive, because they do provide a service of great value to me as an individual and to society at large. (Not to mention that they are invaluable to my profession.) And I give the Times credit for crafting a payment system that spares casual readers -- and allows the Times' content to be accesed through aggregators and social media networks, which, after all, deliver eyeballs and clicks -- while ensuring that the people most likely to pay are probably those most willing to pay. The Times and its peers have had about 15 years to solve this problem. Here's hoping they finally get it right.