Monthly Archives: October 2008

New Business Models for News: Rebuilding the Newsroom

Photo by John Smock, CUNY

At the CUNY summit last week, I was assigned to the group that looked at rethinking our newsrooms to meet the current financial imperatives. Or, as someone wryly named us, “the cost-cutting group.”

But, as Chris O’Brien, one of the thought-leaders in that group, notes in his excellent distillation of the day’s themes and discussions, it was less about the wild slashing that’s going on now in newsrooms large and small, and more about rebuilding a newsroom suited to the needs and challenges of 2008 and beyond.

We took the approach of essentially creating a new news organization from the ground up. But the other way to look at this question is to ask: How would you make a current newsroom more efficient? After leaving the discussion, a number of things occurred to me that should be explored:

1. Use templates for the print paper. Spend less money on designing the paper every day and use that money elsewhere. Newspapers have been trying to design their way out of their problems for years, and it hasn’t worked. I don’t think this something print readers think about. They want substance and content, not more pictures.

2. Cull circulation. Most newspapers are underwriting a chunk of their circulation to fight churn. What if you stopped spending so much money trying to sign up new subscribers? That costs a lot of money. This would require a change in ad rates. But I think it might save costs in the long run.

3. Reduce editors. I love editors, but it seems a lot of content, especially shorter stories, could be posted directly the Web. Many newspapers now let reporters post to blogs without editing. Why not the main site?

4. Newsroom salaries. I’m not sure yet how I feel about this, but it would seem that how we pay people needs to be rethought. Some online news sites pay employees by traffic they generate. That’s ruthless, but still, I wonder if that might work for some online jobs at newspapers?

There’s much more, here at Chris’s Next Newsroom project.

We still talk about circulation because circulation still counts

In a letter posted to Romenesko (no comments allowed, otherwise I’d just post this there), Matt Baldwin of MediaNews Group wonders why there’s so much focus on reporting declining reporting newspaper circulation instead of celebrating the much more robust overall audience, including online, which has been exploding with growth in recent years.

He’s right, to a point. We do tend to dwell on the audited newspaper circulation numbers when they are reported twice yearly. But we do it largely because those are numbers that can directly affect a news organization’s ability to grow revenue. If circulation is up, newspapers traditionally have been able to charge more for ads. If it’s down, as it has been consistently in recent years, it adds to the revenue crisis by devaluing the printed product.

I’m a cheerleader for interactive, probably to a fault. After 12 years building the business, that’s my bias. But as much as online growth matters, print circulation matters just as much at the moment. Yes, digital audience is growing and digital revenues will carry news organizations forward, but due to the competitive environment online, there’s currently not nearly enough online income to make up for the shortfall on the print side.

So circ. matters, and I think it’s right to pay attention to the numbers.

But I’m puzzled by this piece of Baldwin’s argument:

Judging a newspaper by the number of copies in the market makes no more sense than counting the number of television sets to evaluate a TV station. To paraphrase a recent United States President, “It’s the audience, stupid!”

Counting distributed copies strikes me as the best – if not only – way to judge the effectiveness of the printed paper in reaching an audience. It’s not at all like counting TV sets; that analog would be counting newsstands or newspaper trucks. Counting circulation counts consumption of the print product. Whether a paper is paid or free, it’s essentially valueless until someone picks it up and reads it.

Newspaper companies have finally been reaching new people in new ways in the past decade, people who are establishing habits that may not include the printed newspaper at all. Interactive continues to be a substantial success and a growth engine in most markets. I get as frustrated as Matt Baldwin does that the stories about circulation declines – often written by print newsrooms – neglect to mention the enormous upside opportunities. But it’s far too soon to ignore print circulation – and its associated revenue – unless we’re ready to make the leap to an all-digital future.

And that’s a post for another day.

“Newspapers? Newspapers? Nah, doesn’t ring a bell.”

This is one of those non-scientific polls that, nonetheless, is going to jam a shiv in the heart of anyone hoping there’s as much love for the printed paper among “the people” as there is within a lot of newsrooms.

Lifehacker.com asked the question this morning: Will you miss newspapers when they’re gone?

120 replies – and counting – later, the overwhelming answer: Not much.

From the outside, the answer seems obvious

Mark Andreessen – Netscape and Ning founder, Facebook board member and investor in live-video site Qik – interviewed on Portfolio.com, looks at the current newspaper revenue and circulation crisis and sees… opportunity:

If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business—shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing.

The financial markets have discounted forward to the terminal conclusion for newspapers, which is basically bankruptcy. So at this point, if you’re one of these major newspapers and you shut off the printing press, your stock price would probably go up, despite the fact that you would lose 90 percent of your revenue. Then you play offense. And guess what? You’re an internet company.

The past 12 years had nothing but bad news for print circulation

As industry observers such as Alan Mutter and Mark Potts try to sort out the meaning of the latest newspaper circulation numbers, and what they mean in context of the past 10-15 years, I thought it would be instructive to look at the numbers from ABC for one market, my local market newspaper, The Baltimore Sun.

The Sun is typical of a mid-metro market newspaper in that even with the recent news, it remains the dominant media source for news, information and advertising in its market, but it has seen its position slip greatly over the years. When that slippage is reported in 6-month increments of a certain percentage, year-over-year, it’s hard to understand exactly how bad the story is. But, over time, the numbers are bracing.

The oldest reports currently available from ABC are from 1996, so that will be the base year.

In 1996, the Baltimore DMA had 906,100 occupied households. In the September, 1996 Audit Report, The Sun reports an average of 320,986 daily papers and 483,971 Sunday papers. In pure penetration numbers, that represents 35% for the daily and 58% for the Sunday. For every household in the Baltimore DMA, slightly more than one in three was touched by a daily Sun and a bit more than half of the households took a Sunday Sun.

Fast-forward to this week. Using population figures from the March 2008 Publisher’s Statement (not reported yet for September), there are 1,018,455 occupied households in the Baltimore DMA. In the September, 2008 figures reported by The Sun to ABC, the daily average for the paper was 218,923 and 350,640 on Sunday. By these numbers, daily household penetration had slipped to 21% and Sunday household penetration was at 39%.

Keeping in mind that the overall number of households in the Baltimore DMA grew 12% from 1996-2008, during this same period household penetration of the paper in the market dropped 40% on average on weekdays, and 33% on Sundays. While the Baltimore market added 112,355 households in that period, The Sun ended the period distributing 102,000 fewer papers on a typical weekday and 133,000 fewer papers on a typical Sunday.

Of course, in the same period, The Sun’s online audience went from nothing to more than three million visitors a month, from zero page views (The Sun’s web operation launched in September 1996) to more than 37 million a month in 2008. So it can be argued – credibly – that The Sun’s readership actually increased during the 12 years beginning in 1996.

But as robust as the online revenue stream is at The Sun and at similar metro news operations in other markets, the vast majority of revenue is still pegged to print. And when you look at the numbers across the past 12 years, it’s clear that local newspapers would be in a business-model crisis even without over-leveraged corporate owners or the current shaky economy.

Every indicator available to us says that print is not now and will not be the powerhouse driver of revenue it’s been historically. You can’t have your influence drop by 33-40% in 12 years and continue as if nothing’s changed. Slicing dollars and people off the cost structure isn’t enough. Newspapers need to start over, with a business model that acknowledges that the print cash cow has run dry and the digital future is still exchanging dollars for pennies as the audience and advertising moves.

Efforts like Jeff Jarvis’s recent summit on New Business Models for News and the News Innovation web site are good starts, but it’s time that we start treating this like the crisis it is.

New Business Models for News: The opening salvo

I’ve been remiss in posting this. Here’s Jeff Jarvis last week kicking off the New Business Models for News conference. This is part one of two. You’ll find the second part linked at the end of part one.

This conversation could not have come at a more critical time. Circ. is down. Revenue is down. Staffing is down. If there is going to be journalism in the future, it’s time to change the model now.

Helping local businesses to grow: A follow-up to the New Business Models for News summit

Thanks to the New Business Models for News summit organized by Jeff Jarvis at the CUNY Graduate School of Journalism, I have a spiral notebook full of ideas flagged for followup, which I plan to address on this blog.

This morning, a quick one, courtesy of data from Eric Stein of Google.

As we wrestle with the inevitable and undeniably secular disappearance of classified revenue from newspapers and, by extension, their web sites, the obvious question is “How do I replace those dollars?”

The answer for a lot of us has been local – helping local businesses to grow. And, according to Stein, that potential for growth is just beginning.

By federal estimates, there are 23 million small businesses in the U.S. Of that number, 6-7 million have one or more employees; the rest are sole-proprieterships.

And yet, most of them – in fact the vast majority – have yet to create a web site to promote their businesses. We can’t help them drive traffic. Google can’t help them drive traffic. In the digital world, they don’t exist.

So what are local newspapers doing to help? As the largest single sales and marketing organizations in our markets, what can we do to reach out to the millions of going concerns that need to reach the massive and targetable audience we have?

Who’s doing a good job out there of helping local businesses to reach their audiences? Who’s using the pricing advantage of digital media to show local businesses that they can prosper and even grow in a down market?

What are we doing to help local businesses in our markets?