Insanity Redux

American writer Rita Mae Brown – self styled Literary Rabble-Rouser is a super-prolific author. Brown has been publicly active and supportive of various human rights campaigns and causes, but I heard about her when a friend told me about the American author who wrote fantastic detective books with her cat as co-author. This is how I came to know the Mrs. Murphy series. The presence of Brown’s cat is evident in each book in the series  – with names like Santa Clawed,  Purrfect Murder, Puss ‘n Cahoots and more, including the cookbook Sneaky Pie’s Cookbook for Mystery Lovers.  Rita Mae Brown is one of the persons (others include, for example, Albert Einstein) credited with the powerful, evocative assertion that “Insanity is doing the same thing over and over again, but expecting different results.”  The Hearst corporation was founded 120 years ago and, according to its website, it owns “16 daily newspapers, including the Houston Chronicle, San Francisco Chronicle, San Antonio Express-News” and others, it also is “one of the world’s largest publishers of monthly magazines, with 15 u.s. titles and nearly 200 international titles…” including Opra’s O and Marie Claire, as well as Popular Mechanics, Cosmopolitan and Esquire. Their 49 weeklies, broadcasting interests, interactive media and business media make Hearst – according to Wikipedia “one of the largest diversified communications companies in the world.”

As one reads through this impressive list of media assets, it is not difficult to guess what keeps Frank A. Bennack, Jr , vice chairman and chief executive officer of the Hearst Corporation, awake at night: Hearst is all about selling content in printed, broadcast and digital formats to end-users, and – at the same time, selling advertising space on top of the same publications. This business model served Hearst Co. well for 120 years and Bennack, Jr, who’s been serving as Hearst CEO for 23 years, was raised on that model. “As a teenager, ” according to his bio, “the San Antonio native was host of both television and radio programs. He eventually entered publishing in his hometown, and rose from classified advertising salesman to newspaper publisher by the age of 34.” Suddenly, Bennack is expected to come to terms with the fact that the sell adverts on top of (sold or free) content revenue model is moribund.

In all probability, Bennack and his team must have thought along the following lines:  we have one of the world’s largest repositories of content; historically we used to make money by selling this content. How can we continue to do that? Someone pulled out Kindle2, the latest version of amazon.com’s electronic content reader, who’s been attracting positive attention recently, and said ‘let’s have one of those: we can use our content, charge for some of it and sell advertising!’ Old timers, who struggled with the concept, may have been told that this is, in fact, an electronic paper / magazine / TV channel, all put it one. Hurray, Toto, we’re back in Kansas!   

And so it happened, that Hearst came out with the news that they are bringing out an electronic news reading device that will enable people to read content from the Hearst Corporate’ formidable library. Some of the content will be free and some – paid for by the readers. Steven Swartz, the president of Hearst newspapers, wrote in a staff memo quoted on CNet News that “[e]xactly how much paid content to hold back from our free sites will be a judgment call made daily by our management, whose mission should be to run the best free Web sites in our markets without compromising our ability to get a fair price from consumers for the expensive, unique reporting and writing that we produce each day.” (My emphasis.) Here comes that old schlocky rationale that sunk a thousand content-portals, it sounds something like this: “our content is special, it is unique and – therefore – people will be happy to get part of our content for free, and pay for the rest. ” Once again, content owners repeat the same actions – and expect different outcomes. 

In the excited mêlée of self-congratulatory wishful thinking that must have ensued within Hearst, no one thought of – or dared to point out – the major difference between the amaozn.com stock and the Hearst content.  Amazon.com has a comprehensive retail model that it uses to sell books and movies, music and gadgets, toys and baby-stuff, home and garden gadgetry, games and wedding gifts – and more. The type and character, target market, occasion and location of the items on sale – and the buyers – do not affect the model at all.  The amazon.com Kindle is based on this retail philosophy, and one can easily see how the Kindle may be used to access books, movies, music, games, directional features (as a GPS) etc.  If – at some stage – amazon.com retail strategists will decide to sell potatoes and rice – the amazon.com business model and infrastructure will not change one bit. It is only a question of packaging – and the Kindle is designed to present amazon.com stock, whichever it may be.

The Hearst device, on the other hand, fronts only one type of stock. In a sense, the device simply denotes another delivery-channel, one that incorporates existing online traits with added mobile capabilities. There is absolutely, positively nothing new in the Hearst offer. The cooperation seems to have lost the edge it used to have as an intermediary – as did many other content providers.  Hearst is being disintermediated because people’s needs and expectations have changed. Offering the same content through an electronic viewer on a part-free-part-for-pay model is more than just short-sightedness, it is insane.

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