Media

New Business Models for Newspapers: Tilting at Windmills?

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Hope springs eternal in the newspaper world, despite the fact that the business has been unremittingly bleak for … it seems like ages.

And yet, new business models are being trotted out. In addition to publisher Rupert Murdoch announcing that he intends to begin charging for viewing online content of his various papers beginning next year, Journalism Online announced in August that it has signed up nearly 180 dailies as affiliate partners.

Journalism Online is author and lawyer Steven Brill’s venture which is offering a variety of “pay models” that allow for micro-payments, subscriptions, sampling, and versatile flexibility in what news content is offered free or for a charge. Reportedly, more than 500 newspapers, magazines and other media properties have now agreed to sign up.

According to Brill, “By creating a platform of flexible hybrid models for paid content that maximizes online advertising revenue while creating a new revenue stream from readers, Journalism Online has helped shift the debate over charging for online news from ‘if’ to ‘when and how.’”

Just how is this supposed to work in a practical sense? The idea is for newspapers to focus attention on the top 10% of their most avid online readers, which would result in preserving approximately 90% of page views as well as ad revenues, even while migrating to a paid-content structure.

Oh, really?

This forecast pans out only if all of those “avid readers” continue to visit the site after a fee or subscription program is introduced. But what’s to ensure that will actually happen?

The marketing world is littered with examples of rosy projections and expectations that flamed out – despite a bevy of opinion research and focus group interviews predicting otherwise. That’s because talk is cheap.

But most online news is even cheaper – as in free. Nevertheless … hope springs eternal.

The “age-old, old-age” disconnect in advertising.

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Here’s an interesting statistic: Consulting firm McKinsey & Co. projects that by 2010, half of all consumer spending in the United States will be generated by people age 50 or older.

It’s a reminder of just how important the Baby Boom generation has been to the U.S. economy over the past three or four decades. And now, just when you might think that power has shifted to younger generations, the McKinsey statistic helps us realize that Baby Boomers aren’t ready to leave the stage just yet.

In fact, they’re not even ready to leave center stage yet.

Here’s another interesting stat: The average age of creative personnel at ad agencies and related communications firms is … 28 years old. And the number of personnel over the age of 50? Fewer than 5%.

And therein lies the age-old, old-age disconnect.

Perhaps it isn’t surprising that ad agencies are stuffed with creative types who are mostly between the ages of 20 and 35. After all, that’s traditionally the demographic group most likely to buy and spend … and so the vast bulk of marketing dollars – traditional and emerging – are devoted to this segment (as true in the 1970s as it is today).

And of course, having a bunch of twenty-somethings spending time developing marketing pitches to other twenty-somethings makes perfect sense. It’s just that the 18-34 target is no longer where the bulk of the buying power is happening. That’s still happening with the Boomer group, whose average age as of 2009 happens to be 53.

Just how significant are “the oldsters” today? McKinsey’s statistics are telling. They include the finding that the over-50 population in the United States brings home nearly 2.5 times what the 18-34 group earns. Which makes it no surprise that the over-50 group represents more than 40% of all disposable income in the U.S.

And when you look at spending, the over-50 segment — which makes up only about 30% of total U.S. population — accounts for well over half of all packaged goods sales and three-fourths of all vacation dollar expenditures. These spendthrifts buy more than 50% of all the automobiles. They even spend significantly more than the average online shopper during the holidays – 3.5 times more, to be precise.

These are strong financial figures.

Now, consider for a moment to what degree ad creative personnel who are 20 years younger are going to really understand older consumers. Sure, they’re well-versed on the ever-growing interactive and social marketing tactics that are available today. But how likely is it that they’re actually able to craft compelling advertising and marketing messages to older consumers?

Undoubtedly, many will scoff at the very question. For one thing, these creatives grew up with Boomer parents.

But when you consider how many common, worn-out clichés one sees in the advertising that’s aimed at the over-50 set — online as well as off — it does make you wonder if the communications firms are putting their creative emphasis in the right hands!

The Broad and the Beautiful

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It took awhile, but access to faster Internet service is finally beginning to even out across all geographic regions of the United States.

A new study on broadband growth conducted by comScore, Inc., a digital marketing intelligence firm, finds big gains for broadband in rural areas. As of the end of 2nd Quarter 2009, an estimated 75% of rural households with Internet access now have broadband service. (Rural markets are defined as those having less than 10,000 population).

Two years ago, comScore counted only 59% of rural households connected to the Internet having broadband service.

Not surprisingly, large metropolitan areas with populations over 50,000 have higher broadband penetration (92% of Internet households), but this percentage is up only a couple points in the past year.

Who’s providing these broadband services? A just released study by Leichtman Research Group found that 19 service providers account for well over 90% of the U.S. market – the largest among them being Comcast and Time Warner for cable … and AT&T and Verizon for telephone.

Indeed, some metro markets are beginning to approach broadband saturation. For instance, in the New York metropolitan area comScore finds 96% of all Internet households are using broadband. It’s 92% in Chicagoland, and nearly 90% in Philadelphia and San Francisco-Oakland-San José.

The Internet broadband penetration for the country as a whole — at nearly 70 million households now — is estimated to be over 85%, meaning that rural areas are still relatively under-served. But the differential is shrinking quickly. Chalk up yet another instance where regional differences are disappearing – thus making rural markets more attractive not just to consumers, but also for rural-based businesses and for companies that rely on far-flung employees who telecommute from home.

It makes saving money on gasoline and avoiding rush-hour traffic snarls more attractive than ever!

Rupert Murdoch’s “Paid Content” Gamble

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Rupert MurdochMedia mogul Rupert Murdoch’s pronouncement last week that beginning in July 2010, online content for all of his news media properties will be available for a fee – not for free – has surprised many in the industry.

“Quality journalism is not cheap,” Murdoch declared. His announcement comes hard on the heels of his massive media conglomerate News Corporation reporting a ~$3.4 billion loss for the last fiscal year.

While admiring Mr. Murdoch’s brave stance and willingness to get out in front of an issue that has bedeviled the newspaper industry for the past four or five years, one is left wondering if he’s playing the role of Don Quixote rather than Richard the Lionheart in this drama.

For sure, the pay-per-view business model looks great to any publishing company that has seen the advertising-driven business model come under so much stress and strain in recent years. And The Wall Street Journal, one of Murdoch’s properties, has been able to charge a fee for online access in a practice that dates back prior to that publication’s acquisition by News Corporation.

So what will happen in this glorious experiment? Will legions of newshounds flock to the various Murdoch sites – The Wall Street Journal, Times of London, Australian, New York Post – and plunk down pay-per-view dollars or a monthly access fee for the privilege of reading the latest news bits?

Or will people rely on the many other (free) outlets for news, while also receiving and passing along “copy-and-paste” materials over the web — an effortless task that can be completed in mere seconds?

[And good luck trying to use legal means to prevent the dissemination of copyrighted material; the litigation costs could well outstrip any compensation dollars awarded, while being a major distraction inside the company and causing a PR kerfuffle outside.]

That giant sucking sound you hear could be the hordes of cyber-visitors heading on over to CNN, USA Today and other free news sites, whose traffic volume will spike and perhaps even bring in additional advertising revenues off the extra hits. Would these and other free, advertising-driven media properties like to find ways to increase revenues? Sure. But most of them would prefer to be #3 or #4 to take the leap on paid content – not a high-risk first or second.

There will always be some people willing to pay for premium content. But let’s face it; most news isn’t “premium.” It’s a commodity – and its dissemination is helped along by hundreds or thousands of people copying and forwarding articles and and/or links via e-mail, Twitter, LinkedIn, Facebook … you name it.

Rupert Murdoch has a history of being pretty savvy when it comes to the news business. And certainly he has the power and the resources to undertake this new effort.

But his naiveté may be showing on this one. He is, after all, nearly 80 years old and notoriously online-illiterate himself. And while the saying goes that “knowledge is power” … “power without knowledge” isn’t usually a good recipe for success.

How “social” should your office environment be?

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In the early years of the Internet, companies worried about the loss of productivity if employees were tempted to surf online in amongst their work duties. There was also the issue of the “appropriateness” of the web content being viewed. In response, various web tracking capabilities were introduced that enable companies to monitor online activities on networked computers.

On the other hand, as the Internet became all-pervasive in daily life, many companies also adopted a policy of allowing a modest amount of web surfing during work breaks to allow employees to conduct personal business such as shopping and bill-paying.

Now, with the rise of social media, the whole issue has been brought to the fore once again. The proliferation of Facebook accounts in particular has resulted in a new spike of personal online activities at work. A recent study by Nucleus Research bears it out. Based on study findings, Nucleus deduces that companies allowing employee access to Facebook lose an average of 1.5% in total employee productivity. And in an era of cutthroat competition globally, 1.5% of productivity is no slouch amount.

To reach this conclusion, Nucleus Research found that slightly more than three-fourths of the employees surveyed have a Facebook account. Of those who do, nearly two-thirds admitted to accessing their account during working hours.

The average amount of time spent per day on Facebook on office time is about 15 minutes – although the study uncovered a few employees who spent upwards of two hours daily during work hours. (Shame on those employees … but shame on their employers, too, for being so utterly clueless about those employees’ behavior!)

Of course, some people’s activities on Facebook have a business purpose, don’t they? Well … it is true that some employees manage “fan” pages for their company as an adjunct of their personal Facebook account. But that shouldn’t represent more than a small portion of any firm’s workers – perhaps those in the marketing, sales, HR or shareholder relations departments.

And the Nucleus Research study findings reflect this as well, because nearly 90% of the respondents who access Facebook at work could not articulate a business justification for doing so.

Perhaps the study’s most surprising finding was the ~5% of respondents who never access Facebook anywhere but at work. What this may mean is that they built their entire Facebook profile on work-time as well. Chalk up some more wasted hours!

The Nucleus Research findings demonstrate that as time progresses and various social media platforms like Facebook and Twitter become even more pervasive communications tools for people at all levels in the organization, the old guidelines for balancing work and personal life must continue to evolve.

The kneejerk reaction is to simply block access to Facebook on all office computers. But there will always be some employees who have a legitimate business reason to be on Facebook. And then there are the the ever-growing ranks of telecommuters working offsite, who surely have access to alternate laptops or PDAs even if their company-issued equipment blocks access.

As is usually the case with situations like this, the easiest fix is sometimes not the best one. And at the end of the day, “big brotherism” could reduce employee morale even further — hardly the result one would hope for in the current difficult business climate where “improving company morale” is far more just an abstract concept in an HR textbook.

Johnson & Johnson Raises the Alarm about Counterfeiting

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Johnson & Johnson logoOne of the biggest benefits of the Internet has been the ability for consumers to research medical information for themselves. It’s not surprising that people would turn to the web for answers to health-related questions, particularly if they or a family member are suddenly faced with a serious health concern. And from WebMD to other sites, the web is full of valuable information that can increase someone’s understanding of a medical condition quickly.

Unfortunately, there’s a darker side to this, too. Medical product scammers and counterfeiters have found more than a few people online to be susceptible to their “cures.” They’ve surmised that it’s only natural for a person concerned about a medical condition or ailment to be interested in a cure – or at least to find a way to alleviate the pain and discomfort associated with it.

Because the web is global, there’s precious little any government or court jurisdiction can do to control the proliferation of counterfeit pharmaceuticals or other medical products. And the web is full of them – not simply bogus drugs but also counterfeit contact lenses, glucose strips, and a whole host of items let’s just refer to euphemistically as “virility and family planning products.”

But to do nothing isn’t a solution, either. Johnson & Johnson seems to feel this way, too, and is proposing a “Medical Device Product Protection Leadership Initiative” … and inviting other companies, including medical wholesalers, to join in the effort.

In addition, a new pharmaceutical industry initiative, dubbed “Rx-360“, is starting up. It’s focused on securing the integrity of supply chains that lead into manufacturing and packaging operations.

Will these initiatives work? Judging from the spotty success to date in curtailing the proliferation of counterfeit medical products being sold online, likely it’ll be only modestly effective at best. But since we’re dealing with potentially life-and-death matters here, any amount of increased effectiveness is highly welcome.

Surprise! Deep down, we actually like the 24/7/365 work environment.

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It’s a common gripe you hear among business professionals: The proliferation of laptop computers and mobile communication devices has contributed to a “24/7/365” work culture, making it more difficult than ever to disengage from the office and putting bigger stresses on work-life balance.

The irony, people claim, is that laptops, PDAs and other equipment which promise to improve productivity and make daily work tasks easier, have actually created more work and resulted in longer hours devoted to the job. And you can’t escape it — at home, on vacation, or wherever you are.

But now, along comes a research study that gives the lie to these assertions. Manpower firm Kelly Services has just released the results of a massive worldwide survey of ~100,000 people in the workplace. Among the survey’s findings: Three-fourths of respondents appreciate the opportunity to remain in constant contact with work – even though one-third of them report working more hours each week as a result.

And among the North American survey respondents, 64% say they’re happy with their current work-life balance, and more than half claim their productivity at work is “much better” as a result of utilizing the new technologies.

So how do we explain the difference between all the negative “cocktail chatter” we hear … and the far more positive survey responses provided when no one’s looking?

It might be because people tend to exaggerate negative opinions – especially when surrounded by spouses and friends who are more than eager to lend moral support – all the while murmuring protestations of disapproval about the “big, bad organization.”

But I think the reason for the incongruity is more basic. On a theoretical level, most of us want to preserve the boundaries between our work life and our personal life. It just seems like it’s the correct position to take on the issue. But another part of us feels a need to stay connected … to be continually “in the know” and not miss a beat — even for an hour.

Moreover, in today’s challenging employment environment, being hyper-connected and super-clued in with the company is more crucial than ever, for self-preservation if for no other reason.

Besides, when it comes to being in control, most people just like that feeling — a lot.

Sandford Dody: The most famous biographer you’ve never heard of.

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Sandford Dody, ghostwriter to the stars.
Sandford Dody: Ghostwriter to the stars.
The American author Sandford Dody died a month ago. You’re forgiven if you don’t know who he is – and not just because, at age 90, he was a throwback to another era.

Mr. Dody was, in fact, the author of numerous autobiographies of American stars of the stage and screen. But the public never really knew that, because his name didn’t appear on his books.

Dody was a ghostwriter. Acclaimed “autobiographies” that in actuality he authored of celebrities like Bette Davis (The Lonely Life) and Helen Hayes (On Reflection) became best-sellers, with readers delighted to find out how “good” Miss Davis and Miss Hayes were as authors – almost as great as their acting abilities!

Most would never learn the truth – that Sandford Dody, as confidante and gentle interrogator, was the person who coaxed and teased these great stories out of his subjects.

How did Dody end up becoming “Ghostwriter to the Stars”? Like so many people who made their careers in the field of entertainment and arts journalism “back in the day,” the native New Yorker started out wanting to be in show business, perhaps as an actor or a writer. And like many others with stars in their eyes, he made the trek to California to try his luck in the film industry.

Back in the 1940s, it wasn’t so hard to meet the famous as well as not-so-famous who inhabited the then-relatively small world of the Hollywood film industry. Even as he dreamed of becoming a playwright, Dody took bit parts in a few films.

But as it became clear he would never ascend the heights either in front of the footlights or on the marquee boards, and in need of money, Dody turned to ghostwriting beginning in the 1950s. His first project was authoring the autobiography of a now-obscure silent film star, Dagmar Godowsky. (One could assume Miss Godowsky was obscure even then, some 30 years after her film career had ended!)

The assignments with Bette Davis, Helen Hayes, the Metropolitan Opera star Robert Merrill, and members of the Barrymore family came along later, in the 1960s. (The Davis autobiography was particularly successful, and is credited with leading to a late-career renaissance for the aging movie star.) And while these projects would prove to be financially lucrative for Dody, it is clear from his own writings that the author was somewhat ambivalent about the whole business of ghostwriting.

In fact, he stopped doing it after his book on Miss Hayes was released. Why? In his own autobiography, published in 1980, Dody gives us a clue. “The most suitable way to view stars is from a long way off,” he declared.

For Dody, it seems that spending so many hours with his subjects as he prepared to write his manuscripts, experiencing their egotism and petty vanity “up close and personal” inevitably came as a letdown. “Let the next star write her own damned autobiography,” is how he would sum it up after he retired.

In later years, Sandford Dody returned to New York City, where he resided quietly in Lower Manhattan, living off his royalties and indulging in his passion for the musical and visual arts. For those of us who know New York as a “walker’s city,” it will come as no surprise that Dody kept up a nearly-every-day regimen of walking an eight-mile loop from his Greenwich Village apartment to the Metropolitan Museum of Art, Lincoln Center and back. It’s an important clue as to how he was able to reach his tenth decade despite having battled asthma from the earliest years of childhood.

Ironically, it is a poignant passage from his own autobiography, Giving Up the Ghost, that illustrates the uncommon talent Dody possessed as a writer – and hints at what he might have produced had he taken a different literary path:

“When a ghost’s job is done, he wanders, unheeded, unseen in a half-world and in circles now too grand for him. Unseen by everyone – except on rare occasion by the subject who pretends blindness but winks conspiratorially when the unfamiliars are looking the other way – I have been able to slip through closed doors and between locked mortals as they engage in their earthly affairs. Impossible to be heard, I for one have cried out in protest, in joy, in vain. Isn’t that what death is all about, finally?”

The single most important success factor in e-mail marketing …

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Marketers are continually looking for ways to tweak e-mail campaigns to improve their success. From direct mail tradition, we know the “list” and the “offer” are highly important success factors, followed by the creativity and appearance of the promotional piece itself.

But what’s different about e-mail marketing campaigns? Doesn’t a compelling and informative “Subject” line in the inbox also have a lot to do with their success?

Well … yes. But in field research conducted recently by Epsilon, a leading direct marketing agency and consulting firm that queried more than 600 North American respondents, the findings revealed that there’s another factor that is far more important than the “Subject” line. It’s the “From” line on the e-mail.

In fact, nearly 70% of the respondents cited the “From” line as the single most important factor determining whether or not they’ll open an e-mail message. And this figure is up from 60% in Epsilon’s 2002 survey, so the trend is clear.

By contrast, the “Subject” line is the most important factor for only about a quarter of the respondents.

What this means is that people are looking to see if they know (and trust) the sender before they do anything else … even before reading the subject line of the e-mail. Thus, a poorly performing e-mail campaign might have less to do with the campaign’s specific marketing elements than it does with the sender’s familiarity and reputation.

With groaning e-mail inboxes, is it any wonder that people are inclined to eyeball the “From” column, quickly scanning for the (few) e-mails they’ll open as opposed to the scads of other messages they’ll delete without a second thought?

In short, the “From” line offers comfort. It’s the familiarity of people they know … companies with which they have a relationship … brands that they trust.

That’s also why it’s so important for marketers to send “welcome” or “thank you” e-mails to new registrants without delay. Why risk having someone forget they signed up, and then hitting the unsubscribe button (or worse, lodging a spam complaint) when your messages hit their inbox later? That’s snatching defeat from the jaws of victory.

College Textbooks: It’s Time to Throw the Book at Them

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college textbooksConsidering that the digital revolution has dramatically improved access to information pretty much across the board, while also lowering the price of delivering the content to consumers, doesn’t it seem like college textbook publishing has been operating in something of a time warp?

Anyone with kids enrolled in college in recent years (present company included) has likely been confronted by obscenely high bills for textbooks. In fact, stats reported by the U.S. Public Interest Research Group reveal that college students spend an average of ~$900 per year on textbooks. When you consider that some courses don’t even have textbooks, the average cost for those classes that do is even higher than the overall figures would suggest.

What gives here? You can blame a number of factors. High among them are publishers that issue new editions of the same textbook every year or so; never mind the fact that 95%+ of the material is identical to prior editions. And so, perfectly good textbooks that could be used by different students over multiple years are instead relegated to the trash or a box in the basement. Or they languish, unwanted, at the book nook at the local thrift store.

And how about publishing books using expensive and high-margin hardcover binding when soft-cover would be more than adequate? That’s a common publisher ploy.

Finally, let’s not forget the “unholy alliance” between college bookstores and book publishers to try to corner as much of the college textbook business as possible. After all, those textbook sales represent a major contributor to college store profits.

Thankfully, recent developments suggest that real alternatives for students (and their beleaguered parents) have now emerged. Some of these resources are web sites like eBay’s Half.com where students can purchase books for substantially less than the published price. Or Chegg, where students can rent the books and return them following their use. Of course, this is assuming you know the correct ISBN number of the books in question and can be sure you’re ordering the correct edition. Often, that’s not an easy feat at all based on how hard some school stores try to hide the ISBN information from purchasers.

The ISBN information will also serve you in good stead when searching for used textbooks on sites like Amazon where the ISBN numbers are included in book listings.

But beyond simply finding sites to purchase books at a cheaper price, there are new digital alternatives that are also cropping up. CourseSmart provides digital versions of textbooks that are viewable online or can be downloaded. Not only is the cost much less, but students can choose to print out texts chapter by chapter or simply keep their textbooks on their computer, leaving more space in their backpacks for more important things like electronic gadgets, food and bottled water. For now, most of the CourseSmart choices are from major publishers like McGraw-Hill and Wiley, but these offerings are sure to expand in coming years.

Another interesting development is engaging the course instructors themselves in developing custom reading materials. That’s what Flat World Knowledge is doing: It’s an open-source textbook provider that offers online books through a web-based reader, free of charge. Professors can get in on the action by customizing what’s offered to their own specific course by rearranging book chapters and removing or adding text. Not only does it make their course syllabus more user-friendly for students, it’s a labor saver for the instructors as well.

How does Flat World make money doing this? Students can pay for “premium” upgrades such as PDF printing, audio files, and interactive quizzes that are offered along with the free basic text information.

As to which of these new services will turn out to be tomorrow’s standard way of acquiring course instruction materials … who knows? But one thing’s for certain: the cost of buying textbooks won’t be nearly the monetary challenge it’s been for students and parents up til now.