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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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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Freedom Communications' Aaron Kushner (photo by Jebb Harris, Orange County Register).

Freedom Communications’ Aaron Kushner (photo by Jebb Harris, Orange County Register).

California newspaper defies industry wisdom to stay alive – and prospers” declares The Guardian in an analysis of the Orange County Register‘s death-defying experiment under the leadership of a former greeting card executive with no background in newspapers.

Aaron Kushner (right) and his partner, Eric Spitz, formed Freedom Communications and bought the Register a year ago. They then stunned the shell-shocked newspaper industry by declaring their intention to go completely against the prevailing practice of layoffs and cost cuts. They would invest in print, double their reporting staff,  increase subscription prices and  put up one of the industry’s most rigid barriers to online access.

They’ve kept their promise. Newsroom staff is up to 360 from a low of 180 when Freedom took over. The Register routinely publishes daily issues that are nearly twice the size of its nearby rival, the Los Angeles Times. Page counts have been increased by half, color expanded and even the quality of paper improved.

Daily circulation is holding steady and total circulation is up sharply if you include the 28 weekly papers the company has invested in over the last 12 months. The Register has hired investigative reporters and lured newspaper wunderkind Rob Curley out of exile to rejuvenate the editorial product with a focus on local news and practical advice.

Freedom is showing particular sensitivity to  local businesses. One promotion late last year gave each reader the opportunity to contribute $100 worth of advertising to his or her favorite charity. Some 1,300 nonprofits benefited from the program.

Kushner thinks the time is right to place a big bet on print. “Never before and never again will so many people be in the sweet spot of newspaper readership as the next 20 years,” he told the Guardian. “It’s called the baby boom.”

There’s no doubt the Register is growing, but is it prospering as the Guardian‘s headline proclaims? The jury is still out on that.

Ken Doctor ran the numbers back in January and concluded that the Register may be able to cover its estimated $9 million+ in additional annual costs through higher subscription fees, but that the advertising market is in long-term decline and there’s little that any newspaper can do about that. Doctor contrasted Kushner’s growth strategy with the slash-and-burn tactics being applied by Advance Communications and said we’ll know in about two years whether growth or contraction is the recipe for success. Clearly, we’re pulling for Kushner.

Writing on CJR.com in May, Ryan Chittum said the odds are against Kushner, but noted that if he fails, “he will have gone down investing in journalism.” Chittum also has some revealing stats about the profitability of newspapers, which remains quite strong. When newspapers shut down, it’s because they can’t afford the cost of their debt, he says. Most are still in the black on an operations basis, which makes Advance’s frequency cutback strategy all the more puzzling.  It also suggests that value investor Warren Buffett  isn’t a billionaire for nothing.

Kushner says he’s in it for the long haul and he now has his eyes on a bigger prize: the L.A. Times. Tribune Co. is going to be looking to unload some assets now that it has exited bankruptcy, and many observers believe the Times will be on the auction block. If Kushner buys it, he can all but own the southern California market. Regardless of the  current fortunes of daily newspapers, having a  near-monopoly on even a shrinking media business in the country’s largest media market has to be attractive.

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By Paul Gillin | April 13, 2013 - 10:31 am - Posted in BusinessModel, Circulation, Demographics, Newspapers, Paywalls, Revenue20, Solutions

In a dying industry, the sensible thing to do is to maximize your revenues before you die. Paywalls might well make money for newspapers. But that doesn’t mean that newspapers aren’t dying. Quite the opposite.

Felix Salmon, Reuters

That quote, which we first saw in this Mathew Ingram piece on paidContent, gave us new insight on why we dislike paywalls so much. Yes, the newspaper industry seems to be adopting them at a rapid pace, and yes, the paywalls at The New York Times and Financial Times are reportedly successful, but there’s something about putting the subscription genie back in the bottle that strikes us as a step backward.

Salmon puts his finger on one of the weaknesses of most current paywalls: They are defensive strategy. They’re designed to keep loyal readers on board, but they repel potential new readers.

Alan Mutter shares worrisome statistics: More than two-thirds of regular newspaper readers are over 45, their average age is 57 and the average age of the online newspaper audience grows one year older every year. This industry is still headed toward a cliff. Unless those demographics turn around, it’s only a matter of time before the audience dwindles to a size that is no longer economically sustainable.

What’s the answer? Unfortunately, no one has come up with one. In another piece this week, Ingram criticizes paywalls for being a no-growth strategy. His article is mostly a restatement of Mutter’s analysis, but the really interesting part is in the comments section that follows. Both critics and supporters of paywalls vigorously debate the alternatives, and both sides make good points. Done right, it seems that paywalls actually could attract new subscribers, but no publisher is reporting the kind of circulation gains that will be needed to replace this rapidly aging audience.

The time seems right for micro payments, but that idea has never gained any traction. Kachingle was one of the early players in newspaper micro payments, but it has now morphed its business model into a co-marketing app content somethingorother that we can’t figure out. People seem to be OK with using Google Checkout for 99-cent purchases, but not for five-cent purchases. We think there’s a psychological barrier to micro payments. Below 99 cents, people don’t want to be bothered to think about paying. In fact, charging a nickel to read a 5,000-word article seems a little absurd, as if the article has no value. At some point, micro payments work against you.

Reuters’ Salmon argues that paywalls as currently implemented are too inflexible. They impose a limited number of subscription options on visitors regardless of what the visitors want or how they behave. Paywalls should use a sliding scale that maps to the needs of the individual reader, he suggests. People with an intense interest in sports will pay more than those who care deeply about entertainment, so they should pay a different price. Few publishers understand their audiences in that kind of depth, though.

We did see one bit of encouraging news this week. The Newspaper Association of America reported that advertising revenues continued their seven-year-long string of declines, dropping 6% in 2012. However, overall revenues were down only 2%. The reason is that publishers are finally diversifying their revenue streams, and not just by charging readers:

These new revenue sources, which include such items as digital consulting for local business and e-commerce transactions, now account for close to one-in-ten dollars coming into newspaper media companies. They are significant enough in scale that NAA has begun to collect detailed data about these revenue categories and track their trajectory year-to-year for the first time.

Consulting? Affinity programs? Marketing Services? Where have we heard those ideas before?

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By Paul Gillin | March 29, 2013 - 4:38 pm - Posted in Business News, Paywalls

Employees at the San Francisco Chronicle have taken to social media to protest a move by parent Hearst Corp. to impose a new healthcare plan that employees say is inferior to their current coverage and costs up to $3,000 more per year.

The Chronicle has been hanging by a thread since 2009, when Hearst nearly shut it down after complaining the newspaper was losing $1 million a month. A series of layoffs, pay freezes and cutbacks in vacation and holiday time have left employees frustrated and angry, and the latest move has brought that to the surface. they complain they’re being asked to put in even more hours to satisfy the demands of a new pay wall being put in place that will charge readers $14.99/mo. for premium content.

“We love the Chronicle, and we love journalism, but we can’t keep donating our own livelihoods to increase the profits of our corporate owners,” reads a post on the Friends of The San Francisco Chronicle Guild  Facebook page.

There’s also an online petition you can sign that demands fair healthcare for employees. You can also follow the #MakesUsSick hash tag on Twitter for updates. Some reporters changed their Twitter profiles to a red box as part of the protest. We’re not sure why.

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Here’s a news item we didn’t expect to see. Borrell Associates now predicts that U.S. newspaper revenue will rise in 2013, although only by a scant .5%. If the prediction holds true, it would be the industry’s first revenue increase since 2006.

Magazine Print Editions, Websites & Tablets # of Unique Brands Advertising
Time Period Print + Web + Tablet
(unduplicated)
H1 2010 9,536
H1 2011 10,768
H1 2012 14,949
Source: Kantar Media
Base: 60 Publishing Brands with monitored print editions, websites and tablet editions

Borrell’s optimistic newspaper forecast defies conventional wisdom. The research and consulting firm has no particular incentive to bolster the print newspaper business, but it has been forecasting a turnaround for a couple of years. CEO Gordon Borrell said he expects most of the revenue growth to accrue to small newspapers, which have been the most resilient segment of the business during its historic decline. Large dailies will continue to see the annual 4% to 6% declines that have been the norm for the last few years.

The turnaround is shaky, though. Pre-print ads, which typically bring in about 20% of all advertising revenue, could decline as the result of a sweetheart deal between the U.S. Postal Service and a large direct-mail company. The Newspaper Association of America’s howls of protest about the contract have so far fallen on deaf ears.

Borrell is also putting a lot of faith in local online advertising, which it predicts will grow 30% next year. Given that online ad growth at newspapers has been in the single digits annually for the last four years, that seems a stretch. You can hear all of Gordon Borrell’s comments in this recorded webcast.

There’s also good news in magazine land. The Magazine Publishers Association surveyed its members and found a 57% jump  in the number of brands advertising on all magazine media platforms since 2010. That includes tablet, online and print advertising.  The MPA also said magazine apps are some of the highest-grossing titles in the areas of lifestyle, health & fitness and news in the iTunes store.

Publishers apparently are a pretty upbeat bunch. A new study by Michael Jenner of the University of Missouri’s School of Journalism finds that two-thirds of newspaper publishers are optimistic about the future, and only 4% are pessimistic. Jenner said the research is based on 450 in-depth interviews with senior publishing executives. They’re moving ahead aggressively on digital platforms, but 60% “do not envision a time in the future when their individual publications will no longer issue print versions of the news.” We admire their optimism, but that’s just nuts.

The Numbers from Nola

Ken Doctor has no illusions about the future. “We all realize that, at some point, daily print will go away,” he writes at the top of this financial analysis of the New Orleans Times-Picayune‘s frequency cuts. Doctor understands the economics of the news publishing business as few people do (his Newsonomics site is a must-read), and this analysis is a useful insight into the revenue and expense models of metro dailies.

Doctor estimates, for example, that circulation brings in about 30% of total revenue at the Times-Picayune and that the four daily editions that are being eliminated contribute between 25% and 30% of print ad revenues. The net result of the paper’s cutback from seven to three issues per week is about an 11% advantage in profitability, he estimates. That’s good, but there are big risks. One is that the T-P is bucking the trend of deriving more revenue from readers and actually doubling down on advertising as a strategy. In effect, it’s doing more of what got newspapers into trouble in the first place.

Meanwhile, the competitive news environment in the Big Easy has made the paper a tempting target for everything from a startup called The Lens to the Baton Rouge Advocate. “Simply, the T-P’s slimming has opened up a floodgate of competition,” Doctor writes. “That makes the distinctive value proposition of the T-P harder and harder to get paying readers to accept.”

That isn’t stopping owner Advance Publications from methodically duplicating the frequency-reduction strategy across its portfolio. The limited success of that strategy in Detroit, where the Free Press and Detroit News made similar frequency cuts nearly four years ago, isn’t necessarily a reliable guide. The Detroit media market is a lot less competitive than New Orleans’, and the strategy hasn’t stopped the steady drumbeat of circulation declines and layoffs.

Incidentally, Nola residents haven’t taken the T-P cutbacks lying down. Grassroots efforts to reverse Advance’s decision testify to the unsinkable spirit of that unique region.

Update, 10/17/12: A survey by Cribb, Greene reports that newspaper publishers are increasingly confident about the future. More than 40% said their local markets are improving, up from 14% in 2011. The percentage who expect profitability to improve this year rose to 52% from 39%, and those who expect advertising revenue to be higher in 2013 grew by a similar margin. Asked if they would buy a newspaper business in the current economic climate, about half said “no.” However, 69% responded “yes” or “maybe” when asked if they would recommend the newspaper business as a career for their children.

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The paradox continues: U.S. newspaper readership continues to grow as the business model collapses. The Audit Bureau of Circulation figures for March are in and daily circulation for the reporting newspapers rose .68% while Sunday circulation jumped 5%. More interesting is that the ABC reported that digital circulation now accounts for 14.2% of newspapers’ total circulation mix, up from 8.66% a year ago. That’s a pretty phenomenal increase on a large number.

Before breathing a sigh of relief, though, note that about 2/3 of the ABC report is devoted to disclaiming comparisons of this year’s data to previous numbers. That’s because the bureau adopted a bunch of new rules that give papers more flexibility than they previously had in reporting circulation, including a redefinition of paid circulation to “paid/verified,” which now includes a lot of junk subscriptions like those given away to schools or distributed free in hotels. Basically, publishers now have more flexibility to report low-dollar circulation on their audit statements.

Still, the resilience of newspaper brands continues to impress, even though a sustainable business plan is elusive.

More Paywall Converts

Add the Globe and Mail to the growing list of paywall converts. The Canadian daily will begin to charge for access to articles on its website, although it hasn’t announced any more details. In fact, it announced so few details that 80% of the Reuters story is basically background.

U.S. News had an interesting piece last week (full disclosure: we were quoted in it) that likens the emerging paywall model to cable television. Danielle Kurtzleben cites several metro dailies that are having success with paywalls by going deep into local coverage or introducing sub-editions that target special interests. She quoted Tom Rosenstiel, founder and director of the Pew Research Center’s Project for Excellence in Journalism, comparing the model to HBO’s popular “Game of Thrones.”

“You’ve got a small group of people who really love that show and are willing to subscribe to HBO just for that show,” he says. Whether or not an HBO subscriber watches anything else on the network, he or she is still willing to pay the monthly fee to get that one program. The metro dailies that are having the most success with paywalls are the ones delivering new and focused content. Simply putting a registration screen in front of your existing product isn’t enough.

Help Bring ‘Fit to Print’ to the Finish Line

We’ve reported occasionally on the progress of an independent documentary called Fit To Print which examines the ongoing crisis within the U.S. newspaper industry and its impact on investigative reporting. We met the producers of this bootstrapped project in the early days and admire what they’re doing. The film is now in post-production, which means all of the interviewing and leg work has been done, but the producers are seeking to raise $10,000 to cover the costs need to bring the film to market.

We think the industry needs to hear the story that Adam Chadwick and Nancy Wolfe are trying to tell. They document examples of how the loss of journalism watchdogs has let crime and corruption run rampant in some cities and they make the case for why investigative journalism is an essential public service. Go here and donate money. Whatever you can. The producers are making some nice branded merchandise available for different donation amounts.

Donate on Passer.by.

 

Bloomberg News is one of the few news operations that’s flourishing, and Knowledge@Wharton provides a glimpse of the editorial strategy that fuels its remarkable engine. Founded by New York Mayor Michael Bloomberg in 1982, the financially oriented global information network today produces more than 5,000 stories per day from 146 news bureaus in 72 countries. Its TV network reaches 310 million people and it is in the middle of turning around BusinessWeek, which it bought from McGraw-Hill for $1 in 2009.Bloomberg's Matthew Winkler

Underlying the unique Bloomberg style is a 376-page style manual written by editor-in-chief Matthew Winkler (right). The most recent edition is the first that Bloomberg has made public (buy it on Amazon), and Wharton writes that it is a marvel of clarity and consistency. Some people might cringe at the manual’s many hard-and-fast guidelines, but consistency is a virtue when serving a time-pressed audience like equity traders. An excerpt:

Bloomberg stories should fulfill “The Five Fs” — that is, they must be First, Factual, Fastest, Final and take Future events into account. No story is complete if it doesn’t include “Five Easy Pieces” — information about the markets, the economy, government, politics and companies. The ideal lead is four paragraphs long and should always include a theme, a quotation, details and a nut paragraph that explains what is at stake. “Bloomberg News stories have a structure as immutable as the rules that govern sonnets and symphonies,” Winkler writes.

Whether you agree or not with Bloomberg’s style, there are tips in this article that could benefit any writer:

  • Prefer short words to long ones
  • Prefer specific terms to abstract one;
  • Write the headline first;
  • Avoid adverbs that are loaded with assertions, such as “lavishly” compensated or “stunningly” successful.

In many ways Bloomberg is the antithesis of The Wall Street Journal, which has long taken pride in the flourish it brings to its writing, and in particular its clever choice of adverbs. But we suppose both models can co-exist. The point is to have a distinctive style and stick to it.

The Knowledge@Wharton piece also explains Bloomberg’s controversial policy against the use of the word “but.” You’ll have to read to the end of the piece to understand that one, though.

Investors Pledge to Revive Philly Newspapers

There’s good news in Philadelphia, where a group of six investors has agreed to buy the Inquirer, the Philadelphia Daily News and Philly.com from a investment firm that has owned the news operations for the past two years. The investors, led by South Jersey businessmen Lewis Katz and George E. Norcross III, say they’re excited about growing the franchise, are committed to retaining current management and will not interfere in editorial affairs.

The bad news is that the group paid only $55 million for the media properties. That’s a little more than one-tenth the price that Brian P. Tierney paid when he acquired the properties from McClatchy for $515 million in 2006. Outsell analyst Ken Doctor is quoted in the story saying that the 90% valuation decline isn’t unusual. Most newspapers have lost that much value over the past decade.

The investors are talking a good game, at least. Katz, who was an investigative journalist at one point, said they’re investing in the community as well as in the business. “Cynicism or no, we put a lot of our money in this,” he said. “There was [sic] a lot safer places at my age to put money than in a news organization. You know what? This is my way of coming home.”

Rethinking the Paywall

Although fewer than a quarter of the U.S.’s 1,350 newspapers have built paywalls, the number of publishers who are experimenting with metered access is rising. Bulldog Reporter says more than 300 papers have adopted paywalls so far and the industry is hoping that their early success could be the harbinger of a turnaround. Nearly 20,000 people have signed up to pay $1.99 a week for the Minneapolis Star Tribune, the report says, and Gannett plans to expand paywalls from six test markets to all 80 of its small-market newspapers by the end of the year. That move, combined with circulation pricing increases, could add $100 million in annual profit, says the report, citing a company statement.

Writing on GigaOm, Mathew Ingram suggests another approach: Instead of putting up barriers to keep people from reading your content, how about building incentives to attract them instead? Ingram calls it the “velvet rope” strategy: Find creative ways to reward readers for getting involved with your product and they will respond by giving you money for special features and events. “Would you rather have a relationship with an outlet that is always asking you for money, or with one that sees you as a partner and gives you membership benefits that sometimes involve having you pay for things?” Ingram asks. It’s a good point, but Ingram’s post is a bit short on ideas about how to monetize this kumbaya. His argument seems to take it on faith that loyal readers will support a publisher they believe in. Unfortunately, there aren’t many examples of that approach working. Even NPR has to take government money to stay afloat.

Miscellany

News Media Heat MapForbes has posted a heat map showing the most influential news outlets in the country and where they’re influential. The map uses data provided by URL-shortening service bit.ly to overlay geographic data on information about content that is shared most often. Darker states signify places where content is shared more actively and presumably read more often. You can also drill down and see which stories generate the most activity. Not surprisingly, newspaper influence  tends to be localized while broadcast networks have national reach. The map at right shows where Fox News is most popular. Incidentally, if you’ve ever wondered how bit.ly makes money, it’s by selling data just like this.


Last week we reported on the sudden shutdown of the Laurel (Miss.) Leader-Call. Thanks to comments from some alert readers, we’ve learned that Laurel won’t be newspaperless for long. Emmerich Newspapers says it will start a thrice-weekly newspaper to replace the Leader-Call and that the first edition will publish this Sunday. What’s more, Emmerich says it has hired the defunct newspaper’s entire staff and will probably throw in free donuts on Fridays. Emmerich publishes 25 community newspapers, primarily in Mississippi, and is very well-liked in Laurel these days.


We got an e-mail from a startup called Zypages that has an interesting twist on classified advertising. The service creates websites from flyers and product sheets uploaded by advertisers, using a cell phone number as the URL. “Most small contractors and service providers do not have web sites – but they all have mobile phones,” explained CEO Raymond Kasbarian in an e-mail. “Over 50% of the printed classified ads in our weekly newspapers out here list a phone but not a web site. By using the number listed in the classified add, a customer can get valuable information before calling.” Go to the website and click the “Examples” button to see how it works.

10 Newspapers That Do It Right 2012Editor & 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.

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By Paul Gillin | November 23, 2011 - 11:55 am - Posted in BusinessModel, Newspapers, Paywalls, Solutions

In places where paywalls are working – and yes, they are working in some places – publishers have abandoned the metaphor of a wall and focused instead on bundled subscriptions that looked a lot like cable television. So writes Poynter’s Rick Edmonds in a summary of a report by the International Newsmedia Marketing Association (INMA) that looks at 15 successful paid subscription models.

No two are exactly alike, and some even challenge credulity, such as the Oklahoman, which charges 20% less for a combined print/digital package than for an online-only plan. That’s right, they pay you to take the newspaper. All the models have one thing in common, though: they’re working. Instead of being positioned as obstacles, they’re marketed as ways to serve  readers’ need flexible consumption via computer, smart phone, tablet or some combination of all three.

The INMA report cautions that hybrid subscriptions aren’t any easy sale. Readers need to have options and explanations laid out clearly, and digital can’t be positioned as an afterthought. However, readers have adopted so-called “digital replica” editions with surprising enthusiasm, indicating a fondness for the look and feel of print even when reading on a screen. The report also indicates optimism that paid subscription models can work when tuned to the needs of the specific audience.

Start by discarding the concept of a wall. Digital subscriptions need to be seen a convenience rather than a barrier. The emergence of multiple digital platforms may be the best thing that has happened to publishers over the last decade. It has given them a way to make simplicity a feature worth paying for, and audiences are proving to like that story.


Andrew Birmingham isn’t quite so optimistic. The CEO of Silicon Gully Investments and a former associate publisher of the Australian Financial Review pens a lengthy piece in the Australian edition of CIO magazine arguing that pay walls are a fundamentally defensive strategy undertaken by panicked publishers whose entire business models are collapsing around them. “The time to implement paywalls was 15 years ago when [editorial content] was worth paying for,” he writes. “The time to invest in editorial was also 15 years ago when [publishers] should have been erecting paywalls.”

Birmingham’s conclusions aren’t particularly novel, but his explanation of the spiraling downward cost of online advertising is worth reading. Advertising networks in general, and Google in particular, come in for particular criticism. Both promised publishers easy money in the late 1990s, when times were good. The consequence, though, has been cannibalization leading to a plunge in advertising prices “from hundreds of dollars per thousand to $1 to $2 dollars per thousand in Australia across general news websites,” Birmingham writes. “In the US, they are now measured in cents per thousand.

Publishers did this to themselves, of course. Few understood the implications of the Internet on their businesses in the early days and most saw online advertising as simply frosting on the cake. Most are making the same mistake with social networks today, choosing to believe that Facebook is simply another publishing medium rather than a reinvention of the way people consume information. It’s good to see some paywall experiments paying dividends, but it’s also hard to believe that publishers will get themselves out of this mess. New entrants will have to figure that one out. In the meantime, playing defense probably makes sense.

Miscellany

Pitch In logo from Port Talbot MagnetOver in the UK, a hyper local startup called the Port Talbot Magnet is trying the direct approach: It’s asking readers to contribute donations to fund its news coverage. Visitors can pledge amounts starting at just £2 to sponsor a court reporter for a day, and PayPal is accepted.