Nathan Myhrvold, former CTO of Microsoft and perhaps the smartest guy around, gives his take on the future of newspapers. From Bloomberg. 

Deadline Approaches on Survival of Newspapers

By Nathan Myhrvold - 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.

Selling the News

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.

Who Will Pay

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.

Quality Cable TV

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.)

‘Print Has a Pulse’: Buyers Taking a Second Look

by Steve Smith (Min Online)

While TV, Internet and (surprisingly) radio are top of mind among media buyers and planners coming in 2011, according to a new STRATA survey for the fourth quarter of 2010, print media is getting a nod. When asked which medium they are focusing most on in the coming months, 7% of buyers said print. “"Print has a pulse,” STRATA marketing chief J.D. Miller told Radio Sales Today. “It was almost nonexistent, now it has a pulse.”

Spot TV remains the most attractive venue for buyers (44%) in this survey, followed by Internet and Digital channels (21%) and spot radio (16%).

On the digital side there is surprisingly strong interest in display (80%), followed by social media (61%) and search (60%). For all of the hype around mobile, however, only 29% showed special interest. Within mobile the iPhone attracts the most interest (80%), and Blackberry (51%) is outpacing Android (45.8%). The iPad attracts interest from 31% of advertisers, up from 22% in the previous quarter. Overall, digital media actually suffered its first drop in enthusiasm. According to STRATA CEO/president John Shelton, “We see that the focus on digital has fallen off a bit. While still hot, it is used more in a solid media mix than more dollars heading its way.”

The “emerging platforms” are being met with some skepticism. STRATA found that 90% of its clients are showing no interest in the iPhone iAd, Google TV or Apple TV. Location-based advertising is not even in about 70% of plans for 2011, and most interest is going to Facebook Places, followed by Foursquare.

STRATA, a Comcast subsidiary, sells media planning and buying software.

From MIN, full story here

Magazines Continue to Lose Media Mind Share
Wednesday, December 29, 2010
Steve Smith

The daily time spent with magazine media dropped another 9.1% in 2010, a decline equaled only by the drop-off of daily time we spend with newspapers, estimates eMarketer. In an omnibus study of multiple media mind-share research sources, the data aggregator found that adults in the U.S. market now spend about 20 minutes a day with their magazines, compared to 30 minutes with newspapers, 50 minutes with mobile devices, an hour and 36 minutes with radio and two hours and 35 minutes with the Internet.

Television continues to dominate our time with media, responsible for four hours and 24 minutes of use.

The loss of time spent with print media is especially notable since these numbers come on top of a 12% decline in magazine time spent in 2009.

The good news for media brands generally is that the time spent overall with major media has risen from 635 minutes a day in 2008 to 660 minutes a day in 2010. Multitasking is accounted for in the tally. According to eMarketer’s latest aggregated figures, magazines are responsible for only 3% of time spent with media. While TV is still king, the migration to other digital media formats is starting to show. While TV viewing time increased 5.1% in 2009 during the depths of the recession, the medium lost 1.1% in overall time spent in 2010.

And where can media brands recapture some of the eyeballs that are reducing their print time? Not surprisingly, mobile media’s time spent grew 21.9% in 2009 and another 28.2% in 2010. Mobile represents, by far, the fastest-growing media platform in terms of user mind share.

 

Maybe it is just because of where I live (Connecticut) but this is a little bit hard for me to believe, primarily because so many local TV stations do such a poor job reporting the news, it is hard to imagine that consumers of news have an appetite for more. Full story here

Broadcast TV Stations Outpaced Newspapers in Interactive Sales in 2009

NEW YORK, April 20, 2010 -- Web sales growth at broadcast TV stations outpaced newspapers in 2009 as broadcasters gained ground against their principal in-market competitors and posted an 8.7 percent share of all local online advertising, according to a report released today by the Television Bureau of Advertising at a press breakfast at Gannett Broadcasting’s offices in New York. Total online ad revenue for stations hit $1.1 billion last year, a 10% increase over the previous year, and the report forecast that revenues would grow another 21 percent in 2010.

Jack Poor, VP – strategic planning at TVB, said, “In a year where the IAB reported flat internet revenues, the performance of local TV stations is quite stunning.”

“Benchmarking: TV Web Sites Defy Gravity” examines revenue sources, growth rates, site traffic and other interactive issues and offers benchmarking for stations in large, medium and small markets. The research was conducted by Borrell Associates, which tracks interactive advertising for more than 4,400 local websites in the U.S. and Canada through voluntary submission of data. This is the fifth year Borrell has conducted the benchmarking report for TVB. This year’s report focuses on data submitted by 573 TV stations.

 

 From the New York Times, Full Story here.

Although the article focuses on TV Infomercials, some of these products have become big print advertisers as well.

Infomercial Products Take One on the Chin

By ANDREW ADAM NEWMAN

IT may come as no surprise that in the February issue of Consumer Reports, where the product-testing magazine rates 15 infomercial products like the Snuggie (“The blanket with sleeves!”) and the ShamWow (“You’ll say wow every time!”), nearly all are found to be lacking.

What might be more surprising, though, is that editors thought subscribers — savvy shoppers who scrutinize the magazine’s ratings with intensity to guide their purchases — would even give a second thought to buying, say, a SlapChop (“Dice, chop and mince in seconds.”).

But Jeff Blyskal, a senior editor at Consumer Reports who wrote the unsigned article, said that while many smirked at infomercials — also known as direct-response ads — they also fell under their spell.

“We tend to laugh at these commercials but they are very powerful persuaders,” Mr. Blyskal said in a telephone interview. “You say, ‘I’m too smart to buy this,’ but when you laugh you kind let your guard down and get drawn into it.”

In the article, Mr. Blyskal quotes Martin Lindstrom, the author of the book “Buyology: Truth and Lies About Why We Buy,” who says that infomercials “take viewers on a psychological roller-coaster ride.”

That ride, Mr. Blyskal writes, “starts with dramatizations of a problem you didn’t know you had, followed by the incredible solution, then a series of ever more amazing product benefits, bonuses, and giveaways, all leading to the final thrilling plunge of an unbelievably low price.”

 

Although I believe in the power of print as much as the next guy in the newspaper and magazine industry, this seems a little too good to be true, even for me:

From www.PrintInTheMix.com (a great resource for print related facts)

October 2009 -- A study performed by BrandScience for the UK’s Outdoor Advertising Association (OAA) has found that the return on investment for newspaper and magazine advertising is higher than that for TV and outdoor advertising.

For every £1 spent on newspaper and magazine advertising, “bricks and mortar” retailers get a sales increase of £6.23. For every £1 retailers spend on TV and outdoor poster advertising, revenues increase by £3.57.  For these retailers, online advertising generated £2.23 in sales for every £1 spent. If production costs are taken into account, outdoor advertising outperform TV and close the gap with print.

The OAA study finds that using a multi-platform approach is the most effective way to boost sales.  When print campaigns are combined with outdoor ads, the ROI improves by 34%, and TV is 40% more effective if combined with outdoor. Direct marketing campaigns are enhanced by 61% when backed by outdoor ads. 

 

For the study BrandScience, a modeling firm focused on establishing ROI across marketing channels, analyzed 400 brand econometric case studies. It compared the ROI garnered by campaigns through different media. Data on ad spend and corresponding sales was supplied by brand owners.