Content Bridges

Frankly, Candidly, Truthfully: Newspapers CEOs Talk About 2Q

It's time for second-quarter newspaper earnings reports, with Gannett leading off Wednesday, with the long tale of woe to follow. Given the many newspaper staff cutbacks, which I thought might include the investor relations people, I've put together a few boilerplate remarks that I hope are helpful.

Good morning. Let me say I’m glad that the few remaining financial analysts covering the industry want to hear about our second quarter results. Our CFO will be giving you the details on those in a few moments. But let me make a few introductory remarks first.

Frankly, visibility has gotten worse. We told you in the last quarter that it was limited. Well, now – did you see that George Clooney movie “The Perfect Storm” -- we’re smack in the middle of the biggest fogbank you’ve ever seen. Some of you have asked why print revenues have fallen off the table. Frankly, I don’t even see the table anymore. What I see though, I don’t like. Some of you have asked to see what I see, and I’ve got to tell you, it’s better not to.

Excuse, me, I think I’m being Twitterized, isn’t that what you call it? Rupert keeps buzzing, like I’m media so I can be in Sun Valley and you newspaper rats are stuck in your hot, brick buildings. But back to the subject at hand.

First, let’s address costs.

We’re having our people talk to Dean Singleton’s people – I’m not talking to Dean directly; I think that’s how Ganzi got in trouble – about centralized printing. Frankly, Dean’s better than us at thinking outside the box, and we’re talking about one large printing plant, somewhere in the low-wage rural West, and then distributing the papers almost instantaneously, through some kind of system of high-tech pneumatic tubes. Apparently, it’s part of that Google Print deal, involving Google Flux technology. Sounds almost like back-to-the-future, but my people tell me it’s got potential.

You all know that Goldman Sachs is now predicting 30% year over year increases in newsprint pricing for the second half of the year. For some reason, all those Indians and Chinese are buying up newspapers like there is no tomorrow, driving up paper usage and pricing; I’d like to know their secret sauce.

As you know, our biggest cost is people.

On staffing, some of you have asked why we don’t cut more, and some of you have asked why we cut so much. Which proves I think that we’re taking the right, down-the-middle approach.  To tell you the truth, it’s a whole new world out there. Journalism schools seem to be stealing away our most experienced talent. Then there’s ProPublica, which considers itself some kind of high-minded, non-profit, picking off our highly prized investigative reporters. Then there’s the allure of these pajama blogger start-ups; did you see that Rafat Ali guy just got a big payday selling his site to the Brits? I always wondered if his work permit was in order.

We do realize that we need reporters, but frankly, they are a pain in the ass to deal with in good times. And, now, always in a bad mood. I’m told all the so-called “content” they create will prove very valuable online, even if we have to shrink the paper to the size of a menu. I just keep asking how soon?

Now let’s talk about revenues.

On ad sales, we’re thinking of adopting more self-service techniques. Hey, if you haven’t seen that YouTube video on how publishers can make more money using Google’s system, you should.

Our big initiative, of course, has been our work with Yahoo through the consortium. We’ve bet most of our 2009 growth on using its AMP system – or whatever they call, seems they have some legal problem on that, but they’ve got enough lawyers to work it out. Frankly, we love it. They do all the technology hocus-pocus, and our sales people just sell more stuff. You know, when they are over there golfing in Scotland with the car dealers and all, they just ladle on some more online products, and we can make some new revenue.

Some of you have asked what if Yahoo gets sold or split up like an estate. To tell you the truth, we haven’t a clue. Frankly, we don’t think it’s fair. We finally get our, excuse me, stuff together with the consortium, and then Steve Ballmer and Carl Icahn have to spoil the whole thing. We can’t seem to catch a break. We try not to think about how we’ve placed the continued viability of the American newspaper industry on the fortunes of Yahoo. I, for one, sleep better, not thinking too much about it, after 9 p.m. Anyways we have the firm assurances of Hilary Schneider that one way or another, it will work out okay, and my people say her track record certainly bears that out.

On content, you’ve asked what we’re doing in video. Lots, I’m told, though it’s not easy getting those union photographers to deal with things that move, my people tell me. Anyhow, AP’s on top of it, I hear; and yes, we plan to stay part of the AP. We’re now paying on a month-to-month basis, though I think we discontinued the use of the IndyMac card on that one.

Now, let me talk about the company overall.

We’ve previously announced that we’ve engaged strategic consultants, which – I won’t be fancy about it – is a way to say we’re offering for sale anything anyone would like to buy. Sam’s running a seminar on selling the real estate out from under each of us; my people are going, and I told them to watch their wallets. Craig still seem to have some cash – I want you to know that while I’m sure he earned every penny of that $7.9 million last year – we’re a tad more prudent than Gannett, and my compensation shows it. 

Porn & User-Gen: Amateurs Rain on Pros' Parade

Talk about disintermediation.

The new edition of Portfolio, Conde Nast's recent, retro entry into the business magazine market, tells us the conventional porn industry is, well, slowing down. Maturing may be the wrong word, but it looks like the industry, according to Claire Hoffman's piece (helpfully suggested by my friends at Newser), has hit middle age, faced with plummeting DVD sales, as alternatives proliferate.

The culprit: DIY porn, or what we in and around the Internet industry would call user-generated content. That's right. Why pay for professional content -- high-branded journalistic content or low-branded porn -- if you can get it for free? Why let mainstream media or mainstream pornographers dictate what we see, when so many of our fellow citizens are willing to blog or shag for free? It's the ultimate democracy of the web, though I'm not sure how Google's Page Rank is going to adjust its algorithms on UGC porn. (Is that one of those Google use-20-percent-of-your-own-time-for-what-you-want-projects?)

Here's how Portfolio describes the YouPorn challenge to Old Porn site, Vivid:

YouPorn lets users upload and watch a virtually unlimited selection of hardcore sex videos for free. The user-generated clips on YouPorn—like those on YouTube, the site it mimics—range from the grainiest amateur footage to the slickest professional product. Also, like YouTube, the site has far more traffic than income. Just nine months after going live, in September 2006, YouPorn was on pace to log about 15 million unique visitors in May, Jones told the Vivid executives, and its audience was growing at a rate of 37.5 percent a month. Today, YouPorn is the No. 1 adult site in the world; Vivid.com, a pay site, is ranked 5,061.According to Alexa, a website-ranking company, YouPorn’s overall rank is higher than CNN.com (84), About.com (114), and Weather.com (195). (Those numbers are averages for the three-month period from mid-June to mid-September.)

Sounds familiar, doesn't it, to observers of news media. It's hard to compete with free, and the established porn industry -- built on DVD sales -- can't fathom a "free content" that only be meagerly monetized right now, with advertising. So the Portfolio piece captures this well, as industry leader Vivid considers buying YouPorn, not knowing whether it could really be the YouTube of online porn, or just another site among its multiplying competitors, all colorfully named, like PornoTube and Megarotic.

Besides the humor here, there's great irony that Porn, often seen as the pay-model pioneer in the wider "content" arena, is already seeing its basic business model compromised by the combination of user-in-control content and the Internet ad revolution. Welcome to the club.

Coming to a Site Near You: The Battle for Election Traffic

Summer's over, the super-primaries are threatening to consume us and that means one thing if you're a news website: better figure out a way to pull in lots of politico traffic, as sites as diverse as the brand-new Star Tribune "Politically Connected" (more below) and others are doing.

My friend Alan Mutter sent a broadside flying recently with his peek into, of all things, Aussie politics. But as Alan sages points out, Google's little experiment Down Under can be easily understood as a testing ground for a U.S. push. Kind of like trying out a Broadway-bound play in New Haven.

From Alan's recent (okay, I was out of the country, vacationing and blissfully disconnected) post:

The Google election project, an elegant mashup of Google’s arsenal of search, mapping, video, widget and other technologies, is a preview of how all but the most technologically recalcitrant consumers will expect to get political – and many other types of – news in the future. In addition to delivering a wealth of well-packaged election information and interactive tools, Google has created four content-pushing widgets and a number of ways for users to express their opinions via forums and home-brewed video.

In that view, we can see not just an election push, but one that helps us answer the question about Google's direction. The envious among us can say, "Sure, Google hit it lucky and big with search-related ads, but that's the only business that's really clicked, among its dozens of beta Labs projects." And it's true that the ad business is Google's huge driver. But, we can see in this election package and in a few other fledging projects (check out the new Topix-like timeline for finding articles, at the top of Labs now under "Experimental Search") how Google is relentlessly bringing it all together.

Want to roam the Aussie political landscape visually. Try the Google maplet, which provides an entry point to lots of articles and data.               
Want to munch through election data, making choices and seeing the info morph in front of you.
Want to hold candidates accountable for their votes and stands; use the specialized Google search to find out the info you need.

Lots more gadgets and ways into the info.

Take the tour here.

Times Select Cancellation Leaves NYT "Balancing" on One-Legged Stool

It's been a simple news industry precept: two legs are better than one. Reader support and advertiser support. Balance. So the New York Times' decision to eliminate Times Select tonight at midnight leaves its emerging online business in a more precarious state -- in that one-legged balancing position that any yoga newbie knows is a tough position to maintain.

But it's a balancing act that news publishers everywhere are reluctantly accepting -- it's an ad, ad, ad world -- and the notion of mere readers paying for news is now obsolescent.

I've got little doubt that the Times can recoup the $10 million it has been earning annually from Times Select, as it multiplies page view and as increasingly targeted advertising directed at high-demo readers kicks in. But this decision means several things to the future of the Times -- and the daily news industry, which is watching carefully from the sidelines.

The obvious one is the complete reliance on advertising as the only substantial future revenue driver. Not only is the Times giving up on the idea of subscriber revenue. It is placing in jeopardy other millions of dollars it now takes in on licensing of its archives for use by such companies as Lexis Nexis and Factiva. As part of its Times Select termination, it is making its recent (post-1986) archives free to the public. Those archives -- behind firewalls -- generate streams of revenue to the Times. And look for licensors to be paying the Times lots less in financial guarantees going forward, as availability on the free web raises questions of value.

The near-total reliance on ad revenue means redoubling and re-tripling efforts to get the online ad business right, maximizing traffic and yields. Sure, these efforts have been underway for years now, but many news companies continue to underperform web companies in sheer execution.

The stealth problem created I believe though is around print subscriptions and print circulation revenue. Of those 787,000 Times Select customers, almost a half million -- 471,000 -- are print subscribers who've gotten TS for "free." That's a retention strategy, and one that goes by the board as print subscribers look around and say, "I don't need to be a subscriber to get archives and Frank Rich." I can't believe how many people -- well-schooled, well-heeled, appreciative of journalism  types -- tell me that they've dropped their print NYT sub, just relying on the web. There's sometimes a twinge of guilt, but it passes quickly.

Sure, Times Select may not have been the best retention strategy, but retention of a half-million Times subscribers just got a bit harder

There's an inevitability here, well-cheered on the web, and now that it's done, best to make the best of it.

Yes, it will be good for the Times and the country to have its best voices a full part of the national and global conversation as we head into an election. Yes, it will be good for the Times to remove its cloud of uncertainty (some things free, some paid -- columnists, Times Tracker, Times File), approaching the competitive reader marketplace cleanly. And, finally, yes, it will be good for the Times to get all this done pre-Novermber, when Rupert takes over the Journal and begins making his own "free" moves.

More on Times Select and the New York Times overall, here. 

The Merc on Barry: All-Star Anachronism

It's All-Star Week in the Bay Area, so of course the Mercury News felt obligated to weigh in. No, not just on the sports pages and Page One (careful readers will see Media News synergy in action as the All-Star coverage shows the value of Dean Singleton's clustering approach, pooling stories from all his Bay Area properties and eliminating redundancy), but on ... the Opinion Page.

"What Applause Bonds deserves depends on how you see him," intones the lead headline Monday. Twelve inches later, in a piece signed "The Opinion of the Mercury News Editorial Board," we see -- you guessed it -- two sides! Good Barry/Bad Barry theme.

It's not that it's wrong, but it's presumptuous, misplaced and increasingly irrelevant to the age we live and read in.

Beyond the fact that the Good Barry/Bad Barry theme has been bludgeoned to death, we don't need the Editorial Board (7 people) of the Merc to explore it. The world has changed all around editorial pages, yet they often act as if it hasn't. Readers can find far more insightful, passionate, humorous and original Barry commentary everywhere, courtesy of ESPN, blogs of all kinds , radio, sat-radio, on and on.

It's no surprise, I suppose, that editorial pages are stuck in what CBS' Leslie Moonves once called "The Voice of God" syndrome (speaking of TV anchors). As once mass-market, monopoly vehicles, many well-minded editorialists have tried to do the right thing. But as papers become more niche than mass, and just a part of the conversation, we're seeing is a fight for relevance in the early 21st century.

We all remember the history of a century ago. Then, vituperative, highly partisan editors charged ahead in the newsgathering, and often with their own political agendas. Readers could choose from a cacophony of voices. No one pretended to be neutral or objective.

Then monopoly newspapers, birthed by post World War II economics, emerged. Those have been the papers of our times. Editorial pages took on a certain decorum, and with it, a certain boredom. Good-government commentary certainly seemed, well, good, but often missed the point that citizen readers care or know about. And the pages have lacked fire.

Now the blogosophere is all about fire, passion, and no-holds-barred commentary. And readers expect a person, not a board, to be associated with a viewpoint.

Curiously, today the Chicago Sun-Times, essentially announced its political (re-)conversion, offering a "liberal-leaning" editorial page again. That seems a throwback (pre-Murdoch in Chicago), but may be just one more sign that newspapers -- successful news companies -- may take on some of the characteristics that fueled their great growth a century ago.

Get Ready for "Brand Journalism"

Think you know about Brand Journalism?

Think again.

In the words of leading marketers, it's not the New York Times or the BBC writ large. It's IBM, Ford and, probably soon, Taco Bell. At this week's SIIA Information Industry Summit, the hand between Ford's "Bold Moves" website explained the direction of the fingers. "We decided we'd call it brand journalism," said Colleen DeCourcy, who serves as the chief experience officer (candidate for the Wired list of dot-com super-titles?) of JWT ad agency. DeCourcy described the ins and outs of telling Ford's story -- "documenting internal struggles, initial perceptions", etc. -- and how she didn't an overarching way of describing how Ford would describe Ford. Hence: brand journalism, or journalism about the brand.

On the "Advertising and PR for Everyone: Who is Winning the Race for Marketing Dollars?" panel, ably moderated by David Meerman Scott, DeCourcy was joined by Ben Edwards. He's director of new media communication for IBM, and a veteran of The Economist, or as the program had it: "Ben enjoyed a 14-year career as a journalist in the "mainstream media". Ben spent the last nine of these years as a reporter, foreign correspondent and editor for The Economist magazine, covering business, finance and politics from London, Tokyo and New York."

Edwards' take on such brand journalism: He embraced it.

DIY Journalism Dawns in 2007

Do It Yourself or DIY helped build Home Depot, and it built one of Scripps' prime cable properties, DIY Network. Now it looks like a vanguard of journalists, fed up with endless downturn, moanin' and groanin' within Old Media, is blazing paths in DIY Journalism. We've had many websites that have re-purposed news -- from the early Snaps and Excites to the latter-day Googles, Yahoos and Topixs. Clearly there's been lots of gold in that re-purposed journalism, with a few trinkets trickling down to the journalists who produced the journalism, and their employers. Now journalists are seeing that the technology of web creation and distribution becoming more transparent, and they are starting their own businesses or moving to start-up websites.

This week's news tells us about the pugnaciously named Baltimore Bulldog. It's a project involving newspaper people and public radio people, with a nod to involving serious online ad expertise, to interactivity and to engaging community content. "The point is not to create a printed newspaper online but to do something that couldn't possibly be done on paper," says Sean Carton of the Bulldog.

On Jan . 23, The Politico, backed by Allbritton Communications, will debut in DC. It's a political inside-the-Beltway website/targeting paper. The talents come from Bloomberg, Time Magazine and the Washington Post.  And it is hiring on young reporters to add "energy" to the Beltway names -- Mike Allen, Roger Simon -- that will draw first readers. ThePolitico is trying to get the "online first" dynamic right and using the deep databasing abilities of the web for its political junkie readers.

Both new ventures show us the energy of DIY, a good antidote to these troubled times of layoffs, budget cutbacks and the-end-is-near gloom and doom. Clearly the underlying financial models for new ventures -- contextual ads, sponsorships, non-profit funding, angels, etc., etc., etc. -- are uncertain and ungainly. But combine them, with more than a dash of enthusiasm and sense that good journalism reaching readers who want to use modern media to learn and to know, and you have the beginnings of a future, rather than just the handholds of past glories.

Many journalists -- I've talked with several -- are dusting off business plans, seeking ways forward (apologies to President Bush and Ford Motor). In 2007, I think we'll see more of such efforts. Some will harness user-generated content, trying to artfully combine it with professional journalism. Others will be heavier on local knowledge, or local investigation. Still others will be portals of commentary and opinion.

It all reminds me of one of my first Internet epiphanies. Some time in the early '90s, I participated in a Knight Ridder session at Harvard (yes, that's one of the reminders of what a then-forward-looking journalism company could provide its people). Professor Jeff Rayport told us about this weird idea called "disintermediation." He drew out a top-to-bottom flow chart. At the top: a singer, say Springsteen. At the bottom, you, the music buyer. In between, agents, labels, distributors, retailers. He drew a looping line from Springsteen to you and said, that's the relationship the music buyer wants, to hear Bruce's music. Direct-to-buyer sales, or close to it, he said, was the promise of the Internet, and it would cause economic havoc and opportunity. That world has begun to develop, fitfully, and it's giving journalism fits.

DIY Journalism, growing, becoming sophisticated and increasingly networked, is one of journalism's futures. It is getting the news, gathered, written and analyzed by professionals, to the readers. Now all we have to do is figure out how to pay those professionals professional wages. Onward.

 

We're All Becoming Part of the Rev Share Economy

Bit by bit, we're all becoming part of the Rev Share Economy.

I received a check in the mail the other day, oh boy. It was signed by my friend Larry Schwartz, impresario and president of Newstex, the aggregator start-up that smartly saw an opportunity around licensing blogs. In 2005, Larry went out and got re-distribution rights for several hundred blogs, including my modest Content Bridges. Newstex focuses on blogs that may be useful to business. He's now licensed the full-text blog feed to LexisNexis and CanWest's Infomart, a leading Canadian news store.

It's a rev share business, like so many others these days. LexisNexis and Infomart charge their customers for the content. They pay a fee or a revenue share to Newstex. I get a revenue share, based on usage. A rev share of a rev share.

My minor rev share is growing, but the first ones will only pay the price of a meal -- maybe a hearty breakfast with Larry, Paul Gerbino and maybe one other diner at the Carnegie Deli in New York City at the next SIIA event, where can talk about the intricacies of The Bagel and Lox Paradox. Luckily, Content Bridges provides more gainful and more direct compensation.

I got to thinking about this arrangement as I read about the Boston Globe's new contract with its newsroom workers, represented by the Guild. The pact ties future pay increases to this notion: year-over-year revenue increases at the Globe. If you've been following this story, you'll remember that the Globe -- really the New York Times Company, its owner -- first proposed that raises be tied only to revenue increases in the print edition. The Guild contested that, and won the inclusion of digital business increases. Though I find too much about the Boston.com site landlocked in the last century, that inclusion was an essential. The Globe, with its declining print revenues, has joined the tiny but soon-to-grow fraternity of metro dailies that actually lose money year over year. With print revenues in decline there, and largely flat-lining at metros nationally, the only immediate growth engine is online. That growth, which has run in the 30%+ range in recent years, looks like it will slow to the 20% range in '07. Still it's an upside. Put that upside together in Boston with the print downside though, and I wouldn't bet on Globe staffer increases in '07.

The fact that the Guild agreed to tie any pay to revenue at first surprised a lot of us. In our business, the connection between journalism and the dollar is always been a purposely murky one. As journalists, we've enjoyed the murk, and told our readers they profited from it. As managing editor in Saint Paul in the '90s, I remember taking umbrage when unhappy readers would critique a story or its play with the phrase, "you're just trying to sell papers." Uh, no, uh, yes, kind of, you know"; the editor's discomfort with mere commerce.

Of course, we were trying to sell papers, but in our American journalism, we've worked hard not to tie any specific piece of journalism, any one edition of a publication to money. As news executives, we became more comfortable with learning -- then talking -- the marketing talk, as long as we were talking about the enterprise more generally. Maybe that's the line -- between enterprise more generally (whether it's the Pioneer Press, the Boston Globe or Content Bridges) as compared to any specific story or post -- that will become more meaningful as we inch our way into the thicket of the Rev Share Economy. Or maybe newspaper people will become as comfortable with per piece compensation as the small legion of magazine free-lancers out there.

Of course, newspaper people aren't used to joys and sorrows of "at-risk" pay, used to the salaryman and salarywoman employ that we thought would last forever (or at least until retirement). Now, hundreds of riffed newspaper journalists -- I've talked to an uncomfortably large number of 50-something newspaper reporters suddenly forced to take stock of their real skills and real employability beyond their current jobs -- are feeling what at-risk means. They are learning how the new digital content world pays, on rev shares of this fee, and rev shares of how well a story "monetizes," tracked by actual readership.

In a sense, most newspaper journalists are becoming a more direct part of the Rev Share economy, due to the recent Yahoo/newspaper partnerships and Google/newspaper partnerships. What are those, other than complex rev share deals, in which some number of pennies per dollar from advertisers will trickle back down into newspaper coffers, helping cover newsroom salaries. (T-shirt to come?: "Will Write for Rev Share".)

Inevitably, our work, the work of any journalist, or writer, or creator, is rewarded or unrewarded, by a market somewhere. The markets used to be someone else's responsibility. Now the web has removed many, many middleman (and created some news ones like blog aggregators) while making somewhat more transparent what was once hazy. Newspaper and magazine journalists, bloggers, TV and radio reporters and technicians -- we're all being tossed into the thicket. When we look back, we'll see that the Newstex arrangements and the new Boston Globe contract are but early steps in learning new ways to practice an old craft.