Author: Bob Rosenbaum

Bob Rosenbaum is founder and principal of The MarketFarm, a content-oriented strategic communications firm.

News: Not dead, but being reborn

This article, on the effort by eBay founder Pierre Omidyar to start a local news service in Honolulu, validates my postion that journalism and the news business are not dead or dying. They are being taken up by a new generation of media outsiders – people who value news and aren’t so burdened by years of “training” in the industry, that they can see new possibilities that may exist. It also helps that they aren’t burdened by an infrastructure built over decades to support old business models.

The article doesn’t say much about Omidyar’s business model – but he intends the service to be for-profit and to generate new contet.

A couple things about this jump out at me – in addition to the obvious fact that it’s at least one more person who’s not willing to give up on the news.

  • New news businesses tend to be local – where there is less competition to provide information, and where the advertising crisis has had the least impact.
  • The goals of new news businesses are modest; the ones I’m hearing about tend to seek primacy in a small area, to have a good impact on a relatively small number of people, and make a little money in the process.

Which strikes me as a pretty good way to rebuild an industry that is in historic transition.

Years from now, there will be big players again, who have figured out how to consolidate the many small for-profit news operations that are popping up. Some of those big players will be the same names that are familiar in media circles today. Others will be new.

And the news business will look very different from the way it does right now.

But it will be a business and an industry.

Somehow.

The largest wing ever built – and it’s not on a plane

The largest wing ever built was installed this morning on the next U.S. America’s Cup competitor – a 90’x90′ carbon-fiber trimaran built and raced by BMW Oracle Racing.

Photo by Gille Martin-Raget for BMW Oracle Racing. Copyright.
Photo by Gille Martin-Raget for BMW Oracle Racing. Copyright.

Replacing traditional fabric sails, the wing is the largest ever built. It’s 190 feet tall and 80 percent larger than the wing of a Boeing 747, according to the BMW Oracle Racing website.

BMW Oracle as it looked before the wing; Photo by Gille Martin-Raget
BMW Oracle as it looked before the wing; Photo by Gille Martin-Raget

Gentle trials (really on gentle) will begin immediately, culminating in a race against the Swiss defender Alinghi in February. The race is scheduled to be held in Dubai – though that, like so much else in this event, is being contested first in a court of law.

This is only the second time the America’s Cup races will be held using multihulls – though it will be the first where the racing is likely to be more interesting than the court contest.

The first was 1988, when New Zealander Michael Fay challenged the rightful defender, Dennis Connor of the U.S., to a match using a 120-foot sloop-rigged monohull. Connor responded by coming to the race on a 60-foot catamaran (which also had a solid-wing sail). It was an embarrassingly lopsided and unthrilling shellacking. The U.S. won and Connor delivered all the evidence that thousands of insufferable multihull sailors have ever needed to proudly declare their version of the sport to be superior to that played in slower but more maneuverable  monohulls.

In any case, the upcoming contest promises to be a race; both teams have at least agreed to sail in boats that should finish within the same time zone of each other.

The startling drop in audited circulation

According to AudienceDevelopment.com, audited circulation levels are declining at historic rates.

This actually points to two trends — one economics related, and one customer-induced.

The first is that publishers are cutting circulation in order to reduce cost. AD states that “183 publications decreased circ 5 percent or more compared to 142 a year ago and 101 the year previous. Conversely only 41 publications increased circ five percent or more compared to 76 the year previous.”

OK, so publishers are cutting circulation to reduce printing and postage costs. It happens in every recession, and it won’t  come back much, if at all, following this recession because advertisers won’t accept rate hikes in exchange for a larger rate base. There’s simply no money in sending more publications to more people.

But the second trend is bigger and more meaningful to advertisers and publishers – and it could put the auditors out of business. That is that publishers are dropping their audits altogether because the audit process provides decreasing ROI.

AD states: “Departing titles far exceed newly audited titles. A record 69 titles were discontinued or ceased being audited and only 23 titles were added to the audited ranks. The total number of audited “consumer magazines” fell from 545 a year ago to 499.”

More and more advertisers are changing their perspective from wanting to reach a verified audience to wanting to achieve a measurable response from whoever they reach – a painfully fundamental change that I’ve previously addressed, and which most publishers – especially in the glamorous consumer world – are still trying to tiptoe around.
A hundred valid responses from an unaudited audience is worth 10x more than 10 valid responses from an audited audience.
From a publisher’s perspective, if you can deliver the responses, the audit becomes irrelevant.

Based on this, the audit bureaus ought to be frightened.

And while abandoning your audit is still a bold step in the magazine business, I assume that most publishers who do so are reinvesting in products that deliver the kind of results their customers really want.

The parties I’m most concerned about are the publishers who haven’t talked about leaving the audit behind. Because if it hasn’t occurred to you, then you clearly haven’t been listening to what your customers want. And this is one of those watershed times when the only security is to be so close to your customers that you can feel them breathe.

So the Yankees won the World Series…

… and the sun came up this morning. (But you couldn’t see it in Cleveland.)

Iran is on, no off, no on again, and off again in negotiations over uranium enrichment. Jon Stewart made me laugh again, and Rush Limbaugh is about to pop an artery over something or another. My son left the lid up; my daughter stepped right over a pile of her clean laundry in the hall for the fourth straight day.

Another bank either raised my credit card interest rate, lowered my credit limit, or both. The bagger at the grocery store would have put the Coke 2-liter on top of the Wonder Bread if I hadn’t stopped him.

Someone from Nigeria just sent me a personal note, addressing me as “Dear Kind Sir” and offering to give me several million dollars if I will help to launder it by providing my bank account number.

The bottom of my feet hurt a little bit when I got out of bed this morning, but I slept like a baby.

For these things, nobody is going to throw a parade on Broadway. So why should they when the most reliable dynasty in sports does the probable?

God how I hate the Yankees. How nice it would be if I could love them instead.

I could more easily stop being left-handed.

In retrospect, was hanging chad so bad?

After 232 years of the USA you’d think we’d be pretty advanced at managing elections by now. But I’ve got this sick feeling we’re getting worse at it.

Back when I was a kid, my parents voted in mini-van-sized booths with curtains, dozens of little levers and one big, red master lever. When you pulled that, you got an audible whrrrr and a click to tell you your vote had been cast; you could see all of the little levers reset, to verify that your vote would be counted for each issue or candidate.

By the time I started to vote, we were punching holes in cards and sticking them into a metal lock box. The only verification that a vote would be counted was the “I voted today” sticker you got at the door – obviously more symbolic than utilitarian.

When I voted today, I filled out little circles with a pen – like the standardized tests I took back in grade school. Then I stuck the ballot into a scanner that was attached to the top of a plastic bin that looked disturbingly like a medium-sized Rubbermaid garbage can. Given all the hanging-chad problems with the previous method, I welcomed the electronic scan – figuring it would verify that all my circles had been filled completely and my ballot was not only cast, but also complete.

It didn’t. It just gave a little “bong” and swallowed my ballot. The elections worker said, “Thank you,” and they failed to offer me a sticker.

I’m thinking by the time my children start voting, they’ll probably do it by dropping a marble in a box, or sticking their finger on an ink pad. Hope they get a sticker.

All the news that’s fit to buy

The New York Times, according to one of its own, is close to deciding whether to try charging for online content. If you assume that the best way to bolster the future of news is to figure out how to get people to pay for it online, then this is important – and a good thing if The Times does, in fact, try charging for content.

The only way to get people to start paying for content is for a few leaders to simply take the leap and start charging. Rupert Murdoch’s News Corp. is implementing a plan to do so. Having The Times follow would only be good for the movement.

Can it work? That’s the big debate in media. Many think content wants to be free. Others, like myself, think consumers want it to be free primarily because they’ve been trained that content comes cheap. What nobody knows is how much people will actually pay, or whom they would pay, for real journalism.

If the news is to find its footing again – that is, if anyone is ever going to figure out a 21st Century business model by which journalism can flourish – the starting point is knowledge of the true value that journalism has to its end users. This is something that’s been obscured for the past 150 years.

Will consumers place enough value on it that they are willing to pay the full, unsubsidized cost of sending  investigative reporters to do what they do (and defending against the inevitable lawsuits that are a byproduct of their work)? It would be nice. It would simplify the quandary of media executives, who are now gathering in solemn charrettes in search of a bew design for profitable media.

But the truth is that nobody knows. We don’t know what a newspaper would actually cost if paid for fully by readers? Or how its mission, staffing levels, range of focus and intensity of reporting might be adjusted over time to reflect the market-based measure of its value. How would it be distributed? How often would it be published? Who would its readers be?

None of these questions can be answered until enough media simply jump in and try to find out. Until now, few (the Wall Street Journal being the only one of any critical mass that I can come up with) have taken that risk. If The New York Times is getting ready to give it a try, desperation in the business may be reaching some kind of tipping point.

I’m fully confident that real journalism has a significant societal value. The problem is that it’s always been paid for indirectly. Once that value is untethered from the indirect means by which media have always monetized it (that is, advertising), then the real work can begin to right-size the industry and focus efforts where they deliver the most value.

There is real risk that the result would be even more “circular media,” in which celebrities are first manufactured and then covered by the same media organizations as if they were of real consequence  (Jon & Kate and Lindsay Lohan represent two train wrecks in which the front of the train has crashed into its own caboose).

But I’m more optimistic than that. I have enough faith left that if news businesses got serious about charging for the news, they would eventually achieve market balance – knowing how much to spend, and optimizing that for the best impact, as defined by consumers.

I’m hoping the Gray Lady of New York is ready to give it a try.

A novel notion for monetizing the news

While newspapers are wallowing in catastrophic circulation losses, their online revenues are falling short of objectives, and more people look to the web for news, Amos Gelb, a former TV guy and now an associate professor at George Washington University’s School of Media and Public Affairs, suggests a new model for profiting from running a serious news operation: cost transference.

In short, the idea is for Internet Service Providers (ISPs) – his example is Verizon Internet – to pay for news feeds on a per-subscriber basis. It’s how CNN works – collecting 37 cents per subscriber from every cable television provider that carries CNN (which is pretty much all of them). While CNN does earn revenue on advertising sales, its most dependable revenue stream is from the cable providers – which in turn simply pass that cost along to consumers as part of the cost for basic service on their monthly bill. And consumers don’t seem to mind – even though there is plenty of market evidence right now that they wouldn’t pay the same 37 cents per month directly to CNN if given the choice.

How does this transfer to newspapers? The largest news organizations (Gelb cites Time Warner, New York Times and Washington Post) would block their content to ISPs, except when paid on a subscriber basis. Those ISPs that make the payments would then pass along the cost to subscribers.

People who care about getting news content online would gravitate toward those ISPs that provide it.

The model strikes me, on its surface, as incredibly complicated given the wide range of business models that exist among ISPs. It also doesn’t include the many smaller news organizations that, one way or another, are going to survive, but will never be large enough to command attention from ISPs.

I don’t ever really expect to see the model play out as Gelb describes it. But I like the out-of-the-box thinking he brings to the discussion, and I agree with his assessment that news is something people want, and something people will pay for – just not directly.

In fact, the way I see it, it’s already playing out on small scale and through a slightly different medium: the burgeoning app store business.

There are now multiple places where smart-phone users can buy applications: iPhone’s App Store, Blackberry’s App World, and soon, Palm’s App Catalog. Each of these offers apps that let you aggregate and read news from various sources. Many are free, some cost money – from a $2.99 one-time download fee to monthly subscriptions (or so I’m told, though I haven’t actually found one on the monthly model in my time at either of the functioning app marketplaces).

So people are paying money to download an app that will deliver the same news they could get for free right now on the Internet? It’s a little different than the model Gelb envisions, but it plays out the same way psychologically: People who buy these apps aren’t actually paying for news; they’re paying for a new gadget on the smart phone. The cost has been transferred.

Gelb’s notion is heavy lifting, to be sure. To achieve the kind of behavior change that he describes, large news organizations are going to have to give up on their most cherished belief: that increased profit necessarily derives from increased distribution. And then they would have to convince numerous other organizations – like Google, Yahoo, Verizon and AT&T – to alter their business practices, all while risking the anger of their paid customers.

It sounds like a long shot at best. But the drastic decline in circulation and revenue that news media is experiencing is, if nothing else, a strong motivator.

That crazy Mr. Ferguson in Dubai

Least convincing spam-scam of the week

Subject: Your NAMES was used, Call Me:1-814-796-7443.

Attention please,
Your full names/data’s was used to execute a huge Contract in Dubai
without your consent and you have refused to give a correspondence reply
to My messages, why?
Presently I am on Official assignment in US due to My Bank push towards
acquiring a Bank here in US and an be reached via: “SARGENT’S COURT
REPORTUAL INC. 174 E College Ave Bellefonte PA, in USA: 1-814-796-7443”.
This email message poised because One Mr. Ferguson did came to My Office
to explain that he used your name and data’s to execute a huge Contract in
Dubai without your consent that he used it due to the exigent situation he
Found himself as at the time the Contract was awarded to him and he
fervently pleaded for your understanding especially now that the Project
has been genuinely/legally actualized and the total Project Sum has been
paid to him completely.
Mr. Ferguson then asked that the Sum of Five Hundred Thousand United State
Dollars that he kept in One of his Secret coded deposit Vault Funds in My
Bank be cleared and paid to you as a Compensation for using your name and
data’s to execute his Contract in Dubai without your consent.
There is the needed the for My the “$500,000 Secret coded Vault deposit in
My Bank” be made decoded by Legal clearance and Transferred to you Legally
in accordance with the British Monetary Law. First get back to me via my
secured email Address, to enable me directly reach you Officially or call
you and have a direct voice talk conversation with you now that I am in
USA.
As attested therein in these advertorial sites I would be leaving the Bank
soon, so act fast:

[4 links deleted by blogger on assumption that they’re phishing links]

Your’s Truly.
Mark Tucker.
Chief Executive Officer.
Prudential Bank Plc London.
Laurence Pountney Hill, London EC4R OHH.
Securitydepartment@prudentialbk-insuranceplc.com {Restricted}.

First get back to me via my secured email Address, to enable me directly
reach you Officially or call you and have a direct voice talk conversation
with you now that I am in USA.

Measuring the declining investment in journalism

Rick Edmonds, media business analyst at The Poynter Institute, estimates that U.S. newspapers have reduced the amount of money they invest in journalism by about $1.6 billion a year. His methodology is – by his own admission – back-of-the-envelope.

He has essentially calculated the reduction in total revenue of the U.S. newspaper industry over the past few years, and then multiplied this by the average percent of revenue that newspapers spend on their news operations.

The result is $1.6 billion.

According to an the annual survey by the American Society of Newspaper Editors, newsroom employment took a beating in 2008 – down 5,900 positions, or more than 11%. That follows 2,400 newsroom jobs eliminated in 2007.

And the cuts have continued in 2009. Just last week, the New York Times announced 100 newsroom layoffs. According to Papercuts,  a website by graphic designer Erica Smith who began tracking newspaper layoffs in the middle of 2007, nearly 14,000 newspaper jobs have been cut this year. (Her numbers track closely with those reported by ASNE).

Not all of those jobs are from the newsroom. Let’s be conservative and assume that a third of them are jorunalism jobs; that would put this year’s total at about 4,700. Anecdotally, I think it’s higher. But even at 4,700, that would put total newsroom cuts in the last three years at 13,000  – about 1 in 5 newspaper journalists.

What’s the average pay? According to Indeed.com, it’s $35,000 for reporters and $51,000 for editors. What’s behind those number is vague and I wouldn’t take them to the bank. But my guess would have been an average of a bit over $40,000. So let’s just go with that.

At $40,000 per job, plus 18% for benefits, the total savings per job cut is $47,300. Multiplied by 13,000 and you get a total of $614.9 million in permanent cuts from newsroom payrolls in the last 3 years.

So whose number is right, mine or Edmonds? The truth is probably somewhere in the middle. My calculations are strictly meatball, and Edmonds’ blog says essentially the same.

But also consider that these numbers don’t include cuts from magazines or broadcast channels and the real point is clear: There is a lot less journalism going on today than there used to be. And to drive that point home, all you need are the fairly reliable newroom employment figures from ASNE:

Going into 2009, newspapers across the U.S. employed about 46,000 journalists — a number that next year will show up in the low 40s or high 30s.

There are roughly 88,000 municipalities in the United States. Plus state and federal governments. Plus school districts, businesses and sports teams. Not to mention technology, health-care, religion, legitimate causes, social issues, spammers and scammers, and fascinating work in cosmology, physical anthropology and particle physics. And and even ill-behaved starlets and loose-cannon reality TV stars.

Thirty- to forty thousand journalists just isn’t enough.

I don’t know when we’re going to figure out the economic models that allow these watchdogs to get paid for the necessary and under-appreciated work that they do. But it will happen.