Could strategic bankruptcies be needed to transform newspapers?

Continuing on a theme: I’ve been discussing the apparent disconnect between the quality of a news site’s design (as perceived and rated by professionals) and how much time people spend there; as well as the kinds of things that count more than design: reader engagement, interaction, community, personality — real life behind and around the content.

In a comment on the second post, Phil Buckley, whose commentary I had quoted and linked to, asked: “If you were starting a news organization today, where would put your initial efforts?”

I like this, because it’s the key question that all news organizations should be asking themselves. If tackled correctly, it can be a transformative question, a way to self-disrupt the organization, a way to get through the wormhole of reinvention that newspapers are facing, and come out on the other side with a workable business model.

And indeed, forward-thinking news organizations are asking it. But in some news organizations (like Phil, I try to call them that instead of newspapers), the process of dealing with this question leads to an uncomfortable realization: the business model for news in the future is so radically different from today’s legacy newspaper business that there is no way to get from here to there without “a major restructuring event,” which is a euphemism for bankruptcy.

In other words, the viable business model they can glimpse — consisting, perhaps, of a weekend-only or twice-weekly printed byproduct of an online-first publishing operation — represents such a downsizing of the enterprise that it can’t possibly carry the company’s legacy debt load, so the only way to make the transition is first file Chapter 11.

Continue reading this post at Nieman Journalism Lab.

Yet another “What if you go online-only?” scenario

This question keeps getting asked in various ways: “What if you just stopped printing the newspaper and went online-only? How many people would you need, what would your costs be, and could you earn enough revenue to make a profit?”

It’s not necessarily the right question, because there’s still life left in print. An online-print hybrid, with one or two days a week of printed distribution tied to a strong digital publishing operation, is probably a much better solution than online-only.

In any case, Peter Kafka of All Things Digital is the latest to noodle the online-only version and has posted a spreadsheet supplied by Mark Josephson, CEO of Outside.in, which offers a news platform, Outside.in for Publishers, that can augment a local news site (such as that of a newspaper or TV station) with a stream of content links to local blogs and other sources.

In Josephson’s wildly optimistic model, the news operation gets 40 million page views per month, which is then augmented by 93 million page views from the Outside.in adjunct, and ultimately this sugars down to a tidy annual profit of $2.8 million with 20 employees who earn $70,000 apiece.

If it were that easy, it would be happening all over. The problem begins with the combined page views of 130 million per month, which is more than nearly all U.S. newspaper sites get, as Topix CEO Chris Tolles pointed out in response to the Kafka post. As well, it seems unrealistic for the Outside.in add-on to the local site to more than triple the combined monthly traffic. Maybe for the typically underperforming broadcast site, that would be the case, but not with a newspaper partner. Tolles questions the assumed ad CPM, as well.

Josephson responded to Tolles by saying “but the model still works with fewer [pageviews]. [Pageview] reductions reduce the attendant expense and would require fewer people.” Well sure, but look, a typical 30,000-circulation daily paper is lucky to get a million pageviews a month, which, even if leveraged to 3 million with Outside.in, would scale the 20-person staffing model to exactly 0.5 people. Back to the drawing boards, I’d suggest.

What counts more than design in attracting an online news audience?

As I laid out on Wednesday, there seems to be no discernible correlation between the overall quality of a web site and how much time readers spend there.

In the heydays of printed newspapers, we had some similar anomalies: newspapers with terrible designs (as judged by the designer elite) would have market penetrations equally strong as those following the latest design trends and gimmicks.

So what keeps eyeballs on sites, once they’ve landed there? Here are some recent views of interest:

Phil at 1918.com has a nice post building on Dave Brubeck’s breakout “Take Five”, raking over the coals the lackluster site of the News & Observer (once an internet pioneer), and agreeing with my conclusion that it’s not really about design:

Continue reading this post at Nieman Journalism Lab.

Time-spent on newspaper sites: not predictable from rated quality

Much buzz last week about the release, via E&P, of Nielsen’s May time-spent ratings of the top US 30 newspaper sites, and the fact that 17 of them — more than half — showed a decline from year-earlier levels.

Now, any statistician will tell you not to read too much into one month’s data. It’s like drawing conclusions from one day’s fluctuation in the stock market. I’d bet the ratings were up, big time, in November and January on Presidential election and inauguration news. In May 2008, among other things, there was a lot of attention being paid to the final primaries and pre-convention maneuvering in the Presidential race — far more interesting news than we had last month. Clearly, that explains why time spent at Politico dropped about 4 minutes from last year’s 10 minutes, 21 seconds. Barack Obama clinched the nomination on June 3, 2008; Hillary Clinton threw in the towel on June 7 — so when the June 2009 ratings come out, we could see another lackluster month, unless traffic is boosted by events in Iran.

On the other hand, when any site is seeing a consistent drop in reader engagement, year-over-year, that’s an issue, and that seems to be the case with some of these papers, although the data we have is spotty. It would be nice if E&P’s Jen Saba would dip into the Nielsen data for us and draw a graph of the times-spent measured at these sites monthly during the past year — she has previously published reports only on January, March and last September (now behind the pay wall).

Also puzzling: in some cases, while time spent is plummeting, unique-visitor counts are soaring. For example, the May data has time spent at NJ.com, the Star Ledger’s site, dropping from 8 minutes and 25 seconds to 2 minutes and 28 seconds. Meanwhile, however, according to compete.com, uniques at NJ.com have soared from 1.2 million in May 2008 to 2.7 million last month, with site visits zooming during that period from 4.2 million to 7.5 million. Both UVs and visits show a pretty consistent uptrend especially since November.

What’s going on there? Back in August, the site underwent a redesign promising “to make its wealth of in-depth content easier to find and use.” Perhaps, too, there has been more local promotion of the site. But all those extra eyeballs are obviously not sticking around very long. And when investor-oriented 24/7 Wall Street rated the top US newspaper sites last week, it singled out NJ.com as deserving an F rating, with this description:

Continue reading this post at Nieman Journalism Lab.

Circulate enters the fray: holistic, user-centric content discovery tool

Again with full disclosure up front: this is a venture in which I am personally involved:

A few weeks ago in Washington DC, my partners and I announced the formation of CircLabs and the intent to develop a product "code-named" Circulate, incubated at the Donald W. Reynolds Journalism Institute at the University of Missouri. But the announcement stopped short of an explicit description. We've now unveiled the CircLabs Inc. website with more details about our plans for Circulate on the About Us/FAQ page.

Circulate is a holistic, user-centric solution aimed broadly at sustaining journalism in a digital world, with specific relevance to the ongoing exploration of paid-content models for newspaper Web sites. Circulate enables experimentation with subscription and per-item user charges, but as a user-centric content discovery tool, Circulate goes well beyond the announced features of other systems that have been proposed in that space.

Circulate will be rolled out in phases. Initially, it will be a browser add-on that you can have always handy as you move around the Web. Circulate will function on multiple platforms to allow full portability: a mobile application is planned, possibly first as an iPhone application, along with user start page and e-mail notification options.

We describe Circulate on our site in these terms:

Circulate will be present whenever and wherever Web users go online. Circulate learns the user's preferences and becomes an intelligent, indispensable Web assistant that replaces the hassle of search with on-target recommendations and social interactivity....

Circulate travels with you, at your option, wherever you go online. Using your expressly shared interests and preferences, along with your current browsing path, it suggests where you may want to go next, or later on. Over time, you can refine your content interests so that Circulate gets to know you and becomes an even better personal guide to the Web....

Before Circulate, you had to know where you're going online or use unpredictable search engines. And you needed to do all the work by typing search terms or by scanning links. This hasn't changed much during all the time the Web has been around.

Circulate solves this problem by bringing the Web to you simply and quickly. With Circulate, you can take a big step into the post-search, Web 3.0 world. Circulate is a personal information agent that works just for you....

When you begin using Circulate, you'll probably want to tell it a little bit about yourself. As you continue to interact with it, you can allow it to learn more about you and your preferences, and it uses that information to deliver Web recommendations to you.

Eventually, you'll find that Circulate brings you what you want to see, learn about, and interact with online, before you even think about it. In a real sense, it will become an intelligent personal information agent.

As a Circulate user, you'll be able to have an account with a home-base publisher, like the local paper, and optionally profile yourself. Then the Circulate system will go to work and discover and present to you information that’s really relevant to your interests. You'll be able to set alerts if you want, but you don't have to. Circulate won’t start out carrying advertising, but eventually when it does, you'll see advertising that matters to you, not blindly-aimed mass-market ads. And it sets up the possibility that you could optionally subscribe, through your home-base publisher, to valuable information at hundreds and eventually thousands of news and other websites, all at a low monthly blanket rate.

Circulate will feature social functionality, so that you can share and discuss content (but its content recommendations are not sourced through "collaborative filtering"). Over time, you will be able to select additional features on Circulate as they are developed.

Importantly, a core, fundamental value at CircLabs is user privacy. While Circulate will work best when the user shares information, that will happen with the user's explicit permission, not by virtue of obscure language buried in user agreements no one reads.

For publishers, we see Circulate as a game-changing solution that can enhance revenue in a number of ways:

• Local branding
• Increased high-value site traffic
• Local advertising on Circulate
• Subscription revenue
• Per-item revenue
• Other forms of commercial revenue

We invite publishers to contact us and to explore the features of Circulate in more detail. We've begun software development, but Circulate will improve even faster if we can work with publishers in various ways, including technical collaboration, refinement of the end-user experience, marketing to end users, local and national advertising sales, and paid content options.

Besides myself, the CircLabs leadership team consists of Jeff Vander Clute, President; Joe Bergeron, VP, Product Development; and Bill Densmore, Co-founder. You can read more about us here.

We expect to begin beta testing Circulate this fall.

Metamorphosis for the Globe?

Imagine one morning, you wake up from your troubled dreams and find yourself transformed in your bed into a horrible vermin… No, no, wait! Imagine you wake up and find yourself holding the keys to the Boston Globe. And Arthur Sulzberger is standing beside your bed, ready to hand you $20 million or so if you will please, please, just take it off his hands.

This scenario could well play out — well, not quite like that of course — since the value of the paper is essentially zero. The Times Company has put it up for sale, and the question is really whether the buyer will pay some token sum to the Times, or whether the Times will subsidize the buyers by spotting them some working capital.

The folks nibbling at this opportunity (some of whom have been mentioned in the Globe and elsewhere) have to be asking themselves whether this white elephant of a newspaper can be made profitable once again. A key part of that question is whether Boston can remain a two-newspaper town.

My prediction is that, ironic as it may seem, Pat Purcell’s Boston Herald will be left as the only daily paper in Boston, and that the Globe will evolve into something different. That doesn’t mean the Herald wins, because in the long run, daily print is just not a sustainable business model anywhere. Or almost anywhere, if we want to hedge that bet a little.

If Denver, Tucson, Albuquerque and Seattle, all with populations in the same ballpark as Boston’s, couldn’t sustain two newspapers, then neither can Boston.

Continue reading this post at Nieman Journalism Lab.

Time Warner makes a small bet on hyperlocal news sites in Patch

We’re starting to see some dollars flowing into online-only news startups.

Patch, operator of six local sites in New Jersey, was purchased last week by Time Warner. Forbes reported the purchase price to be about $10 million.

Patch has announced plans for three more sites, in Connecticut, and clearly it has its sights set on many more. In an unrelated transaction, Time Warner is also buying a Boston-based events-based site called Going.

Earlier this year, Dallas-Fort Worth local site Pegasus News sold to Gap Communications, reputedly for $1.5 million. (The seller was Fisher Communications, which had bought Pegasus in 2007.)

Just as we’re seeing signs here and there that the financial logjam that created this recession is beginning to loosen up, perhaps transactions of this kind are signs that smart money (or at least money that thinks it’s smart) is putting some value on local news and information.

In the scheme of things, $10 million is not a big valuation, even in this post-recessionary epoch we’re embarking upon. And, with its limited geographic footprint, Pegasus is a long way from proving the fabled “scalability” so desirable in world of Web startups.

To begin with, Patch will have to start generating some revenue from advertising, which is not visible on its sites at this point. In fact, the “advertise” link on Patch goes to a pretty rudimentary information page suggesting a choice between banner ads and “self-service” ads.

Continue reading this post at Nieman Journalism Lab.

Ruminations on newspapers and communities

My friend Richard Floyd keeps a blog called Retired Pastor Ruminates. He is a fellow member of the Monday Evening Club of Pittsfield, Mass., to which I presented a paper, previously mentioned here, on the future of newspapers.

Floyd has now conducted and posted an e-mail interview following up on the paper, in which he pursues, and I attempt to answer, a line of inquiry relating to the function of newspapers in holding together communities, and whether the decline of newspapers will have an effect on the well-being of communities.

Extra, extra, read all about it on your iPhone: Mobile news is gaining fast

A convergence of factoids seems to point to something inevitable: the future of news delivery is on wireless devices, and those devices will be smartphones, much more than e-readers.

First, here’s data about the ubiquity of wireless as of the end of 2008, which is already nearly half a year ago, all from CTIA, “The Wireless Association” (what the initial actually stand for, I can’t figure out) (via Amy Gahran at Poynter):

• The U.S. has 270.3 wireless subscribers, which is the equivalent of 87 percent of the entire population. At the end of 2005 the penetration was just 69 percent. It looks like only centenarians and some of the sub-teen population are still cellphone-less.
• 17.5 percent of households are wireless-only and have no “land line” (one of those retro-formations, like “analog watch”). This is more than double the 2005 level of 8.4 percent.
• In 2008, we used our wireless phones for 2.2 trillion minutes, which is almost 50 percent more than during 2005.
• We sent 1 trillion SMS messages during 2008, which more than 10 times the 2005 level of 81 billion.

Now, at the cutting edge of all these wireless users are the smart-phone owners, and thanks to a study from gravitytank, we have some insights into them as well:

Read the rest of this post at NiemanLab.org

Selling online news content like airline seats: price discrimination maximizes revenue

The other day at RJI’s conference “From Gatekeeper to Information Valet,” at George Washington University, the final presenter on the formal schedule was Albert Sun, a University of Pennsylvania math and economics student who happens also to have a strong interest in journalism.

On his blog, back in March, Sun posted a remarkably confident essay entitled “Price discriminate! The economics of charging for online content,” complete with some nifty graphs.

Now, we know that from the newsroom to the board room, math and economics are not widely held skills. So get out your old Samuelson and try to follow along. This just entails supply and demand and a few special wrinkles, all from Econ 101.

Here are Sun’s PowerPoint slides from GWU:

Read the rest of this post at Nieman Journalism Lab.