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Archive for May, 2012


I will take issue with the poynter.org headline The one chart that should scare the hell out of print media, for two reasons. First, it’s actually two charts, the second of which is above, from a presentation by KPCB’s Mary Meeker. The two illustrate what appears not to be a blip but a trend in the money end of the news business. The one above extrapolates the advertising revenue.

You may question whether it is reasonable to extrapolate a trend from the greatest economic collapse since the Depression. I would argue yes both because it started before the economic collapse and because of the second chart, comparing where advertising revenue is spent and where consumers spend their time:

Note on the far left: People spend 7 percent of their time with print media, but print gets 25 percent of the advertising revenue. Note on the far right: People spend a combined 36 percent of their time with Internet and mobile media, but those get just 23 percent of the ad revenue. Even if print will be perceived as a better buy (not a bet I would make), at some point those numbers seem likely to come closer to equalizing.

First conclusion: The ad revenue decline of recent years seems likely to continue.

This leads to a point made by Ken Doctor at the Nieman Journalism Lab: Money coming to news organizations from readers (paid circulation/online access) is growing as a percentage of revenue. Partly this is because of declining ad revenue — if you’re total revenue is $100, then $20 is a small percentage, but if your revenue drops to $50 then $20 is pretty big – but it’s also from the growth of various kinds of paywalls. I remain convinced that an all-or-nothing paywall closes a newspaper off from the possibility of luring new customers, but the trend toward metered paywalls seems able to draw in both avid readers and those who wouldn’t pay even for the bigger headlines of the day.

What the combination seems to lead us toward, as Doctor indicates, is a model where many news organizations will be asking for subscriptions more on the basis that NPR stations ask for memberships — not because they have something every day that you want know, but because you want free access because they regularly do. Advertising, in this scenario, becomes an increasingly less important revenue source; readers drive the revenue.

One fear I have read often in the past is that a news model driven by what is popular would gravitate toward the lurid and celebrity gossip, but I don’t think the above situation would do that. The kind of readers drawn by that kind of news would not be the ones who pay for regular access. Those readers would want at least the occasional substantial bit of civic journalism or in-depth news. You might make a living (a la TMZ) if you are at the top level of celebrity gossip, but at the local level that won’t cut it.

But what also seems likely is that the new level of revenue may not support seven-days-a-week newspapers in many markets, as Clay Shirky argued will eventually be the case even with the Washington Post. If that becomes the common model, then would mere daily scarcity of news drive enough people to buy online subscriptions to get news from “newspapers”? After all, in many markets there are TV and radio stations, which already send out news for free, and in many cases there may be small sites such as Homicide Watch (cited by Shirky) that focus on certain high-interest news areas more thoroughly. What then would spur people to pay for access to the mainstream non-TV news site?

Aggregation is part of the equation — if a news organization shows that no matter the source, it will round up all the news in the community, it could gain a loyal local following. But that seems not enough, to me. If less frequency is key, I wonder whether a higher quality of writing in the reduced number of publication days will be a major factor. If that’s the case, then the frequent publishers’ first instinct of holding down news salaries when budgets constrict could be counterproductive.

The keystone of my evidence, besides any manager’s common sense, is from a story by NPR’s “Morning Edition” in early May about new research measuring human performance in groups, which found that a minority of any group typically will account for a majority of the group’s performance. In other words, a few stars get more done at better quality than a larger group of more typical people. That runs counter to my experience of what managers at all levels do in the face of budget pressures, which is to replace departing staffers with someone who costs a lot less and is deemed “good enough.” “Good enough” hires, if you extend the logic of this study, actually cost more in the long run because they are not just a little but a great deal less capable.

There’s a tantalizing hint of this thinking in the memo from Jim Amoss to the Times-Picayune newsroom about changes in New Orleans from the paper’s reduction in days of print:

“Concerning pay in the new companies, I want to dispel some rumors: There could be some salary adjustments, depending on changes in job descriptions. But most people will make what they make today, if not more.”

I will repeat the relevant part: “most people will make what they make today, if not more.” In a world where the competition for eyeballs is not just local, the need for writers who can catch a reader’s attention is heightened, and it would make sense that if you find you have someone who can both produce the daily bits of news needed to keep a news site relevant while also producing stories worthwhile to the remaining partial-week readership, you would pay that person better than someone who could do only one of the two functions.

For that reason, I would reach back all the way to the early 2000s for a piece of advice I heard an executive repeatedly give (mostly in vain) to publishers: You get what you pay for. If you cut the size of your staff but increase the pay of the remaining people, so that your payroll overall is the same, you might be able to attract and retain the people you need. It is guaranteed that if you cut the staff size and hold the line on the pay – or, worse, cut it – you will never have the people you need, and who would want to pay to read your sorry rag at that point?

6/12/12 UPDATE: I’m gaining some hope about the above from an INMA article about the Star-Tribune boosting reader revenue closer to 50 percent:

“We’re asking users to pay more of the freight. But for that strategy to work, we knew we needed to focus on high-quality customers who see value in our products and have low churn. And to get those high-quality customers, we’ve focused on three areas: our core print audience, pricing/retention, and accessibility.”

If you’re going to focus on high-quality customers, you have to have high-quality staff to provide the value needed to hold onto those customers:

“The content we provide isn’t available anywhere else. This is local reporting — business, local sports, city council meetings. You are doing that, and you are relevant. Differentiate yourself from your competitors. Once you do that, you’re going to get people and you’re going to get them to pay.”

But it’s beyond content to a smart strategy on pricing and marketing. Those are not my areas of expertise, but the article’s points sound good to this journalist.

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If I had been blogging angry, my post last week about Warren Buffett’s letter to his company’s new editors and publishers might have sounded like Clay Shirky’s take on it:

“Buffett is famously the greatest investor alive, and almost as famous for plain-spoken observations about the market, so you’d assume his first public memo about Media General would offer insight into the current state of the newspaper business. The actual text, however, merely makes it clear that Buffett doesn’t understand that business.”

A lot of the rest is similar to what I said, though. I take no credit for influencing Shirky, I just wrote faster. But he has a line I wish I had thought of:

“Small-town residents of the sort Media General serves tend to adopt technology late, but the future eventually arrives, even in Opelika, Alabama.”

The CEO of Media General, in an interview with a Richmond-area business website, says something pointing in that very direction:

Publishing revenues are down about 50 percent over the past five years, Morton said, but much of the costs— printing presses, delivery drivers, etc. — have held steady.

“There was nowhere to hide from these revenue declines,” Morton said.

“Over the past five years, our first thought was that this was heavily due to the recession and, like many other recessions in the past, that this was a cycle. You tighten your belt, freeze hiring and even drop the number of people.

“So we went through a couple years thinking that was the way to handle it. But it kept going.”

It wasn’t until the second quarter of 2011, Morton says, “that we realized the world had changed.”

UPDATE: And from John Robinson, a briefer but better explanation than I gave of what these newspapers, unshackled from MG’s debt, ought to be doing:

“The real question is, what is the newspaper spending its profits on? And the follow ups: Is it investing in the future? Is it investing in its staff? Is it reducing the profit-taking so that more can be funneled back into the operation? Is it reducing its investment in the newsprint product so that it can increase an investment into digital news creation and distribution?”

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Warren Buffett
I would wager you would have a difficult time finding an employee of any Media General newsroom that is soon to become part of Berkshire Hathaway’s BH Media Group who wasn’t thrilled by Warren Buffett’s letter to his company’s publishers and editors. It declares what he calls a “hands-off principle” in the management of the newspapers. As far as it is defined, it sounds as good as any management declaration that living journalists who don’t own their own papers would be able to remember.

On content:

“I believe newspapers that intensively cover their communities will have a good future. It’s your job to make your paper indispensable to anyone who cares about what is going on in your city or town.
“That will mean both maintaining your news hole — a newspaper that reduces its coverage of the news important to its community is certain to reduce its readership as well — and thoroughly covering all aspects of area life, particularly local sports. No one has ever stopped reading when half-way through a story that was about them or their neighbors.
“You should treat public policy issues just as you have in the past. I have some strong political views, but Berkshire owns the paper — I don’t. And Berkshire will always be non-political.
“… Our job is to reign supreme in matters of local importance.”

On the possibility of duplicating the debt levels that could not be maintained as revenue shrank:

“We shun levels of debt that could ever impose problems. Therefore, you will determine your paper’s destiny; outsiders will never dictate it.”

Read that again: “You will determine your paper’s destiny; outsiders will never dictate it.” That is where the rubber meets the road in this story, because it’s not entirely true, and the real question is to what extent editors and publishers understand that.

What is it that is driving the industry’s decline? The debt was a factor, so its removal is a great help and provides breathing room, but it’s not the driver. The level of debt that Media General had incurred might have been manageable at the levels of revenue that were coming in 10 or 15 years ago, and if those had kept up then everything would have been peachy. What changed? Buffett’s letter somewhat addresses this:

“We must rethink the industry’s initial response to the Internet. The original instinct of newspapers then was to offer free in digital form what they were charging for in print. This is an unsustainable model and certain of our papers are already making progress in moving to something that makes more sense. We want your best thinking as we work out the blend of digital and print that will attract both the audience and the revenue we need.”

Clearly the experiments with online paywalls now under way at a number of these newspapers will continue, but that doesn’t address the real driver. If you find the formula for paywalls of any kind that get you back to the paid-content equivalent of whatever your paid circulation was 15 years ago, you are not fixing the problem because paid circulation has never, at least since the 19th century, come close to paying the cost of producing the news. If you drop $1 in a newspaper box, the actual per-unit cost of creating that newspaper probably was $3 or $4. Traditionally, the bulk of that cost is covered by advertising because advertisers have thought it was well worth it to reach the mass audience. Newspapers produce news, but their business has always (at least since the 19th century) been selling eyeballs to advertisers, not selling newspapers.

Paywalls may help, to the extent that they provide at least some revenue and the lack of free local news online can stem the loss of print circulation, which in turn helps justify the rates charged to advertisers. But advertising has been declining for years for reasons that have nothing to do with drops in print circulation.

The real driver behind the industry’s trouble is that the Internet is not just an alternate delivery medium. As Jeffrey Cole of the University of Southern California’s Center for the Digital Future has put it, the advent of high-speed Internet is driving changes in society and personal behavior just as the advent of television did. That, not the decision by newspapers “to offer free in digital form what they were charging for in print,” is the force behind the growth of 24/7 news on mobile devices and tablets. If you somehow could put every newspaper in the world behind a hard paywall, that wouldn’t address all the TV networks, local TV stations, radio networks (NPR, to name one), web-only news sites, local place blogs, topic-oriented websites, and on and on and on. People expect to find everything they want to know online not because newspapers are there but because, as I said in a post last month, everything else is there. And because everything and everyone else is there, that is where many advertisers increasingly want to be – and they are not just trading print news sites for online news sites, they are exploring the Internet’s plethora of options for reaching an audience.

Buffett knows all this, I think. As he told the Richmond Times-Dispatch in an interview Thursday, “(Print) circulation for the industry will decline,” and experimentation is necessary:

“Some newspapers are experimenting with various pay-for-content models in their digital editions. Buffett didn’t specify what sort of model should be adopted, saying that is something the company’s newspapers will have to work out themselves.
“‘I think there is a better formula’ than the current revenue model, Buffett said in the interview. ‘I don’t think staying free over the next 10 years is the sound choice.’”

So we have to circle back to the “hands-off principle.” Here’s what the directive to publishers and editors boils down to in plain English: You make the decisions, as long as you maintain both your news hole (that’s one of the few things specifically spelled out in the letter) and profitability (not spelled out, but Buffett’s not running a charity, so it’s assumed).

The situation, then, is not much changed from what it was before, for these papers and any others: If advertising continues to migrate not just to other platforms but to non-news venues, what’s left is higher prices for readers, in print and online. Can a paywall for a small or medium-size news organization bring enough revenue to cover all production costs that are not covered by the remaining advertising? I hope so. I think so. If it can’t, hands-off or hands-on won’t matter.

Which brings us to this portion of Buffett’s letter:

“American papers have only failed when one or more of the following factors was present: (1) The town or city had two or more competing dailies; (2) the paper lost its position as the primary source of information important to its readers or (3) the town or city did not have a pervasive self-identity. We don’t face those problems.”

No, we don’t. But that doesn’t mean we won’t discover a No. 4 reason: The publisher and editor failed to recognize what the problem really was.

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As a rookie reporter, I once had the idea of doing a first-person feature about learning to ride a horse, and I called around to a few places. Once place I called, I asked about scheduling a visit, and the person was kind of nonchalant, sort of “Yeah, just come out, we’ll work something out,” sounding not very interested. I called another place and they scheduled something firm. So I never followed up on the first place, wrote my story entirely based on the second — and after the story ran, the first place called my boss and complained about how they had set aside time, scheduled a trainer to wait for me, etc. etc. I was mortified, and it burned a hole in my psyche, and ever since then I have been absolutely mystified — and mortified — by many reporters’ continuing habit to treat public interaction as if it’s a video they can just hit pause and stop on without worrying about how the people on the other end feel or what they are thinking. Last night a reporter told me another reporter would call me today. Still waiting. I work in the business, so I’m like a battered spouse — I’ll forgive anything. But be warned, reporters, whether they read your newspaper regularly or watch your TV show, they think it’s important to have been contacted, and they anticipate the promised follow-up. If you fail to follow through and treat people with this kind of indifference, most people will just write you off, if they are that lenient, and your colleagues with you. You dig your own industry’s grave.

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This is off the usual topics for this blog. Obituaries are completely out of the control of most newsrooms, so my intended audience — journalists — can do nothing about this complaint. But having dipped into the obituary pool Friday after my mother died, I can report with great authority that on this part of their business, this nation’s newspapers are practically lying naked across a table, eyes closed, holding a sign that says, “Whatever,” waiting for a madman with a knife to come along. If you have never made arrangements to place an obituary, let me assure you: It is messy, and it is EXPENSIVE. It is everything, in fact, that begs for someone to come along offering a simpler, easier, cheaper solution — an idea that was introduced to the news industry years ago as a job to be done. But of course no one really wants to make it cheaper, because that would reduce revenue. I remember once hearing a publisher gripe about a company-imposed mandate to simplify and beautify classified ads; the end result was a better-looking (bigger type, more photos), more enticing page that offered more options to people placing the ads, but the ads were bigger without the price going up, so revenue per ad was lower. Focusing on that is just short-term thinking — the number of classified ads has been dropping like a rock for years, driven by free online ads, so the intent of the change was to try to improve the printed ad experience and stem the decline, and maybe entice more people to come back. If you’re constantly watching your back, trying not to lose more ground, you can’t go forward.

Almost two years ago, Steve Buttry pointed out the problems and opportunities in the obit business. He was right then, and he’s righter now. But it’s even worse than I knew when I read his post in 2010.

I attempted to place my mother’s obituary in five newspapers — in the town where she was born, in the city where she began her journalism career, in the city where she retired, in the city where she lived for 10 years before a heart attack changed her life and mine, and in my own city. One told me that obits had to come from a funeral home, not individuals, which is a barrier because I’m not using a funeral home; my mother is being cremated by the Cremation Society of Virginia, which told me to handle the ads myself. I explained this but was told the ad had to come from a funeral home. So, one paper gets no ad. The cost at the other papers ranged from around $300 to nearly $500 (in my own city, the ad was free because I work for the company — an excellent employee benefit but one you hope never to use). In the accompanying listing for each at legacy.com (yes, each one has a separate, unlinked listing), my mother’s name appears as Anita Lucas, even though she never went by Anita — like many people, especially in the South, she went by her middle name, Gail — except for one listing: the obit placed in The News & Observer of Raleigh.

The News & Observer also was the only one that had a completely web-based system for placing the ad. It was easy and seamless. Every other place had me e-mail in the information, and they called me back to get credit card information. Not bad, but not seamless.

One day, probably in the not-too-distant future, someone is going to combine something like the N&O’s online obit-submission system with a cheap price, and at that point, newspapers will hear another nail pounded in the coffin of their revenue model. For instance, why not a TV station? TV has geographic market presence — which I’m not convinced is even necessary nowadays — and this is revenue TV stations don’t now get, so a low-cost, web-only model is nothing but a plus to them. Or some newspaper company, like the N&O’s McClatchy, might decide, “Hey, why don’t we roll out this web-based obit system as a national thing, like Craigslist, and not just limit ourselves to where we have a building?”

When the day comes that someone actually does this, newspaper executives won’t be able to say no one saw it coming or tried to warn them.

5/21 UPDATE: Through Twitter, legacy.com noticed my complaints and addressed its end of them, so her obits now appear online as Gail Lucas, and the guest books have been combined.

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Gail Tabor at Lockbourne Air Force Base
My mother told me not to go into journalism. She made herself crystal clear. I remember when I told her I thought I wanted to study journalism in college. She fixed me with the kind of look teenagers usually get for breaking the news they are gay, and she said something like, “You don’t want to do that. You’ll never have any money.” She was a divorced mother of two boys, working for the Arizona Republic, so she knew her subject matter well.

She started her career at the Columbus (Ohio) Citizen-Journal, where in 1961 her job as society editor took her to cover an “Officers’ Wives” luncheon at Lockbourne Air Force Base, and during her visit she was given a tour of the restricted area where all the planes were kept, and she got the idea to ask for a ride in one of the planes — a supersonic F-101B. Her account of her exchange with Lt. Don Fullerton, the assistant information officer at the base, sums up her life:

Gail Tabor in flight helmet“Ha,” said Fullerton, “you’d faint on takeoff.”

That did it. I just had to get that flight.

She got the flight, becoming the first woman to fly in an F-101 and the fifth woman to break the sound barrier. The experience so exhilarated her that she kept damn near everything about it — from her typed draft, covered with edit marks, to copies of the three first-person stories she wrote about the experience (bearing the two-column logo, featuring fancy cursive-style type, of “Women’s Features”) — in a folder the rest of her life.

She interrupted her career to raise two boys. One had the sense to go into sales and other business-oriented pursuits. The other liked to write and felt the same sort of exhilaration that led to that folder of yellowing paper, so when she said, “You don’t want to do that,” he thought, “Yes I do.” He has second thoughts nowadays, but when it comes down to it, he still hasn’t been able to follow her advice.

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Stijn Debrouwere helps explain “the mess the news industry is in,” going over tangible examples of how the way people — primarily young people, but not just them — have changed the way they look for information and where they look. It’s a post solidly in the mainstream of examinations of industry disruption, which continue to be useful for helping traditional journalists look past their immediate source of distress: layoffs/buyouts and budget cuts (the latest example, from AdAge about a situation at the Washington Post). Those problems are just symptoms resulting from what Stijn calls the “death by nibbles.” He also does address the issue of what journalists should be doing, including stressing storytelling and personality; “joining the revolution” by considering alternate ways of distributing information, ways that you would not call journalism; become less boring (seriously, that is a huge issue); and “Do stuff that does still matter.”

5/8/12 UPDATE: It’s interesting to compare the above with what the CEO of the Deseret News Publishing Co. — which is seeing circulation gains — says are big ideas changing the media industry. One of the two he cited for content can, I think, wind up getting dismissed:

“Differentiate your content: Invest where you can be ‘the best in the world.’”

Don’t let “best in the world” send you off a cliff, particularly if you run a small newsroom. No one is saying a 20,000-circulation paper or small website needs to compete with the New York Times — or even the Deseret News. But what exactly is it your audience expects you to be best at? Probably not the food page. Town council coverage? Local youth sports? Much more likely. Put your efforts where they can make a difference.

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