Terrie's Take 876 -- DeNA and the Economics of (Not) Publishing Trustworthy Content, e-biz news from Japan

Terrie's Take terrie at mailman.japaninc.com
Mon Dec 5 00:31:31 JST 2016

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term 
technology and media entrepreneur living in Japan. 

General Edition Sunday, December 04, 2016, Issue No. 876

- What's New -- DeNA and the Economics of (Not) Publishing Trustworthy 
- News -- Lifetime ramen discount for elderly who give up licenses
- Upcoming Events
- Corrections/Feedback -- Chinese tourist behavior
- Travel Picks -- Grave-hunting in Sendai, Lee Ufan in Naoshima
- News Credits

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With the recent DeNA crowdsourced content scandal (see news section), 
the online publishing sector in Japan is at a crossroads. On the one 
hand web content publishers are getting killed by "functional" content 
sites, like Facebook and Snapchat, and on the other hand they are 
expected to maintain high editorial standards that only a few leaders 
with pay walls can actually afford to maintain. This not a new trend and 
started with the move from paper to online. It is fundamentally a 
challenge to invent a new editorial model.

Now the online content space is so crowded with ex-paper publishers, the 
bottom has fallen out of the advertising model as well. To give you some 
idea of the economics of this: whereas a 50,000-100,000 copy paper 
publication could ask clients for JPY350,000~JPY500,000 for a page of 
advertising, a CPM (cost per thousand) of about JPY5,000, that same page 
online sold through a programmed ad bidding site now only brings a CPM 
of JPY10~JPY100. Obviously a traditional publishing model will struggle 
to keep a staff of reporters and editors with this level of income, and 
in fact they now need to reach about 1,000~10,000 times as many consumer 
eyeballs to earn the same revenues as before.

Practically speaking, then, the reality of online ad pricing pretty much 
eliminates advertising as operating income for most niche publishers.

To stay in the game, they have several choices:
1. They can stay in their familiar niche and remain experts, but need to 
create a new and somewhat disconnected business to support themselves. 
This (continuing to publish) doesn't make sense as a logical business 
decision, but if as a publisher you're passionate about your niche, it 
is an option. Usually these support  businesses will involve consulting 
or expert input in some form. As an example here in Japan, we can now 
see outdoors magazines managing hiking and adventure tours for their 
2. The publisher can stay in their field but make the niche bigger by 
servicing a global audience and charging for premium content. We can see 
this model at work in the entertainment news space, with sites such as 
Rocket News. The main challenge is that this type of approach requires a 
serious investment to support the new languages and markets, and of 
course there are only a few front-runners. If you're late to the space, 
most likely you'll wind up as an also-ran.
3. The publisher can relentlessly slash human production costs while 
building reasonably acceptable content that serves as a database for 
future reference (long-tail) usage, coupled with human edited "frosting" 
(like a cake) stories that actually pull in the traffic. This approach 
can be particularly effective if you have a "functional" website that 
doesn't require much edited content, such as a game website, or a hybrid 
one that only requires human input once (at the start).

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[...Article continues]

DeNA obviously opted for the third path, taking user-generated content 
and doing away with the inconvenience of human editing and checking, but 
using human curators to brush up the best material and thus draw traffic.

The DeNA scandal has several dimensions. Firstly there is the fact that 
the firm's WELQ website was user generated and not professionally 
checked - giving rise to all sorts of semi-fictional health posts. This 
progressed to the revelation that the company also apparently encouraged 
users to plagiarize existing content when posting. We assume that they 
were trying to rewrite content via their contributors, thus increasing 
both throughput of stories as well as claiming they were producing 
original content so as to earn a better SEO ranking.

This rewriting approach will only work if you have a mass-distributed 
checking function, the algorithms for which haven't been sufficiently 
refined yet, OR, you make it a rule that only original content is 
allowed and enforce it with humans. Our sister site www.japantravel.com 
took this route and is now able to rely on spot checks to ensure 
everyone gets the message. Unfortunately for DeNA, the site managers 
were apparently actively encouraging plagiarism, or rewriting, which 
puts it on shaky legal ground. Also shaky is the fact that in curating 
the content, the company made itself appear to be the "source" of the 
content. As a mass-content publisher (as all social media sites are), 
this is a very sensitive area and most publishers are meticulous about 
maintaining the perception that they are really just a forum for users, 
not an officially published site.

Other prolific online publishers have found their own solutions to the 
conundrum of how to reduce costs while maintaining human expertise. In 
Japan one of the most successful is All About (https://allabout.co.jp/), 
which has over 1,600 "Guides" - people who are experts in a particular 
interest or activity or region, and who work part-time to create 
articles and responses to readers. The term "successful" is a relative 
one, though, because All About as a listed company states that its first 
half results for FY2016 include a loss of JPY46m on sales of JPY4.5bn. 
Probably they will repeat previous years by essentially breaking even - 
but it's clear to see that even content companies at the top of their 
game are struggling.

And this is why "functional" content sites such as multiplayer 
role-playing games, dating, and social apps where you can read about 
your mom showing photos of the cat, can make so much money, because 
there is no cost of editing involved.

What does this mean for us as consumers in the future? Firstly the 
phenomenon of fake news sites in the USA is just a taste of things to 
come. If you can't write the truth because it's too expensive, why not 
just make it up and sell it as fact-like entertainment? It doesn't take 
much to see that this phenomenon of eschewing human editors other 
production staff will quickly shrivel up the availability of trustworthy 
news sources and therefore our ability to get multiple viewpoints as 
well. The DeNA scandal demonstrates that trustworthiness is little value 
in the current online economy.

Instead, the future's trustworthy sites will be those that learn how to 
monetize you as a visitor without using sponsors, or who have 
successfully moved to a secondary source of income related to their 
expertise rather than their content. A good example would be our sister 
site, www.japantravel.com, which originally was established to monetize 
from ads served to high levels of traffic. There is of course income 
from inbound travel ads, but it's seasonal and not dependable, so today 
the business mostly makes money out of travel writing services and a 
travel agency it established. Yes, these are very different businesses 
to publishing - but they all have the common denominator of beneficially 
serving the million-plus people a month coming to the site - and more 
importantly, they allow the continuation of the publishing business itself.

...The information janitors/


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+++ NEWS

- Element 113 named Nihonium
- DeNA crowd-sourced content sites in trouble
- Lifetime ramen discount for elderly who give up licenses
- Household spending down again for 8th month in a row
- Lower government tax take in FY2016

=> Element 113 named Nihonium

Japanese scientists who spent the better part of ten years producing a 
new lab-only element with a half life of less than 1000th/second were 
rewarded for their perseverance when the element was formally added to 
the period table, bearing the name Nihonium. The 2012 proof of a 2004 
discovery of Element 113, a radioactive substance temporarily named  
Ununtrium, started a small "flood" of discoveries of similar temporary 
elements around the world, resulting in four new elements being added to 
the table. (Source: TT commentary from phys.org, Dec 1, 2016)


=> DeNA crowd-sourced content sites in trouble

Web publishing company DeNA has been the target of an online backlash 
after accusations of false and hyped consumer-generated content. DeNA's 
problems started after its WELQ health website was found to have 
medically inaccurate information, posted by other users of the site. The 
crowdsourced content was curated in large volumes and used to feed 
search engines so as to drive traffic. In addition to wrong information, 
much of the content was also plagiarized. ***Ed: The problem of how to 
quality control crowdsourced content is highly relevant to us, and we 
cover the subject in today's Take.** (Source: TT commentary from 
asia.nikkei.com, Dec 02, 2016)


=> Lifetime ramen discount for elderly who give up licenses

Aichi-ken is trying something new to get elderly residents to surrender 
their licenses - a lifetime discount of 15% at any Sugakiya ramen 
outlet. The move is an attempt to reduce the surge in traffic accidents 
being caused by elderly drivers with borderline dementia. Currently 17m 
senior citizens aged 65 or older have valid driver's licenses and 
presumably are using them. In contrast, only 270,000 people (2% of 
seniors) have given up their licenses. ***Ed: Rather than a 15% discount 
on an unhealthy food, maybe the government should just bite the bullet 
and make public transport completely free for all seniors, providing 
they give up their licenses? A good portion of them live in the cities 
anyhow.** (Source: TT commentary from munchies.vice.com, Dec 2, 2016)


=> Household spending down again for 8th month in a row

In a disappointing set of economic figures for October, the nation's 
household spending fell for the 8th month in a row, dropping about 0.4% 
from October 2015. The previous month, September, was far worse, with a 
fall of 2.1% over the same month last year. Economists say that the 
depressed spending is linked to poor weather hurting consumer demand. 
***Ed: We don't think this is rocket science. Tight-fisted Japanese 
companies are not increasing wages and so families are stuck on the same 
rates as last year. In the meantime, fresh food, which is not included 
in the inflation numbers, has risen considerably in price and people 
need to eat. As a result, there isn't much left for discretionary 
spending.** (Source: TT commentary from bloomberg.com, Nov 28, 2016)


=> Lower government tax take in FY2016

The Ministry of Finance is forecasting a reduction in its FY2016 tax 
take, from JPY57.6trn to JPY55trn or less. This is the first estimate 
cut since 2009, and comes from the unexpected strengthening of the yen 
for most of this year. The drop is not enough to derail the governments 
pump priming plans, and indeed it expects to cover the shortfall with 
money originally allocated for servicing debt, which has now become 
cheaper to repay. ***Ed: The problem isn't so much the tax take these 
days, it's the unstoppable rise in social welfare costs for Japan's 
swelling aged citizens.**. (Source: TT commentary from 
the-japan-news.com, Dec 03, 2016)


NOTE: Broken links
Some online news sources remove their articles after just a few days of 
posting them, thus breaking our links -- we apologize for the inconvenience.


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Time: 19:30pm to 22:30pm - Doors open. The set menu will include a 
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=> In TT-871 we wrote about a possible foreigner backlash in Japan as a 
result of the flood of tourists entering the country. We received a 
(welcome) flood of email responses as a result. One of the best 
responses was the following:

*** Reader says:
My two cents on this topic: this past summer we returned to Japan as 
tourists for the first time since moving away five years ago, after a 
15-year stint living and working there (my family actually had permanent 
visas for the last few years of that period).  We visited friends in 
Koto-ku, Tokyo, where we used to live, and like you, observed a clear 
increase in foreign tourists around the general environs, particularly 
Ginza and to a lesser extent in other busy districts like Omotesando and 
Aoyama (there still weren't so many in deepest shitamachi, such as 

What troubled us is when, on an outing to Odaiba/Fuji TV area, our 
friends then took us to the new Daiba City Mall and I was using the 
men's washroom nearest the food court. To my surprise, in front of me a 
male Chinese tourist urinated into the sink instead of the proper 
wall-mounted urinal. I looked on incredulously, but having lived for a 
couple of years in Taiwan subsequent to leaving Japan, I was aware of 
and unfortunately familiar with numerous highly publicized cases of the 
bad manners displayed by some Chinese tourists... defecating and 
urinating misdeeds and whatnot. Unfortunately I didn't have the presence 
of mind to recall the appropriate Chinese language to point out his 
transgression. In a perfect world, he should have received attention 
from local law enforcement as well!

I exited the washroom and what I did do is point out the Chinese perp to 
my family and friends, explaining what I had just witnessed, and we all 
proceeded back to the Yurikamome train at the end of our day out. 
Coincidentally, the Chinese fellow had rejoined his family and was also 
walking to catch the same train, blissfully unaware of (or maybe simply 
conveniently avoiding) my reaction to his misdeed. I have to say that 
I've never seen anything like this during all my years of living in 
Japan, where the only Chinese people I knew were similarly long-term, 
acclimated residents like  myself.

 From this story, I don't mean to come off as bigoted or be promoting 
stereotypes, this is just something I personally witnessed. However, if 
this is indicative of what we can expect to see and experience more of 
in the future thanks to loosened visa restrictions, then I imagine that 
it won't be long before Japan will have to take appropriate and reactive 



=> Grave Hunting in Kitayama, Sendai
History, art, and culture... from beyond the grave!

One place I went grave hunting recently (it is becoming a kind of hobby) 
was the Kitayama area of Sendai, Miyagi Prefecture. It is a treasure 
trove of tombs with many interesting things to see and discover. There 
are so many graves and so many stories to share. The grave of the mother 
of  Sendai founder and feudal lord Date Masamune is here. It is a rather 
small, pathetic grave which is overshadowed by a distant third son's 
because he hated his mother for harassing him about his missing eye.

Another is the possible resting place of Hasekura Tsunenage, a samurai 
and Date clan vassal, who led a mission to Rome and back through New 
Spain (Mexico). The first non-Japanese president of Tohoku Daigakuin 
Christian university, David Bowman Schneder (1857-1938), along with 
Christian missionaries are remembered here. Perhaps the most surprising 
is the grave of Iinuma Sadakichi behind Rinno-ji. He is the only 
survivor of a group of teenage boys that committed ritual suicide during 
the infamous Byakkotai incident at Mt. Iimoriyama in Fukushima.


=> Lee Ufan, Time Out in Naoshima
A reflection of time and space

A moment in time. What does it mean? While art and sculpture can express 
itself in three dimensions, how do we articulate the fourth dimension, 
something as intangible, yet essential to nature and the human existence?

At the Lee Ufan Museum, part of the Benesse Art Site Naoshima, Lee Ufan 
tries to articulate the fourth dimension in a single brush in the work 
With Winds (1990) as if this is all you can see in a second of elapsed 
time, with the wind itself making a brush stroke across the canvas. In 
the same way that the wind will leave a trail by blowing some leaves, 
Lee imagines the paint strokes as if the wind had painted on the canvas.

For people brought up in the West, who had always thought that nature is 
inanimate, the stories that underline these art works can be a pleasant 
surprise. Devoid of the other three dimensions, it is a meditative piece 
with a supposedly blank center drawing us in. How do we distil time, or 
life itself into a single brush stroke? We may not understand the 
complexities or the lifetime of thinking and reflection that went into 
this work, but we can meditate on it in this space.




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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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