Wednesday, September 10, 2014

Why do Sunday newspapers cost so much?

As I picked up the Sunday New York Times at a Starbucks in a leafy neighborhood in Chicago, the twenty-something woman behind the counter started to ring up $2.99, the going rate for the Sunday Chicago Tribune.
“Actually,” I said, “it’s $6.”
“It is?” she said incredulously.
“Yeah,” said the youthful male colleague beside her. “Why would anyone spend that kind of money for a newspaper?”
 “Well, the Sunday paper has lots of special sections that you don’t get during the week, like a magazine, book reviews and travel,” I said. “And lots of people buy the Sunday paper for the coupons and the ads” – even though I knew my NYT would contain no local classifieds or Best Buy circulars.
“I guess so,” said the young man. “I have looked at the paper at my grandparents’ house a couple of times, but I still don’t see why anyone would spend that kind of money on a newspaper.”  
This mini focus group gave me lots to think about as I walked back to my sister-in-law’s house. 
First and foremost was the question of how newspaper publishers could sell the value of their truly valuable products to the sub-geezer set.  With studies consistently showing that two-thirds of the print audience is over the age of 55, newspapers clearly aren’t making the grade with twenty-somethings, thirty-somethings and even most forty-somethings. 
Second and equally vexing was the question raised by the Starbucks lad: Why are Sunday papers so ridiculously expensive?
And then it hit me: The answer to both questions is to drastically drop the price of Sunday papers in order to remove price as the formidable barrier that it represents to first-time, fallen-away and wavering readers.
Whether they argue that newspapers cost too much or that they don’t have time to read them, people who don’t buy newspapers are really saying that papers are more expensive than they are worth.  Consumers daunted by weekday editions priced at $1 – or more – are hopelessly repelled by Sunday products costing twice as much, if not more.
There is a better way.
If publishers reduced the steep prices of their Sunday products, they could attract new and former customers to boost circulation on the day of the week that typically delivers half of their advertising revenues and often more than half of their profits. To offset the decline in circulation revenue, increased Sunday readership ought to attract more advertising. 
Although publishers may argue that Sunday newspapers are premium products deserving of premium pricing, they need to face the fact that a growing number of consumers don’t agree with them.
After analyzing a random sample of the nation’s daily newspapers between 2004 and 2014, I found that the industry’s print circulation has dropped precipitously in the last decade.
Total weekday sales among the nation’s 1,300-plus newspapers plunged 47% in the decade to a daily average of approximately 29.1 million as of March of this year, according to data from the Alliance for Audited Media. Aggregate Sunday circulation in the same period dropped 40% to a weekly average of approximately 34.7 million. 
Thus, only a quarter of the nation’s 115.2 million households today consume a weekday paper and only 30% of households take Sunday papers.
With more than two-thirds of the nation’s families not consuming newspapers, there is considerable upside for publishers who do a better job of conveying the value proposition of their products.
Of all the audience-building options at their disposal, cheaper pricing for quality Sunday papers would be the best bet. Here’s why:
From special sections to comics to op-ed columns, the content in the Sunday paper is more comprehensive, and therefore more compelling to read, than any other edition of the week.  Because Sunday papers carry more advertising and coupons than any other day, the typical edition has the potential to pay for itself many times over. Since it is published on the day that many people get a break from their ordinary routines, the Sunday paper represents the greatest opportunity to command attention on a day that Mom isn’t rushing off to work and Dad isn’t hustling the kids to school.  
Although the Sunday paper ought be the gateway to attracting new readers – as well as keeping existing ones – most publishers price the product so aggressively that they turn off all but their aging core readers.
Markets support premium pricing when demand is high and supplies are low.  With an abundance of news, information, entertainment and advertising available through the free or exceedingly cheap digital media, consumers today have many more choices than in 1993, when the Internet was a whippersnapper and average Sunday circulation peaked at 62.6 million.
If publishers want to sustain the biggest and most profitable revenue source that they have, they need to get real about the pricing of their Sunday products. 
© 2014 Editor & Publisher

Monday, September 08, 2014

Get ready for mobile payments

Although wide-screen iPhones and curvy iWatches have gained the most attention as the buzz builds around Apple’s product announcement on Tuesday, the biggest game changer of all may be the companys effort to launch a mobile payments system. 

Assuming the chatter is correct, Apple will seek to supplant credit cards with a wireless payment system embedded in its next-gen gizmos, thus revolutionizing the way consumers pay for things – and merchants track their customers. It is widely reported in the press that American Express, MasterCard and Visa have agreed to join the Apple initiative. 

If mobile payments take off as Apple and its putative partners hope, this frictionless new way of transacting business will disintermediate the media as never before, as discussed in the following Newsosaur post from Aug. 9, 2011

There are a couple of updates to the archived post. 

:: The Isis payment network mentioned in the original article, which was developed by AT&T, Verizon and T-Mobile, announced last week that it is changing its name to Softcard to avoid being confused with the group beheading journalists and terrorizing the Middle East. Also, the planned AT&T and T-Mobile merger was abandoned after it was blocked by federal antitrust regulators. 

:: The Blippy.Com service mentioned in the original article has gone on to other pursuits, but a number of other social shopping sites are only too happy to learn about who you are and what you like.  Further, as previously discussed here, all of the major retailers have apps that track you, your purchases and even your location in their stores.    

Now, here’s the original post:  

It’s not a matter of if, but when, your ever-smarter smart phone replaces currency and credit cards as the way you pay for everything from a latte to a load of lumber for the deck you have been meaning to build.

The arrival of mobile payments will restructure the way marketers interact with consumers, leading potentially to epic shifts in the balance of power and dollars from financial services like Visa and American Express to technology providers like Google and Verizon.

It also is almost certain to lead to further disruption for media companies, unless they can figure out a way to nose into the action – which already is well under way.

The mobile payments revolution will be enabled by a technology called Near Field Communications (or NFC), which adds a micro-range radio to the cellular, wifi and Bluetooth arrays already packed into every smart phone. (More on NFC here.)

While only a smattering of Android devices today are equipped with NFC, there are hopeful rumors in the ever-breathless Apple press that the next-generation iPhone will have the feature when it debuts later this year.

Whether Apple takes the plunge now or later – thus leveraging the 125 million credit cards already on file at its successful iTunes service – the company will join a frenzied land grab including the following players:

:: Google Wallet, which will be seamlessly integrated with the Android operating system that ComScore says powers more smart phones (40% of the market) than its closest competitor, the iPhone (27% of smart phones).

:: Isis, a collaboration among Verizon, AT&T and T-Mobile (the latter of which AT&T is seeking regulatory approval to acquire). These mobile providers, who utterly dominate the U.S. market, are partnered with Discover, MasterCard and Visa.

:: Visa Wallet, a parallel effort by Visa to partner with its network of member banks to create a branded payments app.

:: Serve, the American Express equivalent of the Visa Wallet effort, which has entered not only into partnerships with Verizon and Sprint but also the fast-growing Foursquare mobile check-in platform.

:: Verisign and the other point-of-purchase equipment companies who make the gizmos used to swipe cards. Verisign has a mobile banking suite that it markets with a variety of tech and banking partners.

In a way, mobile payments already have arrived.

You can flash a barcode on a mobile phone to complete a purchase at most Starbuck’s, but it’s a far more complicated process today than it will be in the future. Now, you have to establish a Starbuck’s account by handing your credit card to a clerk, who loads the funds on a Starbuck’s card. Then, you have to download a Starbuck’s app and link it to your Starbuck’s account. Finally, you have to fuss with the phone when you make a purchase to generate a barcode that can be read at the register. If you run out of money, you have to slap some plastic on the counter to recharge your Starbuck’s card.

In the future, this rigmarole will be unnecessary. Sitting on a bus or walking through the park, you will be able to virtually create and manage accounts with individual merchants, simply waving your phone and confirming a transaction whenever you happen to be in a store. More likely, you will have a generic buying account that works with all merchants. Once established, you will be able to top it up from time to time for use at a gas pump, vending machine or furniture store. You might even be able to wirelessly lend a friend $100.

Paperless banking almost is upon us. Chase has an app that allows you to deposit a check by merely taking a picture of it with your Android or iPhone.

Once the mobile payments ecosystem fully evolves, currency and plastic may well become relics of the past.

For consumers, this will provide greater convenience and arguably more security than ever.

For the winners in the land grab, it will unlock vast new markets, potentially shifting revenues from banks and credit card companies to companies like Google, Apple and the mobile carriers.

For marketers, the systems will capture a wealth of information about purchasing patterns, including who, what, when and where people bought something. Even when this data is collected without identifying individuals by name, the volume and specificity of the information will enable marketers to sharpen their messaging and tactics.

Going to the next level, sites like Blippy.Com encourage consumers to disclose and write reviews about their purchases. If such platforms take off, they will provide merchants with the ability to link specific individuals with particular purchasing patterns, enabling brands to reach consumers with unprecedented precision.

At the level beyond that, it seems entirely possible that a significant number of consumers would be willing to have all their purchases tracked in return for such incentives as discounts or frequent-shopping points that can be redeemed for cash or products in the future. This, of course, would enable the Holy Grail of target marketing: Putting the right offer in front of the right person at the right time.

Although the outlook is unclear, there can be no question that mobile payments will revolutionize marketing by creating an ocean of real-time, granular and precise consumer data.

This matters to publishers and broadcasters, because it means that marketers in the future probably will vector ever more of their advertising dollars into direct connections with consumers, instead of mass media.

As mobile payments combine with the power of digital publishing, masses of eyeballs – which happens to be what traditional publishers and broadcasters sell – will diminish in importance in the typical advertiser’s media mix.

Where does this leave the traditional media companies?

Because rich data – not mass audiences – will be the name of the game in the future, every local media company should be gathering as much data as possible about every household and individual in the community it serves.

The most immediate opportunities to do this are through newsletter programs, contests, site registration and smart mobile apps. Obviously, all of these tactics require close attention to government and corporate privacy policies.

The other thing media companies need to do is pay close attention to the evolution of the mobile payments ecosystem. Then, when the time is right, they need to buddy up with the likely winners.

Wednesday, August 13, 2014

How digital retailing could roil local media

Thanks to the growing ubiquity of mobile devices, a digital revolution is about to transform bricks-and-mortar retailing – a fast-breaking phenomenon that potentially poses the biggest challenge yet to the economics of local media companies. 

More than four out of five smartphone and tablet owners use their devices for shopping, according to a report issued earlier this year by the Nielsen marketing metrics service. Nielsen says 65% of consumers research products before they head to a store, 66% of shoppers check prices in stores and 49% of them redeem coupons from their mobile phones. 

Given all this click-to-buy-ing, it is perhaps no surprise that mobile-enabled commerce is projected by the eMarketer research service to nearly triple from today’s level to $113.6 billion by 2017. Now, here’s why publishers and other local media companies should worry: 

With more shoppers making buying decisions and actual purchases on their mobile devices, local retailers and national brands are bound to vector ever more of their marketing dollars into intercepting consumers on mobile platforms, thus diverting ever greater portions of their budgets away from the traditional print and broadcast media. 


Retail advertising, without doubt, is the lifeblood of local media. In 2013, retail advertising accounted for 75% of the $14.5 billion in advertising sold by local television stations, 43% of the $23.5 billion in ads sold by newspapers and 38% of the $4.2 billion in ads sold by local radio.  The broadcast information was provided by Kantar Media and newspaper statistics came from the Newspaper Association of America.  

The rush to digital retailing dominated a June conference in San Francisco sponsored by Street Fight, a smart online news service covering the myriad ways that prodigiously funded start-up companies are developing high-tech solutions to such pressing problems as C2C (Coffee to Commuter), S2S (Shoes to Shopper) and PP2CP (Pepperoni Pizza to Couch Potato).  

Although these commercial goals may seem modest, the technologies, algorithms, analytics and business models developed to solve these problems likely will pave the way to changing how brands target prospects and merchants smooth the myriad frictions associated with driving to the mall, navigating a store, selecting a product, fishing out a credit card and schlepping the purchase home.   

“We don’t believe shopping centers are dead,” says Nicholas Cabrera, who researches the future of retailing for Westfield Group, one of the largest mall operators in the world. But Cabrera told the Street Fight audience that technology is poised to “transform” shopping into a more pleasant experience for consumers – and a more productive one for merchants. 

Here’s how that will happen: 

Using apps, search engines, shopping sites, social media and volunteered information from consumers, everyone in the shopping ecosystem – brands, retailers and even mall operators – will endeavor to learn as much as they can about individual customers. Then, using smartphones, Google Glasses, smartwatches and the like, they will put the right offer in front of the right consumer at the right time, perhaps even adjusting pricing dynamically to recruit desirable new customers. 

Websites, social media, shopping portals and search engines already monitor content consumption, conversations, wishlists, shopping carts and buying behavior. They increasingly are combining this information with masses of acquired and derived data to pigeonhole consumers into ever-tighter segments in order to optimize marketing messages to them.  

In the interests of capturing real-time information about the intentions and behavior of consumers while they are in stores, a growing array of hardware, software, network and analytics companies intend to track customers via not only signals from their own devices but also with concealed cameras using sophisticated facial-recognition technology to gauge buying intent. Leaving nothing to chance, the newest Android phones can take your pulse to identify the shoes that quicken your heart.   

To capture even more data, nearly every major retailer has developed – or soon will launch – an app to help consumers organize their shopping excursions, redeem coupons, make payments and earn loyalty rewards. Walmart’s latest app even issues rebates to customers if it finds a product being sold for less by a competing merchant. Not so incidentally, the apps will help merchants learn tons about customers at the same time.

The retail revolution is nothing short of an arms race to accumulate as much information about individual customers as possible. Local media companies can be major winners in the revolution by developing delightful products that help merchants to capture and leverage customer data. If they fail to act, however, they will be marginalized as advertisers move to interactive marketing.  

While local publishers and broadcasters lack the technology to do this by themselves, their market presence and brand power are extremely valuable to the tech companies trying to solve far more than just the PP2CP problem. When potential partners come calling, media companies need to listen. Then, they need to respond as if their lives depended on it.  

© 2014 Editor & Publisher

Thursday, August 07, 2014

Are newspapers doomed? It depends.

Now that every major media company has dumped or soon will jettison its print division, the question I hear every day is: Are newspapers doomed?

The answer is neither simple nor universal. But the dramatic and traumatic contraction of the newspaper industry in the last decade suggests that the business models, publishing platforms and journalistic conventions that seemed so stable and certain a few short years ago will not carry forward into the future. 

So, yes, some newspapers will fail, as they run out of relevance, readers and revenues. Since the Great Recession, we have lost such titles as the Rocky Mountain News, the Seattle Post-Intelligencer, the Tucson Citizen and the Manassas (VA) News & Messenger. But newspaper failures, as demonstrated by the demise in 1978 of the estimable Chicago Daily News, are not new news. 

So, where does that leave us? Hopeful but worried. Here’s why: 

The future of newspapers – or, more precisely, local news ventures that may or may not involve putting ink to paper – will depend on whether the people running them are up to the considerable challenge of creatively disrupting their businesses before an ever-growing phalanx of digital competitors destroy what’s left of the still-enviable commercial might and journalistic value of their enterprises. 

Unfortunately, the industry’s track record is not good. In the two decades since the Internet burst into common consciousness, the leaders of the newspaper industry have failed to recognize the need for profound change, much less manifested the grit to go for it. Rearranging the deck chairs by shuffling newspapers into free-standing entities won’t, in and of itself, change the troubling trajectory of the newly liberated publishing units of News Corp., Tribune, Scripps, Journal Communications or Gannett.  

If the executives entrusted with the new newspaper companies rise to the task, however, refreshed businesses can be built on the brand power, content-creating power, sales power and marketing power enjoyed by all but the weakest newspaper. But these exceptional attributes, like the value of the businesses themselves, have been wasting at a frightening pace.  

For the record, the average 16% pre-tax profits of the publicly held newspaper companies surpass those of both Walmart and Amazon.Com. But revenues, profits and newsroom staffing ain’t what they used to be. 

As painstakingly (and painfully) detailed here, the weekday circulation of newspapers fell by 47% in the last 10 years to the point that only a quarter of the nation’s households take a daily newspaper. Print and digital advertising sales fell by 55% in a decade. In spite of aggressive efforts by most publishers to increase the fees they collect from print and digital readers to offset the ad decline, the industry’s total revenues slid 35% in the last 10 years, dropping the average pre-tax profits of publicly held publishers by 37%. 

The outlook for print is daunting, given that three-quarters of the print audience at the typical newspaper is 45-plus years old. The print format, as discussed here, largely fails to resonate with Millenials, Gen Xers and even many Boomers. The advanced age of the print audience not only is undesirable to many advertisers but also represents an unavoidable demographic cliff as readers age to perfection – and beyond. 

The reason the newspaper industry is shrinking, of course, is that the digital media have changed everything about the way we get – and increasingly give – the news. This not only has unhinged the traditional relationships between reporters and readers but also the long-time dependence of many advertisers on newspapers. 

Notwithstanding the vague “digital first” sound bite voiced at most newspapers, the industry’s share of the national digital advertising pie shrank by 52% in the last decade. The gap continues to grow, with  the collective digital advertising revenues of the nation’s newspapers rising a puny 1.5% in 2013 at the same time over-all nationwide digital ad sales surged by 17%

The conundrum facing newspaper publishers is that 80% or more of their revenues (and, arguably 100% of their profits) still come from the advertising and subscription fees sold in connection with their print products. Because print quite literally pays the bills, publishers obsessively, and understandably, focused on fixing the print business as ad sales fell from a record $49 billion in 2005 to less than $21 billion in 2013 (revenues continued tumbling this year, too).  

Owing to the relentless focus on print, most newspapers have not invested in developing the content formats, publishing platforms and advertising vehicles that appeal to digital consumers in an age where the average consumer is said to spend 34 hours a month on her smartphone. Consider: 

:: Most newspapers are content to shovel yesterday’s print stories into tomorrow’s website and then port the same material into yards of gray type on mobile apps. Compare the thumb-numbing presentation of this typical 2,925-word newspaper yarn with the thoughtfully deconstructed coverage at Vox.Com, the eclectic aggregation at Huffington Post, the concise presentation at Circa, the data wizardry at Pro Publica, the crowd power at Bleacher Report, the electric vitality of BuzzFeed and the addictive virality at Upworthy. 

:: Rather than reliably “owning” their audiences as they once did in print, the internal metrics at every newspaper show an increasing dependence on the likes of Google, Facebook and Twitter to generate the traffic that is the lifeblood of any media enterprise. As but one example, a recent internal report showed that even the New York Times is consistently, and embarrassingly, out-gunned in promoting its own stories on the web. 

:: The top digital revenue sources at most newspapers are run-of-site banners that are the least-valuable forms of digital advertising to the growing number of sophisticated brands demanding detailed data about readers so they can target their ads to the right prospect at the right place at the right time. Because most newspapers cannot deliver state-of-the-art ad targeting, many publishers have difficulty selling even half of their interactive inventory. The publishers who do offer targeted advertising depend on Google and other digital natives to provide them with both the customers and technology they need to do the job – thus, sacrificing a healthy percentage of the margins they enjoyed when they dominated print advertising in their markets. 

:: Newspapers missed out on – and, accordingly, have been shut out of – such large and significant digital revenue opportunities as search advertising and commerce. The Boston Globe famously declined to invest in the nascent Monster.Com because its managers did not want cheap online advertising rates to cannibalize the hefty fees they charged for print want-ads. Although the newspaper industry eventually got around to establishing Career Builder and Cars.Com as strong online classified brands, it is notable that the broadcasting side of Gannett plans to keep these successful sites for itself when it severs the newspaper division that built the parent company. With respect to commerce, most newspapers remain so digitally tone-deaf that they don’t bother to link to Amazon or iTunes when they review a book or an album. 

Perhaps the biggest challenge facing the newspaper industry is that its practitioners tend to avoid change, instead of embracing it. To some degree, newspaper leaders cherish print, as I do, out of sentimentality. To a larger degree, they carefully cultivate print because it is their core business. But, to the largest degree of all, they focus on print as the only way they know to earn a living, hit their bonus objectives and hang on to their hard-to-replace jobs in a steadily contracting industry. 

Because nearly all senior publishing executives are held to exacting profit targets at the end of every quarter of the year, they have to squeeze the most they can out of the revenues available to them.  When revenues decline – as they have been doing relentlessly since 2006 – they have no rational choice but to cut expenses by consolidating printing plants, restricting circulation, outsourcing ad make-up, reducing newshole and eliminating staff. 

In their hearts, they know that these tactics – which, among other things, have led to the elimination of 1 out of 3 newsroom jobs  in the last decade – are making their products less desirable and less compelling than ever. So, they are understandably reluctant when someone proposes a digital initiative that will siphon resources away from the troubled legacy business they are trying to preserve.

Unlike the stampede of bold, well-funded and single-minded digital natives who are usurping the audience and advertising revenue once commanded by publishers, newspaper executives are trying to tiptoe from print to pixels. But tepid measures won’t work.  

To save newspapers – or, more precisely, local news ventures that may or may not involve putting ink to paper – publishers have to commit to disrupting their tottering business model as enthusiastically as their competitors are committed to overtaking them. There is no other choice. 

Tuesday, July 22, 2014

Robots could do better than some journalists

When the Associated Press announced plans to use computers to write corporate earnings stories, a number of journalists asked me if I was as horrified by the prospect as they were.  In fact, I think robots could do better than some reporters.
With all respect and affection for my fellow journalists, I have concluded that a well-programmed set of algorithms can be far more analytic and precise than the sorts of harried, math-averse humans who are widely employed to write about complex business matters. Here is a case in point:
Poynter.Org led a story today about Gannett’s second-quarter earnings with a headline saying “Circulation Revenue Rises at Gannett Local Papers.” The problem with the headline is that the press release and the accompanying financial tables provided by the company showed unambiguously that circulation revenues actually FELL in both the first and second quarters of the year.
For the record, as reported in the press release, circulation revenue at Gannett’s newspapers for the first half of the year was down 1%, ad sales revenue was down 5.3% and “all other publishing” revenue was down 2.4%. 
So, how did the Poynter reporter get it wrong?  Because, in his haste to crank out a story, the author evidently relied on the bafflegab in Gannett’s press release, instead of looking at the several pages of detailed financial tables appended to it. In fairness the writer, who was alerted to this issue but so far has not amended his article, what human wouldn’t be confused by the following statement from the company:
“Circulation revenues were $277.9 million, down just 0.6 percent from $279.7 million in the second quarter in 2013. An increase in circulation revenue at Newsquest [GCI’s division in the United Kingdom] was offset by circulation revenue declines at domestic publishing operations. At local domestic publishing sites, home delivery circulation revenue was up in the quarter due, in part, to strategic pricing actions associated with enhanced content.”
You can’t blame Gannett for trying to put the best face on the umpteenth weak quarter in a row for its publishing operation. And you can sort of see, sort of, how a time-constrained journalist fell into the PR trap by seizing his lede from a fragment of the third sentence in the sixteenth paragraph of the press release. But a well-programmed computer could have done better.  
A half-decent, natural-language engine could have assimilated, organized and analyzed the facts and figures provided by the company in far less time that an ordinary human could read, much less unpack the meaning of, the document.
The robot would organize the data into normalized tables for instant publication and then drop the key information into templates designed to produce concise and understandable narratives. Knowing in advance the Wall Street consensus on a company's upcoming earnings, the robot could determine whether the company beat or failed to meet investor expectations. Templates would be pre-programmed with dictionaries that would know a drop in revenue from 2013 to 2014 was, depending on the degree of decline, a dip, a slip, a tumble or a plunge.
Because the variables in the realms of financial and sporting news are largely standardized and predictable, robots for the most part can be quicker and more accurate than humans, freeing time for journalists to dig deeper and more analytically into stories.  While it is highly unlikely that a robot would have caught the massive Enron accounting fraud, it actually took a long time before one smart human, Bethany McLean, figured it out, too.
So, bring on robo-journalism.  Like chicken soup, it couldnt hurt.  And it probably will help

Wednesday, July 16, 2014

The newspaper crisis, by the numbers

Roughly a decade after the commercial debut of the Internet, America’s newspapers posted record high advertising sales of $49.4 billion in 2005, leading many publishers to think their businesses would not be seriously affected by the digital revolution. But they were wrong.  

Since hitting that high note in 2005, the industry has undergone a dramatic and traumatic contraction, losing nearly half of its print readership and more than a third of its revenues. With the pre-tax profits of the publicly held publishers cut by 39% since 2003, newsroom staffing has dropped to a historically low level. In spite of the declared determination of most publishers to pivot from print to pixels, the industry's share of the digital advertising market has plunged by more than 50%.   

As illustrated in the following roundup of key performance indicators, it is clear that publishers have failed for the better part of a decade to adequately respond to the new ways that consumers get information and that advertisers want to reach them. 

Because it is easy to become inured to the drip, drip, drip of bad news about newspapers, this quick compendium is offered as a reminder that one of our most valuable journalistic institutions is engaged in a grave, ongoing and so far unresolved crisis. Brace yourself. 

Combined print and digital advertising revenues at the 1,300-plus newspapers in the nation tumbled 55% from $46.2 billion in 2003 to $20.7 billion in 2013, according to the Newspaper Association of America (NAA). Classified print advertising was hit the worst in the 10-year period, plunging by 74% to $4.1 billion in 2013. National print advertising dropped 61% in the decade to not quite $3.1 billion in 2013 and retail print advertising fell 53% to $10.1 billion in 2013. 

Notwithstanding the professed embrace of digital publishing at most newspapers, the industry’s share of the interactive advertising market dropped by 52% in the last decade. While the industry’s collective digital ad revenues rose 181% from $1.2 billion in 2003 to $3.4 billion in 2013, the total digital ad sales in the United States soared 494% from $7.3 billion in 2003 to $42.8 billion in 2013. Accordingly, the newspaper share of the digital advertising market dropped from 16.4% in 2003 to 7.9% in 2013. Newspaper sales figures were provided by the NAA and over-all digital data are from the Interactive Advertising Bureau. 

While newspaper publishers are continuing to gain audience at their web and mobile sites, their interactive efforts typically trail the level of engagement achieved by many native digital media. Here is an example: The NAA reported that a collective 161 million unique individuals visited the digital media of all the newspapers in the land in March, a number equal to two-thirds of American adults. By contrast, Facebook alone attracts 166.5 million uniques per month. Here is the big difference: While the typical visitor spends 1.1 minutes at a newspaper site, the average dwell time at Facebook, the super-sticky social network, is nearly half an hour. 
Weekday print circulation dropped 47% from an average of 54.6 million papers a day in 2004 to an average of 29.1 million papers per day in 2014, according to my analysis of a random sample of data from the Alliance for Audited Media. Sunday circulation in the same period fared somewhat better, sliding 40% to an average of 34.7 million papers per week in the period ended in March, 2014. The circulation decline means that only a quarter of the nation’s 115.2 million households today consume a weekday paper and only 30% of households take Sunday papers. Ten years ago, household penetration was more than 1.6 times higher than it is today. 

NAA data show that the industry’s total advertising and audience revenues across all categories shrank 35% in the last decade, wilting from $57.4 billion in 2003 to $37.6 billion in 2013. The drop occurred even though many publishers sought to offset declines in print advertising and circulation volume by boosting prices for their print products and/or putting paywalls on their digital media. Despite the heavy emphasis most publishers have put on increasing audience revenues, even this category slipped by 3% from $11.2 billion in 2003 to $10.9 billion in 2013.

In spite of effusive efforts by the industry to reduce expenses in the face of plummeting revenues, pre-tax profits of the publicly held newspaper companies fell by 37% in the last 10 years. Earnings before interest, taxes, depreciation and amortization slid from an average of 25.8% in 2003 to 16.3% in the last 12 months, which still compares favorably to the pre-tax margins of 4.9% at Amazon and 9.4% at Walmart. The International News Marketing Association provided the historical data and I compiled the current data at Yahoo Finance. 

One major consequence of the industry-wide contraction is that newsroom staffing dived by 31% from 54,700 journalists in 2002 to 38,000 in 2012, the lowest number since the American Society of News Editors conducted its first newsroom census in 1978. Given additional newsroom reductions at many publications since the ASNE survey, it is fair to assume that staffing is even lower today. In a measure of how coverage has diminished, the number of newspaper reporters covering the nation’s statehouses fell 35% to 470 individuals between 2003 and 2014, according to a survey released last week by the Pew Research Center. 

A newspaper executive told me a few days ago that some people in the industry hate my continuing coverage of the challenges facing newspapers. For the record, I don’t enjoy writing this stuff any more than newspaper people like reading it. But I do it because I am trying to remind them of the urgent and formidable challenges they face in not just protecting their individual businesses but also in preserving the irreplaceable public trust that newspapers represent.  

Thursday, July 10, 2014

Newspapers can’t merely dabble at digital

The New York Times wrote the story in 1853 about how Solomon Northup was kidnapped and sold into slavery, but Gawker got most of the page views by publicizing the archived article when “12 Years a Slave” won the Oscar for best picture in 2014. 

This example of how the Times fails to capitalize on its rich content to build digital readership, relevance and revenues came to light in the leak this spring of a candid, unsettling and must-read assessment of the newspaper’s less than elegant effort to pivot from print to pixels. 

Given the size of its staff, the sweep of its ambition and its stature as house organ to the world’s political, economic, academic and cultural elites, the Times is something of a unique case among newspapers. But its struggle to achieve scale and economic sustainability as a full-on digital publisher – as opposed to a legacy newspaper producing digitized renditions of an increasingly superannuated print product – is directly relevant to nearly every newsroom on the globe. 

If you work at a newspaper – or simply care about the health of these important institutions – then you need to read the 90-plus page internal report about how the Times is trying, with less than dazzling success, to retool its culture and business model. The report, which illustrates why digital must be an obsession and not a hobby, is here

The document, which never was meant for public disclosure, first was published in May by BuzzFeed – another of the digital interlopers who knows how to generate more page views with a Times story than the Times – on the day after Jill Abramson was ousted as editor of the newspaper. Commissioned by Abramson some months before her exit, the report was written by a crew of journalists headed by no less than A.G. Sulzberger, the son and presumptive successor of publisher Arthur Sulzberger, the head of the family that controls the paper. 

The report details an alarming number of occasions that the Times, like most other newspapers, was out-thought, out-promoted and otherwise out-gunned by the growing phalanx of digital publishers. 

In one painful example, a Huffington Post editor told the Times team that their newspaper was “crushed” by the amount of traffic captured by his site when it repurposed NYT coverage of the death of Nelson Mandela. “I was queasy watching the numbers,” said the unidentified editor quoted in the report. “I’m not proud of this. But this is your competition. You should defend the digital pickpockets from stealing your stuff with better headlines, better social.” 

In another example of digital tone-deafness cited in the report, the author of the sprawling Dasani series on a homeless family trapped in horrific public housing did not get around to tweeting about her own story until two days after the first installment ran. Curiously, noted the report, the newsroom controls the Twitter account but the “business side” runs the Facebook page. 

The barrier to nimble and effective digital publishing at the Times is, as is the case at most other papers, its entrenched print tradition. 

The workflow in the newsroom throughout the day is focused heavily on the print edition, including rewriting the summaries – not the articles themselves – of stories being pitched for the next morning’s front page. “The vast majority of our content is still published late in the evening, but our digital traffic is busiest in the morning,” said the report. “We aim ambitious stories for Sunday because it is our largest print readership, but weekends are the slowest online.” 

Because people who distinguished themselves as writers and editors for the print product hold the senior jobs in the newsroom, they lack the skills, the sensibilities and, frankly, the sass that make for successful digital publishing in an age when readers want their news to be as amusing as it is informative. Because masters of the print universe dominate the top newsroom jobs, many young, digital-savvy staffers depart in despair of ever advancing in the organization. 

While the internal Times report recommends many ways to tinker with priorities, process and personnel, the real problem it identifies – without offering any solution – is the lack of commitment to changing the culture of the institution. In part, the inertia comes from the respect and affection that most of us share for the honorable tradition of print. But it also comes from not understanding that the Times, like all newspapers, has to be willing to aggressively disrupt and reinvent itself before readers and advertisers move on without it.  

Everyone at the Times – and at most other newspapers – has the smarts to do this. But the first step to change is acknowledging that you have a problem. Until there is an inalterable conviction at the Times and other newspapers that they need to overhaul their cultures at Internet speed, they will continue dabbling at digital while fierce and well-financed digital competitors peck them silly. Dabbling won’t be enough.

© 2014 Editor & Publisher

Monday, June 23, 2014

An intriguing ‘publishing platform for readers’

An unprecedented collaboration between two leading newspapers and the non-profit Mozilla tech community aims to build a “publishing platform for readers” that could go a long way toward revolutionizing the way we get and give news.  

Inasmuch as the undertaking was announced only last week by the New York Times, the Washington Post, Mozilla and the Knight Foundation, there’s no way of knowing how ambitious the project will be – or how well it will be executed.  

But the project offers the tantalizing prospect of perhaps the best system yet to combine the values, discipline and skills of professional journalism with the equally formidable energy, insights and skills of everyone else.  

As discussed in a moment, the project also could help the legacy media catch up to the native digital publishers that have siphoned readers and revenues away from newspapers and magazines. First, the background: 

Starting with little more than a general idea of the path they will travel together, the New York Times and Washington Post are joining with Mozilla, the non-profit global technology community that created the popular Firefox browser, to build a system to enable the creation, sharing and monitoring of comments, articles, media and other citizen-generated content.  The two-year effort is being funded with a $3.9 million grant from the Knight Foundation to a non-profit entity called Knight-Mozilla OpenNews

“With the platform, publishers will be able to easily include reader contributions in their content cycle, manage their communities and gather valuable user data,” said a press release from the NYT. “The platform will also use reputation scores, self-policing and other tools to make it easier for news organizations to monitor comments.”

The platform, which will be shared at no cost with participating publishers, “isn’t another commenting platform,” said Greg Barber of the Washington Post in the press release. “It is a publishing platform for readers.” 

If OpenNews lives up to its mission statement, we could be on the way to seeing a platform that expands the scope and scale of traditional journalism by enfranchising, encouraging and empowering the voice of anyone who wants to contribute to the public discourse. At the same time, the project could well advance the quantity, quality and credibility of content generated by non-professional contributors.   

Because it would be easier for citizens to contribute to media sites, the number and caliber of contributions would increase. Because multiple media sites would use the platform, citizen contributions would gain wider audiences at the same time the media sites were able to host fuller discussions than generally available today. With more opportunities for their contributions to be seen and heard, more citizens would take the time to post them. 

While boosting the interactivity of mainstream media sites undoubtedly will lead to unpleasant kerfuffles from time to time, the platform could well offer the cleanest and best-lit place yet for constructive and sustainable community journalism. 

But wait, there could be more: 

If the initial incarnation of the platform were successful, it could be the basis for solving some of the most pressing (pun slightly intended) problems facing the legacy media. 

Because most media companies lack the financial resources and technical chops to build state-of-the-art digital publishing systems, their sites and apps pale (and typically trail) in comparison to those powered by the superior engagement tools and analytics enjoyed by well-heeled digital natives like Vox Media, Bleacher Report, BuzzFeed, Upworthy and others.  (Fun fact: The more than 130 million monthly unique visitors at BuzzFeed are almost as great in number as the collective 161 million uniques visiting all the 1,300-plus newspaper websites in the land.) 

If the initial phase of OpenNews were successful, here’s how it could further help the technically-straggling legacy media:

:: Content management – Assuming OpenNews were architected to responsively display all manner of media across all known and likely platforms (and it's hard to imagine it won’t be), the system could be extended to not just manage comments but also to become a default content-management system for publishers great and small. As such, it would house all media assets in one place for ease in discovery, editing and publication across platforms ranging from smartphones to smart crockpots.

:: Content curation – Because the future of digital publishing requires nearly all comers to augment their own offerings with relevant content aggregated from elsewhere, the process of discovering and curating material could be made more efficient – and more effective – if the content from multiple publishers were archived in a single, readily searchable, cloud-based system.  

:: Content promotion – With publishers easily mixing and matching content with one another, each will help to vastly expand the audience for all their work.  This would provide broader content for publishers, a better experience for readers and more premium advertising opportunities.  

:: Content personalization – If the activities and interests of readers could be tracked across the many sites and apps that they visit, the user experience could be taken to the next level by customizing content to suit an individual’s particular needs. This feature would require privacy safeguards and, ideally, a provision requiring consumers to opt-in to such a service. Assuming safeguards are in place, think how slick it would be to click a button to personalize your Firefox browser by linking it to your contacts, calendar, stock portfolio and Amazon wish list.

:: Content merchandising – If the platform were built to protect copyrighted content, it could serve as the basis for an intra-publisher payment system to allocate syndication fees among the originators of premium content wherever their work appears on the web. The system could enable not only paywalls but also newsletters, special reports, databases, multimedia packages and more.   

With the above functions capturing detailed data about individual users as they traffic participating sites, legacy publishers finally could become serious digital competitors at a time that marketers increasingly are using segmentation algorithms and exacting analytics to deliver individually crafted messages to precisely targeted consumers. (Another fun fact: Procter & Gamble aims to buy 70%-plus of its advertising this year through data-centric, real-time bidding systems.)   

Even though granular customer data unquestionably has become the Holy Grail of modern digital marketing and advertising, most legacy media are ill equipped to compete with the native digital publishing and advertising services that are pecking away at them. 

Unfortunately, publishers for the most part have a poor track record for collaborating in their own best interests. Because they absolutely must have a modern, nimble, holistic and multi-brand platform to compete successfully with the well-heeled masters of the digital universe, they really need to coalesce around OpenNews – or something awfully similar to it.  

Wednesday, June 11, 2014

Digital publishing metrics: What’s real?

The ecstasy of digital publishing is that it enables the granular measurement of everything from traffic to ad clicks. The agony is trying to figure out which metrics matter. That’s the vexing issue we’re going to tackle today, but, first, let’s get real:  

There are more questions than answers and more opinions than facts. Given ongoing advances in technology and analytics, best practices for audience measurement not only will continue to evolve but also to provoke ongoing and vigorous debate. The latest thinking on audience measurement is described below, but you can be sure it won’t be the last word. 

As messy as this topic is, it behooves publishers to pay attention to improving audience measurement so they can effectively and strategically manage their businesses in an ever more demanding business environment. 

With that said, here’s what we know about the state of the art – and I do mean art, because audience measurement is anything but an exact science. 

Unique visitors

The most basic metric in measuring traffic is the number of individuals who frequent a digital destination, but the raw number captured by the typical server is deceptively high. The reason uniques are overstated is that most servers count a user as one person when she uses the Firefox browser to access a given site on her laptop, as a second person when she goes back to the same site on the Safari browser on her smartphone and as a third user when she visits the site from the Explorer browser at her office. If the user clears the cookies on one or more of her browsers, she can be counted as a new unique all over again.  

Given the number of devices that most of us use, the raw figures collected on internal servers are “probably more than five times too high,” says Andrew Lipsman, a vice president of comScore, which sells a widely used service that aims to deliver a more accurate count. Combining data on the actual web activities of 1 million volunteers with additional data and analysis, comScore says it can give a truer count of unique individuals across all digital platforms than is possible by using only raw server data. While comScore’s data is widely accepted in the publishing and advertising industries, it is important to note that its tallies are no more than projections based on a statistical construct. ComScore numbers are more like a public opinion poll taken prior to an election than the actual ballot count itself. As we all know, pre-election polls aren’t always right.

Page views 

The most unambiguous way to measure traffic is by counting the number of pages served to consumers. This metric draws perhaps the most relentless focus from digital publishers seeking to maximize revenue from the ads they embed in each page. A direct carryover from the volume-driven way that the legacy print and broadcast media have sold advertising since time immemorial, page views can be lofted legitimately by posting valuable new content or artificially through all manner of gimmickry. 

The problem with concentrating on page views, as discussed more fully below, is that neither publishers, nor advertisers, can be sure that a page served to a consumer actually was viewed by her – or that she paid any heed to the content or ads presented on it.  

Social-media shares

In the age of social media, many publishers and marketers put a high priority on increasing not only the number of friends and followers tallied on their Facebook and Twitter pages but also in maximizing pass-along readership. 

While word-of-mouth generally is considered to be the most valuable form of endorsement for an article or product, Tony Haile, the CEO of Chartbeat, a traffic-analytics company, took to Twitter earlier this year to say that his research found that there is “effectively no correlation between social shares and people actually reading” the article they tweet. On the other hand, Upworthy, a digital publisher that has elevated the viral distribution of grabby articles to a science, reports that people who read to the bottom of an article are more likely to share it than those who scan just the top of it. 

Summing up the kerfuffle over the value of sharing, The Verge, a tech blog, tartly observed: “So if you see someone tweet an article, it likely means they either didn’t really read it, or they read every word.”

Ad clickthrough  

The most crucial measure for marketers – and the publishers who depend on their patronage – is whether their ads are working. And the chief way ad effectiveness has been measured in the short but intense history of the web is the frequency with which they are clicked.  Unfortunately, there’s plenty of controversy about the accuracy of this widely followed metric.

Solve Media, a company selling anti-fraud technology to advertisers, reported that up to 61% of the ad clicks on the web in the final quarter of 2013 were “suspicious,” a sharp advance from the 51% rate of questionable clicks it detected in the third quarter.  While there is no way of knowing if this assertion is too extreme, tech companies and ad networks widely acknowledge that they are in a never-ending battle with clickthrough bandits. 

The number of questionable clicks appears to be formidable on mobile devices, too. GoldSpot Media, an ad-tech company, issued a Fat Finger Report in 2012 stating that up to 38% of static banners were clicked accidentally on mobile devices. The Fat Finger study has not been replicated since companies like Google, a dominant player in the ad serving business, acted to reduce the susceptibility of mobile ads to inadvertent clicks. So, the number of Fat Finger episodes today may be higher or lower today than it was in 2012. 

Meantime, comScore advises publishers and advertiser’s not to worry about weak or errant clickthrough rates. Saying that banner ads enhance brand awareness and prompt subsequent on- and off-line purchases, comScore asserted in a recent presentation that “the click is a misleading measure of a campaign’s effectiveness.” 

Time on site

Medium, the long-form web publisher also known as Matter, believes that the amount of time an individual stays engaged with its articles is, by far, the most important metric. This also is one of the key metrics monitored at Alexa.Com, an analytics service owned by Amazon, which reports that the average time spent on Facebook is 30 minutes per session vs. 3 minutes or less at the typical newspaper site. 

Medium measures “every interaction with every post” by tracking how users scroll through stories, explains the publisher in its blog.  “We pipe this data into our data warehouse, where offline processing aggregates the time spent reading (or our best guess of it): we infer when a reader starts reading, when they paused and when they stopped altogether. This methodology allows us to correct for periods of inactivity (such as having a post open in a different tab, walking the dog, checking your phone).”  

The issue with this methodology, as Medium admits, it that it requires a certain amount of inference and statistical massaging. Upcoming advances in technology may improve the prospects and outcomes for this type of analysis.  Samsung and other smartphone companies are working on screens that will actively track user eye movements to see where they go on a page – and how long they stay.       

Total attention measurement

To overcome the inherent limitations of the various individual methodologies discussed above, a small but growing number of digital publishers and technology companies are mixing and matching metrics to develop what they hope will be more authentic views of their audience. 

Chartbeat, a company selling next-generation analytics systems, has created a dashboard that dynamically graphs site activity so editors can see which stories are driving traffic – and why. For a look at how the system is used at the Journal Record in White Plains, NY, see this.  

Going beyond the simple aggregation of metrics, Upworthy closely measures and analyzes such behaviors as where a user moves her mouse, how far she scrolls into an article and how long she sticks with a video. Illustrating the concept in this recent blog post, Upworthy said different articles attracting a similar number of page views drew wildly disparate amounts of actual and measurable attention. 

As publishers accumulate ever more user data, the most enlightened among them are sharing the information widely with their staffs in the belief that audience engagement is everyone’s job. And they are right to do so. Because it is.  

© 2014 Editor & Publisher

Tuesday, May 13, 2014

All the news that’s fit to Facebook

In launching a mobile app that enables users to graphically view the latest news of their friends, their puppies and the world, Facebook has emerged as one of the most powerful contenders yet in the rapidly expanding cadre of digital news purveyors. 

Newspapers and other traditional media companies need to pay attention to this revolutionary platform because it represents the sort of compelling and personalized digital experience that modern consumers crave. We’ll discuss the urgency of updating the traditional publishing paradigm in a moment. First, here’s what Facebook is up to: 

Introduced on the tenth birthday of the reigning champion of social networks, the cunningly named Paper app elegantly combines content from a user’s Facebook community with dozens of other sources of news and entertainment ranging from photography and sports to food and TED lectures. With the flick of a fingertip, users can choose from brand-name outlets like the New York Times and the Atlantic to customize feeds delivering all the news that’s precisely fit for them. 

The value proposition is spelled out in a promotional video (embedded below) paper featuring such fetchingly retro scenes as a pair of twenty-something hipsters reading (gasp!) a newspaper. The money quote in the video is: “Share the stories that matter the most – your own.”

Thanks to the unimaginable trove of self-published personal information that Facebook aggregates around the clock and around the world, the Paper app for smartphones has the unprecedented and unmatchable power to become the ultimate personal news source for the growing number of consumers leveraging the power of mobile and social media to individualize the media they get – and give. 

Thus, Paper has the potential to emerge as a one-stop smartphone destination for many of the 1.2 billion users of the Facebook ecosystem – an audience that would make Facebook the third largest country in the world, if it were a country. 

So, where does that leave traditional publishers? 

Behind.  

Even though newspapers and most other legacy media companies launched their first websites well before Facebook founder Mark Zuckerberg hit puberty, the senior citizens of digital publishing never thought, nor sought, to create the sort of personal engagement that makes Facebook the stickiest destination on the Internet. While consumers spend an average of 30 minutes in every Facebook session, the typical visit to a newspaper website is 3 minutes or less, according to Alexa.Com. 

Further, and more frightening, newspapers have failed to connect with consumers under the age of 45. Researcher Greg Harmon of Borrell Associates says the average age of a print newspaper reader is 57 and the average newspaper web visitor is 51.  Saying the industry’s aging demographics ought to have “everyone’s hair on fire,” Harmon notes that newspaper readers have been getting a year older every year for more than a decade.  

To be sure, one of the reasons younger readers don’t connect with newspapers is that the so-called Millennial generation is broadly disconnected with many traditional institutions.  After years of researching the Millennials, the Pew Research Center found the under-40 set to be less religious, more politically independent, less patriotic, more socially liberal and less economically secure than the generations preceding them.

At the same time Millennials have turned away from traditional institutions, Pew found that they have embraced digital technology as a way to express themselves, build community, share information and arrange transactions ranging from dating to car sharing. While the average Millennial has 250 friends on Facebook, Pew says the typical Baby Boomer has 98.  Although 55% of Millennials have shared selfies, Pew reports that only 9% of Boomers have done so.  

“Online social networks are the building blocks of social interaction for many young adults,” concluded Pew in a study released in March. “These tools have enabled them to create wide-ranging networks of ‘friends.’” 

The unprecedented use of social media to enable and execute a full array of social and commercial interactions is one of the most significant ways that the digitally native generations are differentiated from their elders. Facebook’s Paper app is but one of many emerging platforms that facilitate the sort of individualized, if not to say intimate, experiences that modern consumers expect – and respond to. 

The lesson that legacy media companies can, and must, take from Paper is that their products have to be far more personal, social and, yes, emotionally engaging, than they historically have been. 

Newspapers cannot, and should not, carry stories about everyone’s new puppy. But editors can look for stories with powerful emotional appeal, can tell them in compelling human terms and then can engage the community in reacting to them.  

If the legacy media can’t make authentic and sustainable emotional connections with younger readers, they will lose them. It’s just that simple. 

© 2014 Editor & Publisher