Observers of the cratering newspaper industries in the US and Europe may be surprised at this news: Print newspaper circulation around the world actually increased 2% in 2013 compared to 2012. The pocket of strength comes from rapidly maturing economies in Asia and Latin America, where people who a generation ago might have used newspapers mainly for kindling are now finding them to be valuable for the purposes for which they were intended.

That’s the highlights from the latest World Press Trends survey, which was released last by the World Association of Newspapers and News Publishers. The survey includes data from more than 90% of the news organizations that make up the industry’s total value.

There was no good news report in North America and Europe, where with print circulation dropped 5.3% last year and 10.3% over the last five years. Print ad revenues in North America are down a sickening 29.6% over five years. In Europe, print circulation declines have been even greater – 23% over five years – although advertising dollars have not fallen as quickly.

It’s quite a different story in Asia/Pacific, where print circulation is up 6.7% over the last five years and ad revenues have nudged ahead 3.3% during that time. Latin America is booming. Print circulation is up 6.3% over five years and ad revenues are up a stunning 50%.

It all adds up to an industry that’s a lot more stable on a global basis that many people thought. While overall revenue annual is down about 13% since 2008, results in 2013 were essentially flat, indicating that the industry’s freefall has slowed.

This is no time to celebrate, however. The last two years have shown that the developing world is migrating quickly to electronic media the expense of print, which still delivers 90% of the global industry revenues. While publishers report some success with packaged print and digital subscriptions (single-copy sales are down 26% worldwide but subscription sales are only down 8%), no one has yet solved the revenue problem.

Print Newspaper Circulation and Advertising Trends

 

Circulation revenue for U.S. newspapers grew for the second consecutive year, rising 3.7% to $10.87 billion in 2013, according to preliminary data from the Newspaper Association of America.

However, that wasn’t enough to offset continuing deterioration in the advertising business. Total revenues for the industry were $37.59 billion, off 2.6% from 2012. The good news is that the rate of decline appears to be slowing. The bad news is that digital advertising is growing more slowly for newspapers than it is for the industry as a whole. The U.S. online ad market grew by 17% year-over-year in 2013, but newspapers’ digital ad revenues increased by just 1.5%. Digital advertising now accounts for 12% of total industry revenue. It’s not clear how native advertising is being factored into those numbers.

Incidentally, online ad spending  surpassed broadcast TV revenue for the first time last year, according to the Interactive Advertising Bureau.

An interesting new area of growth is digital agency marketing services, in which media companies help local businesses build a digital marketing presence through services like online advertising and direct mail. That business grew 43% last year, although from a very small base.

Declines in traditional print advertising continued their numbing downward trend, falling 8.6% from the previous year. Classified advertising was off 10.5%.

An interesting factor in circulation revenue growth is the success of digital-only circulation revenue, which was up 47%. Bundled print and digital circulation packages increased 108%. However, print-only circulation revenue dropped 20%.

Read more on MediaLife.

Marc Andreessen, internet pioneer and founder ...

Marc Andreessen, internet pioneer and founder of Netscape at Web 2.0 Expo in San Francisco, CA (Photo credit: TechShowNetwork)

Pretty much anything Marc Andreessen writes is worth reading, and his latest treatise on the future of the news business should be required reading for any publishing executive.

The man who arguably started all the trouble with the invention of the Mosaic browser in 1993 isn’t just an optimist on the future of the news business; he’s positively bullish about it. But the future he sees is much more like the newspaper market of the turn of the 20th century than the one that dominated the last 30 years of the 21st.

His 3,000-word prescription boils down to a few basic points, not all of which are new:

Run the news business like a business. Take advantage of the many new revenue sources that are emerging, in particular native advertising and subscriptions.

Take advantage of media democratization. Sure, anybody can be a publisher today, but that’s an opportunity as well as a problem. Universal media access creates noise, which presents opportunities for aggregators to simplify the cacophony. It also creates the possibility of much larger audiences than we have known the past. “The big opportunity for the news industry in the next five to 10 years is to increase its market size 100x AND drop prices 10X,” Andreessen writes. In other words, throw out the business model that relied upon scarcity and replace it with one that values abundance.

Stop playing defense. The good old days of news monopolies and oligopolies are gone forever, so get over it and focus on the future. The few organizations that have successfully crossed the chasm – he mentions The Guardian and The New York Times – began thinking digital-first years ago. What are the rest of you waiting for?

Find new revenue models. Bitcoin is going to make micro-payments feasible, so study up and start experimenting. And tear down that Chinese wall. It defeats too many new business ideas. Outlets like the Atlantic and the Times are finding ways to make blended advertising and editorial work and actually growing their influence in the process.

Andreessen provides numerous examples of new and traditional media enterprises that are succeeding and growing. They include several that we’ve talked about here previously as well as a few that we haven’t, including Anandtech, The Verge and Vice.

On the subject of investigative reporting, Andreessen is almost sanguine. “The total global expense budget of all investigative journalism is tiny —  in the neighborhood of tens of millions of dollars annually. That’s the good news; small money problems are easier to solve than big money nightmares.” He believes a combination of crowd funding and philanthropy can more than cover the costs of the necessary Baghdad bureaus and investigative teams.”

The future of news will see fewer large media empires and many more small, focused enterprises. These organizations will take advantage of improved economies that enable them to reach vastly larger audiences at much lower cost than in the past. The mainstream media survivors will be those that move the quickest to tear down old infrastructure and seize every opportunity to reinvent themselves.

Can Technology Save the News?

Pierre Omidyar

eBay founder and news investor Pierre Omidyar

A considerably less optimistic but more diverse perspective is contained in an article from the excellent Knowledge@Wharton service. Technology Can Save the News — If Readers Change How They Consume It consolidates the opinions of several Wharton faculty members about how mainstream media can be saved. They agree that standalone, for-profit news organizations are unsustainable but that that independent journalism is too valuable to sacrifice.

The professors see promise in the interest of billionaires like eBay founder Pierre Omidyar and Amazon.com founder Jeff Bezos in owning media companies. Omidyar recently committed $250 million to a startup media venture run by journalist Glenn Greenwald and Bezos ponied up the same amount to buy the Washington Post last summer.

No one believes these investors are buying traditional media properties for their growth potential. Rather, they think media companies are undervalued and they may see synergies with their other businesses. For example, targeted advertising delivered by Amazon’s impressive recommendation engine could yield immediate sales for advertisers and drive up Amazon revenues.

Many rich people also have an interest in advancing political agendas out of either self-interest or ideology, and media companies provide an ideal bully pulpit. The risk is that these media come to reflect the politics of their owners too closely and contribute to the “echo chamber” problem in which audiences choose to listen only to the outlets that reflect their beliefs.

On this question, Wharton marketing professor Pinar Yildirim is cautiously optimistic. She believes that the proliferation of slanted outlets like Fox News will create a backlash as consumers seek independent voices. “Technology can bring us perspectives other than our own, if the ones designing it build that into the architecture, and the ones consuming the news are open to it,” she says.

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By Paul Gillin | January 3, 2014 - 4:51 pm - Posted in Business News, Local news, Newspapers, R.I.P.

NorthAdamsTranscriptThe North Adams Transcript, a daily fixture in northwestern Massachusetts since 1843, will be merged into the larger Berkshire Eagle later this month. The Transcript name will be discontinued and its five-person full-time editorial staff will join the Eagle. A sister weekly newspaper, the Advocate, will also be folded.

While putting the usual happy face on the announcement, management did provide a rationale for the move: “Publishing two daily newspapers that cover the same market – literally, they overlap – no longer makes sound business sense when one accounts for the duplicate efforts and redundancy in the processes involved in producing, delivering and servicing two newspapers that share the same mission,” wrote Publisher Kevin Corrado and News VP Kevin Moran in a joint message to readers.

The Transcript is  one of four Massachusetts newspapers owned by MediaNews Group of Colorado, which is one of the largest newspaper publishers in the U.S. The company is known for its practice of buying multiple newspapers in the same region and centralizing production, ad sales, business operations and even editorial operations to cut costs. Some former staffers have complained that MediaNews sacrifices journalistic quality for the sake of profits.

In this case, however, the merger probably make sense. The Berkshires are the most rural area of Massachusetts, and with readership declining across the industry the wisdom of maintaining overlapping titles would be questionable. Fortunately, no reporting jobs were lost.

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Brian Stelter“There is no longer a defined final destination for talented journalists,” writes Emily Bell in The Guardian. “The New York Times is surprised to find itself a stepping stone.”

Bell is writing about the sudden and surprise defections of a number of top Times journalists to other media outlets, often for substantial amounts of money. The Times lost three prominent editorial staffers in one day last week: Brian Stelter (right) quit to go to CNN, Sunday editor Hugo Lindgren is off to places unknown and chief political correspondent Matt Bai will join Yahoo News. Last month, gadget specialist David Pogue left to go to an unnamed Yahoo startup. In an unrelated move, Jay Rosen has also joined an unnamed startup founded by Pierre Omidyar of eBay fame.

All of a sudden media is cool again, or at least some media. While traditional publishers continue to struggle with declining revenue, money is flowing into new media companies. Buzzfeed has raised $46 million. AOL is investing in a big overhaul and expansion of Engadget. Snapchat just turned down a $3 billion offer from Facebook, indicating how frothy the social networking market has become. B2B community Spiceworks has raised more than $50 million for its novel media model that uses software and a community as delivery vehicles. Even the Washington Post is expected to get an infusion of cash from its new owner, Jeff Bezos.

This is translating into career opportunities for some accomplished journalists whose brands now arguably transcend the publications they work for. Bell suggests that the star-making apparatus of the media world is shifting in their favor. Not long ago a job at The New York Times was considered the ultimate career plum for news journalists, but belt-tightening has hit the Old Gray Lady just as it has everywhere else (although not as hard). With all-digital operations suddenly flush with cash, the appeal of working for publishers whose survival strategy is to wall off content from non-paying visitors is diminishing.

In many ways, traditional media companies dug themselves into this hole. In their rush to produce more content and add more advertising inventory, they turned some of their best reporters into rock stars. Thanks to blogs, video podcasts and branded talk shows, journalists now get unprecedented visibility. That makes them prime targets for new media firms who want to trade on their personal brands.

Turnover may also be an unplanned consequence of paywalls, which will soon be in place at 41% of US newspapers. The problem with paywalls is that they shut readers out, and readership is what journalists live for. The Times‘ famous Times Select paywall was abandoned six years ago in large part because the paper’s signature columnists complained that their readership had evaporated. The models have improved since then, but no paid-access plan comes without some loss of audience.

So while newspapers  erect barriers to readership, new media entities like Buzzfeed figure out novel ways to get people to share their sponsored content. Is it any wonder that ambitious journalists with growing personal brands are seeking opportunities to spread their work to wider audiences instead of hiding it behind credit card forms?


Even reporters who don’t have million-eyeball reach may have new ways to monetize their audiences. A startup called Beacon has launched a service that enables journalists to derive revenue from their most loyal fans and share a little bit of the spoils with fellow contributors. Mathew Ingram sums up the model succinctly:

Each of the site’s journalists (there are currently about 50) has a page where their content lives, and a discussion forum. When someone subscribes to them for $5 a month, Beacon takes a cut — the amount is in flux, but writers keep around 60 percent on average — and then the reader gets access to all of the site’s other writers. Some of the proceeds from each subscription also go into a pool that is shared by all of the journalists on the platform.

It doesn’t sound like anyone will get rich from this business, but at least there is a direct correlation between work and reward. And we suppose Beacon could be a launchpad for a few new superstar journalists who build their audiences there. Like the crowd funding site Kickstarter, Beacon builds and manages the community. It’s then up to the participants to give the audience something of value. May the best journos win.

 

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Google has arguably been the worst enemy of working journalists for the last decade, but now the tide is turning and the search giant is trying to repair the damage it  has done. It deserves our patience and understanding as it continues on a course that hopefully will revitalize journalism as a career and rescue hundreds of thousands of freelancers who have seen their livelihoods damaged by the monster Google unwittingly created.

Early Lycos home pageA little historical background: Google changed human behavior, which is a pretty big deal when you think about it. Before it burst upon the scene in the latter days of the first dot-com bubble, people mostly browsed for information. Today we default to search because it’s a better way to find stuff. Thank Google for that.

But one of the weaknesses of all search engines going back to Lycos is their dependence upon keywords. Spammers have always used keyword tricks to game search engines, but Google’s enormous influence gave birth to large companies that do nothing but vomit forth keyword-laden text, the sole purpose of which was to drive traffic through Google search results. We’re looking at you, Demand Media.

The Ascendance of ‘Top 10′ Lists

The growing influence of keywords has diminished the importance of content quality. Why pay for professional writers when you can get the same or better results by employing interns or offshore body shops that write to formulas defined by keyword frequency? The reason you see so many “top 10″ lists and tip sheets online is because they perform well in search results, people click on the links a lot and they’re cheap to produce. We don’t think Google intended for this to happen; it just worked out that way.

Many capable writers have seen pay rates plummet by 75% or more over the last five years as publishers have pushed quantity over quality. The only way you can make a living at 25 cents a word is to churn out a lot of them. These journalism serfs are the real victims of the collapse of print media. They’re skilled professionals whose livelihoods have been stolen by publishers who make no distinction between writing and typing.

Serfs Up

google-hummingbird-algorithm-seo-tips1Now Google is throwing them a lifeline. With the release of its Panda search algorithm last year, Google made its first strong statements that it’s cracking down on keyword farms. Last month’s release of the Hummingbird algorithm continues a campaign to elevate the value of quality content in search results and penalize formulaic gamesmanship.

For example, officials sent the PR industry into tizzy by stating that press releases can no longer be used to juice search performance, calling them “link schemes” and “advertisements.” Executives have made it clear that their mission is to deliver search results that most closely match what the user is looking for, not just those that have the right  keyword combinations.

Writing on Forbes.com, Joshua Steimle summed up Hummingbird thusly:

If you’re the best at what you do, these updates Google has been rolling out are opportunities to separate yourself from your competition. [Your competitors] may have been engaging in spammy tactics to get good rankings, but if you’ve been focusing on creating content that provides real value to potential customers, their days are numbered.

People like Mike Moran, who really understand search engines, have said for years that the only true search optimization is quality content. Google is finally speaking the same language.

It’s Good

So what does this mean for journalists? We think it’s all good. Marketers, who are hiring increasing numbers of journalists to stoke their content marketing efforts, are going to have to step up their game. They’ll need better content, which means hiring better writers who charge higher rates. Publishers will also need to re-examine the merits of paying for quality content instead of publishing anything turned in by someone with a pulse.

Does Google’s strategy point to the rebirth of traditional news organizations? Sadly, that horse is already out of the barn. But it does indicate that the days of search engine gamesmanship are numbered and that quality is going to count for something again.

Google can’t change the way search has commoditized news and diminished the value of media brands, but that’s only partially its fault. In any case, it’s hard to feel sorry for the rich executives who have seen their bonuses cut amid falling profits.

The victims we feel sorry for are the career beat reporters who couldn’t anticipate the seismic shifts in their field and who were ill-equipped to adapt. Perhaps their fortunes are finally about to change.

 

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By Paul Gillin | October 1, 2013 - 7:44 am - Posted in Business News, Newspapers, OnlineMedia

Lloyds List 1741We usually focus news of comings and goings on this site solely on major metropolitan dailies, but we’ll make an exception for Lloyd’s List, which claims to be the world’s oldest daily newspaper and which is going out of print at the end of this year. The paper, which originated as a list of ship arrivals, departures and casualties that was posted on the wall of Edward Lloyd’s coffee shop in London in 1734, canvassed readers in June and discovered that fewer than 2% of them read the print edition any  more. Management sounds upbeat about the transition to all-digital, which has been in the works for several months. “The digital approach offers new avenues and opportunities to innovate an up-to-the-minute service that offers in-depth news and information on every aspect of shipping,” said editor Richard Meade in a quote in the Guardian. See the links below for additional coverage. Jolly good.

For you history buffs, Google has digitized about 85 years of Lloyd’s List, beginning in 1741.

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By Paul Gillin | September 28, 2013 - 10:45 am - Posted in Business News, Newspapers

To no one’s great surprise, management and leaders of four unions at the  Newark Star-Ledger reached an 11th-hour agreement on a new four-year contract that will save the 171-year-old daily from shutdown. After two weeks of intense negotiations, which culminated in a 48-hour around-the-clock bargaining session, negotiators said they reached a deal that involved sacrifices on each side. No details were released, but Ed Shown, president of the Council of Star-Ledger Unions, said management got most of the $9 million in cuts it was seeking. Union members will vote to ratify the contract next week.

Star-Ledger executives had little to say, but in reading between the lines of what union negotiators said, we can assume that the unions got the worst of this deal. Management’s original proposal had demanded a 55% cut in wages and benefits, which union leaders said was outrageous. Management sought $9 million in annual savings on labor expenses, saying that was equivalent to the amount it could save by outsourcing production entirely. The Star-Ledger lost $19 million last year and is on track to lose that much money again this year. It’s hard to understand why cutting those losses in half is considered an accomplishment, particularly since owner Advance Publications has been hacking away at expenses across its portfolio of titles.

We expect the drama isn’t over yet in Newark. With an unemployment rate of 10.2% and household income that’s one-third lower than the national average, the economy in New Jersey’s largest city doesn’t offer the paper’s management a lot of options.

 

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By Paul Gillin | August 19, 2013 - 9:50 am - Posted in Business News, BusinessModel, Local news, Newspapers, Paywalls, Solutions

The San Francisco Chronicle is removing its paywall after just four months and the Dallas Morning News plans to follow suit. Observers are speculating that this could be the end of the nearly two-year-old binge that has seen more than one-third of U.S. newspapers erect barriers to their online content.

Neither company is abandoning the idea of gated content entirely, but both are reportedly pursuing new models based on premium services. That’s basically a reversal of the paywall formula. The premium-service model is aimed at monetizing a small part of the audience while a paywall denies service to everyone except those willing to pay. We think this amounts to a concession from both papers that paywalls are ineffective in their geographies.

San Francisco is a particularly tough place to make a paywall work, with its abundance of media and its tech-savvy audience. Also, the Chron isn’t exactly The New York Times of the west coast. In our view, it was a mediocre newspaper before cutting more than half its staff over the last few years.

All the Chronicle content will now be available on SFGate.com. What content will remain paid? A vaguely worded message from the new publisher and president said the paid SFChronicle.com site “will continue to provide readers with an online version that replicates a newspaper experience and reflects the changes in the news throughout the day.”

Replicating the newspaper experience online is a non-starter. We assume they’re working on better ideas.

The premium content model that the Chron and Dallas Morning News reportedly hope to implement is difficult to pull off. It has worked for ESPN, Cooks Illustrated, Consumer Reports and a number of financial publishers, but we’re not aware of any successes in the general news market. The premium model works best with investor audiences or those who are passionate, affluent and have an insatiable thirst for knowledge about a topic. None of those characteristics applies to local news.

It could be that San Francisco and Dallas are just early indicators that paywalls are not a good strategy for most newspapers. If so, we’ll know soon. Many publishers are coming up on their first year of experience, and they’ll have both the data and the experience to make a decision.

Bezos-Watching

Jeff Bezos

If you need any further evidence that Jeff Bezos is the Lady Gaga of media-watching, look no further than this roundup on Nieman Journalism Lab. Everyone is speculating about what the Amazon.com founder plans to do, but Bezos himself is offering few clues. We didn’t read everything Nieman’s Mark Coddington found, but we did peruse a few analyses.

A profile in The New York Times highlights the paradox of Bezos’ interest in being a media magnate, given that Amazon is an extremely secretive company. “There are fewer leaks out of Amazon than the National Security Agency,” write David Streitfeld and Christine Haughney.

What little we know of Amazon comes from its famously vague quarterly analyst calls. Outsiders are rarely permitted to tour its buildings and even its own executives don’t know where all its data centers are located. Bezos himself makes few public appearances and keeps a low profile in his hometown of Seattle.

So why does he now want to carry the First Amendment flag in our nation’s capitol? Ken Doctor sees three reasons why he and other super-rich people are buying into newspapers: Low valuations, a call of duty and the hubris to believe they can turn around an industry everyone thinks is dying. Also, no one else is willing to do it. “The few remaining people with the stomach to run daily newspapers have bank accounts with at least nine zeros after a non-zero numeral of some kind,” he writes at Nieman.

Kudos to Doctor for reminding us of EPIC 2014, a vaguely creepy spoof video made in 2004 that forecast the emergence of a media Death Star created by the merger of Amazon and Google in 2014. Some of the parallels are striking (watch below).

Writer and futurist Tim Carmody says he’s studied Bezos for years and believes the Amazon founder is driven by a fascination with the future and the urge to leave something behind other than the company he runs. Carmody also has interesting details about the sale of the Post, which appears to have been more a coincidence than a plan. “By all accounts, Bezos did not go looking to buy a newspaper,” he writes. “When he was approached by his friend Donald Graham about buying the Post, he initially begged off considering it.” It was Graham who pushed the deal more than Bezos sought it.

A few consistent threads run through the accounts we read. One is that Bezos is intensely focused on customer experience. The Times relates the story of how Amazon stationed ambulances outside its Allentown, Pa. warehouse during a heat wave rather than turn up the air conditioning or reduce the workload for its employees. Meeting shipping deadlines was more important than the health of its notoriously overworked fulfillment staff.

A second is that Bezos is a long-term thinker who aims high. Whereas many entrepreneurs would have been satisfied to build the world’s largest online bookseller, Bezos has set his sights on becoming an infrastructure powerhouse that can deliver goods and services physically or virtually anywhere in the world. The newspaper industry could benefit from this kind of vision right now.

The third is that Bezos is an unpredictable experimenter who disdains the status quo. It’s a given that he will ruffle feathers among his conservative colleagues in the publishing ranks. Again, not a bad thing.

There are also conflicts of interest that will merit scrutiny. The biggest is Amazon Web Services, a contract data center operation that hosts thousands of large research and commercial entities, including more than 500 government institutions. It’s Amazon’s fastest-growing business, and the government market is a huge opportunity.

Will Bezos be able to balance his dual role as free press agitator and major government contractor? Most people seem to think so. As the Times’ headline summed up:  “Expect the Unexpected.”

 

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By Paul Gillin | August 9, 2013 - 7:59 am - Posted in Business News, Local news, Newspapers

Several news outlets are reporting that AOL will shut down one-third of its Patch network of hyperlocal news sites and lay off about 300 people today. Newsday says AOL will close about 300 of its 900 sites and TechCrunch says layoff totals could reach 550. It’s unclear how large the Patch workforce is, but the last figure we saw was about 900.

A lot of reasons are being cited for Patch’s failure to get traction, ranging from competition from local newspapers to a crummy content management system. “Patch has gone from being free-wheeling to overly controlling with its local editors and then back and forth between the two,” writes TechCrunch’s Alex Wilhelm.

Our local Patch is run very well. Susan Petroni, a former daily newspaper reporter, covers the town so efficiently on a shoestring budget that her Patch site regularly scoops the local daily newspaper. However, the site is an unholy mess to look at, with ads and editorial content intermingled with each other seemingly at random. And Petroni’s discipline may not be typical. See  the comment titled “A PATCH INTERN’S STORY” on Romenesko for a more cynical view.

Patch has been dragging down AOL earnings since it launched, and CEO Tim Armstrong has pledged to make the network profitable by the end of this year or shut it down. It looks like this is a last-gasp effort to break even.


Update: Bloomberg BusinessWeek reports that AOL will replace the head of the Patch divison and close or find partners for 400 of its community websites. The exact number of layoffs is still undetermined, but it appears it will be at the high end of the 300-550 positions that were rumored earlier today.

 

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