Friday, December 7, 2007

Fish wrap

I’ve lamented the demise of newspapers, perhaps too personally. As a kid I pedaled papers (Bee, Chronicle and Davis Enterprise routes), wrote for the high school paper (The Davis High Hub), and did the same in college (The Mustang Daily) as a journalism undergrad. Fearful that the newspaper industry is perishing, I donned my old reporter’s cap this morning and dug deeper.

Good news: On an average day, roughly 51 million people still buy a newspaper, and 124 million in all still read one. Newspapers' online ad revenue increased 31.5% in 2006 to $2.7 billion. In the first quarter of 2007, online ad revenue increased 22.3% to $750 million. Still, online represented just 5% of the $49.3 billion in total newspaper ad revenue in 2006.

Which leads to the bad news: Tangible ad revenues are in a tailspin, especially cash-cow classifieds (which are off 15% or more in the past year). The convenience and efficacy of searching for a job, finding a car, or perusing real estate listings (the three cardinal classified classes) is profoundly superior online.

Newspapers are in the advertising business. Yes, they relay news, but it’s a means to attract readers who will view advertisements. Content -> Audience -> $. No audience = No ads = No news. As the content’s appeal and reach increase, so too – not necessarily linearly – does readership and revenue. It’s a pretty simple equation.

Which leads to my first-ever multiple-choice blog question: If you are an advertiser posed with a binary choice, which would you choose?

a. A micro-targeted solution where you pay to communicate with prospective customers – one-by-one – who have proactively sought you out and who seek to engage in a conversation.
b. A mass-media alternative where you pay to speak at/to a somewhat faceless aggregate of readers, whether they read your ad and/or are interested in your product or not, in hope that they will react.
Duh. Effective marketing is pretty simple: It engages interested consumers in a meaningful conversation on their terms and with their permission. Traditional – newspaper – advertising falls far short.

Critics lampoon print media’s inability to effectively monetize their readership, their too-late apathetic adaptation to consumer needs. As newspapers bleed, solutions abound. Here’s a year-old take from Freakonomics, Another Way for Newspapers to Not Die, picking up on an SF Chronicle column by Peter Scheer.
... the most interesting point in Scheer’s article is his proposal for how newspapers can protect their value: by placing a 24-hour embargo on their original reporting, not allowing it to appear on free Internet sites until a newspaper’s paying customers have had first crack at it.
Wait, I’m lost: The solution is to penalize readers – and discourage advertisers – by embargoing news, thereby creating or protecting value? Give me more …
“The point is not to remove content from the Internet,” Scheer writes, “but to delay its free release in that venue. A temporary embargo, by depriving the Internet of free, trustworthy news in real-time, would, I believe, quickly establish the true value of that information. Imagine the major Web portals — Yahoo, Google, AOL and MSN — with nothing to offer in the category of news except out-of-date articles from ‘mainstream’ media and blogosphere musings on yesterday’s news. Digital fish wrap.”
Freakonomics laments the challenge – neutering consumer expectations of receiving something for free – while embracing the concept:
… it is a very intriguing idea, maintaining the value of a besieged commodity simply by shifting the time frame of its use.

It takes a lot of time and a lot of money to produce good reporting. Most people who consume good reporting don’t seem to know this, or care to know it. But they will certainly figure it out if the good reporting begins to disappear because media owners can no longer provide the kind of product we’ve become accustomed to getting for free.
Newspapers as we know them will not go away. Consolidations will continue, staffs will be trimmed, content will suffer, and the weak will swim with (perhaps wrap?) the fishes.

Post-script (17 Jan 08): From Editor and Publisher:

In the most radical move from print to digital advertising by a major newspaper, the Chicago Tribune announced Monday it is eliminating help-wanted [classified] ads from the newspaper on weekdays.

Opines Andreessen: One small step for classifieds, toward the inevitable large step of shutting down the print edition of the newspaper entirely.

Post-script (03 Feb 08): The Great Andreessen -- how does he do it/where does he get the time? -- further forecasts the morbid clouds in newspaperland: Inaugurating the New York Times Deathwatch. Painful by worthy read.

Post-script (04 Feb 08): Chris Anderson chimes in with his perspective of the future of radio. "... now that I've switched to an iPhone [atta boy, Chris!], I've noticed a different behavior. I'm listening to more and more of my favorite NPR shows (This American Life, Terry Gross's Fresh Air, Science Friday, etc) as podcasts, something that finally suits me thanks to having a phone that automatically loads the latest shows." He predicts radio is going to get microchunked, just like the rest of media:
The podcast model is getting cheaper and more ubiquitously available (who doesn't have a cellphone?), and it serves individual needs and taste better. Meanwhile the broadcast model, which is all about one-size-fits-all taste, is based on human labor costs and costly transmission equipment and is only getting more expensive. You can see how this story ends.
Post-script (17 Feb 08): Andreessen shares -- Irony is dead, last gasp of newspaper industry edition -- pieces from the NY Times and Newsweek. "Executives involved said the newspaper companies understand [by which they mean, "used to have a local monopoly but don't anymore"] the local market better than Google, Yahoo and Microsoft..." The ultimate belated (fatal?) pull-your-head-outta-the-sand realization.

Post-script (17 Apr 08): Andreessen is back (not that he ever left), scribing about The Birth of Newspapers. He looks back at the first fish wrap conceived after the invention of movable type ... a taste:

Aretino could have done something constructive with his little publication. He could have written about Florence under the Medicis becoming the center of art and humanism in the Western world. He could have written about the founding of the University of Palermo, which would soon be a major institution for the advancement of learning...

Aretino did none of this.

Instead, he "produced a regular series of [anti-religious] obscenities, libelous stories, public accusations, and personal opinion". The opinion was boldly, and often vulgarly, expressed. It was also for sale, with Aretino running a kind of protection racket on those who were the subjects of his stories: pay what he asked and he praised you; refuse and you were slathered with abuse.

Good stuff. He wraps (more to come):
And we see the nature of the birthing pains of a new medium -- any new medium -- and obviously, all of the birthing pains of the modern consumer Internet are trivial in comparison to the mind-boggling headwinds the original newspaper entrepreneurs faced.

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