Content Bridges

The Real Estate World is Starting to Reel

You think the real estate revolution on the web has begun? Think again.

Sure we all have the lookie-lou time of our lives, perusing fresh digs online. Ipix early on took inside the homes of the never-rich, never-to-be-famous. Now multiple photos (minimize the concrete, please) and slide shows are getting to be the standard. But as would-be buyers and then as necessary sellers, we still go back to The System to transact. Brokerages still charge a national average of 5.1%, even as real estate prices have grown to medians beyond $700,000 in Silicon Valley and $374,000 in the Boston.

Home prices have skyrocketed across the board, witness a report from the Office of Federal Housing Enterprise Oversight. The median home price in the United States rose 12.5 percent last year. It is up 50.5 percent in five years and 249 percent since 1980.

Of course, commissions have skyrocketed right along with them, though arguably no more work is needed to sell a million-dollar house than a $100,000 one.

Why? Well it's not like buying a book on Amazon or a digital camera on eBay or even car via autobytel. It just seems....more complicated, and more potentially perilous.  It must be complicated, we think, given the stack of papers we're supposed to sign without reading at closing.  What if something goes wrong? Lawsuits? Piles of cash gone? Big headaches?

Well, having bought and sold three or four houses so far, I know that it is more complicated. It does seem though a process that can be broken down in parts. Apparently a number of other more experienced people think so as well.

Just last week, the Tribune company, which has taken in tens of millions of dollars from realtors over the years, stuck a finger in their face. It bought ForSaleByOwner.com. That's right, one of the FSBO companies that realtors love to disparage.   ForSaleByOwner.com helps sellers list properties and offers a host of tools onsite to figure out the rest -- title, mortgage, insurance, inspection, etc. Tribune's purchase is a sign it is hedging its bets that web-based buying power will move closer to consumers in real estate as it has for other goods and services.

Or check out Dow Jones Start-Up Journal this week. It's one of the company's free sites. Featured is an absolutely non-remarkable interview with a Donna Chance, experienced Dallas realtor who is now a franchisee for....Assist-2-Sell. That's right, they assist buyers, and not at a commission rate, but at a flat price.

Says our Donna:

I like the concept of saving clients money on commissions. Assist-2-Sell Realtors charge a $2,995 flat fee for service, instead of a percentage of the sales price, typically 6%, like a traditional Realtor. We show the home, handle negotiations, purchase agreement, paper work, financing, and anything else to insure a smooth closing -- everything a traditional Realtor does.

Cautionary note for newspapers loving the realtor ads:

We don't spend a lot of time advertising and promoting agents, the Assist-2-Sell model is to focus on advertising the homes that are for sale. When I competed with other agents as Donna Chance Realtors, I always tried to sell myself as being better. Now when I go in to compete against other agents for a sale, I'm competing based on price. I am willing to offer all the same services at a fixed fee.

Competing on price.  Sounds like the web.

And peruse a post by my friend Peter Krasilovsky on "Yo Chicago" on his Local Onliner blog. Yo Chicago is one of his clients (very well disclosed), and he describes its opportunity well. Get beyond listings and create community around real estate.  It's bloggy, spirited, and you can smell its potential in giving you a sense of place.

After all, look at how much we all talk about our homes, our neighborhoods and our communities. Calling all newspaper editors: this should be done by newspaper companies.

Lastly, there are those pesky feds. When they're done plumbing through Barry Bonds' perjury and income tax evasion files, they'll go back to taking on the real estate industry's monopolistic hold on the Multiple Listing Service. Companies are finding holes in the monopoly, but the case now being worked out of the Justice Department could break the dam.

Knight Ridder: Signage of the Times

Heavier than a platoon of birds. More stylish than a plane. Those would be the two larger-than-life Knight Ridder signs, high atop corporate HQ. If you've flown into San Jose at night, they are hard to miss. By the numbers: Each sign is  13 feet tall, 94 feet wide and weighs 57,000 pounds.

Now they are a bit more of the KR name and legacy moving to the dustbin with the sale of the company to McClatchy. McClatchy says its keeping its HQ in Sacramento and will dispose of Knight Ridder's lease in due course.

Check out this little real estate piece in this morning's Merc, noting how the "Knight Ridder Building" may revert to its original name, the Fairmont Office Plaza. It makes note of the controversy around the sign going up in the first place, minus the color. 

It was 1999 when Tony Ridder announced a move to the Bay Area from Miami in a phone call to company leaders. The early bet on the new HQ: Palo Alto. But there was the little thing called "The Bubble." Not only were office prices sky-high; premium space was not to be had.

Enter San Jose. Its leadership had fond memories of the '80s, the first go-go years of the Valley, when a young man named Tony Ridder just happened to be publisher of the Merc.  In hundreds of calls, faxes and letters (!), San Jose convinced Tony to bring Knight Ridder "home" to San Jose. He agreed -- if he could get premium office space -- and prominent signage.  The only things standing in the way of the move then -- after the city's powerful redevelopment operation was prevailed on to move -- were San Jose's sign ordinance and the FAA.

Seems that the new massive  brushed aluminum signage was designed to sit atop the 17-story tower -- and in the midst of the flight path into the little hub we now like to call the Norm, the Norman Y. Mineta San Jose International Airport. Frankfurt Balkind, the corporate identity company KR hired to conceive the sign, then came up with a nifty cantilevered design. The signs would hang off the side of the building, near the top, lowering its height. That won FAA approval.

The sign ordinance was a little trickier, with some people raising claims of the city playing favorites. Not a ton of coverage in the local daily;  I recall the change in the ordinance appearing on page 5 of the Merc. Another lesson in roles and responsibilities of monopoly dailies.

Quoted in the story, Joseph Horwedel, San Jose's acting planning director, said the city tightened the sign regulations after the sign went up. ``You couldn't get it built again.'' 

Those of us working in the building were told to stay out of the building over the weekend the signs were installed, lest the installation should go awry and Knight Ridder New Media's employees turned to Internet dust. The street in front of the building was closed. Triumphally, the signs were maneuvered into place.

Somehow, as in all human enterprise, the way down will be less celebrated than the way up.

Career Builder: After the Dominoes Fall

The Knight Ridder/McClatchy deal feels like it has been playing out in slow motion. First pushed to put itself on the market in November, the deal should finally finalize around July 1. That's when all the golden parachutes should be deployed and all the properties change hands. McClatchy, buyer of KR, has been busy auctioning off the 12 low-margin newspapers it didn't want to keep. It's announced auctions and declared winners and losers of half of the 12, even though it hasn't officially bought what it's selling.

With the Mercury News, Contra Costa Times, Saint Paul Pioneer Press and Monterey Herald going to Media News and the Philadelphia Inquirer and Philadelphia Daily News going to Philadelphia Media Holdings, put together by a local business consortium, all the most important dominoes have fallen.

And as suggested here in March, newspaper companies may be smartening up,  using the newspaper consolidation process as a way of building national scale.

What's  likely to emerge as details of the sales become public is this:  CareerBuilder will become the recruitment site for the America's top 4 newspaper companies. I've got it on good authority that Media News, as part of the Merc sales deal, will get a piece of CareerBuilder. CEO Dean Singleton, then, presumably will bring in other of his 49 properties to the CareerBuilder fold, along with four new papers.

Media News is becoming the fourth biggest newspaper company, by circulation, with its 53 properties. Ahead of it are Gannett, McClatchy and Tribune, all of whom will be owners of CareerBuilder as well, with McClatchy acquiring its place via the KR deal, and sharing a piece of it with Media News.

Add it up and CareerBuilder becomes the default newspaper recruitment play, even more dominant than it has been.

How dominant? It is the online/print revenue engine for most of the newspaper companies in it, eclipsing revenue from traditional branded CPM ads, Google/Yahoo+ paid search ads and everything else.

Take Tribune CEO Dennis Fitzsimon's assessment of the jewel at the Tribune annual meeting, as reported in E and P:

But Fitzsimons made CareerBuilder.com exhibit number one in the case for optimism. He said the jobs site's monthly unique visitors now total 22 million--nearly double the 12 million visitors to Monster.com, the online pioneer in help-wanted. This year, CareerBuilder.com -- a partnership of Tribune, Knight Ridder and Gannett Co. -- will surpass Monster.com in revenue, he added.
 
"Everybody said we couldn't win with CareerBuilder -- and we did win," Fitzsimons says. "And we will win."

CareerBuilder has a host of issues.

• How much should it continue with or sign up newspaper affiliates from outside its ownership group, and how much should it rely on its own better-trained, better-targeted, better-motivated team?
• How does it meet the challenge of big companies moving quickly forward with smarter recruitment tools that allow the direct locating and hiring of talent?
• What about craigslist, oodle, vast and the like?
• How many dollars does it need to pour into renewing and making new distribution deals to get traffic? Monster often seems everywhere, now sponsoring the MLB All-Star ballot.
  
• Is a closer deal with Yahoo and Yahoo Hot Jobs worth it, combining forces in one way or another to vanquish the Monster?

Network, network, network. That's the lesson that AOL, MSN, Yahoo and Google should have pounded into newspaper heads long ago. CareerBuilder is just about there.

Now how about a truly national network for that pesky thing called news?

 

In Digg Nation

The august Westin St. Francis, of pretentious chandeliers and over-priced shrimp, hosted this year's West Coast Content Forum. That's the annual event of SIIA, for those in and around the growing content part of its work, distinct (largely) from its roots in software.

My favorite panel this year offered a bunch of 20-to-30-something technologist/visionary/entrepreneurs talking to an "older" mainstream media and aggregator crowd.  (You know who you are.)

 These publishers and those who serve them often talk about difficulty of releasing content potential, given print-based publishing system. That of course is not a concern of entrepreneurs.

Google's Bret Taylor,   WetPaint's (and WikiFido proud father) Ben Elowitz, Six Apart's Marissa Levinson, del.icio.us's Joshua Schachter all stirred up the crowd, egged on by the spirited moderation of Forrester's Charlene Li.

As publishers struggle with their own content management systems, these young technologists said that the power in people’s fingertips to put their categories (tags) on content of all kinds and share those tags is the emerging story of our time. Yahoo of course has struggled in making clear all the wonders of its multi-branded social revolution, Flickr, Yahoo 360, My Web, del.icio.us (which it bought), etc.. Still the changing power dynamics in the content world are clear. Content may be something between a commodity and king, but clearly as proud citizens of the Internet age, we're the new rulers.

The rap of another panel member, Digg founder Kevin Rose, said it all.  Kevin reached back to  Beat philosophizing in describing (and pushing the brand of course) of his tagging site, which  he says is pulling about 9 million page views a day, as tech-inflected readers dissect the news of the day:

" You find a story you dig…..A friend has dug it….There are five people who are digging this story."

Digg is a site that allows its users to tag stories with their own categories, highlighting those stories for the wider "community" and themselves. While mainly oriented to tech content, Digg soon will be branching out more widely to news in general. You can see the power of the site as members take apart the recent Associated Press/Topix deal, finding synergy, conspiracy and all kinds of other real and imagined happenings. 18 comments on it, probably more than you'd find anywhere else.

Among the coming innovations are spatial charts that show what stories friends are tagging...make new friends (Publishing + tagging=social networking.)  And Digg Spy 2.0 has just been released, if you want to check on what's hottest of Digg every few seconds, in a real-time view: "Ever wonder what other users are digging, submitting, commenting on, or reporting? Now with Digg Spy v2 you can spy (in real-time) on all site-wide activity."

Two final comments from Kevin:

   On the market value of Digg (think advertising and the NSA): "It’s fun stuff to play with... There’s a lot of data coming in."

   On partnering with the 1.0 dinosaurs: "MSNBC comes to us and says, ‘we know we ought to be talking with you, but we don’t know why." 

"Stinker of an Industry"

Merrill's newspaper analyst Lauren Rich Fine is well-respected. She's been watching and commenting on newspapers for a long time, and her declining optimism is worth listening to. You could say, she's not exactly bullish (which way is that steer running?) on the trade.

Consider these comments from her latest report. Like this friendly one:

"We still think it is a stinker of an industry, but believe management skill and cash flow reinvestment will prove the distinguishing qualities."

And what about Gary Pruitt and Dean Singleton buying in?

"It almost feels like doubling down."

And what about the margins the publicly traded newspaper companies should expect?

Merrill Lynch revised its 2006, 2007 and five-year growth rate ad revenue forecasts down to 1.2%, 1.1%, and 1.6% from 1.8%, 1.4%, and 2%, respectively. Margins are expected to come under pressure over the next five years sinking to 16% in 2011 from today's average of 20%.

Fine says that there is $9 billion classified hit to the industry over 10 years, given what print newspapers are losing to competitors. It is making up $2 billion of that through the Career Builders, Power Ones and Classified Ventures investments -- leaving a$7 billion to make up. (Not to mention flagging preprints and challenged retail.)

Thus those declining margins.

Dean Singleton runs a private company. His peers at McClatchy, the Washington Post, the New York Times and Dow Jones all run public companies with two classes of stock, providing something of a break on shareholder pressure. What about Gannett, Tribune and Hearst and others? How will they manage to assuage the public markets and somehow make the adjustments they need to make -- very quickly? That's just one of the many questions to which Fine's report gives more urgency.

Expect those gap numbers to start just a few conversations.

Could Buffalo Geek Have It Right?

Sometimes the blogosphere provides the purer wisdom, unfiltered by the quotidien worries and conventional wisdoms of those in or alumni of mainstream medium.

Take Buffalo Geek, for instance, a blogger found on Buffalo Rising
, an optimistically named blog focused on the mature city of Buffalo, New York. Buffalo, home of the Buffalo News, a family owned paper unknown for its edge. On Buffalo Rising today, you can see the reaction to the comments of Warren Buffett, legendary investory and owner of the Buffalo News (through Berkshire Hathaway) and major investor in the Washington Post. Buffett's recent remarks, unearthed in Amy Gahran's Poynter post, are straightforward on newspaper company prospects:

What multiple should you for a company that earns $100 million per year whose earnings are falling by 5% per year rather than rising by 5% per year? Newspapers face the prospect of seeing their earnings erode indefinitely. It’s unlikely that at most papers, circulation or ad pages will be larger in five years than they are now. That’s even true in cities that are growing.

But most owners don’t yet see this protracted decline for what it is. The multiples on newspaper stocks are unattractively high. They are not cheap enough to compensate for the companies’ earnings power.

Sometimes there’s a perception lag between the actual erosion of a business and how that erosion is seen by investors. Certain newspaper executives are going out and investing on other newspapers. I don’t see it. It’s hard to make money buying a business that’s in permanent decline. If anything, the decline is accelerating.

Newspaper readers are heading into the cemetery, while newspaper non-readers are just getting out of college. The old virtuous circle, where big readership draws a lot of ads, which in turn draw more readers, has broken down.

Plainly said. And something more of us are beginning to believe. Of course, not all. Take the latest news of the Philly business group "winning" the bid for the Inqy and the Daily News, for a mere $562 million. And pledging to stop the cutting....and the circulation losses....and the advertising turndowns. God bless 'em for trying, but you do have to wonder whether Warren is a bit savvier about the big-picture financial picture than Brian Tierney and Bruce Tool are. And how do we assess the optimism of Dean Singleton, a man who knows his way around a dollar bill far better than most. Dean believes he is buying distressed assets -- the once-stately Mercury News, the Saint Paul Pioneer Press, the Contra Costa Times and the Monterey Herald -- at the bottom of the market  for a mere $1 billion.  Fascinating.

But back to the Buffalo Rising. Check out a few of the posts in reaction to Buffett's remarks. Commonsense writing from some non-journalists who can point the way out of the darkness, this one offered by Buffalo Geek:

Would the News not be able to provide a voice for New Buffalo and the demands for reform and change via commentary on their blogs? Would this not be a common place for New Buffalo and Old Buffalo to join forces and work toward revitalization of our area? If we could only find a way to merge the divergent constituents of the city into the marketplace of ideas, we might just find ourselves working towards a common goal.

Or Daniel Dobie's two cents:

A newspaper that can't update its website until 9:00 a.m. except for AP feeds; then has little of interest either in print or on the net, displays frequently jejeune in-house writing, and depends so heavily on nationally-syndicated opinion columnists, is decidedly third-rate.

The Buffalo News isn't alone.  Many dailies simply aren't worth the money.

Just two of several, and nothing earth-shaking. Just good reminders that new focus groups and more studies aren't needed. Good old-fashioned community and citizen service, aided by 21st century tools, can do the trick.

 

 

10 Questions on the ABC's of Circulation Loss

Newspaper publishers must be beginning to feel like George Bush, waking up each morning and afraid to peek out from under the covers lest The New Numbers come and grab him. The President's numbers keep dipping, and so are the publishers'. It's bad enough to have the vp/circ (and what's the half-life of that job these days?) come into your office with a drawn face. But every six months you get the face the industry's off-key music: the release of the newspaper FAS- FAX report. It's enough to give publishers Numerophobia (yes, it's real -- and treatable!).

That report offers the most immediate look at what's happening with good old newspaper print circulation, with yesterday's numbers covering the period from October, 2005 through March, 2006. As observers awaited the date, the bets revolved around whether the report would best (or worst) the last numbers, reported last November. Those showed a 2.6% daily decline and a 3.1% Sunday decline. It was tight over/under, with the new numbers almost exactly paralleling those -- 2.5% daily decline and 3.1% Sunday turn-down.

What is scary about those numbers is that it is starting to look like a trend, a  sudden acceleration we began to see with the March 2005 report.

It isn't that circ numbers haven't been in decline for a long time. Yes it used to be true that as many as seven of 10 households took a daily newspaper back 30 and 40 years. Now that's a mass medium. Those numbers tumbled down, the toll taken by radio, TV, busier lives and then the Web. And as they've tumbled, a percent or so, more and less a year, publishers have been able to keep pricing advertising up and up.

Imagine the graph: circ slowly cascading down, ad rates constantly moving up. Unless they are very close to retirement,  publishers have experienced a few night terrors as they saw the crossing of those lines. But then day arrives again, and the pricing continues.  With the further splintering of the mass market, the new wake-up call may become a bit more harrowing.

As we look at the report's numbers, a few questions are in order:

1. Isn't clearer than ever that metro papers have less time to restructure for the Web than do community dailies? The WSJ had a great piece ("Unlike Big Dailies, A Paper Prospers In Bismarck, N.D.", 2/8/06) about small papers managing the Web transition more gracefully than the big ones a couple of months ago. Take a look at the heavy losses -- Atlanta Journal Constitution (6.7%), L.A. Times (5.4%), Boston Globe (8.5%) -- and y0u see disproportionate impacts accelerating.
2. Can you see a three-way divide coming: big national papers (with national/global print/web brand and reach; community papers better able to connect and distinguish with "Local" and the big regional metros caught betwixt and between? The NYT was a bit up, the Journal just a bit down and US AT flat, all better than the regional metros. Community dailies were largely flat.
3. Speaking of national papers, and national verticals -- The Times (NEWS), The Journal (BUSINESS), USAT (NATIONAL TAB IN BROADSHEET CLOTHING) -- isn't it time for a new national sports daily? Some of us fondly remember the short-lived "The National", which lasted 18 months, after putting together an all-star sports-writing staff.  These new print verticals in business, news and sports, with their web analogs (or will it be inside-out?),  may be a winning story.
   
4. What's the Chicago Tribune's secret, with daily circ  up .9% to 579,079 and Sunday up .3% to 957,212? Publisher David Hiller cited a new "At Play" Thursday section, for instance, but I couldn't find any corollary of it on the Trib website. Owas it the Chisox' loooooooooooooong-awaited World Series victory?
   
5. Okay, where do these circ reports put the industry on Elizabeth Kubler-Ross' "Five Stages of Grief" spectrum? ( A brief tour, courtesy of Wikipedia) : Denial and isolation: "This is not happening to me."; Anger: "How dare God do this to me."; Bargaining: "Just let me live to see my son graduate."; Depression: "I can't bear to face going through this, putting my family through this." Acceptance.   Insert your own explainers, based on your own office conversations.
6. With the Seattle Post-Intelligencer down another 9% to 131,769 daily circ, how long before the rumors of it going online-only come true, providing a great case study for the rest of the press? With the Seattle joint operating agreement falling apart, the time may be close.
   
7. What's going on in the Bay Area, and does it have portent for the industry? The Chron dropped another 15.6%, on top of  double-digit losses  six months ago. And the Merc lost 7.6%. Both are among the greatest losses, signifying perhaps that in regions where comfort with web news has grown longest and web media choices seem greatest, newspapers have even more to lose.
8. Does Mark Fitzgerald's  Editor and Publisher piece on Hearst's San Francisco woes and its new partnership with MediaNews have more resonance after this circ report? Reports have the Chron losing a million bucks a week.
9. Did someone say mass? Much of newspaper pricing is based on being The Last Mass Medium. Take a look at this chart of Top 50 papers. Last column shows their market penetration, now largely in 30s and 40s percentiles. That's still a lot of bulk, but less mass than ever.
10. Isn't a cruel irony that McClatchy, which had 20 straight years of circ gains wowing the industry and Wall Street, sustained its first turndowns just as it was buying Knight Ridder? McClatchy's losses are now accelerating along with the rest of the industry.