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January 10 2011

18:00

Applying analytics to magazine sales at Hearst

It’s safe to say that analytics are no longer online news’ equivalent of fantasy baseball circa 1998: relegated only to the geekiest corners of the operation. News editors and executives not only know what kind of hourly, daily, and monthly traffic their sites get, but they can tell you who’s their best referrer and what stories will predictably provide a pageview explosion. (Of course there’s still a debate on what role those metrics should play for news organizations.)

But what about on the print side? Specifically magazines: When it comes to newsstand distribution, the numbers are largely a guessing game. And when you’re spending millions on printing and delivering magazines, that’s an expensive guessing game.

“There’s a lot of waste, in a sense,” said Charlie Swift, vice president of database strategy and marketing for Hearst Magazines. “You may put out 10 copies, sell 4 and 6 get tossed.” The flip side, of course, being when you don’t stock enough magazines at locations where they sell out. Distribution has largely been based off previous sales at given locations, but variables can come into play, such as where magazines are placed (near the checkout vs. on a newsstand) and demographics in an area (or as Swift told me: “If you’re selling Cosmopolitan in a retirement community, that’s probably not a good idea.”).

“We believe there’s a way to make [distribution] more efficient by putting analytics behind it,” Swift told me.

All of this is why Hearst held a competition to see who could build a better analytics model to predict newsstand sales for magazines. It’s a Netflix Prize-like approach to figuring out how well a magazine will sell at a given location, based off historical sales data. There were more than 700 participants in the competition, and last month Hearst and the Direct Marketing Association awarded a team $25,000 for their formula, which generated magazine sales estimates that were nearest to actual newsstand figures. Swift said they’re looking at how they can adapt the model to distributing different titles.

They’re hoping analytics can be a way of becoming more efficient and saving money — starting by wasting less paper. According to figures provided for the competition by the National Center for Database Marketing, less than 40 percent of all copies are sold, and the magazine industry saw close to a six percent drop in newsstand sales between 2009 and 2010. Swift said using analytics benefits readers “if we can be more efficient as an industry and take costs out that are not adding to the customer.”

What’s almost ironic about magazines getting turned on to analytics is that they’re historically known for holding on to information about readers from home subscriptions, direct mail, and surveys. Swift knows this better than most; his job is a relatively new position created at Hearst specifically to look at metrics. Like many organizations, Hearst’s magazine division is in the process of building a unified customer database that ties together information like bill payments, web visits, and promotions received.

Aside from the economic benefits of getting better data, Swift said he thinks magazine publishers realize the cost of storing and managing information has gone down. They’re also taking notice of how analytics are used in making decision for news sites. “The web changes the culture too,” he said. “There’s too much information to absorb — you have to process it, have to let analytics drive it in ways.”

Photo by YoungDoo Moon used under a Creative Commons license.

November 30 2010

18:30

Droid Does Mizzou: Speed-dating style app contest builds a new framework for journalism experience

It may not be possible to force innovation in journalism, but you may be able to guide it, starting with a little speed dating.

Lightning round-style matching is the secret to creating teams that can successfully build apps for news, at least at the Reynolds Journalism Institute at the University of Missouri. (For our purposes let’s replace nervous single-ites making awkward small talk with anxious j-students, programmers, and business majors.)

This is the fourth year the Institute has held a competition to encourage journalism students to try their hand at becoming developers. In previous years students have focused on creating applications for the iPhone and Adobe AIR. In this year’s competition students will create apps on the Android platform with help from Google, Adobe, Sprint, and the Hearst Corporation.

“What we try to do is take an emerging piece of technology and challenge our students to come up with a solution for journalism or the advertising that supports it,” Keith Politte, manager of the technology testing center at the Institute, told me.

Over the course of the next few months students will give an initial pitch to judges, followed by months of working on the apps for a final presentation in the spring. Winners will earn a trip to Silicon Valley to present their project to Google. “Android will be fun,” Politte said. “It not only allows us to go to phones, but also some of the new tablets and Google TV.”

In its role Hearst acts as a client and partner, offering specs on what types of apps or content areas it’s interested in, as well as providing project managers to help guide students. The company will also consider student apps for use in its own products. The winning projects from last year’s competition, a recommendation engine and an enhanced photo gallery program, have both been turned into internal projects at Hearst Interactive, Politte told me.

J-schools like Mizzou are taking furtive steps towards blending traditional media education with a sharper focus on teaching technical skills (or perhaps ushering in the rise of the journo-programmer), and the competition at RJI is an example of fostering innovation from journalism students in a less-than-academic (or at least outside-the-classroom) way. And if the last three competitions have been any indicator, it’s a bridge to outsiders (engineers, business students, programmers) who could bring fresh thinking into journalism’s future.

“We bring in different students, introduce them to the concept, and say go,” Politte told me. “After an hour of frenzied experiences you have a team.” Again, speed dating. They bring together undergrads from the School of Journalism with computer science majors, engineering students, and business majors. Absent the young developer toiling away in a dorm, it’s likely most people don’t have experience building web applications or may not have convenient connections to computer science geeks or budding journalists. As a practical necessity teams need members from the J-school and an “other,” meaning students from other schools, Politte said.

One benefit is that journalism students are exposed to thinking like (and communicating with) a programmer, a skill that likely will be handy once they leave college. But Politte said the opposite is true as well, as programmers, engineers, and business students gain an insight into journalism. “The world doesn’t live in silos,” Politte said. “We need to be able to cross disciplines — and our students, when they graduate, if they’re working as a journalist, will interface with IT folks.”

Of course there’s also the reality that working as a journalists going forward doesn’t necessarily mean working in a newsroom or at a newspaper. Politte thinks that future is more than apparent to students, which is why more are interested in broadening their skills outside of media.

“They see the legacy business model being fractured and are wanting to be more entrepreneurial and solve problems in a journalism context,” he said.

What may give students a greater incentive this year is the fact that they’ll own what they create outright. Politte said in previous competitions that there was uncertainty whether the university retained the license to products created by students. Now participants will have the intellectual property rights to what they develop. “The old way is the university owns everything and is motivated by capturing anything created and being able to monetize it,” Politte said. “It’s good in theory, but the university doesn’t have enough individuals to help commercialize and accelerate the licenses we have.”

Practical, tangible experience is now the mindset for many journalism schools, as we’ve seen with Columbia University’s Tow Center for Digital Journalism, the University of North Carolina’s Reese Felts Digital News Project, and the University of Southern California’s Annenberg Innovation Lab.

Journalism schools find themselves launching students into an industry in flux and trying to adapt to ideas and technology that may not be fully formed yet. What the student competition suggests is that creating non-academic frameworks for students to innovate (and potentially find solutions to the industry’s problems of today) may be just as important as any curriculum or classroom experience.

Politte sums it up best: “We wanted to step out of our students’ way and let them be successful.”

January 18 2010

17:51

Singleton’s next chapter: Can he steer MediaNews to a digital future?

[Our regular contributor Martin Langeveld spent 13 years as a publisher in MediaNews Group. That gives him an inside perspective on the company's bankruptcy filing, which he shares with us here. —Ed.]

In August 2006, as part of a deal that netted MediaNews Group the Contra Costa Times, San Jose Mercury News, and the St. Paul Pioneer Press, the Hearst Corporation agreed to make a $300 million equity investment in MediaNews. At that point, the peak of MediaNews’ company’s expansion and with revenue and cash flow at an all-time high, the holdings of the principal stockholders — the Singleton and Scudder families — net of debt, were arguably worth more than $500 million each.

But last Friday, whatever was left of that equity, as well as Hearst’s stake (not finalized until a year later), evaporated as part of an announced plan to file a “prepackaged” Chapter 11 bankruptcy. For Hearst, it’s a hefty writeoff of a bad investment. For the Scudders, it’s a bitter payoff after nearly 25 years of active participation in MediaNews management. For MediaNews CEO William Dean Singleton and his financial wizard, company president Joseph (Jody) L. Lodovic IV, it’s a fresh start (which includes a 20 percent equity stake for the duo, and retained control of the company).

Could readers of the company’s papers now see new investment in its newsgathering capabilities, long hammered by budget reductions? For MediaNews employees, could this be an opportunity to participate in the transformation of the company into a truly digital enterprise? Both answers depend on what kind of vision is shared by Singleton, Lodovic, and the former bondholders who are now their equity partners.

MediaNews’ story

In 1983, Singleton, then a brash 32-year-old newspaperman who already had bought and sold several newspapers, enlisted the help of his friend Richard B. Scudder to buy  the Gloucester County Times in New Jersey. Scudder, former publisher of the Newark Evening News (which his family owned for three generation before selling it in 1972), was founder and president of the Garden State Paper Co., the first commercial-scale producer of recycled newsprint.

Singleton and Scudder went on to create MediaNews Group in March 1985, and steered the company through a long series of deals that eventually built it into the sixth-largest newspaper group (by circulation) in the country — today it owns 54 daily newspapers with a total weekday circulation of about 2.3 million, plus a slew of weeklies and niche products. It also has a television station in Anchorage and a group of radio stations in Texas.

From the outset, Singleton and Scudder agreed to manage MediaNews for growth, and never to pay dividends. Neither of the partners ever personally owned any stock — they put it in trusts for Scudder’s children and grandchildren and for Singleton’s future children. Singleton was only 33, unmarried and childless at the time, but Scudder was 72, so the trust strategy would avoid inheritance taxes in the event of his death.

The company never went public, but because a small portion of its debt was publicly held, it was required for years to file disclosures with the SEC, providing a detailed window into the complex financial structure that enabled its growth. (That window closed in 2008 when the company reached an agreement with bondholders to avoid the filings.)

The financial wizard behind the company’s financial maneuvers was Jody Lodovic, who became chief financial officer in the early 1990s and rose to become president. Together, Singleton and Lodovic created partnerships with Gannett in Texas and New Mexico and with Gannett and Stephens Media in California to which each company contributed its newspapers, with MediaNews assuming the management. They pioneered the concept of “clusters” of papers that could realize economies of scale. They deftly exploited joint operating agreements in Detroit, Charleston, W.V., York, Penn., Salt Lake City and ultimately in Denver at the conclusion of a long battle between MediaNews’ flagship paper, the Denver Post, and the Rocky Mountain News. At times, when cash was tight or they got offers they couldn’t refuse, they sold papers, including the original New Jersey cluster dear to Dick Scudder’s heart.

For Singleton, the elimination of most his company’s debt is a long-delayed goal. As early as 1996, at a retreat for the group’s management and publishers, he outlined strategies including a few more years of acquisitions followed by a push to reduce debt. But somehow, acquisition opportunities kept coming along, and debt reduction was put off. Singleton began to feel that at some point, there would be only two or three newspaper companies left standing, and he wanted MediaNews to be one. To be in the running, the company had to keep growing. Ultimately, revenue tanked not long after the final big deals with McClatchy and Hearst, and MediaNews found itself in workout last April. Given the complexity of its financial structure, it’s not surprising that it took eight months to package the bankruptcy.

For Singleton, it’s not the first disappointing turn, but certainly the biggest. In 1975, pre-MediaNews and at the age of 24, Singleton was involved in an attempt to revive the Fort Worth Press, which had been closed by E. W. Scripps after losing money for two decades. The venture ended in failure after three months. MediaNews bought, but couldn’t make a go of the Dallas Times-Herald, which was closed a few years after Singleton sold it. Later, MediaNews bought the Houston Post but couldn’t make it profitable and sold the assets to Hearst, which owned the dominant Houston Chronicle. Hearst paid $120 million and immediately closed the Post. (The laid-off staffers, calling themselves the Toasted Posties, set up an early social networking site of sorts to stay in touch and swap gossip about Singleton; it was succeeded by a now-dormant blog, and later by a Facebook page.)

Known as a cost-cutter

Though he continues to have a reputation for ruthlessly cutting costs when necessary, Singleton takes a genuine pride and interest in his newsroom staffs. When visiting newspapers, before heading out for dinner with the publisher, he makes of point of visiting the newsroom to see what’s going on. He keeps an eye on editors, reporters and photographers with promise and has promoted some to the Denver Post. He has a mail subscription to every one of his dailies, and when he’s traveling, his sister and personal secretary Pat Robinson sends some of them to his destination in Fedex boxes so he can keep up. Editors are not surprised to get a call from Singleton asking about a local story, or exhorting them to run more local news on the front page. He lets each local paper formulate its own editorial views and endorsements. Before the going got rough, Singleton and Scudder convened annual gatherings of MediaNews publishers to talk strategy; they enjoyed these confabs far better than meetings of publishers.

And as Singleton told the Wall Street Journal in an interview relating to the current bankruptcy process, he continues to press his vision for consolidation of the newspaper industry, telling the Journal he wanted to be the “aggressor” in that effort.  The group’s employees fear that by consolidation, Singleton means more outsourcing or more centralization of operations regionally and nationally. There’s been a lot of that already, and there could be more, but Singleton and Lodovic will now be free to expand their partnerships, to seek mergers with other groups, or to rationalize the market through exchanges of newspaper properties. “Look at the map,” Singleton told the Journal in response to the question of where such consolidations might occur.

Singleton has lived with multiple sclerosis for 24 years; the disease has now robbed him of the use of his legs. In a long and particularly revealing interview last year with the Colorado Statesman, he discussed its effects:

I cheated it for many, many years. The last three years, I haven’t cheated it so well, and it has become more aggressive. I’ve lost the use of my legs and partial use of my arms and fingers. I feel fine most of the time. I’ve never missed work because of it. But clearly the current prognosis isn’t particularly good. The good news about Multiple Sclerosis is, it doesn’t kill you. But it does disable you. Not being able to walk or button your shirts or tie your tie — it’s troubling. But I’d rather be disabled and alive than fully able and headed to the other side. So I count my blessings for all the things it hasn’t taken. But it certainly has taken a lot. I look worse than I feel. I feel pretty good.

I’m still very energetic and do what I want to do. I travel if I want to travel, and get around to the newspapers and go anywhere I want to go. I enjoy life a lot, but I just enjoy it differently without some of the physical things I once had. It’s comical when I go on the road. I can’t button a button because my fingers don’t work. I can’t type anymore. I can’t use a computer because my fingers don’t work. If I go to hotels where I stay regularly, I’ve always got a concierge who’ll come up and button my shirts and help me tie my tie. If I stay in a strange hotel, I ask one of the housekeepers if she’ll button my shirts. She almost wants to call the police or something. You get all kinds of weird looks when you ask a housekeeper, “Would you come here and button my buttons for me?”

And I love it. In some places you get somebody who can’t speak English, so you have to explain how to button a shirt. And some places you get somebody who does, and they first think you’re joking. And then they understand your nod and they start laughing and everything. One of the fun things I have in life when I travel is the look on somebody’s face when I ask them to button my shirt. So you make the best of it.

Clearly, the MS puts some urgency in Singleton’s quest for a legacy. The elimination of most of his debt gives him an opportunity to rebuild newspaper operations that have been hammered for years by revenue declines and the company’s inability to invest adequately in its future (many of the papers are still operating on content management systems installed as Y2K solutions).  Whether he, or Lodovic, will have the vision to turn the company into a truly digital enterprise is an open question. Singleton has an understanding of the web (he helped lead the formation of the Yahoo Newspaper Consortium), but he’s not an active computer user. He has often expressed faith in the future of print, and has strongly espoused charging for content in order to protect the print side of the business: “I think print’s going to be important for a long time…Print is still the meat. Online’s the salt and pepper.”

With that attitude it seems unlikely that Singleton and Lodovic come to share the digital vision of another CEO leading his company out of bankruptcy, Journal Register’s John Paton, who told Jeff Jarvis recently (speaking of his previous company, Spanish-language publisher impreMedia):

The first thing we did was to decide that in our company, a print company, when it came to products we would be digital and brands first and print last. It was our radical way of focusing everyone on the future. By recognizing our competitors and our future were digital everything we built and did had to follow that decision.

Paton is free to pursue that vision at Journal Register, which is also newly unencumbered by debt. The readers and employees of MediaNews could benefit from a similarly unequivocal determination at the top to radically reinvent the business in a truly digital direction.

Disclosure: I worked for MediaNews Group as a publisher for 13 years from 1995 to 2008 at its cluster of four dailies in western New England. In a previous post, I outlined in more detail my suggestions for a more digitally-oriented MediaNews Group.

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