Why are Canadians so much more likely to use broadband?

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54% of online Canadians are using broadband, versus 34% of US citizens who are online, according to comScore Media Metrix Canada. From CyberAltas:

“With more than half of our online population using broadband, it’s clear that Canadians are hooked on speed,” noted Brent Lowe-Bernie, president of comScore Media Metrix Canada. “The cable and telephone infrastructure in this country has allowed broadband service to flourish, and Canadian activity within the Digital Media landscape has responded accordingly.”

This raises more questions than it answers about a staggering gap between two nations with so few cultural differences. Why are Canadian Internet users 59% more likely to have a broadband account? How much has to do with the percentage of Canadian homes that can have broadband connections, price, marketing differences, regulatory policies?

In other words, what can the US learn from Canada about how to increase our use of broadband Internet connections?

Are WSJ Online subscriptions peaking?

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According to Dow Jones, subscriptions to the Wall Street Journal Online increased 5.5% to 675,000 in the last year.

While this is a pretty good rate for a financial site in the midst of a recession, it is certainly slower than the forecast growth in online content and services in general, or perhaps even the potential growth in online advertising this year.

The Journal seems to be seeking new revenue with special editions of the site. We can probably expect them to be more creative an aggressive about generating revenue in 2003.

Discouraging news about Google Content Targeted Ads on general media sites

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Advertising may not be sufficient to support Internet media.

MarketingSherpa has an important study of marketers’ discouraging experience with Google Content Targeted Advertising on general content sites. [Thanks, MarketingFix]

Generally newsy, how-to, and highly targeted articles on niche sites tend to get far better ad clicks than newsgroups, bulletin boards, general interest sites, or stagnant info pages.

Unfortunately Google didn’t take this factor into consideration when designing the program. They chose the partner sites for contextual ads mainly based on traffic (sites had to have more than 20-million pageviews a month, which very few niche sites do) and “quality” which seems to mean being G-rated.

What they found is that click rates are abysmal for many contextual ads, and that conversion rates (share of clickers who take the desired action after clicking on the ad) have been disappointing for many advertisers as well.

MarketingSherpa says low click rates aren’t too big a deal if you’re paying by the click and you’re getting decent conversions. True enough, but it also means that pay-per-click ads aren’t going to pay the bills for an online publisher.

The low conversion rates are even more troubling. This may doom general content sites to seeking price-sensitive, rich-media-laden, dubiously-effective branding ads instead of light, direct-response advertising that is the fastest-growing category on the net. According to the NY Times, search-related advertising has grown “from an estimated $400 million in 2000 to $1 billion in 2002 and even higher this year”.

If this admittedly limited research holds true, what are the implications for online publishers?

First, don’t assume this means you should charge for content. Just because it’s still challenging to sell ads on general content, that doesn’t mean you can sell it to your readers.

Second, seek services revenue. The services sector is producing more revenue and growing faster than general content.

Third, consider publishing content that supports direct marketing. Get your readers when they’re considering a purchase. For local newspapers, real estate comes to mind.

Apple/Universal courtship flummoxes the analysts

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The Apple/Universal thing has left normally authoritative analysts gasping for air.

This is no ordinary strategic merger. This isn’t simply another Sony/Columbia or Time Warner AOL. There are, as yet, no obvious synergies between the companies; no ways to save money at the back end or exploit sales channels. Nor would there be if Apple launched their music service. I think that’s a good thing.

This deal only makes sense if Jobs intends to revamp Universal the same way he revamped Apple when he came back–utterly. And then it’s a huge bet, not some supposedly safe merger of complementary companies.

Economist.com improves its business incrementally

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Emarketer has a very interesting interview with the publisher of Economist.com. Highlights:

  • The current revenue split is 60% advertising, 40% subscription and individual article purchases. “I think it’s hard to imagine that subscriptions become probably more than 50% of revenues, partly because I think advertising’s still going to continue to grow. I think it’s not that subs is less important; I think you’re seeing the overall growth in advertising being bigger or as big. “
  • The Economist has separate print and online sales forces. Not only does it avoid sales people giving away online to sell print, but “It’s also that a lot of what we do is complicated. It’s variable. If you think of selling print, for example, it’s, “Do you want a color page or a black-and-white page?” Selling dot-com is very much about understanding the customers, understanding the technology. I think you need two sets of people doing those separate jobs. “
  • There’s a lot of free content on the home page, but for you have to be a subscriber read most of it. It’s an important tool for selling subscriptions.
  • They have 174,000 subscribers, but the bulk of them are print subscribers who have activated their free online subs. That puts online subscription revenue at under $6 million (174,000/2*$70/year).
  • The average online reader is 10 years younger than the average print reader. If you excluded those free print subs, I suspect they would be even younger.

What comes across is a refreshing lack of hubris. The Economist, as one of the strongest brands in business and news, is as unique a case as the Wall Street Journal. But they are clearly focused on learning from their mistakes and building their business incrementally, instead of thrashing around with strategic shifts.

Apple might buy Universal Music

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The LA Times says Apple (i.e. Steve Jobs) is seriously considering buying the world’s largest record company, Universal Music.

People close to Jobs say he is convinced that the music industry is about to turn a corner in the copyright war. With the government shutting down pirate Web sites and the record industry now going after individuals for alleged piracy, the Apple chief believes digital theft will become increasingly more complicated, prompting fans to migrate to legitimate services, sources said.

Yikes.

I normally think this kind of consolidation destroys shareholder value. After all, Sony and Time Warner have found nothing but negative synergies in their music divisions. But Jobs can probably add more value to Universal Music than anyone, and Apple’s focus is probably more on consolidation of its (tenuous) position than any sort of monster growth trajectory.

I hate that Apple might take its eye off the ball of building better computers and improving OS X. But I love the idea that they’re developing a new music service and feel strongly enough to about it to own a record company. Apple is already refocusing on the consumer computer market. This will hasten their transition to becoming a consumer electronics company.

I don’t know if Apple can do it. But this is the best hope we’ve had in years that the music industry could overcome its innovative inertia.

Online advertising may be bottoming out

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While 2002 Internet ad revenue was down a whopping 17% from 2001, the fourth quarter was down only 10% from the fourth quarter of 2001, and it was up 2% from the third quarter of last year. This is the first quarterly increase since the second quarter of 2000. This information is from the Internet Advertising Bureau / PriceWaterhouseCoopers advertising estimate for the last quarter of 2002.

Remember, ad numbers that are more than a couple of years old contain a lot of junk, including the tail-ends of some awful long-term deals and hundreds of millions of dollars in phony advertising that AOL has since written off. Under the circumstances, this quarterly increase is very encouraging and may mean that Internet advertising has hit bottom and will grow again on an annual basis when the ad market as a whole recovers.

The IAB release mentions in passing (1) 15 online publishers are getting 80% of the revenue, and (2) “the majority of online publishers are profitable, and their revenues continue to rise year-over-year”.

Update: NY TImes links are working again, but only the Times and Dave Winer know why

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This is late, but NY Times links are working again.

Dave Winer has posted a cryptic note about what’s going on: “Martin Nisenholtz, CEO of New York Times Digital, … brought me up to date on what’s going on. I agreed not to talk about it until we’re finished talking. I’ve talked with a few other people who I trust to try to make this come out right for the Times and for the Web.”

(I’d link to it, but this item’s permalink is broken.)

Deal-making and proprietary interfaces retard mobile publishing

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It’s going to be a long, long time before 3g goes anywhere, if this story is the norm for how content makes its way to mobile phones:

  • SmartServ Online made a deal with a big, unnamed handset manufacturer to include the company’s financial news and data application inside some of the manufacturer’s Java-capable phones. The press release says, “The agreement contains three revenue components: upfront development fees, licensing fees and a share of recurring subscription revenue from wireless carrier subscribers.”
  • Summus Inc. said its photo messaging service available through AT&T Wireless Services Inc. now supports the Panasonic GU87, Nokia 3650 and the Sony Ericsson T306.
  • Verizon Wireless announced it will offer The FOX Sports On-Court Live Basketball game developed by Sorrent using Verizon’s BREW application download service.
  • Boost Mobile announced it will offer snow reports from SnoCountry.

Apparently, to offer content on 3g phones, you have to make a deal with each mobile carrier, each handset manufacturer, and then customize your application for individual phone models. If that’s not discouraging enough for developers, you must pay upfront development and licensing fees.

When will the mobile carriers (and their suppliers) realize that having nondiscriminatory access to content is more compelling to consumers than a few exclusive content deals? Probably about the same time they realize that lack of number portability is costing them more money by limiting their market than it’s saving them in churn.