Posts Tagged ‘paywalls’

Ken Doctor lists 10 ways the news industry will judge 2014. I agree with the list, but I’m focused on just one:

New strategies will be tested. We’re bound to get some sense of how the major strategies put into local markets this year are working. Think Advance’s Slim-Fast three-day-a-week home delivery plan is a good or bad idea? Let’s see — or least divine, since Advance is privately held — the results. How about Aaron Kushner’s major reinvestment in southern California? What’s the payoff in circulation, reader revenue, and advertising? As DFM’s Thunderdome rolls out for a full year, will it be a hit or a miss?”

I have about had my fill of debates about what is or isn’t going to work. I want some numbers. The three experiments Doctor cites above are among those too young at this point to judge. Paywalls, at many publications, are another. (At my own, a paywall is tentatively scheduled to go up next month. I’m not holding my breath.) Even after one year, you can’t declare success or failure — I recently heard a publisher tout the gains made by a new (less than a year old) advertising pricing strategy, but to this journalist’s eyes the numbers were front-loaded, with all the gain coming from new advertisers giving the new prices a spin and then not renewing, and I had to wonder what the second year is going to look like — but they are gaining age. Full-year results will be intriguing, second-year results will be when you start thinking about a trend.

It’s a painful thing, this waiting.

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When we were children and encountered a problem, we went to our parents, and they fixed it.

Parents can fix anything.

As we get older we take on more of our own problems, maybe asking advice. Well into adulthood, it’s hard to shake the urge to at least ask for advice when we come up against a really big problem.

Which leads me to the reaction to Amazon founder Jeffrey Bezos buying the Washington Post.

I’ve seen this movie before, and I’m getting the serious feeling that everyone in the news industry is waiting for Dad to show up and Fix It.

As the old business model – using low prices for the product to build audience, then making all your money from advertising – began to unravel, no one in the business had a way to fix it.

I remember when Sam Zell first bought the Tribune papers in 2007, some people (not all, by a long shot) thought he might Fix It. He had made a ton of money, so he must know something about business, and maybe a fresh set of eyes and a less hidebound approach would work. Then he started breaking all the good china, stamping out his cigars in the carpeting and insulting his employees, and it was clear that making a ton of money in one business doesn’t necessarily translate into universal business genius. Then the economy imploded, and that was the end of that.

In 2012, Warren Buffett made a splash with a series of newspaper purchases, which has continued into this year, and there seemed to be a giant sigh of relief throughout the industry. The Oracle of Omaha is widely described as a genius, having made shrewd investments across various industries for decades, so surely he must see the way out of the mess we’re in, or once hip deep in the mess he WILL see it. He must have a plan, right? … Well, he has said repeatedly he does not, and so far Mr. Buffett has cut well over 100 jobs (including mine). If his team has created any new jobs or found a new way to increase revenue, I missed it.

Also in 2012, another very rich man, Aaron Kushner, set journalistic hearts aflutter by doubling down on the old print model, beefing up the Orange County Register’s news staff and cutting off free Internet access. The company claims it is having success, though circulation is flat. As I wrote recently, until someone produces numbers, the jury has to be considered out on that experiment.

Now comes Bezos. He made a bazillion dollars on the Internet! The Internet is at the heart of the industry’s problems, so he MUST be the man to turn this whole thing around. Alan Mutter, generally a sound, pragmatic voice on news-business topics, makes a case for it.

I sure hope so, because I’m getting tired of watching this movie, and I can no longer tell whether its title is “Waiting for Superman,” “Waiting for Godot” or “Waiting for Guffman.”

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Lord knows I want the Orange County Register’s print-centric business model to be successful. It is the model of simplicity: Beef up the content + charge for content = Profit!

But an article at The Guardian that asserts that model’s success doesn’t actually show any success, except in the area of spending more money.

The article sums up the paper’s approach since CEO Aaron Kushner took over Freedom Communications a year ago: Add more staff and pages, prioritize print over digital, erect a hard paywall. A quote from editor Ken Brusic perfectly captures the reasoning:

“Imagine it’s your daily coffee. Each time you put down your money the cup gets smaller and the brew gets weaker. That’s essentially what’s happened to American newspapers. We took things away from people and at the same time gave content away free on the web.”

I happen to agree with that. The first instinct of publishers over at least the past 10 years (if not since the dawn of publishers) has been to cut payroll and expenses first, seek new revenue channels later — which is lunacy. I was in Media General’s corporate offices in the late 2000s when the economy began collapsing, and the company’s three metros went, among other cuts, from four racing writers to zero, two science writers to zero, full-time state capital staff eliminated except at the one paper actually located in a state capital, each newsroom collapsing to focus on “the franchise,” local news. You had the sense of medium-sized, hefty dailies with big ambitions shrinking their staff and ambitions to become oversized small dailies. But the prices stayed the same. I always wondered what would have happened had they offered readers a choice and laid out the economic realities, explained that advertising had collapsed and what that meant for staffing. What would the readers have chosen as their preferred way of handling the budgets? Maybe the same thing. We’ll never know for sure.

In Orange County, Kushner’s approach essentially is turning back the clock to experiment with the approach no one tried: Provide the content and see if you can make that work. The Guardian asserts that “as the paper prepares to celebrate the experiment’s first anniversary, it appears to be thriving.”

But the definition of “thriving” I’m familiar with wouldn’t seem to apply here:

“Home deliveries are flat, compared to a year ago, but circulation overall is sharply up if you include an expanded stable of 28 weekly newspapers.” I would not count them, because the rest of the article didn’t talk so much about beefing up the staff and content of the weeklies. “… Revenue is ahead of target, said Kushner, without elaborating. Annual figures are due to be published in September.”

Where is the skepticism we would bring to any other businessman? Kushner SAYS revenue is ahead of target. But what was his target? You double your staff in one year and make your paper so heavy that, as deputy editor of local news Rob Curley says, it could kill a cat, you incur gigantic expenditures. It’s really easy to ramp up spending. Ramping up revenue is a good deal harder. So what does the Register and its there’s-no-more-free-content approach charge readers for this giant, cat-killing package? Print or online, it costs just $1 a day. I would be shocked if that covers even the cost of the newsprint and ink the Register is using. The Register has been working to increase advertising, but with readers contributing just $1 a day, the idea that advertising has increased enough in just one year, especially coming out of a recession and in a national slump in advertising, for the venture to break even seems ludicrous.

If you were to tell me that Kushner expects to lose money for a while, build the product and its reputation, use that to bring in more advertisers and revenue streams, gradually increase the cost to readers, and eventually get it to where both the print and online products are sustained as primarily pay-for-content products supported by readers rather than advertisers, I could believe that.

Just don’t tell me it’s “thriving” right now and expect me to believe it without any numbers to prove it.

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I have trouble figuring out Warren Buffett’s fixation with newspapers. He didn’t get to be a billionaire by being a sentimental, soft-headed fool, but in his statements about newspapers I often wonder whether it’s that he didn’t know what the newspaper economic model was when he started buying them, or (on the optimistic side of me) that he knew what it was and wants to provide a bridge to move the industry to a new model.

His recent message to Berkshire Hathaway shareholders does nothing to lessen my puzzlement.

My skepticism of his understanding has stemmed from his repeated insistence that paywalls are necessary, that it’s a poor business model to give away what it costs money to produce. That underpinned my questioning whether he understood that newspapers HAVE ALWAYS GIVEN AWAY WHAT THEY PRODUCE. The price you pay to buy a copy of a newspaper doesn’t come close to the actual per-unit cost of producing a newspaper. Advertising has always paid the freight. Newspapers have been willing to essentially give their product away for a price that, for all intents and purposes, is close to free in order to court more advertisers.

But in his recent message to shareholders, Buffett made clear he understood this:

“Indeed, your paper contained so much you wanted to learn that you received your money’s worth, even if only a small number of its pages spoke to your specific interests. Better yet, advertisers typically paid almost all of the product’s cost, and readers rode their coattails.

“Additionally, the ads themselves delivered information of vital interest to hordes of readers, in effect providing even more ‘news.’ Editors would cringe at the thought, but for many readers learning what jobs or apartments were available, what supermarkets were carrying which weekend specials, or what movies were showing where and when was far more important than the views expressed on the editorial page.

“In turn, the local paper was indispensable to advertisers. If Sears or Safeway built stores in Omaha, they required a ‘megaphone’ to tell the city’s residents why their stores should be visited today. Indeed, big department stores and grocers vied to outshout their competition with multi-page spreads, knowing that the goods they advertised would fly off the shelves. With no other megaphone remotely comparable to that of the newspaper, ads sold themselves.

“As long as a newspaper was the only one in its community, its profits were certain to be extraordinary; whether it was managed well or poorly made little difference.”

The advertising itself “delivered information of vital interest to hordes of readers.” Advertising is free content, then, so it costs nothing to create; in fact someone is paying you to print something that helps you draw readers, so giving away the product in that case makes sense. OK, so maybe he knows the history after all.

He also knows the recent history:

“Now the world has changed. Stock market quotes and the details of national sports events are old news long before the presses begin to roll. The Internet offers extensive information about both available jobs and homes. Television bombards viewers with political, national and international news. In one area of interest after another, newspapers have therefore lost their ‘primacy.’ And, as their audiences have fallen, so has advertising. (Revenues from ‘help wanted’ classified ads – long a huge source of income for newspapers – have plunged more than 90% in the past 12 years.)”

So at this point, we know he knows the traditional business model is in the tank. And?

“Newspapers continue to reign supreme, however, in the delivery of local news.”

All right, he wants to change the model from one in which newspapers make their money by selling their audience to advertisers to one in which the newspapers actually do what journalists have always pretended was the real business: selling the news to the audience.

And he has said publicly that he wants his newspapers to be so good that a person will “get the shakes” if he misses his daily paper.

That would be one humdinger of a newspaper.

But I don’t see the real evidence of his belief in that model. Where have salaries increased so he can attract the kind of creative minds that would induce withdrawal symptoms? Where has staff been increased, other than papers that were allowed, now that they didn’t have to feed a parent company’s debt payments, to fill long-vacant positions? Point me to a paper where there is movement toward addictive content.

Where has the price of the daily paper increased to reflect this valuable content that is available nowhere else? Though perhaps you could argue that holding the price steady while losing advertising — which Buffett himself described as valuable content that often drew readers on its own — could be a form of increasing prices. Your paper still costs 75 cents or a dollar a day, even though it is half the size it used to be.

The American newspaper industry conditioned the public to believe for more than 100 years that content was very nearly free because, with advertising paying the bills, it could afford to. Buffett now proposes to make people pay for that content. Bravo. I wish that had been the case for decades. I wish, in fact, that publishers had asked readers whether they would rather pay more than see some of their favorite features and sports beats hacked in order to keep the price of a daily paper from rising when advertising went off the cliff in the late 2000s.

But what is the plan for making Buffett’s vision work? Buffett’s statement to shareholders holds up the Arkansas Democrat-Gazette as “the main exemplar for local newspapers” for having gone early to a hard paywall, because of which the paper “has retained its circulation far better than any other large paper in the country.” True. But it is still losing advertising, just as everyone else has, and has had to hike its price. And predictions are that, paywalls or no, advertising will continue to decline.

Paywalls alone, charging something similar to a print subscription, can’t save newspapers if advertising continues to fall. So, assuming that at some point everyone will have to pay more, what is the ultimate price point at which Buffett thinks his papers can be self-sustaining? Does Buffett think people will pay $3 a day for a newspaper in Danville, Va., or Waco, Texas, or Enterprise, Ala.? The industry’s longtime executives obviously think not, or they would have hiked prices much faster and sooner. Would Advance have cut its days of production in New Orleans rather than raise the price if company officials thought a price hike would achieve the same ends? I hope not, but I can’t rule it out — newspaper executives don’t inspire confidence in their ability to game out the various scenarios.

Buffett obviously thinks that in the long run, the day-cutting strategy in New Orleans and other places will lose:

“… the less-than-daily publication that is now being tried in some large towns or cities – while it may improve profits in the short term – seems certain to diminish the papers’ relevance over time. Our goal is to keep our papers loaded with content of interest to our readers and to be paid appropriately by those who find us useful, whether the product they view is in their hands or on the Internet.”

Well, fine, you’ll produce lots of interesting stuff and people will pay for it. … But how much do you think they will be willing to pay? Just for what you produce right now, since you are not hiring a bunch more people, like the Orange County Register, in an attempt to bring readers back?

If you believe in that strategy, that content equals readers, why not actually implement it?

Reducing daily print publication “seems certain to diminish the papers’ relevance”? No, faster daily personal schedules plus TV, radio and the Internet did that already. Print circulation had been in decline before the very first news website ever was created. “Local news” will bring them back? Define “local.”

Some newspaper executives seem to think that if you jam a paper full of press releases and community announcements, that’s “local content,” and people will value it. I think not. I think people will read it and see that it’s all badly written, fluffy crap, and they will resent paying for it, or being asked to pay for it.

Here’s my radical proposal: The kind of people who are willing to pay for something to read enjoy reading. And I don’t mean they enjoy seeing random printed words on a page. They want to READ. They want writing that engages the mind and the imagination. That the writing happens to be factual and about their neighbors and community only makes it more engaging.

And you can’t get that from writers paid slightly more than migrant field hands are paid, which still is the going wage in some newspapers (including some of Buffett’s).

The future may yet see Buffett’s team roll out an aggressive, content-building strategy tied to a price-raising strategy that includes pay that rewards the best and brightest content-creators, so that the papers all are truly primarily selling content. That’s not happening yet, no one has proposed a path for getting there, and if it weren’t Warren Buffett making the pitch, I wonder how many people would buy what he’s selling his shareholders.

Full disclosure: In November I was laid off by Warren Buffett’s World Media Enterprises. I have made my arguments about pricing, pay and paywalls in the new news environment since long before that.

UPDATE 3/5/13: Yet another interview in which Buffett has to answer no hard questions at all. Buffett says, “It’s almost unnatural how much I love newspapers.” Yes, it is, almost as unnatural as how seemingly all journalists see nothing at all worth questioning about his company’s stewardship and plans, or lack thereof, for what he has bought.

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I recall once writing (although apparently it was before I migrated my blog to WordPress) that I was getting sick of the paywall debate and I wished someone would just pull the trigger and put up a hard paywall so we could get actual data and stop debating what might or might not happen. You know how people always say, “Be careful what you wish for …”? It seems I’m going to soon find out firsthand what a hard paywall does. As of April 1, actually.

While I have long been philosophically opposed to the idea of a paywall — with a possible exception made for metered paywalls — the early weeks of my tenure at the Lenoir News-Topic have weakened my resolve on the issue. I am told repeatedly that there is a noticeable drop in single-copy sales if the day’s big news goes up on the web before most people begin work. The circulation department reports that an increasing number of subscribers who refuse to renew their subscriptions say the reason is they can get it online for free.

Now, obviously we are not talking about a straight line. Even if you hold on to your circulation, it doesn’t mean larger advertisers won’t stop shifting more of their money out of newspapers, so you can hold or build circulation and wind up with less revenue. And although people are telling our circulation department that they won’t renew because they can get the news online, I’m not at all convinced they mean they are using our website. Our site, frankly, sucks. It sucks hard. It will give you a hickey if you use it too much. That is gradually being rectified, but the staff is so small that the progress is halting and low-priority.

But as of April 1, we’ll start to get answers. Maybe subscription renewals will climb, or at least level off. Maybe people will start to tell us all the things that are missing from our site, which will prompt a discussion on the resources needed to get that done every day. I somehow doubt people will say that. I think they will continue saying they are getting their news online for free, even though they will not be able to get our site for free.

But at least we’ll have our answer, the one I have wished for. I hope I won’t again be thinking I should have been more careful what I wished for.

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I got a lot of problems with you people. Too many to list, actually, so some of the big ones:

Pack journalism. Washington, D.C., remains ground zero when making the case for too many people chasing the exact same story, but Newtown, Conn., is the most egregious example of what happens when a big story breaks anywhere else. Why? What was gained by having this many journalists in one place chasing exactly the same thing? Isn’t this why any news organization pays AP?

General unwillingness to challenge traditional beat and story structures. See my previous post and the links there to other sites for more detailed discussion. Staffs are smaller, the world is more linked and mobile than ever, so change is necessary – not just changing what you cover but how you cover it. In many newsrooms, everyone is preoccupied with an urgency to feed the beast. Consider whether you can let the beast go hungry a day or two a week so you can assess whether what you are spooning into it is worthwhile.

Related to the above: story quotas and related mandates. A couple of weeks ago I visited a small newspaper where I was told that staffers are required to file 8-12 stories a week, and that the company requires that the front page be all-local. Eight stories a week is not onerous, in my experience, but as a glance at that paper’s front page made clear, no one was exercising any quality control to ensure that the quota was being filled by solid, well reported stories that people would want to read – probably because the editors were more afraid of not having enough staff-bylined stories to fill the page. Quotas and mandates can have that effect: The staff goes on autopilot, and the product suffers. Manage for quality first.

Also related: general reluctance to engage the community. Our world is full of bloggers, social posting and sharing. Our news is not. Why isn’t that widely acknowledged as a failing?

News websites remain unnavigable. This morning my wife was trying to find something on the site of the local newspaper. Couldn’t do it. I went to Google and found it in seconds. She actually has a better sense of how news sites are organized than the average person because of her exposure to that structure through me – but it’s still a mystery to her. Sites have too many sections, and where stories are listed and how they are tagged may be entirely at the whim of whatever overworked staffer posts them to the website at night. At some sites there is little consistency, or logic. Stories on a race for U.S. Senate, a legislative story, a profile feature and a food story all are tagged as local news? Seriously? Why? Oh, looking at the rest of your stories, I see why: EVERYTHING by your staff is tagged as local news, apparently because your late editor doesn’t want to think about it. And you, the editor, never noticed because who the hell has the time to look at such things? There is a reason your website has a taxonomy in the first place, and it’s not just because the site designer is anal retentive, but if you are tagging everything the same you are nullifying it.

Related to the above: Too many news people have no sense at all of how the industry’s finances work. The next time you see an argument for how many reporters $1 million (or any amount) in paywall revenue could pay for, check to see whether the math includes benefits, insurance, office rent/mortgage, utilities, office supplies, staff expense reimbursement such as mileage … You get the point. You can’t fully participate in an argument over the future of your business if you are ignorant of the business end of the business.

A few grievances that are less about journalism than the practices in the revenue-generating end of the building:

The general unclickability of business transactions related to news websites. Have you tried to place an obituary lately? Or any kind of advertisement? It’s usually an experience straight out of 1990. It is hard to spend money with a newspaper. It’s like you walk up to the building with a wad of money in your hand and can’t find anyone who will extend a hand to take the money from you.

Related to the above: the willingness to charge online readers to read obituaries, which themselves are paid advertisements. Are we so absolutely desperate for any revenue stream at all that we won’t consider the long-term implications of what we are charging for? If you charge the public on the front end to place a type of ad that you know helps you build an audience, and then you charge the public on the back end for the ability to read all of those ads in one place, you are simply begging for someone else to engineer a faster, cheaper, easier way to distribute that kind of ad. There WILL be a craigslist for obituaries, and newspapers don’t seem to care.

That scratches the surface. Looking back over them, I detect some things in common: lack of imagination, too much adherence to tradition, failure to engage new technology, timidity. Happy Festivus. Now, on to the feats of strength …

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Another week, another ruckus over paywalls. That link will take you to Steve Buttry’s angle on the issue, but he links to the rest. Suffice to say I don’t think it’s a good idea for anyone to base an argument in favor or against anything, let alone declare victory, based on trends that started in just the past few years.

This ruckus erupted just ahead of news that Rupert Murdoch will pull the plug on his iPad-only, subscription-only news product, The Daily.

That by itself is evidence enough not to be too eager to declare victory. In this case, it was not the launch of The Daily that I refer to; many raised questions about the wisdom of launching a new product and immediately making it unavailable to the potential audience – that it would be one thing to take a well established, highly regarded newspaper entirely behind a hard paywall, and it’s another thing entirely to launch something new behind one.

What I recall also happening at the time, though, is swooning over the iPad’s implications for print publications moving to digital formats. I remember multiple company meetings where editors asked those responsible for digital initiatives when their newspaper would get its own iPad app. Everyone needed an app, so it seemed. An app! An app! My kingdom for an app.

While I loved the look of things I saw on the iPad, the idea of apps never struck me as a good one. They are not cheap or easy to build, and if you recall, your phone is not only old but totally obsolete in less than two years, so how long, I wondered, would the technology in an app be likely to last before it needed to be redesigned for the next generation (two years from now) of mobile products?

Part of The Daily’s problem, then, might be overeagerness to buy into the Apple iHype. But in a column about The Daily at GigaOm, Jordan Kurzweil lays out what he sees as the ways the The Daily went wrong and that he thinks still could be fixed. And I was struck while reading it that a great deal of what he said sounded like it applies to any newspaper trying to adjust to the digital world:

Be more than daily. Simply put, people now expect constant news updates. It doesn’t matter whether you think that’s good business; if you don’t provide it, the customers will go elsewhere.

Use technology to be bigger. I think the particulars of Kurzweil’s argument for The Daily here are different than I would put them for most newsrooms (most newsrooms having fairly limited technological capabilities), but a big part in either case is curation – or, as Jeff Jarvis says, do what you do best and link to the rest. In any community, it’s a rare news organization that is trying in any serious way to curate local blogs, competing news outlets, Twitter and whatever else is out there. One person doing that using common online tools could re-establish the newsroom as the hub of community conversation and news discovery.

Be available. I used to hear this worded differently: Go where your customers are. Nowadays, that is online, and rapidly it is becoming mobile. If you are 100 percent walled off from non-subscribers – meaning not only do you require payment for reading your stories, but you do not run any kind of free, web-friendly site to offer even a taste of your work to a casual passerby – it is not likely you will gain many new customers. Why are there ever stands in the grocery store offering free samples of a particular product? Same idea.

Fix the user experience. Most journalists I know give this practically no thought at all. Spend a day using nothing but your phone to keep up with the news, then think whether, if you had similar frustration when you went to a local restaurant, you would ever go back. Unfortunately, the technicalities of the user experience are largely outside your control, but you can think about the elements you are delivering to that experience, and if you are thinking about it, then when the opportunity comes to weigh in on the technology, you will have a base of knowledge from which to speak.

Be frugal. Most newsrooms I’m familiar with are way past frugal, so I have to reframe this. The problem The Daily had on this count was ignoring the frequent saying in business, “Fail fast, fail cheap.” But the mindset that led to this failure is well ingrained in newsrooms. Murdoch decided the future of the newspaper was in a highly formatted online product, so he threw a massive amount of money at it and tried to build Rome in a day. Didn’t work. I have seen over and over again that when an idea for something online is presented in a newspaper newsroom, the managers don’t want to do it unless they can make it pretty close to perfect; when moving to a new CMS, they will fuss over minute details and delay the launch; even redesigning the print product, they will agonize or argue over fonts. I would translate “be frugal” here as “be good enough,” using the phrase that in the mid-2000s the Newspaper Next project beat editors over the head with. I don’t think it took. (In 2010, Steve wrote a good update on the topic.)

I don’t know whether any of the above steps would have saved The Daily. But I have trouble finding a downside in the basic ideas.

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My first impulse was to dismiss David Brauchli’s argument in favor of paywalls as a combination of crap and a sales pitch, if that’s not redundant.

But he ends with a solid idea: that perhaps there is premium content people are willing to pay for. I agree, though I’m not sure the audience will be enough to support the traditional newspaper model, but we’ll see. Until proven wrong, I welcome the chance to experiment and find out.

Unfortunately, Brauchli spends the first part of his argument beating the dead horse that any decent journalist should not spread ideas that any content should be free. The worst part of his argument:

“Most people understand that the content found in newspapers costs money to produce. The cost of producing that content is not diminished when the content is distributed online.”

That something costs money to produce is the worst possible foundation on which to assign a value to that thing. I could employ 100 really awful mechanics to build as many car-like conveyances as they possibly could produce, but whether any of those things would be worth money is not a good proposition. The average newspaper probably is in a better position, value-wise, but that doesn’t mean that everything the staff spends time to produce is worth money, or that everything that is worth money to a portion of the readership also is worth something to the rest of the readership. High school sports is one area where newspapers in recent years have decided they should devote a LOT of resources, on the entirely reasonable basis that no one else covers it. I don’t give a rat’s ass about high school sports; why should I pay one thin dime for that coverage? But I don’t have that option when I pick up the Saturday paper after Friday-night football.

As a recently laid-off journalist, I have had to make the value judgment, and I chose not to continue the daily newspaper. After almost two weeks, I really can’t say I’ve missed much. It reinforces the point made to me in 2001 when I first moved out of a daily newsroom: Once you are not directly connected to the daily operation of a newsroom, your perspective changes, and you gradually realize that what the newsroom staff is doing every day may not be as valuable as you thought. Unfortunately, that message is hard to push. I and no one I know really tried hard to push it; at most, major change was given the status of a distance goal, and we tried to push the idea of working toward a better ideal, not making huge changes in the short term.

But the biggest business problem with the newspaper model — one that would not be fixed with any changes on the content side — is it remains a one-bundle-for-all model. It’s a mass-circulation model because that’s what the big advertisers — the people who REALLY pay for the paper — historically have wanted. The content has innovated — it is more mobile than ever and better able than ever to be atomized and customized — but the business end remains a bundle. I doubt you’ll see much innovation on the business side — until the traditional side’s dollars slide far enough that the digital dimes look much more attractive than they do now.

11/27/12 UPDATE: Similar thoughts from Alan Mutter:

By their inaction, publishers have been shut out of nearly half the digital market.

Now, the same thing appears to be happening again. While the IAB reports that mobile advertising has doubled in each of the last three years, most newspapers have only rudimentary capabilities in this rapidly developing area. Publishers also are weak contenders in video, the next-biggest area of growth after mobile.

The challenges will keep coming. Not the least of them will be the innovative, target-marketing capabilities bound to be developed by Facebook, Twitter and dozens of other social media to capitalize on their expanding audiences. And who knows what lies beyond?

While publishers are preoccupied with managing the epic decline in print, they are losing sight of the future.

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Google ad revenue
I keeping beating the dead horse of journalists’ knowledge about their own business, and here I go again. Complain about staff cuts, focus on the quality of the content, whatever, just stop ignoring the reality of the business, which is that advertising is going away, finding new paths to consumers. No paywall will stop it. The news end of the industry keeps doing what it can to keep up with the customer, but the business end of the industry has proven inept at solving its part of this riddle. Is that because the folks there aren’t that good, or is it just that any good solutions are much harder to find?

11/27/12 UPDATE: Alan Mutter has another chart:

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I am happy to have actual scientific evidence that I am right: Newspapers can’t go wrong by explaining to readers what they are paying for and why. Actually the proof is tangential to my argument, but it’s related so I’ll claim it as evidence anyway.

As the combination of the recession and the migration of advertising revenue drove newspapers to lay off staff and cut back content, journalists and readers alike often complained that the publications were being slimmed down and made less compelling just as the price per copy was being raised — all of which is true. The thing is, readers were not presented with any options. The decision was made and then presented to them in as happy terms as possible. I wondered whether it had to be that way and have argued that if you tell readers exactly what it costs to produce a single copy of the newspaper, including specifically the cost of printing and delivering it, readers would be much more likely to accept price increases. After all, the typical subscriber is barely covering the cost of paper, ink and gasoline as it is, leaving the cost of all the humans involved in creating the content out of the picture.

The evidence I’m claiming comes from a study of consumer reaction to the New York Times’ online paywall. The study authors fault the Times for failing to adequately justify charging for online content after it had been free for so many years, because the justification or lack of it made all the difference in the world in how people reacted:

“When participants were provided with a compelling justification for the paywall — that The New York Times was likely to go bankrupt without it — their support and willingness to pay increased,” Cook and Attari concluded.

Times readers who thought the paywall was merely an effort to improve the newspaper’s bottom line, on the other hand, visited the website less frequently and looked for loopholes to avoid the charges.

The reason I’m claiming this as evidence in support of my argument is that the basic situation is the same: People do not inherently understand our industry’s finances. If they truly value what your publication does, they will accept a higher price as the cost of keeping it. If they don’t value it, well, then you have a larger problem. But if you don’t even bother to explain to them the exact reasons you want to charge more, they just assume you want to pocket the higher revenue.

Readers I have talked to don’t even realize advertising has declined. They don’t realize that advertising essentially pays (or historically has) the full cost of news production. They think that all the cost-cutting of recent years, as well as the move to start charging online, has been about INCREASING profits. People understand the need to balance income and expenses. Explain it to them. It’s not a radical concept: Treat them like adults.

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