Archive for the ‘Australian Financial Review’ tag
Last recession skill shortage lesson
In 2001 Australia’s technology sector faced recession following the dotcom crash. At the time I interviewed Professor Michael Vitale of the Australian Graduate School of Management for The Australian Financial Review on the subject of hiring skilled workers during a downturn.
His words are just as relevant today as we pull out of yet another recession:
The main difference between IT companies and the rest of the economy lies in the ongoing, severe shortage of people with the right mix of talent, skills and experience, Vitale says.
It has been going on for some time and shows no sign of abating. The recession might see some companies slow or halt their recruiting, but that’s just like a starving person skipping a few meals – at the end of the day they’ll still be undernourished”, he says.
Importantly, Vitale says despite a severe shortage of talented, skilled, experienced IT workers, there’s no room for compromise.
“Every word in that phrase is important. IT workers need to be talented, skilled and experienced. Anything less won’t do. The shortage doesn’t mean you should be any more tolerant of people who aren’t performing.”
According to Professor Michael Vitale of the Australian Graduate School of Management, the main difference between IT companies and the rest of the economy lies in the ongoing, severe shortage of people with the right mix of talent, skills and experience. He says, “It has been going on for some time and shows no sign of abating. The recession might see some companies slow or halt their recruiting, but that’s just like a starving person skipping a few meals – at the end of the day they’ll still be undernourished”.
Importantly, Vitale says despite a severe shortage of talented, skilled, experienced IT workers, there’s no room for compromise. “Every word in that phrase is important. IT workers need to be talented, skilled and experienced. Anything less won’t do. The shortage doesn’t mean you should be any more tolerant of people who aren’t performing.”
One of the problems peculiar to the IT industry is that companies can’t ease the skill shortage simply throwing money at the problem. Vitale says that most people working in the IT industry already earn more than enough money to cover their basic needs and that extra money isn’t much of an incentive. The skills shortage means workers can leave one job on a Friday afternoon and find another position by Monday morning – and if they are not happy that’s exactly what they’ll do. He says, “Pay is not the issue here, for many key people it is more important that they can work for a company that has a set of values aligned with their own”.
So, in order to hire and retain the best people companies need to define and then clearly articulate their key values. Sometimes this looks clumsy in practice, but when it works it can be extremely powerful. To illustrate this point Vitale points to a business card from a Deloitte Touche Tohmatsu employee. It clearly outlined that companies key values in unambiguous language. The list reads: recruit and retain the best; talk straight; empower and trust; continuously grow and improve; aim to be famous; play to win – think globally; have fun and celebrate.
Vitale says that most people’s immediate reaction would be to dismiss such explicit and corny sounding statements. However, he says, “At least they have said it. These statements are everywhere, on company business cards, on wall posters around the office and on Deloitte web site. It’s very hard for managers to deny these values when, say, someone argues they are not being empowered”
The interesting thing about explicitly such stated values is that they act as both a positive and negative recruitment filter. Some people will sign up because they like the words. He says, “Of course there could be people whose values don’t line up with the company. For example, lots of people don’t play to win and there are plenty of people who don’t want to have fun. Ultimately they won’t want to work for such a company.”
Building a company culture that attracts and keeps the right kind of staff is not the only key to success in the IT world, but it is of overwhelming importance. Vitale says, “If you manage to get the people right, everything else flows. If you don’t every step you take is painful.”
As far as Vitale is concerned, the only thing other than people that really matters for IT success is a degree of flexibility. Markets and industries are now changing so fast that managers are not really able to predict what lies ahead. So instead of contingency planning for expected events, he says companies should develop overall resilience to help them deal with inevitable external shocks. Vitale describes this resilience as an ability to bounce back into shape after being badly stretched.
An example of flexibility and resilience is to make sure employees have the right kinds of expectations. Say, for example, a company has had a long-term policy of giving its employees a job for life. If an external shock causes the management to lay off workers, there will be considerable damage to morale. On the other hand if during the boom years the company creates an expectation that jobs may go in a down turn, then when they actually do go there is less damage. The survivors get over the change quickly and can rebuild for the next boom.
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Australia speeds skilled migrant processing
Despite the global financial meltdown and widespread lay-offs, Australia still faces serious skills shortages. The obvious answer is to drag in workers with the right qualifications and experience from overseas.
It’s not hard to attract skilled people to Australia; from many places overseas it can almost look like a Shangri-la. However, the bureaucratic hoops are daunting and, technology skills requirements are a fast moving target so in many cases, by the time applications are processed, employers demands have changed. Read the rest of this entry »
Here’s what happened to the internet-connected fridge
Internet Fridge Image by SplaTT via Flickr
By Bill Bennett
PC Authority’s Whatever happened to: the Internet-connected fridge? brought back memories of some stories I wrote in 2000.
It was just after the dotcom bubble burst, but at a time when there was still interest in the internet and the way it was insinuating itself in to all aspects of life. Despite huge investments and plenty of hype, internet-connected fridges and similar networked kitchen appliances never took off.
In fact they hardly sold at all. Before we look at why the product category failed, here’s the colourful intro I wrote for a The Australian Financial Review story in June 2000:
Disney’s cartoon movie The Beauty and the Beast featured a castle full of intelligent animated appliances that talked to each other. The film was made as recently as 1991, yet even at that time, the idea of loquacious brooms, smart candlesticks, chatty clocks and even intelligent teapots seemed like pure fantasy.
In fact it was eerily prophetic. Today people in laboratories, software development corporations and marketing departments are working on projects that will put an electronic brain in just about every household appliance you can imagine and provide the hardware allowing devices to talk to each other. By the time Disney’s film celebrates its tenth birthday, the first fruit of their labours will be on sale. Read the rest of this entry »
Kindle: Fairfax, News Corp say no
Not only did Australia’s two main print news media organisations reject Amazon’s Kindle book reader, both made their rejection public. Fairfax went overboard, publishing versions of the story in The Sydney Morning Herald, The Age and on its youth-focused site, The Vine. However, it didn’t run in The Australian Financial Review.
News Corporation has been less vocal, although Rupert Murdoch did mention his dissatisfaction with the reader in comments following his company’s annual results.
As this story in The Sydney Morning Herald explains, the problem is Amazon wants to clip the ticket by too much. Some reports suggest the company takes as much as 70 percent of the price of ebook sales and is seeking similar highmargins from newspaper subscriptions.
Sony and Apple are mentioned as possible alternatives. One aspect of this story is the assumption people will want to read online newspapers via a special reader rather than with a PC or smartphone.
Kindle Rejected By Australian Newspapers | Fairfax Media, News Corporation.
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Fairfax to follow Murdoch’s lead and charge for online news
The signals coming from Fairfax may be slightly jumbled, but the message is clear. Australia and New Zealand’s largest publisher plans to follow Murdoch and charge for online news.
I describe the signals as confused because on Friday, Stephen Hutcheon at the Sydney Morning Herald wrote a story about readers’ reluctance to pay for online news. On one level Hutcheon’s Not happy, Rupert: readers say they won’t pay for online news was a simple dig at the rival News Corporation – complete with an unflattering photograph of Rupert Murdoch. He says News’ announcement was followed by 140 reader comments – mainly from angry readers threatening to go elsewhere the moment charges are applied.
Clearly Fairfax’s left hand doesn’t know what the right hand is doing because Sunday saw Tom Hyland write Fairfax, News to charge for online at The Age website. He also wrote the longer Stop the presses. Hyland had the unenviable job of quoting Fairfax chief executive Brian McCarthy who told him; “charging for online access was essential if publishers were to maintain their newsroom staff.”
You always know things are going to get tricky when a newspaper executive uses a word like ‘monetising’ and Hyland quotes McCarthy getting his teeth around that in the very next paragraph. He went on to talk about a two-level model at the The Age and the The Sydney Morning Herald websites.
Of course Fairfax is no stranger to charging for online content. The company’s The Australian Financial Review has long been one of the regions few major titles to eschew the free online model and charge readers. By all accounts the AFR’s paywall hasn’t been very successful, but it will have taught the company some useful lessons about how to turn reader clicks into real money.
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Crunching newpaper online paywall numbers
Image by Rowen Atkinson via Flickr
Practical subscription models are possible. Micro-payments need a lot more work and may never be a serious option.
Many traditional newspaper publishers plan to charge for online news and other material. Or maybe it would be more correct to say they hope to charge.
Currently online publishers mainly earn money from advertising. They say, with some justification, this doesn’t generate enough revenue to pay for the teams of journalists and editors who produce online newspapers and magazines. It certainly doesn’t deliver the ‘rivers of gold’ profits they enjoyed back in the heyday of newspaper publishing.
But publishers wishing to switch from an advertising revenue model to a charging model or a mixture of advertising and pay-to-read face an up-hill struggle.
For a start, only a small percentage of existing readers are willing to pay any money. Judging by what I’ve heard from people in the industry, publishers believe somewhere between one and 10 percent of existing readers would be willing to hand over money.
The precise number depends on many factors including the value of the material being offered. But most publishers who’ve tried this in the past have only managed to sell paid subscriptions to one or two percent of online readers.
How much does a single page cost?
Let’s for arguments sake here agree that 10 percent of an online publication’s existing readers would be prepared to pay for content. Remember this number is higher than anyone appears to achieved to date.
This means in order for the paywall to generate as much money as the current advertising model each paying reader will have to contribute as much revenue as ten existing readers.
Online advertising is generally charged by the CPM (cost per thousand). Typically publishers can earn somewhere in the region of $50 for every thousand page views (I’m using indicative numbers and not precise numbers). This is 5 cents per page view. Then to make the same money a single online page would cost 50 cents to read.
If publishers can only convert 2 percent of existing free readers into paying readers the single page price would rise to $2.50 – which is close to the A$3.50 The Australian Financial Review charges for each story.
Charging by the page for online newspapers
While billing users by the page to view online content may look attractive to publishers, it’s not a cost free transaction. The price of delivering a single web page to a browser is so small it is in effect negligible. The cost of adding a per page billing system to a site with ecommerce gateways, security and the paywall technology is slightly higher – though still small compared with the $2.50 fee calculated above.
However, that fee would only replace online advertising revenue. As Rupert Murdoch says, the existing revenue isn’t enough to pay the bills, let alone make a profit. On this basis the cost charged per page would need to rise to at least $3.00, but let’s say for the sake of argument Murdoch needs to make $3.50 per sold online page to cover costs and keep his shareholders happy.
The micro-payment price is just plain wrong
There’s something very wrong with charging readers US$3.50 to read a single online story, or for that matter the A$3.50 charged by the Australian Financial Review. It only costs $3.00 to by a print edition of the newspaper, containing somewhere in the region of 64 tabloid pages. The physical newpaper has been written and edited by a large team, printed on dead trees, wrapped up and distributed across an entire continent to arrive at a local newsagent, who takes a 30 percent or so slice of the cover price. It has at least 100 stories – usually plenty of really good reading – and vast amounts of valuable information. All for 50 cents less than the cost of a single online page that cost the AFR’s publisher nothing to deliver to your screen.
Not only that, but the printed paper is your property for as long as you want. It’s hard saving or downloading the AFR’s online content – though you can print it out at your own cost – probably another 10 cents or so on top of the $3.50 you’ve already paid.
Similar logic applies to any other newspaper sold piecemeal online – it’s not really a sensible purchase. There are times when it makes sense to pay for the occasional story, but over the long haul it is much cheaper to buy the print edition. In fact a subscription to the print edition is 20 percent cheaper than buying the paper each day directly from a newsagent, which makes purchasing stories online relatively more expensive.
What about digital subscriptions?
If buying online stories piecemeal doesn’t make sense, what about digital subscriptions? The model closest to home for me is The Australian Financial Review which charges A$75 a month for access to the digital edition only – that’s the same price as a subscription to the print edition. Which from a reader point of view makes far more sense, but doesn’t pass on any of the savings involved in not printing or distributing the physical paper. Given the costs involved, the margins on this would be huge – which may cause resentment from readers, though probably not the well-heeled types who buy the AFR. But it’s important to recognise the Financial Review covers a specialist niche and its readers can afford to pay a premium online – though by all accounts not many do. It would be much harder for a general newspaper to charge this kind of price.
It’s pretty clear after looking at the numbers that publishers are going to follow the subscription model for online content sales and not micro-payments and selling stories one-by-one. Maybe it’ll work for Murdoch, after all, this is the man who convinced half the western world to pay for television – something that had previously been free. Yet there are other complications. As The Sydney Morning Herald points out Murdoch’s claims that readers would be willing to pay for ‘quality journalism’ is, well, something of a talking point.
Also, there are are major privacy concerns about Murdoch’s plans. As Wendy Davis explains at MediaPost, Murdoch wants to collect reader data – that’s not a move to endear yourself to customers when you’re about to hit them up with new charges.
As I’ve said before, as a journalist and editor, I’ve a vested interest in publishers finding ways to make readers pay for editorial. Unlike many I’m not in principle against the idea, I’m just don’t think it can work without major disruption and top-to-bottom reform of the entire publishing industry. Only a fool would dismiss Murdoch, he knows the media business inside out, but this could yet turn out to be News Corporation’s Vietnam. We’ll know soon enough.
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Paid content: the newspaper industry’s suicide pact
Dan Conover at Xark has written a great piece arguing against the newspaper publishers’ campaign to charge readers for on-line news.
Conover describes the move as a suicide pact. While describing the idea that readers should pay for the professionally created content they consume as reasonable, he says attempts to force them to pay are “post-rational”.
He points out some of the main flaws, including the fact that consumers don’t want to pay for news and that previous attempts to make them pay have failed. But Conver points out newspaper publishers are no longer listening to reason and are determined to plough ahead with paid content.
Speaking as someone who has spent more than 30 years working as a journalist – most of that time on newspapers – I’d love to see publishers find a way to make on-line news profitable. But it’s a fantasy.
If Fairfax can only convince a handful of Australian business people to stump up cash to read the highly-targeted and immensely useful Australian Financial Review on-line, what chance to other newspaper publishers have?
You need nerves of steel to bet against Rupert Murdoch, but this time, he and the other newspaper owners are going in the wrong direction – readers are not going to pay to read news. And they definitely will not do so while there are free alternatives.
Xark!: The newspaper suicide pact.
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Murdoch, Fairfax papers disagree on content payment survey
- Image by Getty Images via Daylife
Today The Australian’s Media section ran Readers not averse to paying for online content by Nick Tabakoff. As the headline suggests the story looks at an international study by PricewaterhouseCoopers which found ‘readers could be willing to pay almost as much for some high-quality online newspapers as they do for print versions, particularly in specialist news areas’.
Could this be related to the PricewaterhouseCoopers study referred to by Miriam Steffens in The Sydney Morning Herald’s Readers reluctant to pay for online news?
Indeed it is.
Now, strictly speaking there’s a fairly thin semantic line between ‘readers being reluctant to pay’ and ‘readers not adverse to paying for’. One does not directly contradict the other. But the two headlines are clearly two different interpretations of the same data.
Or as we say in the media, they each have a different spin.
Which one is more plausible?
Both Rupert Murdoch’s News Corporation, the owner of The Australian and Fairfax Media, owner of the SMH have a vested interest in the story.
Murdoch has gone on the record in recent days saying he wants to charge readers for online content on News Corporation web sites. The headline on Nick Tabakoff’s story squares nicely with Murdoch’s recent statements on the issue. We all know Murdoch interferes editorially in his papers. While it’s extremely unlikely he had a hand in this particularly story, it does reflect the official line now coming from News Corporation.
Fairfax is more complicated. The company’s The Australian Financial Review operates behind a content pay wall. It costs around $3 a pop to view an AFR story, though most paying customers have all-you-can-eat subscriptions. On the other hand the SMH, The Age and the company’s other online properties including New Zealand’s stuff.co.nz are all free to readers and make money from online advertising.
Now which story looks the most plausible?
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