Four Things About QuadrantONE

QuadrantONE moseyed out of the gate last week, after a few false starts. It got good ink because it offered good numbers: a potential of 50 million unique visitors waiting to be served in 27 of the top 30 markets. The new network will leverage sites owned by its four co-owners, Gannett, Tribune, Hearst and the New York Times, though neither the NYTimes.com nor USAToday -- national, not local -- sites are included.

QuadrantONE of course is not unexpected. News about it had leaked out a couple of times as Gannett and Tribune -- the two prominent holdouts from the Yahoo newspaper consortium -- have tried to put it together. They romanced a number of consortium members, including Cox and MediaNews. And where's McClatchy, Tribune and Gannett's sometimes partner? It is telling, though, that in the end only Hearst and the Times ponied up and joined in as equity partners.

How well will its staff of 17, anchored in TribuneLand (Chicago), fare?

My sense is that QuadrantONE faces an uphill challenge. Why? Consider these four things about QuadrantONE:

---Scale: QuadrantONE's numbers sound big, but analyst Greg Sterling's Comscore chart of top-ranked networks show that it will place about 34th among those already established, already knocking on the doors of hyperactive, interactive buyers. Centro, at 23rd, clearly is supplying lots of revenue to local news properties already. Real Cities is still hanging around, as is the Newspaper National Network, which Greg notes in his post, Onion-like headlined "Newspapers Create Another Ad Network", is owned by the same companies starting up QuadrantONE. The new network may get bigger (where for instance are the LocalTV sites, now under common Tribune management under Randy Michaels) as other news chains join as affiliates, but it could still be sub-scale. Importantly, there is no clamor from the ad buyers -- to whom power in the marketplace is plainly moving from ad sellers -- for a new, local network. QuadrantONE: Y(et)A(nother)H(ierarchcal)O(nline)O(uting)?

---Technology: The ad business is increasingly all about technology. We're leaving the selling space (newspapers) and time (broadcast) in the rear view mirror. Analytics is everything. Curiously, QuadrantONE says an unnamed technology partner is involved. My sources tell me that those companies pitched to join as equity partners weren't even told who the partner would be, a stumbling point that helped dissuade them. Coincidentally this week, Reuters Americas -- which is now coming on strong in the US market -- announced a deal with Guardian America to represent it for ad sales. I talked to Stephen Smyth, general manager of Americas Reuters Media, about the deal. He understands how technology isn't an add-on, but the very basis of a modern ad network. Who is Reuters affiliate ad network partnered with? Unlike QuadrantONE, he can name his partners in a flash: "Doubleclick for ad serving, Revenue Science for behavioral targeting, Operative for inventory management, Salesforce for CRM and Rapt for forecasting and pricing. The water level [in digital ad sales] is rising," he says. "Everyone needs to have numbers and the analytics to even be in on the RFP."

---The Guarantee: Part of QuadrantONE's value prop is that it can guarantee space to advertisers, commanding 10% of member sites' inventory across vertical channels. That's a two-edged sword. It may be a value to advertisers -- although access to such site inventory hasn't been a loud hue and cry. But it's a deterrent to getting more sites to sign up as affiliates. There are lots of news site gm's with QuadrantONE affiliate agreements on their desk as we speak. These are sites/companies that decided they didn't want to put up the $500,000 or so each to fund the start-up. Now, they are wondering if they want to guarantee inventory (though maybe less than 10%) to a network that will determine pricing. Can QuadrantONE really deliver more than these sites can get themselves or from Centro and other networks? What if turns out to be more of a high-end remnant network than a high-CPM one?

---Tribune: Yes, it's the new Sam Zell Tribune, but Tribune's still the elephant in this room. Going back now more than a decade, Tribune's been an elite presence. Count in New Century Network, CareerBuilder, Classified Ventures and more. As several would-be affiliates are mulling: Different people, but same feeling. Chicago-based. Tribune-led. The need for centralized (meaning Chicago-based Tribune) decision-making. That's one of the reasons Yahoo's HotJobs and consortium has mojo as CareerBuilder's struggling.

What cheers some in the industry is that it's one attempt for the newspaper industry to reclaim its future, to act independently. That thinking: QuadrantONE is a beachhead, a new place for newspaper leaders to come together, strategize together and streamline revenue opportunities and cost savings. That's a good hope, but one that mystifies me.

What, in fact, then is the Yahoo newspaper consortium? Take away the word Yahoo, and you have 22 companies with more than 500 titles agreeing to act (fairly) jointly. The consensus has been rare and the organizers of it deserve kudos for getting it done and achieving a kind of scale that hadn't been achieved before. Now, can they act together -- with Yahoo, yes, but with numerous others -- to seize the many opportunities to build new revenue streams and cut costs smartly (how about a single platform?)? Call it what you want -- consortium, QuadrantONE -- but that's clearly what these times demand.

Comments

[John Public]

Great post. With respect to the potential technology partner, I'd put my money on PointRoll. Ellenthal was previously the SVP of Sales at PR and maintains good relationships there. (And of course, PR is a wholly-owned subsidiary of Gannett.)

Additionally, Centro was founded by former PointRoll employees and has been a target by PR Management since its inception.

[A. Rooney]

If you care about the future of your college newspaper- read on:

College Newspapers- beware the USA Today and the NY Times Collegiate Readership programs and the new Quadrantone on line advertising platform. The Big boys want your college newspaper advertisers and they want you college newspaper readers.

If your school is approached by the Gannett/USA Today Collegiate Readership Program or the NY Times, I hope that you will consider this: They will use their newspapers on your campus to financially beat your college newspaper into submission. They can sell ads to your advertisers at a ridiculously low rate for a while to alienate your advertisers. They can sell local advertising with local advertiser inserts. They can even create customized coupon books that are inserted in the local and national papers they provide for your campus readers- Just another clever way to steal your college newspaper advertisers.

Read what is happening now at The Penn State to their school newspaper- the school that started the college readership program 10 years ago! This has not gone unnoticed at some other schools.

http://media.www.cw.ua.edu/media/storage/paper959/news/2004/02/13/News/Free-Newspaper.Program.Here.For.Semester.Maybe.Longer-2860679.shtml

The large newspaper conglomerates want to get you hooked on reading their publications. They have the same mindset as the tobacco companies- that is to say they must replace older customers with a new generation that does not read the metro papers if they are to survive as a business. The only way they can get college student readers to read national newspapers is by giving them away (actually they are subsidized by your school administration or student government association).

If your college paper has potential for profit, the large newspaper company may offer to buy your paper for a multiple of your greatly reduced ad revenue after they have stolen your advertisers. They may find it necessary just to eliminate your paper all together.

USA Today and the New York Times Collegiate Readership Programs have flatly denied in print articles that they want to take away your college newspaper readers. If that is the case, why are they lobbying almost every college and university in the United States, sometimes for years, to get their papers on your campus? Every free paper on your campus takes readers and advertisers away from your college newspaper. One can only read so many newspapers.

The USA Today and New York Times Collegiate Readership Programs have been cleverly marketed to colleges and universities across the country as a way to enlighten our students and improve the journalism skills of the campus newspaper writers. On Feb. 15, 2008 a joint initiative called Quadrantone was announced by Gannett, The Tribune Newspapers, Hearst Corp and the New York Times. This program creates an unprecedented on line advertising platform that will allow this newly formed oligopoly to offer localized on line advertising on their member online newspaper websites to local advertisers who have relied on the college newspaper to reach students. With Quadrantone, even the on line editorial content can be customized to reach different demographic groups.
Here is the bottom line- This USA Today and the New York Times readership programs are nothing more than a surreptitious way to curry favor with students and administrators under the guise of providing a valuable educational service to our community. Make no mistake about it. The goal of these readership programs is not to enlighten our students and broaden their perspectives as they would have you believe. Their plan involves bringing USA Today and usually the New York Times on campus along with the local metropolitan newspaper (usually a Gannett publication)- They get your school to cover the cost of the papers- not the real cost- just a fraction of the cost- just enough to count each paper as paid circulation that will pass muster with the ABC (Audit Bureau of Circulation). That way the large newspaper corporations can justify ad rate increases to their national advertisers.
Once the Readership program gets the local metropolitan and national newspapers on the college campuses, their goal is to steal college newspaper advertisers by offering below market ad rates to local advertisers and below market on line ad rates through the Quadrantone platform. Gannett and the other large newspaper conglomerates share a common goal- encourage the college newspapers to sell out for a fraction of what they are worth.
A few days after the local metropolitan paper and the two national papers are made available for free in nice shiny racks on the college campus, the multitude of ad reps for the local metropolitan paper and the Quadrantone newspaper ad sales reps will be calling on every local business within a 10-mile radius of the campus and they will of course call EVERY national advertiser that has used the local college paper in the last 5 years. They will offer the college newspaper advertiser an ad rate so low that the advertiser will jump ship. They will pitch to the advertisers the fact they their newspaper and online platform can now reach the college students for less money. Now that Quadrantone can offer locally targeted online advertising, the college newspapers that have local online advertising revenue will no longer be able to compete.
"Citizen Kane" is often considered by movie critics to be the best
movie EVER PRODUCED."Citizen Kane" is a 1941 mystery/drama film. Released by RKO Pictures,
it was the first feature film directed by Orson Welles. The story
traces the life and career of Charles Foster Kane, a man whose career
in the publishing world is born of idealistic social service, but
gradually evolves into a ruthless pursuit of power."- Wikipedia
It supposedly centers around the life of William Randolph Hearst, the
undisputed giant in the newspaper industry in the early 1900's. He
tried everything he could to ban the movie from reaching the theaters
and almost succeeded. If you want to see what corporate greed in the
newspaper industry looks like, watch the movie.


But don't worry. When all looks lost, Gannett or some other newspaper giant might come to the rescue and buy out your college newspaper if it has the potential for profit. If the college paper gets bought out, the students that are left now work for a huge multimedia conglomerate, and they can kiss goodbye the editorial freedom they have taken for granted.
If the students start working for Gannett or some other huge newspaper corporation, they better not say something that the corporation does not agree with in the college paper, especially when it comes to politics. Study your new owner's political mindset and commit it to memory or risk being shown the door. Gannett has already bought an independent college newspaper in Florida and is about to buy another student newspaper in Colorado. This is just the beginning. The alarming fact is that the USA Today and NY Times Readership Program marketers have duped students and their administrators into thinking that their motives are purely altruistic. That should insult the collective intelligence of our future leaders.

The student newspaper is in danger of being destroyed by a modern day Citizen Kane.

[Arul Sundaram]

Ken - really interesting post. I completely agree with your points regarding scale and technology. They thing Centro has done is made it easier to buy local. QuadrantOne (and IB frankly) need to figure out if they can match or better Centro, or else they won't provide value. Where IB has focused is in rich media and content-integration - something that most pure networks cannot offer. Dana and team have done a good job at Tribune to date, but it will be interesting to see if Quadrant One can create a valuable market positioning in the coming months.