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 paidcontent.org: full story here
Stark new research statistics suggest digital replacement of analogue content is now very high amongst tablet owners.
Asia and the Middle East lead the way with, respectively, 90 percent and 80 percent of respondents saying they now purchase fewer printed papers.
“These markets for physical media are already in decline,” the iPad For Business Survey 2012 concludes. “On this evidence, tablet computing will hasten their demise.
“For advertising- funded media (newspapers and magazines), the challenges are particularly substantial. Readers who can afford iPads tend to be more demographically desirable than those who cannot.”
In North America, 15 percent of respondents said they would consider buying an alternative tablet to iPad next time.
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.
From AdAge: Full story here
Vogue's March issue includes 443 ad pages, nearly 4% above the year-ago level, the magazine said today. That's on top of a gain of 50 pages, or 13%, last March, according to Susan Plagemann, Vogue's VP-publisher since January 2010. "That's significant for us," Ms. Plagemann said. "We also beat our five-year average by 4.5%."
The ad-page count of the Conde Nast title will most likely beat any of its competitors, as Vogue has been selling the issue since last fall. "It's like every March for us," Ms. Plagemann said. "It's intense. We go at it early."
Vogue sibling W sold 204 ad pages into the issue -- 25% more than for last March -- including 20 from Saks Fifth Avenue to start its program around W's 40th anniversary later this year. The magazine is continuing to benefit from a 2010 redesign under Editor-in-Chief Stefano Tonchi, according to Nina Lawrence, VP-publisher at W. "Stefano Tonchi's W is a very big success," she said. "Our growth rate is accelerating."
Because marketers use them to introduce new looks, fashion magazines' March and September issues have long commanded extra attention from advertisers and readers. Media observers sometimes weigh September issues to get across just how many pages they carry. March is the next-most important issue.
"Fashion has become a much quicker industry, and most designers create at least four collections a year," Ms. Lawrence said. "But their major introductions tied to the runway shows are spring and fall, tied to March and September issues. If fashion depended on people waiting to buy the next round because their clothes wore out, it wouldn't be an industry. Spring is the introduction of the new season that ignites the engine for consumers to spend."
Advertisers sometimes respond to a soft economy by moving planned ad pages into March from surrounding issues, but that's not the case at W, according to Ms. Lawrence. "March is up, but February was up and April will be up, so it's not like we sucked the pages out of other issues," she said. "Our March is not the exception. It's what we're doing right now."
Glamour, another Conde title, said its March issue will have 181 ad pages, over 5% more than last year. Expanding on the Social SnapTag program Glamour offered marketers in last September's issue, the magazine got 27 advertisers to include SnapTags with e-commerce capabilities.
Allure will have 143 ad pages in March, up 5% from its 20th anniversary issue a year earlier.
Elle magazine -- publishing its first March issue as a Hearst Magazines title -- is running 319 ad pages, 2% more than last March. Elsewhere at Hearst, Marie Claire said its March issue will carry 181 ad pages, up 31%. Cosmopolitan's 121 ad pages mark a 20% gain from a year ago, the magazine said.
Harper's Bazaar, whose redesign will be introduced in March, said ad pages in the issue are up 15.5% from last year, to 271.
Continued economic weakness has made business tougher for marketers and magazines stuck between economy and luxury, according to Carol Smith, VP-publisher and chief revenue officer at Harper's Bazaar since May.
"We needed to choose a direction, and the only one for a magazine and brand like Bazaar is to become a more luxurious experience," Ms. Smith said. "That isn't to say precious and unattainable but is to say that Vogue, Elle and InStyle can do battle in the mass arena. We will never win [there]. I love mass brands, so it's not that Bazaar isn't a wonderful home for Maybelline, but it's a wonderful home for Mercedes, too."
Time Inc.'s InStyle said it has sold 347 ad pages into its March issue, 13% more than last March, when it posted a 20% jump. "In this economic climate, advertisers remain confident in InStyle's ability to deliver," said Publisher Connie Anne Phillips.
People StyleWatch, another Time Inc. title, saw ad pages decline 7%, to 135, ending a 31-issue streak of year-over-year ad-page increases.
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