Bob Rosenbaum | The MarketFarm

Not-for-profit news is no panacea

In the effort to save newspapers, one idea that’s been passed around is that of the newspaper as a not-for-profit institution. The argument is that its role is so central to the public good that it can be protected as a non-taxed, not-for-profit entity.

While the argument may be compelling, I don’t think you can call it mainstream. Well-known newspaper analyst Lauren Rich Fine says for-profit newspapers haven’t done all they can to adapt to new market realities. I agree; Newspapers in the United States have been for-profit ventures for their entire existence, and just because their business model is being challenged today doesn’t mean their industry is obsolete.

But that doesn’t mean there’s anything wrong with a news organization that does figure out how to succeed as a non-profit.

An increasing number of non-profit news organizations exist, such as MinnPost and the hyperlocal, hypermodest Heights Observer, for which I’m an active volunteer — and which is part of a growing list of other loosely affiliated Observer projects in and around Greater Cleveland. (Not all of them are not-for-profit; they have in common technology platform — Ninth Estate Software — and a singular evangelist, Jim O’Bryan, founder of the for-profit Lakewood Observer).

A not-for-profit trial balloon has been floated (and seems to be losting altitude) for the troubled Boston Globe.

Now, one of the existing not-for-profits is going the other way; Geoff Dougherty, editor of the 4-year-old Chi-Town Daily News (Chicago) writes in his blog that the non-profit experiment is over. He says the online citizen journalism news organization needs $1-2 million a year in donations to fulfill its mission. With grants running out and grant-sources ready to move on to other projects, Dougherty indicates private donations peaked at only $300,000 — and even that amount is doubtful this year.

“We are talking with local nonprofits that have expressed an interest in acquiring the [Chi-Town Daily News] website and neighborhood reporting program,” Dougherty writes.

“Ultimately,” he continued, “we believe we will be able to fulfill the same mission we set out to accomplish with the Daily News, though with a new name, a new company, and a different business structure.”

Where were you on 9/11?

I don’t necessarily make a conscious effort to note the anniversary of the moment the 9/11 nightmare began. But every year, within a couple minutes of 8:52 a.m., I seem to look at my watch and then I remember.

I was in a hotel in the Rosemont area near Chicago O’Hare aiport. I was beginning a sales trip and was ironing my shirt while watching the Today Show.

I remember the first sketchy report that a plane hit one of the World Trade Center towers. Within minutes, NBC News hunted down a woman on the street who had witnessed the event; Katie Couric interviewed her by phone.

I remember Katie insisting that it was some kind of small plane with propellers, right? The woman was adamant. She said, to the best my memory serves: I think it was a jet.

Katie pushed, obviously hoping for the least-worst-case scenario: Yes, but like a small corporate jet, right?

The woman replied to the effect of: It seemed pretty big to me. Like the kind of jet you get on at the airport when you’re going somewhere.

In my mind’s eye, while this interview was going on, the visual was a live shot of the burning tower. But I could be wrong.

And then it was 8:03 (central time) and the second plane hit and it was immediately obvious that whatever had happened was no accident.

My insides did a flip-flop. I tried to call my wife, but she had taken the kids to school and wasn’t around. I called my mother and suggested she turn on the TV.

I had to go down to the lobby to wait for the salesman I was working with; we were scheduled to make our first call by phone from my room. He arrived; he had heard the news but apparently didn’t think much of it yet.

The phone-call meeting was short. I don’t remember a bit of it. Before moving to the car for a trip to our first in-person appointment, I suggested to the salesman that we call to see if they were still interested in meeting.

“Nonsense,” the salesman said. “They’re waiting for us.”

I went along. Passive. Happy to be told what to do. But as we listened to radio reports in the car, more information was becoming available. We called the first appointment from the car; the company had sent everyone home. We stopped at a gas station as the salesman called all of our appointments in an effort to salvage the day.

“Jim,” I told him. “The trip is over. Take me back to the hotel.”

“Nonsense,” he said. “You flew all the way here; we’re going to get some work done.”
“Nobody wants to see us,” I said. By this time, the Pentagon had been hit and Flight 93 had crashed in a field. But I don’t remember if we’d heard about it yet. “The radio just said downtown Chicago is being evacuated. I’m not going up in any skyscrapers today. I don’t feel like selling. Just take me back to the hotel.”

“I think you’re being a little dramatic, Bob,” he sad.

The salesman wasn’t insensitive, though he was making me crazy. It was just his way of dealing with it. I was in the acceptance stage and ready to move on to mourning. Jim was simply still in denial, perhaps his higher thinking processes being hijacked by the immediate tension of having his boss in town and nobody to call on.

I eventually succeeded in getting dropped off at the hotel. Jim didn’t want me to be alone, but I told him to go home and be with his family. It was a relief when he left me. I called the office to send my staff home; I needn’t have — the corporate staff had already shut the office. I spent the day in my room, sitting at the end of my bed, still dressed for sales calls, staring at the TV. I talked with my wife somewhere in there and let her know I didn’t know how or when I’d be home.

At about 4 p.m. I went to the hotel bar and got very very drunk on the expense account, enjoying the simple companionship of strangers like me; stranded away from home, refusing to feel alone.

Magazines: Kick ’em when they’re down

A report at the end of August indicated that newsstand sales of magazines were down more than 12% in the first six months of 2009 compared to 2008.

I can only guess why that might be:

A sudden lack of spending money by the nearly 10 percent of people who are now unemployed;
A general feeling that, with so much news about magazines shutting down and facing financial ruin, they aren’t the attractive impulse buy they once were;
Have you seen the cover prices on magazines these days? With ad revenues down, many top-tier magazines now cost $7 or $8 at the newsstand.
I don’t have the foggiest idea what percentage of magazines are purchased at airports. It’s probably not that significant. But if air travel was down in the first half (it was) I suppose fewer people were buying magazines at airports.

With all that said, I’m not reading any more into this than it being one more bad metric for publishers in a year filled with bad metrics. I’m sure newsstand sales will rebound when the time is right.

But in the spirit of kicking them when they’re down, Wal-Mart has just announced that it’s implementing a new floor-plan that will put magazines in the back of the store, alongside music, video games and electronics.

At a level, it makes sense; consumer electronics aren’t near the back of the store because they don’t sell well. That department is usually one of the most crowded; it’s where all the wish-list shoppers loiter while the serious shoppers are boring us to tears in the throw-pillows and laundry-detergent aisles.

Further, the current newsstand location at Wal-Mart, wherever it is, can’t possibly be a great position, sandwiched in there somewhere between diet remedies and pet toys.

And finally, say what you will about the people who run Wal-Mart; they aren’t stupid when it comes to maximizing sales-per-square-foot. If they’ve done their research and they think magazines are going to sell better in the vicinity of music CDs and other entertainment goods, I can’t argue.

But I can say that, symbolically, for magazine publishers, it feels like just one more kick in the front of the pants.

Why the URL is less important every day

I remember reading, in the early days of the Web, how large companies were paying hundreds of thousands of dollars to purchase meaningful URLs. For instance, McDonald’s wasn’t the first owner of www.mcdonalds.com.

About 9 years, ago, I tried to sell a URL that I was abandoning. I found a broker who promised to auction it off, estimating that it might be worth $15-20 thousand. The bubble burst, the auction never happened, and the URL simply expired — sitting unused until sometime in the past year when another company started using it.

The URL remains a most important locator for online information. But the importance of branding a URL — or of obtaining a URL that perfectly matches your brand — is declining.

Jonathan Richman at iMedia Connection offers 4 technologies that are responsible for its declining importance.

They are:

Search engines: The power of search is well-known. More people find websites through search than by typing in the URL;

Browsers: New-generation browsers like Google Chrome and Firefox skip the need for going to a search engine; just type a search term in the address box and they deliver search results;

URL shortening: Sites like Twitter, with strict limitations on size, force URLs to be shortened dramatically. Tools like TinyURL and Bit.ly exist to do this. Which means the URL for this page, as an example goes from https://themarketfarm.com/themarketfarm/wordpress/2009/09/08/why-the-url-is-less-important-every-day/ to http://tinyurl.com/nq6d2y — which is pretty efficient, except any unique branding disappears.

The QR code: Popular in Asia and Europe, you take a picture of the QR code on your smart phone, and it will take you directly to the related website.

Overlooked in Richman’s blog, which is more detailed and well worth reading, is a fifth technology of social networking. More and more businesses are using Facebook, Twitter and other sites to attract audience; these work based on the names of companies and communities — not web addresses. So the brand of the company once again becomes more important than the brand of its URL.

The ultimate point, though, is that if you have a URL you like, don’t spend too much to brand it. And if you have a URL you don’t like, you can work around it.

What’s the economic value of a journalist?

Journalists are historically thick about the notion that they are part of a business model; that they are employed not so much for the public good but because somebody has figured out how to make more money from their work than it costs to produce. That thickness is part of what makes them good at what they do; good journalists tend to follow the trail of information regardless of how they fit into someone else’s profit motive. It’s also why the outsider complaint — “The reporter only wrote that story to sell papers” — never gets any traction.

But the business model under which most journalists have always worked is under attack right now, and that’s changing the very basics of the job: who wants to hire them, what the job requires, and how much it pays.

In recent good times, a newspaper would bring in about $1.35 in revenue for every $1 spent to run the place. That includes such inelastic expenses as distribution and printing. If you eliminate those expenses from the equation (which an economist wouldn’t do, but this is a journalist-centric view, in which the value of a newspaper to its readers and advertisers is directly proportional to the quality of its reportage) then the economic value of a journalist is at least 1.35 times salary and benefits.

But in times like this, newspaper profits are down — which means the economic value of journalists is down too. The work of the newsroom simply produces less profit so, therefore, the value of each person in that newsroom is less.

Media companies deal with this as any business would: When profits drop, you reduce costs. Most media start with manufacturing: production, printing and distribution. (Tips for reducing production costs; 34 tips for cutting costs; United Media cost-reduction strategy.)

But when profits continue to drop, people start to lose their jobs. And despite what journalists like to think about their value, cutting reporters and editors usually stops the bleeding pretty quickly. That’s because producing news isn’t the same as producing, say, cars or other manufactured goods.

If you cut people from the auto assembly line, you can’t make as many cars. Which means you can’t sell as many cars. In a recession, that’s OK because fewer people want to buy those cars anyway; jobs get cut because there’s an imbalance between supply and demand.

But in media, you can cut an untold number of reporters and editors without actually reducing output (Journalism jobs decrease 34% Jan 08-Jun 09). The quality of the reporting might suffer; graphics might not be as well thought-out; typos and errors may increase. But the audience still gets the same quantity of news, and the advertisers still get the same audience.

When a recession ends, a car manufacturer can’t sell more cars unless it hires back workers to increase production. But a newspaper can see advertising revenues increase at the end of a recession regardless of whether it puts more people back into the newsroom. That’s why financial and spreadsheet types like investing in media; the correlation between employment and profit is indirect enough that they can choose to ignore it.

This can go on for a long time, and it has. Eventually, people start saying things like, “That newspaper is just a shadow of its former self.” And any rational explanation about declining profitability should include the long-term effect of decreasing quality and comprehensiveness.

But that’s simply not the entire reason newspapers, magazines, radio and TV are struggling; I’d argue it’s not even a major factor — just a bad symptom.

The real reason is competition. Years ago, a major metropolitan morning newspaper’s only competition was the afternoon paper. (Remember, the competition isn’t for readers; it’s for advertising revenue). Then came radio, television, cable television, city magazines, alternative weeklies, etc. They may all serve readers differently, but their money comes from the same pot of regional advertisers. More recently, add Google Ad Words, online magazines such as Slate and Huffington Post, bloggers like Matt Drudge, social networking like Facebook and Twitter, and dozens of other business models I can’t even think of. The one thing all of these have in common is that they demand a piece of the same marketing budgets that are the financial foundation of newspapers.

Many of these newer organizations pay journalists — but none pay as much for as many journalists as did the old-line media. So not only do newspapers have more competition, journalists have more competition.

All of which is a roundabout way of saying I’m not patient enough to calculate the actual economic value of a journalist. But the following items seem clear:

Economic value and social value are separate issues.
Traditional media still seem to be experiencing declining economic value of their journalists. For example:
Effect of mass layoffs at newspapers
New news models
Bloodletting in the newsroom
Layoff tracker
Meanwhile, types of businesses that didn’t previously value journalists now seem to be the places where the value of journalists is growing. For example:
This is what you get when you pay for reporters
The growth of brand journalism
Best job in the world
Attention corporations: Hire a journalist
Winery hires lifestyle correspondent
Entire business models that do away with the cost of journalists are emerging — and starting to attract big money. For example:
Examiner.com buys NowPublic for $25 million
www.heightsobserver.org
www.printcasting.com
Old business models are trying to revive the value of journalists by finding other revenue streams to pay for them. For example:
How newspapers that charge for content are faring
Murdoch charges for content
Electronic newspaper update
Non-profit newspapers
AP battles with news aggregators
Old-line business models that see the industry’s decline as merely a function of journalism’s decline somehow seem angry and not very realistic.
Our Hometown News, Strongsville, OH
The decline in value is related to the recession; when recovery starts in earnest, the decline will flatten out.
Cox Enterprises hopes for positive earnings
But the decline in value wasn’t caused by the recession; it was caused by huge disruption of traditional business models that involve journalists. For example:

what-b2b-advertisers-really-want-from-media
are-magazines-really-that-important
Journalists may be unwilling participants in the dizzying changes taking place. But those who are determined to make themselves valuable will succeed — whether or not it’s through a traditional channel.
What journalism students need today
Listen up, old-school journalists
The future of news is scarcity
I’m pretty sure the economic value of journalists isn’t declining; it’s declined among media that follow traditional business models, but that’s being offset by new models and innovations that are only now starting to emerge.

Pandora radio: maybe the best thing the ‘net has ever offered

After hearing about Pandora.com for months, I just loaded it on my Blackberry. And then on my laptop.

Pandora is internet radio; you pick an artist or song that you like and it builds a station of music with similar qualities. If it plays a song you don’t like, a click on the thumbs-down icon helps Pandora refine what it plays for you.

I’ve never used an application that loaded any easier or was more intuitive to start up. Over the course of a 45-minute drive in which I was the passenger, I loaded it, got familiar with the controls and set up about 15 stations — all of which play music that I could listen to all day. When I got to my laptop, I loaded the application in less than a minute, then typed in my password, and got to precisely where I’d left off on the Blackberry.

With a $6 cable from Radio Shack, you can plug the Blackberry (or iPhone) into the utility port of a car radio or a set of powered speakers.

Which means that with no learning curve, and for the cost of my cell phone data plan — which I was already paying — I can have the best of all musical worlds (mental note: start a new Pandora station around Candide or Leonard Bernstein).

It’s better than my iPod, because I don’t have to select each song and be my own DJ.

It’s way better than Sirius/XM because the channels I create are better focused than anything satellite radio offers; and I don’t have to pay the $6.99-$12.99/month subscription fee.

I don’t think Pandora is going to hurt the sale of MP3 players; most of them do more now than simply play music files.

But Pandora is everything that Sirius/XM could hope to be — yet easier, better and cheaper. It is the ultimate disruptive technology; it delivers radio at no cost, using technology that lots of people already possess, and it strikes a magical balance between doing all the work and giving the user control.

Last I heard, Sirius/XM was losing more than 100,000 customers a month. I can’t imagine that pace has continued. But I’m guessing the downward trend has. And with its dependence on expensive space-based satellites and human-programmed channels, satellite radio is a precarious business model that has yet to make money.

In Greek mythology, Pandora carried a magical box that contained all things harmful to humans — disease, fear, unhappiness, etc. Zeus instructed her not to open it, but when her curiosity got the best of her, she spilled its contents into the world and upon mankind.

To most of us, this Pandora is a welcome innovation. But to Sirius/XM — and broadcast radio over time — Pandora and the others that will inevitably follow it must look like the thunder from Olympus itself.

With all our communication channels, face-to-face is still king

BtoBOnline.com reports on a study from Forbes Insights that executives still strongly prefer in-person meetings over web-meetings or other virtual get-togethers.

I couldn’t find the study myself and no link was provided, so I’m taking everything that BtoB reports on it as my only source and at face value.

According to the the study out of 760 business executives surveyed in June:

84% prefer in-person contact to virtual;
85% said it helps them build stronger relationships;
77% said it provides a greater opportunity to read another person;
Still, 58% said they travel less for business now than in January 2008.

All of which strikes me as obvious.

Face-to-face contact will always be the highest form of human interaction, and nothing replaces it.
The question is NEVER whether it would be better to have a face-to-face meeting. The question is always whether the circumstances justify the cost/inconvenience.

At any given time, a video chat or Webex presentation might accomplish the immediate goal, but don’t ever confuse that with being just as good as a personal meeting.

BPA Worldwide freezes rates, remains arrogant and irrelevant

BPA Worldwide, a leader in providing third-party circulation audits, has announced that it’s freezing membership dues and audit rates at their July 2008 levels — good through June 2010.

If you’re in the business, you know that BPA is especially strong among magazines with controlled circulation. If you’re not in the business, you need to know that third-party circulation audits are how publications validate their readership claims to advertisers.

BPA is facing obsolescence at an astonishing rate. If BPA is a dinosaur, then the killer meteor has already hit the Earth and the toxic cloud of extinction is on its way. Holding rates will make as much difference to the organization’s future as putting on a sweater.

Am I being a little harsh here? Perhaps. But set aside the fact that for the previous 20 years of my career BPA was one of the most sluggish, obstinate, arrogant and regressive entities I had to deal with. Set aside the fact that — even though it was owned by its customers — it always, without exception, acted as though its role was to prevent me from innovating in my job. Set aside that I don’t know anyone in publishing (though I’m sure there are a few) who doesn’t take some quiet pleasure at seeing BPA suffer.

What BPA faces aside from all that is the fact that its member magazines must find ways to radically reduce distribution costs. That’s required to offset declines in two key performance indicators: advertising pages sold, and cost-per-thousand (CPM) paid for an average page of advertising.

In other words, advertisers are reaching readers less often, and every reader they reach is worth less to them today than it used to be. The only thing advertisers care about is how many people take a measurable action as a result of seeing an ad.

And what is BPA’s ultimate value to publishers? Proof of readers reached. There is nothing that it does, or wants to do, to measure the responsiveness of those readers.

In my last year running business-to-business magazines, I withdrew two of them from membership in BPA. Not because I was so frustrated with the deplorable service BPA provided; but because my advertisers no longer cared about BPA audits. They told me they wanted to know how my audience would respond to their advertising; if I could provide better response per thousand readers than my competitors, nobody cared to see the expensive and painstakingly designed BPA audit statement. (To be fair, advertisers had been telling me that with increasing urgency for about eight years; it just reached a watershed last year — probably brought on by the recession.)

Since that time, I’ve heard of about two-dozen magazines that have terminated their BPA membership — something that used to be as acceptable in media circles as, say, passing gas in an elevator. Entire divisions of media companies have simply walked away from BPA because the organization’s work has ceased to be of value.

I suppose that freezing rates is a reasonable first response. But I don’t give BPA enough credit to understand how inadequate that step will prove to be as its irrelevance grows like a toxic cloud.