In one of the final feature stories in Editor & Publisher, which is closing after 125 years, Jennifer Sabba has an interesting dissection of the circulation experiment at the Dallas Morning News. That paper was one of the first to dig into the economics of circulation pricing in order to better understand elasticity. Newspapers have traditionally derived only about 20% of their revenue from circulation, but the wholesale collapse of categories like classified advertising has forced them to get creative. The Morning News is one of several newspapers have experimented with turning the screws on loyal customers to see how much more they would pay for a print product.

It turns out that pricing elasticity isn’t absolute. Research conducted by the Morning News found that readers were willing to pay more if they thought they were getting more in the bargain. Specifically, the most important topics they identified were national news, local news, business, state, sports and investigative journalism, in that order. “If the paper raised the subscription price but readers felt they were getting more content, the fall-off in volume would be around 10%. At the same price, if readers felt like they were getting less content, volume would fall by 40%.”

The Morning News responded by jacking up its home delivery prices an audacious 66% in one year. However, it also expanded its news hole and launched a free edition that’s distributed to about 200,000 homes four days a week. As a result, in the most recent six-month period, the paper reported one of the largest circulation declines of any major newspaper: 22.1%. But that may not be a bad thing for the bottom line. The paper is sticking with its pricing strategy in the belief that the overall business impact will be positive. That’s the philosophy executives at Hearst Corporation adopted with the San Francisco Chronicle last year. The Chron has hiked its subscription rate 63% in the last 18 months and seen circulation plummet. However, it has reportedly also stabilized a business that was losing $1 million a week in 2008.

Sabba’s story provides a new context for understanding the dizzying drop in newspaper circulation over the last few years. While the declines are troubling, they are at least in part voluntary as publishers shed unprofitable circulation and focus on loyal readers. This isn’t a long-term growth strategy, but print isn’t going to be a long-term growth proposition anyway. The thinking behind the strategy actually makes sense in light of the inevitable shift that news organizations must make from print to digital distribution. If there is a cash cow, then milk as much profitability out of it as possible while transitioning the rest of the business to a new economic model.

Debating Paid Models

Rupert Murdoch is apparently getting sick of being portrayed as an old fuddy-duddy who wants people to pay for information that should be free. So he’s taken his case to the Wall Street Journal. In a December 8 opinion, the News Corp. CEO says journalism is the foundation of a free society and blogger “theft” of the hard work of reporters and editors is undermining the value of quality information. Murdoch rejects suggestions that news organizations should become nonprofits as well as the possibility of a government bailout. “The future of journalism belongs to the bold, and the companies that prosper will be those that find new and better ways to meet the needs of their viewers, listeners, and readers,” he writes. But he also states that the economic future of the industry can’t be sustained by online advertising. Instead, readers must be convinced to pay a “modest amount” for good information. “The critics say people won’t pay. I believe they will, but only if we give them something of good and useful value. Our customers are smart enough to know that you don’t get something for nothing,” Murdoch says. Unfortunately, he provides no research or factual evidence for his belief.

Karthika Muthukumaraswamy has a thoughtful post on Online Journalism Blog about how to make paywalls work. She summarizes conventional wisdom that paywalls only succeed when the publication has content that has a high perceived value, usually for a focused audience. The problem with most news organizations is that they’ve been trained to make their information appeal to the broadest possible readership. So how do you change the mindset? Muthukumaraswamy suggests that the best course may be a dual track: continue to deliver broadly appealing information for free while analyzing traffic to determine where the high-value readers are. Then ask them to pay for access to that information. In that vein, “Steven Brill’s Journalism Online plans to charge only the most frequent users who seek very specific content while allowing cursory surfers to avail of most topical news for free.” Don’t demonize Google – she quotes research estimating that search engines can deliver about 50 cents a day of revenue per unique visitor – but don’t make it an either/or proposition, either. The key is to get focused on the numbers and seek your area of highest value.

Speaking of pay walls, The New York Times is mulling the online subscription option but isn’t tipping its hand about its plans yet. Senior Vice President for Digital Operations Martin Nisenholtz told the UBS Global Media and Communications Conference in New York City last week that there’s too much at stake to make this an all-or-nothing proposition. The company values its relationship with Google but is looking at the paid options employed by the Financial Times and the Wall Street Journal, as well as the possibility of just staying free. There is some evidence that the financial free-fall is turning around at the Times, and staff cuts that have trimmed 25% of the workforce could reestablish some stability.

Traffic figures are in for the first month of Newsday‘s bold experiment to charge a $5 monthly fee for access to most of the content on its website. Declines of 21% in page views and a little under 20% in unique visitors were within expectations, according to management. Year-over-year page views were down 35% and unique visitors off 43%, but that compares to unusually busy election year numbers from a year ago. Management isn’t saying how much of the advertising revenue decline was made up by subscription fees. Newsday‘s numbers also can’t be taken as a benchmark for the industry, since a provision of the plan enables the many Long Island subscribers to Cablevision’s Optimum Internet service to get access for free.

Miscellany

The Journalism Shop surveyed 75 former Los Angeles Times journalists and found that more than half believe the paper will not survive in the long term. Only one in six thought the Times would weather the storm that is buffeting the industry. The poll is hardly scientific, but it has some interesting findings about how the former staffers see their future jobs (more than a third expect to exit the profession entirely) as well as whether and how they believe journalism can survive. The generally dour findings show that the journalists believe the media is descending into a mud pit of top 10 lists and celebrity gossip.

Google continues to try to make nice with newspaper publishers while at the same time introducing new products that threaten their business. Editors Weblog points us to Living Stories, a Google Labs feature that aggregates news from around the Web and organizes it by content. The prototype uses content derived from a partnership with The News York Times and the Washington Post. The feature appears to be a modest evolution of Google News at this point, although there is certainly potential for more innovation. One neat feature is a timeline atop some of the news packages that tracks important milestones in the evolution of a story. According to a post on the Google blog, the content is being maintained by staffers at the two newspapers. Google continues to insist that it has no plans to get into the original content business. The blog entry also says the company will provide open source tools that news organizations can use to adapt the service to their own needs.

It appears the Associated Press has begun to turn the tide of customer defections that began last year when the service raised its rates. Some 180 newspapers canceled their AP contracts after the revised rate structure was announced, but now 50 have come back, although not necessarily under the full licensing plan. The Minneapolis Star Tribune is the latest to rescind its cancellation.

As if to dramatize the crisis facing the newspaper industry, the owner of the 125-year-old Editor & Publisher magazine announced it is shutting down the title. The venerable trade magazine was the unwanted child in a deal between Nielsen Business Media and e5 Global Media Holdings, LLC involving the sale of eight brands in Nielsen’s Media and Entertainment Group. The closing was announced in a one-sentence mention in a memo from Nielsen Business Media President Greg Farrar. AFP has the facts and Huffington Post, considered by some to be the standard-bearer for the new breed of publishers that will succeed daily newspapers, adds detail.

That includes E&P’s string of 11 Neal Awards, a prestigious honor awarded to trade publications by American Business Media, as well as the magazine’s once-formidable position as the journal of record for the newspaper industry. E&P writes its own obituary and suggests that there’s still a possibility that the title could be carried on in some form. It also obligingly lists the e-mail address of all staff members for the benefit of recruiters.

We have often cited E&P‘s work in our posts on this website, and had just this morning written a commentary on an excellent dissection of the circulation experiment at the Dallas Morning News that appeared in E&P this week. While the publications articles could be annoyingly terse at times, its features are often very good and its coverage was always timely. We have particularly enjoyed the work of Mark Fitzgerald and Jennifer Sabba and hope that they quickly find a new place to showcase their talents.

It’s perhaps fitting that we learned of E&P’s demise the way an increasing number of readers consume their news these days: it was posted on Twitter.

Perhaps all those fresh-faced young journalism wannabes who are flooding J-schools across the country right now know something we graybeards don’t. While there’s still plenty of legitimate hand-wringing going on over the collapse of publishing institutions, some media seers are beginning to see promise where others see peril.

David Carr’s essay in The New York Times last weekend is drawing considerable attention and well-deserved praise for its glass-is-half-full perspective. Carr, who put in his time at the traditional media watering trough, observes that the technology-enabled young journalists he meets these days increasingly see the collapse of hidebound media institutions as an opportunity to make a name for themselves based upon merit rather than survival. “The next wave is not just knocking on doors, but seeking to knock them down,” he writes. “Young men and women are still coming [to New York] to remake the world, they just won’t be stopping by the human resources department of Condé Nast to begin their ascent.”

We found ourselves nodding vigorously as we read this piece. Carr expresses no nostalgia for an industry that was built on the inefficiencies of traditional advertising that are now being Googled out of existence. Career paths that relied upon young journalists doing “marginal jobs for indifferent bosses doing mundane tasks” are being vaporized and replaced by a meritocracy in which the best may not only survive but thrive. We’re still a long way from the Promised Land, and it’s a scary world if your job security is based upon having outlasted everyone else, but it’s invigorating if you’re young, energetic and enabled with all the trappings of today’s technology.

New York City venture capitalist Fred Wilson agrees. “I believe the move from a velvet rope model to a meritocracy is a good thing and that the new media business we are building in the wake of the old one will be a better media business; leaner, faster, and controlled more by users than media moguls,” he writes. Amen. As sympathetic as we are to the many people whose careers and lives have been thrown into chaos by the collapse of traditional media, we continue to see a much brighter future once the wreckage is cleared away.

AOL to Automate the News

America Online, which recently announced plans to lay off a third of its employees, is breaking some new ground in the newsgathering field. The company plans to use automation to crawl the Web looking for stories that its visitors have indicated they prefer through their clicks and page views. The robot will then advise a team of increasingly dehumanized editors when and where to publish what it finds. AOL will also use its new venture, Seed.com, to outsource assignments to an army of (presumably low-paid) reporters and photographers.

It sounds impersonal and even a little creepy. The idea of building a new site based entirely upon the preferences of viewers strikes us as a little like the model at Digg.com, which generates boatloads of traffic, but tends toward stories about video games and loopy kids. Digg isn’t threatening to upend CNN.

Writing on FastCompany.com, Kit Eaton makes an interesting case for AOL’s actions creating a revenge effect. If social media is actually adding more of a human element to interactions between groups, does a service that removes much of the human decision-making make any sense? Eaton proposes that readers today actually expect more of the human element in their news coverage rather than less. Of course, we haven’t seen the AOL technology in action and human editors could tweak the parameters over time to make its selections look more like The New York Times. But we doubt it.

Miscellany

Last week we told you about a new daily newspaper that is being launched into the Detroit market, hoping to fill a void left by the reduced publication schedules of the two major dailies there. Well, the experiment didn’t last long. The Detroit Daily Press published just five issues before hitting “a bump in the road” and suspending further operations until the new year. The suspension was blamed on “lack of advertising, lateness of our press runs and lack of distribution and sales,” according to an announcement on the publication’s Facebook page. This sounds to us like more than just a pothole, but we hope the owners, who have courted this market before, can overcome their troubles and come back in 2010. Photographer Rodney Curtis offers an insider’s perspective. Having lost his job at the Detroit Free Press earlier this year, he’s now a double-dip victim of the industry’s troubles.

Some local television stations are now crowdsourcing the news assignment process. Broadcasting & Cable reports on stations in Milwaukee, Lancaster, Pa. and Little Rock that are opening their daily news budget meetings to outsiders through video, live blogs and Twitter. News directors say the experiment has been a mixed bag, since audiences that sometimes number over 100 can get stuck on gossip and minutia instead of general interest stories. However, they say the open-air meetings have also resulted in solid news tips, such as the WITI (Milwaukee) story on a father surprising his son at school upon returning from Iraq. The boy’s teacher had clued the station about the visit.

Add MediaNews and A.H. Belo to the short list of newspaper publishers who are considering joining Rupert Murdoch in his crusade against Google’s evil empire. Executives at both companies were quoted recently saying that they may withhold some paid content from Google’s search spiders. However, they indicated that they would not block access to free content. These statements are a minor blow to Google, which says it can work perfectly well with paid content and that publishers using paywalls need Google even more to make their content discoverable.

The Hopi Tribal Council has decided to close down the Hopi Tutuveni, which is the primary newspaper covering Hopi lands. The 6,000-circulation paper, which has been publishing since the 1970s, was called “ineffective” by one tribal Council maker and didn’t merit continued funding by the budget-pressed group.

It’s the end of an era, of sorts, at the Washington Post. The paper plans to close down its last three domestic bureaus – in New York, Los Angeles and Chicago – at the end of this month in a significant retrenchment that focuses on the Washington area. The move continues a recent trend toward embattled big-city dailies shutting down the remote offices as they attempt to go hyperlocal. David Carr quotes Post Executive Editor Marcus Brauchli as saying “We are not a national news organization of record serving a general audience.” The Wall Street Journal announced plans to close its Boston bureau last month.

It’s Thanksgiving Day in the US, so we present some thoughtful reading for consumption on a day of rest.

Study Examines Citizen Journalists’ Motivations

There isn’t a lot of good news for traditional media organizations in a new study prepared by two college communication professors and funded by the McCormick Foundation. In preparing New Entrepreneurs: New Perspectives on News, Researchers interviewed approximately 50 female consumers and citizen journalists to learn how they see their role in the evolving news ecosystem and what motivations prompt them to participate. While most of the participants expressed respect for traditional media outlets, they also identified some serious shortcomings, including lack of connection with the local community, failure to innovate and hostility toward the grassroots work the citizens are doing. The 18-page report is quick reading.

One of the more striking conclusions is on the subject of objectivity. The citizen journalists expressed frustration at media reporting that equates objectivity with lack of involvement.

New media creators believe that they can be objective, but still be connected to their community and to the stories they report. They saw a very strong distinction between news and opinion and took great strides to ensure that they, their contributors and their readers understood the difference, but they did not see their “participatory perspective,” a more informed, connected perspective, as encroaching on objectivity.

Citizen journalists also believe that their connections and involvement in the local community gives them an advantage over the frequently shifting ranks of beat reporters.

Being a part of the community rather than detached from it also led to more thorough reporting in the opinion of some of the new media creators. They believed they had better access to sources and were better versed in the issues.

“Our local government was hilarious. A lot of times the paper can’t point that out because the paper is an authority figure, and an authority figure who points a finger and laughs is a bully. Whereas, I was just some person on the back porch.”

There are also indications that both consumers and content creators believe that traditional media overplay conflict in the quest to make stories more compelling. This polarizes participants and frustrates efforts to find common ground. Since citizen journalists have a vested stake in their communities, they believe that sensationalism works against the progress they are trying to achieve.

Several of the citizen journalists also said that local media organizations had reacted to their work with attitudes ranging from neglect to outright hostility.

The new media creators in particular felt that traditional media’s reaction to the changes was to attack the new media rather than embrace it. The passion and respect for journalism that was seen among all creators (and even consumers) may make some feel threatened by any change to the industry. But the new media creators are more likely to see the change as an evolution that can be accepted without threatening the basic standards of the profession.

This last point is the most troubling finding of the research. Read Clayton Christensen’s book, The Innovator’s Dilemma, to learn how market disruption almost always comes from below. The new entrants, which are frequently of inferior quality, are treated with disdain by the market leaders. However, as Christiansen points out, new kids on the block open access to much larger audiences and invariably improve with time. Meanwhile, market leaders tend to stake out the high-end and gradually become niched out of existence. The only way to avoid this fate is to embrace new competition, even if it causes considerable discomfort. Reinvention doesn’t come without pain.

Journalism is Changing, Not Disappearing

Doc Searles present a well-reasoned argument why journalism isn’t disappearing from the earth but simply following the path already blazed by business. Searles, who co-authored the seminal Web 2.O essay, “The Cluetrain Manifesto,” looks at the industry from a technologist’s perspective. Much as personal computers and open source software moved computing innovation from the center to the ends of the network, journalism is undergoing a similar metamorphosis. Journalism isn’t going away so much as being democratized.

This transition is nothing new, Searles points out. Peter Drucker foresaw the end of the modern corporation in the late 1950s because “companies existed at the suffrance of the individuals who comprised them, even as it organized their work and put it to use.”

The current transition will move the nerve centers of journalism from monolithic organizations to networks of individuals. Specialists will be able to profit from their work, but they will compete on a truly open playing field. To use an analogy, in the preindustrial age anyone could set up shop and become a cooper, but only a small number of people were good enough or fast enough to make their living building barrels.

This is small consolation to the out-of-work journalists who have lost the enveloping arms of the corporate parent. Journalism’s traditionally high barrier to entry has kept out the vast majority of wannabes, but those barriers have now fallen away. Journalism in the future will be more competitive, but it will also be more innovative and rewarding because the rewards will accrue to the individual journalists rather than to their companies.

Common Sense on Creative Commons

If the concept of the Creative Commons license mystifies you, check out this essay by Joi Ito, CEO of the nonprofit Creative Commons organization. He draws an analogy to the open source license, which has revolutionized the quality and availability of software. If someone has tried to create a Google in the pre-Internet standards page, the effort would have cost billions of dollars and not worked very well. Google happened because standards were already in place and the founders didn’t have to navigate layers of approval and legal challenge. They built the basic technology for small money and evolved from there. The result is a service that has benefited the world rather than the handful of rich businesses. Had Google been created in the pre-open standards era, the fees the creators would have had to charge to make back their investment would have precluded its widespread adoption

The economics of Creative Commons and open source stands traditional business models on their head. In the past, copyright holders jealously guarded their franchise in the hopes of realizing a (usually small) license fee from its use. Under Creative Commons, the assumption is that good work will be passed around freely, usually with attribution to the author, thereby benefiting the Creator in other ways, such as through paid writing assignments, speaking engagements and publicity.

Ito’s case builds upon Doc Searles’ point that in a democratized economy, intelligence radiates outward the endpoints. The more people who adopt the work for their own use, the greater the benefit to everyone. In most cases, the creator also makes out.

There are exceptions, of course. A small number of large organizations stand to benefit when intellectual property is tightly controlled. However, openness creates opportunity for many others. Witness what has happened in the recording industry as the star-making machinery has ground to a halt and hundreds of thousands of bands have taken their case to MySpace. There may be fewer stars, but there are also more bands making a living by having control over their own destiny.

This idea even works for large entities. The success of Google Maps is largely due to the work of independent developers who have created remarkable mashups, while Unilever’s award-winning Dove Evolution TV ad has benefited from dozens of adaptations and parodies, each of which reinforces the value of the original work.

P.S. We just added a creative Commons license insignia to our right sidebar.

After nearly losing its two daily newspapers a year ago, Detroit is actually adding one to the stable. The Detroit Daily Press will launch next week with daily newsstand distribution at first and home delivery scheduled to begin in about a month. This is actually the title’s second appearance; it originally appeared in 1964 and lasted for about four months before folding. The owners, who said they came out of retirement to take another shot at the Detroit market, plan to distribute 200,000 daily copies and charge a fraction of what their competitors charge for newsstand sales and advertising space.

Brothers Mark and Gary Stern say they have enough capital to make a go of it for two months and need 150,000 paying subscribers to break event after that. In light of that short timeframe, the quote in Editor & Publisher seems a little odd: ” “This is a permanent situation for us.” However, the brothers say they have raised private capital and have a much more efficient operating model that does away with unions and captive printing presses, so perhaps they have cash on hand to last much longer. The operation will employ about 60 people. It has recruited several veterans of the Detroit newspaper industry.

The Detroit market was roiled early this year when the Free Press and the News scaled back their home delivery operations to three and two days per week, respectively, in the name of saving costs. Few details have emerged on the financial success of the experiment. Both saw circulation declines in the first half of this year, but well within the average range for the industry

Local writer Isak Dinesen notes that the Stern brothers are Detroit natives and so may have an affinity for their local area. She also points to a Facebook page and online mockup (above) of the new title. The promotional language advertises “paper delivered seven days,” which is a direct reference to its competitors’ reduced schedule.

Miscellany

The question of whether readers are willing to pay for news appears to come down to how you ask the question. Alan Mutters tallies up recent research and finds that the percentage of Americans who say they’d crack open their wallets ranges from a low of 20% (Forrester Research) to a high of 53% (American Press Institute). The amounts vary widely, too. We’d suggest the wording of the question and the makeup of the sample group has a lot to do with the variations. That and the fact that Internet research is inherently unreliable. Forrester at least has been doing this for a long time.

Jeff Jarvis hits the nail on the head again with an essay about the new business model for news organizations. He observes that the cost model for a successful online title is about 10% that of a print property. In other words, there’s money to be made online, but requires the cost structure to be radically changed. The problem is that most newspaper publishers  can’t stomach the idea of eliminating 90% of their staff. Of the major metro dailies that have closed this year, only one — the Seattle Post-Intelligencer — has successfully shifted it is cost model to match the online revenue opportunities. Recent reports have indicated that the P-I actually is profitable online, although few details are available.

It isn’t human nature to shoot nine out of every 10 employees. So for many publishers, it’s easier simply to go under completely. That’s why Jarvis argues that bankruptcy is a bit of a magic potion. It’s an opportunity to get out from under debt, blow up the unions and completely restructure the way an organization works. Unfortunately, he correctly points out that those publishers that have gone through the bankruptcy procedure — which is most of them — have mostly failed to do more than trim a few expenses here and there. That isn’t going to save them; it will just postpone the inevitable.

The New York Times will end its Times Extra aggregation experiment in two weeks, about a year after launching the feature. The company insists that the decision isn’t a backtrack from the goal of aggregating outside content but rather than the content would now be presented within stories rather than on a dedicated site.

The New York Sun, a weekdaily that shut down a year ago, has been rejuvenated online. It will be resurrected for a 20-week run featuring crosswords from famous puzzle editor Peter Gordon for $1 per week. No word on whether management will decide whether to continue publishing the paper, but we expect that revenue will be an important factor.

BusinessWeek is reportedly set to lay off 100 people in the wake of its acquisition by Bloomberg LP. It appears that layoffs will be across the board, with employees who are in the line of fire being asked to submit resumes, news clips, and 250-word statements about their qualifications for continuing to work at the esteemed business publisher. BusinessWeek becomes property of Bloomberg on Dec. 1.

The Associated Press laid off 57 union workers, including 33 editors. The newswire is seeking to cut its personnel expenses by 10% by the end of the year.

Citizen journalism startup AllVoices will start paying professional journalists to cover beats, although the compensation is a meager $250 for now. The site has more than 200,000 registered members, most of whom contribute their work for free. AllVoices’ CEO Amra Tareen said the program is intended to recognize that these are “tough times for many journalists as news organizations downsize” and noted that reporters could earn more than the basic fee if their stories generate a lot of traffic. We profiled AllVoices last year.

And Finally…

Go to the basic Google home page and start typing a question. See what the Genius Google, in its near-infinite wisdom, thinks you’re asking when it provides all those “helpful” suggestions in a drop-down box. It turns out that certain kinds of queries generate amusing suggestions. For example, type “Is there any” (sans quotation marks) and see what Google suggests you really mean. (Okay, so we stole that from TheNextWeb.com.) Let’s get creative… Type in “why will” or “how come” or even “why is it that” and see what you come up with. The results are so strange that this feels like a big practical joke on Google’s part, but it does lend itself to endless experimentation.

The debate over whether search engines are friend or foe to the newspaper industry continues to grow and become more complex.

Rupert Murdoch says he will really go ahead with his stated plans to remove his portfolio of publications from Google’s search index. Jonathan Miller, News Corp’s chief digital officer, told the Monaco Media Forum on Friday that the company would begin blocking Google’s search spiders within a few months. Miller said Google brings in an army of one-click visitors who are “the least valuable traffic to us…You can survive without it.” He also said Murdoch intends to lead the industry in the just-say-no campaign. A Google spokesman responded that the search engine sends about 100,000 clicks to news organizations every minute. TechCrunch estimates that Google drives about one quarter of the total traffic to The Wall Street Journal.

While there’s no doubt that Murdoch is serious about drawing a line in the sand on this issue, the decision to talk about it this far in advance indicates that this is a negotiating tactic. Much as Hearst and the New York Times Co. wrung concessions from unions by threatening to close the papers they own, Murdoch may be looking to extract some kind of licensing deal from Google in return for backing down.

The Journal and the Financial Times are the only two daily newspapers that are having any success with a paid subscription model because both provide information that subscribers see as essential to their business. Few other newspapers can make that claim, which is why paywalls have been so difficult to implement.

Miller’s comment about drive-by visitors is worth noting. Publishers and auditors tend to look at traffic as the ultimate metric of success, but there are different kinds of traffic. Sex and celebrities drive page views just as they sell newsstand copies, but that kind of traffic is undesirable to most advertisers and extremely hard to monetize. If Murdoch has decided that his core base of paying and print subscribers are sufficient to run the company, he may be choosing to press his advantage while he still has leverage. The Wall Street Journal was the only large US newspaper to show any growth in the recent Audit Bureau Of Circulation report and Murdoch may have decided that he doesn’t need the casual visitor in order to be successful.

The Bing Factor

Media entrepreneur Jason Calacanis thinks Murdoch wants to do a deal. He suggests that the publishing tycoon could strike an exclusivity agreement with Microsoft Bing. This would have the win-win effect of driving revenue from Microsoft’s deep pockets while also upping the ante in the search wars. It’s an intriguing idea, and few other companies have the throw weight to pull it off.

Bing appeals to news executives as a foil for Google. TechCrunch reported last week that Microsoft held a secret meeting with representatives of some of Europe’s largest newspapers to discuss throwing its weight behind ACAP, a protocol that provides a variety of access controls over content. TechCrunch says Microsoft told the European publishers that it’s ready to commit £100,000 to fund development of ACAP, which permits search engines, for example, to index the full content of an article while displaying only part of it to a casual visitor. The report speculates that Microsoft may be hoping to use publishers as allies in a flank attack on Google by striking deals that give Bing exclusive or semi-exclusive access to their content.

Bloom Fading from User-Generated Content Rose?

Is user generated content beginning to lose some of its shine? Current TV, the cable channel founded by former Vice President Al Gore is in the process of retooling its content model to emphasize acquired and compiled programming while cutting back on standalone viewer submissions. The company will lay off 80 people in the process. Current TV says that while it’s as gung ho as ever on user-generated content, it will shift to a style of programming that sounds more reminiscent of America’s Funniest Home Videos than full length amateur documentaries. Chief Operating Officer Joanna Drake Earl also said “viewer-created ad messages” have been a huge success, with viewers preferring them by a 9-1 margin and advertisers reporting higher recall rates.

The Current TV downsizing bookends a year that began with the shutdown of another prominent user generated media company, 8020 Media. That publisher had a brief moment in the spotlight when it produced two print magazines consisting entirely of submissions from readers. The experiment proved that user-generated content is no panacea, however. The task of sorting through thousands of articles and photographs and turning them into professional-looking copy was little more efficient than working with professional journalists. The advertising downturn didn’t help.

The troubles of these prominent experiments shouldn’t be seen as a referendum on citizen media. Scores of other ventures are ongoing and an increasing number of events are being reported first through channels like Twitter. The most viable models appear to be those that combine citizen reports with moderation by professional editors. Perhaps America’s Funniest Home Videos had this all figured out years ago.

Miscellany

If you’re following this Twitter thing that everyone is so excited about, you should check out a couple of new resources. Twitter Times is “a real-time personalized newspaper generated from your Twitter account” and it’s a pretty good metaphor for the way trust is awarded in the new world of democratized information. The service chooses news and blog posts mentioned in the Twitter streams of people you follow. The result is a digest that looks like a newspaper, only the stories are selected by your friends.

The algorithm behind Twitter Times is obscure and the site appears to be the work of a single Russian programmer named Maxim Grinev (right). While it doesn’t try to capture every recommendation from trusted sources, its constantly changing selection of content pretty much reflects the topics we are interested in. Users can share personalized home pages with each other and, of course, follow tweeters mentioned therein.

Also check out MuckRack.com. It’s a collection of jounalist Twitter feeds set up by a small group of people who call themselves Sawhorse Media. Journalists have to apply for inclusion and list a publication they are affiliated with before being added to the list. The qualification criteria seems a bit outdated to us in this age of citizen media, but the resulting list is a pretty good lineup of media pros. MuckRack is one of 16 identical sites that run the topical gamut from beauty to beer. It seems that lists are all the new rage on Twitter.

The wrangling over Philadelphia’s two bankrupt newspapers continues to grow more bizarre. A Federal district court judge last week ruled that the creditors trying to take control of The Philadelphia Inquirer and Philadelphia Daily News must make a cash offer for the papers rather than simply taking control of them from the bankrupt Philadelphia Newspapers, LLC. The two parties have engaged in months of legal wrangling, even trading accusations of document theft. The new ruling opens the bidding to third parties as well as current ownership, with the courts apparently trying to steer the matter toward a resolution that keeps both newspapers operating.

Publishers can take heart in recent numbers from Scarborough Research that indicate that newspapers continue to be at the center of American reading habits. Writing on Media Post, Scarborough’s Bob Cohen cites the following 2009 stats:

• 74% of adults read a paper in print or online during the past week. Newspaper readership in some markets reach upwards of 90%;
• 19% visited a newspaper website during the past week;
• 70% of American adults read a printed newspaper during an average week.

Scarborough’s numbers jive with other data that indicates that newspaper readership — online and in print — continues at all-time highs. The problem is monetizing the low-value web traffic. Cohen suggests that publishers need to do a better job of selling the centrality of their products to the audience’s daily habits. “Aggressive self-promotion, while not a natural inclination of this culture, could go a long way in these unusual times,” he writes.

Implicit in the hand-wringing over the death of news organizations (one guest on last week’s Hobson & Holtz Report podcast wondered if PR professionals should even bother tracking newspaper coverage any more) is the concern that good journalism will vanish from the Earth. We’ve always argued that the problem with newspapers today isn’t that they have no value, it’s that they no longer have a sustainable business model. The need for good journalism hasn’t changed but good journalism needs to find new ways to support itself.

Check out two new resources in this area. Jeff Jarvis articulates a future for journalists in an exceptionally cogent summary of his recent work with the City University of New York’s New Business Models for News project. Jarvis sees tomorrow’s journalists as entrepreneurs who create business models around selling their services to those who will pay for them.

We like the analogy to people who work on Hollywood movies. Studios don’t employ legions of camera operators and set designers. They hire that talent as needed for a project. Everyone comes together and works for a few months and then the team breaks up and goes on to other things. Lots of people make their livings that way. Some of them do very well. That’s the way things work in a competitive, entrepreneurial environment.

The skills that journalists will need to survive in this decentralized market are very different from the skills they need today. For one thing, young journalists won’t be expected to spend a decade toiling away for pocket change while learning at the knee of some cranky city editor. They’ll be able to make a good living much faster if they have the smarts and skills to compete.

Political skills won’t matter for much because most journalists won’t work for big organizations. Journalists will succeed or fail based upon the quality of their work and their ability to sustain mutually beneficial relationships with multiple employers. Social skills will matter more than political ones. Self-promotion will be essential. There’ll be less time spent in pointless meetings and bitching about the boss at the local bar because, well, there is no boss any more. Journalists will reclaim vast amounts of time that are now spent on organizational bullshit. They’ll spend their time making money instead of covering their asses.

Risky Business

This future is going to look scary to some people because there’s no job security or benefits. But who’s got job security anywhere these days? And benefits plans are being hacked to pieces as businesses downsize. In the future, working for an organization isn’t going to have many advantages over independence. There will still be company jobs for those who prefer them, but a lot of energetic and resourceful journalists will find that life is better on the outside. It’s amazing how productive you can be when you discard all the overhead of working in a big organization. Trust us on that. We left corporate life four years ago and have managed to produce three books and maintain two active blogs while still making a decent living.

Most journalists we’ve talked to are fine with this idea except for one thing: The thought of selling advertising terrorizes them. They have reason to be nervous. Most journalists we know would be lousy salesman (we tried it for a year and hated every minute) so it’s likely that business models will emerge to manage the business details for them. We told you about one of them – GrowthSpur – back in August, and there no doubt will be many others. As news organizations collapse and journalism opportunities disperse out to a million topical blogs and hyperlocal foundries, new ventures will spring up that aggregate opportunities and provide a variety of other services ranging from promotion to ad sales to accounting.

Read Jarvis’ essay for an optimistic perspective on the future opportunities for journalists. No one is suggesting this transition will be easy, but it will result in a market that is vastly more efficient than the one we have known. Journalism schools today should be training their students in the skills of small business management. Those that continue to preach the virtues of working one’s way up through a newsroom hierarchy are doing their students a disservice. Perhaps J-schools will evolve to become subspecialties of colleges of business. That wouldn’t be a bad thing; just different.

Thriving in the Free Economy

To hear some new ideas about how organizations can profit from the emerging free economy, listen to this Churchill Club podcast titled The Free Economy: How Companies Make Money From Giving Things Away. The panel was moderated by Chris Anderson (left), whose new book,  Free: The Future of a Radical Price, paints a picture of economic change brought about by the availability of cheap digital distribution. Anderson hosts a panel of entrepreneurs who are making money with businesses that give away all or part of their services for nothing.

Paid-content advocate Steven Brill (right) has been busy defending his position lately. He squares off over the pay wall issue with visionary Clay Shirky on McKinsey & Co.’s website.  Shirky says forget about charging readers for content. They’ll pay only if the information is “necessary, irreplaceable and unshareable.”  The Financial Times can get away with charging for online access because people make money from the information they find there, but few outlets have the kind of audience demographics to do the same. On the sharability point, Shirky notes that preventing paying subscribers from sending interesting information to their friends goes against the grain of the Internet, thereby subverting the pay wall by its very nature.

Brill begs to differ. The point is not to charge everyone for access, he says, but rather to charge those people who are most committed to the product and are willing to pay. So a college newspaper could ask alumni to pay for a subscription in order to subsidize free copies for the students. Brill says he basically agrees with Shirky but thinks publishers should go after subscription revenue where they can get it. He resorts to that most annoying of branding tactics by inserting that little ™ symbol whenever he mentions his own products. We at the Death Watch™ just hate that.

Brill was also at an event sponsored by the Paley Center for Media that put him up against National Public Radio CEO Vivian Schiller, iconoclast Jeff Jarvis and media consultant Shelly Palmer. The most damning quote came from Vivian Schiller, who was previously general manager of NYTimes.com during the newspaper’s ill-fated TimesSelect experiment. The pay-walled venture “made $10 million, but I don’t think it was worth it,” she said. “Trying to force a change in audiences’ behavior is the fundamental problem I have with some of these pay wall models.” PaidContent.org’s David Kaplan notes that despite the debate format, the panelists really weren’t that far apart on the fundamental issues. All of them believe publishers need to find new ways to monetize their audiences. It’s just that most believe that charging for content that readers can find elsewhere for free is not the way to do it.

Bloggers Need Shield Laws

Writing on Media Shift, Clothilde Le Coz says a double standard applies when it comes to shield laws for citizen journalists. She notes that 37 states have passed laws that protect journalists from prosecution for failing to reveal their sources. Now there is a bill awaiting Senate approval that proposes to implement a shield law on a national level. The problem is that the bill defines journalists as people who work for professional media organizations. Bloggers are not specifically addressed in its language, which seems a rather blatant oversight these days.

Le Coz cites the 2005 case of journalist and blogger Josh Wolf, who was jailed for failing to hand over video of a clash between protesters and police during the G8 summit. Wolf spent a month in jail but was eventually released under the terms of California’s shield law. “Imagine what would have happened if Wolf wasn’t a journalist and couldn’t argue his right to protect his sources?” Le Coz writes. “He would have been forced to give up his footage and thus become an accomplice in the arrest of protesters.”

Blogger anonymity is a thorn in the side of many professional journalists, but the writer argues that it’s an essential tool for bloggers in some countries if they are to speak freely at all. Even in the US, the rise of citizen journalism as a legitimate complement to mainstream media would seem to argue for an extension of legal protection to those who happen to be on the scene when something happens and who report the details.

Miscellany

If you have a couple of hours to kill and want to trace the history of the Boston Globe‘s near-death experience at the hands of owner New York Times Co., PaidContent.org has a link list of its coverage in reverse chronological order.

USA Today‘s loss is The Wall Street Journal‘s gain. As the Gannett-owned week daily announced a plunge in daily circulation figures earlier this week, the Journal reported a year-over-year increase of .8%, making it the top-circulating US daily. The shift in industry leadership has more to do with accounting practices than actual leadership habits. USA Today attributed much of its circulation plunged to Marriott’s decision to stop distributing the paper free to all guests in its hotels. Meanwhile, changes in Audit Bureau of Control rules now permit the Journal to count more of its deeply discounted copies as legitimate circulation.

“We bought BusinessWeek to invest in it,” says Bloomberg Chief Content Officer Norm Pearlstine in an interview with PaidContent.org. The former Wall Street Journal and Time, Inc. executive says Bloomberg did have some reservations prior to its blockbuster acquisition of the struggling newsweekly, which was announced earlier this week, but that the financial publisher sees BusinessWeek as a tool to expand its reach into the executive suite. Bloomberg intends to invest in the magazine’s editorial staff and become a “true newsweekly,” meaning 52 issues a year and no games during slow times. Paid content.org has a history of the BusinessWeek sale in links.

Huffington Post is doing some pretty creative stuff with customization, reports Zach Seward on the Nieman Journalism Lab. It’s writing two different headlines for some stories and showing them randomly to viewers for five minutes. After that time, the headline that generates the most clicks becomes the default. Huffington Post is also toying with the idea of regional versions of its homepage that would serve up, for example, a different menu of stories to the lunchtime crowd in New York than to people just arriving at their workplace in Los Angeles.

After years of cutbacks and sales declines, the Dallas Morning News is fighting back by raising subscription prices and investing in better journalism. The seven-day home delivery rate just jumped 43%, making the Morning News one of the US’s most expensive metro dailies. The paper has also added pages, increased local news and sports coverage, expanded its recipe section and introduced a new feature in the business section. And it’s looking to hire five reporters. “We need it to continue to be profitable so that we have the funds to invest to make the transition…to digital,” says publisher Jim Moroney.

If you’re using WordPress for your blog (and who isn’t these days?) then be sure to check out this list of 85 WordPress plug-ins for blogging journalists. They include gems like BackType Connect, which pulls comments posted about you on other social media sites into your own pages, and Global Translator, which translates entries into 34 different languages. We’ll include a plug here for Apture, a utility that makes it drop-dead simple to insert links and media into posts without going through the tedious download and upload process. See our ham-handed application of Apture in the Wikipedia clip above. We’re still learning.

And Finally…

Ninety-three percent of all newspaper sales “can now be attributed to kidnappers seeking to prove the day’s date in filmed ransom demands,” reports The Onion in a hilarious spoof on the industry downturn. It seems that evildoers just can’t get enough of “the smell of ink coupled with the mildew odor of a windowless basement.” Publishers are seizing the opportunity to cater to this influential audience by targeting advertorials and special sections devoted to ski masks, abandoned warehouses and industrial meat freezers.

The CEO of the Associated Press is stirring up trouble in China. Tom Curley (right) took the opportunity of an address to the World Media Summit in Beijing to outline plans for an AP-led initiative to retake control of intellectual property produced by the organization and its members.

The three-part initiative includes the News Registry, which is a rights management and tracking system that includes some kind of digital licensing protocols. He also said the AP will create a NewsMap, which is a master index of original content submitted to the registry, and NewsGuide, which is “an aggregated body of unique news content,” that sounds a little bit like Google News only a lot harder to use. All this is happening under the banner of “Protect, Point and Pay,” the objective apparently been to make it really difficult for aggregators to access AP content without paying for it. Of course, history shown that, when faced with roadblocks like this, aggregators simply go elsewhere. No timeframe for the new initiatives was announced.

Jeff Jarvis is having none of it. The media iconoclast says he can’t help pointing out the irony of Curley’s choosing to unveil the AP’s plans in a land where government exercises tight control over what citizens may know. The whole idea indicates that the AP doesn’t understand the dynamics of the link economy and word-of-mouth transmission. Curley and his fellow control freaks, “are the ones killing newspapers, not the Internet,” Jarvis says.

Condé Nast ’09 Revenue Decline May Hit $1 Billion

If anyone doubts how hard this economy has hit the luxury sector, they have only to look at the dismal performance of Condé Nast. Newsweek reports that the upscale magazine publisher – one of the nation nation’s three biggest — may see its ad revenue drop by $1 billion in 2009. In light of that disaster, it’s not surprising that Condé Nast last week decided to close venerable publications like Gourmet and Modern Bride. The company still owns Architectural Digest, Vanity Fair, The New Yorker, GQ, Vogue, and Wired.

But for how long? Newsweek estimates that ad revenues at Architectural Digest are off by almost half and that Wired and Vanity Fairare off 35% and 27%, respectively. For the newspaper industry, there’s bad news, too. Condé Nast owns newspapers in more than 20 cities through its Advance Publications subsidiary. Cost-cutting could force cutbacks at those titles as well.

Glimmers of Good News

Newspaper stocks are finally coming back from the dead, but can they hold their gains? MediaPost points to encouraging news. Since April, Gannett stock has more than tripled from $3.81 to $12.50, McClatchy has quintupled to $2.56, and Media General has jumped 250% from $2.54 to $8.86. It could be that the current valuations better reflect reality, Erik Sass suggests. Newspaper stocks became such a hot potato during the revenue implosions of the last two years that investors may have forgotten that the companies still have valuable audiences and profitable businesses.

Another researcher says the online ad market is bottoming out. eMarketer analyst David Hallerman says ad declines in the second half of 2009 will be less than the first half’s 5.3% drop. These days, that’s considered good news. See the eMarketer chart above. It looks like the big gainer will be search while classified advertising will lose ground.

Miscellany

For beleaguered news industry veteran who happen to speak Portuguese, the new mantra may be “goes south, young reporter.” The people of Brazil are reading newspapers in bigger numbers than ever, reports The Guardian. Total circulation of Brazilian newspapers rose 12% in 2007, or nearly five times the global average. It was up another 5% last year. The cause, apparently, is rapid growth in the middle class, which is seeing disposable income increase and creating both advertiser and reader demand. Newspaper revenues have risen every year since 2001. Rio de Janeiro’s historic Olympic Games win will only add life to the party.

Ink-stained wretches who enjoy pointing out the failings of the blogosphere should read Paul Carr’s rant about an apparently flagrant miscarriage of journalistic justice by ZDNet. The story, which was the work of a ZDNet blogger named Richard Koman, alleged that Yahoo had passed the names and e-mail addresses of hundreds of thousands of bloggers to Iranian authorities during the country’s controversial election. It turns out Koman‘s unnamed source for the story was an Iranian blogger with a decidedly vested interest in spreading misinformation. ZDNet has since retracted and apologized for the misstep. Carr isn’t letting the publisher get off that easily, however. He lectures blog aggregators in general — and ZDNet in this particular — for shoddy journalism for not even passing the blog entry by a second set of eyes before posting it. Quoting Winston Churchill: “A lie gets halfway around the world before the truth has a chance to get its pants on.”

USA Today has defied the industry circulation trends with minimal losses for the last two years, but that’s all about to come to an end. The newspaper is expecting circulation to drop 17%, the largest decline in its 27-year history. That translates into a loss of nearly 400,000 daily copies. The losses are apparently due to USA Today‘s reliance on hotel distribution. Cutbacks in business travel, combined with Marriott’s decision to discontinue automatic deliveries to its guests, created a potent double whammy.

Chicago has a new newspaper magnate, and he says he’s not going to repeat the mistakes of the last one. James Tyree, 51, chairman of Mesirow Financial, can’t help being compared to Sam Zell, the real estate magnate who bought Tribune Co. in 2007 and presided over its rapid descent into bankruptcy. Tyree (right) says Sun-Times Media Group is different. For one thing, there’s no debt. For another, Tyree understands the Internet. He reads six papers daily, all of them online. He has also made no bones about the challenges facing the company and has wrung significant concessions from the unions as a precursor to acquiring the Chicago Sun-Times and 58 suburban titles. If all goes as planned, he will take over control of the company in late October, much to the relief of employees and the Internal Revenue Service, which is owed more than $600 million by former owners.

The Russian owner of the London Evening Standard has decided to stop playing pricing games and simply make the 182-year-old newspaper free. Alexander Lebedev (left) says the move will more than double distribution from 250,000 daily copies to 600,000. The billionaire banking magnate, who took over the paper earlier this year, says the loss of circulation revenue can be more than made up by advertising gains. However, skeptics say that’s a long shot in a market that has recently seen the loss of one free title (TheLondonPaper) and that shows no sign of an advertising upturn.

Canwest Global Communications will be run by a group of creditors as it attempts to dig out from more than $4 billion in debt. Canada’s largest publisher was granted bankruptcy protection late last week. The company owns a variety of broadcasting and print businesses including Global TV and the National Post. Its acquisition of the latter is now widely seen as the source of its current difficulties because it loaded down the company with debt.

The Claremont (N.H.) Eagle has been resuscitated and removed from our R.I.P. list after a new owner rehired about 20 staff members and relaunched the 8,000-circulation newspaper on a somewhat-less-than-daily frequency.

And Finally…

It often takes an insider who understands the existing cultural norms to effect real change. That’s why Dan Gillmor continues to be such an effective voice for new-media reform. The former San Jose Mercury News columnist posts a list of 22 ideas for “changing the way news is produced.” They include simplifying language to speak in facts, not euphemisms, linking aggressively to competitors’ content, doing away with the use of unnamed sources and illuminating the motives of the people behind reported stories. While some of Gillmor’s proscriptions may seem condescending, his manifesto reflects the way information is communicated in the emerging bottom-up world. More than 100 commenters contribute their own addenda.

Don’t celebrate the reinvention of news as a nonprofit model, writes Slate’s Jack Shafer. Although several prominent experiments in philanthropy-funded news have sprung up lately, Shafer says it’s a case of “substituting one flawed business model for another. For-profit newspapers lose money accidentally. Nonprofit news operations lose moneydeliberately,” he points out.

The problem is that deep-pocketed sugar daddies almost always have an agenda, and the news outlets they fund invariably become mouthpieces for their political goals. Think Sun Myung Moon and the Washington Times. “Having just evicted the usual gatekeepers, how many readers are going to be eager to have philanthropists reset the news agenda?” Shafer asks. What’s more, nonprofit ventures may compete with, and weaken, existing for-profit media organizations, which is a loser for everybody. Shafer correctly points out that the most prestigious news organizations in the world all have commercial motivations.

One of the nonprofits Shafer mentions is MinnPost and local media reporter David Brauerhas issues with Shafer’s comments. It’s true that philanthropist’s agenda does influence the staff who write the stories, he says, but can’t the same be said for advertisers’ influence on profit-making entities? MinnPost’s goal is to subsist on reader subscriptions and “I’d rather be subject to the tyranny of members than advertisers.” Texas Tribunefounder John Thornton has even harsher words for Shafer. Newspapering has only been an absurdly profitable business for about 40 years, he writes. Prior to that, it was a street brawl with very little profit for anyone. We’re just getting back our roots, he suggests.

Reporters Need Not Apply

Rick Burnes used to be an editor in Moscow and at The New York Times online. Now he’s in marketing at search-engine optimization firm HubSpot, which has a very well-read blog. Burnes wants to hire a top journalist to tend the blog, but he thinks it’s unlikely a journalism veteran will get the job. Why? Most journalists don’t believe businesses can produce high-quality content, they are repulsed by the business side of publishing and they don’t understand the link- and promotion-driven culture of the Web. Burnes would like someone to prove him wrong, but at this early stage, he’s skeptical anyone will. “As a hiring manager (and a former journalist) with one chance to hire the right person, I’m wary of somebody with a background in news.”

Or if the HubSpot job doesn’t interest you, try applying at Los Angeles Kings, theLos Angeles County Supervisor’s office or Major League Baseball. Those are just some of the organizations that have recently hired journalists. “All think the news media no longer cover the universe — or their corner of it — adequately and all have hired journalists of their own,” writes James Rainey in the Los Angeles Times.  County Supervisor Zev Yaroslavsky’s new deputy for special projects, Joel Sappell, used to work for the Times. Now he’ll be writing about “little-known county programs and issues” for his new boss. Major League Baseball has employed journalists as beat reporters covering the league’s 30 teams since 2001.

Miscellany

Simon Owens focuses on cartoonists who are making it on the Web. But making it doesn’t necessarily mean raking in the dough. Howard Taylor creates his own books of his Schlock Mercenary comic and sells them out of his home, which resembles a publisher’s warehouse. Many other artists run the comics as a loss leader and make their money on t-shirts. The good news: You can make a living. The bad news: It’s really hard.

Ebony magazine is for sale. Its ad pages are down 35% this year and it’s in the third consecutive year of decline. Ebony’s sister publication, Jet, is in even worse shape. Ad revenues there have fallen 40% this year. Ebony was the first African-American magazine and Johnson Publishing is the world’s largest African-American-owned publishing company. It’s not clear whether Johnson can survive as an independent entity, though. The company is reportedly looking for partnerships, rather than an outright sale, it’s likely that control will pass out of the Johnson family’s hands.

Newspapers have dramatically reduced subscriber churn rates and improved circulation profitability through a combination of price increases, outsourcing and better promotions, the Newspaper Association of America reports. The percentage of subscribers who cancel subscriptions fell to 31.8 percent in 2008 from 54.5 percent in 2000. The improvement appears to reflect publishers’ efforts to refocus their circulation promotion on high-quality readership rather than just adding names to the list.