Maghound, already hilariously misnamed the “Netflix for magazines” from Time, Inc., wants to give you an easy way to subscribe to magazines, in one central location, with the ability to swap out subscriptions from one magazine to another on a whim. The service will enable subscribers to explore magazines at the subscription price, rather than paying news stand prices.

But, from early reports of what the service will offer, I think they’re already heading into murky territory.

The price point stinks. According to USA Today, “users will pay about $5 a month for three magazines, $8 for five, $10 for seven and $1 for each additional. About 10% of titles, including some weeklies, will cost more.” That’s 3 magazines for $60 per year. What? Quick grab some subscription cards from your favorite magazines. Most cost less than $20 per year, right?

Let’s look at some numbers:

The best selling fashion and style magazines on Amazon are as follows:

1. GQ - $12/year
2. Vanity Fair - $15/year
3. Glamour - $12/year
4. Marie Claire - $8/year
5. Lucky - $12/year

The price for these subscriptions totals $59. That’s two extra magazines for a dollar less than what Maghound will offer. In other words, with Maghound, you’d pay a 35% premium for the top three magazines, with the option of picking up one of the other two magazines in place of one of three you’ve already subscribed to.

At the $8 price point, or $96 per year, you’re in worse shape with those five magazines, paying a 38% premium on the subscription price. If I just went ahead and subscribed to the top five, that’s $37 I could spend on impulse magazine buys on the news stand.

To be fair, if you move further down the tail into more boutique subscriptions like Metro.Pop ($23 from their Web site), Gay Parent ($32 from Amazon) and Foreign Affairs ($44 from Amazon), you can save some serious cash. But you can save some serious cash by reading magazines that post their content online already (Atlantic, Wired and more magazines already do this. And many magazines have some of the most interesting bloggers on the net, so why bother with with the print product at all?)

Is the tail of any value without the head to drive large subscriber numbers? Time will tell.

There are more points I’d elaborate on, but Stephen J. Dubner has them all covered at the Freakonomics blog.

Note: This post was inspired by a conversation on twitter between Dave Cohn and Will Sullivan. You can work your way backwards through the conversation here.

The Internet is full of numbers. We can spend all day talking about how many people we follow on twitter, how much time people spend on our sites, what the growth rates are for all of our online properties. But a number is just a number if you don’t give it context.

I spend my life in numbers. I think about Bayesian inferences to help determine my menu selections at restaurants. I think about expected value formulas whether at a poker table or talking business and content strategies. I can’t read a book without breaking down arguments into symbolic logic.

But these are just things. I don’t want to talk about numbers when I talk about the Web.

I despise numbers not because they are useless, but because all too often we misuse these numbers.

A number like 30,000 absolute unique visitors per month means nothing to some people. It means dollars to others. Some think of it as audience. These may be truths, but they fail to accurately represent The Truth As I See It.

When you’re spouting off statistics like how many people subscribe to your YouTube channel or traffic your site gets, you should only think about one thing: There is a real human on the other side of the number.

Now, I don’t mean that you should go out and have lunch with the person on the other side of the network. I don’t even think anyone should expect you to respond to every email you get. I do, however, expect you to think about how you’ve made a human connection.

This Internet thing isn’t a broadcast machine. It looks like that on the surface, but that idea isn’t The Truth Of The Matter. The Internet is a phalanx of humans and human knowledge; It is big ideas and small ones at the same time. It is an extension of ourselves. For the most part we interact with Wikipedia as if it were a part of our own memory. We watch low production YouTube videos as if we were watching home movies.

Nearly every person that joins your network, that visits your site, that adds another notch on whatever metric you’re following is a real person trying to make a real connection. Don’t forget that.

When you see a number online, realize you made some kind of human connection. They interacted with you in some small way (the computer was just a conduit). Often in business, it is cheaper to keep a customer than to gain a new customer. That value applies to the Web more than anywhere else in business, I think.

Content itself isn’t valuable. What gives content value is the connection between the producer and the audience.

So what is more important; Is it the total number or the strength of the connections? If you have too many connections does that make each less valuable? I don’t know the answer. But it’s something to think about.

As those of us that work in the online industry know, one thing that distinguishes our media environment from all others is that because of the low costs and barriers to enter the Web world, we can afford to fail often. If we mess up, we can quickly and cheaply adjust until we get it right.

When working on a film, for example, you have to gauge not what audiences will want to watch today, but what they will want to watch one, two years from now. When dumping millions into a risky project, that level of uncertainty could terrify even the most hardened entertainment executive.

It goes without saying that’s the reason Jerry Bruckheimer exists, why the majority of film tends to be safe for wide audiences, grounded deeply in the history of the genre at the box office.

But online, wide audiences can’t easily be captured. People want what they want. They find what they want and they may never come back to your site. Content is more important than your brand. The system is designed for searching. We are hunter/gatherers in the digital world, scratching and pecking for information that nourishes our immediate needs.

By and large, we are first at the whims of the search engines, and second at the whims of those that find (and like) our content enough to link to us. In an online ecosystem, neither are separate. The stronger your connections (via links to and from other sites), the higher your search placement for your content, a symbiotic relationship, when done right, that feeds on itself.

Why do newspaper.coms exit around the brand? When New York Times (or any other paper) publishes new information, I have to dig for information I want (especially if all the content is released at once at midnight, a topic I plan to cover in another post soon). Wouldn’t it make more sense to break out your content types into several brands, each revolving around a specific type of content? Many smaller streams of information, targeted to specific topics seems to be more search-engine friendly (and by proxy, more user friendly).

When one of those products flounders, adjust the strategy for that site or cut it off and reallocate resources towards a different product. More to manage up front, but creating a network may be more beneficial to the entire ecosystem of sites when content can cross pollinate. But when it comes to failure, it’s much, much easier to manage the failure of one small web site than a portion of a large Web site. There’s no reason to put your eggs into one basket.

Find communities you can manage and repeat the process with another community. Magazines and cable television operates like this. Gawker and many other blog networks operate like this–for better or worse.

Why can’t newspaper companies work the same way?

Today is my wedding anniversary, so I haven’t had a chance to read the entire report yet, but I’ve skimmed through some of the online section.

This part really struck me:

If the Web is all about democratization of the news and the flow of information, there is an interesting chasm in the priority of news public interest. Through the year, the one area that the public consistently said the press gave too much attention to was foreign news.

To me that says people look for national/international news at national/international Web sites and they want local content on their local sites. I know we’ve been talking hyperlocal for years, but there hasn’t been a lot of research in what readers actually want out of a local site (the hyperlocal argument having been previously focused on local audience growth through search engines, because there’s much less competition for those local keywords).

Now that doesn’t mean foreign coverage is dying, far from it. It means that if you’re going to cover national and international events, cover them with a local angle. Or, conversely, compete for national/international markets on a different platform and scale that caters to people in the market for that kind of coverage.

Interesting stuff. I’ll have more analysis later in the week.

In order to compete you must cooperate

That statement seems counterintuitive, but hear me out.

Consider the prisoner’s dilemma, a classic study in game theory:

	I keep quiet	I snitch
You keep quiet	We both serve 1 year	I go free, you get 5 years
You snitch	You go free, I get 5 years	We both serve 3 years

Let’s say you and I rob a bank. We’re brought into separate interrogation rooms and the cops give us options: snitch on the other guy and go free or keep quiet and risk getting 3 years if we both snitch or 5 if only one of us snitches. Can you trust me? Can I trust you?

Obviously the matrix has arbitrary numbers. The worst case scenario for both of us is if we both snitch on each other, serving a total of 6 years, the best is if we both keep quiet, serving a total of 2 years.

What if we changed the matrix?

	I keep quiet	I snitch
You keep quiet	We both serve 3 years	I go free, you get 10 years
You snitch	You go free, I get 10 years	We both serve 4 years

Let’s assume we were terribly arrogant about our bank robbing prowess or just stupid like most criminals and didn’t come up with a contingency for this scenario. Since we don’t know what the other person will do, we have to base our decision on some simple logic.

It’s now most beneficial for both of us to take our chances and point the finger. At best we go free, at worst we serve only 8 years total. This disparity in this fictional legal system gives us a positive expectation value to snitch. By snitching we can expect to only spend 2 years prison or a total of 4 years divided by 2 outcomes. By not snitching, we expect 6.5 years in prison or a total of 13 years divided by two outcomes. Obviously, we have to assume these options would be given to us ad infinitum to beat variation to get these numbers, but in the short term it makes sense.

Mathematically it looks like this:

Snitching = 0 + 4 years / 2 possibilities = 2 years.

Not snitching = 10 + 3 years / 2 possibilities = 6.5 years.

Without worrying too much about silly math games, the point is that the matrix changed in our favor (insert obvious The Matrix reference here). Duh. Change happens. Sometimes good, sometimes bad. No matter which way it breaks, you have to adapt.

Change happened to our industry and now we can’t continue making the same decisions. If we continue to keep quiet, we’re making a bad decision in the long run. We have to adapt our way of thinking to a new world model. We shouldn’t ask how change happened or what we could have done to stop it–the world we live in is a much more mathematically complex place than these games–we should ask how we can leverage our situation now.

Now consider the Tragedy of the Commons.

I have a cow. You have a cow. We all have cows. And we all live in a community where we raise our cows on our own lawns. We drink their milk and what we don’t use, we turn into cheese and trade for other items like bread, meat, Wii consoles and Diaper Genies.

But one day, I get the bright idea that I can take my cow out to pasture in the common park. I do this at night, in secret, while the rest of you play Wii and raise babies. My cow does much better than your cows and starts producing more and more excess milk, which I sell to buy cooler Wii games and expensive meats. As long as I can keep this secret to myself, I’m going to do better than you.

But then one day someone I like, say, Howard Owens, comes over to my house. He asks, “Hey man, how do you afford all these delicious meats?” I decide to let Howard in on my secret and he starts producing more cheese and eventually buys some sweet gold chains. He tells Ryan Sholin and Ryan blogs about it, spilling the beans to everybody. The common park fills up with all kinds of people and their cows. It has been democratized and we’re back to where we started, except now we ruined the park. You ruined everything, Ryan…

That’s the old way to think of media. We had a few people hogging the park, dominating communication and most of us were stuck there watching from our homes. The park had certain barriers to entry (like broadcast licenses or high costs of production). That’s just not the case with the Web.

We live in a post scarcity economy (a.k.a. abundance economy) now. Now, grass that’s already been eaten by some cows still has value to cows, forever. The grass never goes away and grass grows every day. It’s always green for the cows that want it, so long as you don’t put up a fence (which is futile). But this new world gets crazier, your cows can now occupy more space faster. They can be two places at once. Your patch of grass can also be your neighbors’ patches at the same time. These cows can teleport, man. It’s nuts out there.

Ground Zero

The old investment edict “buy land because they’re not making it anymore” no longer applies to our community. All because of a little number: Zero.

Gone are the days of false scarcity (i.e. airwaves, static parks) and expensive resources (i.e. ink, paper and shipping) where the prices continue to rise. The falling costs of technology make distribution easier. Chris Anderson recently wrote about this phenomena in this Wired article and he’s been working through the problem for quite some time on his blog. As bandwidth, storage and processing power drop in price, they approach zero in cost and we’re free to waste it by giving away free email, free video hosting, free content, free software, free everything. Obviously the cost of bandwidth, storage and processors isn’t technically zero, but because of the shear volume of it there’s an economy of scale where it’s more valuable to give one product away in exchange for market share and (this is the tricky part) find something else of value to profit from.

If you want to learn more about how free economies work, Mike Masnick covers free in a fun series here.

Free works best in the aggregate for companies like Google who don’t need to worry about how to create content. They just sort data and make it easier to find. For those of us in the paragraph factories, we must find a way to make our content easier to find. But it goes beyond search engine optimization and findability once you’ve got people on your site. You must control a niche (i.e. local news, or regional farming, gadgets, anything). To do that, you must cull the best from others, be where you’re readers are and help your readers help you. That means being a part of a community.

Listen to your mother: share

I know I keep harping about this, but we have to get in front of the conversations going on out there. The whole damn point of the Internet is share media and to “create copies,” as Kevin Kelly puts it; Content can be two–or two million–places at once. Be where your readers are. Unbundle your media. Separate it from your site. Ignore copyright. It sounds like heresy. Creating and controlling information has always been our bread and butter. It still is, but the game has changed. Distribution pipes no longer work and any attempt to fake them on the Web only obfuscates our inevitable failure.

The number one thing you can do to increase readership on your Web site is to make all your content freely available. Get rid of the pay walls tomorrow and I’ll personally guarantee you double digit growth within 18 months. You don’t have to change any processes in your organization. You don’t need to rewrite for the Web. There’s no corporate philosophy shift that needs to happen. Keep posting items at midnight, don’t do video, do absolutely nothing more than open your archives to Google’s and your readers eyes. Just stop trying the transaction model. It worked for old situations, but now it harms your bottom line. Give your site away and they will come in droves. They will find you.

The second thing you need to do: Ignore copyright. No this doesn’t mean letting your competition post your stories without crediting you. Don’t let the local high school post your photos without crediting you. Don’t let Yahoo! News take your content unless they provide a link to you. Give it to them on the condition they provide links back to you. Free of any other charges. Links, in the eyes of search engines, are points. The more sites that link to you, the higher your points, the more relevant Google sees your page. When someone searches for content you can provide, you show up first or second or third and they will come.

The third thing you need to do: Give it away. Unbundle your media. Put it on other sites. Right now, take your content and feed it out to people. Let other sites syndicate your content. Let people find it where they are. Those that don’t find you in searches can find you other places. All links should lead to Rome. They will come.

Lastly, you need to take what others offer you. Pull in the headlines from your competition. Scrape craigslist for classifieds. Syndicate local bloggers. Pull event listings from Upcoming.org. Link to anything and everything you can. Every day. If you don’t have content, link to someone else’s content. If you only do original reporting, you’re doing your site and your community a disservice. Look at how popular blogs like BoingBoing and Kottke constantly link other sites. Hell, look at Drudge right now. What do you see? Links upon links upon links. Sending people away secures page views for yourself. You just have to curate links for your target community.

B-b-but that not journalism! Correct. Journalism isn’t dead, far from it, but the game has changed. We still need to produce content. But we are in the media business. Journalism is just a part of that. Sorry to break it to you. This is good in ways not many people can comprehend yet, though, and we’re on the cusp of some very interesting times in the years ahead.

If you want to really secure your future as a leader in whatever content you provide, start by being a good neighbor.

End game

When I reply to someone on twitter, in public view, the message is meant for the recipient, but others can listen in. One-to-one conversation can also be a one-to-many conversation at the same time. I haven’t read Clay Shirky’s new book yet, but from what I gather this is part of his thesis. This is what I mean when I say the game has changed. We don’t broadcast or have conversation over a few drinks. We do both at the same time. And boy does it sometimes lead to awkward social situations.

But fear of doing something wrong or fear of losing control of the conversation shouldn’t detract us. We’ve already done something wrong. We’ve already lost control. We’ve been trying to play a new game with an old set of rules.

Now, I know so much of this just sounds silly. We should curate conversations?! We talk a lot about attention economies and jostling for eyeballs because on the Web, every site potentially competes for the same people. True to a point. We need to step back and look at the bigger picture.

Yes, people spend a certain amount of time on the Web per day/week/month and what they find is usually all they get. If they’ve found someone else’s content, then they probably aren’t looking at yours. I get that. But we should ask a different question than “How do I get the people looking at site A to look at my site, site B?” We should ask how site A and site B can complement each other, distribute the workload, maximize audience and share in the benefits.

Before we look at a couple examples, I want to get back to ground zero: Free. Giving your content away doesn’t mean you’re going to lose the value of that information. If an article is worth one dollar and you give it away for free, you have to make that dollar back somehow to break even. This is the trade-off. Market share has no business value if you can’t convert size and type of community into dollars.

In reality, a page view has a cost of only a tiny fraction of a cent. Thousands of eyes on an article costs basically nothing to distribute, so charging anything more than a micro-payment flies in the face of market wisdom. And micro-payments don’t work for most products. They create a psychological hangup many people can’t or won’t accept.

So then, who takes on the costs of production and distribution? Advertisers.

Because the cost of producing a page costs so little, you can sell ads for huge returns. But, unfortunately we’re hung up on an old model that involves selling banners or tile ads or large formats to larger companies in our communities. We put ad reps feet to pavement and we go looking for big dollars.

Dumb. Dumb. Dumb. Well, not so dumb. Yes, do that for your high profile, network-wide advertising or vertical sales, but think smaller. Every Tom, Dick and Harry sells their stuff on eBay and craigslist. There’s about bajillion craft shows all over the Midwest in the summer. These people have things to sell and they can’t afford TV or newspaper spots. They have local goods they want to sell locally. So they go to Google. They go to Yahoo! They go to Facebook. They fill out a form and drop $5-$20. The simple, highly-targeted ads direct people to sites where these merchants sell their products using freely available Web tools and you get none of that money. Web forms don’t need a commission. Nearly pure profit slips out of your grasp every second you delay.

There’s a new game in town. Your advertising needs to be as granular and as unbundled as your content. It needs context. Impressions are great, but advertisers are catching on. They want click-throughs and conversions, so make it easier for them to tap your communities. If you target your ads right, your users might actually find advertising useful rather than a nuisance.

Once you have the hang of that, seriously consider sharing your business model. Let other sites handle your advertising. Google does it. Amazon does it. There’s no reason you shouldn’t figure out how to share advertising, too. Build a relationship with your community to keep it healthy. This one really flies in the face of common sense and may not even work for smaller communities. That doesn’t mean you shouldn’t try.

Tying everything together

Ok, I think this has been the longest post I’ve written yet. So let’s take a second and breathe deep. In a nice digestible list, here’s what we’ve covered so far:

• Pick a community. It can be a geographical region, like North Dakota or it can be a theme like Tech news.
• Start creating content. Make it evergreen. Let people into your archives.
• Start curating content when it is relevant to your community.
• Give others in your chosen community opportunity to share what you’ve got. This is how you build a relationship within the network.
• Once you’ve built up a large enough community of readers, you need to fill space with advertising that favors the content.
• Keep your community healthy by creating advertising markets to stimulate its growth.

Does curating work? Compare Drudge to the NYTimes.com. Last July Drudge had one-third as many readers as New York Times. Love him or hate him, He’s Just One Man.

Does opening up your archives work? Hell yeah it does. See that bump in people on the graph linked above? I bet you can guess when they opened their archives.

I want to talk about some sites that embody many of these principles.

The Hype Machine aggregates music posted to music blogs. It does nothing more, really. Just hit play on a song on the main page and listen to music bloggers post. But the site does some awesome stuff. Firstly it links to every blog it culls music from. Giving exposure to some great music blogs in a very, very crowded niche. Secondly, it supports itself financially through music sales at iTunes, Amazon and eMusic, as part of their ad networks. Lots of songs have links to where you can buy the tune.

Exposure to music blogs, so they benefit with link juice and spill over from click throughs. Exposure to music merchants, so they benefit through sales which also have kickbacks to the They Hype Machine. The whole site is a sharing machine. Just turn it on and let it do magic.

Everyblock aggregates data on a local level, breaking it down to the street level. The site culls information from official government sources as well as craigslist, Upcoming.org, flickr and others to give you a picture of what’s going on in your neighborhood. Throw in some story-based news and locally targeted advertising and you have a whole new way to think about news Web sites.

Lastly, this one is small potatoes, but it’s worth noting, because we’re going to start seeing more of it. There’s a small group of papers in Minnesota that started Minnesota Reader. Using only Drupal and some freely available feeds from newspapers across the state (including papers from Forum Communications, my employer), they’ve started aggregating Minnesota news. It’s basically the Google Reader OPML file we’ve set up for our editors in the state turned to face the public. It’s a bit clunky right now, but I think the concept has some interesting potential.

Take a look at the page for Woodbury Bulletin, one of the Forum Comm papers. On some of the posts, our RSS ads show up. On their page, with links back to our marketplace product. Some people may feel very uneasy about something like this. I don’t. It’s our RSS feed, so we basically control our content on their site.

Go out and grow your audience. Expand your network. People will gather around your content. Some of those people will support you by clicking on ads, more will given the right ad in the right context (either on your product or from somewhere else in your network).

All links lead to Rome.

I’ve been thinking a lot over the course of the last few months about community. What does it mean for journalism? What does it mean for business?

Journalism culture has always been like most business: Full-on compete mode. But now, in a world where communication can scale from one-on-one to one-to-many and back again at the drop of a hat, we’re in the nasty situation of trying to compete with the people we want to converse with in the first place. Everybody is media.

We do this because we think resources are limited. That if we don’t take all, we don’t win. If we don’t beat “them” we lose. But is there a better way?

“They” can mean different things. They can be bloggers or advertisers who spend their local dollars in places other than our products. They can be the competition.
We think of content as ours. The high school sports photos are ours, even though the subjects are our neighbors. We clash when the school posts our photos to their sites, we ask that they take them down. We do the same to bloggers. There’s a much better way. The conversations happening all around us are liquid and don’t fit our business models anymore. Stop looking to the past. It’s over.

We need to foster community. We need to build on our relationships with the people around us. Instead of fighting the fundamental purpose of the Internet, sharing information, we need to be stewards of its organic growth for the betterment of our own products (and for the betterment of the conversation).

We attack bloggers for unoriginal reporting and commentary on our work. This is silly. Who has the right to share information? Instead of breeding animosity towards our communities, we need to look to ways that benefit all of us. We must rethink copyrights before our stodginess becomes our complete demise. The digital culture, by and large, has already moved away from this traditional sense of ownership. We must adapt to the current climate or risk death.

We’ve built language for how to gain and control audience. We call our communities “readers,” “users,” “citizens,” “citizen journalists,” “the former audience” and “targets.” “Them.” It’s long past due to that we start seeing people in our communities for the individuals they are. We’re a part of that community. There’s no us vs. them anymore. That idea started to die when AOL chat rooms and The Well were still around. Sorry. There’s only communication and it’s going to happen with or without newspapers and broadcasters.

There’s a lot of money to be made. There’s a lot of journalism that needs to happen. But there’s a huge shift in culture that needs to happen. Start asking yourself how can you help your neighbors and how can they help you.

The single most important thing about the Web is the strength of the network.  If you’re not looking for ways to make your network stronger, you’re simply not going to grow.

How ironic would the loss of the Fourth Estate be because we failed to comprehend the elegance of democratized communication?