Looking Forward to 2016

Predictions are a lot like New Year’s Resolutions – we know they won’t all work out, but we’re programmed to make them.  So instead of fighting the inevitable, let’s dust off our crystal balls and prognosticate about what 2016 might bring.

Skimming the surface

For those of you interested in just the tip of the iceberg, here’s a quick snapshot of what I think we in store for…

  1. The double-edge sword of advertising automation will continue to be wielded by publishers as they look to harness its huge potential, but all they’ll end up doing is further alienating their audiences.
  2. Big Data and Artificial Intelligence with blur into Smarter Data to exploit behavioral analytics so publishers can better predict how people will discover, consume and engage with content. It won’t solve the problems of predication #1 this year, but it’s a good start.
  1. To adapt to a world that is moving from a knowledge-based economy to a passion-based one, more publishers will look to segmenting their content based on people’s passions.
  1. More publishers, particularly in the magazine industry, will diversify their businesses to try and attract and engage with audiences between page flips.
  1. After dabbling in gamifying news for a few years, larger publishers will look to integrating unique content with immersive entertainment, including Virtual Reality (VR) and Escape Games.
  1. More experimentation will emerge, but the gap between those publishers willing to experiment and those just riding the wave will widen.
  1. Publishing will continue to make for strange bedfellows as more transnational and cross-industry consolidations occur, further disrupting the publisher-journalist value equation, mostly for the better.

Curious about what lies underneath these forecasts?  Read on…

Below the surface

Most of my predictions fall into two overriding themes:

  • Continual Disruption
  • People-Centric Publishing

Disruption isn’t a one-time blip in the radar of our evolution, but a catalyst that continues to accelerate advancements in technology and society.  Although many like to call disruption “the new normal”, it’s been around since hominin’s first use of fire over a million years ago.

Today, disruption is propelling us forward at warp-speed, impacting every area of our lives, and humanity as a whole.   Because of its acceleration, Digital Darwinism is infiltrating businesses like never before, causing them to fall short of meeting the needs of people, who are not only riding the wave of digital technology advancements and society’s rapid shifts, they’re driving them both.  It is for this reason that the number one priority for every business going forward must be the user; 2016 needs to be The Year of the Person.

In terms of publishing, this means focusing on what a person wants, rather than looking for people to buy what you’re selling.

It means putting the person at the center of every editorial decision, advertising decision, pricing decision, distribution decision, business decision, product/service decision, design decision and corporate culture.

If we don’t make 2016 The Year of the Person, then I truly believe we will have much bigger challenges ahead of us in 2017, where we won’t really need to talk about predictions for the industry going forward.

Predictions

Amplified Automation

Automation is a double-edged sword that will continue to be wielded by publishers this coming year as they look to harness its huge potential in terms of enhancing operational efficiencies.  But with every silver lining there is always a cloud.

Automated buying and selling of advertising is still in its infancy (especially on mobile) and like many new solutions, it has already created as many problems as it attempted to solve – banner blindness, ad fraud, malvertising and perhaps the scariest of all – ad blocking.  Maturity may eventually lead to ad fraud and malware prevention, but when it comes to ad blocking, technology won’t be able to put the toothpaste back into the tube.   The only solution will be to focus on the needs of the person over publishers’ purses and deliver the type of advertising that would be missed if it was gone.

To try to protect their dwindling negotiating power in the ad exchange value chain, larger publishers will continue to experiment with ad-blocking solutions and form new alliances as they did in 2015 (e.g.  Pangaea Alliance, La Place Média) in an attempt to scale their inventory and wrestle ad dollars away from smaller players.  But this won’t solve the fundamental problem with automation – the alienation of audiences.

Someday advertisers will be able to determine the wants and needs of users without creeping them out and degrading their digital experience, but we’re not there yet and I doubt we’ll be there in 2016.

Which brings us to…

Smarter Data

Big Data was a BIG deal in 2015 and it will continue to get bigger as the fine line between Big Data and Artificial Intelligence (AI) blurs into Smart Data.

Going beyond data mining and statistical analysis, Smart Data exploits behavioral analytics to predict how people will discover, consume and engage with content based on ambiances, what’s happening around them and what they’re doing at any point in time.

Those predictions will lead to more and more granular levels of targeting, allowing publishing systems to choose the optimal content (including ads) to deliver to the person, when, where and how they want to receive it.  What’s even more exciting, is that Smart Data can help empower people with information that they didn’t know they wanted or needed.

Sounds a bit farfetched today, but it’s not that far from reality.  Today Big Data and AI are making inroads into financial markets, healthcare and even crime prevention.  Over 60% of the viewings from Netflix are the result of AI-driven recommendation algorithms that go way beyond user star ratings.

It’s just the beginning, but the evolution of this technology is moving very, very fast.  And if Google’s new quantum computer is any indication of how fast, we might be in store for the next quantum leap in predictive analytics sooner than we think.

Content Segmentation

Driven mostly by millennials who were expected to control US$2.45 trillion of purchasing power globally in 2015, the world is moving from a knowledge-based economy to a passion-based one.

To better serve these consumers, some publishers are starting to segment their content based on people’s passions, producing bundles that could be packaged separately and include not only written content, but audio, video and even syndicated content from other sources such as broadcast media.

The Globe and Mail started down this path with its Globe Investor bundle.  Offering the latest investing news and analysis, this popular site and app is the Globe’s cash cow.  The investment-driven content is also the main trigger that converts trial users to paid subscribers of Globe Unlimited.

Tangible Media in New Zealand is also focused on building and monetizing one-to-one relationships with consumers based around something that they are really passionate about.  They put a large amount of emphasis on relationships with subscribers and the data that surrounds them.  They link editorial propositions within a product or market category where there is commerce taking place and where there is a definite relationship between something that people are passionate about and how they spend their money.

Facebook is also experimenting with segmentation, offering some users category-specific versions of the newsfeed.  It’s all part of its plan to become the best personalized newspaper.

Segmenting and personalizing content fits within the person-first mentality, which is why we should expect to see more progressive publishers looking to test it with their audiences.

Increased Diversification

Diversification has been the mantra of financial advisors since the dawn of the stock exchange, and for good reason. Putting all of one’s eggs in one basket is a high-risk game in finances; the same is true for publishing.  Which is why more and more publishers (e.g. Future Plc and Condé Nast) are diversifying their portfolios with complementary products and services (e.g. events, broadcasting, communities, schools, marketing agencies, stores, cafes, etc.) designed to attract and engage with readers between page flips.  These new business lines are not only strengthening the ties with audiences, they are forming new revenue streams for the brand.

Expect to see more publishers enter into new partnerships and non-traditional acquisitions to further diversify their offerings so they can bundle assets for people based on their passions, interests, needs and desire for new…

Entertaining Experiences

Albert Einstein said, “The only source of knowledge is experience.”  If that’s true, then why aren’t more publishers looking to bundle “experiences” with their content?

In 2015, Newzoo projected screen-based global gaming revenues would hit US$91.5 billion by yearend and US$107 billion in 2017.  Infiltrating these games with news content always seemed like a no-brainer to me, but few have taking the leap into this highly lucrative form of entertainment.   Yes, a few large publishers have dabbled in gamifying the news, but gaming is mostly being seen as just another tool in the journalism toolbox.  It could be so much more!

Another growing trend is the rise in “immersive entertainment”, which includes Virtual Reality (VR) and Escape Games which gained popularity in 2015.  Immersive entertainment is capitalizing on the millennial generation’s willingness to pay for memories and new experiences to enrich their lives.  You don’t need Smart Data to figure out that millennial money is calling you to follow it.  The number of active VR users is predicted to reach 171 million in two years.

It’s no surprise that The New York Times and The Economist are already experimenting in this space, but expect more publishers to jump on this potential gravy train as Facebook’s Oculus Rift, Microsoft HoloLens, HTC Vive, Sony Project Morpheus and the next Samsung Gear VR hit the shelves this year.

VR hardware is expected to create a US$2.8 billion market by 2020, up from only a US$37 million market in 2015.  No real money will likely line the pockets of publishers in 2016 or even 2017, but there is little doubt that once the big global guns have ironed out the kinks in the new technology, smaller publishers will be standing by to tailor VR and other immersive experiences for their local audiences.

Endless Experimentation

When the Apple Watch hit the market in 2015, publishers with deeper pockets spent the big bucks to experiment with what worked and what didn’t on these shiny new toys.  No one really got it right, but it taught publishers a lesson – when building apps for smartwatches, stop focusing on the wearable and what you can do with it; focus on the wearer and what they want to do with it.

2016 is poised to be a big year of experimentation to deliver on the promise of segmentation, wearables, diversification, new advertising solutions and immersive experiences, but I think what we’ll see is a much wider gap between those who are willing to experiment and those who are basically riding the wave.

A number of factors are likely driving this reluctance including a lack of knowledge, fears of high costs and failure, or worse – cannibalization.  Or it may just be blind ignorance, which is very much alive and well in the industry.

The lack of empirical evidence that comes with new ideas will lead panicky publishers down the road most travelled – a behavior that has created a collective cultural paralysis we see today.  When planning for a new tomorrow, traditional publishers will likely rely on their gut feelings – feelings that are misplaced because that gut was formed in the print era.

But for those willing to risk a little to gain a lot, I think their experimentation will pay off, not just in discovering opportunities in emerging trends, but in improving operational efficiencies in legacy products as experimentation becomes increasingly cheaper.

Whether publishers see the opportunities in experimentation or view it as a money pit remains to be seen, but I’m worried risk aversion will win over rewards if past behavior is any indication of the future.

Strange Bedfellows

In 2015 we saw some interesting consolidations in the trade, continuing the trend started by Warren Buffett in 2013 with his purchase of dozens of newspapers in the south-eastern U.S., Jeff Bezos’ surprise acquisition of The Washington Post and John W. Henry’s buying of The Boston Globe later that same year.

Transnational transactions continued throughout 2015 with Nikkei buying Financial Times, Alex Springer investing in Blendle and then procuring Business Intelligence, casino mogul, Sheldon Adelson, acquiring Las Vegas Review-Journal and Alibaba Holdings taking ownership of South China Morning Post (SCMP).

There is no question, the ownership game is changing.  These new owners have little or no background in journalism and may/may not have the altruistic ideas about the spread of democracy through journalism.  They are business people who are passionate about their businesses, not journalism per se. But they believe in the value of quality content, and while some may use it to promote personal/political agendas, more will look to empower journalists to “create” real value for their customers, giving people more of what they want in a convenient way at the right price.

For example, when Alibaba Holdings purchased South China Morning Post (SCMP), one of the first things it did was take down the paywall, seeing it as an inhibitor to the spread of content to a larger audience of new prospects.

Journalism is not going to die as more and more mergers and acquisitions emerge throughout 2016. In fact, the opposite is more likely true in that journalists can actually flourish with more freedom to be creative, build their own brands, develop closer relationships with audiences and connect people through their content.  Meanwhile these less protectionistic owners will open up new channels of communications and engagement opportunities with prospects they need to reach with their other product lines and services.

Mark Twain once said…

“The secret of getting ahead is getting started.”

Although it took early humans 650,000 years after the first use of fire to master it, that one disruption triggered many innovations that fast-tracked humans in their evolutionary journey.  The journey seems to be getting bumpier as more and more disruptions emerge in an already shaky landscape.

The last decade has been challenging, but 2016 is a new year with new opportunities afforded to us by new disruptive technologies and social change.  May you look upon them with hope rather than fear and be inspired to do something amazing this year.  Let’s get started!

Happy New Year everyone!

 

 

Nikolay MalyarovAuthor: Nikolay Malyarov is executive vice president, chief content officer, and general counsel of PressReader in Richmond, British Columbia, Canada.