Weekly notes 10/23-10/30

Work samples: Editorial work flow and its affects on value creation
During my research, I’ve identified that the value component of CNN.com’s business model is represented in three dimensions: intra-business (BB), business-to-business (B2B) and business-to-consumer (B2C).

In the BB dimension, the value component is based on such value drivers as quality, effectiveness, innovation and firstness. Some value drivers are cross-functional and also are potent in other dimensions.

Effectiveness of the organization and its business model is reflected on several levels. In the BB dimension, effectiveness is reflected in the editorial work flow, content management, technology, staffing and talent.

Looking further into the editorial work flow and staffing components, CNN.com employs resources of many departments of the CNN Network, in addition to its own editorial team and the CNN Pipeline’s staff.

The way CNN.com approaches its work flow is very efficient, according to the company’s executives. The dot-com staff produces original Web-only packages, as well as uses the network’s reporting to deepen its news coverage and supply consumers with the highest-quality product possible.

First, let’s examine the dot-com relationships with the TV network and its subsidiaries and joint ventures.

CNN and CNN.com are brands of Turner Broadcasting System, Inc., which is a Time Warner company.

As a Time Warner Company, CNN.com has access to the resources of worldwide workforce of approximately 87,000 people. (Statistics are as of December 31, 2005, according to
http://www.timewarner.com/corp/aboutus/fact_sheet.html) TBS, Inc., employs more than 8,000 people worldwide.

TBS, Inc.’s business operations are by no means perfect but very effective in case with delivering the best product to consumers. The company’s business model benefits from effectiveness being one of the constituents of the overall business value component.

CNN.com’s fruitful access to all those channels is yet another reflection of how effective the company can be in news gathering and having access to news first-hand, which, eventually, plays into the firstness attribute of the value component.

In the B2C/B2B environment, effectiveness is reflected through a variety of distribution channels and effectiveness of content re-use and delivery across those platforms.

TBS’s strategy of creating branded environments on emerging media platforms was once again delivered when the company recently launched two new broadband networks — GameTap (computer-based video-gaming experience) and CNN Pipeline (multiple live news feeds streaming service).

From firstness and product debuts – back to the discussion of effectiveness.

CNN.com is staffed 24 hours, seven days a week, and is located in CNN headquarters in Atlanta, Georgia. In addition to that, CNN.com benefits from being affiliated with 42 CNN news bureaus worldwide.

News coverage is coordinated from the Atlanta HQs from 6 AM EDT to 12 PM EDT. While there’s a small editorial team on the night shift, to further ensure that the product is of the highest quality, editorial teams from other world bureaus take over the main coverage according to their prime-time time zones.

There are three bureaus that take over the main coverage when North America is sleeping and other parts of the world are waking up: Sydney, Australia; London, England, and Hong Kong. Each bureau has its own staff of writers, reporters and online producers to update the CNN.com Web site and its international edition.

CNN.com relies heavily on the network’s reporting to deepen its news coverage and supply consumers with the highest-quality product possible. While the majority of the dot-com product creation and content repurposing for the Web is carried through extensive relations with CNN TV networks, bureaus and wire services; the dot-com staff also produces original content in the form of traditional copy writing; interactive, multimedial storytelling and Web-only story packages.

CNN goes to great strides to be innovative and to create unique content that would differentiate the company from the competition.

Recently, the company started to focus more on the original production and original reporting, as the value of it has been more and more evident in the last several years. In order to create highly valuable, unique content; the business decided to invest more resources in the original reporting.

As the competitive environment is exploring and delivering on new methods of storytelling and development of original content that is unique and is not a mere repurposing of the networks’ TV packages; CNN.com is moving to changing its editorial flow and attitude to getting out of the newsroom and doing traditional reporting, using the latest technology available.

One of the examples of CNN.com’ original reporting that was completely separate from the network’s newsgathering is the special project called “Coming Home” that was launched in time for the Memorial Day celebration in 2006.

Click here
to see an overview video of the "Coming Home" special that I worked on. Or, click on "Play" button in the player window below.



As part of this project, online producers traveled to different parts of the U.S. to gather material that was later combined into a purely multimedial storytelling. It was a very unique example of not only extensive original reporting, but also of uniquely multimedial and interactive character of this special report.

I produced two audio slide shows and a gallery for the “Coming Home” special.

This is the special report http://www.cnn.com/SPECIALS/2006/coming.home/

The slideshows:

Wife to widow with knock at door http://www.cnn.com/SPECIALS/2006/coming.home/interactive/content.html?active=3

War takes a daughter’s best friend
http://www.cnn.com/SPECIALS/2006/coming.home/interactive/content.html?active=8

To give an example of a more traditional and less resource-consuming reporting that is done at CNN.com using the extensive resources of the network, is this audio slide show called “Pictures from Ramadi”
http://www.cnn.com/interactive/world/0512/slidewhow.cal.perry/frameset.exclude.html

This multimedia project was based on pictures taken by Cal Perry, a reporter at the Baghdad bureau, and a following interview with this reporter.

Note that the company continuously struggles to be on the forefront of technological advances and changes its concepts as new technology becomes available. This slide show was done on an old template that just recently changed to a bigger and more user-friendly layout.

Weekly notes 10/16-10/23

Why I chose this project

Why CNN.com:
Among the multitude of e-businesses, CNN.com’s business model was chosen as subject of this study due to the fact that this online news organization proved to be successful and profitable over more than 10 years of its existence.

Why the value component:
The concept of value component in BMs has been widely discussed in the general business research. My literature research points out the fact that research in online business models is quite extensive. Values and value creation processes are identified as a necessary constituents of any given business model. Additionally, the value component is the cornerstone of any business model. Without establishing product’s value and delivering the company’s value proposition through various value-creation processes, the business is hardly viable.

The question as to which value drivers are applicable to the online media industry in particular out of the multitude of general business value drivers is still not answered. More importantly, it is necessary to attempt to answer the question related to which parts of the value component demonstrated in the CNN.com business model can be adopted by other online media organizations seeking to be successful and profitable on the online arena.

To provide some proof to the statement that CNN.com’s business model is indeed successful and profitable, let’s look at online metrics and financial statements. As far as the first part of this equation, Nielsen//Net Ratings of May 2006 indicate that CNN had the following numbers in the sub-category News and Information at Home/Work:

Gross Usage Minutes: 828,135,000
Unique users: 21,510,000
Average time per person: 38.5 minutes

In March 2006, CNN had the largest share of online news among its competitors (the table also gives comparison to the previous month and to one year earlier):























As of May 2006, CNN.com held several leading positions in online metrics as reported by Nielsen:











In the case with financial profitability and revenue generation, there is a challenge. The accounting and financial reporting structure of CNN.com’s parent company – Time Warner – is set up in such a way that no direct revenue numbers generated by the business’ flagship online news medium are separated in financial statements.

At the end of 2006 Q3, Time Warner filed Form 10-Q to the SEC reporting that during the six months ended June 30, 2006, the company generated revenues of $21.219 billion, which is an increase of 1% compared to $20.948 billion in 2005.

According to the latest, 2005 Annual Report, Time Warner generated revenues of $43.652 billion, which is a 4% growth as compared to $42.081 billion in 2004.

Time Warner’s Networks segment comprised of Turner Broadcasting System, Inc. (CNN brand falls under TBS), Home Box Office Inc. and The WB Television Network delivered revenues of $9.611 billion, which makes up 20% of the Company’s total revenue.

The Turner networks include such brands as TBS, TNT, CNN, Cartoon Network and CNN Headline News.

Additionally, the company reported on investment expenses related to high-quality programming and news, among others, led to strong ratings, which, in turn, positively affected the advertising and subscription revenue growth, as well as strong brands and operating efficiency.

This table compares financial results from 2001 to present days, showing steady growth in revenue generation:

Due to the structure of the company’s accounting polices, financials of CNN.com are reported as part of the Turner Networks, therefore, making it difficult to separate the revenues of the company’s interactive wing from those of the advertising-supported cable TV Networks.

However, by analyzing overall continuous growth in revenue generation, one may conclude that CNN.com is continuously delivering financial results on the profitability side.

Additionally, as reported in the 2005 Annual Report, the following revenue was generated in subscription, advertising, content and other areas:

The increase in subscription revenues is primarily related to increases in Cable and Networks segments. The increase in the Cable segment is reported as due to the penetration of advanced services, such as high-speed data, advanced digital video services and Digital Phone, in addition to service rate increases.

The Networks segment’s revenue numbers increased due to higher subscription rates and an increase in the number of subscribers at Turner and HBO.

The increase in advertising revenues was primarily due to growth at the AOL, Networks and Publishing segments. The increase in Networks segment was driven by higher CPMs (advertising cost per one thousand viewers), which can be viewed as a direct measure of CNN.com’s success, as their advertising rates went up as well.

The increase in content revenues is related to increases in Filmed Entertainment, Publishing and Networks segments. The increase at the Networks segment was due primarily to HBO’s broadcast syndication sales of Sex and the City.

Weekly notes 10/09-10/16

Interview with Dennis Quinn
EVP Business Development
TBS

Highlights:

Consumers don’t interact the same way with different types of media distribution platforms, i.e. broadband, wireless, VOD, etc. For CNN to be successful with those various platforms, it needed to understand user expectations and act on them. With TV, for example, there’s little interaction; whereas on a Web site there’s more opportunity for navigation and seeking out of information. Knowing user behavior helps define CNN.com how to achieve the best value possible out of its product.

TV-viewing is a leaning backwards experience, while Internet news Web site browsing is a leaning forward experience. Wireless products are designed to be digested quickly – only then they will have the strongest value proposition for both consumers and businesses.

It is important to take into the account of business development various cultural and technological habits and developments. In the U.S., mobile technology is not digested as quickly, as in other parts of the world, and Asia in particular. While the general value proposition is transparent – this technology helps people stay in touch and access news on the go – the reception of this technology by users differs from one part of the globe to another.

In Asia, as well as in Europe, there’s one uniform standard for mobile technology, while in the U.S. there are several. As an international operations company, CNN has to take a close look at such instances when evaluating its value propositions.

On the other hand, there’s no such preponderance of cable in Asia and Europe, as there’s in the U.S.; therefore, the natural inclination of users to go mobile in those parts of the world is far higher than in the U.S.

Depending on the market and cultural tendencies, CNN launches products that have the potential of having the highest value possible, therefore, supporting the business model’s core; which in turn translates into higher revenue numbers.

CNN started delving into broadband in the early stages of its penetration. This was predicated by the fast-growing development of broadband and its availability to genera; audiences. Nowadays, more than 60% of households in the U.S. use broadband, and CNN,com is the number one news site, according to Nielsen/Net Ratings.

When the company launched its broadband initiatives, it exhibited its “firstness” phenomenon, while following business calculations on how profitable this new medium can be in the future. Both the “firstness” and careful analysis of the business and technological environments allowed CNN to be the first on the broadband front, which paid off in establishing a highly-desirable for advertisers and significant in size audience.

The product is delivered to various platforms in the CNN’s style and fashion: promptly and accurately. The ubiquity of CNN is reflected 24/7 on all major distribution platforms: be it a PDA, a laptop or a TV set. There’s SMS and e-mail alerts to reach users that are not in front of their TV sets.

Establishing this ubiquity early on, now allows CNN to distribute its product effectively from both reach and cost perspectives; therefore, establishing value to both consumers and businesses. This is also effective from the cost perspective, as distributing the same product via different channels doesn’t cost as much as creating different product for different platforms.

Weekly notes 10/02-10/09

Innovation and new technology as part of the value-driving process

From the network's start as the first 24/7 news operation, to being the first to break the news on September 11 – CNN has always had the idea of not only “the most trusted source in the news” but the first one as well.

The idea of firstness lies in the basis of CNN.com’s business model and translates to its value component as the most desired part of the value proposition for customers. To be the first on the market means establishing itself before other companies get to the same piece of the audience pie (which also means the ad revenue pie).

CNN.com was the first major news and information Web site. It was the first among major news organization to launch a completely user-driven application “CNN Exchange.” It was the first to offer a unique subscription-based and ad-free video product – CNN Pipeline.

Even in instances when launching a new product may face some resistance from consumers, CNN.com still followed the firstness model. Exchange was a risly enterprise, but CNN.com made sure it is as good as its own reporting product by putting people-reporters through the same process of vetting and approval as it does its own correspondents.

Then there was podcasting -- to add value to the existing CNN Radio product and to promote this product better across online channels of distribution. However, the public understanding of “podcasting” is still forming. When asked to define podcasting, a majority of Americans mention “file transfer,” “downloading,” “iPods,” “radio and/or television programming” most often. There seems to be some confusion about the differences among podcasting, Internet broadcasting and downloadable music.

Innovation and novelty, introduction of new products and marketing techniques; new methods of production and distribution have always been traditional ways of value creation. E-businesses also have an advantage of new distribution techniques in a new medium. E-bay moved forward in the marketplace after it introduced a new method of conducting transactions: consumer-to-consumer auction buying.

CNN.com is revolutionizing the media landscape by introducing and embracing around-the-clock and all-media approach to distributing news: from cable to radio to broadband to mobile to online. Regardless of where consumer is located physically, there’s always access to CNN.com. When consumers are not on the Web site generating pageviews, they can be reached via mobile services and e-mail alerts. This reach allows CNN.com to consume consumers in all lifecycles and in all environments.

The hassle-free way of getting news is in the basis of CNN’s business model and part of its value component. This approach is a one-stop shop for news consumers, which makes the product increasingly valuable due to its extent of reach and ease of access.

By launching Pipeline, CNN.com created a totally new market for video distribution, creating an even more attractive product by eliminating ads and offering a subscription-based model.

By launching Exchange, CNN.com reversed the information flow and allowed consumers to gain additional value by being a part of the newsgathering process and the ability to become a part of the firstness and the phenomenon of CNNing. The tagline CNN.com uses for promoting Exchange to users is “I report for CNN.” There are even corresponding t-shirts available for sale in the Turner store.

Virtual markets are unique. There are no time or place constraints. Geography is of no importance to the World Wide Web. Physical constraints are going away as well, as users are able to access the Internet not only from their desktop computers, but also from wireless laptops and wireless cell phones and PDAs. And CNN is represented in every channel of distribution.

Even with the newest technological advances like i-Pods and podcasting, CNN is making itself available to users and continue supporting its value to consumers.

Consumers find cell phones and broadband Internet access the most “life-changing” new technologies, according to Arbitron’s Internet and Multimedia 2006 report.

In its research, Arbitron have found that the item consumers reported having the most impact on their lives is the cell phone, with 38% of all respondents saying it had made a “big impact” on their lives. The second most important technology, the most powerful item is broadband Internet access. In the last year, iPod ownership more than doubled, from 10% to 22%.

Households with broadband Internet access have overgrown those with dial-up access. In 2005, the ratio of broadband and dial-up connections was 1 to 1. In 2006, 58% of households use either a cable or DSL modem for a high-speed Internet connection. 25% of those without a broadband Internet connection, say they plan to get high-speed Internet service in the next 12 months.