- The coming death of seven-day publication
- NewsRight’s potential: New content packages, niche audiences, and revenue
- A look back at my 2011 predictions, along with a fresh batch for 2012
- Amazon enters the tablet battle: It’s all about the shopping
- A call for consolidation: Dean Singleton on John Paton, collective action, and the next waves of newspaper cutbacks
- MediaNews group under new management
- Annual interview with Rick Floyd on future of news
- Alden Global Capital drops a shoe: Is the Journal Register acquisition prelude to more consolidation?
- The flip side of black hat SEO: If your news site publishes paid links, you risk suffering Google’s wrath
- Who owns newspaper companies? The banks, funds, and investors and their (big) slices of the industry
- Tackable aims to become the social network for user-generated news
- The shakeup at MediaNews: Why it could be the leadup to a massive newspaper consolidation
- The year 2010 in review
- Predictions 2011: More digital convergence, AP Clearinghouse, more trailblazing from John Paton's JRC
- AP’s “ASCAP for news” — new ecosystem, new revenue streams, new enterprise opportunities
- The pros and cons of charging for news
- What will journalism look like 10 years from now?
- How I made out with my 2010 predictions
- NAA switches webstat vendors — results look better but miss the shift to mobile
- The ASCAP example: How news organizations could liberate content, skip negotiations, and still get paid
- Ruminating with Rick: the second annual "Future of Newspapers" interview
- Moderating declines: Parsing the NAA's spin on newspaper circ data
- Groupon's 2010 revenue pace
- Is print still king? Has online made a move? Updating a controversial post
- AP’s ethnographic studies look for solutions to news and ad “fatigue”
_First posted at Nieman Journalism Lab_
_Update: On Dec. 28, 2012, I appeared on the John Gambling show on WOR radio, New York, to talk about these predictions. Heres a podcast of our talk._ My (newspaper-centric) predictions for 2013 in a nutshell: * Because of the rapid adoption curve of tablets and the convenience of news consumption on them, THE BUSINESS MODEL FOR SEVEN-DAY PRINTED NEWSPAPERS IN MOST MARKETS IS TOAST. We’ll start to see frequency reductions to two or three days a week at an accelerated pace. By the end of 2015, fewer than half of the current dailies will still be on that schedule. * While we’re still seeing more papers hopping on the paywall bandwagon, there will be a growing realization that simple paywalls that just provide access to the content of a single newspaper are not the answer. SoPAYWALLS WILL BEGIN TO MORPH INTO MEMBERSHIP MODELS, where subscribers get access not only to content but to a range of services and benefits. * As part of membership thinking, newspapers will finally start adopting the “jobs to be done” thinking advocated in the American Press Institute’sNewspaper Next project (2005-2008) — the idea that THE RESOURCES OF THE NEWS ORGANIZATION CAN ADDRESS A WIDE VARIETY OF PROBLEMS THAT READERS AND ADVERTISERS NEED SOLUTIONS TO. * Membership thinking will also encourage the idea of paid (or unpaid) access to content from a network or cooperative of news organizations — sort of AN E-ZPASS APPROACH, in which your paid digital subscription at a local news site might also provide you with access to regional and national news sources along with topical news from sites that specialize in business, finance, travel, sports, food, design, or whatever suits your fancy.
Let’s look at each of these in detail.
I’ve been suggesting since 2008 that to transition from a print-centric business model to a digital-centric one, newspapers need to go through an essential and strategic transition: cut print publication from six or seven days a week to two or three days. And when they do this, the printed product should be understood as a niche byproduct of a news organization that understands itself as being above all a digital-first enterprise.
In 2008, the financial and technological environment had not yet created much urgency around this question. But the industry has now experienced 25 consecutive quarters of advertising revenue declines. Print readership has declined to the point that only 23 percent of US adults “read a printed newspaper yesterday.” The industry has reacted with multiple rounds of cost-cutting, managing to preserve a semblance of its high historic profit margins in the process — and thus further postponing the day of reckoning. For example, at the McClatchy Company, which is a pure newspaper play and good stand-in for the industry as a whole, the cash flow margin (EBITDA) in 2011 was still 25.4 percent, and it is on track to match that in 2012.
A company making that kind of EBITDA doesn’t have a big incentive to reinvent itself, which is why we haven’t seen many frequency reductions at newspapers. But one company — Advance Publications — has been moving aggressively to cut frequency at its newspapers, usually from seven days to three. Its first experiment was in 2009 in Ann Arbor, Mich., where it replaced a seven-day paper with a rebranded twice-weekly, and its most notable conversion was the New Orleans Times-Picayune in October this year. Advance has also thrown the frequency switch in Birmingham, Huntsville, and Mobile, Ala., and at its eight Booth newspapers in Michigan including Grand Rapids and Flint. It has announced plans to cut frequency in Harrisburg, Pa. and Syracuse, N.Y., and is in a decision process for similar cuts in Cleveland and possiblyPortland, Ore. All together, this represents more than half the dailies owned by Advance.
Elsewhere, in Detroit the jointly-operated Free Press and Detroit Newsmoved to 3-day home delivery in 2009 while still printing newsstand editions on the other days; a handful of newspapers have dropped one or two days from their weekly schedule, and in Canada, Postmedia’s Calgary Herald, Edmonton Journal and Ottawa Citizen dropped Sunday editions this year.
But despite the continuation of healthy profit margins, I’m convinced that moves of this type are being contemplated in every newspaper company’s executive suite, and that the prime mover in these discussion is the seismic shift in readership habits brought about by tablets.
The newspaper moguls are digesting a slew of recent findings from thePew Research Center’s Project for Excellence in Journalism: Currently about a quarter of US adults own a tablet, and nearly half own a smartphone. More than half own at least one or the other. About two-thirds of tablet and smartphone owners get news on their gadgets, with 37 percent of tablet owners getting news on it every day. And there’s much less age-related skew in this than you might imagine: 32 percent of 65+ tablet owners go to it daily for news. Moreover, Pew found that many tablet owners (31 percent) report that they spend more time with news since acquiring their device, and they report spending an average of 51 minutes — daily — consuming news their tablet (54 minutes for those who own both a tablet and a smartphone). That’s an astounding finding. Imagine what this does to the ability to sell a printed newspaper when tablet penetration triples and begins to approach 80 percent — which it is certain to do as it follows historic adoption curves for everything from AM radios to cellphones. The advertising dollars are following the eyeballs to mobile platforms.
Publishers are doing their best to hide the fact, but the zooming tablet trends are clobbering what’s left of printed newspaper subscription and single-copy sales levels, which had already been dropping at an accelerating rate since peaking in the mid-1980s. This downtrend is no longer regularly reported every six months as new “ABC FasFax” reports come out, because by lumping together the reporting for print and digital editions in the last few years, newspaper owners have engineered Audit Bureau of Circulations reporting so as to obscure the print declines. It takes a little digging now to find the print decline numbers. Alan Mutter, the Newsosaur, ran the numbers last spring when ABC reported a total print/digital combined gain of 0.7 percent, and found that in contrast to the total circulation, at the top 25 dailies, print circulation had plummeted 7.3 percent year-over-year during the six months ending March 31. I’ve rerun those numbers for the fall reporting period, and found a similar 7.9 percent decline at the top 25 dailies (Mon.-Fri.) for the six months ending Sept. 31.
Folks, I know I’m laying on a lot of statistics here, but the point is that numbers like that are not the hallmark of a sustainable business model. That’s why the Newhouse family is systematically converting their Advance Publications newspapers into two- and three-day print operations. And that’s why the rest of the industry is trying to figure out when, not if, they should follow suit. As noted, count on a lot of conversions during 2013 and an avalanche during 2014 and 2015.
MEMBERSHIP MODELS AND “JOBS TO BE DONE”
It has been interesting to follow the arc of the conversation around paywalls since 2009, when Walter Isaacson urged their adoption in a Time Magazine cover story and Steve Brill launched an outfit to make them widely possible. Both of them endured considerable derision from the journoblogosphere, and indeed, adoption was cautious. Currently, some 400 papers have a paywall of some kind (which means about 1,200 are still free), with more set to impose them in 2013. That it has taken four years to get that far is an indication of the resistance to change that still permeates newspaper organizations, but you can also see how how attitudes have evolved whenvarious analysts jump on The Washington Post for _not_ having a paywall yet.
But. Can we really imagine a future, a few years out, where all of America’s newspapers have paywalls on websites and subscription-based apps on tablets and smartphones? Can those newspapers retain any semblance of leadership in their communities? Won’t they simply be yielding the field to Patch.com, the Huffington Post, local independent news sites and topical news sites of all stripes? Is there really nothing better than the rather simplistic metered paywall, in which you get 5, 10, or 15 stories every month, and then a pop-up that keeps you away until the first of the next month?
Well, yes, there is. The alternative is a membership model, which is far more attuned to addressing the needs of readers than any paywall. It’s nothing new — public radio and television have been doing it for decades. The Texas Tribune has very consciously followed that model with a range of membership tiers that offer monthly newsletters, online recognition, invites to receptions, “conversation series” events, and even reserved parking for events. If this works for the Austin nonprofit (and for others like MinnPost) why shouldn’t it work for for-profit local news sites?
And consider this: In the membership model, the news organization can know far more about individual subscribers than they do in a simple paywall model — ranging from detailed socioeconomic metrics to topical interests and buying habits. This in turn allows them to deliver more targeted advertising and offers, both in print and online, at higher CPMs.
Among newspapers, one pioneer on this front is the New London (Conn.) Day, which launched a membership model in Sept. 2011 and is a partner in the development of a “data-driven audience management system” with Leap Media Partners LLC, and is now lining up additional newspapers to follow the same model.
At The Day, there’s a tiered set of membership options, all of which include enrollment in the paper’s The Day Passport “membership rewards” program. Membership has its privileges, including discounts on events and services, chances to win gift cards and tickets, and (occasionally) invitations to special events.
But these membership arrangements, in my view, are just scratching the surface. Look at it this way: As a member of a community, you have certain needs. Those needs include news (knowing what’s going on), connections (to shops, restaurants, and service providers), as well as entrée (mixing and mingling in the right places). The Texas Tribune, The Day, MinnPost, and others are offering packages including those ingredients. But there’s even more to being a member of a community than that. You need recommendations and answers to questions; you want curation in the form of best bets; you want to connect socially with neighbors; you want to spend wisely and locally; you need things delivered and stored; you have personal needs ranging from exercise to art lessons. Those are your “jobs to be done,” and smart publishers can help you with them.
As Michael Skoler suggested a couple of years ago in Nieman Reports, when paywall thinking gives way to membership thinking, the business model becomes community rather than audience. “To harness this model,” Skoler wrote, “news organizations need to think of themselves first as gathering, supporting, and empowering people to be active in a community with shared values, and not primarily as creators of news that people will consume.”
Community as a business model is not a new idea. A few decades ago, some publishers (and some readers) liked to talk about their papers as “community glue.” And indeed, just about all the threads of a community connected via the printed newspaper — politics, religion, commerce, education, health, entertainment, sports, births, and deaths. Now that model is fragmented, the newspaper’s reach and connectivity is diminished. The glue has dried up. The membership approach offers a way to begin to bring the threads back together in a viable enterprise, or perhaps a network of enterprises.
NETWORKING NEWS CONTENT
Outside of print-only local newspaper readers who don’t watch TV news, does anybody still get most of their news in one place? Nearly everyone who gets news online is used to skipping from source to source, especially when hunting for more details on a breaking story. News comes to us — we don’t go to the news anymore — and it comes to us from multiple directions: social networks, blogs, aggregators, news organizations of all kinds.
So as the ecosystem around news evolves toward a membership model that solves “jobs to be done” problems for consumers, doesn’t it make sense for one of those jobs to be access to lots of news, from multiple sources, with a single sign-on — sort of an E-ZPass for news? Imagine signing into your trusted local or regional news site or app, and then having access, without any further tollbooths, to a network of news sources. This network could be one of your own choosing, or one assembled by that local news organization. In it, you’d find local and regional news sources, national and international news sources, and topical news of various kinds — sports, travel, food and wine, gardening, design, finance — whatever you select, or whatever the network infers from your behavior is interesting to you.
_Disclosure: I’m a partner in __CircLabs__, a back-burner startup (with an out-of-date website) that aspires to supply services __to such a network__ and is currently developing a demonstration project under a contract with the University of Missouri’s Reynolds Journalism Lab._
This can be accomplished through limited, defined, cooperative networks established by individual agreements, or by a grand, global collaborative agreement among news creators. Somewhere in the background, there’s a settlement system that allocates subscription and advertising dollars among the content suppliers (as described in my Nieman Lab suggestion for an “ASCAP for news,” (a business model to which the AP spinoff NewsRight could still make a smart pivot).
Some industry execs (like MediaNews chair Dean Singleton) have long held that the future of the newspaper is consolidation. But even with major newspaper properties selling for negligible sums (essentially the value of the real estate they own, or less), there hasn’t been much movement in that direction, nor is it clear that at the end of the day, consolidation offers any solution to the long nightmare of declining readership and advertising. Ultimately, consolidation is just a mop-up strategy — one that simply squeezes out the final remaining profits before the lights are turned out.
Given the depths to which newspapers have declined, and their overall lack of entrepreneurial spirit and investable resources, perhaps a mop-up is the only realistic thing left. But at least in some quarters, there’s hope that a collaborative strategy of networked access to content, along with the membership approach, could pay off.
_Look past Righthaven-related fears and you’ll see the possibilities NewsRight might afford in enabling and automating new ways of redistributing content._ FIRST POSTED AT NIEMAN JOURNALISM LAB
When NewsRight — the Associated Press spinoff formerly known as News Licensing Group (andoriginally announced by the AP as an unnamed “rights clearinghouse”) —began to lift the veil a couple of weeks ago, most of the attention and analysis focused on “preserving the value” of news content for content owners and originators. In the first round of reports and commentary on the launch, various bloggers and analysts quickly made comparisons to Righthaven, the infamous and all-but-defunct Las Vegas outfit that pursued bloggers and aggregators for alleged copyright violations.
But most of that criticism misses an important point: Would NewsRight’s investors, all legacy news enterprises, really invest $30 million in a questionable model just to enforce copyrights? Or are they investing in a startup that has the capacity to create revenues from new, innovative ways of generating, packaging and, distributing news content?
While some of the reactions point to the former, I believe the opportunity (and NewsRight’s real intention) lies in the latter: NewsRight has the potential to create revenue for any content creator large or small, and to enable a variety of new business models around content that simply can’t fly today because there hasn’t been a clearinghouse system like it.
(As background, here at Nieman Lab in 2010, I first described the potential benefits of a news clearinghouse months before AP announced the concept. Then after AP made public their plans, I described a variety of new business models it could enable, if done right.)asked: “AP finally launches NewsRight…and it’s Righthaven Lite?” * InfoWars, posting a video talk with Denver radio talk host David Sirota, inquired: “Traditional media to bully bloggers with NewsRight?” In the interview Sirota said, “What I worry about is that it ends up being used as a financial weapon against those voices out there who are citing that information in order to challenge it, scrutinize it, and question it.” * GigaOm’s Mathew Ingram pointed out that while NewsRight itself says it will stay out of pursuing copyright infractions via litigation, “one of the driving forces behind the agency is the sense on the part of AP and other members that their content is being stolen by news-filtering services…and news aggregators.” Ingram concludes: “What happens when an organization like The Huffington Post says no thank you? That’s when it will become obvious how much of NewsRight’s business model is based on carrots, and how much of it is about waving a big stick.” * Nieman Lab’s own coverage by Andrew Phelps also focused on the tracking and enforcement aspects of NewsRight’s core technology. NewsRight’s launch PR didn’t do much to dispel these concerns. CEO David Westin said himself in a video: “NewsRight’s designed…to make sure that the traditional reporting organizations that are investing in original journalism are reaping some of the benefits that are being lost right now.” And the company’s press release, quoting Westin, went no further that the following in hinting that there were new business opportunities enabled by NewsRight: “[I]f reliable information is to continue to flourish, the companies investing in creating content need efficient ways to license it as broadly as possible.”
Those traditional news organizations (29 of them, including New York Times Co., Washington Post Co., Associated Press, MediaNews Group, Hearst, and McClatchy) are the investors who scraped together $30 million to launch NewsRight. The Associated Press also contributed technology and personnel to the effort.
Given those roots — along with the initial PR, Westin’s own background as a lawyer, and the fact that NewsRight’s underlying AP-derived technology, News Registry, was explicitly developed to help track content piracy — it’s not hard to see where all the skepticism comes from.
But ultimately, if NewsRight is to be successful, it will have to create a new marketplace. It’s going to have to do more than trying to get paid for the status quo — that is, to collect fees from aggregators and others who are currently repackaging the content of its 29 owners. It can do that, but in addition, like any business, it will have to develop new products that new customers will pay for; it will have to bring thousands of content sources into its network; and it will have to enable and encourage thousands of repackagers to use that content in many new ways. And it will have to focus on those new opportunities rather than on righting wrongs perceived by its investors.
I spoke last week with David Westin about where NewsRight was starting out and where it might ultimately go. While he repeated the company mantra about returning value to the originators of journalistic content — “NewsRight is designed with one mission: to recapture some of the value of original journalism that’s being lost in the internet and mobile world” — it’s clear that his vision for NewsRight goes well beyond that. Here’s some of what we covered:
— NEWSRIGHT’S INITIAL TARGET IS “CLOSED-WEB” NEWS AGGREGATORS. Media monitoring services like EIN News, Meltwater News, and Vocus provide customized news feeds to enterprise clients like corporations and government entities, typically at $100 per month or more. Essentially, they’re the digital equivalent of the old clipping services. Currently, these services must scrape individual news sites, and technically, they should deliver only snippets with links back to the original sources (although whether they limit themselves to that is not easy to monitor). What NewsRight offers the monitoring services is one-stop shopping that includes (a) fulfillment: an accurate content feed (obviating the need to scrape, and eliminating uncertainty by always delivering the latest, most complete version of a story); (b) rights clearance; and (c) usage metrics. The monitoring services will have the option to improve their offerings by supplying full text (or they can stick with first paragraphs); the content owners share the resulting royalties.
— WHILE NEWSRIGHT CURRENTLY MUST INDIVIDUALLY NEGOTIATE CONTENT DEALS, IT’S WORKING TOWARD A LARGELY-AUTOMATED CONTENT-EXCHANGE SYSTEM. Clearly, as NewsRight grows, there will have to be an automated system with self-service windows. “I hope that’s right, because that means we will have been successful,” Westin said when I suggested that would have to happen. The deals with private aggregators being worked on now all require one-off negotiations for each deal, both with the aggregators and with the content suppliers. That’s marginallypossible when there are 800 or so content contributors to the network, but to be a meaningful player in the information marketplace, the company will need to grow to encompass thousands of content creators, thousands of repackagers, republishers, or aggregators of content, and many millions of pieces of content (including text, images and video) — requiring a sizable infrastructure and high level of automation.
— ANY LEGITIMATE NEWS CONTENT CREATOR CAN JOIN NEWSRIGHT FOR FREE FOR THE DURATION OF 2012. “Anyone who generates original reporting, original content, can benefit from this. We’re open to anyone who’s doing original work.” Westin says. That includes not only newspapers and other traditional news organizations — it can include hyperlocal sites and news blogs. Basically, that free membership will bring you back information on how and where your content is being used. NewsRight’s system is currently tracking several billion impressions for its investor-members and is capable of tracking billions more for those want to use the service. (All this is rather opaque on the website right now, but if you’re interested, just click on the “Contact us to learn more” link on their homepage, and they’ll get back to you.)
— DOWN THE ROAD, NEWSRIGHT IS LOOKING FOR WAYS TO CREATE NEW CONTENT PACKAGING OPPORTUNITIES. Westin: “There is a large number of possible businesses [that we can enable]. We don’t have any of them up and running yet; it’ll be a better story when we’ve got the first one up. But I do envision a number of people who might say, ‘I wanted to create this product, dipping into a large number of news resources on a specific subject, but it’s simply been too cumbersome and difficult to do’…We should be able to facilitate that.” What he envisions is something that reduces the friction and the transaction costs in setting up a news feed, app, or site on a niche topic and allows a multiplicity of such sites to flourish — “new products based around the content that don’t exist now.” That includes personalized news streams — products for one, but of which many can be sold: “As we continue to expand News Registry and the codes attached to content, it makes it possible to slice and dice the news content with essentially zero marginal cost.”
— WHILE THE INITIAL OFFERINGS TO PRIVATE AGGREGATORS CARRY A PRICE TAG SET BY NEWSRIGHT, IN THE ULTIMATE NETWORKED AND LARGELY AUTOMATED POINT-TO-POINT DISTRIBUTION ARRANGEMENT — INDIVIDUAL ASSET SYNDICATION — NEWSRIGHT WILL LIKELY STAY OUT OF PRICING. The “paytags,” or the payment information embedded in the Registry tags, will be able to carry information on a variety of usage and payment terms — not only what the price is, but nuanced provisions like time constraints (e.g. this can’t be used until 24 hours after first published), geographic constraints (to limit usage by regional competitors), variable pricing (hot news costs more than old news), and pricing based on the size of the repackager’s audience. Content owners would likely have control over these options, but there’s also the potential for a dynamic pricing model — something similar to Google’s auction mechanism for AdWords — in order to optimize both revenue and usage.
— THE NEWSRIGHT NETWORK COULD MAKE IT POSSIBLE TO MONETIZE TOPICAL NICHE CONTENT THAT’S TOO DIFFICULT TO SYNDICATE TODAY. There a lot of bloggers, hyperlocals, and other niche sites today that earn zero or minimal revenue and are operated as labors of love. The potential for NewsRight is to find new markets for the content of these sites. And general publishers like newspapers might find it profitable to jump into specialized niches for which there’s no local audience, but which might generate revenue via redistribution through NewsRight to various content aggregators.
Could that grand vision come to fruition? As I’ve pointed out before, a very similar system has worked very nicely for ASCAP and BMI, the music licensing organizations, which not only collect royalties for musicians but enable a variety of music distribution channels. (This is on the performance and broadcast side of the music biz, not the rather broken recorded music side.) Both AP CEO Tom Curley in launching NewsRight and Westin in discussing it refer to ASCAP and other clearinghouses as models — not just for compensating content creators but for enabling new outlets and new forms of content. NewsRight’s is purely a business-to-business model — it doesn’t involve end users. So the traction it needs will come when it can point not just to compensation streams from private aggregation services, but to new products and new businesses made possible by its system.
Here we go again — time to have look back at my December 2010 predictions for 2011, and to go out on another limb with prognostications for 2012. Below, I’ve listed each of my 2011 predictions (somewhat abbreviated in some cases — just click back to the original post for the full verbiage). Following each 2011 prediction, read my report on how things actually turned out, plus a fresh prediction for 2012. 2011 PREDICTION: Digital convergence: News, mobile, tablets, social couponing, location-based services, RFID tags, gaming . . . All these things will not stay in separate silos. . . . imagine for a moment: personalized news delivered to me on my tablet or smartphone, tailored to my demographics, preferences, and location; coupon offers and input from my social network, delivered on the same basis; the ability to interact with RFID tags on merchandise (and on just about anything else); more and more ability not only to view ads but to do transactions on tablets and phones — all of these delivered in a entertaining interfaces with gaming features (if I like games) or not (if I don’t). In other words: news delivered to me as part of a total environment aware of my location, my friends, my interests and preferences, essentially in a completely new online medium — not a web composed of sites I can browse at my leisure, but a medium delivered via a device or devices that understand me and understand what I want to know, including the news, information and commercial offers that are right for me. All of this is way too much to expect in 2011, but as a prediction, I think we’ll start to see some of the elements begin to come together, especially on the iPad. HOW I DID: Some hits, some misses in a complex prediction there.... CLICK HERE TO CONTINUE READING THIS POST AT NIEMAN JOURNALISM LAB.
What the aggressively-priced Kindle Fire will mean for news publishers. In February 2010, before the first iPad shipments, I went out on a limb here (in a post about iPad strategies for publishers) with this prediction:
I BELIEVE THE BIGGEST TRANSFORMATION THAT WILL BE WROUGHT BY THE IPAD WILL BE TO BRING AN ENORMOUS INCREASE IN ONLINE SHOPPING.
How have things turned out so far? What might the results have to do withAmazon’s new tablet? And, most importantly for the Nieman Lab audience, what new disruptive challenges does all this throw at the elusive and precarious business models for news?
FIRST, IT TURNS OUT THAT TABLETS INDEED PUSH MUCH MORE ONLINE SHOPPING, as Dana Mattioli reported in the Wall Street Journal yesterday. In a story entitled “Tablets: Ultimate Buying Machines” — quoting info from Forrester Research, Macy’s, and others — Mattioli reported these findings:* Tablet shoppers make purchases in 4 to 5 percent of shopping site visits, compared to about 3 percent for consumers visiting shopping sites on PCs. That’s about 50 percent more purchases. * Tablet shoppers, according to many retailers, spend 10 to 20 percent more per order than PC shoppers or smartphone shoppers. Combined with the first finding, that means 65 to 80 percent more spending. * Tablet shoppers who shop via apps tend to spend much more than tablet shoppers on websites. (At TheFind, they’re spending_ three times_ as much through the app compared to the website.)
_My recent post at NiemanLab:_ When MediaNews Group and Journal Register Co. announced a quasi-merger on Wednesday — putting the two under a new common management structure named Digital First, with John Paton serving as CEO of both companies — it was the most dramatic combination of American newspapers companies in years. And it was also a victory for the vision of Dean Singleton, the longtime MediaNews CEO who has been a champion for consolidation in the newspaper industry for decades.
Singleton, now MediaNews’ executive chairman, spoke with me Thursday about the move and his belief that more mergers, clusters, and partnerships are essential for the industry’s survival. “Broadcast consolidated, cable consolidated, and newspapers, in order to have the same relevance that cable and broadcast and others have, need to go through consolidation,” he said.
Back in 1996, at a management meeting when I was working at MediaNews, Singleton said that he anticipated one day just three companies would own most of the papers in the country — and he intended MediaNews to be one of them. At the time, the company owned only 13 newspapers and was not among the top 10 in terms of total circulation. Fifteen years later, with paid weekday circulation of about 2.2 million (JRC adds in another 400,000), it ranks second, behind only Gannett’s roughly 5 million.
Having shed most of MediaNews’s debt via a strategic bankruptcy, and having stepped aside from day-to-day management, Singleton is focused on building the next rounds of consolidation. He feels that collectively, the newspaper industry “should have seen the changing media environment sooner and dealt with it sooner,” and that collective strategies are now essential.
For Singleton, Paton seemed like an ideal partner: Their friendship goes back decades, and Singleton actually helped sponsor Paton, who is Canadian, when he needed a green card to work in the United States.
As a reflection of the daunting headwinds facing the newspaper industry, he predicted: “I don’t think there’s any newspaper company in America that won’t have fewer people a year from now than they have today, and fewer still in two to three years.” But he’s not headed for an exit strategy: “I love this business, I’ve been in it since I was 15, and I love it and I care a lot about it.”
Here’s a transcript of our interview. You can also download an MP3 of our conversation. (Due to the interviewer’s klutziness, the first question and a snippet of the first answer were truncated.) CLICK TO READ THE REST OF THIS POST AT NIEMAN JOURNALISM LAB.
MediaNews Group, the second-largest US newspaper company in terms of weekday circulation, a company I worked for some 13 years, publisher of the Denver Post and newspapers from California to New England, is consolidating management with Journal Register Company under CEO John Paton. This is sort of a merger without merging, but could be a positive development for both companies. Look for big changes, in any case. From Nieman Journalism Lab, heres a post linking to the announcement and a Paton blog post, along with context and background quotes from yours truly posted back in January and July foreshadowing this development.
On Thursday, Journal Register Company announced that it had been acquired by Alden Global Capital, a secretive hedge fund that specializes in “distressed opportunities,” such as companies emerging from bankruptcy — including newspaper groups. The acquisition may foreshadow additional moves by Alden, which is interested in two strategies to add value to its investments: (a) it wants its newspaper holdings to aggressively develop digital capabilities and revenues, and (b) it wants to see consolidation (mergers) among newspaper groups.
In its capacity as a distressed-opportunity specialist, as I detailed here in January, Alden acquired stakes not only in JRC, but also in MediaNews Group, Philadelphia Media Network, Tribune, Freedom Communications, and the Canadian newspaper groupPostmedia Network . Among publishers that avoided bankruptcy filings, it has stakes inA.H. Belo, Gannett, McClatchy, Media General and Journal Communications. (I detailed those investments in this post in March.) In addition to its newspaper holdings, Alden has other media investments, including in Emmis Communications and Sinclair Broadcast Group. Only the investments in public companies are detailed in SEC filings — they add up to about $210 million in media holdings. Together with the non-public investments in JRC, MediaNews, Freedom, Postmedia, and Philadelphia, Alden may have as much as $750 million of its total assets of $3 billion invested in newspaper and broadcast media properties.
At the time of that January post, Alden had just asserted itself at MediaNews Group by shaking up the executive suite and naming three new directors to the seven-member board. (Disclosure: I spent 13 years as a publisher at a MediaNews Group newspaper.) That move was important because it enabled Alden to use MediaNews as a platform from which to drive consolidation in the still-fractured U.S. newspaper industry. (The largest player, Gannett, owns only about 13 percent of the industry in terms of daily circulation.) Under SEC rules, by taking a position on the board, Alden was no longer allowed to speculate in MediaNews stock; hence, their assumption of board seats signalled an intent to use their MediaNews holdings strategically rather than speculatively. Until the JRC acquisition, Alden had not done the same at any of the other firms in which it had invested. CLICK HERE TO CONTINUE READING THIS POST AT NIEMAN JOURNALISM LAB
Last month, the New York Times outed retailer JCPenney for engaging in “black hat optimization” — the practice of buying or placing links designed primarily to improve a site’s standing in Google search results. While JCPenney did a quick _mea culpa_ and fired the SEO consultants responsible for the links (and had its search standings plummet for all the keywords involved), there is also a flip side to the story: a cautionary tale for news sites and bloggers — indeed, for anyone operating a reputable website that looks for advertising revenue. A number of high-profile news sites, in fact, still carry links of the offending variety, potentially to the detriment of their own standing in Google search results. In a survey last week, we identified a variety of news sites publishing paid links that lack Google-required HTML formatting designed to avoid negative SEO results. The list includes GlobalPost (which has since removed the links), the Jerusalem Post, the Christian Science Monitor, The Monthly (of Australia), the Gotham Gazette (which has since made them Google-compliant by adding nofollow tags — see below), the Charleston (WV) Daily Mail and its JOA partner the Charleston Gazette. ...CONTINUE READING THIS POST AT NIEMAN JOURNALISM LAB...
Who owns America’s newspapers? In January, I detailed how a hedge fund named Alden Global Capital, which played a role in the shakeup at MediaNews Group, also had significant holdings in newspaper groups Freedom Communications, Philadelphia Newspaper Holdings, Journal Register Company, Tribune, and the Canadian newspaper firm Postmedia Network — all firms with current or recent bankruptcy status. After noticing that Alden also owned, as of December 31, 3.91 percent of Gannett’s common stock, I surveyed all of the U.S. public newspaper companies to see whether Alden pops up elsewhere as well. It turns out that, other than Alden’s stake in Gannett, there’s little crossover between the principal investors in the public companies and those that have picked up the “distressed opportunities” created by trips through bankruptcy court. First, here’s a set of slides detailing the top investors in each of the publicly-owned newspaper publishers. I’ve included among these News Corporation (both the class A and class B common stock), but for the rest of this analysis, News Corp. is excluded because its global multimedia holdings in film, television, magazines and book dwarf the entire rest of the American newspaper business. (Note: All holding and valuations throughout this post are as of December 31, 2010.) CONTINUE READING THIS POST AT NIEMAN JOURNALISM LAB.
where the epicenter was, but we had no GPS-based way to zero in on those Twitter users who were actually on the scene. “The traditional social network just doesn’t work when it comes to news,” says Luke Stangel, cofounder and chief marketing officer at Tackable, a Palo Alto-based startup tackling this problem by building a standalone social network that “organizes media on a map.” Tackable’s current shape is an iPhone app-based social network focused on geotagged news photos and captions. The system will eventually include text, audio, and video, and of course an Android app is on the way. The Tackable vision is that when breaking news happens, you’ll be able to use the app to zero in on the location on the map, and see whether network members have posted photo, video and comments, without needing to have a previous relationship with those people. “You don’t really care what a dentist in Baltimore thinks about Egypt,” Stangel said. “What you really want to do is talk to a protester who is there on the ground. So what we do is we break the social network and we replace it with something else. We put it on the map. So if you’re interested in Egypt, you simply pull the map over to Egypt and you can see all the media that’s coming out of the country, from people who are there on the ground.” Click here to continue reading this post at Nieman Journalism Lab.
Back in the early 1990s, Dean Singleton predicted that ultimately there would be just three newspaper companies left standing, and he intended his MediaNews Group to be one of them. It was an audacious prediction, because at the time, after a decade of wheeling, dealing and sometimes ruthless management, MediaNews Group still consisted of just a dozen newspapers, and the company’s board meetings, as he was fond of saying, “could be held in the front seat of a pickup truck.” But Singleton often repeated his prediction of industry consolidation, and it was the driver behind MediaNews’s growth into the sixth largest newspaper company (in terms of circulation) over the past 15 years. Today MediaNews has 54 daily newspapers with a total of 2.4 million weekday circulation. (On its own site, MediaNews claims to be the “second largest media company,” but that’s a double stretch: Its properties are nearly all newspaper entities, and, by my count, Gannett, Tribune, News Corp., McClatchy and Advance have more daily paid print circulation — and are certainly all bigger media companies than MediaNews.) READ THE REST OF THIS POST HERE AT NIEMAN JOURNALISM LAB.
Inspired by my friend Richard Floyds ruminations about his 2010 blogifications, heres a rundown on how News after Newspapers was read this year. To the extent Google Analytics tells a real story — there are many visits by folks clearly searching for something else who stick around for just two or three microseconds — visitors in 2010 came from 108 countries (missing: Central Asia, Central Africa, Bolivia, Greenland and a few Central American countries), and all 50 states. There were 11,532 visits in total, 14,584 pageviews, and 8,478 individual visitors. On average, you spent 57 seconds on site, which is not enough to read the average post, so obviously, a lot of you bailed out early. On the other hand, most of my posts here were just trailers for the full posts over at NiemanLab, where the average post got at least 1,000 hits. I managed to put up 20 posts this year versus 75 in 2009 and 66 in 2008 (and I started in September of 2008), so its been a slow year. Nevertheless, overall traffic this year was down just about 5 percent from the year before. What you liked, based on pageviews: 1. iPad strategies for publishers — I must admit, I still dont have one — an iPad that is. But Ive played with one, and I think so far the strategies outlined in that post are looking valid. (See also that posts precursor, with the same thoughts somewhat less polished.) 2. Groupons revenue pace — I predicted a $350 million annual pace back in April. That seemed pretty preposterous at the time (they only came out of beta about a year before), but the actual result, astoundingly, seems to be closer to $1 billion. 3. Are newspapers doomed? — This is a 2008 post that continues to get traction. The answer, if you dont want to peek, is yes. 4. Out on a limb again: Predictions for 2010 — You can check on how those prognostications turned out here. I had more hits than misses, overall. 5. A roundup of media predictions for 2010 — This is a beat that NiemanLab has taken over in spades, with an all-star series of 2011 predictions posted during December, including my own. Happy New Year to all!
CONTINUING AN ANNUAL TRADITION HERE AT NAN, HERE ARE MY PROGNOSTICATIONS FOR 2011 (POSTED ALSO AT NIEMAN JOURNALISM LAB). SEE ALSO MY EARLIER POST WITH PREDICTIONS FOR 2020. DIGITAL CONVERGENCE: NEWS, MOBILE, TABLETS, SOCIAL COUPONING, LOCATION-BASED SERVICES, RFID TAGS, GAMING. My geezer head spins just thinking about all this, but look: All these things will not stay in separate silos. Why do you think AOL invested $50 million or more launching Patch in 500 markets, without a business model that makes sense to anyone? What’s coming down the pike is new intersections between all of these digital developments, and somehow, news is always in the picture because it’s at the top of people’s lists of content needs, right after email and search. There are business opportunities in tying all of these things together, so there are opportunities for news enterprises to be part of the action. Some attempts to find synergies will work, and some won’t. But imagine for a moment: personalized news delivered to me on my tablet or smartphone, tailored to my demographics, preferences, and location; coupon offers and input from my social network, delivered on the same basis; the ability to interact with RFID tags on merchandise (and on just about anything else); more and more ability not only to view ads but to do transactions on tablets and phones — all of these delivered in a entertaining interfaces with gaming features (if I like games) or not (if I don’t). In other words: news delivered to me as part of a total environment aware of my location, my friends, my interests and preferences, essentially in a completely new online medium — not a web composed of sites I can browse at my leisure, but a medium delivered via a device or devices that understand me and understand what I want to know, including the news, information and commercial offers that are right for me. All of this is way too much to expect in 2011, but as a prediction, I think we’ll start to see some of the elements begin to come together, especially on the iPad. THE ASSOCIATED PRESS CLEARINGHOUSE FOR NEWS. Lots of questions here: Will be it nonprofit or for-profit? Who will put up the money? Who will be in charge of it? What will it actually do? It will probably take all year to get the operation organized and launched, but I’m going to stick with the listing of opportunities I outlined when news of the clearinghouse broke. I continue to believe that the clearinghouse concept has the potential to transform the way that news content is generated, distributed and consumed. _(Disclosure: I’m working on a project with the University of Missouri to explore potential business models enabled by news clearinghouses.)_ EMBRACING REAL DIGITAL STRATEGIES. Among newspaper companies, Journal Register will continue to point the way: CEO John Paton ardently evangelizes for digital-first thinking — read his presentation to the recent (Nieman-cosponsored) INMA Transformation of News Summit, if you haven’t seen it. Is there another newspaper company CEO who agrees with Paton’s mantra, “Be Digital First and Print Last”? I doubt it, because what it means, in Patton’s words, is that you “put the digital people in charge, and stop listening to the newspaper people.” Most newspaper groups pay lip service to “digital first,” but in reality they’re focused on the daily print edition. And that’s why audience attention will continue to go to new media unencumbered by print, like Huffington Post, the Daily Beast, Patch, Gawker Media, and hosts of others. So for a prediction: Journal Register will outsource most of its printing, sell most of its real estate, bring the audience into its newsrooms with more news cafes like their first one in Torrington, Conn. It will announce by year end that 25 percent of its revenue is from digital sources. It will also launch online-only startups in cities and towns near its existing markets, perhaps with niche print spinoffs. And finally, toward the end of 2011, we’ll see some reluctant and tentative emulation of Paton’s strategies among a few other newspaper groups. NEWSPAPER ADVERTISING REVENUE. An extrapolation of the 2010 trend (see my 2010 scorecard) would mean 2011 quarters of, say gains of 2 percent, 4 percent, 6 percent and 8 percent. But for that to happen, marketers would have to decide, during Q4 of 2011, to direct 8 percent more money into advertising in a medium that continues to report “strategic” cuts in press runs and paid print circulation, that is not finding fresh eyeballs online, that has an audience profile getting older every year, and that has done little R&D or innovation to discover a digital future for itself. With sexy new opportunities to advertise on tablets and smartphones coming along daily, why would any brand, retailer, or advertising agency be looking to spend more in print? My prediction is for a very flat year, with the quarterly totals (for print plus online revenue) coming in at Q1: +1.5%, Q2: +2.0%, Q3: no change and Q4: -3%. That final quarter will revert to negative territory primarily because of major shifts in retail budgets to tablet and smartphone platforms and to digital competitors like Groupon. NEWSPAPER ONLINE AD REVENUE. This has been a bright spot in 2010, with gains of 4.9 percent, 13.9 percent, and 10.7 percent so far. Assume another gain in Q4. But there are several problems. First, at most newspapers a big fraction of so-called online revenue is hitched to print programs with online components, upsells, added values, or bonuses. So there’s no way to tell whether the reported numbers are real, representing actual gains purely in ads purchased on web sites, whether there’s a lot of creative accounting going on to make the online category look better than it actually is, or whether it would even exist without the print component. Secondly, there’s a lot of new competition at the local level for dollars that retailers earmark for web marketing. Groupon, alone, will do close to $1 billion in revenue this year, compared with about $3 billion total online revenue for all newspapers combined. Add the “Groupon clones” like LivingSocial, and the social couponing business is probably already at about 50 percent of newspaper online revenue, and could well pass it in 2011, very much at newspapers’ expense. That’s why I predict newspaper online revenue will be: Q1: +5.0 percent, Q2: +3.0 percent, Q3: no change and Q4: no change. NEWSPAPER CIRCULATION. The trendline here has been down, down, down, every six-month reporting period ending March 31 and September 30. Complicating the picture: newspapers have been selling combo packages, ABC-qualified, where a single subscriber counts for two because they are buying (sometimes on a forced basis) both a 7-day print subscription and a facsimile digital edition. Lots of inflated and un-real circulation will show up in the 2011 numbers. But if we look at print circulation alone, which ABC will continue to break out, demographics alone dictate a continuation of the negative trend. My prediction: down 5 percent in each of the spring and fall six-month ABC reporting periods. That will mean that by year’s end, print newspaper penetration will fall to about one in three households (a long way down from its postwar peak of 134 newspapers sold per 100 households in 1946). ONLINE NEWS READERSHIP. There are a couple of ways to look at this. For newspaper websites, NAA recently switched from Nielsen to Comscore because they liked Comscore’s numbers better. As a base measure, Comscore is showing about 105 million monthly unique visitors and 4 billion pageviews to newspaper sites, with the average visitor spending 3.5 minutes per visit. Prediction: all three of those metrics will stay flat (plus or minus 10 percent) during 2011. The other way to look at it is: Where are Americans getting their news? The Pew Research Center looks at this on an annual basis, and in 2010 showed online, radio, and newspapers more or less tied as news sources for Americans. Is there any doubt where this is going? In 2011, Pew might add mobile as a distinct source, but it will show online clearly ahead of newspapers and radio, with mobile ascendant. NEWSPAPER CHAINS. Nobody can afford to buy anybody else, and no non-newspaper companies want to buy newspapers. There might be some mergers, but really, there are no strategic opportunities for consolidation in this industry, because there are no major efficiencies or revenue opportunities to be gained. Everybody will just muddle along in 2011, with the exception of Journal Register, which as noted above will move into adjacent markets with digital products and generally show the way the rest should follow. STOCKS. The major indices will be up 15 to 20 percent by September, but they’ll drop back to a break-even position by the end of 2011. Newspaper stocks will not beat the market. Others: AOL and Google will beat the market; Yahoo and Microsoft will not.
In a speech on Monday, Associated Press CEO Tom Curley announced that the AP would soon set up “an independent rights clearinghouse for news publishers to manage the distribution and use of their content beyond their own Web properties.” (Speech text in PDF link)The entity, to be designed with input from multiple stakeholders including AP and the Newspaper Association of America, will be established sometime in 2011. It will be a business-to-business clearinghouse, not involving transactions with consumers. Through the clearinghouse, originators of news content (ranging from local bloggers on up; this is not limited to AP members) will be able to distribute their content for digital publication by others, and receive back royalties of revenue shares according to protocols yet to be determined. The clearinghouse will be facilitate a rapid, realtime means of negotiating rights for such content sharing, resulting in a large increase in the potential market for any particular piece of content. As an illustration: a newspaper (or a broadcaster, or a local blogger) could release a piece of content (a story, a photo, a video) with tags indicating what it is about, who owns it, how and where it may be used, and how the content originator is to be paid. The content, distributed through any available channel, is picked up by another publisher, aggregator, or personalized news service and used in accordance with the attached rights and payments protocols. The clearinghouse monitors usage and payment obligations throughout the network of participating content originators and publishers, and settles transactions among them. The plan Curley described is very similar to what I proposed in a post here in July, in which I asked, “What if news content owners and creators adopted a variation on the long-established ASCAP-BMI performance rights organization system as a model by which they could collect payment for some of their content when it is distributed outside the boundaries of their own publications and websites?” Curley framed the opportunity in very similar language: “With the new rights clearinghouse initiative, we are hoping to give news publishers more tools to pursue an audience and capture value beyond the boundaries of their own digital publications.” Although Curley’s speech did not mention the analogy with ASCAP (the American Society of Composers, Artists and Performers) which has since 1914 protected rights and collected royalties for songwriters and composers when their works are performed or broadcast) although the AP’s own story on the announcement said the clearinghouse would be “loosely modeled” after ASCAP. When I spoke about the project on Wednesday with Srinandan Kasi, the AP’s general counsel, he said that AP had studied clearinghouses in other industries, particularly in order to understand what considerations drove their choice of governance structure. (For those inclined to derail into griping about ASCAP’s perceived shortcomings: the analogy is not to ASCAP specifically; the point is that a clearinghouse for content that will speed up and expand content distribution options, and create a new and efficient content marketplace — not that it will be exactly like ASCAP.) In announcing the project at a meeting of the Southern Newspaper Publishers Association, Curley said it builds on several years of development by AP, beginning with the creation of a digital cooperative in 2007, through which 1,500 newspapers and broadcasters funnel content that AP parses, tags, and returns for use on local websites. In 2009, AP set up News Registry, a system that uses the tags to track where and how that content is being used on the Web and is now used by about 1,000 newspapers. That tracking functionality, and the possibility of pursuing copyright claims for unauthorized reuse of nothing more than a headline, garnered plenty of criticism for the AP last year (and even just a few weeks ago Curley repeated claims of widespread “content scraping,” promising enforcement action against unnamed sites engaged in the practice). NEW REVENUE OPPORTUNITIES FOR CONTENT CREATORS The real opportunity around News Registry was never in tracking and enforcement, but in helping to find new avenues for content distribution. As an analogy, in the retail world, the equivalent to content piracy is shoplifting and other forms of inventory loss from stores — a serious problem, but generally not more than 1.5 percent of revenue and not worth more than that to prevent or reduce. A retailer’s first priority is increasing sales by building new distribution channels, and the same should be true in the news publishing business, where content misuse is a minor revenue leak compared to the opportunities for broader distribution. AP’s clearinghouse is a big step in that direction. The digital approach of most news publishers until now has been to seek to control their own distributions channels — their own websites, their own mobile apps, or individually negotiated syndication channels where they retain control. While successful in a few cases, that approach has generally limited access and revenue — for example, the average visitor to US newspaper websites still spends only about one minute per day at newspaper websites, which is less than one percent of total online time. In a more open system, content with appropriate tags for rights protection and payment provisions could travel the Web (and the mobile world) in search of readers via multiple secondary channels, without the need for slow offline negotiation in every instance. The potential for piracy is still there, but the system can establish a network of publishers, aggregators and others who subscribe to the rights protocols for mutual benefit. The clearinghouse concept grew out of research by Water Street Partners, a Washington D.C. joint venture consulting group engaged by NAA. According to Curley, “Water Street’s work concluded there was a business to be built on the AP’s News Registry work.” (As part of their work, Water Street’s Julian Bene interviewed me about my NiemanLab “ASCAP” post.) Kasi told me that Water Street “talked to a lot of people to independently check on various aspects of the things that were under development here or have been developed here or were being considered for development here, and to ratify the path on which we were going.” For now, Kasi is in charge of the project. He serves as the AP’s chief legal counsel, but is also one of its chief strategists and will likely play a major role in shaping the clearinghouse. He defers answers to many questions about the planned entity’s design. For example, it might be non-profit, or it might be for-profit: “There are models of clearinghouses that are similar constructs in other industries that have a variety of different structures — profit, non-profit, non-stock companies and so on. So there are different models and we’re in the process of analyzing each one of them to understand what drove a particular choice so we are better informed for our effort here.” Kasi is careful to say that AP is not determining the ultimate governance arrangement, the operational details, or anything in between. Since AP is a content supplier itself, he said, “we thought that journalism would be better served by having an independent entity to provide some of these services rather than the AP.” Serving the greater good of journalism as a necessary ingredient in a democratic society is something Kasi referred to more than once — perhaps an indication that the thinking is leaning in the direction of a non-profit setup. While a story by AP reporters April Castro and Michael Liedtke, which was posted on AP’s corporate site, asserted that the clearinghouse would take a 20 percent cut of transactions, Kasi would not confirm that, saying that he was “not privy to the source” of that figure, and that “the number will be something that I think the market will determine.” Kasi also clarified that the clearinghouse will handle content across all platforms from Web to mobile, contrary to a few reports that suggested it would focus on mobile only. The clearinghouse will allow for experimentation on revenue models. It could “clear” payments based on a number of different models, with the method determined by the content originator, who might receive payment based on a share of advertising revenue, user payment revenue, or a royalty payment set by the publisher. Kasi said that ideally, the clearinghouse would provide the flexibility to allow market forces to determine which model would work best. Kasi agreed that a dynamic, real-time, variable pricing or bidding system, as suggested in my earlier post, is possible, but said he’d be concerned that “information may be in some instances essential to democracy, and you don’t want that to be subject to a bidding system that some people may be deprived because they can’t bid into that.” What he expects is a hybrid system that can support multiple pricing methods over time, but not necessarily “on the first day of operations.” NEW ECOSYSTEM, NEW OPPORTUNITIES I can see the clearinghouse spawning a wide range of new business opportunities, and Kasi (who calls it a “new ecosystem”) agrees: “The idea really is for the clearinghouse to bring that efficiency and the toolkit to everybody, regardless of scale, so that we can actually create some vibrant new packaging for example.” Among the possibilities I anticipate: * LARGER, MORE ROBUST AGGREGATORS OF CONTENT STREAMS like Daylife. This is also an opportunity for AP itself, which is one of the reasons it wants the clearinghouse to be a separate organization. Channeling content flows through wholesaler portals of this kind helps ensure proper tracking of rights and payment obligations. * MANY NEW “REMIXERS” — aggregators and niche publishers who take advantage of the ability to publish full content units (stories, pictures, video, graphics) created by others but re-published in new contexts, in new markets and to new audiences. * MANY NEW “HYPERPERSONALIZED NEWS STREAMS” created by semantic content matching engines and presented in multiple formats on the web, as browser add-ons and as apps. Some of these will be highly specialized enterprise solutions with a subscription revenue models; others will target consumer interests such as sports, weather, cooking, recreation, style, entertainment, travel, pets, sci/tech, etc. * PERSONALLY OR SOCIALLY CURATED NEWS CHANNELS could multiply and flourish by being able to supply full versions of news content rather than snippets. * MANY NEW CONTENT CREATION OPPORTUNITIES FOR PUBLISHERS. The remixers and hyperpersonalized news applications can be seen as akin to the explosion in cable channels since the 1960s which has resulted in a huge increase in video content production and consumption (certainly unanticipated in the 60s when the main worry was from movie theater owners who figured “pay TV” was going to steal their audience). Far more local info can be fed into the content pools available to remixers and hyperpersonalized apps, because as consumers spend more time with these content providers, they will look at more specialized niche content just as they do on cable. For example, newspaper publishers could add more video versions of their stories; they could publish more local statistical information; they could get more traction out of the backstories in their archives; they could create more content on local businesses and artists (perhaps sourcing this from freelancers who share in the ensuing revenue); they could cover events over a wider region; they could provide more specialized coverage of businesses in their area, etc. * CLEARINGHOUSES — there can be multiple clearinghouses, not just one, that would become major businesses in their own right. * CLEARINGHOUSE OPTIMIZATION — the equivalent of SEO services: publishers could engage them to help maximize clearinghouse revenue by fine-tuning the rights and pricing parameters, just as there are specialists in Google and Facebook ad marketing for retailers. * PAYMENT PROCESSING SERVICES — (assuming an eventual expansion beyond B-to-B and into business-to-consumer transactions) — this is a niche that most clearinghouses would outsource rather than do themselves, because of the complexities of interfacing with bank and credit card back-ends and later on with currency exchange issues. * USAGE METRICS — new kinds of distribution will require new kinds of metrics; an opportunity for existing as well as new metrics services. * OTHER SERVICE BUSINESSES would emerge or grow; for example: businesses that semantically tag content including audio and video as well as text and photographs so it can be fed into the system; advertising networks that focus on supplying local as well as national ads to the remixers and content streams, including real-time priced ads. * AND THE BIG UNKNOWNS: additional opportunities that are created as all of the above are impacted by the very rapid growth of mobile in all its forms, by location-aware services, by social couponing in all its forms, by the addition of item-level RFID tags to virtually all retail inventories (now beginning), the proliferation of QR codes (already saturating Asia), and the emergence of a viable mobile payment systems using point-of-sale proximity sensors or bump technology — all of which could be ingredients in turbocharging a direct commerce layer on digital platforms. Put all this together and there is no end to the content and commerce opportunities that are enabled when content can travel freely in search of consumers, with revenue flowbacks at multiple levels. _(Disclosure: I am working with faculty members at the University of Missouri School of Journalism on opportunities to research, flesh out and develop some of the new opportunities around the clearinghouse concept.)_
Robb Crocker, a mid-career grad student in communications at Rutgers, did an email interview with me about the pros and cons of charging readers for news content. He posted the interview on his blog, heres the Q and A portion. Q. In your opinion, what are the pros and cons of charging readers for online news?
A. On the pro side: it helps put in the minds of readers the idea that this content has some value; that there is a cost to producing it. And of course, in theory it creates a revenue stream for the publisher. Against this, on the con side, are these arguments:
(a) Before online distribution, news in most media was free: radio, TV, and even newspapers — the subscription price or newsstand cost of a newspaper is really a convenience fee readers were willing to pay for their own personal copy. Historically, at least until the 1980s, it was a kind of freemium model: you were likely to find a newspaper to read sometime in the course of your day: at the barbershop, on a bus, in a waiting room, at the lunch counter, etc., and the pass-along readership factor was quite high. So if the prior news media never established value and a willingness of consumers to pay for news as distinct from convenience, then doing so for online news will be very difficult.
(b) Except for a handful of publications with high-value content, like WSJ, FT, possibly NYT and various more topical niche publishers, it will be very difficult to implement a paid model in which the loss of ad revenue from lower page views is offset by the subscription income. Small local publications will simply not be able to implement pay systems by looking at the models that work for the high-value and niche publishers.
(c) Content has become atomized. The typical reader assembles a stream of online news not from a single source but from multiple sources, and will be unwilling to return to a single-source model.
Q. Did newspapers wait too long to try to charge? A. Newspapers waited too long to innovate, and now they are turning to pay models not strategically but in desperation. Most newspapers got on the web early on, but they assumed that the Web was an extension of print, that the business model would be the same as print. They sold online ads as "value added" benefits for print advertisers, rather than understanding Web advertising and helping their customers maximize results from online ads. While most large companies in the 90s began to reinvent themselves as digital enterprises, newspapers continued, to this day, to operate print-centered businesses. If you dont believe this, go to any newspaper and probe employees about their jobs — youll find that the central organizing element in 90 percent of the jobs is the moment the press starts: advertising, newsroom and prepress work toward it; pressroom, mailroom, distribution, circulation and the business office pick it up from there. The Web is a sideline, an afterthought, no matter what some of the slogans may be. In a truly digital news enterprise, most jobs would focus on digital publishing; print would be a niche product; and production, printing and distribution would be outsourced.
The real question is not whether newspapers should charge or not, or whether they waited too long. Even if they had charged from the beginning they would have failed, because they would not have made that fundamental shift to digital enterprises. If huge new Web-based businesses like Ebay, Amazon, Google, Yahoo and Facebook could arise without charging for any content, while newspapers got at best a toehold online, then the fault is not in whether they charged their readers or not; the fault is in their fundamental strategy.
Q. Hows charging going to stop sites like the Drudge Report from subscribing, cutting and pasting news articles? Do you see that as potentially creating copyright issues?
A. Well, if they subscribed and then cut and pasted, with current protocols that would be a copyright issue. The content owners would sue the pants off Drudge et al, and they would win. What publishers are complaining about is snippet aggregation, but they also know that it drives traffic back to their own sites. And they claim that they lose money from the more unscrupulous, generally offshore operators who cut and paste whole articles and try to make money on Google ads and the like — but in reality, that revenue leak is probably less than one percent of all newspaper revenue.
If newspapers started thinking strategically they would realize that the whole nature of the Web is to cut, paste, share and link, and that they will never make money online if they focus on confining content to their own sites and syndication channels. As I proposed at NiemanLab in July, what they should really do is find a way to go with the flow, leverage the way the Web works, and allow their content to travel the Web in search of readers, with a rights and payments clearinghouse to channel revenue back to them. The Associated Press, in October, announced their intent to create just such a clearinghouse, which I believe will fundamentally change the way news content is created, distributed and consumed and enables a large new set of business opportunities around it, as outlined in this second NiemanLab post on the topic.
Q. Will charging for online content bring people back to print editions or push them to news sites such as CNN, Fox, and other network news sites? Or will charging create a domino effect, where those sites will begin to charge?
A. Charging for news on the publishers proprietary channels like Web sites and mobile apps will limit the audience for their news, and hence limit the revenue opportunity. It will certainly not push CNN _et al_ into charging for news, because it will demonstrably fail to create big new revenue streams. Without the shift to an open clearinghouse system, paid models will have very limited success for the reasons outlined above. But_ with_ the rights and payments clearinghouse, a local publishers content might find a much wider audience on other news sites, niche sites (like Drudge) and even on CNN, Fox and the like, with revenue channeled back to the originating publisher. That publisher, themselves, can do the same thing: aggregate content from many sources, deliver it on a variety of platforms to their local audience, and share in the ensuing revenue growth.
Q. Will a changing signal the near end of print media or will charging online fail disastrously?
A. Charging will have little impact on the sustainability of print. US newspapers have already lost about half their total revenue over the last five years; they are still losing revenue year-over-year in each succeeding calendar quarter, and very little of that will ever come back, because no retailer, brand marketer or advertising agency is trying to figure out how to spend more money in print. They all want to connect with consumers digitally, because thats where consumers are shifting their attention more and more (with a significant age skew, but even baby boomers are buying iPads and reading more and more of their news online). Print publishers may think that they can stabilize things and survive on a lower profit margin, but (a) they have no cushion left against the next recession, (b) those demographic trends will continue inexorably, (c) the impact of iPad and other tablets and ereaders on reading habits is just beginning, and (d) newspaper circulation continues to fall at five or six percent year over year, as well (which is much faster than it ever was until five years ago. So clearly, at some point theres a tipping point, where daily print is no longer sustainable — you might see publishers switching to weekly or twice-weekly, and perhaps thats sustained for another 5-10 years in most markets on the strength of preprinted advertising. But even that still-lucrative revenue stream will dry up as marketers find ways to deliver those promotions digitally.
The premise of your questions seems to be that charging is the hail-Mary do-or-die option facing publishers right now. But in reality, the do-or-die choice is to follow their audience to the digital side, to figure out how to connect with them and stay connected, and make their money by facilitating transactions. Essentially, thats what newspapers always did: retailers had to reach out to customers, customers had to show up at stores to buy things, and newspaper advertising made that connection. Now, the transaction can happen anywhere, anytime. So its no longer a question of presenting a two-dimensional advertising message to move a customer to a store — its about connecting a customer with a retailer and moving the merchandise (or services) to the customer. Ebay and Amazon do that very well. Newspapers could figure out how to do it, but Im afraid very few of them have the requisite capacity for innovation, change, and entrepreneurship — let alone the financial resources to make it possible.
Over at NiemanLab, there has a been a litany of predictions for journalism for 2011; my own should be in the works over there. But at Quora, where Im a member, somebody asked, "What will journalism look like 10 years from now?" This is a good question, because year-to-year changes dont always reflect the long-term trends. Heres the answer I posted: There are those who say that only trained professionals can practice journalism, but as a practical matter, journalism will continue to be practiced by a range of people with professionals at one end and amateurs at the other, publishing via a range of channels with large commercial and non-profit news organizations at one end and individual bloggers at the other. Some of these will have paid access, some will be free; some will be on paper, some on websites, some on apps, some on other channels, and many on some combination of these distribution methods. Journalism will be fully platform-independent. But although platforms and cost are not directly relevant to how journalism will be practiced, they do affect how journalists may earn a living. So lets look at ways the work of journalists across the spectrum may change over the next ten years: MORE FREELANCERS: Individual journalists will have enhanced ability to earn a living by selling directly to news consumers, which will better enable them to operate outside of traditional news organizations and sell their content in multiple ways including syndication, curated channels, individually branded channels. DEEPER, SMARTER ANALYSIS: The teams unleashed on the Wikileaks troves are just one example of the ways journalists could be extracting more information out of piles of data, much of which is publicly and legally available but not subjected to journalistic scrutiny. To do this, journalists will need to acquire better skills and resources in data mining and statistical analysis. MORE SOPHISTICATED COVERAGE OF NICHE TOPICS: Journalists have traditionally been generalists with training and experience covering broad topics like politics and business, but with relatively few journalists specialized on narrower topics in science, medicine, engineering, education, philosophy, etc. But coverage of special interest niches offers some of the more lucrative revenue opportunities going forward, so there will be more journalist/scientists, journalist/doctors, journalist/engineers, etc. who offer expert coverage in many narrow topical areas. MORE ACCOUNTABILITY THROUGH SOCIAL COMMUNITIES: Nearly all journalism will be practiced in conjunction with robust social networking functionality. To some extent this is already the case as there is commenting on stories, distribution of story links via Twitter and Facebook, etc. But social functionality will evolve into the formation of many more online communities around topical content, so that nearly all journalistic output will be subjected to more rigorous, more real-time scrutiny and discussion. As well, these content-focused communities will become resources to journalists in researching and reporting news. MORE LOCAL COMPETITION: Barriers to entry are nil at the local level. While newspapers and broadcasters have had some degree of monopolistic control over local news markets, their remaining dominance will disappear, creating many opportunities for locally-focused news enterprises supported by advertising networks connecting local businesses with consumers across multiple platforms. MORE DIVERSITY (IN THE US): As the country becomes more diverse — ethnically, politically, religiously, socially — there will be many more opportunities for minority journalists in many fields of coverage. MORE MULTIMEDIA: This should go without saying, because even today a journalist should be proficient not only with written language but with audio, video and graphics of all kinds. THE DEATH OF THE "STORY:" Just as "editions" are obsolete in a 24/7 continuous news cycle, so will "stories" as units of output. News output will become wikified — that is, most developing news stories will start out as a quickly-broadcasted headline; it will grow into a news alert of a paragraph or two; that will evolve into a story; the story will gather social input and commentary, becoming a wiki; the wiki will evolve just like a Wikipedia entry through further input from the community and from journalists; it will split into multimedia formats and gain multimedia illustrative components; and finally it will gain analytical depth and statistical data components as appropriate. Rather than the currently typical story about a news development in which there are a few new facts and a great deal of rehash of background, those new facts simply become attached to the existing, ongoing, long-lived topical wikis, or to several of them. "Breaking news" effectively will consist of the changelogs of the wikis.
TIME TO LOOK BACK ON MY PREDICTIONS FOR 2010, POSTED DECEMBER 17, 2009. HERE ARE THE FULL TEXTS OF THE PREDICTIONS, WITH OUTCOMES, AS NEAR AS ASCERTAINABLE AT THIS POINT. (POSTED ALSO AT NIEMAN JOURNALISM LAB)
NEWSPAPER AD REVENUE
PREDICTION: At least technically, the recession is over, with GDP growth measured at 2.8 percent in Q3 of 2009 and widely forecast in Q4 to exceed that rate. But newspaper revenue has not followed suit, dropping 28 percent in Q3. McClatchy and the New York Times Company (which both came in at about that level in Q3) hinted last week that Q4 would be better, in the negative low-to-mid 20 percent range. This is not unexpected — in the last few recessions with actual GDP contraction (1990-91 and 2001), newspaper revenue remained in negative territory for at least two quarters after the GDP returned to growth. But the newspaper dip has been bigger each time, and the current slide started (without precedent) a year and a half before the recession did, with a cumulative revenue loss of nearly 50 percent. Newspaper revenue has never grown by much more than 10 percent (year over year) in any one quarter, so no real recovery is likely. This is a permanently downsized industry. My call for revenue by quarter (including online revenue) during 2010 is: -11%, -10%, -6%, -2%.
REALITY: CLOSE, ONE CIGAR. Actuals for Q1, 2, and 3: -9.70%, -5.55%, – 5.39%. And Q4, while not a winner, will probably be “better” than Q3 (that is, another quarter of “moderating declines” in news chain boardroom-speak). So, a win on the trendline, and pretty close on the numbers.
NEWSPAPER ONLINE REVENUE
PREDICTION: Newspaper online revenue will be the only bright spot, breaking even in Q1 and ramping up to 15% growth by Q4.
REALITY: CLOSE, ONE CIGAR. Actuals for Q1, 2, and 3: +4.90%, +13.90%, and +10.7%. Since Q1 beat my prediction and was the first positive result in eight quarters, I’d say that’s a win, and pretty close on the ramp-up, so far. Q4 might hit that 15%.
NEWSPAPER CIRCULATION REVENUE
PREDICTION: Newspaper circulation revenue will grow, because publishers are realizing that print is now a niche they can and should charge for, rather than trying to keep marginal subscribers with non-stop discounting. But this means circulation will continue to drop. In 2009, we saw a drop of 7.1% in the 6-month period ending March 31, and a drop of 10.6 percent for the period ending Sept. 30. In 2010, we’ll see a losses of at lest 7.5% in each period.
REALITY: HALF A CIGAR. Actual drop in the March 31 period was 8.7%; actual drop in the Sept. 30 period was 5.0%. So, half a win here.
PREDICTION: I don’t think we’re out of the woods, or off the courthouse steps, although the newspaper bankruptcy flurry in 2009 was in the first half of the year. The trouble is the above-mentioned revenue decline. If it continues at double-digit rates, several companies will hit the wall, where they have no capital or credit resources left and where a “restructuring” is preferable and probably more strategic than continuing to slash expenses to match revenue losses. So I will predict at least one bankruptcy of a major newspaper company. In fact, let’s make that at least two.
REALITY: CORRECT — TWO CIGARS. Well, MediaNews Group filed its strategic bankruptcy in January, as did Morris Publishing. So this was a quick win. Canwest Ltd. Partnership, publisher of 12 Canadian papers, filed in January as well.
NEWSPAPER CLOSINGS AND PUBLISHING FREQUENCY REDUCTIONS
PREDICTION: Yup, there will be closings and frequency reductions. Those revenue and circulation declines will hit harder in some places than others, forcing more extinction than we saw in 2009.
REALITY: WRONG. Nope, everybody managed to hang on, nobody of any size closed.
PREDICTION: It’s interesting that we saw very little M&A activity in 2009 — none of the players saw much opportunity to gain by consolidation. They all just hunkered down waiting for the recession to end. It has ended, but if my prediction is right and revenue doesn’t turn up or at least flatten by Q2, the urge to merge or otherwise restructure will set in. Expect to see at least a few fairly big newspaper firms merge or be acquired by other media outfits. (But, as in 2009, don’t expect Google to buy the New York Times or any other print media.)
REALITY: WRONG. Google didn’t buy the Times or any other newspaper, but by the same token, there were no significant mergers or acquisitions all year. So much for Dean Singleton’s promise of “consolidation” in the industry after MediaNews emerged from its quick bankruptcy.
PREDICTION: Given the fact that newspaper stocks generally outperformed the market (see my previous post), it’s not surprising that there were few changes in the executive suites. But if the industry continues to contract, those stock prices will head back down. Don’t be surprised to see some boards turn to new talent. If they do, they’ll bring in specialists from outside the industry good at creative downsizing and reinvention of business models. Sooner would be better than later, in some cases.
REALITY: NOT FLAT WRONG, BUT NOT CLOSE. Perhaps the closest any company came to truly shaking things up was Journal Register Company, which in January appointed as its CEO John Paton, an executive with experience in Hispanic media. He’s not an outsider, but he’s preaching a very different gospel that includes a clear vision for a web-based future for news. Elsewhere, Tribune, still dealing with bankruptcy, tossed CEO Randy Michaels, not for strategic reasons but because accusations of sexism and other dumb behavior were “tarnishing” the company’s name.
PREDICTION: There will be more and more launches of online and online/print combos focused on covering towns, neighborhoods, cities and regions, with both for-profit and nonprofit bizmods. Startups and major media firms looking to enter this “space” with standardized and mechanized approaches won’t do nearly as well as one-off ventures where real people take a risk, start a site, cover their market like a blanket, create a brand and sell themselves to local advertisers.
REALITY: CORRECT. This is happening in spades. AOL’s Patch launched hundreds of sites. It may be a “standardized” approach, but it’s not “mechanized,” and hired more journalists than any company has in decades. At the same time, one-off ventures continue to sprout in towns and cities everywhere.
PREDICTION: At the end of 2008, this wasn’t yet much of a discussion topic. It became the obsession of 2009, but the year is ending with few actual moves toward full paywalls or more nuanced models. Steve Brill’s Journalism Online promises a beta rollout soon and claims a client list numbering well over 1000 publications. Those are not commitments to use JO’s system — rather, they’re signatories to a non-binding letter of intent that gives them access to some of the findings from JO’s beta test. Many publishers, including many who have signed that letter, remain firmly on the sidelines, realizing that they have little content that’s unique or valuable enough to readers to charge for. JO itself has not speculated what kind of content might garner reader revenue, although its founders have been clear that they’re not recommending across-the-board paywalls. So where are we heading in 2010? My predictions are that by the end of the year, most daily papers will still be publishing the vast majority of their content free on the Web; that most of those experimenting with pay systems will be disappointed; and that the few broad paywalls in place now at local and regional dailies will prove of no value in stemming print circulation declines.
REALITY: CORRECT. Most papers are still publishing the vast majority of their content free on the web. ALSO CORRECT: Broad paywalls have done little to stem the decline in print. JURY STILL OUT: But it’s too soon to tell whether those experimenting with paywalls are disappointed. All eyes are on the impending paywall start at the New York Times.
PREDICTION: The recently announced consortium led by Time Inc. to publish magazine and (eventually) newspaper content on tablets and other platforms will see the first fruits of its efforts late in the year as Apple and several others unveil tablet devices — essentially oversized iPhones that don’t make phone calls but have 10-inch screens and make great color readers. Expect pricing in the $500 ballpark plus a data plan, which could include a selection of magazine subscriptions (sort of like channels in cable packages, but with more a la carte choice). If newspapers are on the ball, they can join Time’s consortium and be part of the plan. Tablet sales will put a pretty good dent in Kindle sales. One wish/hope for the (as yet un-named) publisher consortium: atomize the content and let me pick individual articles — don’t force me to subscribe to a magazine or buy a whole copy. In other words, don’t attempt to replicate the print model on a tablet.
REALITY: CORRECT, MORE CIGARS. My iPad description and data plan price point were right on the mark. It’s hard to say for sure whether iPad sales have put much of a dent in Kindle sales, since Amazon doesn’t release numbers, but Kindle sales are way up after a price cut. The magazine consortium, now called Next Issue Media, still has no retail product, but it does look like it intends to “replicate the print model on a tablet” rather than recognizing atomization. Meanwhile, the Associated Press is recognizing atomization with its plan for a rights clearinghouse for news content.
PREDICTION: Twitter usage will continue to be flat (it has lost traffic slowly but steadily since summer). Facebook will continue to grow internationally but is probably close to maxing out in the U.S. With Facebook now cash-flow positive, and Twitter still essentially revenue-less, could Zuckerberg and Evan Williams be holding deal talks sometime during the year? It wouldn’t surprise me.
REALITY: WRONG, MOSTLY. Twitter is still fairly flat in web traffic, but it’s growing via mobile and Twitter clients, so its real traffic is hard to gauge. No talks between Twitter and Facebook, though.
PREDICTION: The Federal Trade Commission will recommend to Congress a new set of online privacy initiatives requiring clearer “opt-in” provisions governing how personal information of Web users may be used for things like targeting ads and content. Anticipating this, Facebook, Google and others will continue to maneuver to lock consumers into opt-in settings that allow broad use of personal data without having to ask consumers to reset their preferences in response to the legislation. In the end, Congress will dither but not pass a major overhaul of privacy regs.
REALITY: CORRECT. Indeed, we don’t have any major overhaul by Congress, but we’re actually seeing more responsible behavior from all of the big players with regard to privacy, including better user controls on privacy just announced by Microsoft.
PREDICTION (with thanks to Art Howe of Verve Wireless): By the end of 2010 a huge shift toward mobile consumption of news will be evident. In 2009, mobile news was just getting on the radar screen, but during the year several million people downloaded the AP’s mobile app to their iPhones, and several million more adopted apps from individual publishers. By the end of 2010, with many more smartphone users, news apps will find tens of millions of new users (Art might project 100 million), and that’s with tablets just appearing on the playing field. During 2009, Web readership of news (though not of newspaper content) overtook news in printed newspapers. Looking out to sometime in 2011 or 2012, more people will get their news from a mobile device than from a desktop or laptop, and news in print will be left completely in the dust.
REALITY: JURY STILL OUT, BUT LOOKING CORRECT. To my knowledge, nobody has a handle on how many news apps have been sold or downloaded, but certainly it’s in the tens of millions, counting both smartphone and tablet apps. One the other hand, a lot of people with apps on their phones don’t use them. As to where mobile ranks among news delivery media, the surveys haven’t picked up the trends yet, but wait till next year.
PREDICTION: I accurately predicted the Dow’s rise during 2009 and that newspaper stocks would beat the market (see previous post), but neglected to place a bet on the market for 2010, so here goes: The Dow will rise by 8% (from its Dec. 31 close), but newspaper stocks will sink as revenue fails to rebound quarter after quarter.
REALITY: ON THE MONEY. As of mid-afternoon December 15, the Dow is up 10.19% for the year, so I claim a win on that score. The S&P 500 is up 11.11%, and the NASDAQ is up 15.63%. Among newspaper groups, McClatchy (up 33%), Journal Communications (up 26%) and E.W. Scripps (up 44%) handily beat the market, but all the other players indeed sank or underperformed the market: New York Times Company is down 23%, News Corp. is up 5%, Lee Enterprises is down 30 percent, Media General is down 30% and Gannett is up 4%._(Posted also at Nieman Journalism Lab) _
When last we checked on the Newspaper Association of Americas webstats (and other data) back in April, the monthly website usage information that the nations daily newspaper organization was publishing came from Nielsen Online, and it wasnt all that pretty. The NAA tried to put the best spin on the data, but as we pointed out at the time, time spent at newspaper sites was in the doldrums and getting gradually worse, with three of the seven shortest attention spans measured by Nielsen occuring in the first quarter of 2010: 34:10 minutes in January, 31:39 minutes in February, and 32:21 minutes in March. For context, consider that at the time, also according to Nielsen, the average Facebook user was spending nearly seven hours on the social networking site. It looks like NAA was not happy with those first quarter web stats. It published April data from Nielsen but offered no further updates for four months. At that point, I inquired whether NAA had decided to stop publishing the data, and was informed by Jeff Sigmund, Director of Communications, that "a new methodology" was in the works. The new methodology turns out be be Comscore. Last Thursday, NAA posted Comscore data for September, and simultaneously wiped all the old Nielsen data off its site. The reason for the switch is clear: Comscores results are more favorable to newspapers than Nielsens in several categories, as trumpeted in an NAA press release. As part of the switch, Comscore provides NAA with data specific demographic slices, something it didnt get from Nielsen. For example, it reports: "More than 55 percent of adults in the 25-to-34-year-old demographic visited a newspaper website in September. During that same time period, 52 percent of this age group visited Yahoo! News Network, 22 percent visited CNN and 24 percent visited MSNBC." Wed love to drill a little deeper there, but that particular comparison seems to suggest that with no real statistical difference between Yahoo!News and the entire newspaper business in reach among 25-to-34-year-olds, Yahoo! offers a vastly more efficient one-stop ad buy than newspapers do. Similarly, NAA says Comscore found that "one-in-four (25 percent) of adult newspaper website visitors come from households earning at least $100,000 a year, compared to 21 percent of all adult Internet users." News consumption and newspaper readership have always skewed a bit toward higher income strata, so thats not surprising — in fact, that four percent advantage is not particularly impressive, and here again, advertisers can easily find sites that are far more efficient in reaching high-income consumers. When compared with the old Nielsen data, the benefits of the vendor switch are obvious. In March, Nielsen found 72.1 million unique visitors, which was about equal to the average for the previous 9 months. But in September, Comscore identified 102.8 million UVs, "almost two-thirds (61 percent) of all adult Internet users" according to the NAA release. (The release explains that Comscore is now NAAs preferred methodology because "it more accurately reflects the true size of the newspaper Web home and at-work online audience," but it offers no explanation of the major discrepancies between the old and new systems. "More accurately" seems to mean "they found more of them.") Time spent, or engagement, is the metric that matters most to advertisers these days. Unique visitors, no matter how impressive a slice of the total web audience they represent, dont deliver customers to advertisers. They key is whether site visitors are engaging — interacting — with the content and the advertising on the site, and that kind of engagement still eludes most online newspapers. The NAA release says "the findings point to engagement," without putting that engagement in context or mentioning the specific per user, per visit "time spent" portion of Comscores findings, which are posted in the "Trends and Numbers" section of NAAs site. There, Comscore reports 3.8 minutes per September visit, and 8.5 visits per visitor, for the month. Thats 32.3 minutes per visit, total, for the month of September — a result slightly below the first-quarter average of 32 minutes, 43 seconds found by Nielsen. So in the engagement metric, "more accurate" means "almost exactly the same." So, while its no doubt statistically invalid to directly compare the Nielsen and Comscore findings, what NAA seems to have bought by switching is a larger audience spending about the same amount of time per visitor. And that "time spent" by either method boils down to an average of about a minute per user per day — still only about one half of one percent of all time spent online. Comscore measured a total of 3.3 billion minutes spent at (U.S.) newspaper websites (compared to an average of 2.3 billion in the first quarter — the increase being due to the improved UV count) which sounds like a lot until you consider that (in August, and globally) we collectively spent 41.1 billion minutes at Facebook. Those figures should not be directly compared, but its clear that newspapers, collectively, enjoy just a fraction of the attention the top social network commands. Perhaps more important than all of this statistical nitpicking, though, is the fact that while the NAA fiddles with methodology and stat sourcing, the audience, is in the middle of another major shift in its digital news consumption from web browsers to mobile platforms — smartphones, e-readers and tablets. By sometime in 2012, cumulative sales of iPads, alone, will exceed the number of home-delivered newspaper subscriptions. The majority of mobile content consumption is likely to fall on the leisure side of the consumers online time — enabling deeper, longer engagement than the fleeting workday news consumption being measured by Nielsen and Comscore. Many newspapers are in fact working to follow their audience in this shift (though few are _leading_ them there), but NAA is still stuck in an earlier mode of touting questionable browser traffic stats. NAAs vendor switch for the sake of a somewhat more impressive monthly press release misses the mark of what it should really be doing to help its members find a digital audience. Its time for NAA to dig much more deeply and broadly into this shifting landscape — to begin measuring and comparing news consumption in print, in broadcast, on computers and on mobile devices. So far, few news media have found ways to make their digital versions profitable, let alone self-sustaining in the absence of their legacy print versions. Will they ever get there, when their national trade organization is still refining "methodology" for counting its web browser audience, while that very audience is rapidly shifting its consumption to a whole new generation of digital devices in which usage of apps, rather than websites, is what counts? Photo by Paul Mayne, used under Creative Commons license.
Jason Fry suggested in a post here last week that current paywall thinking might be just a temporary stop along the way to adoption of “paytags — bits of code that accompany individual articles or features, and that allow them to be paid for.” But how? As Fry recognizes, “between wallet friction and the penny gap, the mechanics of paytags make paywalls and single-site meters look like comparatively simple problems to solve.” I suggested a possible framework for a solution during a couple of sessions at the conference “From Blueprint to Building: Making the Market for Digital Information,” which took place at the University of Missouri’s Reynolds Journalism Institute June 23-25. Basically, my “what-if” consisted of two questions: * What if news content owners and creators adopted a variation on the long-established ASCAP-BMI performance rights organization system as a model by which they could collect payment for some of their content when it is distributed outside the boundaries of their own publications and websites? * And, taking it a step further, what if they used a variant of Google’s simple, clever, and incredibly successful text advertising auction system to establish sales-optimizing pricing for such content? READ THE REST AT NIEMANLAB.
Newspapers could borrow a line from a recent Dilbert comic strip: “We’ve been doing great since we redefined success as a slowing of failure.” Or perhaps it was the other way around, and Dilbert creator Scott Adams was inspired to write that line in a recent strip by the inventive terminology of newspaper executives describing “sequential improvement” and “moderating declines” in their revenue trends despite continuing losses in the double digit range. Currently, the industry is reporting first-quarter earnings, and last week the Audit Bureau of Circulations released unaudited “publisher’s statements” reporting paid circulation for the six months ending March 31. The numbers are down, but the spin is up. On the circulation front, the Audit Bureau of Circulations reported that circulation fell 8.7 percent on weekdays and 6.5 percent on Sundays, among newspapers filing publisher’s statements. This compares with drops of 10.6 percent weekdays and 7.6 percent Sundays for the prior six-month period, enough of an improvement for Newspaper Association of America CEO John Sturm to declare that “the data indicates the declines are moderating.” Actually, it’s hard to discern real moderation in the rate of decline. The losses in the most recent period are indeed a bit less severe than those in the prior (Sept. 30) period, but they are worse than the drop in the period before that, _or in any previous period_. If we ignore the Sept. 30 data as an outlier, we actually have a trend that’s been worsening steadily for the last six years: Nothing about that final uptick indicates that it’s a reversal of the trend — it would take two or three periods of “improvement” in the form of “moderating declines” to make that a valid conclusion.CONTINUE READING THIS POST AT NIEMAN JOURNALISM LAB.
One of the hottest companies around is Groupon, the social buying site thats offering daily deals in dozens of cities, and has dozens of clones trying to capitalize on the business model. It is, or should be, of interest to newspaper publishers because (as Michael Skoler has written about at NiemanLab) (a) it is probably eating their lunch, and (b) offers a model that they can adapt to facilitate, and profit from, direct connections between their readers and local retailers of goods and services. Just how big is this opportunity? Pascal-Emmanuel Gobry was wondering at Business Insider which of the Groupon revenue and profitability guestimates are correct. He wrote:
Were still very bullish on Groupon and think its valuation was justified at whatever end of the spectrum its financials are, given the market and the brand. But its financial picture is still very hazy. Who has the details? Let us know!So I responded with a calculation based on Groupons own data:
Why is the picture hazy? Groupon all but publishes its revenue in real time. Groupons revenue is easy to estimate from the real-time stats they have on their site, plus estimates from sampling the deals to see what the average discount is. Heres my calculation based on the deal clock from Feb. 16 to April 4. Based on that period, revenue annualized to $150 million. However, its growing rapidly, so $350 million is certainly possible. 3,001,657 "Total Groupons bought" as of 4/4 1,905,218 "Total Groupons bought" as of 2/16 1,096,439 Groupons bought in 47 days 23,328 Average number of Groupons sold per day, national total 543 Average number of sales per Groupon (per day total divided by 43 cities) $141,593,040 "Total dollars saved" 4/4 (how much they saved customers) $87,996,041 "Total dollars saved" 2/16 $53,596,999 Savings in 47 days $92,408,619 Gross value (58% avg discount - based on a sampling of Groupons) $38,811,620 Net revenue (42% actually paid by buyers) $825,779 avg sales/day $35.40 average individual sale/deal $19,204 average total revenue per deal $301,409,389 Current annualized sales pace (actual cash, not undiscounted value of deals) $150,704,695 Groupon share of revenue at 50% As to growth to a $350 million 2010 pace: the deals clock at this moment is at 4,007,360, the "dollars saved" clock is at $154,567,861. Thats just 12 days after my prior benchmark on 4/4. So the deals pace is accelerating (83,808 daily deals sold per day in the past 12 days vs 23,328 in the prior 47 days). However, the value of the average deal is dropping, probably as Groupon moves into smaller markets. Based on the increase in dollars saved over the past 12 days, revenue has actually DROPPED to $782,963 per day, or a $142 million pace. Twelve days is not a good sample period, but this does suggest that the pace is leveling off. So I would say: they are heading for $150 to $200 million this year (assuming some additional growth and of course holiday spending uptick). I think expansion beyond this pace gets difficult, unless they find ways to (a) move into smaller markets, and (b) expand their demographic appeal beyond the young urban professional women who predominate right now. I leave it to others to figure out what Groupons costs are against this, but I suggest that a 50% operating margin is not out of the question - so, something in the $75-100 million range (EBITDA).Clarification: my estimate of $150-200 million is after paying the merchants 50 percent. So Groupon would actually report $300-$400 million in revenue on this basis. Update: based on another comment at Business Insider (questioning whether Groupon is a great idea from a merchants perspective), I added this comment:
Theres an interesting discussion of Groupon from the merchants perspective in this thread at Groupons own forums (goes on for 8 pages, well worth perusing). Merchants need to see Groupon as a marketing channel, not a sales channel. Yes, when they are the featured deal of the day, theyll sell hundreds of items or services at or below cost. But they dont do this every day, or even every month, because Groupon wants a lot of diversity in what its offering. Again the math is worth considering: Say you have a nail salon in Denver (nail jobs seem to be particularly popular on Groupon). You offer on Groupon a $75 service for $32 - close to the average discount. You sell 1000 of them, and Groupon pays you half the proceeds or $16,000. (You get that over 3 months, while the redemptions will probably spread over the next year, so you have a bit of cash flow advantage there.) Lets say your out-of-pocket cost for providing those services are $40 apiece or $40,000, so youre out $24,000. Thats your marketing expense to get 1000 ladies (mostly) into your store, or $24 each. Do a good job and they come back. You have the opportunity to upsell each of them - do a $24 upsell and youve recouped your entire out-of-pocket expense. Plus youve had the marketing exposure of being on the Groupon site, being featured in Groupons emails to thousands of members, etc. At the end of the day, youre certainly better off, if you do it right. And its doubtful whether $24,000 in advertising on Denver radio, TV and print would bring 1000 people into your store.Update 2, April 17: Paul Butler did a bit more sophisticated data scraping and came up with some pretty similar numbers.
A year ago, in a Nieman Journalism Lab post that garnered 88 comments and still has viral life out there, I maintained that just three percent of newspaper content consumption happens online; the rest of it happens the old fashioned way, by people reading ink on dead trees. Given the continuing attention being paid to that conclusion (it was cited just last month by Hal Varian, Google’s chief economist, in testimony to the Federal Trade Commission), let’s revisit the numbers and see whether anything has changed. With updates or improved data on at least some of the numbers, the general conclusions still hold: U.S. newspapers have not pushed much of their audience to their websites, nor have they followed the migration of their readership to the web. Their combined print and online readership metrics, whether measured in pageviews or in time spent, show that there’s been significant attrition since last year in the total audience for newspaper content, and that the fraction of that audience consuming newspaper content online remains in the low-to-mid single digits. Continue reading at NIEMAN JOURNALISM LAB.
A new study by the Associated Press has come to the conclusion that consumers are “tired, even annoyed, by the current experience of advertising,” and that, as a result, they don’t trust very much of it. But at the same time, AP found, consumers do want information relevant to their needs, as well as ways to socialize that information. Although it tends to move cautiously and deliberately, AP has been subtly and quietly introducing tools aimed at improving relevance and socialization, and may have plans for an ad-supported aggregation business that applies what it has been learning. I spoke about the study with Jim Kennedy, AP’s vice-president for strategic planning, about how the study’s findings will impact AP’s strategic thinking. “The future of information delivery needs to be quite different from current practices and quite different from the old packaged practices that we’ve had offline and online so far,” Kennedy said. “That’s the big deal for us now. You can’t figure all that out in a minute or even a year.” Continue reading this post at NIEMAN JOURNALISM LAB.