Newspapers: Defending the indefensible

Newspapers and the postal service are in a tug-of-war over couponsWhat happens when one industry in disruption runs into a business conflict with another industry in disruption? Think of two huge carnivores fighting over a third helpless beast at the tar pits of LeBrea.

An editorial in the Madison Eagle newspaper of Bernardsville, NJ last week caught my attention, because it provides a new enemy for newspapers — the United States Postal Service (USPS) — and proposes the same tired refrain of a threat to freedom, if something isn’t done about it. Last month, the Postal RegulatoryCommission approved a three-year discount deal to boost use of the mail system by Valassis Communications, which sends mass coupon mailings to homes under its RedPlum brand. Newspapers opposed the deal, because it cuts into “their” value proposition on delivering coupons via the Sunday paper.

I get that this is yet another rug being pulled out from under the newspaper business, but I object to the industry’s defense, as spelled out beautifully in the Eagleeditorial:

To newspapers that count on advertising to pay its reporters and cover the news, this USPS plan is beyond alarming – it’s a threat to journalism and an informed public. Many think it will push some newspapers in America already struggling with a fragile economy and Internet competition over the edge.

If that or anything like it happens, communities across our country will suffer the most long-term harm.

…We don’t fear the Internet; we are using it, and it is vastly expanding our ability to inform the public up-to-the-minute.

But, two things to keep in mind: The most reliable and comprehensive news on the Internet is posted by journalists who work for print newspapers. Anything that weakens those newspapers will have a negative ripple effect on access to solid, accurate news on the Web.

And two: This is a media age not only in revolution, but in transition, to a future no one can fully describe. There are still many readers who aren’t satisfied that the news has really been reported and disseminated “until it’s in print.”

I’m especially struck anytime I read such hubris as: “The most reliable and comprehensive news on the Internet is posted by journalists who work for print newspapers.” Let’s ask the Pulitzer Prize winning Huffington Post about that.

Do newspapers truly believe stuff like this, that they are so important to freedom in the U.S. that their loss would be a threat to an informed public? In a capitalist economy, the powers that be simply say, “Cry me a river,” for only fit businesses are allowed to thrive. Fifteen years ago, newspapers had a virtual monopoly on classifieds, display advertising, and coupons. As each one has been stripped away, the industry has chosen not to compete with the disruptors, but instead do nothing except cry “foul” and offer a threat to freedom as the consequences of their doom.

As Lisa Williams famously wrote in 2008: “Journalism will survive the death of its institutions.” Do I really need to go into the ways it’s already happening?

We need to get over ourselves

Business Insider PageThere it was, staring at me with remarkable clarity, a headline from Business Insider on the sad state of newspapers pared with a picture from the film “All The President’s Men,” the story of Bob Woodward & Carl Bernstein, The Washington Post and, of course, Watergate. The irony? Evidence (Gallup) suggests that this event — the elevation of everyday journalists into superstar status — was the bellwether occurrence that began the downward slide of press trust in the U.S. Of course, you won’t hear contemporary journalists speak such heresy. After all, Woodward & Bernstein are the model of what it means to be the successful professional (a.k.a. “real”) journalist of today, and this is why BI used the photo.

The BI article examines new research from LinkedIn on sectors of the economy that are losing jobs.

On a percentage basis, newspapers shed the most jobs, down 28.4% between 2007 and 2011.

The good news: online publishing had job growth of 20.4%. But it didn’t add as many jobs as newspapers lost.

We’ve heard from thousands of insiders and outsiders, experts and armchair quarterbacks on what’s causing this decline, and all tell part of the story: disruptive innovations, Craigslist, the recession, failing to initially charge for content online, and so forth. But most of these are shortsighted, and the Gallup research is the only evidence that points to the origin of the decline in press trust in the country, and it begins shortly after Watergate.

I’ve written much about what I think happened, that journalism subtly shifted from a way from a career in which a single person could make a difference to one of riches and notoriety (see: “I love to be in front of cameras” below). The ability to hobnob with those they covered — and, therefore, gain status simply by rubbing elbows with the famous — became the wish of many of those who passed through the gates of accommodating journalism and communications schools. I witnessed this up close and personal in my own career. Employees who “wanted to be on TV” became the majority, and then there’s the ugly side of market-hopping, the slow shift from parochial news coverage to cosmopolitan news coverage in smaller markets as more and more Woodward & Bernstein wannabes expressed themselves for the sake of their resumes instead of the community they were supposed to be serving. How else do you explain stories of young TV reporters doing things like jumping a fence at a very small market airport to “prove” how easy it would be for a terrorist to do likewise? This kid got himself arrested, but that’s not the point.

Playing hotshot super sleuth in a place like that wasn’t even close to reporting news for the community, and the thing we’ve always failed to see about this is that people — you know, the audience — have been paying attention. It’s crystal clear to them that news people are in it for themselves and serve neither the public nor the profession. Beginning at the university level, an entire industry swung from making a difference to the quest for the big bucks (“quest,” because we never really got there, except for the few, right?), and the hell with what the audience might think.

This is why I wrote last week of the Great Winnowing that has begun, wherein the practice of journalism is having its way with a whole generation of misled practitioners. I have faith that the demand for journalism remains (and will be) strong and that people will earn a decent living at the end a really rough season for most.

Ego is a funny thing. It drives people to great personal risk, which can produce great rewards, but it can also create unrealistic expectations and turn normally sane people into preening peacocks of staggering insanity.

What has been our chief sin since Watergate? We just can’t seem to get over ourselves.

Of original sin and downstream profitability

This may be the headline of the week:

The Boston Courant: Proud not to have a website until the owner sees “a profitable end game.” Publisher David Jacobs says he has no interest in the web — at least not until someone else figures out a business model for it.

The article, in Harvard’s Nieman Journalism Lab, is a fascinating tale of a man with a niche audience who decided long ago that his publication was a newspaper, period. Publisher Jacobs is a guy who sees the simplicity of it all. “I won’t launch (a website) until I find a viable business model…We’ve never come close (to launching),” Jacobs told Callum Borchers, author of the piece. He also gave Borchers this wonderful line:

In business, one of my philosophies has been the first pioneer into enemy territory gets all the arrows.”

How true, and it brings a warm smile to my face. There are those who would say that Mr. Jacobs is a man who resisted the temptation of newspaperdom’s “original sin,” that of giving away for nothing what people used to have to pay for.

I’ve long believed, however, that the original sin of the newspaper industry was in creating the Web version of itself in its own image, to use another Biblical reference. It’s a forgivable sin, because we didn’t know then what we know now, but the extent to which we continue in this error is another matter. The newspaper industry gave birth to the media Web and a new form of geek to manage it. These new individuals had ink in their veins and ones and zeroes in their brains, but they bore scant resemblance to their counterparts in California and elsewhere who were actually building the Web and its applications. A newspaper background was deemed essential in the creation and execution of a newspaper’s online strategy.

These people were invited to speak at conferences on “new media.” They wrote books and coined phrases. When national publisher groups met, these people were assembled to advise and teach. The newspaper industry was perfectly capable of taking care of itself, thank you very much (same with TV, but that’s another article). This is not to suggest arrogance. It’s just the way it was.

Imagine a whale oil convention a hundred years ago where the speakers about electricity only came from within the ranks of the whale oil industry. One session is dedicated to new innovations in oil lamp manufacturing where the oil is lit by a spark of electricity. Another looks at the benefits of listening to the radio while resting with the soft light and therapeutic fragrances of scented oil lamps. Still another examines innovations on the future use of electricity in steamship navigation equipment. You get the idea.

Newspapers never stopped to ask this one fundamental question: what is the best way to meet the news and information needs of the community online?

Instead, when the “real” geeks started asking the question and creating simple applications to accomplish the task, the best newspaper people could do was criticize them. Where institutions wouldn’t listen, individuals did, and so was born the tools of personal media. The term “blogger” became instantly pejorative with the newspaper industry, despite the reality that the software they used was far better in terms of communicating online.

Newspapers — and their broadcasting counterparts — have continued to bolt onto their core item after item, so that the finished product resembles more a complex Frankenstein monster than the simple money-maker that Mr. Jacobs continues to provide. This is why new media is about reinvention, not brand extension. Moreover, the venture-backed souls who are taking the money that used to go exclusively to us are quite content to “help” us bolt other things on. Meanwhile, we’re helping revenue shift to other people’s infrastructures, and so it goes.

David Jacobs recognizes his brand as a newspaper. The question for him is the same for everyone: What is it about that brand that will allow me to make money online, and here’s a hint: it’s not mass marketing.

Nuff said.

New Pew report should open eyes

Today’s new report from the Pew Research Center’s Project for Excellence in Journalism reveals some unsurprising but damning information about news websites that we can ill afford to ignore. Here are the key findings:

  • In-House ads, ads selling or promoting a news organizations own products, fill more space across these news websites than any other advertising category.
  • The finance industry is represented far more than any other on the news websites studied.
  • Discount or coupon advertising such as Groupon was fairly limited.
  • Most of the news sites did not feature ads targeted to consumers based on their online behavior.
  • News organizations tend to rely most heavily on static banner ads.
  • Even though search ads don’t appear on most news sites, Google’s advertising presence is still strong there.

What this says to me is that media companies continue to try and force “their” business model into a medium that rejects it. Moreover, I think this is right where Silicon Valley wants us.

Media, in its purest business sense, is an order-taker world. What we have is so scarce and so important that people call us to spend their money with us. In the good old days, regardless of which form of media we’re talking about, the sales force got into a nice rhythm of sitting at desks and counting the money. Oh I know that people will debate this, but a replacement for that rhythm is what we desperately seek today. We need something to replace it, because if we have to work harder to make and sell our audiences, the price of sale (POS) goes way up, and our business model itself collapses.

Searching for this replacement online, however, has been our mistake, because the obvious benefits of mass marketing are utterly disrupted by the Web, and mass marketing is all we know. All we’ve done is waste our time, and the Pew report makes that statement loud and clear.

Beginning with newspapers and continuing with television and other forms of media, we’ve built websites that serve (we think) the business model of mass marketing, and that has been nothing less than suicidal. So far downstream are we in this error that we can’t even imagine anything different for now, so let’s begin with a few basics:

  • Time is the new currency. We don’t care about this in the outside world, where scarcity earns us the right to stomp all over people in the name of “serving” them, but online, this is a crucial, crucial reality. We must conform our online products to this reality.
  • Do what you do best and link to the rest. In a world where infrastructure carries the monetization mechanism, it’s necessary to keep people inside that infrastructure for as long as possible. This doesn’t work forever online, however (think AOL, not Facebook), because the Web is bigger than anybody’s application. One of the oldest Web axioms is “If you send people away, they will come back.” This is a habit unpracticed by media companies, but one we must begin embracing.
  • Create “for” the Web by accepting the following: The Web is not TV. The Web is not newspapers. “The Web is more a social creation than a technical one,” said Sir Tim Berners-Lee. The Web is a three-way form of communication: up/down, down/up and sideways. The Web is real-time flows and streams, not static displays.
  • News content online must be unbundled, so that users in the network can pass it around to meet their needs to inform and share. Our need to drive users to our infrastructure is contrary to this, and we must find the courage and creativity to do something about it.
  • Advertising is content — the only new content that really matters. Advertisers are the new content makers, and we need to be exploiting our strengths as experts in the world of content creation in order to serve this burgeoning market.

There are so many things I could say about what we need to be doing, but that would take all day and then some. The point of this Pew report — and many others like it — is that what we’re doing isn’t working, and that’s being kind.

We’ll never get out of this hole unless we first stop digging.

NYT & union on collision course

New York Times logoI feel pretty sad about the “profound dismay” expressed by former and current New York Times’ employees due to a decision by management to freeze the pension plan for foreign bureau employees and other “recent developments.” The union sent a petition letter (384 signatures as of this writing) to publisher Arthur Sulzberger Jr. expressing their concern.

We have worked long and hard for this company and have given up pay to keep it solvent. Some of us have risked our lives for it. You have eloquently recognized and paid moving tribute to our work and devotion. The deep disconnect between those words and the demands of your negotiators have given rise to a sense of betrayal.

A Huffington Post article on the matter by Michael Calderone notes that it could have been worse.

Bill O’Meara, president of the New York Newspaper Guild, said some staffers had considered even “more dramatic” actions.

There were people who wanted to storm Arthur Sulzberger’s office,” O’Meara told The Huffington Post. “There were people who wanted to stage a walkout.”

The problem here is that this is 1960’s style labor posturing that really feels ancient in today’s media world. I don’t like it anymore than anybody else, but crying for yesterday does nothing to solve today’s problems. Managers of public companies have fiduciary responsibilities to their owners, the shareholders, and people don’t buy or hold stocks in companies that can’t produce growth. It’s not about how much money one makes, nor is it directly about margins; it’s about growth, and there are only two ways to do that. You can increase revenue, which isn’t happening anymore, or you can cut expenses, and that’s what’s happening here.

There’s very little growth in any sector of our economy right now, but this is more than just an economic problem. This is a problem of core business decay, and it will not get any better unless there’s a total reinvention undertaken. The truth and the laws of economics apply to everyone, even a vaunted institution like the New York Times.

What can be done? Take a look at the marvelous work of Lewis DVorkin at Forbes. Here’s a company that has blown out the original concept of making media and replaced it with a much leaner, more nimble and flexible system. The problem, of course, is that there’s no room whatsoever for organized labor’s perspective, which is now simply dead weight around the necks of the people who are trying to save the institution.

But beyond that — and to every individual in media today — the safe harbor that once was “the collective” is no more. It is literally every man and woman for themselves. If your organizations won’t or aren’t able to assist you in reinventing you, then you must do it yourself. I get the letter to the boss, but the arguments are sadly and unfortunately irrelevant. You must take care of you, because nobody will do it for you.

Big ad money shifting to promotions (and away from media)

Advertisers are now media companies themselves, and as I tried to point out in my last essay, we now find ourselves actually competing with them. The evidence of this is everywhere, but media companies simply ignore it, because the only thing we can see with advertisers is, well, advertising.

For as long as I have known Gordon Borrell, we’ve both been saying that the ad category to watch — due in large part to the disruptive nature of the Internet — is what Borrell calls “Promotions,” the spending of marketing dollars on things other than traditional advertising. So dramatic has the growth been in this category — and what’s projected to come — that the gouge it takes out of advertising budgets won’t be a small bite.

This was no boating accident; this was a shark!”

Borrell Associates is a research and consulting company that’s driven by data. Once each year, the company produces major trend reports and then tracks those quarterly. Its latest data about the Promotions category is incredibly revealing, especially as it relates to growth.

Share shift is underway

Kip CassinoIn an email exchange with Kip Cassino, Borrell’s research guru, he noted that for some time, far more has been spent on promotions than intermediated advertising and that this trend is not only continuing but accelerating.

Most of it is money — five cents off a can of peas at the supermarket, or $2,000 off the next new car you’ll purchase. Discounts, deals, couponing, loyalty programs all share one thing in common: they are vehicles for enhancing sales with the promise of savings.

Promotions have another thing in common as well. Their ROI is immediately apparent. If a store owner puts a coupon on his website or in the daily paper, he knows exactly how much business it brought him — no guessing about “engagement,” or reach and frequency. This appeals to most businesses, especially the smaller ones.

Online promotions have lagged online ad spending, but Cassino says that is changing as well. “With the burgeoning popularity,” he wrote, “of mobile devices — the phones and tablets — online promotions will see massive growth during the coming five years.”

upward growth for promotionsHe noted that most businesses don’t separate promotions from advertising, so spending on a website or social media strategy is just “advertising” to them. The ramifications for media companies are stark.

As overall spending on the intermediated (ad) side of marketing continues to decrease,” he wrote, “these media outlets will either have to learn how to gain revenue from the promotional side or face growing competition for a shrinking revenue pool.”  The result, he added, will resemble “a continuous game of musical chairs.”

Most media companies, Cassino noted, simply ignore the situation. “They note incremental growth on the ad side,” he wrote, “and see no reason to look at where most marketing growth is really occurring.” This is true, he noted, for both legacy and online players. Education, said Cassino, is the first step.

Promotions are not merely an extension of advertising. They have been invisible to many media outlets for decades, because they are primarily tactical tools — the province of the brand or product manager. They are top-line, not bottom line, oriented. Almost any media can find a good spot in promotions, but to do so requires a thorough knowledge of how and when it makes sense, and how it is best applied.

The invisibility is most obvious when it comes to the online world, where, as noted, we’re now competing with the people who have the money. More and more companies are spending promotions dollars on social media, for example, because it really delivers for them. According to Borrell’s latest SOCIAL LA$R™ (Local Ad Spending Report) research, businesses use the following metrics to determine success in this area (in this order):

  1. New Customers
  2. Additional Fans, Friends, Followers
  3. Increased Visits to Business website
  4. New email contacts
  5. Increased Sales volume
  6. Increased Visits to Business Social Network pages
  7. Lead Generation
  8. Increased Tweet Responses

National advertisers are way out ahead of local businesses, as the below graph shows, which ought to look like a big, fat opportunity to everybody.

Online promotions versus advertising, local versus national

When you examine these numbers, it’s pretty clear that businesses — remember, they’re the ones with the money — are now functioning exactly as we function. They are using tools that used to be ours alone, and the energy powering the movement to personal media (which includes businesses) is both abundant and renewable. Our goals are virtually the same as those of business-turned-media-companies, but the problem is we’re still counting on them to support ours. That is not going to last forever.

The opportunity we’ve always had is to use our knowledge and skill to advance this phenomenon and find our new value therein. There’s growth written all over this, and it begins with eyes to see it.

If you haven’t already, I encourage you to read my latest essay, Social TV and Second Screens: To What End?.