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Defining what the term New Media means and its potential. Ten minutes from a New Media Business conducted at Syracuse University's S.I. Newhouse School of Public Communications on September 3, 2008, by Adjunct Professor and Senior Consultant about Executive Education in New Media Vin Crosbie.
In the second part of my essay, Transforming American Newspapers, I mentioned several corollary effects that occur when the sheer number of Media vehicles radically increases. However, I inadvertently omitted two other corollary effects.
The primary business model of most Mass Media vehicles (newspapers, magazines, broadcast programs, etc.) is to attract sufficient numbers of consumers so that the vehicle will attract advertisers who will pay to place their advertisements either adjacent or interstitial to the content that attracts the consumers. The more consumers the vehicle attracts, the higher the rates the advertiser are willing to pay and the more money the vehicle earns.
Yet when the sheer number of Media vehicles radically increases, the median number of consumers attracted to any vehicle decreases because the total number of consumers are spread across many more vehicles (the so-called 'fragmentation' of audiences). That tends to reduce the median revenues of those vehicles. Mass Media vehicles try to compensate for this by (1) 'dumbing' the quality of their content, attempting to attract a larger audience by appealing to a lower common denominator and restore larger numbers of consumers.
That corollary effect is why so many television networks have 'dumbed down' (a wonderful technical term) their programs. The plethora of 'reality' programs are examples. Other examples are how formerly 'quality ' programs or 'quality' networks are now purveying content of questionable quality. For instance, the Biography television program on the Arts & Entertainment Network used to broadcast biographies of Einstein, Picasso, and Michelangelo, but now broadcasts biographies of Madonna, Jim Carey, and Britney Spears. Or, for instances, how the Learning Channel used to broadcast programs about mathematics, science, and the humanities but now broadcasts programs about purchasing real estate, upgrading wardrobes, and home furnishings.
The another corollary effect that I inadvertently omitted is similar. When the sheer number of Media vehicles radically increases and the median number of consumers attracted to any vehicle decreases, (2) Mass Media vehicles become more timid, fearing further loss of consumers. No surprise.
Both of these effects are caused by the radical increase in the supply of media vehicles consumers now have. Both doom us to increasingly crass content on television and, more often than not, more timid content in all Mass Media nowadays.
If the major reason for the American daily newspaper industry's demise were its stories contained too many dangling participles, then the industry could more easily comprehend its situation than instead hearing that the reason was it had violated the Principle of Supply & Demand.
The understanding of economics, particularly media economics, has never been its strong suit, except if the topic is how many tons of newsprint to buy, how many points a major stock market dropped, or how cut expenses to match revenues. Most newspaper publishers, editors, or journalists tends to equate economics as solely the science of government financial policy, household spending, Wall Street speculation, and petroleum pricing. They don't understand or have forgotten that a major branch of it is the behavioral science of Microeconomics - the study of how individuals make decisions to allocate their time and activities.
The main paradigm of microeconomics is known as rational choice theory or rational action theory, which states that individuals choose the best action according to their preferences and what constraints of supply, demand, time, and access face them. In it now lays the demise of American daily newspapers as we know them.
How did the American daily newspaper industry violate the Principle of Supply & Demand by failing to adapt the industry's core product to a radical change in consumers' supply of news and information during the past 35 years? To understand how, both start and end at the roots of the newspaper industry.
Start in the European city of Strasbourg during 1605 when the world's first newspaper began publication. It used a technology developed there 164 years earlier by the metalworker Johannes Gutenberg, who had invented
Some modern critics of newspapers say the industry is leaden and 'doesn't think outside the box.' They probably don't realize the historical irony that underlay their criticisms. The core of Gutenberg's technology was a box containing lead type whose impressions could print innumerable copies of the same thing. In that core is the inherent limitation that it produces the same edition for everyone. Although in the 19th Century steam and later electrical power speeded Gutenberg's technology and the introduction of offset lithography during the middle of the 20th Century eliminated its use of lead, the analog technology used to produce today's daily newspapers is still Gutenberg's. Indeed, today's analog printing technology still has the same limitation that it had in Gutenberg's days - it produces the same edition for everyone.
That technological limitation delineated the newspaper industry's editorial and advertising practices during the past four centuries. Because each edition had a finite number of pages and was printed by analog technology had to produce the same for everyone at once, newspaper editors had to select stories according to two criteria:
Continue reading "Transforming American Newspapers (Part 2)" »
Ignorance isn't bliss to the dying. Witness the pathos of American daily newspaper companies. Most have finally begun to realize that the deterioration of their businesses isn't cyclical but grave. Yet few, if any, understand why. Almost all grasp for the reasons.
Some attribute their grave condition to advertisers suddenly switching huge portions of spending from print to online - an excuse that ignores more than 30 years of declines in those newspapers' printed editions' circulations and readerships. Some others attribute their deterioration to not having transplanted their content into online quickly enough -an excuse that ignores not only the dozen years they've spent transplanting it but how their online editions are now read even less frequently and less thoroughly than their printed editions.
Most of the print newspaper experts who diagnose these companies' condition still prescribe stale nostrums such as more consumer focus groups, subscription price incentives, more stylish typography, or shorter stories. Meanwhile, most of the experts who diagnose these companies' Web sites prescribe balms and accessories such as giving blogs to reporters, adding video, or having the readers themselves report the stories. American daily newspaper companies have long been too financially impatient to submit themselves to anything but ostensibly quick cures and they've even longer been too conceptually myopic to perceive the real reasons for their declines.
I'll declare the real reasons. There are but two and neither has anything to do with multimedia, 'convergence', blogs, 'Web 2.0', 'citizen journalism,' or any ancillary topics you may have heard presented at New Media conferences this millennium.
Nor is either of the real reasons advertisers' abandonment of printed newspapers. Their abandonment is a symptom, not the reason for the decline. Contrary to myopia of many newspaper executives, advertisers aren't newspapers' primary customers. Although advertising revenues may be sunshine for newspaper executives, the roots of their business are readers. A newspaper with readers will attract advertisers but a newspaper without readers will not. Readers ultimately support and sustain the newspaper business.
To understand the real reasons why the American daily newspaper industry is dying, first understand why more and more Americans are no longer reading daily papers and how their abandonment of newspapers has been wrought by changes in their own media economics. Also comprehend why the epicenter of the newspaper industry's problems in post-Industrial countries is America and exactly how grave the situation is there.
Continue reading "Transforming American Newspapers (Part 1)" »
[My opening keynote speech at the Second Annual Global Conference on Individuated Newspapers, Denver, Colorado, June 26, 2008]
Some of you here know me. Since 1993 when I began working full-time in newspaper new media, I've given approximately 100 speeches at conferences. I've given speeches at E&P, WAN, Ifra, INMA, and Seybold. But this is the speech I've been waiting for all those years. I may not have known it then, but I know it now.
In it, I'm going to say some heretical things. But please remember that I'm a fifth-generation newspaperman. I literally grew up in a letterpress-era newsroom, can read teletype, work a linotype, cut press plates, and run a press. I've sold ads. I've driven delivery trucks. I've reported, edited, and general managed a daily. I'm a professor at Syracuse University's Newhouse School of Public Communications. If I speak what sounds like heresy or I criticize this industry, know that it is because I love the newspaper business. It's my family and my life.
The reason why this is the speech that I've been working up to all my life, is it distills all I know about this business and its future. The culmination of all I know as a newsman, newspaper, and professor. We've a bold agenda today.
Continue reading "Second Annual Global Conference on Individuated Newspapers" »
Thanks, David! Two linguistic notes before I begin.
First, please forgive my Yank accent. My great-grandfather Crosbie, who was born in London, would wince at it.
Second, doe anyone here speak Chinese? I ask because, after people who read English, the second largest linguistic group online today is people who read Chinese. To make sure they benefit from my speech, I took the title that the conference organizers suggested - Thriving in the digital age: threats and opportunities for digital publishers - and put that into Google's English-to-Chinese translation engine. Then, just to make sure that I got the Chinese version right, I took that result and put it into Yahoo's Chinese-to-English translation engine. The resulting title is Watts that you say? Screw Gutenberg, the Change Underway is Even Larger. So that's what I'm going to talk about.
Gutenberg. The Screw. Watt. And why the changes today underway are even larger than during Gutenberg. (Don't worry, I'll explain the screw.)
Here is a slide of Gutenberg in Strasbourg. His statue in bronze and a target today for pigeons. He's also a target for quotes about the Internet. My guess is that you've all heard most the quotes before:
'The Internet is the biggest things since Gutenberg.'
'The change underway will be the biggest since Gutenberg.'
'The Internet will change things as much as Gutenberg did.'
Well, don't get me wrong: Gutenberg's invention of the printing press probably sparked the Renaissance. Yet it's time we understand something: The change today underway is even larger!
The change now underway is bigger than mass production was for the medieval calligraphers and scribes who Gutenberg's invention put out of work. Moreover, it's not just a change from production of single calligraphic editions to mass production of millions of books. What is underway is an intellectual jump. It's a quantum jump in how information is distributed to people and how they find information.
I've lately become an academic, and in academia we have a technical term for the magnitude of the change today underway. It is an academic term that combines Norman French and Anglo-Saxon. We call it a Mindf*ck.
It's like a jump from two to three dimensions. And from this new dimension arises phenomenal new opportunities for publishers. Opportunities we'll talk about.
Unfortunately, most publishers today still think only in the old two dimensions - and therein lay the only threat to their livelihoods. Their failure to understand the new dimension underway in publishing is the threat. Understand me: The only threat is not to understand the change underway.
Let's go back in time for a moment. The U.K. Statistics Office says there are more than 10,000 Britons who are more than 100 years old. In 1908, the streets outside this hotel, and all the streets of London, were full of horse carriages and horse carts. Though the 20th Century was new then, people nevertheless knew that the 21st Century would be a mechanized age despite the abundance of horses.
The early automobiles showed promise. Telephones were beginning to become common in offices and homes. Tesla and Marconi were each experimenting with something that would eventually be called radio. Yet nobody knew how quickly all those things would affect London's seven million people, one million horses, 25 daily newspapers. Also, more esoteric and far-reaching things were also being developed in 1908. Things like quantum mechanics, which would later give us devices such as television, the transistor, the computer, the laser, and the CD, DVD, etc.
Today in 2008, people still get information distributed on paper pulp or from analog broadcast transmitters that fundamentally have changed little since Marconi's time. Nevertheless, we know that our new century will be an all- digital age. An age of pervasive information. If the personal computer and mobile phone were our equivalents of the newfangled telephones and automobiles for people 100 years ago, so too can we now foresee things that are only recently being and invented, things we're starting to have a clue that will shape the 21st century.
The one million horses were gone from London's streets by 1920, only a dozen years' after 1908. Likewise, the changes between now and 2020 will be phenomenal. If you think that you've seen change during the past dozen years, you ain't seen nothing yet!
I've a bold agenda this morning. My job is to tell you how much things will change and explain the general themes and opportunities in those changes for publishers in the 21st century.
If you work in the media industries and are serious, ask yourself this questions right now: 'Where should I be working to have the most beneficial affect on my industry?'
If you aren't working there now, why aren't you?
Is it because of money? Are you working where you are because that job pays you more than other jobs? Well, if that job pays you just enough to care well for you (and your spouse and family, if you have those), then rest easy.
But if instead you are working where you are because your job is highly lucrative, then know I have the credentials to say to you, shame on you. I earned more than $200,000 in each of the years from 1998 until just recently. But I realized that lucrative earnings˜trying to take as much money as possible from industries that are challenged by fundamental changes in their environment˜is not leadership but exploitation of those industries and the people who work in those indiustries. You might think you are a leader but you definitely are not; you are fooling yourself. You are merely a high-level bureaucrat who is managing decline; you are an incompetent general who is trying to manage a retreat.
Oh, and if you a middle-level manager who is reading this and you think your bosses should be doing more but you are afraid of telling them so, then you as nearly culpable as they are. If you what you do as a middle manager isn't bold enough and forward enough to nearly get you fired during this turbulent time in our industries, then you aren't ably doing your job and you yourself aren't showing the traits of leadership.A lieutenant or captain, no less than a general, has to put herself at risk.
I am the fifth generation of my family in the newspaper business: the son, grandson, great grandson, great-great grandson, and great-great-great grandson of men and women who worked their entire lives to make that business succeed. What they did was mainly for the public good. What right should I have to cash out when during my watch that industry is undergoing challenges that I could otherwise show it how to overcome? What right do you who work in it today, no matter your ancestory, have to cash out in that case despite thousands of your predecessors who've worked to make it succeed?
I've recently left consulting full-time after 12 years and taken a job that will probably cut my income by 75%. But the remainding 25% gives me enough to live on while I work where I can have the most beneficial affect on my industry.
What are you doing? There are people in the media industries who quite literally risk their lives every day. If all you've done is cut staffs and haven't invested long-term in your industry, then you're a bureaucrat no matter how high is your job title. It's time to put your career and livilihood to risk. Make the long-term decisions. Make the long-term decisions. Lead from the front. That's what real generals do.
"But Mr. Hiller said the paper was investing as much as it could, especially in its Web site, and the cuts were nothing more than an acceptance of reality.'Last year, our operating cash flow went down by about 20 percent,' he said.
'Can you solve the newspaper industry's problems by spending more?' Mr. Hiller said. 'It's an attractive theory, but it doesn't work.'" - as reported by The New York Times
The Los Angeles Times (and the American newspaper industry in general) has cut its newsrooms budget dozens of times and none of those cuts have increased circulation or gross revenues. Likewise, this wasn't the first time that the publisher of the Times has fired an editor who refused further to cut newsroom budgets (and a previous publisher had been fired for refusing to cut newsroom budgets further).
Then why would the David Hiller, latest publisher of The Los Angeles Times, think that further cutting the newsroom budget - or firing an editor who refused to do so - will change anything or result in any different outcome? It certainly won't reverse the newspaper's plummeting circulation or revenues.
Benjamin Franklin said that "The definition of insanity is doing the same thing over and over and expecting different results."
Insanity and lack of leadership.
Hope and faith aren't business plans.
In an article entitled Online Salvation, American Journal Review, examines the continuing delusion among American newspaper executives that their industry's troubles are somehow 'cyclical,' that because newspapers were people's major source of news for centuries then newspapers will somehow continue to be that major source, that double-digit annual increases in the industry's relatively small online advertising revenues will ever compensate for the single-digit annaul decreases in the industry's relatively gargantuan print advertising revenues, and that perhaps fedoras will return in men's fashions. (OK, I made up that part about hats).
The article quotes Harvard University's Thomas Patterson as seeing a two-tier news system developing, in which national sites continue to see online traffic increase but online traffic falling at mid-sized and smaller newspaper sites.
I don't know what data Patterson is seeing, but traffic isn't falling at smaller sites, though it is at mid-sized newspapers. The reason that traffic is slowly increasing at national and small newspapers is but not at mid-sized newspapers is that people are visiting the sites of national and small newspapers to use those newspapers respective core competencies of national and local news. Mid-sized newspapers have core competency in neither national nor local news (national newspaper do far better at national and the small newspapers that surround the mid-sized ones do far better at local).
I've always been amazed by one other article of faith among American newspaper executives, which wasn't mentioned in this AJR article. That article of faith is American newspaper executives' belief that the woes of their industry can be reversed at any time. They failed to reverse those woes years ago, but they believe they can reverse them today. And if they fail to reverse those woes today, they believe they can somehow reverse them in the future. Those newspaper executives apparently don't live in the temporal world. Their faith is like that of perennial sinners who believe they can still go to heaven if they repent in the very last seconds before their deaths. A very convenient belief.
Unfortunately, the reality-based world doesn't permit 'eleventh hour' redemptions and eternal salvation. 'Windows of opportunity' are stay open only temporarily, not eternally. Had American newspapers cooperated online years ago, they would have been today's Google Newes, CraigsLists, and Ebays. But their windows of opportunities to do those things have closed years ago. To do great things now at all, they must work with Google, Yahoo!, CraigsList, Ebay, etc.
In another article, American Journalism Review assesses U.S. newspaper websites' use of online video:
News organizations are embracing video on their Web sites in a big way. The quality ranges from bad to basic to superb. And for some journalists, the advent of video is a terrific new career opportunity.
On another topic, ACAP (Automated Content Access Protocol) is the newspaper industry's latest attempt to control how the online search engines access and index newspaper content. It's online coding that aims to replace the antiquated robots.txt protocol that still controls how the search engines' access and index websites.
A driving force behind ACAP is the World Association of Newspapers, which not long ago wanted to prohibit and sue the search engines from accessing and indexing newspapers' contents. WAN apparently now realizes that that strategy wouldn't be successful, hence its backing of development of ACAP.
Unfortunately, Google, Yahoo!, and other major search engines aren't involved or cooperating with the ACAP effort. They would need to be for ACAP to be successful, otherwise their search engines will just ignored the new protocol. Moreover, some of the preliminary reviews of ACAP, even within the newspaper industry, see no benefits in it for consumers.
The Times of London is the first major newspaper to use ACAP.
The Financial Times last week reported that the ABC, CBS, NBC, and Fox television networks earned approximately $120 million from video advertising on their websites. That sounds like a lot, but the FT article happened to mention in passing that an estimated $1.3 billion was spent on video advertising on U.S. web sites last year. So, it seems to me that those traditional networks have been losing the lion's share of it. Meanwhile, the BBC has apparently underestimated the growth of its online revenues.
It's been a very dangerous year in which to be a journalists. Roy Greenslade of The Guardian noted last week that:
At least 171 journalists and other news media staff have died as a result of their work around the world so far this year, making 2007 the bloodiest year on record for the industry.With more than a month still to go before the end of the year, the all-time high of 168 deaths recorded in 2006 was exceeded on Tuesday when at least three editorial staff were killed in Sri Lanka during a military air strike on a radio station.
"This horrible statistic should be regarded as a low point in the safety and welfare of the media profession. We need better protection for media workers worldwide," said the president of the International News Safety Institute (INSI), Chris Cramer.
Last month, I met numerous journalists who've been beaten, shot, and almost blown to bits. Here's what I was doing in Guatemala for the Media Development Loan fund, an organizationt that funds freedom of the press in countries with repressive regimes.
Hey, if anything we produce is now automatically copyrighted when we produce it, tell the copyright lawyers that everytime they sing 'Happy Birthday' to their kids, every time they include a full text of a correspondent's e-mail when they reply to it, and every time they snap a family photo that happens to have an artwork, poster, or advertisement in the background, they are infringing on someone's else copyright. University of Utah law professor John Tehranian estimates that he himself infringes to the tune of $12.45 million in liabilities each day. What's your own total?
Totals? Math? Oh, yes, In case you care, the Internet is growing sigmoidally,not exponentially. What would Sigmoid Froid say?
A fellow professor today asked me:
"What will the future of the newspapers be?"
Meanwhile, someone on the Online News publishing discussion lists notes:
The question is often asked: 'What will be the future of the newspapers? But, it seems that before we ask that question, we'll have to first figure out what, if anything, constitutes the absolute core minimum of what it takes to be called a 'newspaper.'
What iss troubling about those questions is these people are still trying to define their news organizations according to products that are becoming obsolete. The true question is 'What will news organizations do in the future?'
No news organization should be a 'newspaper"' in the future. Nor a 'news network'. Nor a 'news radio station'. Nor a 'TV station news department'. It's time that news organizations stopped defining themselves according to news formats that are becoming obsolete.
Yes, I realize that newspapers are now asking themselves 'What will newspapers do in the future?' That news radio stations are now asking themselves 'What will news radio stations do in the future?' That TV station news departments are now asking themselves 'What will television stations news departments do in the future?' And that TV news networks now are asking themselves 'What will television news networks do in the future?'
However, the basic fact is that each is a news organization. The problem is they're internally organized to produce products that are becoming obsolete.
Obsolete? Yes, the likilihood is that consumers in the future won't want to receive a daily news report printed on wood pulp or even the online analogue of wood pulp (despite some video and animation added). Nor will consumers want to receive audio or video sent to them in a schedule or program line-up that they can't control or re-arrange. The era of the 'newspaper' in the United States, Canada, and many other countries, is over. And the simultaneous era of tradition 'broadcasting' will likewise be over once broadband becomes part of the tuning mechanism of the average consumer's television.
Note that I didn't say that journalism is ending. News organizations and the service of journalism that they produce will still be wanted and needed after the obsolete products known as newspapers, news networks, news radio, and news programs are long gone. Each news organization will be producing services that utilize all those traditional forms (i.e., text, photography, graphics, audio, video, or animation) plus new forms have yet to discover. No news organizations will any longer produce just one, two, or three of those forms (such as just text and still photos or just audio and video) anymore.
People refer to these new journalistic services as 'multimedia' or 'convergence.' Well, the trick to 'convergence' isn't necessarily to produce 'multimedia.' It is for each news organization to learn which of its traditional practices (such as its journalistic focus, staffing, assignments, workflow, business practices, business models, etc.) to continue and which (such as printing news on wood pulp or transmitting news only at a set schedule) to discard, plus what entirely new practices to adopt. 'Convergence' is as much a choice of practices as it is producing 'multimedia.'
News organization that print news on wood pulp must stop defining themselves as 'newspapers' because that traditional definition intrinsically limits what they should do. Likewise, news organization that have always transmitted audio news clips on set schedules must stop defining themselves as 'news radio.' Etcetera.
The true question is 'What will news organizations do in the future?' Not what will 'newspapers' do?
During the past three days, I've written about Immediacy, 'Multimedia', and 'Podcasting/Vodcasting'. Those are three of the ten components that news organizations need to offer, if those organizations are to survive in the 21st Century. I'd also mentioned how the order of these ten components is important because each builds atop the previous ones.
Though my advice about those first three components might have seemed simplistic to many veterans of online publishing, I'd written it that way because many publishers (and broadcasters) still don't know, understand, or practice Immediacy, Multimedia, or offer on-demand audio and video (i.e., Podcasting/Vodcasting') despite re having published online for many years.
However, the fourth component is something that most veterans of online publishing themselves don't know, understand, or practice. That's the real surprise. That component is Interactivity. Hardly any of the websites operated by newspapers, broadcasters, and magazines actually offer it, despite what many of their new-media executives believe.
Continue reading "Time To Give Away Some More Consulting Advice (4)" »
This is my third day of giving you what general advice my firm has been giving its clients this past year. On Monday I wrote about Immediacy and on Tuesday about 'Multimedia'.' Though this advice might seem simple, you'd be surprised how many news publishers (and broadcasters) still don't know, understand, or heed it, even after many years of publishing online.
The third component I generally tell them to do is to provide audio and video online:
Continue reading "Time To Give Away Some More Consulting Advice (3)" »
Yesterday, I mentioned that I want to reveal what general advice my firm has been giving its clients this past year. To succeed in this new century, every online news organization must incorporate into its operations ten components, whose order is important because each (with the exception of the last) builds atop the previous ones.
I wrote about Immediacy, the first of those ten . Today, I'm writing about the second component, 'Multimedia':
Continue reading "Time To Give Away Some More Consulting Advice (2)" »
I've long been meaning to reveal what general advice my firm has been giving its clients this past year. To succeed in this new century, every online news organization must incorporate into its operations the following ten components. Note that the order of these components is important because each (with the exception of the last) builds atop the previous ones. These are:
Continue reading "Time To Give Away Some More Consulting Advice" »
Writing about the Four Fundamental Traits of New-Media, I mentioned in 1998 that...
"Distance Disappears. Geography ceases to be a factor, except for language and culture."
Several months ago, Thurman was kind enough to send me a draft copy of his report, which I'll write about later this month. However, The Times (of London) Media Analyst Rhys Blakely yesterday published an interesting story about foreign readership and how recent Nielsen//NetRatings data from the UK that confirms much of this research.
According to the latest figures from Nielsen//NetRatings, the media researcher, Guardian Unlimited and TimesOnline, the UK's two largest 'quality'newspaper websites in terms of users, have more American than British readers. The Daily Telegraph's online offering is approaching a similar tipping point. The Independent is nearly twice as popular in the US as on its home turf. Perhaps most strikingly, the Daily Mail, commonly regarded as speaking to Middle England, has more than three times as many US readers online as British ones.This is not a new phenomenon. At least 1,375 US daily newspapers are on the web. And yet, as long ago as 2005 (which counts as another age on the internet), the Evening Standard [of London] was the 31st most popular online source of news for Americans. London's local paper punched well above its weight in a field dominated by the American broadcast networks NBC, CNN, ABC, CBS and Fox News.
As I mentioned in 1998, the first of The Four Fundamental Traits of New-Media is, as Nicholas Negroponte, founder of the MIT Media Lab, put it, "Bits, not Atoms."
Unfortunately, most countries' advertising industries are based on delivering gazillions of atoms of printed paper or radiating a radio or TV signal across their country's physical geography, not necessarily delivering electronic bits of information across entire languages or cultures. These legacy industries need to change.
If Americans make up an average of 36 per cent of the readership of news websites based in Britain, then it seems clear that those sites had best advertise to them or else waste over one-third of the sites advertising potential.
My desk is awash with quarterly financial reports from newspaper companies. Almost all try to emphasize anything positive that could distract from the larger negatives. For example, 'Digital Revenues Rose 50 percent, Despite Print Revenues Declining 30 Percent' is the type of sleight-of-hand that newspaper companies' investor relations departments use to distract attention from the fact that the good news of the digital operations' gains doesn't compensate for the print operations' larger losses.
The only number I care about is one these financial reports don't state, but which I've invented and call the Dead Tree Digital Replacement Index.
The DTDR takes the change in the net income (i.e., gross revenue minus gross expenses) of a newspaper company's digital operations and divides it by the change in the net income (i.e., gross revenue minus gross expenses) of that newspaper company's print edition operations. Note that DTDR calculations include no special charges (such one-time gains from the sale of an operating division) and is calculated before taxes or depreciation.
If a newspaper company has a DTDR greater than 1, then the growth in its digital operations revenue gains are more than compensating for the company's print operations' losses. In other words, it's a company with a healthy core. But if a newspaper company's DTDR is less than 1, that means the company's print operations are losing money far more quickly than its digital operations can compensate. In other words, it's a newspaper company whose core operations are unhealthy.
Now, before some of you quibble that a newspaper company can have a DTDR of less than 1.0 but be still financially healthy because it also owns non-newspaper businesses that compensate for any losses by the print operations (companies such as Scripps Howard with its cable television networks or The New York Times Company with About.com), remember that I'm formulating an index that examines newspaper companies' core business of newspapers and nothing else.
I also don't calculate DTDR indexes for newspaper companies whose print operations had net gains or digital operations had net losses, but there are precious few such companies today. The DTDR is short-hand mathematics, and I'll leave it to any mathematicians out there to help me fine-tune it. The bottom line in the DTDR is that newspapers' digital operations had better be more than replaciing any revenues that printed editions are losing.
Let's calculate some examples of the Dead Tree Digital Replacement Index.
The Tribune Company's says its digital revenues increased 17 percent to $66 million last quarter. Although the company's press releases don't mention the digital operation's expenses, let's just say for simplification that this 17 percent increase of $ 11.22 million was the overall change in Tribune's digital operations' net income. The press releases do mention that the company's Publishing division revenues declined 9 percent or $95 million and that this division's expenses increased by 1 percent or $7 million. So, the change in its Publishing division's net income was a loss of $102 million ($95M + $7M). The Tribune Company's DTDR would thus be 0.11 (11.22 divided by 102), which is woefully unhealthy. If you calculate the reciprocal of the DTDR, you'll see it indicates that the Tribune Company's print operations are losing money nine times quicker than that the growth of company's digital operations can compensate.
The New York Times Company's say its digital revenues grew 23.4 percent or $15.3 million last quarter, but that print revenues fell 4.5 percent or $36 million. Its press releases don't include expenses, but a simple calculation would nevertheless shows a DTDR of 0.425, which is better than Tribune Company but still unhealthy.
The Washington Post Company reported that its digital operations earned 2.9 million more this quarter but that the company's print operations lost $17.7 million more. The DTDR here is only 0.164. Not good.
Are all newspaper companies' DTDR indexes below 1?
Yes, outside of Scandinavia, the Baltic Countries, and a few companies in the Netherlands, most newspaper companies's print losses are larger than digital gains.
It will be interesting to see if newspaper companies' DTDR indexes move closer to 1 during the next few years. However, history indicates you should bet against that happening: The gap is growing. Newspaper companies print losses are outpacing digital gains.
Dorian Benkoil last month e-mailed me asking what I thought about Business Week columnist Jon Fine's recent article, When Do You Stop The Presses?.
In the column, Fine ponders which major American newspaper will be the first to stop publishing a print edition and publish online only. He speculates that it will be the San Francisco Chronicle, which has reportedly lost $330 million this decade, approximately $1 million per week. Fine wonders if how the Chronicle should consider stopping its presses and start delivering news only online.
On the surface, that sounds like a good idea. The Chronicle's print edition is losing money. It has a large potential online-only audience in San Francisco. And if the Chronicle stops using its presses, it will no longer have to bear the costs of purchasing, printing, and distributing paper edition, costs that probably total 50 to 60 percent of the Chronicle's expenses.
But before roaring off with this idea, check under its hood to make sure it has an engine. I don't know what percentage of the Chronicle's revenues its website produces, but my guess is 5 to 10 percent. The printed product generates the rest. So, if the Chronicle were to stop printing paper, it would reduce its expenses to only 40 to 50 percent of their prior level, but the will have also removed 90 to 95 percent of its em>Chronicle's revenues. So, it's rather obvious that the Chronicle would be in a much, much worse predicament than it is now if it were to stop its presses permanently and publish online only. A not-so-fine idea.
But what really troubles me about Fine's speculation—and for that matter most newspapers' attempts to shovel their printed content onto their websites— are two two unconscious and linked presumptions that I think underlie such ideas: (1) That there is nothing inherently wrong with the Chronicle's product (i.e., its package of journalism and advertisements) except (2) that it should be delivered online rather than on paper because more and more people are getting their information online.
A lot of publishers suffer from these presumptions. They see less and less people reading printed publications, more and more of those people reading things online, and believe that all they need to do is shovel their printed editions over to online (and add video and audio) to reverse their newspapers' declines in readership.
These presumptions ignore the fact that newspaper readerships have been declining for more than 30 years and that approximately half of those declines occured before the Internet was opened to the public or the public had any online access. Shouldn't that give publishers a hint that the major cause of their readerships' declines isn't the Internet or their content not being online?
And is adding video and audio to that content (so-called 'multimedia') going to reverse those declines? Consider that television station's news viewerships have been declining for more than 20 years and that radio station's news listenerships have been declining for even longer. Do you think that if radio or television stations add newspaper-like texts to their own websites that this will reverse the declines in their viewerships or listenerships? So, why do publishers think that newspapers adding video and audio to their own texts online will reverse newspapers' declines in readerships? Adding together two or more declining media do not an ascending new-media make.
The real problem, Mr. Newspaperman, isn't that your content isn't online or isn't online with multimedia. It's your content. Specifically, it's what you report, which stories you publish, and how you publish them to people, who, by the way, have very different individual interests. The problem is the content you're giving them, stupid; not the platform its on. But I digress.
Back to Fine's column. If the San Francisco Chronicle, despite losing money, cannot afford to stop its presses and go online only, what it is likely to do?. I think that daily newspaper presses will be outsourced before being stopped.
I think the Chronicle will try to do what another troubled newspaper is considering. Boston Herald owner and Publisher Patrick Purcell has been talking about outsourcing his newspaper's printing. Dow Jones & Company has a printing plant with spare capacity 80 miles outside of Boston, a plant that prints the regional edition of The Wall Street Journal. This plant in.Chicopee, Massachusetts, is far more efficient than the Herald's antiquated presses. Purcell is calculating whether eliminating his own presses, pressmen, ink, and paper costs would save him money against whatever markup on those costs that Dow Jones would charge him.
A footnote: We frequently see much larger dollar amounts printed in the business sections of newspapers ('Murdoch Buys Dow Jones for $5 billion', etc.), making us somewhat inured to smaller financial figures such as $330 million or $1 million per week. However, the San Francisco Chronicle's latest weekday circulation figure is 386,564, so if that newspaper has lost $330 million during the past six years, it's lost approximately $853.67 per reader during that time or $14.23 per reader per year! Now does its amount of loss impress you? It does me. Though it might sound ridiculous, the Chronicle would lose less money if it delivered two pennies, rather than a newspaper edition, to each reader each day. Think that would be a good business? Well, it makes more financial sense than what the Chronicle has been doing for the past six years.
Much as I dislike seeing 24 journalists lose their jobs or be reassigned, I'm glad to hear that the Associated Press's ASAP service will cease in October. During the nearly two years since its launch, I've been tempted to write something about it, but hadn't been able to think of anything kind to write about it.
I've never understood why the AP or any newspaper needs a new service whose "original content will be provocative, smart, relevant and immediate." The AP or any newspapers's existing service should already be all those things.
If the AP's writing in general isn't provocative, smart, relevant, and immediate, then the AP needs to reëxamine itself. Unfortunately, the AP's writing is best defined as unprovocative, as smart and immediate as a small claim's court transcript, relevant only to 50 year-old Caucasian male editors, but at least immediate. I suppose one out of four isn't too bad, but it isn't good either. News can be provocative, smart, and accurate (hint: go read The Economist). Provocative needn't mean subjective: evocative writing is provocative and objective.
Moreover, why should the AP or any newspaper start a new service aimed at an audience who are age 18 to 34? If its service in general isn't attractive to them—the single largest segment of the American population—then the AP or that newspaper needs to revamp itself in general.
What the Associate Press should instead be doing is revamping itself. I've got some friends who tell me that the ASAP might have been its experiment about that, but I think the wire service should have made its main courses provocative, smart, relevant, and immediate, rather than just a side dish.
While I'm on the subject of the Associated Press, let's point out's the 'Emperor's New Clothes' of that organization. Before newspapers and the public gained access to the Internet, the AP had two main values for news organizations: (1) The AP's worldwide staff of journalists produced a very valuable news product. And (2) the AP communications network was the integral system linking together American newspapers, broadcasters, and syndicates who wanted to sell or share stories.
Newspapers' access to the Internet eliminated that second main value of the AP. Sure, most news syndicates (New York Times News Service, King Features, and other companies even more hidebound than the newspapers) still use the AP's network to deliver stories to newspapers. Yes, the AP shares its member newspapers' stories with other member newspapes (AP 'electronic carbon'). But all that can just as easily done nowadays by the newspapers and syndicate themselves via the Internet. The Internet makes the AP communications network redundant. The AP's main value is reduced to the work of its correspondents.
Despite its second main value becoming an inexpensive commodity in the news marketplace, the AP has never reduced the rates it charges newspapers, broadcasters, or syndicates. Economic would indicate that this situation cannot sustain.
What's buoyed the AP and has kept it from collapsing is that it doesn't have any functional competition. United Press International functionally went out of business during the 1980s. Reuters could have stepped into the domestic U.S. news market, but decided that the cost of staffing news bureaus in each U.S. State was prohibitive.
Atop of that problem, the AP—an organization chartered under New York State's fish & game club laws during the 1800s —is constrained by its ownership. They are the newspapers it serves, who refused to let it serve broadcasters until the broadcasters sued the AP in the 1940s and the U.S. Supreme Court ruled for the broadcasters. The AP's newspaper members/owners have similarly been very reluctant to let the AP serve 'pure-play' new-media companies (such as Yahoo! and Google) that compete with the newspapers online.
So, where does the AP find new revenues to offset rising costs? It's already got a nearly 100 percent market share of the American newspaper market (the AP would have a 100 percent share had not the daily in Willimantic, Connecticut, a newspaper owned by a certain Crosbie family, not dropped the AP and found it could publish quite fine daily for years). The AP has been losing broadcast business ever since the 1980s when the U.S. Federal Communications Commission begtan permitting licensed broadcasters the option to operate without news programs. And the AP's ownership won't readily permit it to pursue 'pure-play' Internet businesses. The only thing the AP can do is to keep raising the rates of its existing customers each year.
Something has got to give or break. I think the Associated Press had better fix its problems before what breaks is the AP itself.
A few years ago at a symposium about blogging, Jeff Jarvis was moderating a discussion about commercial uses of blogs. To answer an audience member's question about whether or not having a blog on your commercial website can increase business, he turned to me, someone in the audience who Jeff knew uses this blog on this commercial site, and asked me if my blog had increased my business.
When writing a blog, you can ponder your words before writing them, but that isn't always an option when a moderator suddenly picks you out of the audience and ask you impromptu to answer a question he's been asked. I made a snap decision to be politic, so I told everyone that adding this blog to this site had tripled the site's traffic.
What I said was true; this blog has tripled this site's traffic. But what I didn't say was that none of that increased traffic had resulted in new business. It still hasn't. It's resulted in traffic, not business. I can't think of anyone who has hired me as a consultant because of something I've written here. Nor have I ever had a new client tell me that they've read this blog. I've instead been hired because of referals from other clients, speeches I've given at conferences, and articles I've written in trade journals; never because of this blog.
Indeed, blogging here has interfered with my business, as most pro bono efforts tend to do. Note that I say interfered with my business; I didn't say it hurt my business. But also note that I didn't say it helped my business. Blogging can help a new consultant's business because it can make prospective clients appreciate that he knows what he's writing about. But an established consultant who blogs can too easily give away advice or knowledge for which he could be charging clients. Furthermore, his blogging takes time away from more potentially lucrative marketing efforts.
So why am I blogging? Because the more knowledge that an industry has, the better for that industry, the better its prospects for the future, and (theoretically) the better for a consultant's business. Put another way: Brain dumps float all boats.
Nevertheless, my concern that blogging givies away my store and steals time from more lucrative work is one of two reasons why I've not blog much this year.
The other reason—since I'm addressing how blogging removes time for more important work— is that during the past 18 months, I've radically changed my opinion about the future of daily newspapers in North America. In what little free time I've hadthis year, I've been drafting what I intended to be an article about that, a 2007 follow-up to my 2004 essay in Online Journalism Review, What Newspapers And Their Web Sites Must Do To Survive.
However, my draft article has turned into an approximately 20,000-word treatise because I want to be self-contained and to establish that American daily newspapers are dying; why; what they did wrong when faced with cable & satellite television, topical magazines, and the Internet; what American daily newspapers should have done; what will replace them; and what some daily newspapers can still do to survive. I'd been hoping to publish this work in April, but haven't had enough free time yet to finish it. I hope to during August.
Blogging here takes time away from that. Moreover, any blogging I do now will be from the perspective of my changed thinking, a perspective that haven't yet explained. I think it's better that I publish the larger perspective before doing any day-to-day blogging.
However, some of my friends say, "'We understand that. But we're interesting in what you think about things that are happening now.''
Fair enough, I'll try. Between consulting assignments and writing that treatise, I'll try to find time each day to blog about a few things, even if it's only pointers to what trade news I'm reading. I'll post my longer essays and 'think pieces' on Corante's Rebuilding Media, but try to blog here more often. Starting today.
By the way, new-media still accounts for only about five per cent of the average American daily newspapers' revenues. I'm tired of their publishers asking me to tell them the easiest and quickest way that their newspapers can double that percentage during the coming year. They should beware what they ask, because the logical answer to their question is simple but not something I recommend:
A newspaper merely has to lose half of its print revenues during the coming year in order to double the percentage of revenues it earns online. And I know of a few newspapers that are inadvertently doing just that.
Well, maybe not losing half their gross revenues or turnover just yet. But quite a few major newspaper companies in the U.S. have seen their income drop by around 50 percent during the past fiscal quarter. The Tribune Company's Q2 income fell 58.7 percent. The New York Times Company's fell 59 percent. The Journal Register's 44 percent.
Yesterday on the Online News Association's discussion list, the editor of a 37,000-circulation daily newspaper asked to hear:
"…from folks who have tried something in between free and paid regarding your online content, such as holding back some print content from online; charging for 'premium' online content; giving access to some online content only to print subscribers. If you've done anything like this has it produced revenue or slowed print circulation erosion?"
Though I've not run a newspaper website in more than a decade, I today replied because I've spent more than a dozen years studying online paid content strategy and cases and had for several years been a columnists about the subject.
Here's the information I provided:
Continue reading "Supply & Demand and 'Unpackaging' on Newspaper Content Online" »
Nearly two months after it cut 289 employees so it could address "the needs of the Web site, specials, and other technologies that will be emerging," Time Inc. has launched a sweeping redesign of its eponymous news magazine, the publication's biggest overhaul in 15 years. According to the New York Post, the redesigned Time features "more short news items - some no longer than a paragraph - and points of departure to Web sites all through the mag."
Is this an indication of the future of printed news media — print editions becoming pointers to the publications' websites? It would certainly be a reversal of a decade ago when the publications' websites pointed to the printed editions. Back then, most publishers of news though it would be decades, if at all, before online editions superceded printed editions. I think we can safely say that's instead happening this decade.
When asked if his newspaper will be printed on paper in the future, Arthur Sulzberger Jr. publisher of The New York Times, said, "I really don't know whether we'll be printing the Times in five years, and you know what? I don't care either." He told the World Economic Forum in Davos, Switzerland, that his paper is managing the transition from print to Internet.
Nevertheless, I sense hypocracy among those publishers (Sulzberger is not one of them) who cut their print editions' staff, claim they are switching their company's focus from print to online, but then don't significantly add any online staff. I think they're just cloaking print staff cuts under the trendy excuse that they're switching focus to online.
"Even if the Times picked up most of its existing online readers, how are they going to grow a new generation of online Op-Ed readers if they keep the columnists behind a pay firewall?"
Starting tomorrow, the Times will grant TimesSelect access to all students and faculty who have .edu e-mail addresses. "It's part of our journalistic mission to get people talking on campuses," said Vivian Schiller, senior vice president and general manager at NYTimes.com, as reported in Editor & Publisher magazine. "We wanted to open that up so that college students and professors can have a dialogue," Schiller said. ""I want to reinforce that this is the most important generation for us to reach out to."
The Times apparentlly hopes those students will pay for TimesSelect access after graduation. That's a nice hope, but I think it will just put the those students into the same predicament TimesSelect has with everyone else: Will people who previously had free access to that content pay for it? After 18 months, the Times has gotten only a 1.6 percent of its websites' users to pay for TimesSelect. Perhaps granting students free access now will someday raise that conversion rate to 1.8 or 2 percent. Even if the rate were to double, it's hardly a success
The more business we do, the less time we have to post our views. That's one of three reasons for the scarcity of recent postings to the business blog section of this website.
The second reason is that I'm drafting a long article about the root of why American newspaper circulation has declined during the past 30 years, why that industry's efforts to transplant its existing business from print to online won't save it, what should have been done, and what might still be done in the ruins. I intend this article to go beyond What Newspapers and Their Websites Must Do to Survive, my essay published three years ago this month in Online Journalism Review. I think almost everyone has overlooked the major cause of why newspapers have lost circulation and readership during the past 20 years (which is also a major the reason why most newspapers' websites after ten years are still read by fewer people and less frequently than the printed editions).
What's the major cause? Sorry, but I'll spotlight that in my article, which I hope to publish either late this month or early next month. As food for thought, meanwhile, allow me to list what the major problem is not:
Finally, the third reason for the scarcity of recent postings here is that any time my business partner or I blog is unpaid time for us. Unlike many other bloggers elsewhere, neither of us has had a paycheck or salary during the past ten years. We live solely from the net profits of our companies. An hour or so blogging is an hour or so of lost income to us, which can be a costly distraction.
Nevertheless, many people have asked us to continue blogging. So, we'll continue to try whenever spare moments between business and other writing permits. Here's what caught our attention online today:
National Journal magazine columnist William Powers believes that, "What the newspaper industry needs right now is a good publicist. Not a 'vice president for public relations' or a 'spokesperson' who puts out press releases and waits for phone calls. I mean a hard-core, hard-charging publicist like the ones celebrities employ to craft the image and keep the 'brand' humming." Yes, that's what he thinks it needs. He apparently thinks readership and circulation has been declining because newspapers don't get enough publicity and need brands that 'hum' more. I'm glad he didn't suggest Tupperware parties, too.
Jack Klunder, the circulation chief of the Los Angeles Times has sent a memo to the newspapers' employees, "The fact remains there are too many of us with too many reasons for not subscribing. Is it because you don't care? Is it because you get it at the office? Price? Latimes.com? Regardless of your lame excuse, all of us should be subscribing to our great paper. Why we don't escapes me." Perhaps, because they read it at the office?
The Wall Street Journal yesterday reported that its advertising revenues slid ten percent last month, largely because of "weakness in technology, financial, general and classified advertising categories."
Meanwhile, the Tribune Company, which earlier this month sold its two smallest newspapers (the joint operation of The Stamford Advocate and Greenwich Time), announced that, " we have no current plans to sell additional newspapers." So said Scott Smith, president of the publishing division of the Chicago-based parent company, in a brief statement. Considering that nobody responded when Tribune put its other newspapers out to bid, Tribune's plan is no surprise.
I live in Greenwich and know some Greenwich Time staffers socially. They were happy that Tribune sold their newspaper to Gannett Company, which publishes neighboring newspapers. That is, they were happy until Gannett asked all Greenwich Time and Stamford Advocate employees to apply for their own jobs. Apparently, Gannett bought the assets of those newspapers, not the company or its employment.
Just as Tribune was selling its smallest newspapers, the Washington Post reported what many of us who have published small newspapers know: "If there's any good news about the businesses of newspapering these days, it can be found at the industry's littlest papers, which are doing well even as their bigger brothers founder."
I may need to hike my consulting fees. The Philadelphia Inquirer reports that it's hired one of my acquaintances, 36 year-old Eric Grilly, as the new president of Philly.com, that newspaper's online operation. Eric's departure from the MediaNews Group newspaper chain, where he recently was given a seat on the executive committee and where his father retired as chief operating officer eight months ago, has surprised a lot people in American online news publishing community. More surprising to people was his compensation at MediaNews Group, which Philly.com reported as $346,050 in salary and bonus during 2006.
eMarketer.com is predicting that American online advertisement revenues will increase only 18.9 percent this year, compared to increases of more than 30 percent during each of the past three years. eMarketer predicts it will rebound to 22.1 percent during 2008, but then begin shrinking to to 13 percent annual growth in 2011. MediaPost reports that five other analysis firms (Borrell, Forrester Research, JupiterResearch, Oppenheimer and PricewaterhouseCoopers) predict annual growth slipping into the single digits in the next couple of years, for the first time since the start of the commercial Internet. I keep that in mind whenever I read newspaper trade journal predictions that at the 'current rate of growth' online revenues will be able to save the declining print operations. What makes those journals think that the 30 percent growth will continue?
I would have liked to attend the UK Online Publishers Association meeting in London or the World Association of Newspaper's Digital Winners conference in Oslo this week, but was preparing for a business trip to Central America (which became postponed yesterday).
Over the years, I've learned that each day on the road requires three days in the office to catch up. I've been on the road for the five of the past 13 weeks and can barely see where I should be, nonetheless catch up. Nevertheless, here are some of the things (some a bit old) that I'm today noting during my catch up:
TimesSelect, the paid-access portion of The New York Times' website currently has approximately 627,000 subscribers, 34 percent of whom actually pay. The rest get free access to TimesSelect because they subscribe to the newspaper's printed edition. The newspaper's website receives
This means that the premier newspaper in the English-language has been able to convert only 1.6 percent of its website's users into paying after 18 months of marketing. I think that result fits within the One Percent Rule I formulated in my ClickZ columns nearly five years ago. When TimesSelect launched in September 2005, The New York Times' digital chief Martin Nisenholtz told Editor & Publisher magazine's Steve Outing that its goal was hundreds of thousands of subcribers in the eary years and even more over the long term. Outing wroter: So you be the judge. TimesSelect has approximately 213,180 paying customers (forget the claimed 627,000 customers: 413,820 of them aren't paying). That number is in the hundreds of thousands. But is it a significant portion of the 1.5 million to 2 million 'Times loyalists' who were targeted? It's certainly not a significant portion of the more than 13 million users of the website. Does having 213,180 paying customers after 18 months mean that TimesSelect might have 426One factor that Nisenholtz thinks will encourage people to pay to keep reading the Op-Ed crew is the notion of the "Times loyalist" -- perhaps 1.5 million to 2 million readers who are devoted to The New York Times brand, and spend significantly more time reading NYTimes.com than they do other news sites. With them, he claims, their willingness to fork over "the equivalent to buying a few martinis" for an annual subscription could be expected.