by Dana Blankenhorn
Volume VI, No. VIII
For the Week of February 25, 2001

This Week's Clue: The Journalism Crisis

Journalism is a simple business. You define your market, you write stories for the defined market, you get that market to pay you for giving them the stories, and you create billboards (which you sell as "ad space") to people who want to reach that market. If you sell enough billboards, you make money. If you don't, you lose money.

In a recession people don't buy billboards. Billboards are risky. You can't guarantee the people you want are seeing the billboards, digesting their meaning, and running toward the billboard buyer with money in hand. Instead of buying billboard space a lot of people make their own, little billboards. They don't worry about whether there's valuable content next to their message, and (often) they don't even worry about whether the content of their message represents true value-for-money.

Messages without value or content are garbage. In the e-commerce business, we call them spam.

Over the last six months all of us have seen a flood of spam. But we've seen more than that. My fax machine is now loaded with spam (fortunately it's not connected directly to the printer), and when I drive around town every telephone pole (if it's near a corner) is filled with tiny plastic signs which I call "street spam."

Some of these messages are legitimate. I get notes I consider "spam" (because I didn't give permission to be sent them) from big companies like eBay, Amazon, and Best Buy. Some spam represents affiliate marketing from re-sellers of mortgages, cell phone contracts, dish antennas, and credit card processing services, as well as other products. Some spam comes from the legal borderline. I get spam from Internet casinos and porn merchants, whose businesses may or may not be legal. I also get spam from crooks - stock touts, MLM schemes, phony "Viagra-like" potions, and spam selling spam lists of spam e-mail addresses I can spam spam spam myself.

The same thing is happening to my fax machine and on the street corners. Some "street spam" is from speculators looking to buy houses in poor neighborhoods, or from nearby stores and service businesses. Other "street spam" is put up by the same crooks who fill my e-mail box, including MLM touts whose "street spam" features Web site addresses. (Most of my fax spam comes from stock touts.)

Crime goes up when the economy goes down. People get desperate and morality goes out the window. But the semi-legitimate and legitimate offers represent companies who have simply become too cheap to buy billboards, whether along the highways, on radio or TV stations, or in magazines, newspapers and Web sites.

The media is failing because it's a billboard business. Whether you're running a Web site, a TV station, or a print magazine, you're facing a shrinking water hole. Thus the small number of billboard buyers can make inordinate demands of you to keep you alive. Print advertisers demand mailing lists. TV ad buyers demand make-goods and pay less for spots. Web site buyers demand cost-per-action pricing and more-intrusive formats.

While building their businesses, all media have built databases. Web sites have registration databases, e-mail databases, and Web logs. Newspapers and magazines have databases on the industries they cover, the names, addresses and (these days) phone numbers and e-mail addresses of their readers and prospects. They protect these databases as their "crown jewels." They may sell lists of readers to advertising prospects (the direct mail industry) but they would never sell the data.

There is also a big database industry. It ranges from Fortune 500 outfits like Axciom to smaller vendors who sell (or re-sell) mailing lists of all sizes. From these people you can get a list of all the people in the 30317 area code who've bought homes in the last year - you can even find out how much they've paid. You can get lists of new parents, new college students, and new businesses, arranged by size or location.

Michael Bloomberg created an intersection between the database and journalism industries 20 years ago. Reuters also has one. Both companies sell market data, at various prices, to various people. They surround this data with news stories, which are also re-sold in various ways, some to TV and print journals. With each recession the journals retreat while Reuters and Bloomberg grab bigger hunks of the financial journalism market.

Your Clue is this and it should be obvious by now. News is data. All media is data. But the reverse is also true. Data is media, and data is news. Data, like time, is money. A service business creates machines that turn time, media, or data into money. Journalism is a business based on the time-value of data.

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You may have noticed that I've increased my coverage of 802.11 and wireless broadband technology lately. It's the coming thing. The markets for e-commerce, e-advertising and e-content won't boom again until we get massive acceptance of broadband. Wireless technologies offer the promise of cheap, universal (indoors and outdoor) broadband, with huge implications for every technology market. So you'll see more of this from me in the future - a lot more.

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This month I opened a new market for my articles with Ray Fix of Wildwood Marketing. The first one appeared here . More exciting deals are on the way. You can join the A-Clue.Com discussion at I-Strategy , our shared e-mail digest produced with Adventive.Com. You can also read me at ClickZ , BtoB , and Boardwatch . I'm also on the mast-head at Bottom Line Personal , a great print newsletter.

Remember that it's journalism that keeps the Clues coming...

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Takes on the News

The 802.11 Backlash

The 802.11 industry is climbing a wall of worry. Since service is not available everywhere, some deride it as a failure. Since all its promises have a downside, others are spreading fear of its possible success.

Paul Andrews, who co-authored a biography of Bill Gates, illustrates the FUD . He complains about the WiFi service at Starbucks, and the hiccups at Boingo, but ignores the fact that current 802.11 service is aimed at homes and offices where users are sitting at desks, rather than walking around. He also ignores the low cost of entry - anyone with a home LAN can (with a little signal boost) provide DSL-quality service to their neighbors.

The capabilities of wireless networking for security applications, meanwhile, is leading to scare-mongering. Wait until William Safire gets a gander at D-Link's new remote Internet camera, which sends its pictures back without wires and thus can be used anywhere . Big Brother really can watch you with WiFi.

The fact is that like every other revolutionary technology 802.11 has its problems, its hiccups and its dangers. You can claim TV has turned us into idiots and the car has made our highways into rolling Vietnams but no one really prefers carrier pigeons and carriages. Early PCs didn't work well, either (you can argue today's don't work much better) but, combined even with today's Internet, they've sped the pace of change beyond even our own leaders' ability to control it.

By the time all the kinks are worked out with WiFi its exciting days will be over. Whether this becomes a tool for freedom or oppression depends on us, not on our technologies. An exciting ride has just begun, and I wouldn't miss it for the world. I find the nay-sayers inspiring.

A Worthless Approval?

The FCC issued a report and order for Ultrawideband (UWB), but only at frequencies above 3.1 GHz and only at very low power. Some of the first products to emerge from this will be home networks supporting camcorders and other bandwidth-intensive devices .

Supporters of GPS , however, are fighting even this limited approval, claiming that UWB interferes with their "life safety" signals. They're gaining support from the Department of Defense, which developed the technology. A recent forum on the topic at Slashdot , which is usually very friendly toward guerilla bandwidth, showed a lot of opposition.

Both sides in the debate are hiding behind the interests of firemen. Time Domain's PulseON fuses communication signals with GPS positioning and radar . It's designed to cut through smoke and fire at a disaster scene so rescue workers can stay in touch and remain within reach even while buildings are coming down around them. While the company's press release looked on the bright side, its vice president for corporate development told ZDNet his company's products can't work within the FCC power limits .

All this seems to point toward a restricted market, not an expanded one. Even if UWB supporters can deliver their promises within the FCC power limits, they'll be working in a tiny, tiny niche, with little hope of expansion. UWB may be another technology which, like encryption, has to grow outside the U.S.


Big companies with established market positions rely on inertia to maintain high profit margins. Habits, in other words, change slowly.

I face it right here. I still have two phone lines, even though the second line is mostly used to send me junk fax. I haven't tried changing my cellular calling plan although I know it would save me money. I still have regular cable, even though many homes on my street now have dishes, and thus pay less for their service. I still have AT&T long distance, with a "billing" system based on 4-digit codes that can divide my bill among people I invoice, even though I haven't charged clients in months because it's not worth the hassle.

The point is that if I'm that lazy - staying with what works and avoiding what's better - imagine those 30 million AOL users and Microsoft sheep in the IS departments. Then consider that we're in a deep recession, that fear is the dominant theme of this time, so attitudes are only hardening.

It's tough to make headway except among that small segment of people who remain optimistic risk-takers, and I'm talking here about customers. In a recession, the customers you want are as entrepreneurial as you are.

Clued-in, Clueless

Clued-in is Steve Stroh , whose understanding of the technical issues involving wireless broadband is first-rate and fine-grained. I'm thrilled to be on his beat.

Clueless is the Bush Administration, whose Internet policy is to endorse oligopoly , call every opponent a terrorist , and waste its mandate to fight Al-Queda in a useless effort to Soviet-ize the American system .

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