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December 07 2011

19:20

Your 2011 holiday gift guide, brought to you by the news

Santa running down the street in Algers, France

If you want to save journalism, you might turn to journalism this year for all your Christmas shopping.

This weekend at NewsFoo, an O’Reilly “un-conference” for about 170 journalists and tech disrupters, the tech writer Mónica Guzmán posed a question: “Can’t we [news organizations] sell anything besides articles?” Yes, it turns out, and there are numerous examples of them trying it.

A couple of months ago Guzmán was talking to an entrepreneur in Seattle who had just sold his latest startup to Google. “We got to talking about journalism, and I’m always fascinated to listen to people who come from an innovative mindset, but not a news mindset, look at news. What he said, basically, is I don’t see how news is really going to innovate and move forward unless they can get past this idea that what they sell is just content.”

News organizations have one big advantage in business: They know their audience.

“We have a huge leg up when it comes to organizing information communities,” she said. “[News outlets] build those communities that can be really specific and really well defined.” (NewsFoo is generally off the record, but Guzmán talked with me after her session.)

Here are a few examples of all the ways news companies are selling non-news products to consumers. Some might look better wrapped up under the tree than others, but if you feel like supporting the news, maybe there’s room on your credit card for one or two of them.

Merchandise!

For the oenophile in your life, buy a gift subscription to the New York Times Wine Club. Six rare wines (four red, two white) for $90 per shipment, or $180 for the most exquisite Reserve Club varietals. Each bottle is paired with tasting notes and an NYT recipe. Europeans can sample Telegraph Wines, “one of the UK’s most respected wine merchants.” A case of six bottles of Prosecco goes for £54 and includes two complimentary Champagne flutes.

Spaceballs: The Flamethrower

The Telegraph doesn’t stop at wine. There’s a Telegraph Garden Shop, Motoring Shop, a travel shop for holiday cottages. You can buy earrings, duvet covers, snow boots, and clothes hangers. “They are the leading retailer of clothes hangers in the U.K.,” said Jeff Jarvis in an April 2010 Editor & Publisher story. The newspaper raked in a quarter of its profit in 2009 from selling things, he said.

The Onion cheaply repurposes tons of its own content into coffee-table books and framed prints. NPR, almost true to stereotype, sells “green gifts,” “gifts for gardeners,” and “gift for tea lovers.” None of those items have NPR branding, just the kind of things a typical NPR listener might like to buy. (And shoppers know their purchase helps support the news.)

The überaggregator Boing Boing sells stuff as weird as that which it aggregates, e.g., rubber finger tentacles, a remote-controlled flying shark, a bacon-scented air freshener. That site outsources the e-commerce software and payment processing.

Specialty iPhone apps

Santa's Hideout screen shot

There are plenty of smartphone and iPad apps that try to generate revenue for news organizations, but it’s less common for there to be an app that doesn’t have anything to do with the outlet’s journalism. Just today we wrote about Condé Nast’s new Santa app, which helps parents assemble and share lists of what their kids want for Christmas.

This summer Hearst Corp. launched its App Lab, a sort of digital R&D unit for the ad agencies who work with Hearst. It was Hearst that developed Manilla, a financial management product for consumers, earlier this year.

Events

In September, the web-only Texas Tribune launched the Texas Tribune Festival, a first annual symposium that brought together politicians, wonks, lobbyists, and others from the universe of Texas politics. (I interviewed editor Evan Smith about it this summer.) Tickets cost $125, but the real money comes from corporate sponsorships. In 2010, before the festival existed, the Tribune raised about $600,000 in event sponsorship, Smith told me. The Tribune festival was modeled on the New Yorker Festival, which also sells tickets and big-name sponsorships. Forbes follows a similar model for its CEO conferences around the world, but those tickets are a lot pricier.

Digital marketing services

Rubber finger tentacles

435 Digital is a Chicago consulting firm that does web design, SEO, and social media — actually, it’s a division of Tribune Co., but you would never know that from looking at its home page. The group is made up of the people who gave us Colonel Tribune and the ChicagoNow blog network.

GannettLocal, too, offers marketing services for local businesses that advertise in Gannett-owned papers. Condé Nast sells its in-house creative talent to advertisers, competing with the very agencies whose work fills the pages of its magazines.

Using reporters’ smarts

The Chronicle of Philanthropy, as I wrote this summer, packages its reporters’ in-house expertise about particular topics as paid webinars that cost as much as $96 apiece.

The premium content, the merch, the events, the consulting, the apps — they are all specialty products for niche audiences. Whether all of the offerings are making money is for another story.

“Last-minute shopping?” by Louise LeGresley used under a Creative Commons license.

September 03 2011

15:17

Forced vacation use ordered at L.A. Times

LA Observer :: More cost cutting: the same week that parent Tribune asked the bankruptcy judge to tapprove bonuses for 640 managers, Los Angeles Times employees received an email saying they will not accrue vacation for the rest of 2011. They also have to use up some of their banked vacation days, like it or not. LA Observer published the memo.

Continue to read Kevin Roderick, www.laobserved.com

July 18 2011

16:00

Alden Global Capital drops a shoe: Is the Journal Register acquisition prelude to more consolidation?

On Thursday, Journal Register Company announced that it had been acquired by Alden Global Capital, a secretive hedge fund that specializes in “distressed opportunities,” such as companies emerging from bankruptcy — including newspaper groups. The acquisition may foreshadow additional moves by Alden, which is interested in two strategies to add value to its investments: (a) it wants its newspaper holdings to aggressively develop digital capabilities and revenues, and (b) it wants to see consolidation (mergers) among newspaper groups.

In its capacity as a distressed-opportunity specialist, as I detailed here in January, Alden acquired stakes not only in JRC, but also in MediaNews Group, Philadelphia Media Network, Tribune, Freedom Communications, and the Canadian newspaper group Postmedia Network . Among publishers that avoided bankruptcy filings, it has stakes in A.H. Belo, Gannett, McClatchy, Media General and Journal Communications. (I detailed those investments in this post in March.) In addition to its newspaper holdings, Alden has other media investments, including in Emmis Communications and Sinclair Broadcast Group. Only the investments in public companies are detailed in SEC filings — they add up to about $210 million in media holdings. Together with the non-public investments in JRC, MediaNews, Freedom, Postmedia, and Philadelphia, Alden may have as much as $750 million of its total assets of $3 billion invested in newspaper and broadcast media properties.

At the time of that January post, Alden had just asserted itself at MediaNews Group by shaking up the executive suite and naming three new directors to the seven-member board. (Disclosure: I spent 13 years as a publisher at a MediaNews Group newspaper.) That move was important because it enabled Alden to use MediaNews as a platform from which to drive consolidation in the still-fractured U.S. newspaper industry. (The largest player, Gannett, owns only about 13 percent of the industry in terms of daily circulation.) Under SEC rules, by taking a position on the board, Alden was no longer allowed to speculate in MediaNews stock; hence, their assumption of board seats signalled an intent to use their MediaNews holdings strategically rather than speculatively. Until the JRC acquisition, Alden had not done the same at any of the other firms in which it had invested.

The first strategic move MediaNews made after the January shakeup was to make a bid for Freedom Communications, publisher of the Orange County Register and other papers and owner of broadcast properties, which put itself up for sale in March. Alden is believed to own about 40 percent of Freedom, a stake similar to its MediaNews holdings, but by not taking board seats, it had remained on the speculative side of the fence at Freedom, and therefore could not influence Freedom’s choice of an acquisition partner. But clearly, the ideal marriage from Alden’s point of view would be between Freedom and MediaNews.

Last month, the Wall Street Journal reported that talks between MediaNews and Freedom had broken down, with a Freedom valuation of about $700 million at issue. Other suitors, including Tribune (in which Alden has a stake), may be in the picture, but with its relatively debt-free post-bankruptcy structure, and its heavy presence in the California newspaper market, MediaNews was in the strongest position in the bidding for Freedom. As Denver-based Westword (which keeps a close watch on MediaNews) said about the talks breakdown, “expect MediaNews Group and Freedom to sit down again in the coming months despite the current state of negotiation interruptus.”

Meanwhile, the Alden takeover of JRC gives it a second operating platform for its consolidation goals. Its JRC investment is now strategic rather than speculative as well; it can call the shots. Clearly, it likes JRC CEO John Paton, one of the prime exponents of a “digital first” strategy. Paton has also had a relationship with Alden’s Canadian interest, Postmedia, including a spot on its board and a role in recruiting its CEO, Paul Godfrey.

Since Paton took over JRC as it emerged from bankruptcy in 2009, he has built a reputation as a visionary by replacing old proprietary systems with open source software and cloud-based services. In 2010, the company said it earned $41 million in cash flow and increased digital revenues about 70 percent.

JRC, with Alden backing, could now become an east-coast consolidator by scooping up other newspapers and newspaper groups — perhaps even acquiring the East Coast holdings of MediaNews, papers in Pennsylvania and New England which, although dear to the heart of chairman Dean Singleton, are mostly a distraction to its Denver-based, California-centric holdings.

Obviously, the Philadelphia newspapers could be part of the reshuffle/consolidation, and other owners, including Gannett, could join the fray. (Gannett already is partnered with MediaNews in California.) It’s not hard to imagine an east-west strategy, with newspaper properties flowing into a western-U.S. consolidation led by MediaNews and an eastern grouping led by JRC. Even without mergers, there are places where Alden could encourage strategic partnerships between companies it owns or has invested in — for example, between JRC and the Philadelphia newspapers.

Shira Ovide of the Wall Street Journal noted, in response to the Alden acquisition of JRC, that there hadn’t been much action in the newspaper acquisitions market for some time. But the market could be loosening up. During the recession and beyond, owners held on, remembering the inflated values of the 1990s and early 2000s. It’s now clear both that those days will not come back and that Alden has its fingers on key factors that could build value: digital first, and consolidation. And Alden seems to have a nice cash pipeline.

Nostalgia for “local newspaper ownership” notwithstanding, the market will push owners into sales and mergers until there are just a few major owners of newspapers across the country. Even if this happens, daily print publication may still not be sustainable in many markets for more than a few years — but that’s another topic. The gamble for Alden and others is to accumulate a stake in a consolidated newspaper industry in the hopes that its local brands can retain (or regain) value as mainly digital enterprises.

Still, neither JRC’s digital-first focus nor industry consolidation strategies are magic bullets. Alden’s money chases risk in order to earn high rewards, and there’s a lot of risk in this picture.

On the digital-first side, we’re still waiting to see if newspapers can catch up and increase their share of the online ad market. JRC may have grown its online revenue by 70 percent, but in 2010 digital revenue for the daily newspaper industry as a whole grew just 10.9 percent, and still showed less online revenue than it had in 2007 ($3.042 billion in 2010 versus $3.166 billion in 2007). And much of what newspapers count as digital revenue is sold in print-dominated packages, not as pure online advertising.

As for consolidation, as I noted in a comment to Ken Doctor’s March post, “The Newsonomics of roll-up,” we could be looking at a classic industry mop-up operation — where the consolidator knows it’s all downhill from here, but is able to buy assets so cheaply that just milking them until they run dry produces a nice return. I wrote at the time in that comment:

While newspaper values have bounced back from rock bottom, you can still buy newspaper assets for a fraction of what they were worth at the peak six years ago (20 to 25 cents on the dollar, at most, depending on the company), with cash-flow paybacks in the range of 5-6 years, plus the consolidation benefits, plus, in many cases, valuable real estate that can be flipped. And with some luck, a digital spinoff or residual asset a few years down the road. So without much risk, maybe you can double your money over five years. (And if you’re really lucky, the economy keeps improving and you can find a bigger sucker and double your investment in just in a couple of years.) I believe that’s the Alden Global strategy. They have put their people on the board at MediaNews (and nowhere else) in order to use it as a launching platform for consolidation.

Let me temper that with the benefit of the doubt. John Paton says that Alden believes in digital-first. But if that strategy doesn’t begin to deliver the returns Alden expects — at JRC, MediaNews, or any other media outfit where Alden chooses to exercise the influence that comes with its ownership stake — the mop will come out of the closet and we’ll see a consolidation that’s driven purely by financial strategists at Wall Street firms, with no particular concern for journalism, digital or otherwise.

November 29 2010

15:00

The Newsonomics of eight-percent reach

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

We’ll all familiar with the chaos of the moment. Publishers and broadcasters, readers and viewers, search giants and software midgets — they all see that we’re on the verge of the next news and information revolution, as the built-out Internet really begins to power human access to content on an array of digital devices, anytime, anywhere. But it’s not just the media dealing with that revolution. The same chaos of choice that alternatively delights and befuddles envelops businesses as well.

For old-fashioned sellers of newspaper space and broadcast time, it’s been a fitful education, and a reminder that merchants don’t want to buy advertising — they want to find customers, as cheaply and efficiently as possible. The First Amendment didn’t tie merchants to media in a constitutional permanence; it just seemed that way.

Marketing spend — email marketing, social media commerce, search engine marketing and optimization, building and operation of brands’ own websites, events and conferences, among others — is increasing worldwide, while “advertising” stagnates, and that’s due mainly to the increase in digital, increasingly measurable, marketing alternatives for businesses of all kind.

Yet, it’s also clear that we’re at the beginning of this digital marketing revolution, with two numbers convincing me we’re maybe not even a tenth of the way there. I’ll call that the Newsonomics of eight-percent reach, and explain those eight percent in a moment.

Consider first the big picture of marketing spend. Chuck Richard, a fellow information industry analyst at Outsell, has done work showing that marketing ad spend in the U.S. now totals $368 billion, of which 32.5 percent is going to digital and 30.3 percent to print.

It decreased at the rate of only 4.5 percent in the recession-wracked 2009, and should rise about 4.2 percent this year. Spending on advertising alone was down 8.5 percent in 2009 and is forecast to be down 0.8 percent in 2010.

So against those numbers, let’s look at a couple of numbers.

Google reaches about eight percent of the small businesses in the country, estimates Click Z’s Gregg Stewart. That’s 1.5-2 million businesses who use Google’s ad services, contributing to its $27 billion annual revenue run rate. As Stewart points out, Google advertising is a convenience for many harried smaller merchants:

Local businesses face a multitude of challenges daily; servicing customers, generating sales, meeting payroll, and in effect doing what they “do” for a living. Basically, they’ve got their hand in everything and this rarely allows for deep specialization in any one specific facet of their business. Local businesses do not have the time required to research keywords, monitor results, and modify bids and ad creative along with all the additional complexity that is associated with SEM.

Look at that eight percent another way, of course, and we see 92 percent upside, a big opportunity to help merchants make sense of the chaos. Google — along with Yahoo, Yelp, Yellow Pages companies, AOL, and Microsoft — have been plumbing this territory, and so have newspaper companies and a trio of hungry online marketing services companies.

Now Google is making a couple of aggressive moves. It has announced Boost. It’s a product that is built on top of its local listings and Google Maps. Boost — there’s an ironic ambiguity to the name, in that it is intended to boost Google’s revenue and boost some money out of the pockets of local media — adds the ability to put ratings and reviews in place-based ads, and they are sold on a pay-for-performance basis, unlike an earlier similar offering. The Boost test is going forward in more than a dozen cities.

Secondly, Marissa Mayer, Google’s long-time maestro of the search business, is now in charge of the local business. That’s another signal of what an opportunity Google sees in local business, online and on mobile.

How much of the local business market do you think metro newspapers reach? Eight percent, estimates Mike Sacks, VP for operations at Tribune. That’s a number, give or take a couple of points, I’ve heard from other publishers as well. While that total is likely higher for smaller-circulation dailies, its small size is a reflection of the old way of selling, pre-chaos.

Newspapers worked the biggest local merchants for big contracts, concentrating on getting a relatively small number of checks from a small number of deep-pockets advertisers. Now, those advertisers — the likes of Best Buy, Target, and Macy’s — are increasingly going direct to their customers and using all manner of social and engagement media to find and upsell customers (“The Newsonomics of online marketing“).

So, newspaper companies, including Gannett, Hearst, and Tribune, most prominently, are re-strategizing. If the dollars from that eight percent are only half what they were 10 years ago, then we’d better get some revenue from the other 92 percent, they’re saying. They’re doing that three main ways:

  • Retraining salesforces, and hiring more commissioned salespeople, to work the territories, selling not only space in their own papers and sites, but Yahoo inventory, Facebook placements, mobile messaging and more.
  • Telesales: Think “boiler room” lite; more salespeople calling more prospects.
  • Self-service: Sack’s Tribune is one of the companies using the Mediaspectrum platform to enable local merchants to place their own online or print ads. This Orlando Sentinel “Place an Ad” page shows what merchants can choose from. At the sister Sun-Sentinel, in Fort Lauderdale, Sacks says that more than a hundred new advertisers have been added in the year the service has been in place. “Every single cent is a new one…I’d like to see it grow ten-fold,” he says of the prospects of turning an experiment into a line of significant revenue. Sacks says average sized deals come in at about $1,000/$2,000 and also provide lead generation for upselling. Overall, Mediaspectrum’s self-service ad product is in place at almost 100 newspaper titles, including all of the Tribune’s papers (but not broadcast properties), UK’s Trinity Mirror chain, Morris Publications, the Columbus Dispatch, and the Washington Post. Most offer both online and print placements.

As we enter 2011, this new battle for local ad dollars is growing in strength, as merchants aim to make sense of the chaos of marketing choice. This exercise in chaos — and how sellers of marketing services do or don’t take advantage of it — affects more than just newspapers, of course. Locally, commercial broadcasters and Yellow Pages companies — the two other local media with substantial feet-on-the-street sales forces — are sensing the same opportunity to get to smaller businesses, as they, too, lose some of the bigger-business advertising they’ve long held.

Advertising agencies are in the midst of their own identity crises, as their value proposition to businesses is thrown into question, with the advances of pay-for-performance advertising and self-service overall.

The online-only players aren’t just the search giants. ReachLocal, Orange Soda, and Yodle are the companies you hear a lot about when you talk to local site general managers. They are all working the same turf, with ferocity. A recent visitor to the Yodle “sales pit” came away with the impression of “how well trained these guys are” and how their state-of-the-art customer relations management system qualified prospects well.

That 92-percent “open” market — maybe 23 million businesses — tells us how early we are in this digital marketing movement. Commerce change is one thing. For those who care about the news, the big thing to watch is whether those dollars, as they move digitally, move to companies that produce news, distribute news — or have nothing to do with news.

Photo by Leo Reynolds used under a Creative Commons license.

August 12 2010

14:00

The Newsonomics of TBD

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Thirsting for good news, the welcome given TBD.com by news observers has been a bit overwhelming. In a desert of too-scarce good news about the news business, TBD represents one of the potential oases, like its smaller — and largely nonprofit — counterparts from San Diego to Austin to the Twin Cities to New York.

Most of the first appraisals have focused on the site’s product innovations. Let’s now take an early look at the size of this possible oasis and the unique business model under it, to gauge what kind of a test it may be. Let’s look at the Newsonomics of launching what is the nation’s first combined local online news startup/24-hour news channel.

That combination is the most basic to understanding the business of TBD, informing both TBD’s cost structure and revenue models. If TBD turns profitable within two to three years, it may become a prototype for digital/video/TV city-based news businesses.

While there may be two dozen or more metro news channels in the U.S, none has yet combined with a online news site to the extent that TBD is doing. The only parallel may be Cablevision’s News 12, its longstanding Long Island/Connecticut/New Jersey-oriented station that got a new cousin when the parent company bought Newsday from Tribune in 2008. In a post on that acquisition, I noted the potential synergies in the deal:

  1. Joint ad sales.
  2. Synergistic news-gathering and production.
  3. Monetizing cable-produced news video through Newsday’s site.

Since then, we haven’t seen a lot of that synergy in New York, as the cable news site and Newsday.com remain separate, with those who don’t subscribe to either having to pay for direct access. A cursory look at the sites doesn’t betray much sharing, but there may be more under the hood.

It is those three principles, though, plus an all-important fourth one — promotion — that should define this next, and bigger, experiment, as TBD.com and TBD TV (which has been rebranded from the former NewsChannel 8) take flight.

Let’s look first at the costs of TBD. TBD has added 50 new positions, all additional to the approximately 50 jobs ported over from the former NewsChannel 8. Jim Brady, TBD’s general manager, outlined the 50 for me: “About 30 doing news, including 15 reporters, six editors, two senior editors, six community engagement people. Another 20 doing tech, sales, product, and design.”

That tells us that the nut for TBD is about $3.5-4 million, salaries and operating costs combined. It needs to find new revenue — exclusive of what the former NewsChannel 8’s sales staff of seven brought in — to get to profitability. Profitability is a key goal for this for-profit company, and one key to proving out the model for use in other metro areas. The cost side is one of the areas that distinguishes the TBD experiment; it’s two to four times bigger than most of the local online news startups we’ve seen.

Key to our understanding here is that TBD — the website and the cable news station — is one organization. Brady is in charge of the P&L of it, though he has a dotted-line relationship to the ad sales heads. While it adds costs to do 24-hour cable news as well as 24-hour digital news, it offers more revenue opportunities as well.

The key synergy: a kind of virtuous circle of promotion to stoke growth of audience and advertising dollars.

“They have the big megaphone [of promotion],” points out Phil Balboni, now CEO of startup GlobalPost, but also a veteran of New England Cable News, which he built and operated. “They can push TBD on every program. Within a short period of time, they will get great brand awareness.” So, yes, TBD TV pushes people to the website, but TBD.com also pushes people to the cable news channel. And WJLA, the ABC7 affiliate also owned by Allbritton, promotes both. JLA’s been the second-ranked station in the broadcast market.

The idea: Big promotion drives in samplers. Then the site must convert a good 20 percent of them to regular customers.

So what does TBD need to get to profitability — and make itself the model to match? Let’s quickly look at the two big qualifiers, audience and sales.

A big audience: Let’s remember that TBD starts with a significant audience, though one far smaller than WashingtonPost.com, just to drop a name. It gets traffic from both WJLA and the former NewsChannel 8; both of their former websites now point to TBD.com. According to Nielsen, WJLA pulled in about 327,000 unique visitors and 1,516,000 page views in July, while NewsChannel 8 appeared to attract a small fraction of that.

Make no mistake: Gaining attention in a crowded media marketplace won’t be simple — and is one of the reasons for the fast-out-of-the-chute TBD Community Network of 129 bloggers.

The Post is formidable competition. It is a premier regional website (built by Brady and others) and in a June Nielsen report, showed a 5.27-percent increase in unique visitors year over year, to 10,089,000 unique visitors and 106,387,000 pageviews. It zigged — up — while the news category zagged down 2.74 percent overall for the same period.

So figure that TBD.com needs a web audience of between 10 and 20 million page views a month at some point in the next 24-36 months to get to profitability. That’s a fifth to a tenth of the Post’s online audience, which, we should keep in mind comes more from outside D.C. than in within it.

Significant new revenue from both TBD.com and TBD TV: The revenue will be mainly advertising. As a for-profit, TBD.com is taking a different route than non-profits MinnPost and Texas Tribune, for instance, both of which are focusing strongly on membership and corporate/institutional sponsorships. The nonprofits are thinking that maybe a third — or less — of their revenue will come from traditional “advertising.” For TBD, though, it’s all about the sale of advertising. Just as TBD TV is critical to TBD.com site promotion, its own revenue growth will be key.

Figure that as much as 30 percent of new revenue generated out of the new enterprise could come from new TV revenue; to the extent it does, the site’s growth could trend more to the 10 million monthly page views, than 20 million, and still be profitable.

Brady says a new online-only sales staff of four will drive both online-only and bundled sales, working with the established sales force. “You start with a sales force that has relationships with an auto dealer, for instance, ” says Brady. “You don’t need a million uniques to get a meeting with them.”

The questions here are familiar ones for local broadcasters and for newspaper publishers: How do you a traditional ad sales staff — one mainly used to selling “time” — to sell the web effectively? How do you blend the online-only sales force with TV-oriented one? How much do you emphasize online-only sales, or continue a focus on bundling with TV time?

It’s a complex sell, combining sales of space, time, and pay-for-performance advertising. “They need to sell four or five different kinds of advertising,” says Arul Sundaram, an industry consultant who formerly was vice-president of strategy for Internet Broadcasting, which has powered dozens of local broadcast station websites. Beyond selling cost-per-thousand display advertising, Sundaram ticks off various pay-for-performance (largely search-based), video, and mobile ad products that the operation should learn to sell as well.

Pioneering models is a tough business. As the news business looks for new models, the man of the moment is man behind the TBD curtain, Robert Allbritton, CEO of his eponymous company. Allbritton’s gotten credit for seeing, and seeing through, Politico, his first web venture, to on-again, off-again profitablity. Importantly, he’s been credited with allocating sufficient resources, even in cash-negative startup times to create journalistic products that attract audiences.

As Phil Balboni sees it, Allbritton’s move, especially in this economic climate, is “a gutsy statement.” In 2010, especially, no guts, no glory.

July 15 2010

15:00

The Newsonomics of the dead cat bounce

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

The season’s upon us, as newspaper and media companies announce their second-quarter earnings. At least some of the companies will announce: fewer than used to a couple of years ago, as Tribune has gone private (and banko), metros like Philly and Minneapolis have moved to private hands, MediaNews releases less information than it used to, and Dow Jones’ results are less decipherable, aggregated within News Corp. news division results.

Still, Gannett — the largest U.S. newspaper company — leads off Friday. The New York Times Co. follows on July 22. McClatchy comes in on July 29. We’ll also hear from A.H. Belo, Scripps, Lee, and Media General, dates TBA.

Let’s get ahead of it a bit and see what we can look for in the announcements and what that will mean for the news industry. Let’s look at a newsonomics primer of this struggling industry as the rest of the economy haphazardly improves around it.

I could call this post “The Newsonomics of newspaper quarterly earnings reports,” but much better is the story of the moment: How much will newspaper companies tout — and how will the reduced-but-remaining corps of those who cover the industry report — how positive their dead cat bounce is. “Dead cat bounce” is a phrase you hear — confidentially — from some newspaper executives. It’s an old Wall Street term, observing that even long-declining stocks will bounce a bit sometimes.

Let’s recall that last year’s ad revenue results had all the spring of a dead cat — down some $10 billion and 27 percent. So take a dead cat and pump a little life in it, with things less worse than they were in the disastrous 2009 and you get a bit of a bounce — but not one to crow about. Unless, that is, you don’t have much else to crow about, and that’s that’s the predicament, circa mid-2010, of most newspaper companies. They don’t have a big, positive story to talk about.

So, consider this a parsing guide to what we’ll hear in the next month:

  • How much was the second quarter down from 2Q 2009? First-quarter numbers were down largely in single digits, and that seemed a relief after comparable double-digit declines. We heard such CEO parsing as “improvement in comparables” and hopefully spun statements such as “Domestic classified advertising was just seven percent lower than March a year ago.” The problem: The rest of the economy, and even the TV and online ad economies, are all showing real growth — and taking market share from newspapers. Newspapers’ continuing inability to find real arithmetic growth doubles down on the theory that these revenue changes are more structural than cyclical — and that the Great Recession may have accelerated newspapers’ downward fortunes. Are there any positive growth numbers to report? Which categories may be turning positive — maybe national or retail display ads — as the sagging economy continues to plague the traditional classified strengths of auto, recruitment, and real estate?
  • How much will the prepared remarks focus on cost or debt reduction and how much on revenue growth? Play Earnings Bingo and count the comments involving “debt reduction” or “cost restructuring” as compared to “growth.”
  • How much of revenue is now coming from digital, and what’s the digital growth rate? Most newspaper companies increased their percentage of overall revenue attributed to digital to the 12-15 percent range in 2009 — but that was largely because print revenues dropped so precipitously. The news industry is becoming more digitally oriented, but still has a long way to go. Still, it’s a useful percentage to know; few companies report it routinely, but often mention it in Q&A. Most importantly, is the digital business growing, and at what rate, after being just north or south of flat in Q1? Such growth is key to these companies’ future.
  • How much of that digital revenue is coming from digital-only sales? McClatchy CEO Gary Pruitt was the first to make a point of digital-only sales, as it approached half of total digital revenue. Pruitt’s right; it’s an important barometer of where the business is going, not where it’s been. Since the mid-’90s, the industry has been overly reliant on “bundled” ad packages of print/online. Now as the digital marketing revolution matures, a number of companies — often spurred by the Yahoo Newspaper Consortium — are really pushing online-only packages.
  • How much revenue is coming from emerging marketing services business initiatives? Tribune and Gannett are among the leaders at selling website building, search engine optimization services, and more to small and medium-sized businesses. Will we hear about this big new push — and how many dollars it is starting to drive?
  • Is there any circulation revenue growth? Circulation numbers have continued to plummet, while newspaper companies have priced up substantially. The overall notion: Get long-standing, habituated print subscribers to pay more of the freight. For The New York Times, the strategy has worked and circulation revenue has continued to grow (up 11 percent in Q1). For other companies, Gannett (circ revenue down 5 percent) and Lee (down 4 percent), the math isn’t working as well. Pricing up and losing both revenue and circulation numbers that are the lifeblood of selling advertising is not the outcome desired. So watch circulation revenue numbers in the reports. If they’re still negative, that’d be an indication that newspapers’ circulation pricing power is waning.
  • Do we hear any strategies discussed for the second half of 2010 or into 2011? Any iPad/tablet plans or development? The discussions surrounding the earnings calls can focus just on numbers, sometimes arcanely so, or get into actual strategies that may lead from the tepid now to a better tomorrow. How much strategy do these companies have and/or are willing to share with investors?

Image by Eric Skiff used under a Creative Commons license.

March 12 2010

10:40

Posthumous byline

While pre-prepared obituaries are standard practice, it was a little surreal to see an obituary of Michael Foot by Mervyn Jones (d. 23 February 2010) in the print edition of the Guardian on 4 March 2010, the Tribune’s diary notes. An obituary for Jones, who was Michael Foot’s biographer, had appeared in the Guardian on 25 February. The deaths were so close together, the Tribune says, it had to run its own tributes in the same edition.

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February 02 2010

17:00

CNET and Gizmodo are sharing content, and they don’t seem worried about a “duplicate penalty”

CNET and Gizmodo have been sharing content for the last couple months. I confirmed that a partnership exists, but requests for additional information from either party were not fruitful.

Frankly, the most intriguing aspect of this partnership is already in plain view: The sites are posting the same articles. Take a look at this Gizmodo story then click over to the CNET version. Headlines change and there are subtle formatting differences, but the body copy is essentially the same.

Why is this relevant? If you’ve spent any time in the SEO world, you’ve probably heard of the semi-mythical duplication rule. As far as I can tell, CNET and Gizmodo are in duplication’s gray area.

The duplication penalty, or lack thereof

The cautionary tale of duplication generally goes like this: Google wants its search results to give precedence to the most popular/legitimate/relevant pages, and it’s tough to pull that off if the same articles appear on different domains. So Google uses filters to push copycats to the margins. Some people call this the “duplicate penalty,” but that’s a misnomer. Google isn’t slapping hands.

Here’s how Google describes its policy on cross-site duplication:

If you syndicate your content on other sites, Google will always show the version we think is most appropriate for users in each given search, which may or may not be the version you’d prefer. However, it is helpful to ensure that each site on which your content is syndicated includes a link back to your original article. You can also ask those who use your syndicated material to use the noindex meta tag to prevent search engines from indexing their version of the content.

The noindex meta tag doesn’t appear in the source code of these sample stories from Gizmodo and CNET. However, CNET’s version does link back to Gizmodo’s original. Gizmodo returns the favor when it’s hosting CNET content. (Both show up in a Google search for one of the article’s sentences: Gizmodo’s version is No. 1, CNET’s No. 4.)

Since the noindex tag represents the outer limits of my search engine understanding, I dropped a line to Brent Payne, the Tribune Co.’s head of SEO, to get his take on this type of content share.

Payne said variation between two similar articles could help both pieces rank well in search engines. But achieving this variation requires each story to have its own inbound links, as well as feature different title tags, different headlines, and altered HTML and body text. CNET and Gizmodo customize titles and headlines. The body copy doesn’t really change.

Payne noted that Google supports a “canonical” feature that signals the original version of a story (or the version that’s supposed to get the most attention). The canonical tool doesn’t appear to be in use by CNET or Gizmodo.

Payne also brought up an interesting point about Google News, which doesn’t share its big brother’s hang-ups about duplicate content. He said a duplicate article that cites the original — something CNET and Gizmodo both do — could give the original “extra weight” in Google News.

Why are they sharing?

All of this inside-SEO stuff is interesting, but it doesn’t really answer the big question: What’s the upside to duplication?

I’ve got a couple guesses:

Marketing: It used to be you’d visit a publisher’s site to see their latest content, but readers now discover material in a variety of ways — Twitter, Facebook, Digg, RSS, etc. One analytics firm estimates on-site engagement dropped 50 percent between 2007-2009. Smart publishers are already addressing this by pushing content beyond their own sites. Toward that end, Gawker Media (owner of Gizmodo) could be using the CNET partnership to “find the next million people.”

Money (obviously): An influx of content can theoretically generate page views, unique visitors, and better user-session times. Good metrics lead to better ad rates and more revenue.

Again, these are just guesses. I’m sure we’ve got SEO and marketing wizards in the audience, so please post a comment if you see clearer explanations.

January 07 2010

19:11

Keeping Martin honest: Checking on Langeveld’s predictions for 2009

[A little over one year ago, our friend Martin Langeveld made a series of predictions about what 2009 would bring for the news business — in particular the newspaper business. I even wrote about them at the time and offered up a few counter-predictions. Here's Martin's rundown of how he fared. Up next, we'll post his predictions for 2010. —Josh]

PREDICTION: No other newspaper companies will file for bankruptcy.

WRONG. By the end of 2008, only Tribune had declared. Since then, the Star-Tribune, the Chicago Sun-Times, Journal Register Company, and the Philadelphia newspapers made trips to the courthouse, most of them right after the first of the year.

PREDICTION: Several cities, besides Denver, that today still have multiple daily newspapers will become single-newspaper towns.

RIGHT: Hearst closed the Seattle Post-Intelligencer (in print, at least), Gannett closed the Tucson Citizen, making those cities one-paper towns. In February, Clarity Media Group closed the Baltimore Examiner, a free daily, leaving the field to the Sun. And Freedom is closing the East Valley Tribune in Mesa, which cuts out a nearby competitor in the Phoenix metro area.

PREDICTION: Whatever gets announced by the Detroit Newspaper Partnership in terms of frequency reduction will be emulated in several more cities (including both single and multiple newspaper markets) within the first half of the year.

WRONG: Nothing similar to the Detroit arrangement has been tried elsewhere.

PREDICTION: Even if both papers in Detroit somehow maintain a seven-day schedule, we’ll see several other major cities and a dozen or more smaller markets cut back from six or seven days to one to four days per week.

WRONG, mostly: We did see a few other outright closings including the Ann Arbor News (with a replacement paper published twice a week), and some eliminations of one or two publishing days. But only the Register-Pajaronian of Watsonville, Calif. announced it will go from six days to three, back in January.

PREDICTION: As part of that shift, some major dailies will switch their Sunday package fully to Saturday and drop Sunday publication entirely. They will see this step as saving production cost, increasing sales via longer shelf life in stores, improving results for advertisers, and driving more weekend website traffic. The “weekend edition” will be more feature-y, less news-y.

WRONG: This really falls in the department of wishful thinking; it’s a strategy I’ve been advocating for the last year or so to follow the audience to the web, jettison the overhead of printing and delivery, but retain the most profitable portion of the print product.

PREDICTION: There will be at least one, and probably several, mergers between some of the top newspaper chains in the country. Top candidate: Media News merges with Hearst. Dow Jones will finally shed Ottaway in a deal engineered by Boston Herald owner (and recently-appointed Ottaway chief) Pat Purcell.

WRONG AGAIN, but this one is going back into the 2010 hopper. Lack of capital by most of the players, and the perception or hope that values may improve, put a big damper on mergers and acquisitions, but there should be renewed interest ahead.

PREDICTION: Google will not buy the New York Times Co., or any other media property. Google is smart enough to stick with its business, which is organizing information, not generating content. On the other hand, Amazon may decide that they are in the content business…And then there’s the long shot possibility that Michael Bloomberg loses his re-election bid next fall, which might generate a 2010 prediction, if NYT is still independent at that point.

RIGHT about Google, and NOT APPLICABLE about Bloomberg (but Bloomberg did acquire BusinessWeek). The Google-NYT pipe dream still gets mentioned on occasion, but it won’t happen.

PREDICTION: There will be a mini-dotcom bust, featuring closings or fire sales of numerous web enterprises launched on the model of “generate traffic now, monetize later.”

WRONG, at least on the mini-bust scenario. Certainly there were closings of various digital enterprises, but it didn’t look like a tidal wave.

PREDICTION: The fifty newspaper execs who gathered at API’s November Summit for an Industry in Crisis will not bother to reconvene six months later (which would be April) as they agreed to do.

RIGHT. There was a very low-key round two with fewer participants in January, without any announced outcomes, and that was it. [Although there was also the May summit in Chicago, which featured many of the same players. —Ed.]

PREDICTION: Newspaper advertising revenue will decline year-over-year 10 percent in the first quarter and 5 percent in the second. It will stabilize, or nearly so, in the second half, but will have a loss for the year. For the year, newspapers will slip below 12 percent of total advertising revenue (from 15 percent in 2007 and around 13.5 percent in 2008). But online advertising at newspaper sites will resume strong upward growth.

WRONG, and way too optimistic. Full-year results won’t be known for months, but the first three quarters have seen losses in the 30 percent ballpark. Gannett and New York Times have suggested Q4 will come in “better” at “only” about 25 percent down. My 12 percent reference was to newspaper share of the total ad market, a metric that has become harder to track this year due to changes in methodology at McCann, but the actual for 2009 ultimately will sugar out at about 10 percent.

PREDICTION: Newspaper circulation, aggregated, will be steady (up or down no more than 1 percent) in each of the 6-month ABC reporting periods ending March 31 and September 30. Losses in print circulation will be offset by gains in ABC-countable paid digital subscriptions, including facsimile editions and e-reader editions.

WRONG, and also way too optimistic. The March period drop was 7.1 percent, the September drop was 10.6 percent, and digital subscription didn’t have much impact.

PREDICTION: At least 25 daily newspapers will close outright. This includes the Rocky Mountain News, and it will include other papers in multi-newspaper markets. But most closings will be in smaller markets.

WRONG, and too pessimistic. About half a dozen daily papers closed for good during the year.

PREDICTION: One hundred or more independent local startup sites focused on local news will be launched. A number of them will launch weekly newspapers, as well, repurposing the content they’ve already published online. Some of these enterprises are for-profit, some are nonprofit. There will be some steps toward formation of a national association of local online news publishers, perhaps initiated by one of the journalism schools.

Hard to tell, but probably RIGHT. Nobody is really keeping track of how many hyperlocals are active, or their comings and goings. An authoritative central database would be a Good Thing.

PREDICTION: The Dow Industrials will be up 15 percent for the year. The stocks of newspaper firms will beat the market.

RIGHT. The Dow finished the year up 18.8 percent. (This prediction is the one that got the most “you must be dreaming” reactions last year.

And RIGHT about newspapers beating the market (as measured by the Dow Industrials), which got even bigger laughs from the skeptics. There is no index of newspaper stocks, but on the whole, they’ve done well. It helps to have started in the sub-basement at year-end 2008, of course, which was the basis of my prediction. Among those beating the Dow, based on numbers gathered by Poynter’s Rick Edmonds, were New York Times (+69%), AH Belo (+164%), Lee Enterprises (+746%), McClatchy (+343%), Journal Communications (+59%), EW Scripps (+215%), Media General (+348%), and Gannett (+86%). Only Washington Post Co. (+13%) lagged the market. Not listed, of course, are those still in bankruptcy.

PREDICTION: At least one publicly-owned newspaper chain will go private.

NOPE.

PREDICTION: A survey will show that the median age of people reading a printed newspaper at least 5 days per week is is now over 60.

UNKNOWN: I’m not aware of a 2009 survey of this metric, but I’ll wager that the median age figure is correct.

PREDICTION: Reading news on a Kindle or other e-reader will grow by leaps and bounds. E-readers will be the hot gadget of the year. The New York Times, which currently has over 10,000 subscribers on Kindle, will push that number to 75,000. The Times will report that 75 percent of these subscribers were not previously readers of the print edition, and half of them are under 40. The Wall Street Journal and Washington Post will not be far behind in e-reader subscriptions.

UNKNOWN, as far as the subscription counts go: newspapers and Kindle have not announced e-reader subscription levels during the year. The Times now has at least 30,000, as does the Wall Street Journal (according to a post by Staci Kramer in November; see my comment there as well). There have been a number of new e-reader introductions, but none of them look much better than their predecessors as news readers. My guess would be that by year end, the Times will have closer to 40,000 Kindle readers and the Journal 35,000. During 2010, 75,000 should be attainable for the Times, especially counting all e-editions (which include the Times Reader and 53,353 weekdays and 34,435 Sundays for the six months ending Sept. 30.

PREDICTION: The advent of a color Kindle (or other brand color e-reader) will be rumored in November 2009, but won’t be introduced before the end of the year.

RIGHT: plenty of rumors, but no color e-reader, except Fujitsu’s Flepia, which is expensive, experimental, and only for sale in Japan.

PREDICTION: Some newspaper companies will buy or launch news aggregation sites. Others will find ways to collaborate with aggregators.

RIGHT: Hearst launched its topic pages site LMK.com. And various companies are working with EVRI, Daylife and others to bring aggregated feeds to their sites.

PREDICTION: As newsrooms, with or without corporate direction, begin to truly embrace an online-first culture, outbound links embedded in news copy, blog-style, as well as standalone outbound linking, will proliferate on newspaper sites. A reporter without an active blog will start to be seen as a dinosaur.

MORE WISHFUL THINKING, although there’s progress. Many reporters still don’t blog, still don’t tweet, and many papers are still on content management systems that inhibit embedded links.

PREDICTION: The Reuters-Politico deal will inspire other networking arrangements whereby one content generator shares content with others, in return for right to place ads on the participating web sites on a revenue-sharing basis.

YES, we’re seeing more sharing of content, with various financial arrangements.

PREDICTION: The Obama administration will launch a White House wiki to help citizens follow the Changes, and in time will add staff blogs, public commenting, and other public interaction.

NOT SO FAR, although a new Open Government Initiative was recently announced by the White House. This grew out of some wiki-like public input earlier in the year.

PREDICTION: The Washington Post will launch a news wiki with pages on current news topics that will be updated with new developments.

YES — kicked off in January, it’s called WhoRunsGov.com.

PREDICTION: The New York Times will launch a sophisticated new Facebook application built around news content. The basic idea will be that the content of the news (and advertising) package you get by being a Times fan on Facebook will be influenced by the interests and social connections you have established on Facebook. There will be discussion of, if not experimentation with, applying a personal CPM based on social connections, which could result in a rewards system for participating individuals.

NO. Although the Times has continued to come out with innovative online experiments, this was not one of them.

PREDICTION: Craigslist will partner with a newspaper consortium in a project to generate and deliver classified advertising. There will be no new revenue in the model, but the goal will be to get more people to go to newspaper web sites to find classified ads. There will be talk of expanding this collaboration to include eBay.

NO. This still seems like a good idea, but probably it should have happened in 2006 and the opportunity has passed.

PREDICTION: Look for some big deals among the social networks. In particular, Twitter will begin to falter as it proves to be unable to identify a clearly attainable revenue stream. By year-end, it will either be acquired or will be seeking to merge or be acquired. The most likely buyer remains Facebook, but interest will come from others as well and Twitter will work hard to generate an auction that produces a high valuation for the company.

NO DEAL, so far. But RIGHT about Twitter beginning to falter and still having no “clearly attainable” revenue stream in sight. Twitter’s unique visitors and site visits, as measured by Compete.com, peaked last summer and have been declining, slowly, ever since. Quantcast agrees. [But note that neither of those traffic stats count people interacting with Twitter via the API, through Twitter apps, or by texting. —Ed.]

PREDICTION: Some innovative new approaches to journalism will emanate from Cedar Rapids, Iowa.

YES, as described in this post and this post. See also the blogs of Steve Buttry and Chuck Peters. The Cedar Rapids Gazette and its affiliated TV station and web site are in the process of reinventing and reconstructing their entire workflow for news gathering and distribution.

PREDICTION: A major motion picture or HBO series featuring a journalism theme (perhaps a blogger involved in saving the world from nefarious schemes) will generate renewed interest in journalism as a career.

RIGHT. Well, I’m not sure if it has generated renewed interest in journalism as a career, but the movie State of Play featured both print reporters and bloggers. And Julie of Julie & Julia was a blogger, as well. [Bit of a reach there, Martin. —Ed.]

[ADDENDUM: I posted about Martin's predictions when he made them and wrote this:

I’d agree with most, although (a) I think there will be at least one other newspaper company bankruptcy, (b) I think Q3/Q4 revenue numbers will be down from 2008, not flat, (c) circ will be down, not stable, (d) newspaper stocks won’t beat the market, (e) the Kindle boom won’t be as big as he thinks for newspapers, and (f) Twitter won’t be in major trouble in [2009] — Facebook is more likely to feel the pinch with its high server-farm costs.

I was right on (a), (b), and (c) and wrong on (d). Gimme half credit for (f), since Twitter is now profitable and Facebook didn’t seem too affected by server expenses. Uncertain on (e), but I’ll eat my hat if “75 percent of [NYT Kindle] subscribers were not previously readers of the print edition, and half of them are under 40.” —Josh]

Photo of fortune-teller postcard by Cheryl Hicks used under a Creative Commons license.

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