Nathan Myhrvold, former CTO of Microsoft and perhaps the smartest guy around, gives his take on the future of newspapers. From Bloomberg.
By - Jan 22, 2012
These days, one of the saddest stories on Page 1 is about newspapers themselves. All over the country, venerable old dailies are shedding reporters, editors and other workers.
In my hometown, the Seattle Post-Intelligencer stopped its presses for good in 2009, as did the Rocky Mountain News, in Denver. In the past few years, major papers have gone bankrupt in Philadelphia, Minneapolis and other cities, as circulation and advertising revenue have plummeted. Even the proud New York Times recently needed a $250 million loan from Carlos Slim, a Mexican multibillionaire.
Just a decade ago, newspapers were still the primary conduit for local information. Where else could the neighborhood furniture store advertise a sale; the local factory attract new workers; or town residents sell their used cars or sofas? The paper used to be dropped daily on almost every stoop in town.
For much of the early 20th century, the newspaper business was both profitable and competitive. New York City still had seven dailies in 1960, spanning a full range of political philosophy and journalistic style. Movies such as “Citizen Kane” and “The Front Page” portrayed an era when driven newspapermen would do anything to get a story. The U.K.’s rough-and-tumble Fleet Street remains something of a throwback to that era, as demonstrated by the recent phone-hacking scandal -- which led to the demise of yet another century-old paper, the News of the World.
The great winnowing of the industry began slowly, as the rise of television siphoned off much of the national advertising business. Even then, most cities retained one or two papers operating profitably as monopolies or duopolies. Newsrooms took this privileged economic position for granted; they began thinking of themselves as selling news rather than ads. Competition based on journalism, they rationalized, would drive readership, and ad revenue would follow.
In market research I did at Microsoft Corp. in the early 1990s, I estimated that the Wall Street Journal took in about 75 cents per copy from subscribers, $1.25 at the newsstand and a whopping $5 per copy from ads. The ad revenue let them run a far bigger newsroom than subscribers were paying for. It was a bargain for readers and a boon for journalists, who were able to travel to distant assignments and do in-depth reporting.
The trouble was, the tie between excellent journalism and revenue worked only so long as the ads did. New online formats gutted the newspaper-ad business. Why pore over tiny print looking for a job in the want ads when you can tap a few keywords into monster.com, then click through and apply? Why pay a steep per-character rate for a classified when you can hawk a whole garage full of used stuff on EBay or Craigslist for free? In so many ways, Match.com, OkCupid.com and hundreds of others offer a better experience than personal ads can. RottenTomatoes.com tells you what movies to watch, Fandango.com lets you book the tickets, and OpenTable.com gets you a dinner reservation.
Newspaper websites tried offering these services, too, but it wasn’t their strength, and they failed to keep up. It didn’t help that online sites such as Google News could serve up most of the news without ever hiring a reporter; they just aggregate information from many free news sites. Newspapers’ trump card had been the local information that they alone offered, but the Internet was simultaneously better at both local and global information distribution.
At least when television burst on the scene in the 1950s, it largely spared classified and truly local advertising. It also created its own journalism; some of the revenue that television diverted from newspapers was reinvested in TV news. In contrast, the new forms of Internet advertising rarely support news gathering, or content creation of any sort. Instead, most of the ad money now goes to infrastructure technology that connects people with ads, search engines such as Google, or social networks such as Facebook.
The dilemma for early 21st century journalism is this: Who will pay for the news? This column is part of an experiment in one direction. Bloomberg makes its money providing proprietary financial information to subscribers, and this business has not been hurt by the Internet, so it can afford to offer a good old- fashioned op-ed page without ad subsidy. As the saying goes, it’s nice work if you can get it. But this model won’t extend very far because there aren’t a long list of similarly situated data providers dying to support journalism.
Filmmakers and book publishers have never relied much on advertising revenue; when we want to read “The Girl With the Dragon Tattoo,” or watch “Avatar,” we know we need to pay without an ad subsidy. Would the public be willing to pay full price for journalism, too?
A few newspapers -- the Economist, the Wall Street Journal, the New York Times -- have started selling digital-only subscriptions. It’s a first step, but they still plainly consider their print editions to be the gold standard, so they generate little unique digital content and fail to tap the full potential of online news. Tellingly, their current web revenue falls far short of what it would take to support their newsrooms. Meanwhile, most online news sites are still free, which tends to undercut the business model of those who charge.
The situation reminds me of the early 1970s, when cable arrived in our neighborhood, and the adults in my family were arguing over why anybody would pay for something they could already get free. After all, with a set of rabbit ears, you could tune in three major networks and plenty of local affiliates, all supported entirely by ads.
Initially, cable providers offered the same channels as conventional broadcasters did, so picture quality was the selling point. Cable cut down on ghosts and snow and having to fuss with an antenna. Once improved reception got cable-TV operators going, they shifted their selling proposition toward quality -- and quantity -- of programming. Ted Turner started CNN. Others started HBO, MTV and Discovery, betting that consumers would pay for a kind of television they never had before.
It took 20 years, but the cable-TV industry prevailed. A generation grew up thinking “I want my MTV.” Today, 85 percent of American households subscribe to cable, satellite or telephone-company TV, paying an average of $82 a month, according to the research firm SNL Kagan. This revenue has been a bonanza for TV production, financing some of the best television shows ever made, all outside the original broadcast networks.
Could newspaper journalism likewise entice readers to pay for online news? People like quality journalism, so I believe that, ultimately, they can be persuaded to pay for it. But as with cable, the price will have to start low; it can then inch upward as the public gradually accepts the new business model.
The question is whether paid-subscription news sites can make the transition fast enough to make up for their plummeting ad revenue. It takes time to persuade people to pay for something they expect to get free. Ultimately, the change will happen, but maybe not fast enough to save some of the great institutions of newspaper journalism.
(Nathan Myhrvold, the former chief strategist and chief technology officer at Microsoft Corp. and the founder and chief executive officer of Intellectual Ventures, is a Bloomberg View columnist. The opinions expressed are his own.)
From MarketingCharts.org: full story here
Print (15%) proved a far more popular way to find holiday shopping deals in 2011 than Facebook (3%) or Twitter (1%), according to a survey released in January 2012 by Crowd Science. The largest proportion of respondents said that visiting companies’ websites (24%) was their favorite way to find deals, although the same proportion said they had no preferred method. Email newsletters were cited by 13% of respondents, ahead of talking with friends and family (9%) and online flyers (5%).
Although 23% of the consumers surveyed said they preferred to conduct all of their holiday shopping online, they were outweighed by the proportion (35%) that did not prefer to do so. Those aged 24 or younger were less inclined to prefer online shopping for the holidays, as compared to older shoppers.
Additionally, 1 in 5 respondents cited an anxiety about security when buying online. The concern over online safety was more pronounced among lighter internet users (less than 24 hours per week) compared to their more experienced counterparts.
17% of respondents admitted to doing nearly all of their holiday shopping at the last minute. Among the 43% who denied being last-minute shoppers, women were more prominent than men (51% vs. 38%). According to survey results released in December 2011 by PriceGrabber, , with men more likely than women to do so (11% vs. 8%).
About the Data: The Crowd Science findings were gathered from a random sample of 1,756 respondents from November 16-28, 2011, and 3,545 respondents from November 29-December 29, 2011.
From MediaPost- full story here
by Erik Sass,
Jan 25, 2012, 5:32 PM
2012 doesn’t hold much hope for some of the main traditional media categories, including newspapers, magazines and radio, judging by the latest advertising forecast from MagnaGlobal, which sees revenue losses for all three media. The declines come amid growing competition from online advertising, as well as continuing economic uncertainty.
Total U.S. radio advertising revenues will decrease 0.8% in 2012, according to MagnaGlobal, which also predicts declines of 5.2% for magazines and 6% for newspapers. These drops are especially noteworthy because MagnaGlobal forecasts overall U.S. advertising growth of 2% to just shy of $150 billion, when Olympic and political advertising are discounted. Including these special categories, total advertising will grow 3.7% to almost $153 billion.
This growth will have to come from other media. Thus, MagnaGlobal sees Internet media jumping 10.9%, due mostly to continued increases in paid search, online video, and burgeoning mobile advertising. Broadcast TV will grow 8.5% in 2012, largely on the strength of the Olympics and political ads. Outdoor media will experience more modest but sustained growth, with a 4% increase in 2012.
MagnaGlobal explained the misfortunes of radio and print, as well as the slow growth rate for media in general: “A weak economic environment and high unemployment (forecast to remain above 8%) will result in cautious consumption growth and marketing expenditure."
The new forecasts for magazines and newspapers are especially ominous, coming on the heels of earlier declines. Through the third quarter of 2011, newspapers have experienced 21 straight quarters of year-over-year revenue declines, according to the Newspaper Association of America, and the fourth quarter is expected to bring another revenue decline.
Total magazine ad pages dropped 8% in the fourth quarter of 2011, following a 5.6% drop in the third quarter -- ending an anemic recovery, as sustained growth failed to take hold after the downturn of 2008-2009.
A recent press release on Mediabids -
From PaidContent.org- full story here
Mobile action codes—including 2D barcodes, QR codes, Microsoft (NSDQ: MSFT) Tags and watermarks—became much more prevalent in the top 100 U.S. magazines in 2011, increasing 439 percent from 352 codes in Q1 to 1,899 codes in Q4.
Mobile marketing and technology company Nellymoser creates these types of ads for magazines and conducted the research, so the company obviously has skin in this game, but its findings are interesting for showing how marketers are changing the ways they use these action codes. (The report doesn’t focus on how well action codes are actually, you know, spurring action but I’ve asked for some follow-up data.) Some findings:
—Mobile action codes are much more likely to be used in ads than in editorial content—the ratio of advertising codes to editorial codes was 25:1 by December 2011. Editorial codes were primarily used to run sweepstakes.
—Most action codes were used to showcase a video (54 percent), often a video created specifically for mobile use. 30 percent were used for data capture and list building, especially sweepstakes. “While sweeps can be run with one action code, there is a growing trend towards sweepstakes that span an entire publication with multiple advertisers and editorial sections participating, each with its own code,” the report says.
—Nearly 40 percent of codes were created by the beauty, home and fashion industries and the codes were especially likely to appear in women’s magazines.
From Marketingcharts.org - full story here
This report should be interesting for newspapers and magazines still determining the best way to sell their digital space.
|
|
|
|
A “one-staff-fits-all” strategy may not be the best approach for local media companies, according to a January 2012 report from Borrell Associates, which finds that sites with dedicated digital account executives (AEs) outperform those without by a factor of 2.5. In fact, gross online revenue per sales representative (online dollars divided by all representatives selling digital products) is roughly $186,000 for sites with digital AEs, compared to $73,300 for those without any dedicated AEs.
Among TV stations the disparity is even greater: those with sales representatives dedicated exclusively to selling online advertising average almost 3 times the gross revenue of those without ($208,200 vs. $70,300).
46% of local media respondents reported having an online-only AE, down from 60% in 2009. Radio sported the lowest average of digital-only sellers, with just 11% of radio companies employing at least one. Only 2 in 5 local TV stations had at least one online-only AE, although the majority of newspapers (55%) did.
Overall, sales managers seemed pleased with their representatives’ performance using the consultative approach, with the majority rating their performance good to outstanding. However, there was a clear difference between companies working with dedicated digital AEs and those without: managers with digital AEs reported an excellent to outstanding rank at a rate of 56%, while those without a dedicated digital staff reported that satisfaction level at a rate of 32%.
Similarly, managers whose staff included digital AEs were far more likely than those without to rank their staff’s understanding of digital products as excellent to outstanding (58% vs. 11%).
About the Data: Borrell’s analysis was derived from: an online survey of 345 local media sales managers that yielded 230 usable responses, conducted November 2011 to January 2012; Borrell’s database of online revenue and number of dedicated sales representatives at more than 5,100 local media companies in the US and Canada; and a survey of 7,805 local businesses conducted January to December, 2011.
*Mediabids on Twitter
Print Ad Deals