Thoughts on news outlets

Below are a couple of quick thoughts on news outlets that I have had in mind for a while

Change in business model to avoid “click-bait” culture

News outlets traditionally had revenue mostly from advertising. To sell ads, they needed eyeballs. So everything that could attract a couple of clicks or a few more minutes of attention would be welcome. As a consequence, outlets keep churning out articles or content with the prioritized purpose of creating shock effect, the effect that we are naturally drawn into. I am amazed every time CNN features some pundits or people that they know beforehand that they will disagree with. I have an impression that many CNN daily sessions are just to create controversy and attract attention. The majority of CNN anchors seem to oppose GOP. What do they expect to gain by inviting repeatedly GOP allies to the TV and shouting and arguing when the answer is almost too predictable? Gradually, these attention-seeking interviews erode credibility of the news outlet. Even CNN’s top executive admitted that they aired too much of Trump’s speeches in 2015 and 2016.

If not for concern over credibility, the competition from Facebook and Google should be persuasive enough for the media to change business models. They are two biggest advertising platforms in the world with so much data and years of perfecting their algorithms. New York Time has consistently reported the drop in print advertising and relied more than ever on revenue from other sources such as subscriptions or crosswords. If NYTimes or Economist can do it, why can’t others?

The switch to subscriptions puts consumers first. If readers are not satisfied with the quality of reporting, they will cancel as there is no shortage of alternatives. News outlets relying on subscriptions have no choice but to be vigilant about their reporting and the quality of their delivery.

No Opinion column

My view on this is very simple. News outlets should only report news and factual events. If someone wants to air an opinion, that person should do it on personal channels such as social media or blogs. The Internet makes it frictionless nowadays to access or release information. A few clicks can allow one to create a personal blog or Twitter account to voice opinions. A “No Opinion” column won’t violate any “Free Speech” right.

The reason is that news outlets’ reputation will be tainted by association one way or another by allowing Opinion posts. Under the name of free speech, how can an editor decide what should or shouldn’t be posted? Every Opinion piece is subjective, biased and divisive; which goes against the very mandate that news outlets should maintain: being objective. If a news outlet is fine with publishing biased pieces, then be willing to face the criticisms of not being objective. It’s impossible to have it both ways.

 

Sinemia and MoviePass

If you live in the US and are a fan of watching movies at cinemas, chances are that you have heard of a company called MoviePass. It is famous for its unprecedented business – $10/month for one ticket every day. The company has suffered a great deal financially and operationally for its business model, including an urgent financing round to keep its servers running, downtimes, unimpressive customer services and frequent changes to its pricing.

In the subscription world, the mandate is that once a user subscribes, the more the subscriber consumes services/content, the better and marginal cost is trivial. Take Netflix for example. After a successful subscription, a user can watch as many movies and for as many times as possible. Netflix takes in minimal marginal costs (probably for servers, storage and networking) for every time a movie is watched. In the case of MoviePass, it’s not the case. Every time a ticket is dispensed, MoviePass pays the cinemas either the full amount of the ticket or the majority of it. Slap on it the cost of marketing, financing and operations and the business loses money.

How does MoviePass make money in that case? I suspect that MoviePass prioritizes growing its user base to the point that it is big enough for the company to convince cinemas to cut its a much better deal. Advertising can be another avenue.

The failure of MoviePass is also from the customer segmentation perspective. We moviegoers differ from one another in our consumer behavior. Some go to cinemas every week, some go for only blockbusters and some only do so once in a while. The difference in behavior requires multiple offerings from MoviePass. The less frequent users don’t feel motivated to keep a subscription every month. Movie junkies who go as many times as possible will bleed the company dry. There are some users who look at the release schedule, subscribe for only one month in which I can watch movies I like and then unsubscribe, myself included. Such users don’t offer much value to MoviePass as they don’t, ironically, consume enough to contribute to MoviePass’s value as a company.

The “one-size-fits-all” model that MoviePass is famous for doesn’t take into account any user behavior. Unsurprisingly, it failed.

Sinemia today announced an unlimited plan. For $30 bucks, users can get a ticket every day and advanced bookings are allowed (not possible with MoviePass). The difference obviously is a higher price tag that comes with the plan. I suspect that even at $30/month, it is still a money-losing deal for Sinemia but it is less damaging than a $10/month plan. Moreover, Sinemia has 5 different plans now. Each appeals to a different segment of users.

Sinemia

To discourage users from unsubscribing early, Sinemia enforces an initiation fee for monthly-based plans. That way, users care more about the subscription and are motivated to stay longer. If users unsubscribe, Sinemia gets more revenue in return. If users want to avoid the initiation fees, the only way is to be locked in for a yearly bill.

Even though Sinemia has multiple plans and higher pricing points, Sinemia will try to enlarge its user base and leverage it for a better deal with cinemas. What I think will be appealing to cinemas is that Sinemia can prove that it attracts moviegoers in unpopular times during a day. Movie slots are perishable. Once it goes by, there is no way to recover it. Hence, cinemas would be interested in putting butts on their seats during low-traffic hours. If Sinemia can prove that it is able to deliver that, its position will be stronger. Anyway, its business model is saner than MoviePass’.