Newspapers have made a number of forays into free distribution of their product. From the free youth oriented tabloids like RedEye in Chicago to Dallas's home delivered Briefing, newspapers have tried to use free light versions of the paper to either supplement or encourage full subscriptions. Or at least that seemed to be the original plan. Current business models seem to acknowledge that the "trade up" is unlikely and has moved toward these as portfolio products.
I still think that newspapers could do a lot better with the free model by looking to other products that do it fairly well.
Let's take trade magazines. A great number of these are provided to people free of charge. However, in exchange a certain amount of business and personal information must be given, and re-verified every year. Advertisers know exactly what they are buying. And since the subscriptions are at least requested, there's some semblance of engagement. Far better than the carpet bombing approach of bonus days, advertiser paid circulation, or home delivered free new-spam-pers. Certainly the circulation numbers would be lower, but I'm fairly certain that the circulation that goes straight into the garbage is of no value anyhow.
The second lesson they should look to is their own internet division. Registration on newspaper websites may be waning, but the data can be used to introduce other products and start a conversation. Ironically, registration forms are a frequent complaint from users, but the sites keep using them. The internet is about targeted information, and its pretty clearly become the competitor that's eating their lunch.
Data is valuable. Newspapers in the garbage can are not.
Thursday, October 30, 2008
Tuesday, October 28, 2008
High or Low quality audience - AHC needs to choose
A recent press release from the Dallas Morning News touted their worse than average decline in circulation as a triumph. They made the bold statement that if they hadn't tried to reduce low quality audience they would have had a circulation gain. While press release puffery is quite common, this one in particular is troubling.
You see, this is the same company that just launced the "new-spam-per" known as Briefing. Briefing is delivered to non subscribers regardless of their desire to have it. It can only be considered the lowest quality circulation. I actually thing that papers are going to look a lot more like Briefing in the not too distant future, which may or not be a good thing
The press release implies that high quality audience delivers the highest possible ROI for advertisers.
It's one or the other. Quantity or quality. Briefing and the Dallas Morning News are trying to have it both ways, and one of them is clearly counter to a valid strategy.
You see, this is the same company that just launced the "new-spam-per" known as Briefing. Briefing is delivered to non subscribers regardless of their desire to have it. It can only be considered the lowest quality circulation. I actually thing that papers are going to look a lot more like Briefing in the not too distant future, which may or not be a good thing
The press release implies that high quality audience delivers the highest possible ROI for advertisers.
It's one or the other. Quantity or quality. Briefing and the Dallas Morning News are trying to have it both ways, and one of them is clearly counter to a valid strategy.
Monday, October 20, 2008
Cancel the AP? Exactly the wrong thing to do.
Tribune recently made waves when it joined a few other newspapers in announcing their intent to cancel the AP. The two year notice provision means there's still plenty of time to work things out, but the notion that papers could do without the wire service is sending plenty of waves. Most think its only a negotiating tactic, with the intent to cut costs from these large contracts. I think these papers are dead wrong in this effort.
The issue to me isn't one of coverage, as most would see it, but one of failing to use one of their most powerful levers. Because the AP has been structured as a not-for-profit cooperative, it reaches across most coverage. It's a single point of contact for large entities, like google, to make deals for content in one swath. It could be a key point of leverage, dare I say a union, to work out reasonable terms with those that "steal" content. It can be a powerful lever in the right hands.
However the structure of the AP as a not for profit collective virtually assures these deals will stink. Rather than the AP trying to maximize its economic terms, it seeks to spread out its costs and treat everyone fairly. Now more than ever the AP should act as a profit maximizing entity, not a shared expense. AP should be more like OPEC than REI, focused on making money for its members, not minimizing costs.
Newspapers shouldn't be trying to pull out of the AP and further weaken its power. They should be investing in it to restructure the out of date entity for modern times. The key is in looking at the age old entity as a business, rather than a line item in the budget.
The issue to me isn't one of coverage, as most would see it, but one of failing to use one of their most powerful levers. Because the AP has been structured as a not-for-profit cooperative, it reaches across most coverage. It's a single point of contact for large entities, like google, to make deals for content in one swath. It could be a key point of leverage, dare I say a union, to work out reasonable terms with those that "steal" content. It can be a powerful lever in the right hands.
However the structure of the AP as a not for profit collective virtually assures these deals will stink. Rather than the AP trying to maximize its economic terms, it seeks to spread out its costs and treat everyone fairly. Now more than ever the AP should act as a profit maximizing entity, not a shared expense. AP should be more like OPEC than REI, focused on making money for its members, not minimizing costs.
Newspapers shouldn't be trying to pull out of the AP and further weaken its power. They should be investing in it to restructure the out of date entity for modern times. The key is in looking at the age old entity as a business, rather than a line item in the budget.
Wednesday, October 15, 2008
newspaper earnings season begins, some predictions
Tomorrow begins the Q3 newspaper earnings reporting. Those, such as Gannett, that still report monthly data have set the stage for what most believe will be a dreadful report. Media General begins the parade when they report. The monthly info has already shown their July and August declines to be on the order of 20%. One can only expect that September will be worse.
Lots of prior advocates of the industry have begun to completely sour. Peter Appert was predicting in June that some newspaper could quickly swing to a loss. He recently cut his estimates for the sector, saying that even the currently low valuations could drop by another 12 to 50%. The outlook is quite grim.
To my eye, here are some things to look for:
1. The outlook for the online portion of the business. Some companies reported declines in the online portion of the business over the past quarter. I predict that more will follow suit. Online CPMs appear to be falling, and pure play classified players continue to grow in strength. Neither is good news for newspaper companies.
2. Big drops in automotive advertising, perhaps to the degree encountered in real estate beginning around 9-12 months ago. The softness in the sector shouldn't surprise anyone, but newspapers are likely to be disproportionally weak. GM for one had already planned a 50% reduction for the year according to adage.
3. Further reductions in force. Sadly, even for companies that just finished one round, another one might be on the way. McClatchy showed they are more than willing to announce layoffs one quarter after another. I wouldn't want to predict the degree or companies likely to be affected, but it's going to hurt.
4. A move to unlock assets. It might be sales of real estate, or minority stakes in investments. These companies are in survival mode, and need to sell anything they can to survive.
5. Round after round of depressing news. With a jittery economy heading into the consumer shopping season, the outlook isn't good for ANY advertising business.
Lots of prior advocates of the industry have begun to completely sour. Peter Appert was predicting in June that some newspaper could quickly swing to a loss. He recently cut his estimates for the sector, saying that even the currently low valuations could drop by another 12 to 50%. The outlook is quite grim.
To my eye, here are some things to look for:
1. The outlook for the online portion of the business. Some companies reported declines in the online portion of the business over the past quarter. I predict that more will follow suit. Online CPMs appear to be falling, and pure play classified players continue to grow in strength. Neither is good news for newspaper companies.
2. Big drops in automotive advertising, perhaps to the degree encountered in real estate beginning around 9-12 months ago. The softness in the sector shouldn't surprise anyone, but newspapers are likely to be disproportionally weak. GM for one had already planned a 50% reduction for the year according to adage.
3. Further reductions in force. Sadly, even for companies that just finished one round, another one might be on the way. McClatchy showed they are more than willing to announce layoffs one quarter after another. I wouldn't want to predict the degree or companies likely to be affected, but it's going to hurt.
4. A move to unlock assets. It might be sales of real estate, or minority stakes in investments. These companies are in survival mode, and need to sell anything they can to survive.
5. Round after round of depressing news. With a jittery economy heading into the consumer shopping season, the outlook isn't good for ANY advertising business.
Wednesday, October 8, 2008
Colbert leads with a slap to newspapers
Breaking news - Colbert's opening featured the line:
"If they call it the USAToday, why is all the news from yesterday?"
Newspapers are offically now a punchline, literally in this case.
UPDATE - A link to the episode. You only need to hear the first minute to hear the newspaper punchline.
"If they call it the USAToday, why is all the news from yesterday?"
Newspapers are offically now a punchline, literally in this case.
UPDATE - A link to the episode. You only need to hear the first minute to hear the newspaper punchline.
Friday, October 3, 2008
The danger of Citizen reporters - $100M in Apple trades
Today a false rumor was circulated on CNN about Steve Jobs having a heart attack. This rumor quickly sent Apple's stock (AAPL) into a nose dive, losing about $10 in just a few minutes. During this time roughly 10 million shares traded hands, transferring about $100M around from one single rumor posted in a credible location by someone who was obviously incredible.
This isn't that far removed from the recent debacle that occurred when an analyst picked up an old story about United's bankruptcy and published it to Bloomberg as if it were happening again. That screwup cost about $1.3B by my estimation in transferred wealth.
Yet again the value of information is shown to be rather high in this information rich age. The value of a credible brand is also proven.
The implications for newspapers are numerous. First, the answer to reducing costs for journalists has frequently been a reliance on citizen reporters. Reducing costs is obviously the nice way to say layoffs. These citizen reporters don't have the same standards as professionals. Errors like this are bound to occur more often, and manipulation of the system just became much easier. Even the pros aren't perfect, but there is at least some accountability built into the system. Trying to put checks and balances into citizen reporting will take away most of its cost and speed advantages.
A second important implication is how citizen reporters put your brand at risk. It won't take too many of these falsehoods before a trusted brand looks like the National Enquirer. Even bad reporting and self motivation can quickly erode the trust of a newspaper brand.
A third implication, and the real opportunity, comes from reversing the weakness. Newspapers are the slow, fact checked, deep reporting source. They need to be proud about it and make their checking systems even more apparent and transparent. I can honestly say that the average person has no idea how many people look at a story before it makes the paper. Now is the time to tell them.
This isn't that far removed from the recent debacle that occurred when an analyst picked up an old story about United's bankruptcy and published it to Bloomberg as if it were happening again. That screwup cost about $1.3B by my estimation in transferred wealth.
Yet again the value of information is shown to be rather high in this information rich age. The value of a credible brand is also proven.
The implications for newspapers are numerous. First, the answer to reducing costs for journalists has frequently been a reliance on citizen reporters. Reducing costs is obviously the nice way to say layoffs. These citizen reporters don't have the same standards as professionals. Errors like this are bound to occur more often, and manipulation of the system just became much easier. Even the pros aren't perfect, but there is at least some accountability built into the system. Trying to put checks and balances into citizen reporting will take away most of its cost and speed advantages.
A second important implication is how citizen reporters put your brand at risk. It won't take too many of these falsehoods before a trusted brand looks like the National Enquirer. Even bad reporting and self motivation can quickly erode the trust of a newspaper brand.
A third implication, and the real opportunity, comes from reversing the weakness. Newspapers are the slow, fact checked, deep reporting source. They need to be proud about it and make their checking systems even more apparent and transparent. I can honestly say that the average person has no idea how many people look at a story before it makes the paper. Now is the time to tell them.
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