Friday, December 31, 2010

The year 2010 in review

Inspired by my friend Richard Floyd's ruminations about his 2010 blogifications, here's a rundown on how News after Newspapers was read this year.

To the extent Google Analytics tells a real story — there are many visits by folks clearly searching for something else who stick around for just two or three microseconds — visitors in 2010 came from 108 countries (missing: Central Asia, Central Africa, Bolivia, Greenland and a few Central American countries), and all 50 states. There were 11,532 visits in total, 14,584 pageviews, and 8,478 individual visitors. On average, you spent 57 seconds on site, which is not enough to read the average post, so obviously, a lot of you bailed out early. On the other hand, most of my posts here were just trailers for the full posts over at NiemanLab, where the average post got at least 1,000 hits.

I managed to put up 20 posts this year versus 75 in 2009 and 66 in 2008 (and I started in September of 2008), so it's been a slow year. Nevertheless, overall traffic this year was down just about 5 percent from the year before.

What you liked, based on pageviews:

1. iPad strategies for publishers — I must admit, I still don't have one — an iPad that is.  But I've played with one, and I think so far the strategies outlined in that post are looking valid. (See also that post's precursor, with the same thoughts somewhat less polished.)
2. Groupon's revenue pace — I predicted a $350 million annual pace back in April. That seemed pretty preposterous at the time (they only came out of beta about a year before), but the actual result, astoundingly, seems to be closer to $1 billion.
3. Are newspapers doomed? — This is a 2008 post that continues to get traction. The answer, if you don't want to peek, is yes.
4. Out on a limb again: Predictions for 2010 — You can check on how those prognostications turned out here. I had more hits than misses, overall.
5. A roundup of media predictions for 2010 — This is a beat that NiemanLab has taken over in spades, with an all-star series of 2011 predictions posted during December, including my own.

Happy New Year to all!

Wednesday, December 22, 2010

Predictions 2011: More digital convergence, AP Clearinghouse, more trailblazing from John Paton's JRC

Continuing an annual tradition here at NaN, here are my prognostications for 2011 (posted also at Nieman Journalism Lab). See also my earlier post with predictions for 2020.

Digital convergence: News, mobile, tablets, social couponing, location-based services, RFID tags, gaming. My geezer head spins just thinking about all this, but look: All these things will not stay in separate silos. Why do you think AOL invested $50 million or more launching Patch in 500 markets, without a business model that makes sense to anyone? What’s coming down the pike is new intersections between all of these digital developments, and somehow, news is always in the picture because it’s at the top of people’s lists of content needs, right after email and search. There are business opportunities in tying all of these things together, so there are opportunities for news enterprises to be part of the action. Some attempts to find synergies will work, and some won’t.

But imagine for a moment: personalized news delivered to me on my tablet or smartphone, tailored to my demographics, preferences, and location; coupon offers and input from my social network, delivered on the same basis; the ability to interact with RFID tags on merchandise (and on just about anything else); more and more ability not only to view ads but to do transactions on tablets and phones — all of these delivered in a entertaining interfaces with gaming features (if I like games) or not (if I don’t). In other words: news delivered to me as part of a total environment aware of my location, my friends, my interests and preferences, essentially in a completely new online medium — not a web composed of sites I can browse at my leisure, but a medium delivered via a device or devices that understand me and understand what I want to know, including the news, information and commercial offers that are right for me. All of this is way too much to expect in 2011, but as a prediction, I think we’ll start to see some of the elements begin to come together, especially on the iPad.

The Associated Press clearinghouse for news. Lots of questions here: Will be it nonprofit or for-profit? Who will put up the money? Who will be in charge of it? What will it actually do? It will probably take all year to get the operation organized and launched, but I’m going to stick with the listing of opportunities I outlined when news of the clearinghouse broke. I continue to believe that the clearinghouse concept has the potential to transform the way that news content is generated, distributed and consumed. (Disclosure: I’m working on a project with the University of Missouri to explore potential business models enabled by news clearinghouses.)

How I made out with my 2010 predictions

Time to look back on my predictions for 2010, posted December 17, 2009. Here are the full texts of the predictions, with outcomes, as near as ascertainable at this point. (Posted also at Nieman Journalism Lab)

Newspaper ad revenue
PREDICTION: At least technically, the recession is over, with GDP growth measured at 2.8 percent in Q3 of 2009 and widely forecast in Q4 to exceed that rate. But newspaper revenue has not followed suit, dropping 28 percent in Q3. McClatchy and the New York Times Company (which both came in at about that level in Q3) hinted last week that Q4 would be better, in the negative low-to-mid 20 percent range. This is not unexpected — in the last few recessions with actual GDP contraction (1990-91 and 2001), newspaper revenue remained in negative territory for at least two quarters after the GDP returned to growth. But the newspaper dip has been bigger each time, and the current slide started (without precedent) a year and a half before the recession did, with a cumulative revenue loss of nearly 50 percent. Newspaper revenue has never grown by much more than 10 percent (year over year) in any one quarter, so no real recovery is likely. This is a permanently downsized industry. My call for revenue by quarter (including online revenue) during 2010 is: -11%, -10%, -6%, -2%.
REALITY: CLOSE, ONE CIGAR. Actuals for Q1, 2, and 3: -9.70%, -5.55%, – 5.39%. And Q4, while not a winner, will probably be “better” than Q3 (that is, another quarter of “moderating declines” in news chain boardroom-speak). So, a win on the trendline, and pretty close on the numbers.

Newspaper online revenue
PREDICTION: Newspaper online revenue will be the only bright spot, breaking even in Q1 and ramping up to 15% growth by Q4.
REALITY: CLOSE, ONE CIGAR. Actuals for Q1, 2, and 3: +4.90%, +13.90%, and +10.7%. Since Q1 beat my prediction and was the first positive result in eight quarters, I’d say that’s a win, and pretty close on the ramp-up, so far. Q4 might hit that 15%.

What will journalism look like 10 years from now?

Over at NiemanLab, there has a been a litany of predictions for journalism for 2011; my own should be in the works over there.

But at Quora, where I'm a member, somebody asked, "What will journalism look like 10 years from now?" This is a good question, because year-to-year changes don't always reflect the long-term trends. Here's the answer I posted:

There are those who say that only trained professionals can practice journalism, but as a practical matter, journalism will continue to be practiced by a range of people with professionals at one end and amateurs at the other, publishing via a range of channels with large commercial and non-profit news organizations at one end and individual bloggers at the other.

Some of these will have paid access, some will be free; some will be on paper, some on websites, some on apps, some on other channels, and many on some combination of these distribution methods. Journalism will be fully platform-independent. But although platforms and cost are not directly relevant to how journalism will be practiced, they do affect how journalists may earn a living. So lets look at ways the work of journalists across the spectrum may change over the next ten years:

More freelancers: Individual journalists will have enhanced ability to earn a living by selling directly to news consumers, which will better enable them to operate outside of traditional news organizations and sell their content in multiple ways including syndication, curated channels, individually branded channels.

Sunday, November 14, 2010

The pros and cons of charging for news

Robb Crocker, a mid-career grad student in communications at Rutgers, did an email interview with me about the pros and cons of charging readers for news content. He posted the interview on his blog, here's the Q and A portion.

Q. In your opinion, what are the pros and cons of charging readers for online news?

A. On the pro side: it helps put in the minds of readers the idea that this content has some value; that there is a cost to producing it. And of course, in theory it creates a revenue stream for the publisher. Against this, on the con side, are these arguments:

(a)  Before online distribution, news in most media was free: radio, TV, and even newspapers — the subscription price or newsstand cost of a newspaper is really a convenience fee readers were willing to pay for their own personal copy. Historically, at least until the 1980s, it was a kind of freemium model: you were likely to find a newspaper to read sometime in the course of your day: at the barbershop, on a bus, in a waiting room, at the lunch counter, etc., and the pass-along readership factor was quite high. So if the prior news media never established value and a willingness of consumers to pay for news as distinct from convenience, then doing so for online news will be very difficult.
(b)  Except for a handful of publications with high-value content, like WSJ, FT, possibly NYT and various more topical niche publishers, it will be very difficult to implement a paid model in which the loss of ad revenue from lower page views is offset by the subscription income. Small local publications will simply not be able to implement pay systems by looking at the models that work for the high-value and niche publishers. 
(c)  Content has become atomized. The typical reader assembles a stream of online news not from a single source but from multiple sources, and will be unwilling to return to a single-source model.  

Friday, October 22, 2010

AP’s “ASCAP for news” — new ecosystem, new revenue streams, new enterprise opportunities

In a speech on Monday, Associated Press CEO Tom Curley announced that the AP would soon set up  “an independent rights clearinghouse for news publishers to manage the distribution and use of their content beyond their own Web properties.” (Speech text in PDF link)
The entity, to be designed with input from multiple stakeholders including AP and the Newspaper Association of America, will be established sometime in 2011. It will be a business-to-business clearinghouse, not involving transactions with consumers. Through the clearinghouse, originators of news content (ranging from local bloggers on up; this is not limited to AP members) will be able to distribute their content for digital publication by others, and receive back royalties of revenue shares according to protocols yet to be determined. The clearinghouse will be facilitate a rapid, realtime means of negotiating rights for such content sharing, resulting in a large increase in the potential market for any particular piece of content.

As an illustration: a newspaper (or a broadcaster, or a local blogger) could release a piece of content (a story, a photo, a video) with tags indicating what it is about, who owns it, how and where it may be used, and how the content originator is to be paid. The content, distributed through any available channel, is picked up by another publisher, aggregator, or personalized news service and used in accordance with the attached rights and payments protocols. The clearinghouse monitors usage and payment obligations throughout the network of participating content originators and publishers, and settles transactions among them.

The plan Curley described is very similar to what I proposed in a post here in July, in which I asked, “What if news content owners and creators adopted a variation on the long-established ASCAP-BMI performance rights organization system as a model by which they could collect payment for some of their content when it is distributed outside the boundaries of their own publications and websites?”

Curley framed the opportunity in very similar language: “With the new rights clearinghouse initiative, we are hoping to give news publishers more tools to pursue an audience and capture value beyond the boundaries of their own digital publications.”

Tuesday, October 19, 2010

NAA switches webstat vendors — results look better but miss the shift to mobile

When last we checked on the Newspaper Association of America's webstats (and other data) back in April, the monthly website usage information that the nation's daily newspaper organization was publishing came from Nielsen Online, and it wasn't all that pretty.

The NAA tried to put the best spin on the data, but as we pointed out at the time, time spent at newspaper sites was in the doldrums and getting gradually worse, with three of the seven shortest attention spans measured by Nielsen occuring in the first quarter of 2010: 34:10 minutes in January, 31:39 minutes in February, and 32:21 minutes in March. For context, consider that at the time, also according to Nielsen, the average Facebook user was spending nearly seven hours on the social networking site.

It looks like NAA was not happy with those first quarter web stats. It published April data from Nielsen but offered no further updates for four months. At that point, I inquired whether NAA had decided to stop publishing the data, and was informed by Jeff Sigmund, Director of Communications, that "a new methodology" was in the works.

The new methodology turns out be be Comscore. Last Thursday, NAA posted Comscore data for September, and simultaneously wiped all the old Nielsen data off its site. The reason for the switch is clear: Comscore's results are more favorable to newspapers than Nielsen's in several categories, as trumpeted in an NAA press release.

Wednesday, July 7, 2010

The ASCAP example: How news organizations could liberate content, skip negotiations, and still get paid

Jason Fry suggested in a post here last week that current paywall thinking might be just a temporary stop along the way to adoption of “paytags — bits of code that accompany individual articles or features, and that allow them to be paid for.” But how? As Fry recognizes, “between wallet friction and the penny gap, the mechanics of paytags make paywalls and single-site meters look like comparatively simple problems to solve.”
I suggested a possible framework for a solution during a couple of sessions at the conference “From Blueprint to Building: Making the Market for Digital Information,” which took place at the University of Missouri’s Reynolds Journalism Institute June 23-25. Basically, my “what-if” consisted of two questions:
  1. What if news content owners and creators adopted a variation on the long-established ASCAP-BMI performance rights organization system as a model by which they could collect payment for some of their content when it is distributed outside the boundaries of their own publications and websites?
  2. And, taking it a step further, what if they used a variant of Google’s simple, clever, and incredibly successful text advertising auction system to establish sales-optimizing pricing for such content?
Read the rest at NiemanLab.

Friday, June 11, 2010

Ruminating with Rick: the second annual "Future of Newspapers" interview

My friend Rick Floyd has posted his second annual interview with me about the state of newspaperdom, at his blog Retired Pastor Ruminates. Here's a link to the first one, done in June 2009.

Tuesday, May 4, 2010

Moderating declines: Parsing the NAA's spin on newspaper circ data

Newspapers could borrow a line from a recent Dilbert comic strip: “We’ve been doing great since we redefined success as a slowing of failure.” Or perhaps it was the other way around, and Dilbert creator Scott Adams was inspired to write that line in a recent strip by the inventive terminology of newspaper executives describing “sequential improvement” and “moderating declines” in their revenue trends despite continuing losses in the double digit range.

Currently, the industry is reporting first-quarter earnings, and last week the Audit Bureau of Circulations released unaudited “publisher’s statements” reporting paid circulation for the six months ending March 31. The numbers are down, but the spin is up.

On the circulation front, the Audit Bureau of Circulations reported that circulation fell 8.7 percent on weekdays and 6.5 percent on Sundays, among newspapers filing publisher’s statements. This compares with drops of 10.6 percent weekdays and 7.6 percent Sundays for the prior six-month period, enough of an improvement for Newspaper Association of America CEO John Sturm to declare that “the data indicates the declines are moderating.”

Actually, it’s hard to discern real moderation in the rate of decline. The losses in the most recent period are indeed a bit less severe than those in the prior (Sept. 30) period, but they are worse than the drop in the period before that, or in any previous period. If we ignore the Sept. 30 data as an outlier, we actually have a trend that’s been worsening steadily for the last six years:

Nothing about that final uptick indicates that it’s a reversal of the trend — it would take two or three periods of “improvement” in the form of “moderating declines” to make that a valid conclusion.

Continue reading this post at Nieman Journalism Lab.

Friday, April 16, 2010

Groupon's 2010 revenue pace

One of the hottest companies around is Groupon, the social buying site that's offering daily deals in dozens of cities, and has dozens of clones trying to capitalize on the business model. It is, or should be, of interest to newspaper publishers because (as Michael Skoler has written about at NiemanLab) (a) it is probably eating their lunch, and (b) offers a model that they can adapt to facilitate, and profit from, direct connections between their readers and local retailers of goods and services.

Just how big is this opportunity? Pascal-Emmanuel Gobry was wondering at Business Insider which of the Groupon revenue and profitability guestimates are correct.  He wrote:
We're still very bullish on Groupon and think its valuation was justified at whatever end of the spectrum its financials are, given the market and the brand. But its financial picture is still very hazy. Who has the details? Let us know!
So I responded with a calculation based on Groupon's own data:

Why is the picture hazy? Groupon all but publishes its revenue in real time. Groupon's revenue is easy to estimate from the real-time stats they have on their site, plus estimates from sampling the deals to see what the average discount is. Here's my calculation based on the deal clock from Feb. 16 to April 4. Based on that period, revenue annualized to $150 million. However, it's growing rapidly, so $350 million is certainly possible.

3,001,657 "Total Groupons bought" as of 4/4
1,905,218 "Total Groupons bought" as of 2/16
1,096,439 Groupons bought in 47 days
23,328 Average number of Groupons sold per day, national total
543 Average number of sales per Groupon (per day total divided by 43 cities)
$141,593,040 "Total dollars saved" 4/4 (how much they saved customers)
$87,996,041 "Total dollars saved" 2/16
$53,596,999 Savings in 47 days
$92,408,619 Gross value (58% avg discount - based on a sampling of Groupons)
$38,811,620 Net revenue (42% actually paid by buyers)
$825,779 avg sales/day
$35.40 average individual sale/deal
$19,204 average total revenue per deal

$301,409,389 Current annualized sales pace (actual cash, not undiscounted value of deals)
$150,704,695 Groupon share of revenue at 50%

As to growth to a $350 million 2010 pace: the deals clock at this moment is at 4,007,360, the "dollars saved" clock is at $154,567,861. That's just 12 days after my prior benchmark on 4/4. So the deals pace is accelerating (83,808 daily deals sold per day in the past 12 days vs 23,328 in the prior 47 days). However, the value of the average deal is dropping, probably as Groupon moves into smaller markets. Based on the increase in dollars saved over the past 12 days, revenue has actually DROPPED to $782,963 per day, or a $142 million pace. Twelve days is not a good sample period, but this does suggest that the pace is leveling off. So I would say: they are heading for $150 to $200 million this year (assuming some additional growth and of course holiday spending uptick). I think expansion beyond this pace gets difficult, unless they find ways to (a) move into smaller markets, and (b) expand their demographic appeal beyond the young urban professional women who predominate right now.

I leave it to others to figure out what Groupon's costs are against this, but I suggest that a 50% operating margin is not out of the question - so, something in the $75-100 million range (EBITDA).
Clarification: my estimate of $150-200 million is after paying the merchant's 50 percent. So Groupon would actually report $300-$400 million in revenue on this basis.

Update: based on another comment at Business Insider (questioning whether Groupon is a great idea from a merchant's perspective), I added this comment:
There's an interesting discussion of Groupon from the merchant's perspective in this thread at Groupon's own forums (goes on for 8 pages, well worth perusing).

Merchants need to see Groupon as a marketing channel, not a sales channel. Yes, when they are the featured deal of the day, they'll sell hundreds of items or services at or below cost. But they don't do this every day, or even every month, because Groupon wants a lot of diversity in what it's offering. Again the math is worth considering:

Say you have a nail salon in Denver (nail jobs seem to be particularly popular on Groupon). You offer on Groupon a $75 service for $32 - close to the average discount. You sell 1000 of them, and Groupon pays you half the proceeds or $16,000. (You get that over 3 months, while the redemptions will probably spread over the next year, so you have a bit of cash flow advantage there.) Let's say your out-of-pocket cost for providing those services are $40 apiece or $40,000, so you're out $24,000. That's your marketing expense to get 1000 ladies (mostly) into your store, or $24 each. Do a good job and they come back. You have the opportunity to upsell each of them - do a $24 upsell and you've recouped your entire out-of-pocket expense. Plus you've had the marketing exposure of being on the Groupon site, being featured in Groupon's emails to thousands of members, etc. At the end of the day, you're certainly better off, if you do it right. And it's doubtful whether $24,000 in advertising on Denver radio, TV and print would bring 1000 people into your store.

Update 2, April 17: Paul Butler did a bit more sophisticated data scraping and came up with some pretty similar numbers.

Monday, April 5, 2010

Is print still king? Has online made a move? Updating a controversial post

A year ago, in a Nieman Journalism Lab post that garnered 88 comments and still has viral life out there, I maintained that just three percent of newspaper content consumption happens online; the rest of it happens the old fashioned way, by people reading ink on dead trees. Given the continuing attention being paid to that conclusion (it was cited just last month by Hal Varian, Google’s chief economist, in testimony to the Federal Trade Commission), let’s revisit the numbers and see whether anything has changed.

With updates or improved data on at least some of the numbers, the general conclusions still hold: U.S. newspapers have not pushed much of their audience to their websites, nor have they followed the migration of their readership to the web. Their combined print and online readership metrics, whether measured in pageviews or in time spent, show that there’s been significant attrition since last year in the total audience for newspaper content, and that the fraction of that audience consuming newspaper content online remains in the low-to-mid single digits.

Continue reading at Nieman Journalism Lab.

Friday, March 26, 2010

AP’s ethnographic studies look for solutions to news and ad “fatigue”

A new study by the Associated Press has come to the conclusion that consumers are “tired, even annoyed, by the current experience of advertising,” and that, as a result, they don’t trust very much of it. But at the same time, AP found, consumers do want information relevant to their needs, as well as ways to socialize that information.

Although it tends to move cautiously and deliberately, AP has been subtly and quietly introducing tools aimed at improving relevance and socialization, and may have plans for an ad-supported aggregation business that applies what it has been learning.

I spoke about the study with Jim Kennedy, AP’s vice-president for strategic planning, about how the study’s findings will impact AP’s strategic thinking. “The future of information delivery needs to be quite different from current practices and quite different from the old packaged practices that we’ve had offline and online so far,” Kennedy said. “That’s the big deal for us now. You can’t figure all that out in a minute or even a year.”

Continue reading this post at Nieman Journalism Lab.

Wednesday, March 24, 2010

"Velocity of ad decline is moderating," NAA chief says of Q4 losses

The Newspaper Association of America has quietly updated the "trends and numbers" section of its site with 4th quarter 2009 revenue, showing a 14th consecutive quarter of overall revenue loss and only a few indications of slowdown or reversal in the downtrend.

Counting online revenue, the industry's total revenue came in 23.73 percent below Q4 of 2008. In the first 3 quarters of 2009, the losses were 28.28 percent, 29.00 percent and 27.94 percent. While the lower loss rate in the Q4 results could be considered an improvement, the only category with a significant improvement was online advertising, which lost just 1.00 percent in Q4, compared to drops of 13.40 percent, 15.90 percent and 16.92 percent in the first three quarters. (For the full year, total revenue came in at $27.564 billion, which is a mere $64 million over my prediction made back on September 22.)

Putting the best possible spin on the situation, NAA President and CEO John F. Sturm said in a statement: "The velocity of the advertising decline for print classifieds continued to moderate, and adverse trends for national advertising and newspaper Web sites lessened considerably as last year came to a close." He added that he had been hearing "buzz" that this "ad trend improvement" was continuing in the first quarter of 2010.

Indications from a few of the firms for the first quarter of 2010 do point to a smaller loss, perhaps in the low teens. Since the downtrend began in 2006, the industry has lost more than 44 percent percent of its revenue, including nearly 48 percent of print revenue.

In most categories, Q4 provided no particular relief from the downtrend. Details:

Online revenue, as noted, was down just 1.00 percent, perhaps an indication of better days ahead. Part of the problem for online has been that for many, if not most publishers, a good fraction of online revenue is directly tied to printed advertising, with the online component sold as an "upsell" or added value proposition. This means online volume drops right along with print, even if there's growth in ads sold on an online-only basis. As I mentioned a few weeks ago, at E.W. Scripps, this linkage of online and print covers about half of all online advertising, and I'm finding similar levels at other firms.

Retail revenue (the largest category) was down 24.33 percent, continuing precisely the track it was on for the first three quarters (which were off 23.68 percent, 24.92 percent and 23.98 percent, consecutively). And keep in mind that while retail sales have not rebounded much, we've had GDP growth since mid-2009. Every retail category measured by NAA showed a decline, which has been the case all year. Not surprisingly, the worst drop was in the building materials category, which fell 36.58 percent, a tad better than losses in the 50 percent ballpark for the first three quarters.

Classifed revenue was down 31.72%, falling less than the first three quarters (42.34 percent, 40.42 percent and 37.90 percent), but that may be because there's just not much left to lose. In Q4, total classified revenue was $1.757 billion, compared with $5.243 billion in Q4 of 2005, the best quarter ever in classified volume. In other words, in four years, more than 66 percent of classified revenue has evaporated.

As in retail, every classified category (automotive, real estate, recruitment and other) was down in every quarter of 2009. The slight reduction in the rate of decline can be attributed to slowdowns in the loss rates in automotive (down just 37.0 percent in Q4 versus losses in the low 40s during the first three quarters), and "other," which was off just 8.0 percent (versus 16.1 percent, 11.7 percent and 8.8 percent earlier in the year), but that "improvement" is probably due to the growth in foreclosure notices, which are generally counted in this category.

National revenue fell 19.80 percent, compared with losses of 25.87 percent, 29.61 percent and 29.84 percent in the first three quarters. National saw small upticks in automotive (based on spending by manufacturers to support the cash for clunkers incentives), food, household furniture and furnishings (which almost doubled), and medical and toiletries. While most categories were down, at least there is evidence of a few actual trend reversals in spending by national brands.

Tuesday, March 9, 2010

Google’s Hal Varian to newspapers at FTC confab: “Experiment, experiment, experiment!"

Google’s economist-in-chief, Hal Varian, was the keynote speaker this morning at the Federal Trade Commission’s second round of hearings on the future of journalism. (The study is entitled “How will journalism survive the internet age?” Round 1 was held in December; transcripts and other material are linked here — scroll down. Not to be outdone, the Federal Communications Commission also has a project studying pretty much the same thing.

Here’s the slide deck from Varian’s presentation, entitled “Newspaper Economics, Online and Offline”:

Click through to slide deck and full post at Harvard's Nieman Journalism Lab.

Sunday, March 7, 2010

iPad strategies for publishers

This is a white paper based on and expanded from my earlier post on the same topic, prepared for the Digital Publishing Alliance meeting at the Reynolds Journalism Institute at the University of Missouri, Columbia, Missouri on March 7-9, 2010

iPad is not a linear, incremental development. It’s not a simple next step after everything that has preceded it (even iPhone); it’s a new direction that will have unpredictable impacts on digital behavior. One potential impact:

iPad will bring a huge increase in mobile shopping (assuming we consider iPad to be a “mobile” device). There was only $396 million in U.S. mobile shopping in 2008; only $1.2 billion in 2009. Before Apple’s introduction of iPad, predictions for mobile shopping were for growth to $119 billion by 2015.

But iPad has the potential to greatly accelerate this trend, because iPad will showcase merchandise and services far better than smartphones, and iPad will claim more leisure time than deskbound computers or smartphones. Consumers with iPads will be connected to the Web in far more places, with far more engagement (relative to smartphones), presenting far more opportunities for direct marketing and sales than any previous interface.

Direct mailers are already nervous, asking “Will the iPad be the nemesis of direct mail?” “Robert Wong, chief executive of Catalogue Central [Australia], which digitises traditional print catalogues for some of the nation's biggest retailers, says the iPad, and an expected flood of copy-cat rivals, will find a place residing on the coffee tables of consumers in a way traditional laptops have failed to do. And he predicts that within five years iPad devices will have proliferated so much that many retailers will eschew letterbox delivery of catalogues for digital.”

Similarly, newspaper preprint revenue is in jeopardy. Preprinted inserts (which amount to half of all retail advertising) are the last newspaper ad category where publishers still have some semblance of monopolistic pricing power, because the supermarkets and big box stores have not found a more efficient way to push their weekly promotions. But the category, already vulnerable because of printing cost, distribution complexity, falling household reach, and even “green” issues, will now be further challenged by mobile digital alternatives.

In considering their strategies for iPad, publishers should assume:
  1. Mobile will be everywhere. Upward of 70 percent of adults will be connected to the Web on mobile platforms virtually all of their waking hours.
  2. All forms of media consumption will increasingly shift to mobile devices, especially to iPad and other tablets.
  3. Marketing budgets will increasingly shift to mobile platforms and out of printed newspapers, magazines and direct mail. (It is hard to imagine many marketers looking for ways to increase their print spending these days, but clearly they're looking for ways to do more online and especially in mobile.)
  4. Consumers will respond strongly to mobile pitches in the form of ads, video, social recommendations, online catalogues, deals-of-the-day and channels yet to be invented. Spurred also by new options for digital payments, both the ability and the inclination to make mobile purchases goods and services will explode.
  5. The genie will not go back in the bottle. The Web has atomized content; consumers have learned to surf and explore; new tools will connect them with more content from more sources than ever before. Therefore, selling content in packaged, dated “issues” that emulate the old print product won’t work. Consumers want a hyperpersonalized stream assembled from atomized content.
  6. We’re only at the beginning of understanding what’s possible on iPad et al. Early concepts like the Sports Illustrated demo are heavily rooted in print, lacking hyperlinks or social functionality. At some point, we should expect a new kind browser created especially for tablets, significantly different from standard browsers, that enables easy touch navigation to let people move around not only from page to page as they have been for 15 years, but more easily from topic to topic, person to person, place to place, idea to idea.
To succeed in this radically changing digital landscape, publishers must adopt a number of new strategies:
  1. Embrace the mobile Web and the iPad. As Ken Doctor wrote about Next Issue Media, the tablet publishing consortium, publishers still have a chance to get this one right (“a digital do-over,” Doctor called it), after having misread signals and failed for the last two decades to catch the online waves consumers were riding. The opportunity for publishers here is to lead their audience, rather than belatedly to follow it.
  2. Reinvent content for the mobile Web and iPad. As Doctor also notes, this is easier for magazines, with their stronger visual orientation and design resources, than it will be for newspapers, which will need to invest in new, innovative design capabilities.
  3. Challenge journalists to develop new streams of content, in new formats and with new kinds of interactivity and connectivity that will attract new readers and built new relationships of trust with them.
  4. Work with Apple and other mobile platform entities to enable content and advertising personalization. This means pushing Apple for a more open platform and for access to at least some of their customer data. If publishers are to be players in the mobile marketing game, they must be able to deliver individually targeted marketing messages, and that means having some ability to identify readers and to respond (with their permission) to their profiles and preferences.
  5. Work with marketers to invent new ways to interact with customers: to facilitate conversations, to blend news, social media and brand messages, to actually sell stuff and facilitate transaction — in short, to leverage those new relationships of trust into brand new streams of revenue.
  6. Be ready to shift gears often. The job is not just to create a presence on iPad, but to adapt to the new mobile landscape as it develops and changes. Like the saying about the weather in various localities, if you think you have your iPad strategy figured out, wait five minutes.

Tuesday, March 2, 2010

Earnings season, Part 2: Intel from the quarterly filings of Scripps, Belo, WaPo, and Journal Communications

As a followup to my report on fourth-quarter 2009 earnings reports from most of the major public newspaper firms, we now have earnings releases from E. W. Scripps, A. H. Belo, the Washington Post Co. and Journal Communications (leaving only Gatehouse Media without a report).

The releases from this group followed the script set by the earlier reports: Newspaper ad revenue and total revenue were down (as noted, for the 14th quarter in a row), online revenue was a mixed bag, and quarterly profits were up due to repeated rounds of aggressive cost-cutting during the year.

Here are the particulars by company:

Thursday, February 18, 2010

The iPad business model for news: Strategies publishers must embrace

There’s been a lot of hand-wringing in the journosphere about what newspapers ought to be doing vis-a-vis the iPad. If publishers adopt their usual defensive stance and take a slow approach, they’ll miss the iPad boat. Or the iPad rocketship, as the case may be.

Kenneth Li of the Financial Times reports that “Newspaper and magazine publishers are stumbling over key issues such as sharing subscription revenues as they consider deals to offer digital versions of their products on Apple’s upcoming iPad digital media device.” Apple’s 30 percent take of any subscription revenue is a far better deal than the 70 percent many publishers forked over to Amazon to be on the Kindle, but some publishers are balking at Apple’s deal. “Thirty percent forever changes the economics,” one newspaper exec complaned to Li. “You can imagine we feel less good about it.”

In addition to the revenue share, publishers are kvetching about control of information. Apple intends to hold on to customer data, as it does with iTunes, and to share only sales volume with publishers. One unnamed metro newspaper publisher told Li: “Is it a dealbreaker? It’s pretty damn close.” Magazine publishers, despite some similar concerns, have already formed a consortium (Next Issue Media) to publish their content on the iPad, and Condé Nast has begun announcing titles that will appear on the device.

Continue reading this post at Nieman Journalism Lab.

Friday, February 12, 2010

Earnings season: Newspapers finish 14th straight revenue-losing quarter; some intel from Wall Street filings

When revenue is still seriously down, but profits are up, is that good news? The U.S newspaper companies that have reported fourth quarter 2009 results so far would have you believe it is. But based on their reports, it’s clear the industry as a whole is still in deep trouble, with no strong indication that better days are ahead.

Five of the ten publicly-owned U.S. newspaper companies have reported their fourth-quarter 2009 results; five more to go. (Those reporting so far are Gannett, New York Times Co., Media General, Lee Enterprises and McClatchy. We also have results from News Corp., but News publishes newspapers on four continents, and much of its revenue comes from films, television, cable, and book publishing. Its U.S. newspapers represent perhaps 10 percent of News Corp.’s total revenue and are not broken out for comparison.)

Based on these reports (representing about 42 percent of U.S. daily newspaper circulation), it’s clear that the industry in Q4 2009 saw its 14th consecutive advertising revenue decline; the last nine of those quarters were double-digit declines. And Q1 2010, the one we’re in, won’t be a winner: on the conference calls, nobody reported positive trends for January; a typical positive spin statement was that “we’re seeing a modest improvement in the declines” (Janet Robinson of the New York Times Co.)

Extrapolating from the reported numbers, I’m projecting that the NAA will report (sometime in March) a Q4 2009 ad revenue loss for the industry of about 16 percent (versus 28.3, 29.0 and 27.9 percent declines in the first three quarters), bringing total revenue for 2009 to about $28.4 billion, versus $49.4 billion in the boom year of 2005 — a cumulative decline of 43 percent. The biggest impact continues to be in classified revenue, which will end 2008 at least 66 percent below its peak in 2000.

Based on the releases and statements on earnings calls with analysts, here are the details so far.

Continue reading this post at Nieman Journalism Lab.

Monday, January 18, 2010

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

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

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

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

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

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

Tuesday, January 5, 2010

California Watch: The latest entrant in the dot-org journalism boom

“Ten years ago,” says Mark Katches, editorial director of California Watch, “there were 85 reporters covering the California state house; today there are fewer than 25.”

Katches sees California Watch, which officially launched yesterday after a soft launch period and months of preparation, as stepping into a “big void in doing investigative work in California.” Katches has assembled the largest investigative team in the state: seven reporters, two multimedia producers, and two editors.

The site is focused on investigative watchdog journalism. It won’t cover the ins and outs of the California legislature or other governmental minutiae, aiming instead to “expose injustice, waste, mismanagement, wrongdoing, questionable practices and corruption, so that those responsible can be held to account and the public is armed with the information it needs to debate solutions and spark change.” Besides political topics, the site will cover higher education, health and welfare, and criminal justice.

Based in Berkeley, California Watch has a four-person team in Sacramento, and hopes to open a Los Angeles office as well.

The team’s credentials are impressive...

Read the rest of this post at Nieman Journalism Lab.