Newspapers

Newspapers Turn on Each Other

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Dinosaurs in Disney's FantasiaLast week, the Associated Press reported that U.S. newspaper advertising revenues declined dramatically in 2009, bringing ad receipts to the lowest level recorded in nearly 25 years.

In fact, newspaper publishers’ total advertising revenues last year came in below $28 billion, down $10 billion from 2008. According to the Newspaper Association of America, annual ad revenues have now fallen by nearly $22 billion – a whopping 44% — since 2006.

And now, amid this toxic environment comes word that The Wall Street Journal has declared an all-out war on The New York Times for local advertising. In mid-April, the Journal — up to now focused almost exclusively on national and international news — is set to introduce a New York-focused section as part of its paper. Outside observers believe this will put as much as ~20% of the New York Times’ retail advertising revenues at risk.

And this isn’t a minor foray on the part of the WSJ, either. It will be spending upwards of $15 million to produce the new 12-page section which will cover local business, real estate, sports and cultural events. The financial outlay includes salaries for ~35 editorial writers – surely one of the few instances of new editor jobs actually becoming available.

The WSJ action couldn’t come at a worse time for the Times, which has experienced sharper ad revenue declines than the industry average. It’s responding by launching a major trade marketing campaign of its own, touting its audience strength with female readers and “high culture” afficionados.

But just how effective this countermove will be is debatable, as recent moves by the paper haven’t exactly telegraphed a continuing commitment to the local news scene. In the last few years alone, the Times has consolidated weekly sections covering specific regions of the New York metro area (Long Island, Westchester, Northern New Jersey), as well as axing its stand-alone “City” and “Metro” sections.

Over the coming months, it’ll be interesting to see how effective the WSJ is with its new local-focused section – whether or not it’ll land a major blow on its rival.

Either way, the vision of two venerable newspapers engaged in a Herculean struggle, fighting over an ever-shrinking advertising pie is isn’t exactly a pretty sight.

It reminds me of the famous scenes in the Disney movie Fantasia of the huge dinosaurs furiously going after one other – even as the world’s changing ecosystem is rendering the entire species extinct.

Where Does the News Begin? Pew Looks for Answers.

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Pew studies news reporting today ... and who's crafting it.
You don’t have to be over 50 years old to be concerned about where the world might be heading when it comes to the generation of news stories and how they are vetted. As newspapers and other publishers have cut the size of their reporting and editorial staffs, the quality and consistency of news reporting has suffered in the eyes of many.

Recently, the Pew Research Center’s Project for Excellence in Journalism decided to take a look at this issue to see how it’s playing out on the ground by studying the “news ecosystem” of a single geographic region. The market chosen for the study – Baltimore, Maryland – just happens to be in my backyard, so I’ve been able to review the results with a good understanding of the dynamics of the region in question.

Pew’s Baltimore study evaluated the news environment during the summer of 2009 and came to some interesting conclusions. While the regional media landscape – print, web, radio and TV – has broadened considerably to include 53 separate outlets that regularly produce and broadcast some form of news content, much of what is truly “new news” came from the traditional news outlets and not from other media resources.

Six major local/regional news threads were studied, ranging from the Maryland state budget situation to crime trends, issues affecting the metro transit system, and the sale of the Senator Theater, a local historical landmark. An analysis of those news threads found that:

 More than 80% of the news stories were repetitive – just rehashes of someone else’s original news content that contained no new information.

 Of the ~20% of the news stories that did include new information, nearly all of the content came from traditional media, published either in conventional format (e.g., print) or in digital.

 General-audience newspapers like the Baltimore Sun produced roughly half of the news stories, followed by local TV stations such as WBAL-TV contributing ~30% of the reporting.

 Specialty business or legal newspaper outlets such as the Baltimore Business Journal and the Daily Record contributed just under of 15% of the news items, with the remaining news reporting coming primarily from local radio stations such as WYPR-FM.

 Interestingly, about one-third of the news coverage generated by newspaper publishers appeared on the Internet rather than in their print editions.

Thus, the Pew study demonstrates that “new news” is coming from the same sources as before, led by the local papers. But another clear picture to emerge from the Baltimore profile is that the scaling back of editorial staffs has resulted in less original reporting, with much heavier reliance on simply republishing stories that have appeared elsewhere.

At the same time, new interactive capabilities are giving “we the people” an unparalleled broadcast platform via the ability to post feedback and commentary, not to mention utilizing Facebook, Twitter and other social media platforms as a megaphone.

In today’s “everyone’s an editor because they can write” environment, no one can stop us from broadcasting our own opinions and analysis to the world. But that’s not the same thing as a properly sourced, properly vetted news story. And that’s what Pew sees falling away.

“Mag Drag 2009”: Year-End Update

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Earlier this year, I reported on the sorry state of print magazine publishing as illustrated by the spate of closures reported up to that time.

Now that we’re wrapping up 2009, we can see the full scope of the damage. MediaFinder has tallied up more than 370 magazine titles that have folded over the course of the year. And the number is closer to 450 if you also include magazines that ceased to publish in print form and went to an all-digital format.

Interestingly, magazine closure stats for 2009 were actually a bit lower than in 2008 and 2007. But this year saw the demise of some pretty important titles. Among the more noteworthy casualties were:

 Country Home
 Editor & Publisher
 Gourmet Magazine
 Hallmark Magazine
 Modern Bride
 Nickelodeon
 Portfolio
 Teen
 The Advocate
 Vibe

As we move into 2010, will these trends continue, or will magazine closures level off? It’s too soon to say, but some prognosticators are forecasting a slight uptick in print magazine advertising revenues, so perhaps the worst is behind us.

But coming off of a disastrous 18-month period when print advertising revenues have tanked 25%, 30% or more, it’s hard to see how some magazines can continue to survive at the new, depressed revenue levels which will likely be a fact of life going forward.

And what about newspapers? For them, 2009 was even more depressing, with a record number of bankruptcies filed including the companies that own the Chicago Tribune, Philadelphia Inquirer, Chicago Sun-Times, Minneapolis Star/Tribune and a number of other iconic newspaper brands. At the end of the year, though, some firms had managed to resolve their bankruptcy proceedings thanks to cash infusions, labor concessions, or selling out to new owners.

Newspaper publishers and online news consumers: Still miles apart on paid content.

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How can the views and perspectives of newspaper publishers and readers be so out of kilter? It might have something to do with “wishful thinking” on the part of the publishers.

Case in point: American Press Institute has just released the results of a field research study that compares the opinions of readers and publishers on paying for news content.

Naturally, this issue is of paramount concern to newspapers that are trying to create a new business model that is profitable. In fact, nearly 60% of the publisher respondents in the survey reported that they’re considering requiring paid access for online news — news that is currently provided to readers free of charge. At the same time, these respondents seem to believe that consumers will willingly “pay to play” in a new paid-content environment.

But I wonder about that.

Here’s an example of the disconnect between newspaper publishers and news consumers found in the survey: More than two-thirds of the publishers believe it will be “not very easy” or “not easy at all” for consumers to find similar news content online from alternative free sources once the shift to paid content happens. Do consumers agree? Well … only ~43% think the same way.

And where do newspaper publishers think people will go for news if their paper’s free online information is no longer available to them? Again, we see a big disparity in the results. The top three sources publishers think consumers will turn to are:

 The publisher’s own print newspaper: 75%
 Other local media: 55%
 Television: 53%

For consumers, those alternate sources all rated lower – in two cases, dramatically so:

 The publisher’s own print newspaper: 30%
 Other local media: 17%
 Television: 45%

[For the record, the alternative free news source identified by the most consumers was “other local web sites,” cited by 68% of respondents.]

With such dramatically different views held by newspaper publishers and their consumers, it’s clear that both sides can’t be correct. I’ll to bet that the consumers’ responses are closer to the reality.

For this reason, it would be advisable for publishers to tread very carefully as they attempt a shift to a paid content business model. Does the term “evaporating audiences” mean anything to them?

What are the very latest trends in media usage?

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TargetCast TCM logoWith all of the rapid changes occurring in the media world today, it’s hard to know just what kind of impact they’re having on the media usage patterns of consumers. Now a just-released report by TargetCast Total Communications Media based on a September ’09 survey of ~900 American adults age 18-64 is providing some interesting clues as to what’s going on out there.

The report provides a host of interesting statistical figures, but I find a couple broad conclusions from the report more interesting:

 Men and women are consuming media differently. Men are more likely to adapt their usage habits to incorporate more digital and online platforms, while women are more apt to stick with traditional media forms.

 Radio, which surprised many by successfully surviving the challenges of broadcast TV in the 1940s, cable in the 1970s and the Internet in the 1990s, may finally have met its match. As a “passive” media, it’s being tuned out in large degree by a younger generation of people far more attracted to programmable MP3 players, iPods and interactive multimedia devices.

 Newspapers continue to be respected for their role in covering major news events, but they’re losing ground in the face of increasing digital and mobile news media use. What’s more, nearly three-fourths of the respondents in the survey expect their online news to be available for free. (Rupert Murdoch, are you listening?)

So overall, what media has become less popular with consumers? Answer: Newspapers and magazines, with around one-third of the TargetCast TCM survey respondents indicating they’re using these media less than one year ago. Conversely, ~40% reported higher usage of the Internet for informational purposes … and ~28% higher Internet usage for entertainment.

These findings help explain why print magazine advertising is still in the doldrums. In fact, Media Industry Newsletter reports that November 2009 ad pages are down nearly 20% from November 2008. This comes as a surprise for some people because the full brunt of the economic crisis had already hit the media by November of last year. But instead of showing flat performance or maybe even a slight rise in ad pages, the numbers tanked yet again this year – making the two-year drop-off between 2007 and 2009 a whopping 35%.

Sure, some of the blame for the sorry ad numbers can go to the continuing economic downturn. But the rest is due to the fundamental change in media consumption habits that are continuing to happen – as cleanly illustrated in the TargetCast TCM report.

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 Latest NYT Financials are Atrocious

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The latest quarterly financials have just been released by the New York Times Company … and the figures are worse than even the more pessimistic observers had forecast. Not only did the company lose nearly $75 million in the first quarter, it is also laboring under a $1.3 billion debt load. Rival newspaper The New York Post was quick to report that the Times’ cash position, net of upcoming debt maturities, is a mere $34 million.

The looming cash crunch is causing some analysts to speculate that the venerable Gray Lady is slouching towards insolvency.

Not surprisingly, the biggest cause of the financial tailspin is plummeting ad revenues. Declines in classified advertising led the pack (down ~45% compared to the same quarter last year). National advertising fell ~22% and retail advertising declined ~25%.

What’s even more startling was the weak performance of Internet advertising. Instead of growing as had been the case up to now, those revenues actually posted a decline of ~6%. This result blows a huge hole in the notion that online advertising will take up the slack in print advertising.

What’s become abundantly clear is that newspapers have yet to adjust to a world in which they no longer have a near-monopoly on the news in a city or a region. The fact is, for years newspapers were able to bankroll large editorial and administrative staffs precisely because there were few if any other ways for local or regional advertisers to reach their audience. So they were able to charge a pretty penny for advertising space and get away with it. A lucky few cities had two competing newspapers, but many have had single-paper monopolies for years. TV and radio advertising represented alternate promo options, of course, but not in the same medium.

[For those who think that the New York Times, by virtue of its reputation as one of the United States’ leading newspapers, is less a local/regional paper than a national one, they are correct — up to a point. National print advertising represents only around 45% of the paper’s advertising revenues.]

The simple fact is that people today have far more choices online for local, regional and national news – practically all of them free. At the same time, the advertisers have more options than ever before in choosing where to advertise.

So what’s next for the New York Times Company? More staff layoffs? Unpaid furloughs? Halting pension plan contributions? Perhaps all of these … plus trying to sell off other assets like the Boston Globe or the Boston Red Sox franchise.

The all-too-likely outcome: None of this will make much difference.