by Dana Blankenhorn
  Volume VII, No. II

This Week's Clue: I Read The News Today (Oh Boy)

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This Week's Clue: I Read The News Today (Oh Boy)
SSP (Shameless Self Promotion)
SP (Shameless Promotion)
Yahoo's Google Problem
Proof of Web's Impact
Squaring Contradictory Predictions
Clued-in, Clueless

Dana Recommends The Blankenhorn Effect offers a powerful, positive message for our time. Once you understand how Moore's Law impacts every part of your life, how powerful it is, and how irresistible a force it truly is, you will have the power to predict the future and know how to change it. Buy it today, and make 2003 a better year for yourself, your business, and your family.


For the Week of January 13, 2003

The folks at Google keep expanding in the right directions. And while the media hordes mostly concentrate on some necessary compromises (no Nazis for you Frenchies, sorry) I find it more on-point to look at what they do have.

Take their latest effort, Google News . The main page can build a "box" on a story within minutes of its arrival, if it comes from an "important" source. There aren't many sources that reach the top of that stack - CNN, the BBC, the Washington Post, and the New York Times predominate. Below them are The Guardian in the UK, The Age in Australia and (often) Voice of America, which is run by the State Department.

For sites that require a subscription, like The Chicago Tribune, that fact is clearly marked, and even when that coverage leads there are many other non-subscription sites just centimeters away to click on. Google is doing a great job showing just how little value required subscriptions have. (The New York Times, which requires a subscription, has opted to "partner" with Google, freeing Google News linkers from the registration requirement unless they leave the page they linked to.)

Things get really "interesting" (for me) when you dig down on a story by using the search box, or just clicking the "related" tag at the bottom of a box. You may find what look like a few hundred stories, allegedly from several hundred newspapers and TV stations. But what you actually get are clones of a handful of wire service reports, from the Associated Press and Reuters. This is true whether you're looking at a business story, a crime story, a sports story, or a political story.

There just aren't many independent sources. America's "news industry" is, in fact, a "Potemkin Village," a Hollywood stage set. This became very clear to me when, after several days of surfing "Google News," I opened my local paper and found that I'd read nearly every story there the day before. The only "independent" effort any American paper or TV station makes is with a strictly local story, and then it's mainly car crashes (they bleed good) or crime (pictures of police tape and direct quotes from spokesmen). Maybe they send a reporter to the courthouse to cover a murder trial, so he can stand there looking silly at noon and five.

The fact is there are no "enterprise" stories being done in the U.S., and (it seems) there is no place to sell them. The news is boring because no one is digging for it, and no one is paying to dig. That's partly because news today is considered very expensive to get. We're talking here about someone on a $50,000 salary (with benefits), a car, an office, plus editors. And as soon as the story comes out, it's fish wrap. So the costs are shared among hundreds of sources (the AP relies on local news for its national feed) resulting in very basic, but very thin, coverage of most events. Third World stories like the war in the Ivory Coast are covered by just a handful of reporters, and all in the same way.

There are efforts in some areas to change this. There are regional news wires, there are specialty wires covering business. This is especially vital in the Middle East, where entrepreneurs are creating online forms of al-Jezeera, and (unlike that electronic agency) including English-language coverage as well. Where their money is coming from is hard to gauge. (You can bet the publishers' spin explains the investment -- this is how western news services developed a century ago.) World News , for instance, lists an administrative contact in the United Arab Emirates, but its domain name is held in Utah .

What this means is that, for most stories, there are only a few perspectives offered, and only a few eyes on the source. You can get the dry, top-down view of the wire service, a longer story from a government-owned outlet, and you might get (if you're lucky) CNN, the Post or the Times interested. Is it any wonder, then, that Americans today prefer spin to the news (since they're not getting any), which is why they're locked in a box with Fox. They will take being told, since no one is finding out the truth for them.

This doesn't just point out the ideological weakness of the news business, or the limited biases of the people who define the news (although it does like a dream). What it mainly points to is opportunity.

What would it cost to create a Web-based news service? Mainly you would need a few editors to buy stories, a budget to pay for them, and a site. While most people look at this from the perspective of building a CNN or a Fox News, with the cost of a studio, talent, and satellite links stopping them from going further, the fact is that the Web really has cut the costs of getting news down to a bare minimum, and practically eliminated the cost of disseminating it. (I know what I'm talking about here -- Newsbytes ran on on a shoestring for a decade and had 14 reporters around the world.)

What if freelancers in Moscow, Beijing, New Delhi, and Abidjan knew there was someone who would pay good money for well-sourced copy, would pay extra for digital pictures, and would pay still more for some digital film clips? What if j-school students at Columbia, Northwestern, USC and Missouri knew they could sell something meaningful, getting clips and checks, before they even graduated?

Yes, it's not quite that simple. How does an editor trust what they're getting? How do you rewrite what you get to a style that is clear, concise, yet unique? How do you turn that copy into money, beyond posting it yourself?

Every worthwhile business plan faces hard questions like this. There are answers, however. You start with an experienced board of advisors, and you bring in freelance editors to work with the copy and the writers. (You pay them on a per-story basis just as you pay the writers on a per-story basis, with bonuses for length, importance and difficulty, plus expenses.) You become a wire service, offering your new sources to all the AP, Reuters and CNN customers. You establish a link with Google, so your quality will become known quickly.

Compared to the start-up costs faced by Ted Turner in 1980, the start-up costs here are minimal, maybe $10 million tops. While Turner looked at a five-year plan for breaking even, this can probably reach that level within a year. And the news then becomes a platform for hiring columnists, new voices who will have credibility because they come from a trusted source.

All that is needed now is an entrepreneur, a detailed business plan, and a bit of capital. You, too, can become a news baron. The time is right.


SSP (Shameless Self-Promotion)

Buy my book. . Please.

And there's more good news. I've gotten my first big new gig in years, at MediaPost commenting on, of all things, the off-line media. (What fun!) This goes alongside new orders from BtoB and Mobile Radio Technology . Things are indeed looking up.

My book, "The Blankenhorn Effect: How to Put Moore's Law to Work for You," should be available in just a few weeks from Trafford Publishing . You can pre-order a copy with no obligation by sending me an e-mail . I'll let you know as soon as it's available.

You can follow the continuing story of The Blankenhorn Effect on my "Moore's Lore" blog . I still write for Boardwatch , Boardroom , Marketing Profs and Thom Reece's eComProfits . I still produce I-Strategy for Adventive

Tell your friends, clients, partners, and Congressperson about You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know .

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


Shameless Promotion

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Takes on the News

Yahoo's Google Problem

Reportedly, Yahoo bought Inktomi because it has a "Google problem."

Buying a firm Google has already buried won't solve the problem. At one point (pre-Google) Inktomi was worth $234 per share. Yahoo's price was more like $1.60 per share, and Inktomi was thrilled to get it.

The real problem Yahoo has isn't Google at all. It's Yahoo's insistence on hosing its users in order to pay its bills. Five years ago Yahoo was Google - a clean, simple interface you could use to search anything. Then Yahoo lost its way, becoming a "portal" that hosted content on its own. It sought to become "sticky," meaning people would spend more time on its server. As a result Yahoo under Terry Semel became convinced that advertisers were more important than users, and began throwing pop-ups, pop-unders and mouse-over ads in front of its content.

In contrast Google remains focused on search. It holds its costs to a minimum, so that it can dictate to advertisers the text-based process they will use to link with customers from its site. This also cuts the time users spend on Google in any single session. It's the number of times people go to Google in a day, not the time they spend on each Google session, that gives Google its power.

That could have been Yahoo, but Yahoo blew it. Yahoo tried to follow MSN and AOL when it had the search market locked-up. Once Yahoo throws Google off and goes back to Inktomi for search, it's going to find out just how big a mistake it made five years ago.

The Clue here is simple. Don't listen to market analysts. Do what you know best, do more of it, and do it for less.


Proof of Web's Impact

The proof of the Web's impact isn't its gradual insinuation into every aspect of American life. It's not how everyone knows how to Google.

The proof of the Web's impact is its ability to clear markets.

This is the key to eBay, not just its auctions but its unit as well. The Web technology finds the market clearing price between buyers and sellers, just as systems like NASDAQ (and market makers like the Island) do for stocks.

You see this most clearly after a market moves to the Web. That's what the travel market has now done. By all rights the cruise ship market should be on its butt - terrorism, recession, and Montezuma's Revenge are the three strikes that should have it out. But the industry keeps humming, and why? Because the buyers are all online, because people love bargains, and the press of those bargain-hunters on the market keeps prices in equilibrium.

The easier it is for all buyers and sellers to reach the marketplace, the more efficient the market can be, and the better the deal everyone gets. Nothing in history has provided this value more than the medium you're now using, and that is the true source of its power.

The word for this is disintermediation, the elimination of the middle man, and it's taking place in all markets. This is not always a good thing, as Japanese police are now learning . It seems teenage girls there are using the Internet to sell their bodies without pimps - of 211 incidents analyzed, the initiative was from the girl 94% of the time. The cops are attacking the sites, and in the old way of the market that would be the right move - get the pimps and you get the girls. But that's not the answer here. If you don't like what is being sold online, you can only go after the sellers. The marketplace is just magnetic ink.


Squaring Contradictory Predictions

Analysts are predicting trouble in the business computing market while the chip business is rebounding .

How is this possible? Readers of this letter know the answer. Paradigms are changing and that's where the growth is. Stop thinking of communications as something that requires a wire. Stop thinking of computing as a TV, typewriter and tape recorder. Communications is the transmission of bits, turned into meaning by software. Computing is the power to calculate and deliver a result, also based on software.

But software must also embrace new paradigms. Software isn't something stored on a hard drive. It's not something separate from the machine. General-purpose computing is going to give way to special-purpose devices that sense, compute, and communicate, all at once.

Communication is everywhere. Computing is the application of intelligence to data. If anything, this new revolution has bigger implications than the computing and Internet revolutions that came in the 1990s.

The future has just begun.


Clued-in, Clueless

Clued-in is IBM's new open source server software. Proving the profitability of Linux is the key to breaking the Windows monopoly.

Clueless is this story on the 50-year expiration of European copyrights. It only takes the record industry's view and never asks the obvious, which is by what right is a 90-year copyright "limited?" This despite the Supreme Court's active consideration of that very question.


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