Archive for the ‘Business’ Category

R.I.P. E&P

Thursday, December 10th, 2009

epAdd another surprise that’s not a surprise to the long list of publications that died in 2009: Editor & Publisher, the No. 1 title serving the newspaper industry itself, is folding at year-end.

E&P was such an institution – it’s been around since 1901, but existed under a different title since 1884 – that it’s hard to imagine a media world in which it doesn’t exist. That’s why it’s closing is so surprising.

On the other hand, The Nielson Co. had been trying to sell its media publications group, including E&P, Adweek, Brandweek, Mediaweek, Backstage, Billboard, Film Journal International and The Hollywood Reporter. Most of the group was just sold; E&P was not included in the deal.

I don’t know anything about E&P’s finances, but you don’t need an MBA to understand what that means.

Trade books that cover the media industry are chronically short on advertisers. They all live a subsistence existence. E&P’s folio has been razor thin since I first saw it in the early ’80s.

If E&P ever made good money (high margins), it never made big money. And in times of recession, small-money magazines do worst in the effort to maintain their margins.

I’m sure E&P is in the red, and that any forecast in which it could become proftable again doesn’t deliver enough earnings to justify the turnaround project.

And with the dire condition of many newspapers, E&P’s expiration is a symbolic event that was probably inevitable.

In that context, that E&P should die broke and alone isn’t a surprise at all.

I’m sorry to see it go, and feel for everyone on the staff. It was a great institution right up until the end.

Does Glenn Hansen have a death wish?

Monday, December 7th, 2009

In a recent article in Media Business magazine, Glenn Hansen, president and CEO of BPA (the dominant auditor of controlled circulation media) said this about his organization’s website auditing service:

“Our numbers are going to be lower than any other numbers that you get from any other source, whether Google or any commercial Web-analytics company.”

Add some coal-tar?

Add some coal-tar?

It’s impossible to tell from the article, but I infer that he was proud of this.

Several years ago – the last time I seriously looked into auditing websites – my research told me that I could expect a 50% drop in reportable traffic by doing a BPA web audit. At the time, my company was  using an analytics tool that, when implemented, had already cut traffic 33% by weeding out search engine spiders.

In the end, I didn’t need the BPA audit, and I sold around the numbers delivered by our analytics system by focusing on products that gave customers what they were asking for: guaranteed impressions, delivery of clickthroughs, and various levels of leads. When we did these things, the prospects didn’t worry if we had the largest or busiest website.

I’ve previously written about BPA’s lack of contact with the reality of its members; and about why audited circulations continue to shrink.

It’s natural that BPA, like any auditor, would seek to extend its product line by pushing website audits. But  boasting about the great difference between BPA’s traffic measurement and those of other analytic systems demonstrates that BPA is as far away as ever from understanding the grim future that it faces.

The problem BPA members are having is that an audit – whether it’s for a print product or a website – addresses advertiser questions that are now obsolete. Not all advertisers have figured this out yet, but the number that has is growing. A recession hastens the education process, as marketers are forced to coax more measurable impact out of a reduced spend.

An audit is testimony to the nature of a media outlet’s audience: it’s size, the sources from which it was recruited, and any additional information that members of the audience themselves volunteer to offer.

That’s not what advertisers want – or ever really wanted. What they really want is a measured response to their marketing activities. The audit always fell short of that goal. Whether any of us knew it, the circulation audit was just a long-term stop-gap – an alternative set of metrics until technology created a way for the desired metrics to be used.

Today that technology exists. It’s called the Internet, and advertisers (if you haven’t heard) are swarming to it.

BPA hopes to secure some kind of future for itself by pushing website audit services. But those services aren’t necessary, because advertisers can get all the measurement they want with intelligent programs that generate clickthroughs and other direct responses. And unlike audits, which provide a snapshot that is 6 to 12 months old, clickthroughs and leads arrive in real time. Within 30 days, an average marketer can tell if he or she is getting an adequate return from a specific program.

Worse, not only is BPA measuring the wrong stuff in its website audits, it’s bragging that the numbers members will be compelled to report are well below the numbers that non-members get to use.

To summarize: It provides undesirable information that people don’t need. I can’t help comparing it to Burger King putting a dollop of coal-tar on it’s bacon triple cheeseburger.

If there is ROI in this for the publisher, will somebody please help me understand?

I don’t know why anyone bothers with a BPA website audit; if I were a buyer, it would be an immediate sign to me that the website’s owners are slow to understand or respond to the customers’ changing needs. The best thing a BPA web audit could tell me is to look elsewhere.

The Adventure is over

Thursday, December 3rd, 2009

ngadventureNational Geographic Adventure has lost its passport. It’s the latest casualty in the 2009 media meltdown. Staff was told today that the magazine, a 10-year-old extension of National Geographic, would close, according to a report by Folio:.

Seventeen staffers will lose their jobs, the report says. The brand will continue online and with other affiliated products.

More on AOL’s content push

Monday, November 30th, 2009

This article in Media Buyer/Planner goes into more detail about AOL’s plan to differentiate itself with original content. With a staff of 3,000 journalists, AOL could differentiate itself simply by assigning them beats and cutting them loose to go report on stuff. It would be, by far, the largest deployment of journalists from a single U.S. media source.

But I don’t have much faith in the ability of algorithms to deliver pleasant surprises. By shackling its journalists to algorithmic results, I can’t help believing that they only thing we’re going to get from AOL is more of the same that it’s TMZ.com website is already producing. And heaven knows, nobody is sitting around wishing we had more of that.

More on AOL: It’s new content strategy is dead wrong

Monday, November 30th, 2009

A week ago, I wrote about the futility of AOL’s rebranding unless it figures out how to become more relevant to its audience.

This week I have to write about the futility of AOL’s effort to become more relevant to its audience.

The centerpiece of that effort, according to PaidContent.org, is a three-pronged approach to generating new content:

1.

Hire lots of journalists. It’s good news that AOL is trying to generate original content, and I’m pleased that it’s using trained content professionals – of which there are plenty available. It has a staff of 3,000 journalists, according to PaidContent, which puts it into the top tier of U.S. news-gathering organizations.
2.

Use algorithms to predict what stories people want to read, and then assign these to the journalists. The objective is clear. AOL CEO Tim Armstrong hopes that by giving people content they want, AOL will become the content place to go.

He’s wrong. This is the kind of thinking that puts Jon and Kate Gosselin in our faces day after day, week after week, month after tawdry month. It takes variety out of the news cycle, just as Wal-Mart’s unceasing desire to stock only the best-selling SKUs limits the variety of what you can buy at the world’s largest retailer.

When someone says, “I want more stories like the one about Jon and Kate,” they aren’t really saying they want to hear more about the Gosselin family. They’re saying they want information that makes them feel the same way they did when they heard it (for better or worse), and that makes them feel as informed as they did when they talked about it at work the next day.

People can tell you what was important to them yesterday, but they don’t know what’s going to be important to them tomorrow. Media have not succeeded until now, nor will they in the future, by giving people what they want so much as by giving people what’s new, important and interesting.

The real function AOL’s journalists could serve is to present information that is new, important and interesting. AOL has hired the journalists but it’s about to screw up in deploying them.

3.

Get advertisers more involved with content. This isn’t unique and it isn’t new. It’s just one more effort to help marketers bludgeon their target audiences into submission. Hey, I’m a marketer and I still can’t stand the thought of this. Everybody on one side of the equation is doing this, and everybody on the other side of the equation is trying to tune it out. Creating more and more advertorial microsites – no matter how well intentioned some of them will inevitably be – is not the big-internet business model of the future.

In fact, this is the very reason why social media is so hot right now: because social media lets users find the information they want. AOL’s model is to deliver the information, fire-hose style, right down the user’s gullet. It may generate some short-term revenue, but it won’t make AOL relevant or desirable.

It will do the opposite.

None of this is to say that AOL’s plan is evil or particularly dreadful. I think it’s pretty typical. But that’s why it won’t work. AOL is trying to distinguish itself by doing what every other large media company is trying to do. For a company in trouble, that’s a formula for failure.

The great search engine standoff

Tuesday, November 24th, 2009

Seth Godin is one of my favorite bloggers, and I quote him regularly. He’s been a source of clear thinking and wisdom for me since long before blogs existed.

But in today’s blog, he writes about News Corp. Chairman Rupert Murdoch’s idea to control how news content is indexed on web sites. He got it wrong. He writes, in entirety (and you’ve got to admire Godin’s brevity):

Rupert Murdoch has it backwards

You don’t charge the search engines to send people to articles on your site, you pay them.

If you can’t make money from attention, you should do something else for a living. Charging money for attention gets you neither money nor attention.

If Murdoch were just another blogger, or just another guy with another product to shill, I would agree with Godin. But Murdoch owns one of the largest news-gathering organizations in the world. And here’s the point that Godin misses:

When search engines index vast troves of original content, such as Murdoch’s News Corp., the impact is synergistic:

  • It drives traffic to News Corp.;
  • It provides the kind of top-of-the-charts, original content that makes a search engine valuable;
  • It provides a large class of users with the kind of content they’re seeking.

Here’s the nuance; there is less and less original content of the kind that News Corp. produces. Anyone who has ever used the Web has had the experience of following one good link after another to find they’re all connected to the same piece of mediocre content. The money dedicated to generating high-quality content has evaporated; it’s down by more than $1.5 billion in the U.S. newspaper business alone – not to mention all the other businesses that pay content providers to create information that people want and need.

So anyone who wants this kind of content to continue, must make some kind of investment in it.

When search engines index to content like that provided by Murdoch’s company, they profit by selling sponsored search results in the space around it.

But the news organizations’ only means of profit from this activity is to sell advertising around the content. But advertising isn’t selling – nor is it expected to significantly recover. Further, a portion of the money that marketers no longer spend to advertise in newspapers and magazines has been reallocated to the paid search function of search engines.

So why shouldn’t they pay for the right to index high-end content?

The attention that search engines generate is doing less and less good for newspapers and other free-content websites. If News Corp. can’t sell ads around its content, it has no reason to care if search engines promote the content.

So Godin has it wrong. He supposes that news media get the larger share of value in their relationship with search engines. In fact, to the consternation of anyone in the news business, it’s the other way around.

Further, the search engines may be able to extract even more value. Right now, one search engine is much like another. But if one could brag that it’s the only search engine to index the world’s largest news generators, that might make a difference to consumers. I know it would to me.

I don’t know if even Rupert Murdoch has the juice to take on Google. But he may be able to set the big search engines against each other. I don’t know if he’ll succeed in getting paid by one search engine and in locking out the rest. But to me, like it or not, it sounds like the kind of clash that isn’t likely to go away without creating some kind of change that affects everyone.

Here is more background on the issue:

Murdoch no longer alone in desire to block Google

Murdoch wants a Google rebellion

Bing not likely to outbid Google for news

Murdoch could block Google searches entirely

What is the world’s smallest deck chair?

Tuesday, November 24th, 2009

aol-logo-4It’s the period in Aol. As in, America Online’s new branding effort, which changes the company from AOL to Aol. – but doesn’t make it any more relevant in a post-internet-service-provider world.

Seriously, this isn’t like rearranging deck chairs on the Titanic; as AOL and Time Warner complete their de-merger, it’s like replacing the rubber pad on a leg of a deck chair so it doesn’t scuff the deck.

I don’t understand why Aol. even exists anymore, except that it’s too big to go away quietly. The services it provided in the early days of the Internet – everything under one roof like a well-lit mall in an otherwise under-developed part of town – have all been superseded by a wider variety of offerings on the well-developed ‘Net.

Its search engine has dropped out of the top tier and offers no unique user value that would separate it from any others.

And I’m always startled when I find myself exchanging e-mails with someone who still has an address at the aol.com domain. Actually, it’s not an exchange; any e-mail I’ve sent in the last few months to the few Aol.-users I know has bounced back to me. Just this morning, I printed out a document and put it in an envelope with a stamp, because the Aol. user’s address rejected the attachment.

aol-logo-3Yes, Aol. has a brand problem. If you’re an investor who bet your retirement on AOL-Time Warner, the brand represents broken promises and unfulfilled dreams. For pretty much everyone else it represents obsolescence.

aol-logo-2That’s obviously not what the folks at Aol. and its branding agency, Wolff Olins (of the Omnicom Group) are thinking.

In its coverage (linked above), The New York Times quotes Sam Wilson, managing director in the New York of Wolff Olins, the branding agency Aol. has hired. The Times writes:

The period in the logo was added to suggest “confidence, completeness,” Ms. Wilson said, by declaring that “AOL is the place to go for the best content online, period.”

aol-logo-1The article also quotes Aol.’s CEO (or is that Ceo.?) Tim Armstrong:

Mr. Armstrong said he liked to describe the period as “the AOL dot” because “the dot is the pivot point for what comes after AOL,” whether it is e-mail, Web sites or coming offerings that will “surprise people.”

What will surprise me is if Aol. can provide the Internet community with a reason to exist other than its legacy – something about which the online world is notoriously indifferent. To me, the dot looks a lot like the head of a nail, a coffin nail maybe – which might be enough to keep the deck chairs from sliding around as the ship continues to list.

News: Not dead, but being reborn

Thursday, November 19th, 2009

This article, on the effort by eBay founder Pierre Omidyar to start a local news service in Honolulu, validates my postion that journalism and the news business are not dead or dying. They are being taken up by a new generation of media outsiders – people who value news and aren’t so burdened by years of “training” in the industry, that they can see new possibilities that may exist. It also helps that they aren’t burdened by an infrastructure built over decades to support old business models.

The article doesn’t say much about Omidyar’s business model – but he intends the service to be for-profit and to generate new contet.

A couple things about this jump out at me – in addition to the obvious fact that it’s at least one more person who’s not willing to give up on the news.

  • New news businesses tend to be local – where there is less competition to provide information, and where the advertising crisis has had the least impact.
  • The goals of new news businesses are modest; the ones I’m hearing about tend to seek primacy in a small area, to have a good impact on a relatively small number of people, and make a little money in the process.

Which strikes me as a pretty good way to rebuild an industry that is in historic transition.

Years from now, there will be big players again, who have figured out how to consolidate the many small for-profit news operations that are popping up. Some of those big players will be the same names that are familiar in media circles today. Others will be new.

And the news business will look very different from the way it does right now.

But it will be a business and an industry.

Somehow.

A novel notion for monetizing the news

Thursday, October 29th, 2009

While newspapers are wallowing in catastrophic circulation losses, their online revenues are falling short of objectives, and more people look to the web for news, Amos Gelb, a former TV guy and now an associate professor at George Washington University’s School of Media and Public Affairs, suggests a new model for profiting from running a serious news operation: cost transference.

In short, the idea is for Internet Service Providers (ISPs) – his example is Verizon Internet – to pay for news feeds on a per-subscriber basis. It’s how CNN works – collecting 37 cents per subscriber from every cable television provider that carries CNN (which is pretty much all of them). While CNN does earn revenue on advertising sales, its most dependable revenue stream is from the cable providers – which in turn simply pass that cost along to consumers as part of the cost for basic service on their monthly bill. And consumers don’t seem to mind – even though there is plenty of market evidence right now that they wouldn’t pay the same 37 cents per month directly to CNN if given the choice.

How does this transfer to newspapers? The largest news organizations (Gelb cites Time Warner, New York Times and Washington Post) would block their content to ISPs, except when paid on a subscriber basis. Those ISPs that make the payments would then pass along the cost to subscribers.

People who care about getting news content online would gravitate toward those ISPs that provide it.

The model strikes me, on its surface, as incredibly complicated given the wide range of business models that exist among ISPs. It also doesn’t include the many smaller news organizations that, one way or another, are going to survive, but will never be large enough to command attention from ISPs.

I don’t ever really expect to see the model play out as Gelb describes it. But I like the out-of-the-box thinking he brings to the discussion, and I agree with his assessment that news is something people want, and something people will pay for – just not directly.

In fact, the way I see it, it’s already playing out on small scale and through a slightly different medium: the burgeoning app store business.

There are now multiple places where smart-phone users can buy applications: iPhone’s App Store, Blackberry’s App World, and soon, Palm’s App Catalog. Each of these offers apps that let you aggregate and read news from various sources. Many are free, some cost money – from a $2.99 one-time download fee to monthly subscriptions (or so I’m told, though I haven’t actually found one on the monthly model in my time at either of the functioning app marketplaces).

So people are paying money to download an app that will deliver the same news they could get for free right now on the Internet? It’s a little different than the model Gelb envisions, but it plays out the same way psychologically: People who buy these apps aren’t actually paying for news; they’re paying for a new gadget on the smart phone. The cost has been transferred.

Gelb’s notion is heavy lifting, to be sure. To achieve the kind of behavior change that he describes, large news organizations are going to have to give up on their most cherished belief: that increased profit necessarily derives from increased distribution. And then they would have to convince numerous other organizations – like Google, Yahoo, Verizon and AT&T – to alter their business practices, all while risking the anger of their paid customers.

It sounds like a long shot at best. But the drastic decline in circulation and revenue that news media is experiencing is, if nothing else, a strong motivator.

Measuring the declining investment in journalism

Tuesday, October 20th, 2009

Rick Edmonds, media business analyst at The Poynter Institute, estimates that U.S. newspapers have reduced the amount of money they invest in journalism by about $1.6 billion a year. His methodology is – by his own admission – back-of-the-envelope.

He has essentially calculated the reduction in total revenue of the U.S. newspaper industry over the past few years, and then multiplied this by the average percent of revenue that newspapers spend on their news operations.

The result is $1.6 billion.

According to an the annual survey by the American Society of Newspaper Editors, newsroom employment took a beating in 2008 – down 5,900 positions, or more than 11%. That follows 2,400 newsroom jobs eliminated in 2007.

And the cuts have continued in 2009. Just last week, the New York Times announced 100 newsroom layoffs. According to Papercuts,  a website by graphic designer Erica Smith who began tracking newspaper layoffs in the middle of 2007, nearly 14,000 newspaper jobs have been cut this year. (Her numbers track closely with those reported by ASNE).

Not all of those jobs are from the newsroom. Let’s be conservative and assume that a third of them are jorunalism jobs; that would put this year’s total at about 4,700. Anecdotally, I think it’s higher. But even at 4,700, that would put total newsroom cuts in the last three years at 13,000  – about 1 in 5 newspaper journalists.

What’s the average pay? According to Indeed.com, it’s $35,000 for reporters and $51,000 for editors. What’s behind those number is vague and I wouldn’t take them to the bank. But my guess would have been an average of a bit over $40,000. So let’s just go with that.

At $40,000 per job, plus 18% for benefits, the total savings per job cut is $47,300. Multiplied by 13,000 and you get a total of $614.9 million in permanent cuts from newsroom payrolls in the last 3 years.

So whose number is right, mine or Edmonds? The truth is probably somewhere in the middle. My calculations are strictly meatball, and Edmonds’ blog says essentially the same.

But also consider that these numbers don’t include cuts from magazines or broadcast channels and the real point is clear: There is a lot less journalism going on today than there used to be. And to drive that point home, all you need are the fairly reliable newroom employment figures from ASNE:

Going into 2009, newspapers across the U.S. employed about 46,000 journalists — a number that next year will show up in the low 40s or high 30s.

There are roughly 88,000 municipalities in the United States. Plus state and federal governments. Plus school districts, businesses and sports teams. Not to mention technology, health-care, religion, legitimate causes, social issues, spammers and scammers, and fascinating work in cosmology, physical anthropology and particle physics. And and even ill-behaved starlets and loose-cannon reality TV stars.

Thirty- to forty thousand journalists just isn’t enough.

I don’t know when we’re going to figure out the economic models that allow these watchdogs to get paid for the necessary and under-appreciated work that they do. But it will happen.