Recovering Journalist

Alt.AP

Newspaper frustration with the high cost of the Associated Press–and some misguided perceptions about what AP does–is creating some interesting new competitors for the venerable wire service.

The New York Times has a story on CNN's nascent effort to offer its reporting to newspapers on a syndicated basis. And an outfit called GlobalPost has been quietly laying plans to create a Web-only international reporting service, with some fairly big names attached. It's scheduled to launch in January.

Aside from newspaper-based syndication services and Reuters, these are the first significant challenges to AP to arise since UPI cratered a couple decades ago. In that time, AP enjoyed a near-monopoly on providing wire service reports to newspapers and others, and along the way picked up a reputation for being expensive and a bit arrogant–if not competitive to the newspaper companies that own it. 

Faced with threatened cancellations from several member newspapers, AP recently rolled back its recent rate hike a bit (and announced staff cutbacks to go with it). The arrogance/competitive problem is a bit harder to deal with. A lot of newspaper people perceive that AP takes their work and sells it to competitors like Google News, when in reality what Google, Yahoo and others get is original content produced by AP–and the fees from Google, et al, help offset what the wire service charges newspapers. (By contract, AP can't sell newspaper-produced content outside the industry, which gets it through AP's state wires, not the general wires.) Still, this attitude leads to things like nutty calls for newspapers to abandon the AP or to figure out other ways to keep Google from "stealing" newspaper reporting. Sigh. What decade are we in, anyway?

In any event, AP now has some company in providing national and international news to newspapers. CNN's offering seems to have potential, if the cable TV network can provide high-quality text-based coverage (not necessarily its forte). GlobalPost makes somewhat less sense–with a need to have a staff of expensive foreign correspondents, its business model isn't very clear, especially with many newspapers cutting back on international coverage in general to focus more on local news.

Online, there's another alternative, which newspapers seem to have problems figuring out: Beef up coverage by aggregating links from other news sites. I'm always flabbergasted to hear editors complain about sites that link to them (somehow, in this view, the linkers are stealing content,), when in fact that traffic is almost always additive--and newspapers should be doing the same thing themselves. Newspaper sites should be the central source of links to anything they cover, and they should use those links to supplement coverage they can't do themselves. 

This is what NBC and Examiner.com are doing with their news-aggregation sites; for that matter, it's the secret behind Google News and the DrudgeReport, which are significant traffic drivers for many large newspaper sites. You'd think newspapers would take the hint and start aggregating links for their readers. That would be a lot cheaper than the AP or any of its new alternatives.

What It Takes

How many newspapers have a sizable staff responsible for managing print circulation? All of them of course. Now, how many have even one staff member responsible for managing online distribution via RSS, e-mail or Facebook? Damn few.

How many newspapers have a department devoted to fixing and painting news boxes? Just about all newspapers of any size. Now, how many have any staff devoted to thinking about how to optimize their site's placement in Web searches? Not many.

How many newspapers have an advertising production staff that can churn out a good-looking ad for any advertiser? It's essential, of course. Now, how many have anybody thinking about new forms of Web advertising that take advantage of tools like search, widgets, Flash, interactivity, data-mining, etc.? Very few.

How many newspapers have copy desks that work hard at presenting news to readers in a clear, understandable form? 100 percent. Now, how many have even one staff member whose job it is to find ways to place the newspaper's content on other Web sites, for maximum visibility and to create incoming links? Or to aggregate content from multiple sources into a one-stop local news portal? Almost none.

I could go on, but you get my point. Newspapers are still almost entirely focused on the print product, and still aren't devoting sufficient resources to optimizing and maximizing their online offerings. Yeah, they've got Web producers, but all they're doing to wrangling print content onto the paper's Web site. Sure, there are newspaper Web ad sales reps, but they're calling on the same advertisers that have been feeding the print side for years, trying to sell banner ads that are little more than online versions of print ads. Yes, there are (maybe) Web technical and marketing and (maybe) business development staffs in newspaper companies, but invariably they're overwhelmed and undermanned–token efforts compared to their equivalents on the print side.

This is why Marc Andreesen's daring recent suggestion that The New York Times dump its print edition and focusits efforts entirely online is so intriguing to many of us who've been watching the newspaper industry founder for years. Until newspapers put a laser focus on growing and improving their Web business–the same kind of focus, and more, that they're currently putting on their legacy business–they're going to fall farther and farther behind, to the point of extinction. 

The Internet-related jobs and skills I mentioned above are absolutely essential to success on the Web, as much so as the traditional ones I compared them to are essential to print success. But resource allocation, management focus and internal culture at newspaper companies still are largely–overwhelmingly–print-oriented. Regardless of high-minded proclamations about being "Web-first" or lip service paid to attempting to truly compete online, virtually all newspapers still aren't taking their new media operations seriously enough. At best, it's probably a 90-10 split in favor of print these days. It needs to shift in the other direction, and pronto. 

Newspaper Web sites need more people thinking about optimizing content, about finding new advertisers and types of advertising, about creating niche products to target specific audiences and advertisers, about aggregation, search, social networks, behavioral targeting and all of the other buzzwords that seem exotic to many print people but employ legions of people at competitors like Google and Yahoo and the Web startup you've never heard of that's coming after the papers' local news, information and advertising business. These upstart competitors think about this stuff all the time; newspaper people don't. And that's why newspapers, by continuing to fight the old battles, are losing the online war.

PS–Seth Godin suggests three essential more job types for any company that wants to be successful online. The first two–community organizer and stats fiend–are completely alien to newspapers. The third, manager of freelancers, sounds familiar, but really isn't. These are the sorts of skills newspaper Web sites need to get, and soon. And Alexandre Gamela updates the skills needed by journalists.

Update: Steve Outing has some similar thoughts.

He Said What?

I've been trying to figure out how to write a post praising–yes, praising–Sam Zell's largely sensible recent remarks about what ails the newspaper business without getting into an instantaneous flamewar with the anti-Zell zealots. But then I saw that Alan Mutter had underscored Zell's highlights even better than I could. 

It's worth reading the Zell Q&A with an open mind. Yeah, his obsession about putting the temperature on the front page is fairly inane. But most of the rest of it–especially his understanding of the enormous structural changes roiling the newspaper business, of the idiotic practices of previous management, and of some of the faulty assumptions that underlie newspaper business models and the religion of journalism–are spot on. 

Sorry, folks. There are times when Zell makes a lot more sense and shows a much firmer grasp on the issues than a lot of longtime newspaper people. Yes, he's heavy handed about it, and yes, he's made severe cuts–cuts I bet he didn't expect to have to make. But more so than a lot of people in the newspaper business, he's dealing in a reality-based environment, not living in the past. 

Let the flamewars begin.

Follow the Audience

While you're done breathing a sigh of relief at the lower price of gas next time you fill up your car, take a glance above the pump–you might see a video screen running news, weather and advertising from your local NBC station.

Kelsey Group reports that it's part of a concerted effort by NBC to get its content out in front of as many audiences as possible, in as many ways as possible. That means putting content and advertising in such non-traditional media as online gaming, taxis, supermarkets and others. According to the same report from the Kelsey Group, cable giant Comcast is doing something similar by gobbling up niche sites and services like movie-ticket seller Fandango and networked personal organizer Plaxo. 

This is smart thinking, and something that all media companies should be emulating. It's just not enough to merely have a Web site. In fact, a Web site is not nearly enough, because it means you're essentially sitting around waiting for customers to come to you. Instead, news organizations should be working to push their content and advertising out through multiple channels and to get it in front of readers and viewers any way they can. 

It doesn't have to be something as non-traditional as gas pump video screens or the back of taxi seats. There are many other more standard–but underutilized–media that every news organization should be exploiting with smart, tailored products, such as:

• E-mail newsletters
• RSS feeds
• Facebook and social networks
• Widgets for blogs and social sites
• iPhone apps
• Mobile distribution
• Syndication to other sites (and its mirror image, aggregation of content from other sites–even competitors)
• Brand-extending partnerships with other sites, such as co-produced videos
• Niche products–not distribution per se, but sites and other products that target specific audience segments, both demographic and geographic

These all should be standard elements of a news organization's playbook for success. But way too often they're given lip service–if they're pursued at all. Major parts of your audience are gravitating to these venues to get their news and information (and to communicate with their friends), and you need to be there to reach them. It's essential to growing traffic, eyeballs and advertising opportunities. (Checked out the CPMs on e-mail newsletters lately? They're often lip-smackingly good.)

Back in the earliest days of planning The Washington Post's online strategy, 15-plus years ago, we talked a lot about our intentions to "be promiscuous"–placing as many bets as possible on as many different technologies and strategies as we could. 

That philosophy kind of went by the wayside over the years at The Post and other publishers as they put almost all of their chips on building up their Web sites. But as it turned out, the audience was promiscuous, adopting all sorts of online media and devices that publishers never fully appreciated. 

"Be promiscuous" is still a sound strategy, perhaps more so than ever. You've got to put your news, information and advertising in front of the audience wherever it decides to alight–even if that's in front of somebody who's pumping gas into their car. Otherwise, somebody else will.

Humiliation as a Management Tactic

These are horrible, scary times in most newsrooms, with recurring rumors of cutbacks and open speculation about the future of the business and journalism. Newsroom morale, chronically bad in most places, is even worse these days–if that's possible. Fear and loathing is at a record pitch.

So there's no excuse for management to add insult to injury by humiliating staff members. Nonetheless, there are a couple of ugly examples today of exactly that happening:

• At the Newark Star-Ledger, two newsroom veterans have been reassigned to the mailroom.
• At the Longmont, Col., Times-Call, staffers have been invited to work as parking valets at the publisher's holiday party–albeit at full pay. How generous.

And this is on the heels of the Raleigh News & Observer's silly two-slice limit on election night pizza. (Yeah, it was called off. But the morale-killing damage was already done.)

C'mon, Scrooge. These are people you're dealing with here, with feelings and egos and (formerly) loyalty to your company. They deserve better, especially in these tough times–tough times that, in large part, can be traced to your own mismanagement. Demeaning them like this is disgusting. 

Will Newspapers be the New Newsweeklies?

Pop quiz: Name a newsweekly.

OK, that's an easy one: Time, Newsweek, US News and World Report (well, maybe not anymore). Extra credit if you got The Economist.

But what if big-city daily newspapers turn into newsweeklies? That's right: weeklies. 

It's not such a far-fetched notion: I hear it's being whispered about as a possibility in the executive suite of at least one major newspaper company as a solution to the current crisis. Here's the theory: Sunday papers are still popular with readers and (relatively) full of ads. The rest of the week, however, the paper is pretty thin, to the point where papers may even be losing money printing some days of the week. 

So why not retrench to Sunday-only–or at least reduce the print edition to two or three profitable days–and use those editions to for features, analysis and news recap, with everything else, including breaking news, left to the Web site? 

It sounds crazy–if nothing else, it would require an enormous cultural and operational shift in newsrooms and production operations. Just look at the Christian Science Monitor, which is planning exactly such a move. 

But it also could be a huge money-saver at a time when newspaper managements are looking for ever-more-drastic ways to cut costs. And it could allow some papers to survive with some sort of print presence while concentrating efforts to make their online business profitable.

With the economy in the dumps and advertising sales plunging, the next few months are going to be enormously trying in the newspaper business–even more so, believe it or not, than the tumult of the past year or two. Newspapers that want to survive are going to have to put every possibility on the table. And becoming newsweeklies–or at least non-dailies–is very likely to be one interesting option.

PS: Martin Langeveld is thinking some of the same thoughts on News After Newspapers.

Do Something!!!

Smart words from Pat Thornton:

Innovation is ultimately what will save journalism. Innovation requires experimentation. Experimentation requires a willingness to fail.

But unlike the failure that the status quo will bring on, experimentation is a momentary feat of failure. It’s losing a battle, not the war.  Doing nothing will cause us to lose the war.

If there's a theme of this blog, that's pretty much it.

No Consensus on Collision With Iceberg

API's 50-executive conference last week on the crisis facing the newspaper industry wasn't very transparent to begin with. But the group's efforts to open the door a bit more on what was discussed just took another hit: A press call scheduled this morning to fill in the trade press on the confab was abruptly canceled at the last minute. Why? "Because no reportable consensus was reached." according to an API representative. Wonderful.

Obviously, the subjects at hand are extremely complicated, and you can't expect 50 newspaper executives (especially) to come to any sort of constructive conclusions about such weighty topics in a single day. That's fair. But it sure would be nice for some of those executives to emerge from behind the curtain and at least give their frightened employees and beleaguered stockholders some idea of what they were talking about and a reading on how seriously they're taking the situation. 

"The summit conference was a constructive dialog among senior industry leaders, serving as a catalyst for continuing conversation and efforts at reversing declining revenue and profit trends," API says. "As progress toward those goals is made, additional information will be provided."

We'll be waiting. Hopefully, it won't take six months for the executives–or what's left of them–to continue that dialog, as API hinted in its initial report on the conference, and to provide that "additional information."

Oh, and by the way:  If, say, an important government meeting about a crisis had been this closeted, with a press conference to report progress suddenly canceled, those same executives would logically expect their reporters to be digging hard to find out what happened behind those closed doors and to get it out in the open. Ah, irony. 

Thinking Creatively...About Advertising

It's an axiom of newspaper Web site strategy and design that one of the worst things you can do is "paste a newspaper on a screen," or too slavishly replicate the print experience online. 

It may even be worse to paste print advertising onto a screen. But that's what too many newspaper Web sites do. And that's a big reason why newspapers are having trouble finding growth in Web advertising revenue, especially in this lousy economy.

Look at any newspaper Web site. What advertisers do you see? Pretty much the same ones that dominate the print editions. You'll see plenty of banks, car dealers, big retailers and the like. There's a good reason for this: They're traditional customers of newspapers, they're relatively easy to sell and they pay big (though diminishing) bucks to be on the Web site. And the ads they usually buy? Banners, skyscrapers and the like, the Web equivalent of old-fashioned print display ads.

This is a problem. Why? Because these sorts of advertisers have been among those hardest hit by the current economic downturn. And because by sticking to this traditional ad base, newspaper Web sites are failing to go after other forms of advertising that might truly expand their revenue. 

You hear all the time the complaint that newspaper Web sites can't bring in enough revenue to cover the costs of a fullscale newsgathering operation plus related expenses like marketing and online production. This has crippled the goal of moving toward freestanding Web business for newspapers. 

But I'd argue that that's because newspapers just haven't tried hard enough to build online products that are attractive to a different type of local advertiser, and haven't tried hard enough to sell to those advertisers–who tend to be smaller and have very different needs than the old standbys.

Most newspaper sites know nothing of things like contextual advertising, search advertising, self-service advertising tools, behavioral and geographical targeting, business directories, RSS and mobile ads, video ads and other newfangled ad models that are springing up all over the Internet. Guess what: their online competitors are all over these. And that's why newspapers are losing the local online ad war, and badly, to the likes of Google, Yahoo, Local.com, Yelp and others that have scooped up a majority of local online ad spending. 

Hello? Local ad spending? Didn't that used to be the newspapers' domain? Not anymore. Not online. Papers are losing it to smarter competitors the same way they let the classifieds business slip away to the likes of craigslist, Monster and eBay--by failing to innovate and move quickly to come up with online advertising offerings that local advertisers–many of whom have never advertised in print–are now looking for.

There's some hope. E.W. Scripps, A.H. Belo and McClatchy reportedly are finally focusing on truly ramping up their local advertising efforts and going after smaller businesses that they've never even called on before. And perhaps the much-vaunted Yahoo newspaper consortium will finally bear some fruit in this area. But newspapers are playing from behind, and the economy is exacerbating the situation.

There's no doubt that the current economic mess is going to slow down online spending–Borrell Associates recently scaled back its 2009 predictions for overall local online ad spending growth to 7.8 percent, after a 47 percent increase this year. And small local businesses are cutting all types of advertising right now. But newspaper Web sites haven't benefited much from this year's increase in local Web advertising anyway–many have reported paltry online revenue increases, at best, while competitors were charging ahead–and Borrell argues that newspaper sites will be even more affected by next year's slowdown because they're so dependent on online display ads and classifieds. 

Yes, online advertising isn't–for now–as lucrative as print advertising. Yes, measurements like CPM are lower online. Yes, the chasm between the legacy print advertising business and the online future is widening and deepening for newspaper companies. But a lot of that is because newspapers are approaching Web advertising with one hand–or more–tied behind their back. Until they get much more sophisticated about pursuing Web advertising opportunities and really broaden their client targets and offerings, and get really serious about winning the Web advertising game, they're going to keep falling further behind at precisely the moment they need to be increasing Web revenue.

Disclosure: I'm doing some consulting for a local online advertising tools startup called PaperG, which has some newspaper clients and is seeking more. But the problem is far bigger than one small company can solve.

Paper Losses

We all know that the stock market has taken a terrible beating in the past couple of months. But one sector of the market has been particularly hard hit: newspaper companies. What's worse is that the carnage in newspaper stocks over the past two months has been an acceleration of a steep downward trend in their values over the past year. And it seems unlikely to get any better soon–indeed, some newspaper-company stocks are now essentially worthless, according to Wall Street.

Here are the ugly numbers: The value of shares in the 14 significant publicly traded newspaper companies has fallen by an average of 49 percent since mid-September, when Wall Street's meltdown began (the Standard & Poor's 500 has fallen 28 percent in the same period). That sharp decline followed a 69 percent decline from a year ago through mid-September (the S&P 500 was off 17 percent in that period). Put them together and newspaper stocks show a whopping 83 percent year-over-year decline in value through this past Friday. That's more than double the magnitude of the S&P 500's loss in that period.

Considered another way, the overall market value of the publicly traded newspaper industry has plummeted from a bit more than $90 billion a year ago to about $26.6 billion today–meaning that more than $63 billion in newspaper value has gone up in smoke over the past year. About one third of that drop in total stock value has come in the past two months.

But wait, there's more–or less. If you subtract behemoth News Corp. from that calculation–because its value is buoyed by its massive non-newspaper holdings–the remaining companies have seen their market capitalization fall to just over $7 billion–total–from $25.2 billion a year ago. Perspective? Companies like Microsoft, Apple and Google each have way more than $7 billion in cash on hand. They could buy most of the American newspaper industry in one fell swoop with what amounts to petty cash. But they're too smart.

These are enormous losses, reflecting the catastrophic problems the newspaper industry has gotten itself into in recent years. They're even worse if you examine the individual stock performance of some–well, most–of these 14 companies. 

Three of the companies–Gatehouse, Journal Register and American Community Newspapers–have lost 99 percent of their value in the past year, and their stocks are trading for pennies a share. Gatehouse' total market capitalization right now stands at just $4 million; the other two are worth just $600,000–yes, $600,000–apiece. You could buy a nice house in many markets for that kind of money, though it wouldn't come with a newsroom–or the hundreds of millions of dollars in debt these companies are saddled with.

Four more of the 14–Scripps, McClatchy, Lee Enterprises and Sun-Times Media–have lost 90 percent or more of their value in the past year, with much of that loss coming in the past couple of months. Four others–Gannett, A.H. Belo, Journal Communications and Media General–are down about 80 percent since last November. Almost all of the newspaper stocks bottomed to new 52-week lows last week, as well. So, for that matter, did trading in Tribune Co.'s debt, which isn't included in these stock calculations.

One more nasty comparison: Add together the value of all of the newspaper stocks, minus News Corp. and The Washington Post Co., and together they're worth less ($3.6 billion) than Washington Post Co. is all by itself ($3.7 billion). And Post Co.'s value is helped immeasurably by its extremely profitable Kaplan academic-testing division. Nonetheless, Post Co. hit a new trading low–well under half its stratospheric year-ago value–week before last.

You can see more of the gory details in this chart: 

Clearly, no investor wants to be caught dead owning a newspaper stock these days. (Disclosure: I own a tiny amount of News Corp. stock, alas.) The reasons are obvious: Competition from the internet, high costs (despite cuts), declining circulation, an aging print audience and a worsening advertising market. The recent economic downturn is particularly dangerous to newspapers because it's choking their traditional advertisers: banks are failing, American carmakers are in nearly as dire trouble and retailers' sales are plummeting. That all means less advertising in the months ahead. As Alan Mutter has reported, newspaper profits continue to decline, which will further depress stock prices.

Wall Street analysts are pessimistic about newspaper stocks, individually and collectively, to say the least. Investment research firm Morningstar suggested last week that McClatchy stock "could be worthless" at this point; it said the same thing about Gatehouse earlier this year. Morris Communications–not traded publicly but buffeted by the same forces–had a key debt rating dropped to the lowest possible level by Standard & Poors last week, signaling a potential bankruptcy. S&P cut Gannett's debt rating to near-junk levels last week; it pegged the debt of no less than the The New York Times Co. as junk a couple of weeks earlier. And one pundit, looking more broadly at the media and advertising business, predicted that "a great (media) depression looms" in the coming months.

It's hardly news that the newspaper business is in financial trouble. But the depths of its problems, as measured by what's happening in the financial markets, is stunning, putting it up (or down?) there with other disastrous American industries like the auto, airline and music businesses. It's very difficult for an industry to come back from depths like these, certainly in any recognizable form. And while it seems hard to believe things could get much worse, the economic environment seems to portend that what we've seen over the past couple of months–accelerating the decline of the past year–is just a taste of even worse things to come.

A footnote on the numbers: Figures have been adjusted in a couple of cases to reflect corporate reorganizations and stock delistings, to make comparisons more accurate.