Source: Mark Perry

Tablet computers have been hailed as the salvation of the newspaper industry, but most publishers are squandering the opportunity, writes Newsosaur Alan Mutter in a searing sendup of newspaper tablet apps on Editor & Publisher.

“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.

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Speaking of Facebook, if you’re trying to improve your presence there, take a few tips from Entrepreneur magazine. Starr Hall’s advice includes naming your page appropriately and greeting visitors with a “welcome” page rather than the Facebook wall. And have you heard about the new subscribe feature that lets people follow your public updates without friending you? Read more about that. We also recommend these tips for small businesses and these tips for slightly larger businesses, perhaps because we wrote them. The key to success on the world’s largest social network is engagement, not publishing. Ask questions, prompt response, provoke and amuse. Our vote for the most awesome Facebook page: Skittles. Unique voice and dripping with personality. “Skittles now has 20 million fans? If I had that many guinea pigs, I’d be unstoppable.”

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.

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An Australian philanthropist and Internet entrepreneur has pledged more than $15 million to fund a new, nonprofit media venture called The Global Mail. Graeme Wood says he has only one goal in mind: “produce public-interest journalism.”

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.

California Watch isn’t the only outlet breaking new ground in this area. Writing on Nieman Journalism Lab, Justin Ellis tells the story of New England Center for Investigative Reporting, another nonprofit operation that is surviving on a combination of grants and revenue from paid training workshops for aspiring journalists. The group has only two full-time staff and a corps of freelancers. It delivers its investigative work via a subscription service and republishes them on its website. The Center recently reached a milestone by matching its grant funds with revenue generated from subscriptions and training, meaning it’s on the road to self-sufficiency.

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.

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Meredith is closing the hip, do-it-yourself magazine ReadyMade and eliminating 75 positions. Apparently an audited circulation of 335,000 wasn’t enough to attract advertisers.

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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.

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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.

It gets even weirder. Quoting the account in StinkyJournalism.org:

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.

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.

Note: Our book on B2B social media marketing has a lot more detail about this topic.

Bill Densmore has drafted a 55-page white paper outlining some ideas for sustaining journalism in the free-mass-media age that should be of interest to anyone who worries about the future of trusted media.

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.

Good point.

Nieman Journalism Lab scored a coup in landing the eloquent and insightful Ken Doctor as a weekly columnist focusing on the economics of news. His analysis of the cost of journalism at California Watch is well worth reading if you want to understand why nonprofit investigative ventures are so popular right now (ProPublica just nabbed its second Pulitzer).

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.

Hmmm, why didn’t we think of that?

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.

Respected journalist James Fallows (right) could be excused for scolding new media entities like Gawker for trivializing the news and playing to its audience’s most base instincts. He could also be forgiven for mourning the emergence of “truthiness” as a substitute for fact in an Internet-driven culture that has become more concerned with immediacy that accuracy. Yet Fallows does neither of these things in a thoughtful and well-sourced 8,000-word piece in this month’s Atlantic entitled Learning to Love the (Shallow, Divisive, Unreliable) New Media.

In fact, Fallows drops in on Gawker founder Nick Denton and spends time learning to appreciate a scene in which reporters compete to repost the most salacious and bizarre stories about celebrities and the weirdness around us. Their progress is tracked by big-screen TVs that display real-time traffic to the company’s properties, which include Gizmodo, Jezebel, Lifehacker, Deadspin, Gawker and others. Writers do almost no primary sourcing, but mainly dig around the Web for nuggets posted by others. They’re rewarded based upon the number of first-time visitors they attract.

Denton is unapologetic about his model, which has turned the art of story selection and headline writing into an analytical science. He’s giving people what they want, and if you have a problem with that, go elsewhere.

Which kind of sums up Fallows’ conclusions about the state of new media. Upon considering input from experts ranging from Tom Brokaw to Jeff Jarvis, his conclusions are basically that the world is what it is and we will have to figure this stuff out. On the one hand, we’re giving up the luxury of knowing that the news reaches us has been vetted  by professional journalists. On the other, we are getting a whole lot more information than we used to get. That’s not necessarily a bad thing. We have to figure out how to do less of the bad stuff and more of the good stuff.

The piece bristles with great quotes. “Everything is documented, and little of it is edited. Editing is one of the great inventions of civilization,” says Jill Lepore, a professor of American history at Harvard and the author of the recent The Whites of Their Eyes.

Artificial intelligence pioneer Jaron Lanier, author of Digital Maoism, adds, “We have created a technology that has wonderful potential, but that enormously increases our ability to lie to ourselves and forget it is a lie. We are going to need to develop new conventions and formalities to cut through the lies.”

Fallows resists the urge to pass judgment on what is right and wrong about new media. He sees some merit to Gawker’s lowbrow model, praises Jon Stewart and Stephen Colbert for inventing a new approach to journalism and even gives Fox News a pass for at least being honest about what it is.

He also dips into historical analogy to make a case that the media world has never been very stable. For example, Time and Newsweek were Depression-era experiments that were given little hope of success in their early days. National Public Radio didn’t exist during the Johnson administration. Television trivialized news, but it also gives us great shared experiences like the Apollo moon landing. All of these institutions were ridiculed in their early days because they broke with the way information had traditionally been delivered.

We are breaking the mold again, Fallows sums up, and very little can be done about it. So let’s look for virtue in new models and try to minimize our losses.

“I am biased in favor of almost any new project, since it might prove to be the next New York Review of Books, Rolling Stone, NPR, or Wired that helps us understand our world,” he concludes. “Perhaps we have finally exhausted the viable possibilities for a journalism that offers a useful and accurate perspective.”

Miscellany

Alan Mutter asks “Will classified advertising come back?” The short answer: No. The people who used to buy real estate, automotive and recruitment advertising have found new and more-efficient channels and simply moved on, Mutter says. He has some interesting stats about newspaper classifieds:

• Recruitment advertising is down 85% since 2005
• Real estate advertising is off 76% in the same period
• Automotive is down 73%

Not only has that business permanently migrated elsewhere, the Newsosaur writes, but the one bright spot in the newspaper classified picture – legal advertising – is likely to shrivel as the economy improves and foreclosure and bankruptcy notices disappear. You can’t win for losing.

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Matt Waite (left), who was the primary developer behind the Pulitzer Prize-winning Politifact fact-checking application at the St. Petersburg Times, comments on the reluctance of news organizations to embrace meaningful change with extraordinary clarity.

The daily newspaper is the result of a finely tuned process in which each component must perform exactly as expected or else there’s hell to pay, Waite says. This process has been developed over the course of the last 150 years and is embedded into every aspect of the newspaper culture. Whatever you do, don’t mess with the production system.

This is why newspaper websites continue to be little more than digital versions of their print products. Process is so important that publishers can’t imagine doing things any other way. Waite notes that while innovative applications have emerged at many newspapers, they all exist on separate servers outside of the production system. These ideas won’t go mainstream – and news organizations won’t change what they do – until technologies like map mashups, real-time updates and crowdsourced fact-checking are integrated into the content management system. That will happen slowly, if it happens at all, he writes on Nieman Journalism Lab. A culture that is so hidebound by process is not one that sparks innovation.

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Perhaps Mozilla can provide an answer. The organization that created the Firefox browser, among other things, has partnered with Knight Foundation on a fellowship program that will deliver 15 technologists to major newspapers to develop “new, adaptive tools for the future.” The idea is that these fellows won’t be simply hired hands, but will bring innovative ideas based upon open source concepts like sharing and assimilation of other applications. They will spend the next three years working with some major newspapers on projects that will be available to anyone.

 

Wow, that was fast.

Just six months after it was launched as the most ambitious hyperlocal news operation in the US, Washington’s TBD has cut expenses deeply and narrowed  its mission to arts and entertainment. One third of the staff – or 12 employees – were let go this week. The apparent chaos at TBD is evidenced by the fact that general manager Bill Lord, who came on board just two weeks ago, said layoffs were only one of several options being contemplated at that time. Owner Allbritton Communications cited low traffic figures as the cause of the cutbacks. Considering that TBD racked up 6 million page views in January, it must have needed a lot of traffic to cover expenses.

The breathtaking speed with which Allbritton reined in the TBD venture shouldn’t be lost on other hyperlocal publishers. Alan Mutter sums up the difficulties that all such organizations face:

• Small audiences are difficult to monetize in the first place;
• Finding and converting advertisers to reach small audiences is expensive;
• Advertisers are reluctant to spend a lot of money on online ads in general, particularly when the audiences are small.

Mutter calls AOL’s Patch.com, which now encompasses more than 800 hyperlocal sites, the next litmus test for the concept. AOL is reportedly spending $50 million on the venture, but the tone of Mutter’s analysis is that that money is probably wasted.

Keep reading, though,  if you want a different perspective. Nearly every one of the 20 or so people who weigh in on Mutter’s post disagree with him, some vehemently. They argue that hyperlocal news does work if publishers don’t get too greedy. Comment writers include several people who are successfully running the kind of small operations for which Mutter see so little hope.

“Hyperlocal is just a way of expressing the need for news that is more local, closer to the neighborhood or town level, than the metro daily ever could be,” notes  Jay Rosen. “And of course it corresponds to a class of advertiser that was priced out of and ill served by the metro daily and TV stations.”

Adds Oscar Martinez (left) of NeighborsGo, a successful hyperlocal venture by the Dallas Morning News, “If nothing else, [the Patch.com] effort should be applauded because the competition will remind newspapers that there IS money on the table and, more important, there’s still time to go after it.”  We interviewed Martinez more than 2 1/2 years ago, and his hyperlocal operation is still alive and kicking.

Our take: Mutter’s analysis is accurate, but publishers continue to debate the wrong thing. The issue isn’t whether there’s enough advertising out to fund a lot of successful hyperlocal ventures; there probably isn’t. The solution is in finding other ways to monetize small businesses in the area. We laid out our proposal two years ago, but with the exception of Sacramento Press, a hyperlocal venture that is truly flourishing, we haven’t seen a whole lot of interest.

Promoting Newsroom Innovation

Lauren Rabaino picks up on a Twitter chat with Jay Rosen in which the professor said newsrooms need to radically revamp their culture. Rabaino points to a few examples of how tech startups break the mold in interacting with the customers and investors. While her use of the word “awesome” is a bit excessive, her examples aren’t.  Why are biographies on news sites so boring? Probably because newspaper cultures have traditionally buried the identities of all but their most prominent columnists. In contrast, tech startups use bio pages to point out that there are real people behind the products. Why not humanize the staff that brings you the news? Chances are they’re members of the community, anyway.

There’s also an interesting idea about bringing webcams into the workplace, something that text-messaging startup Tatango has reportedly done for its investors (although we can find no evidence of it on Tatango’s website). We’re not sure if webcams in the newsroom would be very interesting to look at, but the idea of opening up news meetings to the public has always intrigued us. Yes, competitors would be free to watch the action, too, but might the involvement of the community in the news gathering process also give the open newsroom a competitive edge? We’ve always thought that when it comes to reporting the news, more participation is better than less. Some traditionalists still resist that idea.

In a similar vein, Editor & Publisher has an essay by Neil Greer, CEO and co-founder of ImpactEngine.com, about how to motivate people to innovate. We think the recommendations are mostly management common sense, but they’re valid anyway.. T

Miscellany

The Selma (AL) Times-Journal will put up a paywall next Tuesday, becoming the latest in a trickle of small papers to charge for access. It’ll cost you $48/year or $4.95/month to get the news, and PayPal is accepted. Print subscribers will get in for free, but only after paying the online fee and then asking for a rebate. The story about the paywall is bylined by Times-Journal news editor Rick Couch, who temporarily abandons journalistic impartiality in failing to explore the controversy around paywalls or the possibility that this could actually be a bad idea.

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The University of Colorado should eliminate its standalone journalism major in favor of an integrated information science or digital communications program, according to the chancellor of the Boulder campus. If approved, the shutdown of the current journalism school could happen as early as  next year. Chancellor Phil DiStefano isn’t calling for journalism education to fade from this earth. Rather, he thinks it should be incorporated more holistically into a liberal arts education and perhaps become a minor concentration. Boulder’s Daily Camera presents both sides of the debate, including anxious statements from the current journalism faculty who will be moved, like displaced persons, to other corners of the campus.

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The Detroit Media Partnership is borrowing an idea from the fast-food industry and offering a $5,000 prize to the person or group who can come up with the best idea “for helping The Detroit News and the Detroit Free Press increase their audiences or better serve the community.” Management is taking suggestions now and will hold a public vote in early April. Finalists will pitch their ideas to a panel of judges that includes Domino’s Pizza Inc. CEO Patrick Doyle, whose policy of responding to customer complaints about his company’s crappy product is credited with turning Domino’s around.

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Detroit’s second most famous business – rapper Eminem – shook up the local journalism world a bit by snubbing hundreds of media supplicants and granting a rare interview to East Hills Middle School eighth-grader Annie Reed. Reed, who had pursued the interview at the urging of her newspaper instructor,  talked to the 38-year-old rapper for about 10 minutes. The word “cool” was apparently used several times. The Detroit Free Press story is more about how Reed got the audience with Eminem than about what was said on the phone. It’s an uplifting tale and the photo is great. Lose Yourself.

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“Launch glitches” will keep Rupert Murdoch’s tablet-only Daily free for at least several more weeks, according to Publisher Greg Clayman. Users have been reporting frequent crashes and freezes, which Clayman said is not surprising for a digital news publication that sometimes exceeds 100 pages per day. While people we know who have tried the Daily mainly dismiss it as gossipy fluff, Clayman says subscriptions are running ahead of plan, although he wouldn’t be more specific

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The quarterly earnings season is upon us, and newspaper publishers are reporting better results, but not on the print side. The Washington Post Co. earned $11.59 a share in the quarter, which is nearly $3 dollars better than analyst consensus estimates.  However, print advertising revenue dropped 12%, continuing the ugly trend of the last five years. The good news: online revenues were up substantially.

A.H. Belo Corp., which publishes the Dallas Morning News and Providence Journal, among others, lost $119.5 million, or $5.65 per share, during the final quarter of 2010. That’s way down from earnings of $5.6 million, or 27 cents per share, in the same period the previous year. However, a large charge to cover pension expenses responsible for much of the drop. Revenue was down about 4%.

Gannett reported a fourth-quarter profit increase of 30%, largely due to cost-cutting and strength in its broadcast division. However, advertising revenue on the publishing side dropped nearly 6% and circulation revenue was down 4%.

And Finally…

Thanks to Legends and Rumors for calling out this correction from The New York Times, which we publish in its entirety:

An article on Jan. 16 about drilling for oil off the coast of Angola erroneously reported a story about cows falling from planes, as an example of risks in any engineering endeavor. No cows, smuggled or otherwise, ever fell from a plane into a Japanese fishing rig. The story is an urban legend, and versions of it have been reported in Scotland, Germany, Russia and other locations.