Monday, January 30, 2012

Net To Newspapers: Drop Dead

Newspapers are cockroaches. No matter what is introduced into the media ecosystem, the oldest of the Big Media survives. Despite decades of doomsayers, newspapers prospered through radio, through TV and cable, through video games, through the Internet....

Not so fast. Suddenly, even sober Wall Street analysts think something new is afoot.

What looms now "is different from all other threats," says Lauren Rich Fine (no relation), a Merrill Lynch & Co. (MER ) analyst who has covered the industry since the 1980s. Consumers are shifting decisively to online information, says Fine, especially the young, and are no longer yoked to the local newspaper. "Ads are following the eyeballs to where they make transactional decisions." Fine recently forecast that newspapers' profit margins are set to enter a long period of decline.

The new and troubling reality for newspapers is that even if they excel as purveyors of information to appreciative audiences, they still face tough business terrain. "They can try to be the destination where you go online and [can] be really successful with citizen journalism and blogs," says Fine. But such innovations are "not going to pay a lot of bills."

Newspaper execs are groping for some killer app, but nothing has yet taken hold. Charging for online content works for The Wall Street Journal, where Web-only subscriptions cost $79 -- still far below the $215 print subscription -- but no other brand-name newspaper dares to follow. The New York Times will charge Web users to read its columnists' prose later this year, but the Los Angeles Times just lifted the fee for its arts listings site, Washington Post Co. (WPO ) Chairman Donald E. Graham has said he won't charge for

INTERNET DAMAGE WAS QUANTIFIED in an April McKinsey & Co. report on online classified ads that bluntly talked about "price destruction." The Internet's effect on help-wanted classifieds, the study found, cost newspapers $1.9 billion in revenue between 1996 and 2004. And classified-ad categories like real estate and automotive may not be exempt from such trends, the report warned. (The report is "a very shallow and superficial effort," says P. Anthony Ridder, chairman and chief executive of Knight Ridder Inc. and a past chairman of the Newspaper Association of America, which commissioned the study.) Newspapers have been hurt by the quiet march of free (or low-cost) classifieds on, which now serves more than 100 U.S. regions and 33 countries and logs more than 2.5 billion page views a month.

Further pressure may be discerned in analysts' studies showing recent increases in discounted newspaper subscriptions. This coincided roughly with widespread broad-band adoption, enabling painless perusal of endless free content. And it has occurred alongside the advent of free dailies from the likes of Sweden's Metro International (MTOAF ) and Knight Ridder, which in February bought five free dailies in California.

Companies like Knight Ridder and Tribune Co (TRB ). have also moved aggressively into low-cost and free classifieds online. But holding share via ultra-low prices means, in bottom-line terms, that "you lose for winning," says Fine, substituting lower-margin for higher-margin business. Knight Ridder exec Hilary A. Schneider disputes the lower-margin claim, pointing to successes with online and offline classified packages. But that doesn't convince. Given the Internet's vast, almost infinite, expanse, scarcity will never drive ad pricing online. "There's just so much inventory out there," says Deutsche Bank analyst Paul Ginocchio.

No medium disappears quickly, and it will be a while before rusting newspaper boxes creak vacantly in the breeze. Newspaper companies now pursue digital deals. Recently, Gannett (GCI ) acquired online ad tech provider PointRoll, and E.W. Scripps (SSP ) snagged comparison shopping service Shopzilla. Diversifying means snapping up Web outfits -- and therein lies an unpleasant reminder. Newspapers are cockroaches. But the Net's starting to resemble Black Flag.


Differing views of newspaper paywall potential

By paulgillin | - 11:55 am - Posted in BusinessModelNewspapersPaywallsSolutions

In places where paywalls are working – and yes, they are working in some places – publishers have abandoned the metaphor of a wall and focused instead on bundled subscriptions that looked a lot like cable television. So writes Poynter’s Rick Edmonds in a summary of a report by the International Newsmedia Marketing Association (INMA) that looks at 15 successful paid subscription models.
No two are exactly alike, and some even challenge credulity, such as the Oklahoman, which charges 20% less for a combined print/digital package than for an online-only plan. That’s right, they pay you to take the newspaper. All the models have one thing in common, though: they’re working. Instead of being positioned as obstacles, they’re marketed as ways to serve  readers’ need flexible consumption via computer, smart phone, tablet or some combination of all three.

The INMA report cautions that hybrid subscriptions aren’t any easy sale. Readers need to have options and explanations laid out clearly, and digital can’t be positioned as an afterthought. However, readers have adopted so-called “digital replica” editions with surprising enthusiasm, indicating a fondness for the look and feel of print even when reading on a screen. The report also indicates optimism that paid subscription models can work when tuned to the needs of the specific audience.
Start by discarding the concept of a wall. Digital subscriptions need to be seen a convenience rather than a barrier. The emergence of multiple digital platforms may be the best thing that has happened to publishers over the last decade. It has given them a way to make simplicity a feature worth paying for, and audiences are proving to like that story.

Andrew Birmingham isn’t quite so optimistic. The CEO of Silicon Gully Investments and a former associate publisher of the Australian Financial Review pens a lengthy piece in the Australian edition of CIO magazine arguing that pay walls are a fundamentally defensive strategy undertaken by panicked publishers whose entire business models are collapsing around them. “The time to implement paywalls was 15 years ago when [editorial content] was worth paying for,” he writes. “The time to invest in editorial was also 15 years ago when [publishers] should have been erecting paywalls.”
Birmingham’s conclusions aren’t particularly novel, but his explanation of the spiraling downward cost of online advertising is worth reading. Advertising networks in general, and Google in particular, come in for particular criticism. Both promised publishers easy money in the late 1990s, when times were good. The consequence, though, has been cannibalization leading to a plunge in advertising prices “from hundreds of dollars per thousand to $1 to $2 dollars per thousand in Australia across general news websites,” Birmingham writes. “In the US, they are now measured in cents per thousand.
Publishers did this to themselves, of course. Few understood the implications of the Internet on their businesses in the early days and most saw online advertising as simply frosting on the cake. Most are making the same mistake with social networks today, choosing to believe that Facebook is simply another publishing medium rather than a reinvention of the way people consume information. It’s good to see some paywall experiments paying dividends, but it’s also hard to believe that publishers will get themselves out of this mess. New entrants will have to figure that one out. In the meantime, playing defense probably makes sense.
Pitch In logo from Port Talbot MagnetOver in the UK, a hyper local startup called the Port Talbot Magnet is trying the direct approach: It’s asking readers to contribute donations to fund its news coverage. Visitors can pledge amounts starting at just £2 to sponsor a court reporter for a day, and PayPal is accepted.

Adverts, adverts, and finally adverts

Newspapers' reverse-publishing idea flawed

Newspaper production teams scored a big win when technology allowed for stories entered into a print publishing system to be sent automatically to their online CMS. No longer did they need multiple employees to copy and paste text from one medium to the other. And everyone gets the same content, be it online or print.
So the concept of reverse publishing, or publishing stories first online that will later be sent to the print product, will only improve things, right? Not quite.
The feeding of stories from print to online on an automated basis worked for a Web 1.0 world. This technology was a crutch for newsrooms to limp into online journalism.
But as most of us know by now, you can't change how folks use the Web by vomiting print-centric stories online. The two mediums are used in a different manner: 1,000-word stories don't translate into bytes.
Granted there are steps that can be taken to make those print stories amenable on the Web. You can break them up using subheads or with multimedia such as photo galleries, audio, video or interactives. But unless you're hacking paragraphs off that story, it's still going to be a problem -- users don't read long stories online (unless it's a really relevant story to that user).
So why would we want to employ a reverse-publishing model when it doesn't address the problem of not producing content appropriate for the medium?
Most newsrooms have separate print and online staff with some, such as The Roanoke Times, utilizing a combined newsroom. I think that although print and online newsroom staffs need to be merged, there needs to exist different responsibilities for each medium.
Online content producers should concentrate on collecting and disseminating information for that medium. Things like breaking news, database creation and multimedia should be their raison dêtre.
The print content producers will be deployed on stories that play well on paper. Examples of this are long-form storytelling and in-depth perspectives of issues. This will not be the inverted-pyramid approach to the previous days' news.
I'm not suggesting that the online team shouldn't produce content that is in-depth. To the contrary, much of their content will require an approach similar to the print content. It will be disseminated for the Web however.
A newspaper that employs this theory probably won't be able to produce a daily newspaper; a weekly would suffice. And that's OK. This makes sense with the media audience shifting from print to online.
So the only positive benefit to using a reverse-publishing model for newspaper content is perhaps the cost-savings associated with one system into of two. Though I think this would quickly be negated when you consider the complexity of such a system, and the size of the IT staff required to support it.
I think this method would improve content for both print and online while taking into account the wants of both the users and journalists alike. What's not to love?

Newspaper wire services are obsolete

It's time to put an end to newspapers' use of wire services.
With more than 50 million Americans getting their news online on a typical day, it doesn't make sense for local media outlets to publish information rooted outside of their locality. And I'm talking about print and online platforms.
I know this is a hard argument to accept for many traditional news-types, especially since it once made perfect sense to run wire copy alongside local stories.
Folks living in Bristol, Tenn. before 24-hour cable news or wide-spread use of the Internet could turn to the local newspaper for trinkets of state, national and international news mostly provided by services like The Associated Press or Reuters. If they wanted more of this content, they could turn to national papers like The Wall Street Journal, The New York Times or USA Today.
Nowadays the first place many people turn to the Internet for coverage of events like the fires in Greece, not I'm not picking on this Web site, nearly every local newspaper site I can think of is guilty of peddling wire content.
Case-in-point: Google "Greece fires" and view the results. The first four results are from the International Herald Tribune, the New York Times and the BBC. The ninth is the random regional pick: The Charlotte (N.C.) Observer.
So maybe that's the payoff: Post wire copy on your Web site in hopes that Google's algorithm can be duped into thinking it's a relevant result. People will then click the link not realizing the story about fires in Greece is from a news outlet in Charlotte, and then click a few ads while they're reading the story.
Here's a better idea: Unless you're a national or international publication, ditch the wire services and redirect the money towards a FTE that can help collect information of interest locally.
If you're attempting to localize a national story, which is a fair journalistic practice, link out to the media outlet where the news is local to them. In the case of the fires in Greece, maybe the Athens Daily News might suffice.
This practice services a dual purpose: providing additional context as only the Web can do, and helping with SEOLinking out can also help reduce costs associated with sending local reporters to a story of national context.
One final benefit to dropping wire services is that local newspaper Web sites will be teaching users to expect local news and information when they visit, something crucial to long-term growth online.
UPDATE: CNN has said it's going to stop using Reuters in an effort to cut costs an invest in their own news gathering operations.


Sunday, January 15, 2012

From the front row, ANC VIP and NEC members in Bloemfontein

The newsonomics of the long goodbye: Kodak’s, Sears’, and newspapers’

How do U.S. newspapers compare to the symbols of old-business-model decline? The numbers don’t look good.

No old-world icon is safe. Just in recent weeks, both Kodak and Sears have percolated back into the news, offering headline writers a dilemma borrowed from the classic Saturday Night Live Weekend Update line, “Generalíssimo Francisco Franco is still dead.”
How long have these companies been dying? Yes, it was a surprise sometime a long time ago, that digital media was challenging Kodak and that Walmart, Target, Kohl’s, and later Amazon were making life difficult for one of America’s retailing pioneers.
Ask an American in 1990 if they could imagine a world without Kodak. Or a shopper of a world without Sears. Now, in 2012, it’s a lot easier to imagine. These are companies ebbing away, drip by agonizing drip. Which reminds us, of course, of the newspaper industry, and the question still on some lips: Can you imagine a world without newspapers? Now two years into the tablet, it’s much more easily imaginable. I always laugh when asked the question, “Will newspapers exist in 2015 or 2020?” Papyrus is a durable medium. It’s just that digital is rapidly replacing print, and in the process rapidly restructuring the nature of news ownership, news creation, news employment, and more. We’ll have some kind of print for the rest of our lives, but it will be the sidecar to the revving engine of digital news and information, as more and more publishers call it quits on print.
We like to think of change in the world as an on/off switch. This….or that. In fact, the world changes both in an instant and agonizingly slowly.
Let’s call the slow disappearance of familiar brands the newsonomics of the long goodbye. Take companies that have huge imprints in our culture and habits — and cashflows to match — and their disappearance from our lives can seem like it is moving in glacial digital time. But that disappearance is no less real. It is a fact of the news landscape that newspapers, and to some extent consumer print magazines, will disappear over time. We can take bets how much more quickly they’ll continue to vanish. By continue, I mean that data shows 44 percent less newsprint usage (and about 75-80 percent of all newsprint usage is attributed to newspapers) over the past four years, according to The Reel Time Report. (And for more on the industry-leading Michigan Meltdown, check out Alan Mutter’s column at E&P.)
So we can see this goodbye is both real and long. At some point, though, you see this message (on one medium or another), “Kinograph to cease production of silent films,” as borrowed from the neo-silent film The Artist. (Perhaps someday we’ll be talking about “neo-print”?)
Let’s ask a couple of questions about the relationship of Kodak, Sears, and newspapers. How do their revenue slides compare? What lessons apply across the three?
On revenues, take a look at the chart below. I’m tracking revenues from Kodak, Sears, and all U.S. dailies through 2010 — with final 2011 data not yet in, though the year wasn’t kind to any of the three.

What stands out most prominently is that U.S. newspapers’ ad revenue decline is worse, percentage wise, than either Kodak’s or Sears’. Yes, although Kodak and Sears are now poster children of legacy businesses gone wrong, newspapers — as counted through their main revenue source — are doing worse.
Ad revenue is down 53 percent over the period shown, while Kodak’s overall revenues are down 49 percent. Sears’ overall revenues (I removed Kmart revenues, which became part of the Sears Holding Company in a 2005 merger) are down 31 percent over the same period.
The savings grace for newspapers has been circulation revenue, down a relatively low 6 percent in the last decade. Circulation has continued to plummet, but continuing price increases have moderated the revenue losses. Circulation revenue now makes up about 30 percent of all U.S. daily newspaper revenue, so it’s significant — but not enough to stabilize companies reeling from ad revenue loss.
If you combine ad and circulation revenue, over the decade, newspapers have lost 45 percent of the two tentpoles of their business overall, four points less than Kodak.
Share prices will tell us a similar story, as investors — slow to the understanding of the long goodbye — head for the exits.
What are the threads among our three cases? Digital news pioneer Steve Yelvington shared a similar thought about Kodak/newspapers relationship, this week, noting that “brands decay” and “disruption doesn’t happen just once,” among other lessons.
Let’s extend the metaphor. Remember those “Kodak Photo Spots,” where tourists were encouraged to stand and take the exact same picture that tens of thousands had taken before them? Let’s put the newspaper owner — or buyer, given that there’s been a spate of recent purchases — on that spot, and see what they can see about this landscape.
The viewing is hugely important. Why? While we may say newspapers are dying, we can say long live the news. Those owning — or buying into or creating news franchises — do still have time to pivot and learn from failure. History is not fate; this Kodak/Sears history is simply a big cautionary tale from which to learn, a slomo Kodak moment.
With that in mind, let me suggest five points of learning deeply applicable to news management decisions of 2012:
  • Don’t believe your own b.s. Public companies carefully apply their makeup as they talk with analysts and shareholders, as do politicians. Too often, though, they begin to believe what they see in the mirror. Trumpeting the future of the department store, or of “photography,” or of community newspapering doesn’t solve the fundamental issues of disruption plaguing them. Give credit to the few change agents who publicly proclaim that the clock is ticking and that the current business model will explode sooner rather than later.
  • Cutting costs ≠ innovation. Simple, right? Yet Sears chairman Eddie Lampert, heralded early as a whiz by some in the business press when he took over the company in 2005, cut and cut and then cut some more, making the unattractive Sears floors even more moonscape-like than before. Most newspaper companies have cut so much, while driving out nodes of innovators here and there, that they are left half-staffed for the apps/HTML5/digital circulation revolutions playing out before them. Innovation means at least fast-following; otherwise, you’re left in the dust.
  • Constant re-organizing and re-structuring doesn’t mask deeper problems; it just diverts time from consumer focus. Kodak is now reorganizing its units; Sears has done the same in recent years. How many times have newspaper companies shifted back and forth from standalone digital units to integrated operations, in the process losing time and focus, no matter the potential benefits of reorganization?
  • Selling assets is a short-term band-aid. Kodak, as it makes a last stand, is busily trying to sell off its intellectual property, though the value of much of that IP is in question. The sale may raise some cash, but it won’t solve long-term issues, and it will sap ability to innovate. Newspapers don’t have much IP (they have intellectual capital, perhaps), so they are selling their only real assets, their buildings and land, and leasing back quarters. That may buy time — but not that much.
  • And, finally, perhaps the biggest parallel: The old companies are still stuck in a manufacturing mindset. Kodak creates film and products. Sears sells products. Newspapers print products and far too many “print” websites. The new world is about service. iPhone photos are about capturing moments, sometimes for family scrapbooks, but far more often adding to our individual and collective memories, of events, places; they are the kinds ofextensions to our brains that we’ve lately come to accept. Retailers like Target (“Expect more. Pay less.”) are about about price, but also attitude and service. News is about getting what I want now, not a physical product. Of course, it’s tough to change such a manufacturing mindset — one that produced profits to drool over for decades. The manufacturing mindset, though, is oh-so-last-century, and those that adhere to it are going down with it.
One newer victim of the old mindset may give us pause: Best Buy. Best Buy built expensive and dominating superstores, eating alive the CompUSAs and Circuit Cities. Now Amazon and a hundred websites have made buying a 62-inch TV cheaper and as easy to deliver to your house as a sweater. Faced with disappointing financial results in an otherwise booming holiday season, Best Buy CEO Brian Dunn, like his Kodak, Sears, and newspaper counterparts before him, is left to sputter: “This misguided perspective [that electronics buying is moving profoundly online] is especially troubling for me, because it blatantly and recklessly ignores overwhelming evidence to the contrary.” His irritation is understandable — but history is proving increasingly hostile to those failing to adapt fast enough.

Monday, January 9, 2012

The crowd at the ANC's birthday bash.

ANC centenary in Bloemfontein 2012

In sweltering heat at the Vodacom stadium in Bloemfontein on Sunday, 8 January, 2012 – South African President President Jacob Zuma acknowledged factionalism and "political demons" within the ANC during the party's centenary celebrations. 

As the 1.27-million member party battles criticism around poor service delivery, cronyism and infighting, Zuma called for all South Africans to 'enjoy an improved quality of life, especially the working class and poor'.

He told the rally that the most urgent task was to speed up the building of a national democratic society.

As the 1.27-million member party battles criticism around poor service delivery, cronyism and infighting, Zuma called for all South Africans to "enjoy an improved quality of life, especially the working class and poor".

Addressing 60 000 ANC supporters to commemorate the party's 100 years anniversary, Zuma -- who is facing his toughest year in politics -- outlined a number of urgent and practical interventions.

'We need to ensure that our programme of transforming our country is accelerated and taken to new steps,' he said.

He conceded the problems facing the ruling party, saying it needed to take 'urgent and practical steps to restore the core values, stamp out factionalism and promote political discipline'. 

'As we mark the ANC centenary, not only do we celebrate glorious history of selfless struggle by millions of ordinary South Africans who defeated the apartheid regime, but most importantly we summon new courage and energy to face the future with confidence,' he said.

Zuma also noted the need to implement interventions for it to survive as a liberation movement and political party. 

Friday, January 6, 2012