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May 15 2013

12:20

The newsonomics of where NewsRight went wrong

newsright-wide

Quietly, very quietly, NewsRight — once touted as the American newspaper industry’s bid to protect its content and make more money from it — has closed its doors.

Yesterday, it conducted a concluding board meeting, aimed at tying up loose ends. That meeting follows the issuing of a put-your-best-face-on-it press release two weeks ago. Though the news has been out there, hardly a whimper was heard.

Why?

Chalk it up, first, to how few people are really still covering the $38.6 billion U.S. newspaper industry. Then add in the fact that the world is changing rapidly. Piracy protection has declined as a top publisher concern. Google’s snippetization of the news universe is bothersome, but less of a central issue. The declining relative value of the desktop web — where NewsRight was primarily aimed — in the mobile age played a part. Non-industry-owned players like NewsCred (“The newsonomics of recycling journalism”) have been born, offering publishers revenue streams similar to those that NewsRight itself was intended to create.

Further, new ways to value news content — through all-access subscriptions and app-based delivery, content marketing, marketing services, innovative niching and more — have all emerged in the last couple of years.

Put a positive spin on it, and the U.S. newspaper industry is looking forward, rather than backward, as it seeks to find new ways to grow reader and ad revenues.

That’s all true. But it’s also instructive to consider the failure of NewsRight.

It’s easy to deride it as NewsWrong. It’s one of those enterprises that may just have been born under a bad sign. Instead of the stars converging, they collided.

NewsRight emerged as an Associated Press incubator project. If you recall the old AP News Registry and its “beacon,” NewsRight became its next iteration. It was intended to track news content as it traversed the web, detecting piracy along the way (“Remember the beacon”). It was an ambitious databasing project, at its peak taking in feeds from more than 900 news sites. The idea: create the largest database of current news content in the country, both categorized by topic and increasingly trackable as it was used (or misused) on the web.

AP initially incentivized member newspapers to contribute to the News Registry by discounting some of their annual fees. Then a bigger initiative emerged, first called the News Licensing Group (NLG). The strategy: harness the power of the growing registry to better monetize newspaper content through smart licensing.

NLG grew into a separate company, with AP contributing the registry’s intellectual property and becoming one of 29 partners. The other 28: U.S. daily newspaper companies and the leading European newspaper and magazine publisher Axel Springer. Those partners collectively committed more than $20 million — though they ended up spending only something more than half of that before locking up the premises.

Renamed NewsRight, it was an industry consortium, and here a truism applies: It’s tougher for a consortium — as much aimed at defense than offense — to innovate and adjust quickly. Or, to put it in vaudevillian terms: Dying is easy — making decisions among 29 newspaper companies can be torture.

It formally launched just more than a year ago, in January 2012 (“NewsRight’s potential: New content packages, niche audiences, and revenue”), and the issues surfaced immediately. Let’s count the top three:

  • Its strategy was muddled. Was it primarily a content-protection play, bent on challenging piracy and misuse? Or was it a way to license one of the largest collections of categorized news content? Which way did it want to go? Instead of deciding between the two, it straddled both.
  • In May 2011, seven months before the launch, the board had picked TV veteran David Westin as its first CEO. Formerly head of ABC News, he seemed an odd fit from the beginning. A TV guy in a text world. An analog guy in a digital world. Then friction between Westin and those who had hired him — including then-AP CEO Tom Curley — only complicated the strategic indecision. Westin was let go in July, which I noted then, was the beginning of the end.
  • Publishers’ own interests were too tough to balance with the common good. Though both The New York Times Company and AP were owners, it was problematic to include feeds of the Times and AP in the main NewsRight “catalog.” The partners tried to find prices suitable for the high-value national content (including the Times and AP) and the somewhat lesser-valued regional content, but that exercise proved difficult, the difficulty of execution exacerbated by anti-trust laws. Potential customers, of course, wanted the Times and AP as part of any deal, so dealmaking was hampered.

Further, all publishers take in steady revenue streams — collectively in the tens of millions — from enterprise licensors, like LexisNexis, Factiva, and Thomson Reuters, as well as education and copyright markets. NewsRight’s owners (the newspaper companies) didn’t want NewsRight to get in the way of those revenue streams — and those were the only licensing streams that had proven lucrative over time.

Long story short, NewsRight was hobbled from the beginning, and in its brief life, was able to announce only two significant customer, Moreover and Cision, and several smaller ones.

How could it have been so difficult?

It’s understandable on one level. Publishers have seethed with rage as they’ve seen their substantial investment in newsrooms harvested — for nothing — by many aggregators from Google to the tens of thousands of websites that actually steal full-text content. Those sites all monetize the content with advertising, and, save a few licensing agreements (notably with AP itself), they share little in the way of ad revenue.

But rage — whether seething or public — isn’t a business model.

Anti-piracy, itself, has also proven not to be much of a business model. Witness the tribulations of Attributor, an AP-invested-in content-tracking service that used some pretty good technology to track pirated content. It couldn’t get the big ad providers to act on piracy, though. Last year, after pointing its business in the direction of book industry digital rights management, it was sold for a meager $5.6 million to Digimarc.

So if anti-piracy couldn’t wasn’t much of a business model, then the question turned to who would pay to license NewsRight’s feed of all that content, or subsets of it?

Given that owner-publishers wanted to protect their existing licensing streams, NewsRight turned its sights to an area that had not well-monetized: media monitoring.

Media monitoring is a storied field. When I did content syndication for Knight Ridder at the turn of the century, I was lucky enough to visit Burrelles (now BurrellesLuce) in Livingston, New Jersey. In addition to a great auto tour of Tony Soprano country, I got to visit the company in the midst of transition.

In one office, older men with actual green eyeshades meticulously clipped periodicals (with scissors), monitoring company mentions in the press. The company then took the clips and mailed them. That’s a business that sustained many a press agent for many a decade: “Look, see the press we got ya!”

In Burrelles’ back rooms, the new digital monitoring of press mention was beginning to take form. Today, media monitoring is a good, if mature, industry segment, dominated by companies like Cision, BurrellesLuce, and Vocus, as social media monitoring and sentiment analysis both widen and complicate the field. Figure there are more than a hundred media monitoring companies of note.

Yet even within the relatively slim segment of the media monitoring space, NewsRight couldn’t get enough traction fast enough. Its ability to grow revenues there — and then to pivot into newer areas like mobile aggregation and content marketing — ran into the frustrations of the owner-newspapers. So they pulled the plug, spending less than they had actually committed. They decided to cut their losses, and move on.

Moving on meant making NewsRight’s last deal. The company — which has let go its fewer than 10 employees — announced that it had “joined forces” with BurrellesLuce and Moreover. It’s a face-saver — and maybe more.

Those two companies will try to extend media monitoring contracts for newspaper companies. BurrellesLuce (handling licensing and aggregation) and Moreover (handling billing and tracking) will make content available under the NewsRight name. The partnership’s new CAP (Compliant Article Program) seeks to further contracting for digital media monitoring rights, a murky legal area. If CAP works, publishers, Moreover, and BurrellesLuce will share in the new revenue.

What about NewsRight’s anti-piracy mandate? That advocacy position transitions over to the Newspaper Association of America.

NAA is itself in the process of being restyled into a new industry hub (with its merger and more) under new CEO Caroline Little. “As both guardian and evangelist for the newspaper industry, the NAA feels a tremendous responsibility to protect original content generated by its members,” noted Little in the NewsRight release.

What about the 1,000-title content database, the former AP registry that had formed the nucleus of NewsRight? It’s in limbo, and isn’t part of the BurrellesLuce/Moreover turnover. Its categorization technology has had stumbles and overall the system needs an upgrade.

There’s a big irony here.

In 2013, we’re seeing more innovative use of news content than we have in a long time. From NewsCred’s innovative aggregation model to Flipboard’s DIY news magazines, from new content marketing initiatives at The New York Times, Washington Post, Buzzfeed, and Forbes to regional agency businesses like The Dallas Morning News’ Speakeasy, there are many new ways news content is being monetized.

We’re really in the midst of a new content re-evaluation. No one makes the mistake this time around of calling news content king, but its value is being reproven amid these fledgling strategies.

Maybe the advent of a NewsCred — which plainly better understood and better built technology to value a new kind of content aggregation — makes NewsRight redundant. That’s in a sense what the partners decided: let the staffs of BurrellesLuce and Moreover and smarts of the NewsCreds make sense of whatever newer licensing markets are out there. Let them give the would-be buyers what they want: a licensing process to be as simple as it can be. One-stop, one-click, or as close as you can manage to that. While the disbanding of NewsRight seems to take the news industry in the opposite, more atomized, direction, in one way, it may be the third-party players who succeed here.

So is it that NewsRight is ending with a whimper, or maybe a sigh of relief? Both, plainly. It’s telling that no one at NewsRight was either willing or able to talk about the shutdown.

Thumbs down to content consortia. Thumbs up to letting the freer market of entrepreneurs make sense of the content landscape, with publishers getting paid something for what the companies still know how to do: produce highly valued content.

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.

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