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.”

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.

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.

Newspapers take a bus plunge: circulation plummets 10.6 percent

It’s hard to put a good face on this kind of news; in fact, it reminds me of the old “bus plunge” meme. The Audit Bureau of Circulations (ABC) reports that newspaper circulation for the six months ending Sept. 30 dropped 10.6 percent from the same period in 2008 (7.5 percent on Sundays).

And this is an accelerating trend. Here are the results for the three previous six-month reporting periods (in each case, versus the same period one year earlier):

— Oct. 1, 2008-Mar. 31, 2009: down 7.1 percent on weekdays, down 5.3% on Sundays
— Apr. 1, 2008-Sept. 30, 2008: down 4.6 percent on weekdays, down 4.9 percent on Sunday
— Oct. 1, 2007-Mar. 31, 2008: down 3.5 percent on weekdays, down 4.5 percent on Sundays

In each case, the decline was the worst ever reported by ABC. The bus-plunge, cliff-drop analogy will get additional support when the Newspaper Association of America’s third-quarter advertising revenue report comes out (typically at Halloween); it’s likely to continue the trend of the previous two quarters with a drop in the 20-30 percent ballpark.

The NAA has not provided positive spin on the circulation news (it usually distributes an internal memo with upbeat talking points for publishers), but last week it did report gains in newspaper website traffic along with this comment from NAA President and CEO John Sturm:

Newspaper publishers continue to aggressively reinvent their business models, leveraging trusted brands to attract a growing and sophisticated audience in the digital space. At the same time, industry executives have adopted smarter circulation strategies that are growing circulation revenues even though paid circulation numbers are lower. This places the focus where it belongs: retaining core readers who deliver maximum value to advertisers while harnessing digital platforms to broaden our medium’s audience and position us strongly for the future.

Rick Edmonds at Poynter provides a good enumeration of the various factors behind the print decline, including strategic pullbacks by newspapers from fringe distribution and higher prices charged to subscribers and single-copy buyers. NAA also reported recently, as a positive development, that the “churn rate” (which measures how often subscribers fail to renew their subscription), had dropped from 54.5 percent in 2000 to 31.8 percent in 2008. It’s probably even lower today, as papers simply stop trying to retain marginal subscribers and focus on keeping their “core readers,” as Sturm says.

The 10.6-percent decline means that since last year, about 4.5 percent of U.S. households have given up reading a printed newspaper, and that printed newspapers now reach less than 40 percent of U.S. households. About the same percentage of adults say they get “most of their news” from printed papers, but that fraction will very soon be overtaken by the portion who get most of their news from the web.

You could read Sturm’s comment as an acknowledgment of several inexorable trends: news readership is moving to the web; print circulation will continue to fall; print is now a niche product which still reaches our “core readers” (older, higher income readers still desirable to a subset of advertisers); newspapers will charge whatever they can for print subscriptions — but “digital platforms” are going to be the industry’s future.

I’m hopeful that’s the NAA’s real advice to publishers. Taken seriously, it implies that the much-discussed, little-implemented strategy of charging broadly for online content in order to “protect print” is backing the wrong horse. It’s because print is now a niche business that newspapers are able to show the growing circulation revenues mentioned by Sturm. Readers can’t be forced into print by online prices, although they certainly may pay for niche content online and they should pay, handsomely, for the luxury of a home-delivered newspaper. Meanwhile, the industry’s all-out focus should be on seriously growing its online audience.

Unfortunately, in that department it has a ways to go. The NAA is upbeat about the stats outlined in its web traffic report, but (as I outlined also after the Q2 report), seen in context, they paint a picture of an industry that’s lagging seriously in transforming itself to a digital news medium. An “active reach” of 38 percent means 62 percent of adults ignored newspaper web sites. About 48 pages per person per month means the average visitor looked at only 1.5 pages per day. Time spent, at 34 minutes per person in September (and down from the previous two summer-vacation months), is barely one minute per person per day. At most of the top newspaper sites, according to E&P’s compilation, that time spent is even lower — just twelve and a half minutes at the top-ranked NYTimes.com, for example.

Meanwhile, the average web user spends between 30 and 40 hours a month online, depending on which survey you like, and dabbles at Facebook and other social networking sites 17 percent of that time. Time spent at social networking sites has tripled in the last year, while time spent at newspaper sites is flat, at best. (All these stats are from Nielsen, by the way, so there’s no apples/oranges issue going on.)

All of which is to say: newspapers have a pretty tiny share of online attention and are losing ground online just as they are in print. But online is the future the NAA’s Sturm is talking about. The focus for newspapers has to be on growing online attention share, fast.

(Also posted at NiemanLab.)

Can newspaper publishers survive this revenue freefall? Perhaps, if they embrace a digital future.

Without the fanfare that accompanied the recent release of its online readership data, the NAA quietly posted last week its latest compilation of quarterly revenue data for U.S. daily newspapers, in a data set it has maintained for 50 years. The latest figures, for the second quarter, show an alarming drop of 30.15 percent in print revenue and 15.90 percent in online revenue versus the same period in 2008. Despite signs elsewhere that the recession may have bottomed out, these figures are even worse than the first quarter results (declines of 29.70 percent in print and 13.40 percent online).

Alan Mutter, the Newsosaur, analyzes these numbers by category and projects that for the full year 2009, combined print and online revenue will be “no more than $27 billion” — and worse if the economy doesn’t pick up — a drop of more nearly $11 billion from 2008’s $37.8 billion. My guess is slightly higher: print revenue of $25 billion; online revenue of $2.5 billion, total $27.5 billion — a drop of $10.3 billion.

How did this happen to an industry that in 2005 garnered record revenue of $49.4 billion ($47.4 billion of it in print)? By adjusting the historical numbers for inflation, as Mutter did, the industry is half the size it was in 1986, when it scored $52.3 billion in 2008 dollars. But that doesn’t paint the whole picture.

A better way to look at the historical revenue record is to place it in the context of total advertising expenditures across all U.S. media. I’ve done that, and here’s what it looks like:

Continue reading this post at Nieman Journalism Lab.

NAA/Nielsen stats show newspapers own less than 1 percent of U.S. online audience page views, time spent

The NAA has issued another of its regular updates on the state of the U.S. daily newspaper Web audience. As usual, the numbers, sourced from Nielsen Online, sound impressive:

Newspaper Web sites attracted more than 70.3 million unique visitors in June (35.9 percent of all Internet users), according to a custom analysis provided by Nielsen Online for the Newspaper Association of America. Newspaper Web site visitors generated 3.5 billion page views during the month, spending 2.7 billion minutes browsing the sites over more than 597 million total sessions.

NAA mentions that Nielsen has changed its methodology (in part by increasing the sample size of its online usage survey to more than 230,000 panelists), so the numbers should not be compared with those issued in prior months. But just in case you do compare, they are nicely up in the unique visitor and page view categories — so far so good.

Comparison with past performance is one way to put the numbers in context, but another that seems appropriate is to compare them with the total online audience. In other words, just how much of time spent online, and page views, are going to newspaper Web sites? And how do newspaper numbers compare with top Web brands? The answers are, unfortunately, rather dismal.

A few weeks back Nielsen issued some information, also based on its new methods, painting a picture of the total online audience in June. Combining those number with the ones put forward by NAA, here’s the whole picture in context (all figures for the month of June, all from Nielsen Online):

• The total “Active Digital Media Universe” (Nielsen’s term for total U.S. unique visitors online during the month, both at home and at work): 195,974,309.
• Of these, 70,340,277 or 35.89 percent visited a newspaper Web site. (On the other hand, 64 percent got their news elsewhere.)
• The average member of the Active Digital Media Universe visited 2,569 Web pages. That adds up to 503,457,999,821 page views.
• Of those 503 billion page views, 3,468,549,698 (3.5 billion) went to newspaper Web sites. That’s less than 1 percent of all page views, or 0.69 percent to be exact.
• Nielsen says the average page view (in that universe of 503 billion) lasted 57 seconds.* That translates to 7,971,418,330 hours spent online or 40 hours, 40 minutes and 33 seconds per person.
• Of those 7.9 billion hours spent online, time spent at newspaper Web sites was 45,022,485 hours. That’s less than 1 percent of all time spent online, or 0.56 percent.

Further context: the total audience as measured in unique visitors for the top eight online brands, individually, exceeded the audience for all newspapers combined. Those eight, with their unique audiences, are: Google (147,778,000), Yahoo! (133,139,000), MSN/WindowsLive/Bing (111,352,000), Microsoft (96,071,000, AOL (92,705,000), YouTube (87,686,000), Facebook (87,254,000) and Fox Interactive (72,724,000). Most of these brands also far exceed the average time spent, in total, at newspaper sites (38 minutes, 24 seconds in June). Time spent by the average visitor at Facebook, alone, was 4 hours, 39 minutes, or more than seven times the newspaper average.

The challenge to newspapers is not simply to improve their numbers over prior months, or to post numbers that look impressive at first blush — the challenge is to gain market share. To do this, newspapers need to build not only unique visitors, but visits per person, pages per visit, and time spent per visit. At less than 1 percent of page views or time spent, newspapers are barely on the radar screen.

The dialogue in the industry should not be about building paywalls, punishing aggregators, tweaking copyright laws or anything else that would constrict, rather than build, the online audience for newspaper content. And it should not be about “protecting print.”

The dialogue should be primarily about transforming newspapers into online-first digital enterprises. That’s what those eight brands I listed are, that’s what everyone working for them understands, that’s what drives every decision they make, and that’s how they are able individually to far outpull the entire newspaper industry in online audience share.

*The release as originally posted transposed some numbers but I’ve confirmed with Nielsen that 57 seconds is the correct time per page view.

Click here for my prior posts at Nieman Journalism Lab

Online newspaper audience growth: Good news? Not really.

The Newspaper Association of America trumpeted the release of first-quarter online audience data last week with this headline: “Newspaper Web Site Audience Increases More Than Ten Percent In First Quarter To 73.3 Million Visitors,” followed by the glowing subhead: “Newspaper Web Sites Set Records for Audience, Page Views and Active Reach; Latest Scarborough Research: Newspapers Attract Key Demographics in Print and Online.”

Pardon me, then, for reading and questioning the details and putting the data in context, something the NAA doesn’t do.

NAA reports:

• First quarter traffic to newspaper Web sites was reported as 73.3 million unique visitors (average per month) by Nielsen*.
• That’s 43.6 percent of all U. S. internet users, and up 10.5 percent versus the same time last year.
• Page views grew from 3.1 billion per month in last year’s first quarter, to 3.5 billion in 2009.
• NAA CEO John Sturm suggests this points to “digital success.”

Context:

• Each of the top three news destination on the Web (MSNBC, CNN and Yahoo!News) individually each drew more than half the unique visitors of the entire newspaper industry in March. Year-over-year, MSNBC grew 9 percent, CNN 4 percent, and Yahoo!News 16 percent.
• Yahoo!News alone gained 5.2 million uniques in March, or nearly 70 percent of the gain of the entire newspaper industry.
• Newspaper page views at 3.5 billion per month are less than one percent of total U.S. page views (386 billion in February).
• Time spent on newspaper sites in February, 43 minutes, 9 seconds per month per NAA/Nielsen, compares with total time online of 61 hours, 11 minutes and 56 seconds per U.S. person. This means newspaper sites get the attention of the U.S. online audience just 1.2 percent of the time.
• The total U.S. online audience (what Nielsen calls the “active digital media universe”) in February was 167 million individuals. As NAA does note, 43.6 percent of that audience visited a newspaper web site, but given that newspaper site traffic works out to only about 1.6 page views per reader per day, many of the newspaper site uniques are clearly represent one-time-only traffic.

NAA further reports:

Continue reading this post at Nieman Journalism Lab.

Photo by Raoul Trifan, used under Creative Commons license.

Print is still king: Only 3 percent of newspaper reading actually happens online

Surprise.

All generally accepted truths notwithstanding, more than 96 percent of newspaper reading is still done in the print editions, and the online share of the newspaper audience attention is only a bit more than 3 percent. That’s my conclusion after I got out my spreadsheets and calculator out again to check the math behind the assumption that the audience for news has shifted from print to the Web in a big way.

This exercise was prompted by recent posts by John Duncan of Inksniffer, in which he argues that “internet metrics substantially exaggerate the importance of the newspaper web audience.” Duncan (who seems to have revived Inksniffer from a long dormancy with a series of math-heavy posts during March), provides calculations supporting his conclusion that in the UK, online sites have only 17 percent of the page impressions delivered by printed newspapers.

Let’s examine how this looks in the U.S. First, print impressions: The NAA’s research shows a “daily” (Monday through Saturday) print audience of 116.8 million, and a Sunday print audience of 134.1 million. (This is much higher than paid circulation, but there are 2.128 readers per daily copy, and 2.477 on Sunday.)

We don’t have clear data about the average number pages each member of that audience looks at, but let’s make an educated guess: 24. That translates to about 87.1 billion printed page views per month*. As a check on our assumption of 24 pages: based on annual newsprint consumption of 9 million metric tons, the industry prints about 190 billion pages (a mix of tabloid and broadsheet sizes). So we’re assuming the average reader looks at about half the pages published, which seems reasonable.

Continue reading this post at Nieman Journalism Lab.

Photo by Dustin Diaz, used under Creative Commons License.

The ever-dwinding newspaper share of ad dollars

Tim Windsor's post the other day, in which he updated his chart of constant-dollar U.S. newspaper advertising revenue, got me thinking. I commented in his post that perhaps a better way to look at the numbers would be to view them as a fraction of the Gross Domestic Product. But then I realized that total advertising expenditures across all media, as a fraction of GDP, might vary a bit over time, which would skew that approach (although it turns out that total advertising spending is pretty constant at about 2 percent of GDP, ranging mostly between 1.8 percent and 2.3 percent, with few outliers).

So I downloaded 49 years worth of cross-media advertising revenue from the data available at the Television Bureau of Advertising. All of their numbers come from Universal McCann, so they have the advantage (hopefully) of being consistent over time. The newspaper revenue data is identical to that published by the Newspaper Association of America. I loaded it all into a spreadsheet and calculated the "share of total" for each of the media over time. Here's what it looks like:



(Sorry about the fuzziness of that graph; any tips for publishing a sharper image from an Excel file would be much appreciated. The graph labels, reading across, are Newspapers, Magazines & Farm Publications, TV & Cable, Radio, Yellow Pages, Direct Mail, Business Papers, Billboards & Out of Home, Internet, and Miscellaneous.)

For the sake of simplicity I combined Magazines with Farm Publications, as well as TV with Cable. Around 1989 Universal McCann started including "out of home" (ads on buses, etc.), which causes the blip and jump in the Billboards line. And Yellow Pages is included in Miscellaneous prior to 1980, which accounts for the sudden sag in the Miscellaneous line.

[paragraph added 12/01:] In a nutshell: newspapers had unchallenged dominance with about 37% of all advertising (national and local) in 1949. Television grew rapidly during the 1950s, to about 14% in 1960, and continuing to grow thereafter. Starting in the late 1970s, direct mail started a long uptrend from about 20% to more than 25% in 2007. Newspapers were overtaken by TV & Cable in 1992, and by direct mail in 2001. In 2008, they could slide below radio.

My chart stops at year-end 2007, because 2008 projections for all media are hard to come by at the moment. But as discussed already by Tim and by Alan Mutter, the full-year newspaper results for 2008 look rather dismal. Assuming it finishes in the $35 billion ballpark and total ad spending for the year is down just slightly (it was buoyed nicely by the elections and the Olympics), the newspaper share will probably be 13%, or less. So that dark blue newspaper share line will resemble, even more than it already does, the "Phases of a Crisis" graph presented at the recent API Summit for newspaper execs.

Notice that in contrast to Tim's graph, there are no camel's hump peaks in 1988 and 2000, as there are in his constant-dollars view. Newspapers have been on an unrelenting down-trend for a half-century, with very few upticks, and they're now sliding off the cliff. They maintained market share for more than a year or two only from about 1964 to 1974 (at the expense of magazines and direct mail).

For fans of stacked graphs, here's another way to look at the trends:



Once again, I'll ask: Where is the Manhattan Project to reinvent the newspaper business, before it's too late?

The Numbers Game

As they do every six months, last week the Audit Bureau of Circulations (ABC) reported newspaper circulation averages for the "FAS-FAX period" from April through September. The news didn't look good, with weekday numbers down 4.64 percent year-over-year, and Sunday down 4.64 percent. This represented an acceleration of the prior-year pace of decline, which was 2.6 percent weekdays and 3.5 percent Sundays.

As usual, the industry tried to put a good spin on the numbers, as summed up by Russell Adams in the Wall Street Journal:

But the reality is in some ways less bleak than the latest numbers indicate: Some newspapers have raised newsstand prices, curtailed discounted copies and halted delivery to the least profitable customers. Also, while print circulation has been declining for years as readers continue their mass migration to the Web, many publishers point out they are reaching more readers than before through print and online. The problem for publishers is the printed paper commands higher ad rates than the Web so even as more people read newspaper content, the papers pull in less money.

Some newspapers were able to point to gains in overall combined audience of online and print readers. In particular, Matt Baldwin, V.P. of Research at MediaNews Group, wrote an indignant memo claiming growth in the total audience of the Denver Post (owned by MediaNews) and Rocky Mountain News (managed by MediaNews as part of a joint operating agreement). This came after the Post as well as the Rocky had each reported their print circulation drops the other day without, apparently, getting the online audience spin from their V.P. of Research.

An obvious question about this combined audience approach might be, aren't we comparing apples and oranges? The print portion of the averages reported (in the first link in the previous paragraph) are seven-day readers. A one-day reader counts as only one-seventh of a reader in that average. But the are adding to that the seven-day "unique visitor" number, in which a one-time, one-day web site visitor counts as one full reader. Apples and apples would demand adding only the one-day unique visitor average, which is undoubtedly much lower. Moreover, as acknowledged by Baldwin, some print readers are also site visitors, and nothing has been done to eliminate the overlap.

A set of web audience metrics that looks more reliable comes from the National Newspaper Association (NAA), which reports:

Newspaper Web sites attracted more than 68.3 million unique visitors on average (41.4 percent of all Internet users) in the third quarter of 2008, a record number that reflects a 15.8 percent increase over the same period a year ago, according to a custom analysis provided by Nielsen Online for the Newspaper Association of America.

The NAA recognizes that both the election and the economy are contributing toward this rise, but their stats show pretty similar reach during July, August and September, which is not what you'd expect if the trend were due mainly to current events. In the NAA's findings, the average unique visitor made eight or nine visits, however, so this is not seven-day readership. In fact, if you examine their stats closely, the NAA is saying that 41 percent of web users spend about 45 minutes a month, or an average of only 90 seconds per day, at newspaper sites. If you look at it that way, it's not much of an audience. In fact, the top half-dozen or so domain names all individually outpull the entire newspaper industry in unique visitors.

Still, there seem to be some optimists out there. Neither the revenue slide nor the circulation decline seem to bother Richard Siklos at Fortune in recommending a bet on printed newspapers.