By Fred Tuccillo
A panel discussion on “The Newspaper Crisis” drew a lot of journalists to Princeton University’s Woodrow Wilson School recently. Most hoped to hear ideas for restoring the economic health of newspaper companies.
We may well have been in the wrong campus building.
A couple of blocks away, in the university’s School of Electrical Engineering, a small research team has been developing what they believe will be a groundbreaking online marketplace for published content of all kinds.
The team is led by Mung Chiang, an associate professor of electrical engineering, and H. Vincent Poor, dean of the School of Engineering, and includes electrical engineer Hazer Inaltekin and computer scientist Necati Ozgencil. Together, they hold at least four more doctorates than the average newspaper editor.
Their project is called “Sharing Mart: A Monetary System for Online Content Trading.”
”S-Mart” is a “Web engine” that archives digital content — text, images, video, etc.—that readers will access with digital “tokens” that they can either purchase or earn by viewing advertising content tailored to their interests. Their interests will be determined by S-Mart’s proprietary algorithms, which will track the information preferences of users and match them up with ads they may actually be interested in viewing.
Mr. Chiang told me S-Mart will know how many tokens you have in your account at any given time and how many of those you were willing to spend on a particular piece of content.
”For example, maybe historically, we see that you are willing to bid 50 percent of your ‘net worth’ (in tokens) on statistics about a particular football star,” he said. “You must be a really big fan of that content. . . so we use that to build a profile.”
Continuing the example, Mr. Chiang says, a user might say, “I am short of cash, but I need 10 more tokens.” He hits a prompt on the screen and gets a customized list of links to advertising that will earn him 10 tokens.
S-Mart will sell the tokens to advertisers, who won’t be charged until users “earn” them by reading or watching the ads selected for them.
Publishers, large and small, will be able use S-Mart’s technology to list content items for a set number of tokens or offer them for bid, much as products are auctioned on sites like ebay. Then they can cash in the tokens for payment.
Mr. Chiang told me the S-Mart team believes some portion of the “huge amount” of content available on the Internet “should not remain free” — including “online journalism.”
This is an enticing premise for those of us who were at the Woodrow Wilson School a few days earlier and heard that newspapers have little prospect of getting online readers to pay for their content.
Mr. Chiang asks, “What if we had an online market mechanism to let demand and supply work out the value of a piece of journalism? Let the market forces work out the value and the advertisers pay for it. So the producers, in this case, editors and journalism reporters, will be monetizing their content.”
What if, indeed.
I started thinking out loud about this as Mr. Inaltekin showed me the S-Mart beta site. I asked him, “Is the premise that the ability to generate revenue from online content will reduce the amount of premium content that is available for free?”
”Yes,” he said.
”And the less premium content that is available for free, the less resistance people will have to paying for it?” I asked.
”Exactly,” he said. He compared it to the successful evolution of pay-TV content in a medium where hours of free programming still are available.
But I was thinking about the old newspaper business model: You pay the newspaper a small fee to lay eyes on its pages, and advertisers pay the newspaper larger fees to put their messages in your line of sight.
As a member of the first generation of “new media” directors at daily newspapers some 16 years ago, I was tasked with figuring out how to migrate that business model to the digital realm, along with the news. The news turned out to be the easy part.
The early-adopting newspapers partnered with America Online or Prodigy whose pre-Internet, subscription-based services were based on hours of use. The idea was that newspaper content would generate more hours of use, and the papers would share the revenue.
But in a matter of months, the emergence of the World Wide Web reduced this online subscription model to digital dust. Compared to the snail’s pace of online subscriber growth, Web traffic seemed viral, especially when marketing efforts were applied.
Newspaper publishers and advertising directors, who initially saw little potential for online ad sales, were suddenly excited — too excited as it turned out. That was the mid-90s moment when most of us dropped the paid subscription model like a hot potato and joined the mad dash for maximum Web traffic and the ad dollars that would surely follow.
In part, the chase was consciously defensive as it quickly became clear that the Internet would be a powerful vehicle for classified advertising, then a huge revenue generator for many daily newspapers.
Newspapers played their aces, throwing news stories, features and photos onto Web sites as quickly as they could learn how, so that ever-larger audiences of nonpaying digital readers would attract advertising dollars. This does, indeed, happen on newspaper Web sites, but it also happens on Google, Yahoo and other Internet-only media sites which neither charge nor pay a dime for the newspaper content they display.
So, here we are in May of 2009, as likely to find the future of newspaper journalism in the electrical engineering department of Princeton University as at a newspaper forum across campus.
Will S-Mart be the answer? I don’t know but I suspect that it — or things like it — will be an important piece of the puzzle.
Some 250 electrical engineering students at Princeton have been using the beta site since last November. Journalism, after all, represents just a sliver of the content product line that can be offered through S-Mart. Specialized texts, graphics and images of all kinds will become part of the inventory.
Meanwhile, the S-Mart team says it is continuing development work on “advanced digital rights management algorithms and intelligent advertisement and content recommendation algorithms based on machine learning, data mining and collaborative filtering.”
It also is picking the brains of people in publishing and advertising and reaching out to potential investors and partners.
”It’s still a research project,” Mr. Chiang said, “although we are now looking at the possibility of bringing out its value in the external world.”
Out here in the external world, some of us will be watching with great interest.
Fred Tuccillo, managing editor of The Princeton Packet, is a former new media director for Newsday and a former group publisher for Advance Internet, the online affiliate of the Star-Ledger and other Newhouse newspapers.
His e-mail is ftuccillo@centraljersey.com
