How to monetize "air"

So, letting others dissect the Tribune bankruptcy (foreshadowed here last week), I've been thinking about how social networks will impact the online advertising business, particularly in connection with yesterday's discussion of the Information Valet Project.

A while ago, I had this to say about marketers transitioning in their pursuit from eyeballs to friends:

Publishing stuff online in order to generate "eyeballs" and then selling ads to folks interested in reaching those eyeballs is pretty much yesterday's model. (Actually, it's a previous-centuries model that may have lost its final bit of momentum on 9/11—an event "important enough to find" just about everyone long before showing up anywhere in print, and one that created new imperatives for people to reach out and connect with each other.) A community-centered news enterprise that exploits the power of social networking will tend to generate "friends" rather than "eyeballs," and friends—customers with loyalty—are what advertisers are looking for.

And, I quoted from a Wired piece by Chris Anderson about the economics of giving things away free (content, for example, because there is plenty of it) in order to make money:

There is, presumably, a limited supply of reputation and attention in the world at any point in time. These are the new scarcities—and the world of free exists mostly to acquire these valuable assets for the sake of a business model to be identified later.

Clearly, reputation and attention will follow friend relationships in social networks, and friends will have far more value than standard display advertising in print or online. To understand why, find 45 minutes to watch this video featuring Charlene Li speaking at Google about social media. (If Google want to hear what she's got to say, so do you.)

Li reminds us that while advertisers just throw stuff at us to see what will stick, friends have conversations. She cites plenty of examples, such as Oracle's homepage campaign "Oracle Listens," and Comcast's seeking out customers mentioning problems with them on Twitter, and stepping in by asking "What can we do for you?" She notes that the value of a friend gained by a business is huge, when you consider the cost of customer acquisition and retention, the lifetime revenue during the relationship, and the referral value of a loyal customer.

"Social networks will be like air," she says, and lists four components of such networks (with quotations from this blog post by Li):

• Universal identity — "First let’s get at the real problem—I want to be able to maintain and control my identity, and when needed, to make them connected between services. And I think that the way to do this is a federated approach..." This is a problem also being tackled by Information Valet and by Information Card. Li suggests that the universal keys can be e-mail addresses and mobile phone numbers.
• Open (and single) social graph — "In a world of a single social graph, social networks will have to compete on the basis of creating the best experience for its members—not because it controls a unique social graph."
• Portable applications that tap into the social graph—not just the relatively trivial recreational communication that dominates Facebook, but, for heaven's sake, shopping: "The biggest hole and opportunity, IMHO, is shopping. I research and buy things online every day, and with rare exception, these activities take place outside of Facebook. Facebook Beacon brings some of the information into News Feed, while a few shopping-oriented applications like StyleFeeder have potential. But by and large, social networks don’t figure into my shopping experiences. But it could, and in a very significant [way]."
• Personal CPM — the business model of the future for social networks, and potentially for news organizations that awaken their slumbering potential social networks. Demographics is how marketers have always targeted eyeballs. But in the future, remember, reputation and attention are scarce and have value, and those who have it will be able to monetize it. "Everyone is a marketer," Li says. "Today’s advertising models don’t work on social networking sites—that’s because simply targeting better on profile or social graph details is still the same old media model of CPM and CPC pricing. What’s missing is marketing value based on how valuable I am in the context of my influence."

To me, this line of thinking starts to fill a few of the gaps in the InfoValet model, especially (a) how users get rewarded for their participation in the system (I'm envisioning a kind of PageRank system that quantifies one's Personal CPM in a way that can't be gamed by blindly clicking on ads), and (b) how advertisers can benefit by more efficiently finding "friends" and having "conversations" rather than advertising the old-fashioned way.

A few more Li links:

• Corporate Rock Star blog post with a bit more about personal CPM and the death of demographics.
• Another slide show presentation by Li on social media.
• Li's book, Groundswell: Winning in a World Transformed by Social Technologies.
  

Now, if Li is talking to Google, what's Google doing in this space? Via a Jeff Jarvis post last week, here's a slideshow that could take another 45 minutes out of your life. (At least, that's how long I spent studying it.) It's a fascinating look at all the ways Google makes money, or plans to make money, but the operative part for this discussion is OpenSocial, on slide 11. OpenSocial is simply a way to build program applications that will work on multiple partnering social networks. Currently participating networks have about 700 million users, but don't include Facebook, which is going its own way for now. But, the camel's nose is in the tent—expect Google and Facebook to begin developing competing ways to match marketers with "friends."

All of this leads me to wonder whether InfoValet should be thought of as a social network. It certainly envisions solutions related to—and in fact aiming well beyond the limits of—each of Li's four social network attributes. It took 2 days for a bunch of brainiacs convened at Mizzou to come up with some unwieldy definitions of InfoValet. It would be a whole lot easier to be able to say, "InfoValet is a social network consisting of trusted connections between creators, consumers and marketers in a way that allows all of them to make a little money."

Inventing the Information Valet

I spent a few days in Columbia, Missouri this past week, in the company of 50 or so people gathered by Bill Densmore at the spanking-new Reynolds Journalism Institute at the University of Missouri. Bill is there on a Reynolds Fellowship, with the mission of inventing something he calls the Information Valet (which I call InfoValet for short). Our collective purpose at this gathering was to help him "blueprint" InfoValet.

Bill has been chewing my ear about this and other projects for years, but I must say that before getting to Columbia, I could not have explained the InfoValet concept to anyone (despite my perhaps intelligent-sounding post about it some time ago). As it turned out, neither could most of the other attendees at the conference. We came from a variety of backgrounds. Only five conferees currently work for newspaper-publishing companies, and a few others did so in the past. The rest were drawn from technology, law, new media, consulting, academics and electronic commerce. Which is to say, it was the right mix to brainstorm solutions to the ambitious challenge Bill was posing.

InfoValet is perhaps best described and understoood by looking at it from the point of view of each of its stakeholder components. Once operational, it will be a networked set of content providers, content consumers/web users, and commercial content providers/advertisers, linked by means of tools and technology managed by the fourth component, the Information Valet system itself. Like the proverbial elephant being manually examined by a group of blind men, here's how it might variously appear, fully realized, to these stakeholders:

Content consumers/web users:

• Would register their personal data via InfoValet and would, in a secure system, retain complete control over who could access that information.
  
• By doing this, they would also gain the convenience and security of not having to enter a raft of data over and over each time they register at another site to access information or make purchases. Their personal information would reside in only one place on the web.
  
• In return for allowing selective access to their personal data, they would gain two important benefits: (1) access to information more tailored to their demographics, needs and interests, and (2) a system of rewards in the form of cash or points based on their web usage and exposure to advertising content. These rewards would be greater if they are willing to share, selectively, a larger amount of personal information with advertisers for targeting purposes.
  

Content providers including newspaper web sites:

• Would act as portals through which content consumers initially sign up for InfoValet. As such they could gain a share of future transactions, including ad-viewing rewards, associated with individuals they have signed up--even when those users are elsewhere on the web.
• Would be able to sell and host advertising targeted more precisely at site visitors by means of InfoValet registrations

Commercial content providers/advertisers:

• Would benefit from more efficient, better targeted ways of advertising to InfoValet registered consumers, published through "trusted nodes"--local brands through which consumers have signed up for infoValet
  
• Could send new, more welcome forms of commercial content to InfoValet consumers

If that has you sufficiently confused, here's the conference's consensus "executive summary mission statement" description of InfoValet:

A permission-based ecosystem assuring privacy that allows you, in a trustworthy way, to share personal information so that content providers and partners can create a structure to provide you with content, applications and incentives tailored to you and your needs.

While a system like this will not necessarily save newspaper publishers (because, for one thing, it will take some time to gain traction), it has the potential to help save journalism by enabling online news publishing at a different scale. While the New York Times could be an InfoValet network member, so can a blogger or micro-local news site, and each can benefit proportionately to their traffic and content value to advertisers and consumers.

If this description makes sense and whets your appetite, here's a set of links where you can learn more:

• Bill Densmore's Information Valet Project blog
• The December 3-5, 2008 InfoValet conference wiki. This includes a great deal of detail on the discussion, alternatives considered, the consensus project outline, and next steps toward an actionable business plan
  
• The Information Card Foundation site--this system, presented at the conference by its executive director, Charles Andres, is seen as forming the secure customer registration and data protection system for InfoValet.
• Blog post on the conference, and further thoughts, by Chuck Peters, CEO of Gazette Communications, Cedar Rapids, Iowa.
• Liveblog of the conference set up by Chuck.

Stay tuned, when Bill has more to talk about, I'll be talking about it.

The dominoes are falling

As mentioned here last week, it's year-end crunch time. I predicted we would see, during December and January, a rash of tactical, non-strategic moves by newspaper owners aimed at conserving cash and postponing the inevitable. It's only been four days, but so far we have the following:

• As many as 2,000 more layoffs are announced at Gannett, as chronicled by Jim Hopkins at Gannett Blog.
  
• E. W. Scripps, after informing MediaNews Group, its JOA partner in Denver that it plans to shut down the Rocky Mountain News, puts up a for-sale announcement in case there's a white knight out there somewhere. Dean Singleton, MediaNews CEO, issues a memo making it clear he believes the Rocky will be gone.
  
• McClatchy announces an auction of its flagshap paper, the Miami Herald
• Fitch Ratings tells us that newspapers in "several cities," meaning major U.S. metro areas, may simply shut down
• Martin Peers at the Wall Street Journal, agreeing with me that major change is in the offing, suggest that MediaNews, Lee and Freedom should consider merging, and that Tribune could be broken up, with California pieces going to MediaNews and Florida pieces to McClatchy—oh, but, whoops, McClatchy is selling the Herald. In any case, Peers may think that some consolidations are "logical," but combining newspaper operations yields slim pickings, usually limited to shared back-office functions. You can't combine the key functions of news gathering and advertising sales in widely separated local markets.
• UPDATE 12/07 8:57 pm: Sam Zell's Tribune hires Lazard Freres and other advisers to help stave off bankruptcy. Since most of the Tribune's newspapers are major market metros, this helps confirm my suspicion that most of the top 50 papers in the country are now in the red. Lazard is also handling the presumed liquidation of Journal Register Company.
  

Meanwhile, Dennis Kneale at CNBC predicts that in 2009: "Print media will survive. In fact the Old Media may have a surprise resurgence of sorts, as advertising price cuts bring back sponsors and once-torrid online ad sales continue to slow down."

Huh? This would be price cuts on top of a two-year sales decline of 21.3% (first nine months of 2008 versus same period in 2006, according to the NAA)? Unless Kneale is expecting boom times during 2009, it's inconceivable that rate cuts of, say, 10% would result in revenue growth for print.

The real answer for newspaper companies continues to be genuine strategic restructuring into digital enterprise models. Either they do this themselves, or the door is open for startups to do it, in large and small markets across America. (Several thousand laid-off journalists are already thinking about the latter option.)

Off to Missouri

I'm heading for the Information Valet conference at the University of Missouri today, and will have a full report about it over the weekend.

The Digital Enterprise Solution

Yesterday I summarized why it's crunch time in newspaperland—and why, rather than making strategic decisions, most of America's newspaper companies will be rolling out a variety of tactics to chop off a digit here and a limb there, until the patient bleeds to death. Shortly after I published that post, Jim Hopkins reported that Gannett will chop as many as 3000 jobs, or 10 percent of its newspaper division, on top of earlier cuts, and that a corporate reshuffling is to be announced today. I rest my case.

And you know, some cuts may be essential and unavoidable. Some newshole tightening is probably called for. Some sections and supplements make no sense and ought to go. In my own career, I found plenty of ways to reduce expenses. It's part of doing business. And guess what, I even supported, right here on my blog, my old boss Dean Singleton's thoughts about outsourcing the copy desk—I've wondered for years why nobody was doing that. In fact, what's the difference between that and Dave Morgan's proposal to disaggregate the whole news business?

Yesterday I promised some solutions, but I'm going to suggest and expand on only one, and mention an organization that's embracing it. It's not new, it's the necessary strategic transformation everyone has been talking about, but which very few companies have actually thought through.

The strategy sounds simple: Transform the business from its manufacturing roots into a digital enterprise. I proposed a version of it in my second-ever post, back in September: "To have even a chance of survival, the mindset of the industry needs to become: We are in the business of publishing information content continuously on our web sites; every 24 hours (for now, and this may ultimately change to once or twice weekly) we gather some of that information into a printed product and distribute it, but our business is focused on and driven by our online operations." And I've explained it again more recently when I explored the economics of a daily that morphs into a web-first weekly or twice-weekly, and previously as part of my Six Theses, and elsewhere. I'm not alone on this. "Digital is first" is at the top of Steve Outing's list of suggestions for the industry as well; others have hammered away at it; it should simply be on everyone's list.

But, the problem with"digital enterprise," "digital first," or "online 24/7", however it gets distilled, is that it's much easier said than done. Many news organizations have talked the talk, but when you really look closely at how they're organized, they're still completely focused in all departments on the daily print cycle. Newsrooms plan budgets, assign stories, cover events, write stories, edit, format and send, all with the old 11 p.m. deadline in mind. That's not "digital first," it's digital when we get around to it, no matter what the mission statement might say.

An organization adopting the strategy of becoming a digital enterprise must think through what it really means. If they do it right, they'll find it will literally change every job in the company. Getting people's heads into those newly defined jobs is not easy, but it has to be done.

(And really, newspapers are about 10 years late to the party. Most Fortune 500 firms have been engaged for at least a decade in transforming themselves into digital enterprises. It means different things in different outfits, but those that ignore this revolution are left behind.)

One newspaper CEO engaged in this process is Chuck Peters of the Cedar Rapids Gazette, who gained a few moments of fame while microblogging the API summit a few weeks ago. (He heads Gazette Communications, which encompasses TV and commercial printing as well as the daily paper, its web sites, and other print and online products).

Chuck's blog is called "C3—Complete Community Connection." Back in July, after spelling out the need to break away from a focus on product, he laid out this challenge to his team: "What we need is the ability to create and collect, in the first instance, textual snippets, audio, video, and visual assets in native XML, tag them appropriately, and place them in a contextual framework that has meaning for the community or communities that have interest in that information." That's the raw material and the core content flow in a digital news enterprise focused on becoming the glue that holds its communities together.

After some setbacks from this summer's floods in Cedar Rapids, Chuck is now focusing his organization on understanding the changes in jobs and mindsets that are needed for success.

As an individual, my interests are not easily discerned by my geographical location or demographics. So, I am looking for a way to keep up with friends, neighbors, certain local organizations, and certain local issues, while getting the overview of key issues that an editor thinks I should know. We need an elegant organization of information to make that happen....

It is my strong belief that an organization such as ours, with over 500 employees, cannot expect that we can change all the mindsets and pursue a new game by simply repeating the forces and ideas driving the change in a series of seminars or links to interesting articles. We need to change the tasks, titles and organization so that we are doing new tasks, in new ways, and making the results of our efforts available immediately to our communities as we begin the larger task of organizing all this information elegantly.

Walking the walk, the other day Chuck laid out new job concepts for various key players in the C3 organization, including himself. The CEO becomes "Community Liaison," the editor becomes "Information Content Creator (Moderator)." The process is ongoing (for more detail and background, read this report from the Readership Institute about what's happening in Cedar Rapids.) But the point is, here is one news organization working hard at blowing itself up, reinventing itself, and becoming a truly digital enterprise.

Becoming a digital enterprise has many other potential implications, depending on the market. I've suggested some of them: emulate the CIA's Intellipedia model; find an end-run around the FCC's cross-ownership rule (Cedar Rapids is one of the grandfathered markets); disaggregate; adopt social networking as a key part of your model; experiment with lots of new digital tools like Twitter. Every news organization needs to be exploring these and many other implications of becoming a digital enterprise.

Can any of this be even discussed in an organization demoralized by waves of layoffs and cutbacks? It won't be easy, obviously, but it has to be done. A newspaper organization that chooses not to adopt, embrace and fully implement a strategy of becoming a digital enterprise will remain a manufacturing enterprise with a product that fewer people want or need, every day. Perhaps it will be remembered one day by a nice brass plaque on the historic printing plant.

Year-end crunch time at newspaper firms

During the next month or two, the crisis at America's newspapers will come to a head. There will be boardroom decisions that go well beyond the incessant paring of staff we have seen all year. Here are the reasons why it's crunch time now:

• Those of us still subscribing to "ink-on-dead-trees" versions of newspapers noticed that after a 4-day weekend with apparently ad-laden papers, what got tossed on our porches yesterday and today was mighty thin. Retailers expect a very slow holiday sales season, and they're going to be stingy with their ad dollars from here on out.
  
• The fourth quarter is normally the best for newspapers because of holiday-related advertising, but with slow retail sales in the offing, there's every indication that the revenue slide will continue. Total revenue (including online) was down (click on "Quarterly"), year-over-year, about 13 percent in the first quarter, 15 percent in the second quarter, and 18 percent in the third. Notice a trend? (For a longer trendline, the losses during the prior four quarters in 2007 were -4.8%, -8.6%, -7.4% and -10.3%,) If the fourth-quarter bleeding holds at "just" 18 percent, total revenue for the year will come in at a hair over $38 billion, down 16.1 percent versus 2007 (which was down 7.9 percent from 2006).
• Faced with these numbers, "stakeholders," also known as bankers and stockholders, will want to see evidence of serious restructuring. After December 31, most newspaper companies will have to report end-of-fiscal-year results, face Wall Street analysts, and hold stockholder meetings. Some, both publicly and privately owned, are laden with bank debt and will face loan covenant defaults. Banks are not in a position to be especially lenient about this, and will demand evidence of serious restructuring before issuing default waivers at the customary fees. Even firms that still possess fairly solid balance sheets will be looking to conserve cash and otherwise prop up ratios to placate stockholders.
• The first calendar quarter of the year is typically the slowest for newspaper revenue, so the pressure will be on to announce and implement drastic measures as early as possible.
• There will be no bailout in this sector, they're on their own. And the industry quietly failed in its single attempt (the API Summit on Saving an Industry in Crisis) to come together to develop an industry-wide strategy, agreeing instead to reconvene in six months—when it will clearly be too late.

So what will happen? I wouldn't expect much in the way of positive thinking in upcoming weeks. The talk in newspaper boardrooms will be tactical, not strategic (about "newspapers," not "post-newspapers"), and the actions under consideration will mostly be steps down a dead-end avenue. They include:

• Further layoffs and buyouts, where there's still "fat" left to cut
  
• Closing or selling underperforming papers
• Closing distant bureaus; paring coverage of Washington, D.C. and foreign venues
• Pulling out of A.P. in favor of the new CNN service (or no wire news at all), and creating shared statehouse bureaus
• Combining printing, packaging and distribution operations with neighboring papers, even with competitors
• Merging newspapers in neighboring markets, even when those markets have separate, distinct identities, interests and concerns
• Cutting frequency—not radically and strategically as suggested here and elsewhere—but one or two days at a time, prolonging the agony.
• Outsourcing whatever is outsourceable at a savings, regardless of quality
• Cutting virtually all investment in capital resources and new business development (or R&D as it's called elsewhere)
  

Alan Mutter, the Newsosaur, is in the midst of a series, "Thinking the Unthinkable," with two installments so far, discussing these kinds of options.

There have been plenty of suggestions made by journobloggers (yours truly among them) and other industry observers on how to restructure in positive ways that will allow newspapers to become post-newspaper information utilities. Some are even being implemented here and there.

Tomorrow, I'll have a roundup of solutions, free for the taking.

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?

Thanksgiving week Odds and Ends

Since it's Thanksgiving week in the U. S., a slow week for news about newspapers, I've got some odds and ends, most of them from across the pond:

Who's on Twitter? Following up on my prior musings about Twitter, here's a list of U.K. journalists using the service, courtesy of Stephen Davies of PRBlogger.com. A compilation of U.S. journo-Twitterers might be a useful tool, as well. Or at least a list of links to lists. I've only come across the Twitter directory of the enlightened newsroom of the Cedar Rapids Gazette. (Which covers local Twitter developments, as well.)
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Who's next to make the leap? The estimable U.K. columnist and blogger Roy Greenslade suggests in his Guardian column today that The Independent should exit the world of print and go 100 percent digital. The paper losing its owners about £12 million a year, sells only about 200,000 papers a day, but has more than 8 million website unique visitors a month. Their predicament sounds similar to that of the Christian Science Monitor, which last month announced its plans to go all-digital. From the column:

I imagine the O'Reillys both wondering - and not for the first time - if this media commentator has lost his marbles. But I sincerely believe their ailing newsprint paper is in danger of attracting so few readers in the coming year that the balance of those sums is likely to change for the worse. So they need to plan now for an online future and to reap the rewards of being the first major paper in the world to boldly go where no man has gone before.

That Star Trek reference could not be more apt because they are in a position to explore the final newspaper frontier, the one highlighted to an extent by none other than Rupert Murdoch in his speeches in Australia last week. [Subject of a prior post of mine.] Though he was stressing that newspapers do have a future (though I tend to think he means his own newspapers rather than other people's) he also made it clear that news brands are the future.

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A new addition to my blogroll: Utrecht (Netherlands) journalism prof Piet Bakker blogs daily at Newspaper Innovation on the subject of free newspapers around the world. The news about free print is mixed: some are shutting down (The Virginian-Pilot's Link, Czechia's 24 Hodin, the Mitteland edition of News in Switzerland), but elsewhere there are new launches (ADN in Columbia). Readership of free papers is up in the U.K, but down in Spain. In the Netherlands, some free papers are crossing the line by selling their editorial space. A free paper might be an option for some U.S. papers looking restructure themselves into online-print hybrids, so keep an eye on Bakker's blog.

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North of the border: Insights from Jonathan Kay at the National Post, urging like most of us journo-pundits that radical change is needed, on "islands of profitability" that might survive the current challenges to print journalism. His life raft is aiming for:

(1) Business-oriented media that cater to older, more affluent readers of the type who can justify the expense of long-form news consumption (in both time and money) as a work activity. Successful media in this mould will look more like the Wall Street Journal than the New York Times, more like The Financial Times than the Daily Telegraph....

(2) Premium publications that cater to the ideologically involved and intellectually upscale — i.e. the sort of well-educated, well-heeled reader who prefers to spend his scarce free time in the world of ideas. These people do have a sense of community — but it is a sense of community rooted in their political attitudes, foreign-policy interests, cultural beliefs, charitable causes and consumer interests, not their geography....-

(3) The hyperlocal. People love local news — which is why even really bad local newspapers manage to remain profitable. Simply put, people want to find out where the big potholes are, who got drunk and wrapped their car around a phone pole last night, what happened at yesterday's school-board meeting and — most of all — how the local hockey team is doing.

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I agree: Amy Gahran urges reporters to link to sources. This seems obvious if you're writing a blog, but not to newspaper reporters and publishers, which is just another indication that they are still overwhelmingly print-centered.

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Make a different wish: If you're looking for a Kindle under your holiday tree, forget it. Dan Frommer reports Amazon is sold out. Order now and you'll have one in late February, maybe. That means it might be a Kindle 2. (Previously on News After Newspapers) Amazon still won't say how many units they've sold (nor will book publishers, but one mentions a "triple digit" jump in e-book sales , but my educated guess is, More Than You Think. Among the best-sellers on Kindle, as ranked among e-books: The New York Times (number 28), The Wall Street Journal (number 36), and the Washington Post (number 158). [ADDENDUM: Just after posting this, I found via Paul Biba's TeleRead the Nieman Journalism Lab post with good evidence (a Times internal memo) that the New York Times now has 10,000 Kindle subscribers. That's about 1 percent of their entire circulation. Good news, along with the Times's rapid acquisition of a slew of Facebook friends, also mentioned in the memo.]

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Happy Thanksgiving to all!

Can reduced publishing frequency bypass the cross-ownership rule?

Here and elsewhere, the suggestion has been floated that struggling daily newspapers should be considering drastic restructuring in the form of a truly web-first publishing plan, paired with a twice-weekly printed paper, or a similar frequency adjustment, depending on the market.

So, if a daily paper does that, could it then make an end-run around the Federal Communications Commission's cross-ownership rule?

It looks to me like it could, and for some of the major dailies across the U. S. where the red ink is flowing, that might be an excellent option to pursue.

Here's a reminder of what the cross-ownership rule has dictated for most of its 33-year existence: Basically, a newspaper and a television station in the same market can't be under the same ownership, with some tricky exceptions and a few dozen grandfathered exceptions, most of them dating from before the rule's origin in 1975, along with a few waivers granted since then.

(Under revisions proposed by the FCC in 2007, in the top 20 television markets (DMAs), a newspaper could be combined with a TV station that's not among the top four stations in the market, so long as at least eight independent "major media voices" remain in the market. Beyond the top 20 markets, the FCC has said consistently that "it is inconsistent with the public interest for an entity to own newspaper/broadcast combinations and emphasized that it therefore is unlikely to approve such transactions." In any case, these changes were voted down by the Senate last spring, and are being challenged in court. The whole issue will now tide over to the Obama administration, which is not likely to do anything that would be perceived as permitting "media concentration," and has also strongly signalled its interest in renewed enforcement of anti-trust legislation as well as the encouragement of "media diversity.")

The rule itself, as it currently on the books and will likely remain, is damned hard to find but makes for interesting reading because of several apparent loopholes. Here's the operative part of the rule (Found at Title 47 of the Code of Federal Regulations, Section 73.3555(c):

Cross-media limits. Cross-ownership of a daily newspaper and commercial broadcast stations, or of commercial broadcast radio and television stations, is permitted without limitation except as follows:
(1) In Nielsen Designated Market Areas (DMAs) to which three or fewer full-power commercial and non-commercial educational television stations are assigned, no newspaper/broadcast or radio/television cross-ownership is permitted.
(2) In DMAs to which at least four but not more than eight full-power commercial and noncommercial educational television stations are assigned, an entity that directly owns, operates or controls a daily newspaper may have a cognizable interest in either:
(i) One, but not more than one, commercial television station in combination with radio stations up to 50% of the applicable local radio limit for the market; or,
(ii)Radio stations up to 100% of the applicable local radio limit if it does not have a cognizable interest in a television station in the market.
(3) The foregoing limits on newspaper/broadcast cross-ownership do not apply to any new daily newspaper inaugurated by a broadcaster.

That last bit says that a TV station could launch a new daily newspaper in its market, but if it did, an established newspaper in that market still could not buy a different TV station in the market, or launch a new one. (Because it would then be in violation of the basic rule.) Whether you generally feel that cross-ownership restrictions are a good thing, or not, that particular one-sided restriction makes no sense at all. Perhaps it was inserted at the behest of some broadcast industry lobbyist. In any case, I don't think any TV station owner has ever tried to launch a new daily paper, nor would they think about it, at least not in today's financial climate.

The loophole that should be of much more interest to newspaper publishers is contained in the definition of a daily newspaper as it pertains to the rule. Together with much other qualifying fine print, that definition is spelled out a bit farther down in the bureaucratese:

Note 6 to Sec. 73.3555: For the purposes of paragraph (c) of this section a daily newspaper is one that is published four or more days per week, is in the dominant language of the market in which it is published, and is circulated generally in the community of publication. A college newspaper is not considered as being circulated generally.

Four days per week! This means that if, let's say, the Boston Globe decided to cut its frequency to three times a week, it would immediately be exempt from the cross-ownership rule and could buy the biggest TV station in town. (Or, the biggest broadcaster in town could buy the Globe.) Boston is one of the top-20 DMAs where the FCC's proposed loosening of the rule might permit the Globe, under daily publication, to combine only with a station ranking fifth or worse in the market, but all restrictions go away entirely if the Globe simply got out from under the FCC's definition of a daily newspaper.

In a market like Pittsburgh, not a top-20 town, even under the proposed loosening, the FCC would not contemplate any combination at all, but if published once, twice or three times weekly, the Post-Gazette could go right ahead and buy whichever of Pittsburgh's nine full-power TV stations it fancied.

Should newspapers consider such a strategy? Well, why not? The industry, in a self-acknowledged crisis, has yet to come up with anything better than continual cost-slashing by shrinking page sizes, reducing news holes, cutting staff through layoffs, buyouts and attrition, consolidating sections, dropping niche supplements, and, in a few cases so far, considering or actually making frequency reductions of a few days per week—all of which, as many have argued, are tactics simply accelerating the industry's death spiral by incrementally (and irreversibly) reducing newspapers' ability to carry out their core mission, retain audience, and sell advertising.

Here at News After Newspapers, I've suggested newspapers should blow up their business model and emerge as web-centric news enterprises publishing maybe twice a week, Wednesdays and Saturdays. I wrote that among other things, this would strengthen the brand because "two fat newspapers each week and a robust web platform will have more impact than five or six skinny papers and a site that’s not foremost in the newsroom’s mind." (Again, different non-daily solutions would work in different markets, so let a hundred flowers bloom.)

Suppose, then, that a reinvented twice-weekly took it a step further and got formally hitched to one of the major TV stations in town, without FCC interference. While TV news web sites are usually nothing to write home about, the combined entity could collaborate internally on a truly comprehensive multi-media web site, while maintaining strong print and broadcast divisions. The number of news "voices" would be actually increase, especially if the site applied social networking and participatory journalism techniques and pulled in a multitude of bloggers and niche-topic experts.

Given that broadcast TV networks and local stations are going through structural upheavals of their own, a hybrid web-print-broadcast enterprise might have the best shot at long-term survival.

The end of the monolithic news organization

I've been wondering, in the context of the great search for new business models for news, whether the following could work as model for the creation, distribution and consumption of news content, as a complete replacement for today's vertically integrated news organizations:

• A network of completely independent journalists who gather news and post their news content on blogs
  
• A variety of aggregators who collect, organize and promote this output—locally, regionally, nationally, and around various niche interests
  
• A universe of news consumers access news, directly from the blogs of the independents as well as from the aggregators; and share, digest and repurpose news in social networks.
  
• Other enterprises provide related services such as the aggregation and organization of raw data (this might be Google) and the management of a set of localpedias and nichepedias (this could be Wikipedia operating at a more granular level than it does today)
  

Essentially, this model would expand to a societal level the Intellipedia model I described recently—not within a single organization but as a set of networked individuals and entities. The reporter becomes an entrepreneur, the editor becomes an aggregator and wiki moderator, the news librarian becomes a database vendor, the readership becomes a networked community, the publisher manages the flow of advertising revenue among all of them.

So where's the "monetization" part of this business model? Here are some possible components:

• Blogs for independent journalists: Anil Dash of Six Apart just created the TypePad Journalist Bailout Program, intending to help out a few friends but ending up with a wave of interest. Participants get, Anil writes: "a TypePad blog, a place in our Six Apart Media advertising program, promotion on Blogs.com, and a healthy dose of our expertise and insights into helping publishers and bloggers succeed online."
• Resources like David Cohn's brilliant startup, Spot.Us, allowing crowdfunding as one of the ways journalists get paid.
  
• Tools such as Attributor to help track use of content by aggregators and flow audience and advertising share back to the originators.
• A system like the one envisioned by the Information Valet Project to regulate the allocation of advertising and transactional revenue across all components of the network, including, potentially, news consumers themselves.

And, how do we get from here to there? Well, if the components of our existing news network, like newspapers, continue to self-destruct, we may well get there by default, with the survivors self-organizing themselves in this fashion. And newspaper organizations that get serious about reinventing themselves for the digital future might well want to look at models that involve networking of independent entrepreneurial components rather than monolithic enterprises.