Monday, March 23, 2009

How newspapers can learn from Obama 2008

In considering how newspapers are to regain relevance through online channels, recent efforts to mobilize local communities for political campaigns provide an interesting case study.

Ranjit Mathoda, quoted in the NYT, describes a timeline of presidential proficiency in media,

Thomas Jefferson used newspapers to win the presidency, F.D.R. used radio to change the way he governed, J.F.K. was the first president to understand television, and Howard Dean saw the value of the Web for raising money, but Senator Barack Obama understood that you could use the Web to lower the cost of building a political brand, create a sense of connection and engagement, and dispense with the command and control method of governing to allow people to self-organize to do the work.

The changes the the Obama campaign ushered in for politics mirrors changes newspapers are facing with the Web.

  1. Having to shift from a top down approach of disseminating information and opinions to dealing with an audience that expects a conversation.
  2. Enabling people to self-organize under your banner.
  3. Trying to get people to care enough about what you are telling them to get them to open their wallets.

There are several resources on the Web explaining how to apply these techniques to enterprises. However, newspapers have a greater stake in this social media strategy, as community mobilization and generating conversation about social and political issues is more within the domain of the newspaper than that of commercial enterprises. The following includes lessons for applying these techniques to the newspaper's social media strategy.

  1. Enable involvement of friends. The “email this” function is common place, however this barely scratches the surface. Available information about people's extended networks and shared interests, political affiliations, business connections, supported groups or causes, allow newspapers to initiate deeper levels of peer involvement into stories. For example, Obama's campaign used social networking and contact lists in mobile phones to enable people to find friends in key states and contact them on independently.
  2. Be a platform for organization. This goes beyond event announcements. If a mother wants to mobilize other moms to petition a school to change it’s lunch program, why shouldn’t the local newspaper provide the digital platform of such a mobilization?
  3. Crowd-sourced news categories. Work with your audience to divide news into categories locals care about and let those categories lead coverage. Have your own journalists dig deep into those topics, host user generated content under those topics, and allow audiences to filter news streams by the issues they care about.
  4. Have a participatory agenda. Newspapers often have agendas that fall along party lines. The purpose of a political party is to allow various interests to pool resources to win elections. However, Obama's use of social media to connect with people directly rendered many of those resources obsolete. Rather than become an obselete extension of partisan agendas, newspapers need to have participatory agenda--an agenda where the newspaper works to enlist citizens to use its platform to further their own agendas, the end goal being a plurality of participation that is representative of the whole community. It is remarkable how much bipartisanship disappears when national coverage is traded for coverage of local community issues.
Links and Sources

Tuesday, March 10, 2009

US Newspapers: Asia to profit from your hard work?

The newspaper industry in the United States is in crisis. However, despite a recent worldwide pullback in ad spending, newspapers in other countries are not doing as bad. In fact, newspaper circulation and advertising is rising worldwide.

Much of that push is coming from Asia. According to a 2008 report by the World Association of Newspapers, China is the world's largest market for newspapers with 107 million copies sold daily, while India trails closely behind at 99 million. China newspaper advertising revenue has grown nearly 50% in the last five years.

India's demographics support growing readership over the longterm. That said, in the short term the global crisis has injured Indian newspapers through scaled-back ad budgets and increasing costs for imported inputs. So while we will wait and see on India, this article looks at the factors that are supporting the newspaper business in China, with a mind that these factors can be used to understand India and other developing markets as well.

Factors Behind China's Circulation
  • Maturation. China's newspapers have evolved from 45 publications after the revolution that merely printed party propaganda, to more than 2200 newspapers today. While still strictly regulated and required to adhere to the party line on many issues, they have subjected themselves to the pressure of the market economy (some more than others). While journalism still has its setbacks, the newspaper business has matured, and newsrooms are much more adept than they used to be at creating content that will sell papers in a competitive environment.
  • Urbanization. Unlike the USA where people are relatively spread out, Chinese cities are heavily and densely populated, and they are growing, as more people move to cities in search of work. As Chinese newspaper distribution is almost entirely focused on cities, the number of people a single newspaper can reach is growing.
  • Digital Divide. While the Web and digital devices have given people more choice in where they go for information, there is no sign that the rapid growth of Internet use in China has come at the direct expense of traditional media the way it has in the West. Part of this is the nature of Internet content and user behavior in China, but more significant is the digital divide between young and old, haves and have-nots, urban and rural, which have created a bifurcated media environment where print, tradition electronic media, and digital are all flourishing.
Factors Behind the Growth in Advertising
  • Economic Growth. Double digit growth has given advertisers more money to spend on an nascent consumer market. Advertisers frenzy to reach consumers whose consumer habits are not yet established. When you are advertising to a new middle-class that has money and has not yet figured out what to spend it on, you get a better ROI on your advertisement dollar.
  • Urbanization. Simple. If more people are concentrated in one place, then you can reach more people through fewer newspaper ad buys.
  • Immature Internet Advertising. I assume that in the short term, successful models for online advertising are a threat to newspapers, because they are not yet in the position to take advantage of them. In China, these online advertising models is plagued by problems. The lack of reliable third-party measurement means online ad space is still sold on a "cost-per-time" basis, rather than by CPM, since buyers don't reliably know how many impressions they are paying for. Ad-targeting technologies from companies like Tacoda and Blue Lithium do not exist, with the exception of a few start-ups. High click-fraud has so far made PPC an extremely tough ad model. As a result, when you take the most optimistic projections of 2008 online advertising revenue in China, you still get about one month of the Guangzhou province print market.
Innovation Will Come from the West
The innovation necessary to find a new digital business models for newspapers is going to come from the US newspapers, who have the Darwinian choice of innovating or dying. Then when the newspaper business comes under pressure in Asia, local entrepreneurs will hire inexpensive software engineering labor and copy whatever US-born models worked or showed the most promise.

Links and Sources

Monday, March 9, 2009

From the Web: Paypal on your phone, Amazon looms, individualized print, blogger-ranked media, employers pay for search

News from the Web and its implications to local news-gathering organizations
  1. Ebay's Paypal won a deal with Blackberry to handle online payments for their app store. Pay attention to the companies that will be controlling the cash register in the virtual markets of your local community's future.
  2. Recent survey shows Amazon's brand is getting stronger at the same time local news gathering organizations are getting weaker. This is a threat to local content publishers.
  3. New York Times reports on MediaNews new initiative to create a individualized print edition that prints out in the home. Not a new idea, but might involve a new business model. I believe that if RSS met the right user interface, it might work.
  4. Technorati ranks the top websites in terms of the attention they recieve from bloggers. This is relevant to the discussion of whether blogs are a hinderance to traditional media (by driving traffic based on using traditional media's content) or a complement (by linking and thus driving traffic to the original source).
  5. Some employers are moving away from the job boards and going to paid search, for mixed results. Local media companies can use this to predict the trajectory of other the flight from newspaper classifieds by other commercial advertisers--to the boards, then to paid search. An opportunity for newspapers? Paid search requires copywriting skills to get good results.
Links and Sources

Sunday, March 8, 2009

Editorial: Response to's Eight Barriers to Local Content.

In a recent post on Yelvington, the author argues why paid content is a false grail. Summarizing:
  1. The painful lessons of experience, i.e. it has not worked before. It certainly hasn't worked well for the PC internet. Handhelds hold promise because people are used to paying for value added service on a mobile. But no models for news content have emerged. Local media companies will have to invent new applications for handhelds, rather than re-purposing local news content.
  2. The problem of scale (volume)--basically, unique visits mean nothing, the users who visit three times a week for more than one minute at a time are the key. A paid content model would require a large number of these users, because only a small percentage would opt to pay. The numbers are not there. "How can you get them to pay if you can't even get them to visit frequently when it's free?"
  3. The problem of scale (breadth)--Paid content, along with enough free content for advertising...that is a whole lot of content.
  4. Competition--It is true that re-purposing existing content to the Web is easy. Therefore, there is a sea of competition. Supposing then we differentiated with local content? That leads to the next item.
  5. Lack of unique content, coupled with a false sense of being unique. The argument is that newspapers maintain the mindset of a decades-old but now broken monopoly, while your audience has less confidence in your brand and uniqueness. The author makes a (cheap) shot at newspapers, saying newsroom cuts in recent years has exacerbated this problem.
  6. Support costs. Not a big deal in my book. Outsource it.
  7. Your own staff--Makes the valid point that your online people will fight against paid content because they buy into Web 2.0 free and open hype. However, increasingly I talk to experienced media executives who understand sales driven online initiatives. Your online guys are the ones I try to avoid when I sell into your newspaper.
  8. Relative strength of the geotargeted advertising model.--Though this was initially number 4, I saved it here for last because it is the lesson. I once heard someone say that given the difficulties of running any enterprise, always use an existing business model rather than try to invent a new one. Yelvington points out that there is so much inventory on the web that CPM of non-local advertising has been driven into the sand. Local adverting, supported by a sales team, is a substantial revenue stream. Moreover, it is an established model. What has changed, as mentioned above, is that the local monopoly is kaput and the brand has been eroded. So innovative energy is better spent creating a new mix of print and digital content that reinvigorates the brand, with a local advertising value proposition that can be sold to local businesses. "Local advertising" is itself too simplistic a term, as local news-gathering organizations are positioned to help local businesses use a broader spectrum of methods to communicate with local customers.
Links and Sources

Sunday, March 1, 2009

Hearst plans to start selling porn?

Much of the conversation regarding the crisis affecting newspapers has revolved around the idea that people should not get content for free. The tone of this argument is unfortunate, because it reeks of the antagonism the music industry has shown to music fans in recent years, accusing them of stealing content. There is one key difference--there never was a true model for paid content for newspapers.

For most newspapers, the primary source of revenue has always been display advertising, and subscription fees are there really just to cover print and delivery costs, and assure advertisers that people actually read the thing. Raising fees to cover the rising costs is one thing, but it is hard to believe that newspaper companies would try to make print subscriptions a key source of revenue going forward.

However, the Hearst memo indicates that it intends to do just that.
Our print subscribers don’t pay us enough today that we can say they are actually paying for content. Rather, we only ask readers to pay for a portion of the cost of printing the paper on newsprint and delivering it to the reader’s doorstep. We must gradually, but persistently, change this practice.
Innovations in distribution and cost structure can make the print edition a lasting force. Indeed, technology like the Kindle are the first step in putting "print" (or rather text) back into our hands at breakfast time. However, there is no reason to expect a subscription model for paid newsprint will ever be viable. Concentrate innovative powers on local advertising and other ways of adding value to local businesses.

However, it is probably easier to build an offline paid content model than an online one. Bill Bishop, an associate of mine here in Beijing, fellow SAIS graduate, and founder of CBS Marketwatch, once said to me, "People will only pay for four kinds of content online; Business/financial intelligence, entertainment (games/music), gambling, and porn."

Perhaps Hearst plans to start selling porn?

Links and Sources

Saturday, February 28, 2009

Newsday has the audience to make paid content work.

"We plan to end the distribution of free Web content and make our news gather capabilities a service to our customers," Cablevision COO Tom Rutledge said on an earnings call. The statement is up to interpretation but it has added to recent conversation about micropayments and other models for paid content.

Ken Doctor at Content Bridges sites E&P Nielson Rankings in arguing that Newsday will have a tough time monetizing the mere 4.5 minutes a month the average unique visitor spends on the site. Number of unique visitors is not a significant statistic for the purposes of understanding how a paid-content model will work.

Unique visitors include everyone who has seen the site, even those who arrive through Google search and stay only a minute. The people who would pay for Newsday content are those who (1) visit the site often, (2) have high engagement in the website's offerings, and/or (3) are already paying customers--either to a print subscription or classified/display advertising. The goal is to find out who they are a create a paid content product for them.

Newsday has a strong subscriber base. According to a Newsday classifieds rep reached by phone, they have 700,000 exclusive readers, circulation of 387,000, and altogether 3/4 of adults in Long Island. 75% of their readers have the publication delivered to their door. However, of that circulation, who is using the website, and how are they using it? Alternatively, how much of those unique website visitors pay for a print edition or for advertising, and (again) how do they use the website?

Content Bridges quotes email from an unnamed Newsday reporter, "[At Newsday] the Web is seen, still, as an accessory to the dead-tree edition. There is no emphasis from the newsroom editors on getting content online quickly, on blogging, etc.". Newsday will not succeed by adding an online price tag to made-for-print content. It has to build the internal structures needed to develop digital content products to an audience that will pay for them.

Links and Sources

Sunday, February 22, 2009

Newspapers compete online. Examples from Gannett, Advance Publications, and Packet Publications

Local newspapers that have enjoyed operating in noncompetitive markets for many years are increasingly competing directly with each other online.

This is in addition to the new competition with publishers and aggregators of local content, such as Craig's List. I refer specifically to direct competition between newspapers for online traffic.

The culprit is the one-to-many model for establishing local content sites, where one site for a broader geographical region is established, with newspapers sub-sites in that region associated with the broader website.

The newspaper may be unrivaled on its own turf. However, often there is crossover between the regions the broad websites cover. As a result, the broader content websites compete for traffic and regional online advertising.

New Jersey, for example is seeing heated online competition between the following Groups:

According to, has much higher overall traffic than the other sites. However, traffic alone does not tell you much. Packet Publications' 14 papers all focus on the Princeton area, and its print rivals in the area have no significant web presence. Advance and Gannett do not have any competing print publications in Princeton, but Advance's does have a "local news" section for Mercer County, where Princeton Township is located. The advertiser's choice depends very much on desired audience, regional coverage, and combination of online and offline advertising.

There are deeper advertising questions to be answered:
  • How well is the combination of print and online reaching the target audience in the target region?
  • Who is reading the paper first and the website second (or not at all)? Who is reading the website first and the paper second (or not at all)? How do these groups break down in demographics and in online user behavior?
  • Print goes out daily, but how often do visitors to the website return to the website?
  • How are online traffic number related to circulation numbers?
  • What kind print/web packages are available to advertisers? (Print advertising is pretty much standard, but web advertising comes in various forms.)