The situation bears a strong resemblance to the newspaper industry, and the reason papers are in the same place as the auto industry. Let's take a look at the places where the news industry and the auto industry screwed the pooch: [...more]
GM’s NUMMI plant in Fremont was the solution to their crisis. So why did they ignore its lessons?
They don't make 'em like this any more. Even so, the rear bumper had to be reattached.
It’s about how the U.S. auto industry could have saved itself by actually paying attention to the way its business was eroding, and listening to the people who came back from Japan and transformed the Fremont plant from a place that was “like a prison … with sex, drugs and alcohol freely indulged in during the working day … where the workers maliciously sabotaged cars, and the managers didn’t care, as long as they got their bonuses for churning out pure numbers…”
The situation bears a strong resemblance to the newspaper industry, and the reason papers are in the same place as the auto industry. Let’s take a look at the places where the news industry and the auto industry screwed the pooch:
1. Starting in the 80s and going through the 90s, sales declined, as customers were turned off by the shoddy quality of the product
In the auto industry: anyone who drove a U.S.-made car in the 80s knows what I’m talking about. Everything about the cars sucked. The seats were uncomfortable to sit in, the controls made no sense and were hard to deal with. I drove a lot of rental cars in that era, and I can’t tell you how many times the A/C control knob came off in my hand. Or the windshield wiper knob was installed upside-down. In one case, the bolt holding the steering column up on a Chevy Cavalier came loose and the steering wheel dropped into my lap. Which is minor, compared to the engines seizing and misfiring, the electrical system shorting out, the windows not rolling up (or down), the doors sagging on their hinges…
In the newspaper industry: the buyouts and mergers started by the relaxation of the cross-ownership rule, caused many papers to skeletonize their staffs, and run big colorful graphics in the papers. And lots more wire copy. I worked at the Arizona Republic during this era, and I saw what they were doing on “Zone Editions.” We had the same cruddy stories for Mesa, as we did Tempe, as we did Scottsdale. They were feature stories about things like a guy with a trained parrot that would whistle and dance. We’d run it one week in the Mesa zone, and then the next week, I’d see it in the queue again for Scottsdale. Mostly, the Zone Editions were there to snarf up the advertisers in those areas, and make sure that no competition sprang up to challenge the big paper. “It doesn’t pay NOT to advertise,” was the slogan, and it was true, because of the package deals the Republic was able to offer, sucking the oxygen out of the local markets. Most papers had a monopoly position in their markets, and could pretty much be assured of making a profit, no matter what they did. Meanwhile, the readers were starting to notice that their newspapers were lacking … how shall we say this … news.
2. The workers felt ignored and belittled, so they began to act out, and a “give a shit” attitude took over
In the auto industry: the line workers had no power to offer suggestions, and indeed, were punished for speaking up. All that mattered was churning out enough cars to meet the quotas, no matter how shitty the quality. Resentfulness led to workers intentionally sabotaging cars, which led to even greater expense down the line, when the shitty cars had to be fixed by workers who really didn’t understand what was wrong with them, and just used the “bigger hammer” method to make cross-threaded bolts hold, or quarterpanels stick onto the chassis.
This is a strategy that is also being pursued in New York by NY Daily News publisher Mort Zuckerman, who has invested more than he would like to admit to (millions? hundreds of millions?) into high-tech printing presses, capable of churning out massive print runs with razor-sharp color. The 15-tower, triple-width ultra-compact Commander CT press looks a lot like the last-generation Nikon F6 film camera. It was the apex of film technology, what many analysts recognized at the time as "the perfect camera" -- but that alas, was rolled out just as every working professional made the move to use digital. [...more]
Print die-hards claimed that all that was needed to reverse the audience migration to the internet was to make newspapers more “lively” in appearance. Early verdict: looks pretty, but the advertising still isn’t there, and that sound you heard was Mort Zuckerman puking and weeping over in the corner.
I’ve been in the Bay Area for a convention of “[fill in blank] for Dummies” authors and various business meetings, and I’ve taken the opportunity to scope out what the San Francisco Chronicle has been doing with its much-ballyhooed investment in glossy magazine-style paper for the front pages of its sections, and the use of high-quality color images.
This week's debate is not as acrimonious as in the past (although there are exceptions to that, of course), and in the wake of the biz models released by the Aspen conference, some people are taking building new revenue streams seriously. At least, they say they are. It turns out that a lot of what has been reported in this paid content debate is a little like Microsoft software releases: trial balloon "vaporware." [...more]
This week’s debate is not as acrimonious as in the past (although there are exceptions to that, of course), and in the wake of the biz models released by the Aspen conference, some people are taking building new revenue streams seriously. At least, they say they are. It turns out that a lot of what has been reported in this paid content debate is a little like Microsoft software releases: trial balloon “vaporware.”
Page design at Rue89.com looks a little like what splatters on the side of the carny Tilt-a-Whirl after you load it up with a buncha 10-years olds who've spent the day eating cotton candy and mystery meat hotdogs. I think the boxes up & down the sides are supposed to be clickable ads, but they were inert when I tried them... (click for larger)
The illustration here is of a new French news site that is apparently taking off at Rue89; I can’t decide whether the chaotic design is totally off-putting, or intriguing because it basically violates every rule of page design. Also, I can’t hear the word “Rue” in a title without flashing to “Murders in the Rue Morgue.” Or some B-movie villain twirling a moustache and chortling, “You’ll rue the day, Rex Manly!”
As a bonus, this week I’ve broadened the focus a bit to include some big-picture thinking from some of the unusual suspects; Doc Searls has a post wherein it is posited that what we think of right now as the internet is just a finger pointing in the direction of what this thing is actually going to grow into. Which should fuel a couple of late-night dorm-room debates, if nothing else…
In which I get very "Meta" and write a blog post that aggregates other blog posts that were written about aggregation. The discussion in all cases gets heated very quickly. Insults are thrown around, fisking takes place in the comment threads, but a few actual new ideas & fact-based analyses sneak in here and there. The fact that some very smart entrepreneurs are actually interested enough to toss in some innovative thinking is rather heartening, actually. [...more]
In which I get very “Meta” and write a blog post that aggregates other blog posts that were written about aggregation.
I am also posting this over on the AIM Group blog, as part of what I think might become a regular feature, “This week in the paid content debate.” The best of the bunch is the back-and-forth between billionaire Mark Cuban, and the bete noire of many print publishers, Michael Wolff, who runs the Newser.com content-aggregation site. Cuban actually suggests something that shows that he’s put more thinking into the issue than the kneejerk “Up with the paywalls!” bunch. I note below the flaw in his plans – my ex-roommate used to describe for me in detail how impossible it was at Time-Warner-AOL to get the jealous VPs of Home Video, say, to play nice with the guys from HBO and pay-per-view. Why make someone else’s P&L sheets look good? That just means they are going to get the Exec VP slot faster than you…
This is an example of a newspaper that has developed multiple, reliable, alternative revenue streams. UOL in Brazil is doing quite well, thank you. They planned ahead, unlike so many complacent U.S. papers.(Click for larger)
Anyway, the discussion in all cases gets heated very quickly. Insults are thrown around, fisking takes place in the comment threads, but a few actual new ideas & fact-based analyses sneak in here and there. The fact that some very smart entrepreneurs are actually interested enough to toss in some innovative thinking is rather heartening, actually.
Mark Cuban gives some free advice to fellow billionaire media mogul Rupert Murdoch: http://blogmaverick.com/2009/08/08/my-advice-to-fox-myspace-on-selling-content-yes-you-can/ Basically, he advances the idea that to get consumers to pay for news, you have to bundle it up with other goods, services and content that exist within giant organizations such as Fox or Time-Warner. A “Newsjunkie” subscription would come with access to special sections of Fox News, a couple of books from HarperCollins, magazine subscriptions and DVDs of 20th Century Fox movies. Commenters point out that such “synergies” remain elusive in these big media conglomerates, as each of the divisions is still in its own silo, with its own P&L, jealously guarding its own turf. Cuban paid special attention to aggregators, suggesting that newspapers ban links from aggregators such as Michael Wolff’s Newser.com.
…leading to Mark Cuban responding with a schoolyard-taunt opus: I’m Rubber, You’re Glue http://blogmaverick.com/2009/08/12/to-michael-wolf-im-rubber-youre-glue/ Not sure what it means when the discussion over paywalls degenerates so quickly, even amongst intelligent and successful publishers. Apparently, Cuban takes umbrage to Wolff calling him a “big fat idiot,” and in turn, taunts Wolff by criticizing his “outdated model” of a site.
The fallacy of the Link economy: http://paidcontent.org/article/419-the-fallacy-of-the-link-economy/ This is another assault on the value of inbound links from Google and other news aggregation sites. Arnon Mishkin says that even sites that publish a headline and short description of a news story appearing on another site are destructive, because readers mostly skim stories, and therefore get the news content they need without having to click through. No word from him on what he thinks newspapers should do on newsstands – perhaps they should be like old-school porn magazines, in plain brown wrappers.
Ken Ellis responds on NP-Harder: http://npharder.wordpress.com/2009/08/14/the-fallacies-of-arnon-mishkin/He picks apart some of the assumptions as to what constitutes value from links, and concludes, “All that being said, I still agree in principle with his final three points. However reclaiming value from aggregators isn’t going to help publishers much. They need subscribers and a pay wall. Not an iron curtain, but a permeable pay wall along the lines of the Wall Street Journal. There’s no save-my-business-model pot of gold out there in the hands of aggregators to help you pay for all that good journalism.”
TechCrunch proclaims “The Media Bundle is Dead,” http://www.techcrunch.com/2009/08/16/the-media-bundle-is-dead-long-live-the-news-aggregators/ Erick Schonfeld addresses paid content by claiming that back when newspapers still enjoyed local monopolies on news, “80 percent of the stories in the paper sucked,” but that the audience was still forced to buy the paper because there was no alternative. Kind of like the argument that the music industry has failed because people are no longer willing to pay $15 for a CD that contains one song they like, and 9 others that are crummy.
Five Key Reasons Newspapers Are Failing: http://www.splicetoday.com/politics-and-media/five-key-reasons-why-newspapers-are-failingOnly the first point really addresses paid content, but the suggestions at the end of the piece on how to transform a newspaper into a web-based news operation that will produce the type of content that readers will actually reach into their wallets and pay for – is very instructive.
A post drawing an interesting parallel between Microsoft’s dilemma on how to compete with Google’s free Open Office product, while still maintaining its huge profits from its own MS Office suite http://www.pbs.org/idealab/2009/08/future-of-local-news-about-more-than-paid-content225.html
From “Scooping the News” a post entitled: Newspaper Access Fees Destined for Failure: http://www.scoopingthenews.com/2009/08/newspaper-access-fees-destined-for.html He compares the paywall solutions to pop-up ads. He lists five points that he claims explain why access fees will not generate that much revenue. Basically, the argument against boils down to the “internet readers are used to getting information for free, and they have lots of alternatives, so they’ll never pony up when newspapers start slamming down the paywalls.”
Another quick hit, this one courtesy of an article in AdAge about how the free-fall in the ad industry has at least stopped, but what’s emerging out of the wreckage is that things will never go back to the way they were. “This current economy has stimulated a new marketing consciousness,” said Laurence Boschetto, president-CEO, [...] [...more]
“This current economy has stimulated a new marketing consciousness,” said Laurence Boschetto, president-CEO, DraftFCB. “Clients are saying they want accountability for every dollar they spend, and they want cause and effect. Clients will continue to rally behind ideas that build business, and we as an industry have to accept that things will never revert back to the pre-recession mind-set that wasn’t totally focused on accountability.”
At every conference I’ve attended this year, especially OMMA and Digital Hollywood, I’ve sat in the room with media planners and ad buyers (AKA the guys in expensive suits who write the multi-million dollar checks to buy 30-second spots on American Idol), and listened to them piss & moan about their jobs.
“The goddam clients are calling me every day and screaming in my ear,” groused a Tums-chomping buyer for a major food company. “All they talk about is ‘The Board,’ and how everyone is shit-scared of winding up on the front page of the New York Times for blowing millions while we’re in a Depression.
“The orders have come down from on high that every nickel they spend has to be tracked, assessed, spreadsheeted and connected to a dollar in sales. Well, it all rolls downhill to me. I have to show results for everything, and when it comes to print and broadcast, that’s getting harder and harder to justify.
“Even if the scale and the reach aren’t there yet, when I’ve got a Google Analytics spreadsheet tracking the ad buy, at least I can walk into the client meeting with more than my dick in my hand.
“I’ve got a $300 million budget for the next year. Zero point zero zero is going to print. Nada. Nothing. I can’t justify it anymore. And broadcast TV is next.”
This came to me via the Media Giraffe project at UMass (and a very special h/t to Janine Warner, currently filming a video for Microsoft up in Seattle), and I was inspired to write a long comment in response to it. Basically, Circulate is the creation of a team at the Donald Reynolds Journalism Institute [...] [...more]
This came to me via the Media Giraffe project at UMass (and a very special h/t to Janine Warner, currently filming a video for Microsoft up in Seattle), and I was inspired to write a long comment in response to it.
Basically, Circulate is the creation of a team at the Donald Reynolds Journalism Institute that includes Martin Langeveld, who blogs for the Nieman Journalism Lab. Langeveld made the announcement of its existence on the “News After Newspapers” blog, and I was initially somewhat blase about it, due to these early grafs:
Circulate is a holistic, user-centric solution aimed broadly at sustaining journalism in a digital world, with specific relevance to the ongoing exploration of paid-content models for newspaper Web sites. Circulate enables experimentation with subscription and per-item user charges, but as a user-centric content discovery tool, Circulate goes well beyond the announced features of other systems that have been proposed in that space.
Circulate will be rolled out in phases. Initially, it will be a browser add-on that you can have always handy as you move around the Web. Circulate will function on multiple platforms to allow full portability: a mobile application is planned, possibly first as an iPhone application, along with user start page and e-mail notification options.
DIGRESSION ALERT: When the subject comes up, and the cranky content publishers insist that charging for content is the only way to survive, my response is that yes, you can and probably should charge for content. But you can’t charge online for the same old stuff you’ve been selling offline. The audience doesn’t want it, won’t pay for it, and can find the same ol’-same ‘ol in a lot of different places. If you really want to change your news organization to charge people for content, that content has to be something that people perceive enough value in to be willing to type in the credit card numbers/click PayPal.
And – here’s the real core – producing, marketing, updating & charging for that kind of information is going to require just as wrenching a philosophical change as any of the other so-called “pie in the sky” digital triumphalist schemes that invoke the “information wants to be free” mantra. I’ve worked for publications – currently still do, as a matter of fact – that survive by charging for content, rather than via ad support. It’s a different way of thinking – far more intense, in some ways, than what newspapers have become acclimated to accepting as their regular content strategy.
END DIGRESSION.
What made me see this as more than a rehash was these three grafs:
As a Circulate user, you’ll be able to have an account with a home-base publisher, like the local paper, and optionally profile yourself. Then the Circulate system will go to work and discover and present to you information that’s really relevant to your interests. You’ll be able to set alerts if you want, but you don’t have to. Circulate won’t start out carrying advertising, but eventually when it does, you’ll see advertising that matters to you, not blindly-aimed mass-market ads. And it sets up the possibility that you could optionally subscribe, through your home-base publisher, to valuable information at hundreds and eventually thousands of news and other websites, all at a low monthly blanket rate.
Circulate will feature social functionality, so that you can share and discuss content (but its content recommendations are not sourced through “collaborative filtering”). Over time, you will be able to select additional features on Circulate as they are developed.
Importantly, a core, fundamental value at CircLabs is user privacy. While Circulate will work best when the user shares information, that will happen with the user’s explicit permission, not by virtue of obscure language buried in user agreements no one reads.
That’s the key: to successfully sell something, whatever that thing is, if it’s information, it has to be information that isn’t available anywhere else. If your audience is saying, “Aw, I heard/saw/know that already,” then you’re screwed.
The book “The Return of the Player” ends with the anti-hero making billions by making the concept of a “Find Engine” work; maybe I’ll excerpt a couple of grafs from the book to illustrate what the vision was of this as of 2004 or so. At the time, reading it, I thought it might have something of a core of value, but that the online marketplace was not ready for it yet. Maybe it is now.
Anyway – here’s what I wrote in response:
Interesting concept, guys – although I have to admit that reading through the first few graphs, my stomach sank when I read “charging for online content.” Way too many collective clock cycles are being devoted to coming up with arcane ways to try to extract some kind of revenue stream from online readers. Most tend to be veneers over the failed strategy of erecting paywalls over existing content, without really given a thought to how the core product has to be radically different for the consumer to be willing to yank out the wallet.
Reading further, it became evident that what you’re doing is a variation on the “Find Engine” concept – that is, that the app/site/widget/whatever will take over for the Almighty Google, and serve you up the information that you need, when, where & how you need it.
OK, that’s interesting.
You also addressed the core problem with a Find Engine – that is, if the app/whatever knows enough about you to be able to accurately (and if it isn’t accurate, what use would it be?) know what you want, then isn’t that a treasure trove of information about you that could be hacked/exploited/sold? Well, yeah. We all start to feel a bit creepy about the thought that something in the machine knows us & is ratting us out. Despite the fact that it happens all the time …
Well, to a certain extent, it does. Big online ad agencies get quiet & change the subject when people bring up the idea of a “Universal Cookie.” Which would be far easier to implement if Circulate takes off.
Anyway – one suggestion. You talk about mobile, and indicate that one of the first moves might be to develop an iPhone app. While I applaud your willingness to engage with this new platform, you might want to check the numbers. At a recent Online News Association event I helped organize, Nick Montes of Viva Vision laid out the numbers involved with selling content – I’m posting the video and a description in the next day or so.
Briefly: the iPhone has market penetration of 9M handsets in a US market of 250M+ handsets. Nice, but not staggering.
But the real eye-opener was that Verizon makes about $20 billion a year from selling/licensing/streaming content. The much-touted iPhone App Store is likely to make Apple about $300 million.
Basically, you’d be pouring sweat equity into constructing something for a platform that comprises about 1.5% of the money on the table…
Anyway – I look forward to seeing what Circulate looks & feels like. At least you’re trying.
Man, I didn’t think there was anyone left at the Chronicle to fire – and here I read that they just canned 151 more people? Delfin Vigil, a reporter at the Chron, took out an ad in the Examiner to decry the sorry state of the paper after all the cutbacks, layoffs, contractions, consolidations, downsizings [...] [...more]
Delfin Vigil, a reporter at the Chron, took out an ad in the Examiner to decry the sorry state of the paper after all the cutbacks, layoffs, contractions, consolidations, downsizings & general slow self-asphyxiation. Surprise! He just got canned in the latest round of layoffs, and has written an impassioned letter questioning what’s left of journalism these days.
In his letter, Vigil does raise a valid point, about how journalists are encouraged to criticize every other leader besides the guys in charge of the media companies that they work for.
Here’s my stupid question: Why is it that journalists are allowed (and even encouraged) to publicly challenge, question and criticize everyone else’s boss — except for their own?
(snip)
If we as newspaper journalists aren’t allowed to place the same kind of public pressure on our own authorities, who will? Does anyone truly believe that the leaders of The Chronicle and other dying newspapers across the country don’t deserve the same level of scrutiny?
It’s long been a truism in the industry that the story that the press covers the least (and the worst) is themselves. The fruits of that neglect are now becoming clear to all of us.
What would have happened if, back in the 80s, the industry had really done an in-depth investigation of what was plainly obvious to anyone working in & around papers that were being snapped up by chains like Gannett? Every journalist I knew then talked about how being bought by Gannett meant that the paper was stripped of everything that made it distinct, and the best talent was shipped off to toil at the USA Today, while the newly installed publishers were under tremendous pressure to “make their numbers,” and sought to do so by widening circulation by any means necessary. This model was quickly copied by other large & rapacious chains, who took advantage of the relaxation of media ownership rules to start a feeding frenzy on small papers and TV & radio stations.
Which meant that smaller staffs were whipped like dogs to produce copy that could be wrapped around the ads. That fat colorful graphic packages were produced to “engage” the readers and give them the sense that they were actually learning something from the paper, while longer investigative projects – and particularly those troublesome community-defending “crusades” were quietly taken out back and shot.
Yeah, I know, there are always exceptions to these broad generalizations. I am quite certain that a lot of the smaller papers that get consumed by the big chains continued to do the best they could with what they had. But the problems only accelerated in the 90s, and I recall very little mention of it at the time. Perhaps we had become inured to it by that point. It was the inexorable trend, so we might as well figure out how to exist under it.
Only…
What would have happened if, sometime in the 90s, reporters and editors had started making it as much of a priority to report about what was happening to the news business … maybe some fraction of the news hole that was allocated to oh, say, the O.J. Simpson case?
Again – I know – long analysis stories about the consolidation of news outlets hardly grabs the same numbers as the White Bronco freeway chase.
The prestigious stock-rating firm of Morningstar says that two big newspaper chains, McClatchy and Lee Enterprises, may be worth zero. “McClatchy stock could be worth nothing,” says Morningstar, adding that Lee Enterprises “shares could lose their entire value.” Fair value of each is listed at $0.00. Both are deep in debt.
And for the editors and reporters who fear that switching over to a reader-driven basis for content is going to lead to endless pages of bikini shots and [fill in the anatomical blank] slips ... well there are plenty of sites dedicated to that kind of content already.
The users have the power, you see, to go to wherever it is that we want to go to, to find the kind of pictures/video/stories that we want.
If all there were on the web was imitations of Maxim-meets-Ogrish, that would be unbelievably boring after a while. [...more]
Well, there are two schools of thought to this. The first is the one that was espoused there:
What exactly do these people think that newspaper execs will do with
data showing exactly how profitable every single article is? Just sit
on that information? Or will they use it to make business decisions
about which departments, types of articles and individual journalists
are delivering the most ROI? “Sorry, Woodward, we know you won the
Pulitzer last year, but your articles only generated $97.85 in revenue,
so we’re going to have to let you go.” Of course, it wouldn’t just
influence the executives. Journalists themselves would start shading
their stories to what sells, and the most successful would be the ones
who were the best salespeople (or who knew the most tricks). Get ready
for a lot less zoning-board recaps and a lot more “Top 10 Sexual
Positions.”
You can see one example of this over at the Santiago, Chile daily Las Ultimas Noticias, where the publisher started to let the tail wag the dog — that is, the stories that garnered the most clicks on the website would be the ones given the biggest play in the paper edition the next day.
Also, the stories that got lots of attention would lead to follow-ups. The upshot of this was that the coverage did start to resemble a deranged issue of Maxim magazine.
Business news? “Picture of Women Executives Working Out & Getting Sweaty”
Political news? “Vote on Whether Japanese Women Have Cute Butts.”
But before everyone starts jumping on the already-crowded “I Told You So” train, LUN was always a bit of a downmarket paper. They were #8 out of 8 daily newspapers in Santiago, Chile. So their core, and the people they attracted with their marketing blitz, were readers that were not already dedicated to the bigger papers, such as El Mercurio and La Tercera.
And yes, LUN did vault from last to first, and a big part of this was the aggressive strategy.
But since then, LUN has been branching out in its coverage; they no longer have T&A on every page. They have the core audience of what the British call “Lager Louts” or “Yobbos,” but they are branching out to include more technical content that appeals to the same young webheads that come for the biscuit shots.
And for the editors and reporters who fear that switching over to a reader-driven basis for content is going to lead to endless pages of bikini shots and [fill in the anatomical blank] slips … well there are plenty of sites dedicated to that kind of content already.
The users have the power, you see, to go to wherever it is that we want to go to, to find the kind of pictures/video/stories that we want.
If all there were on the web was imitations of Maxim-meets-Ogrish, that would be unbelievably boring after a while.
And as we’ve seen with OhMyNews, even when users are allowed to pick their perfect, tailored mix of stories and information, after a while, we kinda want someone (read: an editor/blogger/”curator”) to surprise us.
We want to see things from outside the bubble. Well, most of us do. Some people will gleefully sustain themselves on a steady diet of mental Twinkies, and never get tired of them. Never mind them. They were never your readers anyway.
I think that the recent political campaign and the economic meltdown have hammered home to a generation of news consumers that it’s kind of a good idea to pull our heads away from whatever dingbat thing Paris & Britney did this week, to see what it is that our elected officials are doing with our money … and how they’re funneling it to the equally dingbat financiers and bankers that bribe them.
So yeah, maybe there will be a bit of a blip when the micropayment model is implemented. But it will shake itself out.
If you believe that all your audience wants is cheezcake … well, aren’t you saying then that your audience is a bunch of pervert dimwits?
In terms of charging for content, both Jarvis and Edwards are wholly in agreement. Jarvis is of the opinion that it is now more valuable to build audience – “I think the odds of success in charging now are slim to none”. Edwards echoes his sentiments, with his belief that “if we charged for content on the internet our traffic would go down significantly… It’s abandoning the trust in the advertising as a financial model.”
Well, that trust has been strained recently, and it is only going to get worse, unfortunately. The continued soft economy is going to put some severe downward pressure on ad revenues, at least for the next nine months. The best news that I’ve seen today came out of the LA Times – a small article about how the bottom-feeders are out snarfing up low-priced houses in the Phoenix area (which was pretty much the most overinflated area in the U.S. when it came to the housing bubble). If this holds up over the next couple of months, that would mean that a lot of the “frustrated money” that’s been sitting on the sidelines is going to start getting back into the game.
Again: I do think that there is a place for charging for content online. But that model necessitates a radical change in how the news business does/would operate, one that makes shutting off the presses and moving only to web distribution look positively timid by comparison. I’ve worked at magazines that were almost all circulation supported. The key to survival is that you have to have something that the consumers can get nowhere else.
This is the first part of the rather incendiary keynote speech by Jason Calacanis, founder of Mahalo.com, at the OMMA Hollywood 2009 conference. The keynote's title is "Advertising, Riots, Twitter, Facebook and the Depression," and in it, Calacanis cheers the death of newspapers and "Old Media," and lauds paid search as the "most powerful advertising medium ever created." [...more]
Advertising, Riots, Twitter, Facebook and the Depression
Curmudgeons skip directly to 7:50 or so, for the juicy bits. If you are in a crowded place, please allow at least 10 feet of safety space in all directions for when your head explodes.
This is the first part of the rather incendiary keynote speech by Jason Calacanis, founder of Mahalo.com, at the OMMA Hollywood 2009 conference. The keynote’s title is “Advertising, Riots, Twitter, Facebook and the Depression,” and in it, Calacanis cheers the death of newspapers and “Old Media,” and lauds paid search as the “most powerful advertising medium ever created.”
Not coincidentally, Mahalo is a paid search company.
Along the way, Calacanis also trashes social media advertising, showing screenshots of drunken parties to “prove” that all advertising on this platform is unwelcome, intrusive and doomed to die.
Highlights:
“Gosh, newspapers didn’t see this coming, did they? I mean, the newspapers were reporting on their own demise for a decade. And they still couldn’t change it.
It’d be as if you’re the Titanic and you haven’t even left port yet. And they’re like, “By the way, there’s a lot of icebergs to the north.” And you’re like “OK, thanks.” A day later, it’s “Icebergs are still there.”
They’re like, “Full speed ahead! To the icebergs, as quick as possible!”
They did nothing. They deserve to die. Don’t cry for newspapers, it’s great that they go out of business, because new things can take their place that are better. Much better.
(snip)
Don’t cry for journalism. Rejoice, because a new journalism is being built, today, as we speak. And it’s going to be better than the last one.
(snip)
“They deserve to go away. Goodby, good riddance.”
The keynote was obviously designed to provoke a reaction (more than one conference attendee muttered “linkbait” after listening), and it certainly did that, as every other session after this opened with the panel trying to refute Calacanis’ claims. I’ll post John Battelle‘s rather more measured keynote tomorrow.
I have a few reactions to this, and I’ll post some more with the other three videos in this series. But to start with, the notion that newspapers did nothing at all about the internet is absolutely false. The industry has tried to engage with online since before there was an internet (you’ve probably all seen those videos from San Francisco, showing the early paper over video screen tech of the 80s). The problem is, that the battlefield on which newspaper have been trying to engage has shifted radically. First, it was the fight between portals – Prodigy vs. CompuServe vs. AOL. Then it was Netscape vs. Internet Explorer. Yahoo vs. Google. Facebook vs. MySpace.
Newspapers are a $50 billion a year industry, with tremendously expensive production and distribution infrastructure, grown up over centuries. If the Tribune chain had just splashed kerosene over the presses back in ’92, and declared in the flickering light that they were shifting every penny over into becoming a competitor to AOL … well, they probably still woulda wound up about where they are. But along the way, there would have been tremendous dislocation – millions of readers not getting information. Millions of readers turning to competitive print products that would have made billions.
So the newspaper industry has tried incremental solutions. Right up to this point, where, as we see in Seattle & Denver (despite what Jason sneers at, there are plenty of people who want to read what he dismisses as “boring” stories about local government, taxation, schools and crime) the papers are being forced to migrate to the web under conditions that are nothing short of brutal.
It’s all very well and good to talk about the exciting news products that are “being built today, as we speak.” But I know many of the people that work at these small, struggling web news outfits. They are up against the wall, just trying to keep the broadband bill paid. They are not going to be able to devote thousands of man-hours to digging through documents and making connections, and going out and doing original research (i.e. interviewing people to get things that are not archived on the magical, all-seeing web). Maybe this will be solved someday – but it ain’t the case today, and that’s when we need it. We need this kind of enterprise reporting, or this country is going to implode, because society is angry at the economic collapse, and nobody’s really been able to dig deep enough to explain it. At least, not in a way that holds up & makes sense for more than a month or so…
If I sound like a bit of a curmudgeon here, well, it’s hard to watch this and not get a bit grouchy. I agree with Jason on the broad points – that Big Media has sinned, and is paying the price; that ad dollars are shifting to where the consumer eyeballs are, and that this trend is only accelerating.
The last couple of months have seen the weaker papers in two-newspaper towns file for bankruptcy, fire their staffs & announce impending doom. A lot of this can be written off as the natural consequences of a contracting ad market and an epically bad economy; the announcement today by Hearst that the San Francisco Chronicle [...] [...more]
The last couple of months have seen the weaker papers in two-newspaper towns file for bankruptcy, fire their staffs & announce impending doom. A lot of this can be written off as the natural consequences of a contracting ad market and an epically bad economy; the announcement today by Hearst that the San Francisco Chronicle is facing yet another massive & painful round of layoffs came as both a surprise and not. The gut-clencher came a little bit down in the story:
The Hearst Corp. today announced an effort to reverse the deepening operating losses of its San Francisco Chronicle by seeking near-term cost savings that would include “significant” cuts to both union and non-union staff.
In a posted statement, Hearst said if the savings cannot be accomplished “quickly” the company will seek a buyer, and if none comes forward, it will close the Chronicle. The Chronicle lost more than $50 million in 2008 and is on a pace to lose more than that this year, Hearst said.
Observers have been waiting to see which major U.S. city will be the first to go without a major daily newspaper, and San Francisco is a front-runner for the role.
Over at Content Bridges, Ken Doctor muses about the other struggling Bay Area newspapers, and wonders why a viable web-based alternative hasn’t sprung up yet, in an area that’s within a hurled semiconductor of Silicon Valley (hell, I can’t figure that one out either). However, he gets close to what I think is the underlying story here:
Could the Chronicle indeed go away? Well, don’t expect anyone to buy it. The newspaper market is, to use the kind word, illiquid. Frozen solid by two minor problems: 1) the credit meltdown, which will someday ease; 2) no one knows how to hell to value a newspaper company because no one has “visibility” in future revenue, which is a nice way to say no one likes what they see ahead.
Maybe, Hearst and MediaNews, once close, but now more distant partners, can figure out some new cost-sharing plans that will pass government review. If not, we can now imagine the Chronicle indeed closing, if it doesn’t get the “significant” cost reductions it wants. My guess given our times, is that it will get reductions, and then reduce itself in product and people to some sense of immediate sustainability. It may keep publishing, though it may scrap days like Detroit or whole sections like many of its brethren.
My read on the threat of folding the paper is that they have run up against a wall of union contracts, and want to get around them without having to resort to Chapter 11. The “concessions” that Hearst wants are going to be ugly – over at Newsosaur, Mutter spitballs them at nearly 50%.
At that point, mere eliminations of staff positions will not hit that target. To eliminate half of the staff would mean that the paper quite simply would not get out. There wouldn’t be enough people to run the presses, drive the trucks, or lay out the display ads from wackjob religious sects. Not to mention, report & edit news. That means the survivors of the cuts would have to take massive pay cuts. Maybe the newsroom staff would meekly submit to the replacement of a paycheck with a moldy roast-beef sandwich and a family pass to Hearst Castle, but those Teamsters, well, that’s another story.
The other unsettling prospect is that Hearst would either sell the Chronicle to MediaNews, the Dean Singleton empire that has been similarly troubled, or perhaps even demand back all the money that Singleton owes the Hearsts (which I’m guessing he does not have), which would mean that Hearst would wind up taking MediaNews titles like the Merc-News or Contra Costa as a barter-type payoff. Both moves have significant anti-trust problems, not to mention less than rosy implications for journalism in the Bay Area.
The big record labels’ entire business was built around moving little plastic discs around the world, similar to how a newspaper’s business was built around moving paper through a printing plant and on to you. That’s about 60-70% of the cost of producing a newspaper: getting the ink on it and moving the damn thing around. Moving things from place to place–be it plastic discs or bundles of paper–is very difficult and expensive. It’s the kind of business that rewards economies of scale and, as a result, allows for huge concentrations of power and money. It’s the kind of business that creates five major record labels and a dozen or so major news companies (that’s a generous number, actually, once you get past the first five or six you’re down to small town paper chains). It’s the kind of business that comes crashing down the quickest once its central complication–moving things from here to there–disappears. With the efficiencies of digital distribution, the established order is not simply threatened, it is broken.
So if size is a disadvantage in the New Media world, the teetering newspaper empires’ reflex to merge and merge again is perhaps the exact wrong move at this time. If the key to web success is that overused buzzword “community,” then an amorphous conglomeration that exists mainly to cater to efficiencies in distributing an ad sales platform that grows daily less relevant, is not a move in the right direction.
Because surfing the Internet is like drinking from a firehose, David LaFontaine braves the torrent to tell you what trends and technologies to gulp down, swirl in your mouth, or spit out.
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