Editor & Publisher asked readers to nominate news organizations that are doing innovative things to diversify their businesses and find new revenue streams, and the list of 10 Newspapers That Do It Right 2012 shows that creative thinking is alive and well at mainstream publishers, although mostly at smaller ones.
The mini-case studies are a grab bag of ideas, ranging from novel circulation promotions to radical new lines of business, but they all have one thing in common: They leverage the newspaper’s unique position as a trusted companion within a geographic area.
Some papers have found ways to innovate within their traditional business, like the Carrollton, GA Times-Georgian, which scrapped its advertising rate card in favor of a time-based package that gives advertisers a variety of positions and sizes. It’s a smart idea that recognizes that advertisers are the least-qualified people to dictate where and when an ad should run.
Others are diversifying outside of the advertising dependence that has been the crack cocaine of the newspaper industry. The Altoona Mirror in Pennsylvania launched an events business that hosts thematic gatherings around things like cooking and outdoor recreation. The new line of business is a natural extension of the newspaper’s traditional role as community gathering spot, but also requires a change of philosophy. “We’re not selling a product called ‘a newspaper’ but manufacturing a product called ‘audience,’” said General manager Ray Eckenrode. That wasn’t so hard, was it?
Several organizations have completely merged their print and online operations, which surprised us because we assumed most newsrooms had done that a long time ago. Still, the reorganizations have cut production times and improved staff morale as journalists have bought into the idea of platform independence. It’s hard to believe that at some newspapers copy is still thrown over the wall between Web and print instead of created from scratch for an online audience.
A couple of entries even highlighted efforts by newspapers to push into the broadcast market. Manitoba’s Winnipeg Free Press, which is one of the largest papers to be recognized, took advantage of cutbacks in election coverage by local TV stations to set up a live webcast at a coffee house and analyze election results throughout the evening. Considering the dismal quality of most local TV news operations after years of cutbacks, this seems like low-hanging fruit.
E&P also lists 11 honorable mentions for a total of 21 stories of innovation. The package is nicely edited and there’s an accompanying photo gallery. It would be nice if there were hyperlinks to some of the featured examples, but we supposed E&P has still got some learning to do.
Money from Content
We recently reported on a little-noticed milestone in the New York Times Co.’s fourth-quarter earnings: Revenue from digital sources surpassed editorial operating costs, making it theoretically possible for the Gray Lady to get out of print entirely without affecting its editorial quality.
Now the Financial Times may be about to turn another corner. Content sales are about to eclipse advertising revenue. CEO John Ridding sprang this news on an FT conference in London earlier this month. The secret is mobility. By reaching paying audiences on phones and tablets around the globe, the FT is able to greatly increase its reach at almost no marginal cost. More important is that it now knows something about those people.
“The real power is in data,” Ridding said. “We’re moving from the dark ages where people would walk into a newsagents and we wouldn’t know them but now we know pretty much everything about them.” Contrast that thinking to a recent Pew report that found that few newspapers are using targeted advertising to reach online readers based upon their interests. But the FT is a business paper, after all.
Of course, the crossover is also influenced by the ongoing precipitous declines in print advertising. US newspaper ad revenues fell 7.3% year-over-year in 2011 to $23.94 billion, according to the Newspaper Association of America. We doubt the FT’s UK and European markets fared much better. Like the success stories spotlighted in Editor & Publisher, the FT is finding ways to escape the burning house before it’s too late. Incidentally, 60% of publishing leaders polled in one informal survey said they expect print publishers to be digital-only by 2020.
Near the end of the overview section of the Pew Research Center’s exhaustive study of the business issues facing American newspapers, one unnamed executive sums up the industry’s dilemma: ”There might be a 90% chance you’ll accelerate the decline if you gamble and a 10% chance you might find the new model. No one is willing to take that chance.”
That’s it in a nutshell. The newspaper industry is standing on a railroad trestle 100 feet above a rushing river while a locomotive bears down on it. The only thing worse than getting hit by the train is jumping out of the way. The study outlines in depressing detail how paralyzed the industry is in its search for new business models, although there are glimmers of hope in the successes of a few innovators.
Pew’s Project for Excellence in Journalism surveyed 38 US newspapers and conducted extensive on-site follow-up interviews to examine the industry’s search for new business models. The sample was representative of the composition of US newspapers as a whole, with a mix of geographies and a preponderance of smaller titles.
In general, small papers are faring better than the large ones, but all are facing the same specter off print advertising declines that far exceed growth of digital alternatives. In fact, researchers concluded that for every $1 gained in new digital revenue, newspapers are losing $7 of print revenue.
“There’s no doubt we’re going out of business right now,” said one executive.
No Names, Please
One of the project’s most frustrating characteristics is its anonymity. Researchers had to promise not to name names in order to get executives to let down their guard. The result is some memorable quotes but few actionable examples. We learn of one small paper that posted 63% growth in digital revenue in the last full year while also growing print sales 8%. Another major metro daily was said to have grown its digital business 50% in the last year. It would great if these outliers would come forth and tell everyone else how they did it, but we may never know their identities.
The Pew study is emphatic in identifying the industry’s core problems as more cultural than operational. “There’s a big difference between understanding the new media environment and comprehending what it takes to adapt,” says one executive.
Fifteen years after the arrival of the commercial Internet, the industry continues to rely on print advertising to an alarming degree and has made only halting progress in developing new revenue streams. That isn’t for lack of trying. Everyone is trying to find digitally savvy salespeople, most are paying premiums for online ad sales and all publishers are aware of the need to experiment with alternative revenue sources like daily deals and business services.
However, they’re mostly having meager results. Few papers studied in the report are taking advantage of the growth in targeted digital advertising. Most are still reliant upon low-margin display ads. Nearly half of the publications have experimented with alternative revenue streams like consulting services and digital shopping malls, but only one reported any significant revenue.
Culture Clash
Unfortunately, rapid sales declines in the profitable print business are creating a hair’s-on-fire hysteria that sabotages change. The kind of salespeople publishers need to hire don’t want to work in an industry that’s in crisis. The number of print-focused sales representatives outnumber digitally focused reps by about 3-1 at the newspapers surveyed and there continues to be debate at some companies about whether digital is event the future. That sounds incredible, but the study identifies entrenched resistance among many publishers to diverging from the business model that served them so well in the days of monopoly market share and 20% profit margins.
Officials at 10 of the 13 companies said their biggest challenge was the continuing tension between people in their organizations who are advocating a more aggressive digital approach and those more aligned with the legacy tradition. In essence, they described a conflict between going faster and going slower…”We haven’t needed innovative people,” explained one executive. “So you get what you need. The kind of people that came into this industry were more operationally focused, executors instead of innovator risk takers.”
The good news is that there is broad awareness at the highest levels of the companies surveyed that the industry’s problems aren’t going to heal themselves. In fact, no one quoted in the report suggests that the current downturn is temporary or cyclical. Where they differ is on what to do about it. “The data and interviews suggest companies are almost evenly divided between optimists and pessimists-evidence of a lack of consensus on how to proceed in developing the new business model,” the report says. Unfortunately, at a time like this the only certainty is that inaction is death.
“In contrast to the crisp, graphically engaging and highly interactive apps flooding the Apple store, the typical newspaper site is filled with gray, meandering columns of text requiring multiple swipes to get to the bottom of the page. That is to say: Newspapers don’t come close to leveraging the power of this new medium,” Mutter writes, pointing to products from the San Francisco Chronicle, Philadelphia Inquirer and even The New York Times as examples.
Many publishers are opting to use the native tablet browser to deliver content rather than customizing the experience for the device, and some are simply delivering PDF versions of their print products, Mutter says. This laziness is particularly alarming in light of the fact that people who consume information on tablets are among the most desirable prospects for paid circulation and advertising. The Newsosaur believes once they get a load of the visually rich and interactive offerings from magazine and broadcast competitors they’ll never come back to the digital broadsheets being offered by the dailies.
Although we own a tablet, we’ll admit we haven’t spent much time surveying the landscape of news apps. RSS feeds do the job just fine for us. However, if Mutter’s critique is on the mark, this is a head-slappingly stupid mistake on the part of publishers, who finally have a platform that at least some people are willing to pay for. Anyone who has worked in both print and digital media will tell you that the design and presentation skills that work in one format fail badly in the other. The worst mistake a print publisher can make is to put print designers in charge of online look and feel. It’s even worse on tablets, where apps offer a whole new level of interactivity. This is software, not ink on dead trees.
NYT Co. Takes Earnings Hit
Now the sobering news about The New York Times. Coming off a promising third quarter in which the company reported strong growth in subscriptions to its digital editions, parent New York Times Co. reported a $40 million loss in the fourth quarter on an 8% decline in print advertising. The paper’s paywall continues to thrive, and digital advertising revenue was up 5% in the quarter. However, the success online can’t make up for the continued free-fall in the much more profitable print advertising business.
The collapse of that revenue stream was dramatized by blogger Paul McMorrow, who came up with the chart at right. We can’t vouch for the accuracy of the numbers, but the choice of scale demonstrates clearly the industry’s dilemma. Digital revenue is nowhere close to making up for the decline in print.
The Times Co. was also hurt by a dramatic drop in the performance of About.com, the online encyclopedia/how-to engine it acquired for $410 million 2005. About.com was victimized by recent changes to Google’s search algorithms that penalized so-called “content farms” like Demand Media, which pay freelancers pennies to produce crap in the name of driving search traffic. About.com used to top Google search results for a lot of popular consumer queries, but no more. Profits at the site dropped 67% in the quarter on a 25% revenue decline.
Miscellany
Social media is beginning to cover itself. Social blogging site Tumblr, which hosts more than 42 million blogs, will hire two professional editors to write about what’s going on on Tumblr. The thinking is that a community with that many members must generate a lot of content all by itself. Twitter and Facebook have both recently hired journalists to write about what’s hot in those communities.
this release is republished verbatim from eMarketer. More here.
US online advertising spending, which grew 23% to $32.03 billion in 2011, is expected to grow an additional 23.3% to $39.5 billion this year-pushing it ahead of total spending on print newspapers and magazines, according to eMarketer. Print advertising spending is expected to fall to $33.8 billion in 2012 from $36 billion in 2011.
Online Growing Even Faster Than Expected: eMarketer’s previous US online advertising forecast from July 2011 was among the more bullish estimates issued during the year-forecasting 20.2% growth to $31.1 billion in 2011-yet consistently stronger-than-expected results from major industry players and the IAB/PwC benchmark through the first three quarters of 2011 contributed to the upward revision.
Total Ad Spending is Growing Too: Despite concerns about the troubled economy among agencies and marketers, total ad spending in the US is expected to rebound in 2012 after rising 3.4% to $158.9 billion in 2011, according to eMarketer. US total media ad spending will grow an estimated 6.7% to $169.48 in 2012, boosted by the national elections and summer Olympics in London, eMarketer estimates.
TV is Steadily Up: Spending on TV advertising grew 2.8% in 2011 to $60.7 billion, eMarketer estimates. This year, TV ad spending will grow an estimated 6.8% to $64.8 billion-driven the Olympics and election-while remaining resilient from worries about the soft economy.
Digital remains the sole bright spot for newspapers and magazines: eMarketer estimates US digital newspaper ad revenues grew 8.3% to $3.3 billion in 2011. Print advertising revenues at newspapers fell 9.3% to $20.7 billion in 2011. At magazines, US print ad revenues are expected to rise 0.5% to $15.34 billion in 2012, up from $15.3 billion last year. US digital advertising spending at magazines grew 18.8% to $2.7 billion in 2011.
We’ve posted several positive items about the local Patch operation in our community, a one-person news bureau that has become our favorite – and most timely – source of information about local events. So we feel it’s also important to share the news that AOL’s Patch operation, a constellation of more than 800 hyperlocal news sites, looks like a train wreck.
Business Inside says Patch has generated only about $8 million in revenue in 2011 on an investment of more than $160 million. InvestorPlace says revenues were closer to $20 million, but that Patch still lost $150 million on the year. Some investors are calling for the head of Tim Armstrong (right) the former Google executive who took the helm at AOL nearly three years ago. Armstrong conceived of Patch in 2007 and funded the first two years of its operations before assuming the top job at AOL in 2009 and buying Patch outright. Since then he’s embarked upon an aggressive expansion program to place hyperlocal news bureaus in as many US locations as possible. He’s also spent lavishly on the acquisitions of Huffington Post and TechCrunch. At this point, critics are calling the strategy a bust.
The problem with Patch is that the hyperlocal revenue model doesn’t work nearly as well as the hyperlocal news model. According to Business Inside, Patch sells advertising through a network of mostly outsourced telesales representatives. It’s clear that these sales people don’t have their tentacles into the local communities that are the core of Patch’s model. The advertising on our own local outlet is mostly a mix of display ads from big national brands (presumably sold at remainder prices), Google AdSense and a smattering of classifieds. With that kind of revenue base, it’s not surprising Patch is losing a fortune.
As we’ve argued before, the hyperlocal model needs to work from both the content and revenue perspectives. Patch has clearly succeeded in hiring editors who are closely tied in to their communities, but it isn’t doing that on the sales side. This is a tough problem to solve. Small businesses aren’t big advertisers to begin with, and the cost of deploying dedicated sales reps to 800 local communities would be far higher than the centralized telesales model. On the other hand, the centralized model isn’t exactly killing it.
We hope Patch figures it out, because it’s inventing some creative new ways to report the news. We continue to like the business model of Sacramento Press, which positions itself as an integrated marketing partner rather than an advertising outlet. Addiction to advertising revenue is one of the reasons newspapers are in so much trouble in the first place. In its current iteration, Patch appears to be making the same mistakes.
Miscellany
As if reporters don’t like to gripe enough, there’s a new website where they can do it anonymously in public. It’s called Dash30Dash.org, and it was started by a former newspaper reporter who wants “to give reporters, editors and others a chance to post comments about their jobs and their ever-changing profession.” So far, it looks like the commentaries are mostly limited to contributions from the site’s creator, but it’s still early. The writing is lively and pointed, so check it out.
Wood, whose personal fortune is estimated at $337 million, was apparently taken with the example of ProPublica in the U.S. That nonprofit investigative venture was also started with a large grant from a single donor but has been successfully diversifying its support base and now employs 34 editorial staff members. Wood’s commitment to support The Global Mail for at least five years resulted from a dinner party conversation with former Australian Broadcast Corp. journalist Monica Attard, who is now the site’s editor-in-chief. That’s pretty good sales efficiency in our book.
How bad is it in the magazine world? Two years ago we bought a subscription to ESPN magazine after finding a promotional offer of 26 issues for just $2. We subscribed simply for the experience of getting a fortnightly magazine for less than the cost of postage.
But it turns out we were getting a lot more than just ESPN. Around the time our subscription expired, we started getting Golf magazine every month in the mail. Golf’s promotional price is $10 a year, but we never paid for or requested a subscription. Then, about three months ago, Sports Illustrated began showing up in our mailbox each week. We like that because we’ve actually paid for Sports Illustrated in the past. However, we aren’t paying for this one. It appears to be another side=benefit of our $2 ESPN deal.
We’re not sure if this embarrassment of riches is at an end, but we do know that altogether we’re receiving about $70 worth of magazine subscriptions for $2. Why? Because the publishers are desperate. New Audit Bureau of Circulations rules have significantly relaxed the criteria for paid circulation. That means the publisher statements for Golf and Sports Illustrated now count us as subscribers despite the fact that we never requested or paid for either subscription. Any advertiser that thinks it’s getting an engaged audience through this accounting sleight-of-hand is fooling itself. Don’t get us wrong: We hope the SI subscription never runs out, but we are never, ever going to pay for it. Are we as valuable to an advertiser as a paying subscriber? Not so much. Is the print magazine industry in a crisis? We think so. BTW, we did not get the attractive tote bag that comes with a paid subscription..
Gannett Pounds 700 Nails in Print’s Coffin
If you need any further evidence that print has no future, look no further than Gannett’s announcement of 700 layoffs this week, says Poynter’s Rick Edmonds. Revenues at Gannett’s 81 community newspapers were down 7% overall and nearly 10% in print, even as most mainstream media are experiencing a modest recovery right now. Not so in print. Publishing operating margins fells four times as fast as revenues, and it’s been a decade since Gannett bought any print properties at all. Meanwhile, the company has reduced its stable of newspapers from 99 to 81. Its broadcast and online operations are actually doing just fine, but they’re not growing fast enough to make up for declines in print advertising. That’s the problem across the industry. Online revenues are growing, but the volume and margins are a tiny fraction of print revenue.
Gannett, which traditionally dances to the tune of Wall Street, is sending a message in aggressively cutting back on its already lean print businesses. In that respect, it’s ahead of the market. Edmonds points out that, ironically, “Metro papers like the Boston Globe and Dallas Morning News that have adopted a high price/high quality circulation strategy know readers will not be satisfied with skinny papers that have little worth reading. So those newsrooms are protected and, in a few cases, growing.” For a while, that is. Those papers are milking an aging but still profitable population that will dwindle sharply over the next decade. When the tipping point is reached and paid subscribers no longer justify a printed product, the closures will happen en masse.
Nonprofits Figuring It Out
We wrote recently about California Watch, a nonprofit investigative news operation that is breaking even by syndicating its content at low cost to dozens of news outlets to customize as they wish. California Watch and others like it understand the economics of multiple revenue streams. Few newspapers can afford to support large investigative reporting staffs, but a bunch of smaller publishers can collectively contribute enough to make an independent investigative team viable.
Co-director and veteran New England TV reporter Joe Bergantino (left) says, “To be successful you have to walk through the door and immediately think about how to make money.” And what’s wrong with that? For the last 50 years or so, journalists have had the luxury of having the bills paid by people they don’t even know. Very few businesses operate that way, so Bergantino and his tiny team are simply functioning by the same rules that small businesses have lived with for years. Does that make the quality of their work less reputable?
Got HTML5?
The Financial Times’ new mobile app racked up 100,000 users in its first week. The twist is that the FT decided to develop the app in the new HTML5 format instead of coding it for the iPad or Android platform. If you don’t know what HTML5 is, here’s a tutorial. It’s an important new technology that could make Flash animation and other plug-in-based multimedia obsolete.
HTML5 works entirely within the browser and gives the publisher considerably more control over display, organization and animation than earlier HTML versions did. Information can be stored and read offline, as well as updated automatically without user intervention (No more Adobe updates; how cool is that?) The trick is that most browsers don’t fully support it yet, but that’s just a matter of time. Apple’s Safari is one of the best browsers for HTML5 apps. That’s not surprising, given that Steve Jobs has engaged in a bitter public dispute with Adobe over Flash. The downside for Apple is that HTML5 enables publishers to deliver apps themselves without using the iTunes store as an intermediary. That’s why the FT is updating its content directly, without going through the iTunes store. HTML5 will also make it easier for publishers like Playboy, whose content wouldn’t make it past the Apple censors, has also gone the HTML5 route.
Miscellany
If you’ve ever wondered whether the image you’re about to publish has been Photoshopped, try out this new service from Google. Upload or type the URL of an image and Google will now scan its database for images just like it – including the exact same image. We’re not sure what it will find if given a photo of one of Lady Gaga’s dresses, but for those beautiful sunset landscapes that come in from “citizen journalists,” it might be worth a try, just to be safe.
John Locke has become the first self-published author to sell over 1 million books on Kindle. The 60-year-old Louisville, KY resident has written nine novels, mostly thrillers, and charges only 99 cents for the Kindle versions. He says he has no intention of raising his prices. Having brought in about a million dollars this way, Locke is making a decent income for a novelist, especially since he doesn’t have to pay publisher and distributor costs that typically leave the author with only about 10% of a book’s cover price.
In deference to Huffington Post, The New York Times plans to intermingle news and opinion in its “Week in Review” section, saying, “We thought readers would find it more useful to have the stories, photographs and charts offered in an integrated way.” Back in the day, op-ed sections themselves were controversial. Now they will be indistinguishable, although the Times says it will clearly label opinionated content.
And Finally…
This one is almost too bizarre to be believed. A couple weeks ago, it was revealed that a popular Syrian lesbian blogger who went by the name of “A Gay Girl in Damascus” is actually a 40-year-old married dude from Scotland. Despite the fact that gay activists in Syria believe this guy put their safety at risk, he continues to blog under the pseudonym, although he did post a profuse apology for the ruse.
The very same week, a guy in Ohio named Bill Graber admitted that he is Paula Brooks, an executive editor for lesbian site LezGetReal.com. Graber used his wife’s name in the hoax and even posed as the father of the fictitious blogger for media interviews, claiming Paula is deaf. Graber got away with hoax for three years because he was so believable, according to LezGetReal’s managing editor.
Months ago, Graber, posing as ”Paula Brooks,” reportedly encouraged “Amina Arraf” to start a blog, but neither Graber nor MacMaster knew the other was really a man posing as a lesbian woman online. According to the Washington Post, Arraf and Brooks “often flirted” with each other online as well.
This week, after both hoax identities unraveled, Graber described his interactions to the Washington Post with Arraf/MacMaster as a “major sock-puppet hoax crash into a major sock-puppet hoax.”
We can only hope neither sock puppet survived the collision.
How much do you really know about your reader? Chances are it isn’t very much. News organizations traditionally haven’t had to know their customers very well because the booming advertising market ensured they didn’t have to. Now that advertising’s value is in free-fall, however, this kind of knowledge may become the most valuable asset you’ve got.
New Revenue for News Organizations Presentation on SlideShare
We had the chance to speak to a group of newspaper executives about new revenue models a couple of weeks ago and were a bit surprised at how foreign the concepts of lead generation and qualification were to them. In the business-to-business (B2B) publishing industry, lead management has been the lifeline that has kept publishers afloat. It has corollaries that would be useful to news executives in consumer publishing, too.
Lead generation (called “lead gen” in the trade) is the process of matching sellers with qualified prospective buyers who are ready to make a purchasing decision. Advertising is a basic shotgun approach to lead gen in which the publisher plays a passive role by merely providing a platform for delivery. The onus is on the advertiser to convert those leads to customers. That’s an expensive process. B2B companies focus most of their attention on so-called “warm” leads, or those who are ready to sign a check. The problem with advertising is that it also delivers “cold” leads, or tire-kickers, and it’s expensive for the vendor to weed those people out.
Know Thy Reader
Publishers can be a whole lot more active about matching buyers and sellers, though. As they gather information about the characteristics of their audience, they can structure programs that generate better-quality leads and charge more for them.
B2B publishers went through the valley of death a decade ago in a market contraction that was a lot quicker and more dramatic than the one that’s hit newspapers over the last five years. Publications like PC Magazine, which raked in more than $100 million a year in ad revenue at one point, were completely out of the print business by 2009. A lot of publishers perished, but those that survived have converted to a lead gen model.
These publishers now focus on developing customized online destinations and real and virtual events that deliver warm leads. The more they know about the customer, the more they can charge for the lead. Web analytics make it possible to know a lot more about our online visitors in particular than we used to know. When combined with customer relationship management (CRM) systems, publishers can now build extremely detailed profiles of individual audience members.
Newspaper publishers know about the value of segmentation. That’s why they created automotive, real estate, arts & entertainment and home sections decades ago. Advertisers wanted to reach more qualified buyers. Online, you can take that to a new level.
Once an online visitor registers with you and accepts a cookie, you can track that person’s every online interaction with you and build profiles that enable your advertisers to make customized offers. A visitor who reads a lot of article about boating and clicks on your offer of a discounted ticket to the boat show is a lot more interesting to local suppliers of nautical equipment than the average reader. Similarly, a member who registers for your discounted passes to the bridal expo is going to suddenly interest a lot of specialty retailers.
All About Targeting
Is what we’re telling you a revelation? We hope not. Google and Facebook have built their businesses on delivering warm leads as indicated by search activity and member profiles. They’ve sucked a lot of money out of the print advertising market in the process. On LinkedIn, you can now buy ads aimed at engineers with VP titles who belong to construction groups and live in the greater Cleveland area. Can the Plain Dealer deliver that level of granularity? Probably not. But if it had that same quality of information in its database, it could create some pretty compelling packages for local businesses that wanted to reach those people.
We don’t mean to imply that B2B and consumer newspaper publishing are the same thing, but there are lessons news organizations can learn from their B2B counterparts, who have a half-decade’s more experience with adversity. Qualified prospective customers who are ready to make a buying decision have a lot more value to advertisers than drive-by readers. What can you do to capture more information about the people who visit your online properties? How can you use that information to develop high-value – and high-priced – marketing programs for your customers? Finally, how can you use your unique advantage of local presence to distinguish your products from Google’s and Facebook’s?
Tell us what your news organization is doing to tap into this opportunity.
We say “trust” because that is at the essence of Densmore’s argument in “From Paper to Persona:” the vast profusion of online information has created a trust crisis that represents a business opportunity. People have no incentive to pay for information any more, but they may be willing to pay for information they can believe. The risk is that the collaborative effort needed to solve this problem may be so massive that no one will attempt to undertake it.
Densmore’s “nut graph” is the following:
Free information is so devalued and so frequently untrustworthy that the public is now looking for alternatives that save time, promise reliability and are always available from multiple platforms.
Sound familiar? Have you recently sought medical advice online? The most common complaint we hear about the Web in general these days is that you can’t trust anything you read. While Wikipedia, Snopes and IMDB are pretty accurate, they aren’t going to tell you much about the possible negative effects of drug interactions or the real risks of radon in the average home.
Not to mention whether Osama bin Laden is alive or dead, a conspiracy theory topic that already shows signs of reaching Elvis Presleyan proportions. Not only has news become a commodity, it has also become so politically polarized that partisan echo chambers continually corrupt whatever the reliable channels of news may tell us.
Densmore proposes that this chaos may be quelled by consortia created – with or without public funding – that “uniformly exchange payments for the sharing of text, video, music, game plays, entertainment, advertising views, etc., across the Internet… Consumer users should have a choice of providers – agents – for accessing services, with one account and one ID providing simple access to multiple resources.” Sort of like iTunes, except a lot broader in scope.
This is going to be a tough pill for many conventional media veterans to swallow, however. It requires that they migrate from “the most-trusted information source” to and “information valet,” which Densmore describes as “a combination of curator, adviser, authenticator and retailer of personalized news, entertainment and service information from anywhere.”
The proposal makes sense, but the problem is that news people aren’t trained to be valets; they’re educated in the school of hard knocks and worn shoe leather, where scoops were trophies and one would no more cooperate with a competitor than evict one’s mother from her apartment. But as this blog has been arguing for three years – and Densmore argues much more eloquently – all that stuff has got to change.
Sustaining journalism requires rethinking the very notion of advertising, and of news as a service…Aggregate for advertisers and sponsors audience measurement and selected demographic data…track, aggregate, sort and share revenues, including payments to users for the use of their “persona.” The user should be in control of the data use and flow concerning them.
In other words, trade the two assets consumers have to offer – money and personal information – for a service they increasingly crave: truth. The answer isn’t all-or-nothing notions like paywalls; it’s creating something with perceived value and flexible options for paying for it.
Can Densmore’s vision work? It has to. The two billion people in the world who are now connected to the Internet have already moved beyond the notion that information is a scarce commodity, even if a lot of news publishers still haven’t. The information-consuming public understands that today’s problem is not lack of knowledge but lack of trust. News organizations are actually in a pretty good position to deliver on the trust equation, but they have to discard the notion of propriety and exclusivity.
In Densmore’s words:
The Next Newsroom could be a service organization — like a law or accounting firm — and it will be paid accordingly. For now, it will be extremely difficult to convince people to pay for such a service. But as the years go by, it will be seen as an absolutely indispensible way to get through the day. People will become as reliant on their “newshare” as on their doctor, lawyer, accountant, teacher or business colleague, or for 1their water, gas heating or phone service, all of which are services for which we pay on a project or metered basis.
California Watch’s “On Shaky Ground,” an account of the dangerous vulnerability of many California schools to collapse in the event of an earthquake, is “old-fashioned, shoe-leather, box-opening, follow-the-string journalism, and it is well done,” Doctor says. It also cost over a half million dollars to report, an amount that would have caused most newspaper publishers to gulp even before the industry entered its string of 21 consecutive quarterly revenue declines.
But a half million is a relative bargain when you consider the number of media organizations that benefited from it. Pieces of the series ran in six major dailies and were picked up statewide by ABC-affiliate broadcasters. Top public radio stations in the Bay Area and Los Angeles ran with it, and a number of ethnic and online outlets (including more than 125 Patch sites) also picked up the coverage. Many localized the content by snipping local maps or extracting information about their area from the voluminous database of school-by-school information that the project produced.
Doctor notes that California Watch is building a new kind of syndication business around investigative journalism, which is the branch of news that has been hardest hit by budget cuts over the last three years. This is not a reincarnation of the Associated Press model, which mainly delivered breaking news. Bloggers, citizen media and Twitter have diminished the value of that function considerably. What citizen journalism can’t do it spend 20 months developing a story, which is what California Watch did.
California Watch is still “feeling its way along,” in Doctor’s words. Syndication revenue won’t support its current $2.7 million annual budget, so donations are grants are still essential to its livelihood. But look at what donors get for their money: About 70% of that $2.7 million goes to support the project’s 14 journalists. By comparison, a typical daily newspaper’s editorial costs are about 20% of overall expenses. These nonprofit models are vastly more efficient than the newspaper investigative teams they’re replacing.
And when you spread those costs among a lot of subscribers who pay a few thousand bucks a year to get access to the reports, it’s really not that expensive. “An owner…can hardly reject the offer of paying one-hundredth of the cost for space-filling, audience-interesting content,” Doctor writes. Particularly when compared to the value of a single child’s life who might have been saved (hearings are already under way).
Doctor’s analysis raises an important point about the evolving economics of information. In a world in which raw data has become a nearly valueless commodity, value is derived from filtering and contextualizing information for specific audiences. The small California weekly that could never dream of spending a half million dollars on an investigative project can spend a few hundred dollars to buy the work of a dedicated investigative team and then extract the information that’s relevant to its readers.
This is a much more efficient way to deliver news, but taking advantage of it requires discarding treasured assumptions like the not-invented-here syndrome and the belief that scope and scale define importance. It’s good news for local publishers. In the traditional model, only a handful of California papers could have tackled a project the size of On Shaky Ground. Now nearly everyone can share the wealth.
The Long, Slow Bleed
Lest anyone think the lack of major metro daily closures over the last couple of years is a sign of strength in the newspaper industry, consider recent earnings reports. Ad revenues at Gannett, McClatchy, Media General and Journal Communications were all off between 6% and 11% in the first quarter, and there’s no sign of a turnaround. Alan Mutter’s analysis makes an important point about why newspaper advertising isn’t sharing in the sputtering recovery.
The more advertisers of all types experiment with Web, mobile and social advertising, the more they will come to appreciate the power of the digital media to tightly target qualified prospects while granularly measuring the costs and effectiveness of their campaigns.
In sales jargon, the buying process is a funnel, with a large number of uninformed prospects at the mouth and a few qualified buyers at the tip. As consumers increasingly research their purchase decisions online, the need for merchants to advertise their availability declines. They get more leverage from intercepting buyers during the decision-making process. The deeper into that process buyers get, the better the prospect of converting them to customers. And incidentally, vendors only have to pay for actions like clicks and leads, not vague measures like circulation.
The reason newspaper closures have largely stopped is that the industry’s near-death experience in 2008 – 2009 focused publishers on slashing costs, raising subscription prices and squeezing as much blood as possible out of the stone of an aging and shrinking circulation base. That is not a prescription for growth. We continue to stand by our 2006 prediction that major metro daily print newspapers will all but disappear by 2025. In fact, we think it’ll happen sooner than that. It’s just that death will come from cancer, not heart attack.
Miscellany
The Las Vegas Review-Journal is expanding its business model beyond pure advertising. according to a press release, a partnership with parent company Stephens Media LLC’s digital arm will enable the Review-Journal to launch a service to provide local businesses:
…full website, branding and logo design; hosting and customer support for websites and related digital services; email marketing; mobile marketing; training to provide local businesses easy tools to maintain and update their own sites and analyze web traffic; search engine optimization and search engine marketing; customer reputation management with daily reporting; social media presence and tracking tools for digital and traditional marketing efforts to ensure monitoring of ROI.
Desperation often drives innovation, and the miserable state of the Las Vegas economy no doubt played a role in this quest for new revenue sources. We think it’s a smart move; most small businesses have no idea how to market themselves online and a local newspaper is a trusted partner that’s in a great position to give them a hand.
AOL’s Patch network of hyperlocal news sites intends to recruit 8,000 bloggers over the next few days. It’s asking each of its 800 sites to sign up 10 community members to blog. No word on whether the contributors will be paid, but given that Arianna Huffington is now running the show, we think we know the answer to that one.
And Finally…
Reports emerged in the Twittersphere early this week that the world’s last manufacturer of mechanical typewriters was closing down its India production plant. A lot of people, including us, were taken in by this. But there’s good news for the old-timers who still appreciate the clatter of metal on paper. Atlantic Wire reports that several factories in China, Japan and Indonesia are still manufacturing typewriters. Even if production shuts down, there’s a pretty good used market. For old time’s sake, we bought an IBM Selectric, which used retail for $450 in the 1970s, for a buck at a yard sale a couple of years back. We’re still not sure what to do with it.
Editor & Publisher asked readers to nominate news organizations that are doing innovative things to diversify their businesses and find new revenue streams, and the list of 10 Newspapers That Do It Right 2012 shows that creative thinking is alive and well at mainstream publishers, although mostly at smaller ones.
