Wednesday, April 1, 2009

IN THIS ISSUE:

SMART RADIO COMPANIES ARE SEIZING MEDIA 2.0 OPPORTUNITIES
HERE COMES THE KNOT: WEDDING SITE LAUNCHES 75 LOCAL AFFILIATE
HOW THE DISNEY/ABC DEAL WITH YOUTUBE AFFECTS LOCAL TELEVISION
MEDIA 2.0 101: REINVENTION INCLUDES JOURNALISM
AR&D LEADS THE WAY ON RTNDA@NAB PANELS
QUOTE OF THE WEEK

SMART RADIO COMPANIES ARE SEIZING MEDIA 2.0 OPPORTUNITIES (Terry)
For a long time, Steve and I have been talking about the necessity of local media companies to dip their revenue nets in the bigger pond of the internet pureplay companies. The graph below is the latest from Borrell Associates, and it shows the dominance of the pureplays in the average market, whether the revenue comes from just local businesses or from all businesses wanting to advertise in the market.

Borrell 2008 Local Online Spending

Local media companies who are content to go after revenue based solely on their own medium are playing a foolish and dangerous game, because the revenue possible from those niches is considerably smaller than the revenue potential of the whole pie. This is why the pureplays are so dominant; they’re not trying to obtain revenue by any legacy media “type,” choosing instead to view the entire marketplace as a whole.

One local medium sees this where others apparently don’t and is able to view its legacy platforms’ role in digital media as primarily marketing. That medium is radio, and there are some very, very smart people playing in this space.

GAP Broadcasting here in Dallas has a very forward-thinking strategy. GAP Holdings owns and/or operates 119 radio stations in 25 mid-sized markets that are primarily located in the Gulf Central and Pacific Northwest regions. The company’s strategy is to become the preeminent provider of local content through its over-the-air and online offerings. GAP is controlled by funds managed by Oaktree Capital Management, L.P.

GAP purchased Dallas-based Pegasus News from Fisher Broadcasting earlier this year and created another subsidiary, Archstream Media, to manage GAP’s digital assets. Vic Savelli, Executive Vice President Archstream Media (and a former Belo Interactive guy), told me they plan to use the Pegasus software to develop local community information portals in the markets it serves, rolling out in 12–15 markets this year. Pegasus is run by Mike Orren, a smart guy with a gift for hyperlocal content, and the combination of Orren’s secret sauce and the radio station promotional push has promise.

“The Pegasus technology was built to rely on those individuals that use Google or Yahoo to search for content instead of associating with a local media brand,” Savelli told me. “We believe that the combination of search engine optimized content combined with the promotional power of local radio will be a winning combination.” The new community portals will use a single URL that will “cookie” users to the correct content for their local market.

Archstream will also continue to operate PegasusNews.com in Dallas and plans on selectively inviting other radio companies to align with the community portal as affiliates.

GAP also owns SaveOnTheLot.com, an auto dealer inventory site that allows local dealers to make their inventory portable for use on many different sites. The database is searchable by ZIP code, so the company is rolling out local auto inventory sites in its markets, under the SaveOnTheLot domain. Savelli said the radio/auto dealer partnership is working. “While we have just launched in a handful of markets,” he told me, “we are seeing that there is no question as to radio’s ability to drive local automotive purchasers to the portal and have accelerated the launches.”

Radio listeners simultaneously use the WebIn each of these cases, the business have nothing to do with the radio business, per se. Gordon Borrell thinks this is smart strategy. “I’ve always felt that radio had a strong advantage when it came to the Internet,” he told me, “but I also had this nagging feeling that the industry was squandering that advantage.” Radio has an uncanny ability to drive Internet traffic, probably because of simultaneous web-radio usage (see the graph to the right). Borrell also noted that radio tends to be run by people who make a science of building relationships with their niche audiences.

“I mean, they ought to be the ones creating the new local brands of Facebooks and MySpaces and creating marketplace excitement about those social-network sites,” he added. “Country music people? Classical music lovers? Hip-hop? Sports talk? All news?”

Generally speaking, most radio groups are still behind-the-times, lacking a basic business-development mindset. “The radio industry will barely generate $300 million this year from Internet sales,” Borrell noted, “while the yellow pages, newspaper and TV competitors are generating billions. If someone with a great business mind could tap radio’s strengths and use them to build up separately branded local Web initiatives, I think they’d hold the secret formula.”

GAP seems to be doing just that. Savelli told me that the company is “trying to prove what’s possible,” and that their equity partner, Oaktree Capital, fully supports their innovative approach.

Meanwhile, other radio companies are getting creative with similar concepts. The Black Crow Media Group is running successful free classifieds sites in three of its four markets, Valdosta, GA, Huntsville, AL, and Daytona Beach, FL. Like the GAP strategy, the Black Crow stations heavily promote the sites and, while gutting the local newspapers’ classifieds, are creating unique ad platforms for targeted and contextual advertising.

These companies are proving what some readers here may have considered just theory, as Steve and I have gone through the various possibilities of an aggressive Media 2.0 strategy. Separate businesses that take advantage of the big microphone offered by the legacy platform have a competitive advantage over pureplays without such a reach, including the big boys like Google and Yahoo. People like Vic Savelli are teaching us that, in the world of Media 2.0, it’s more often who gets there first than who has the deepest media pockets in town.

And speaking of pureplays, read on…   Link>

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HERE COMES THE KNOT: WEDDING SITE LAUNCHES 75 LOCAL AFFILIATES (Steve)
The popular wedding site “The Knot” is moving in on your turf. The site is launching 75 local sites, bringing its total to 85. This is a huge development, because local media companies have been reluctant to get into niche media. At best, they have bridal pages buried within their brand extension site. With this move, “The Knot” has launched an instant network and will be moving in on local advertising turf.

This new network has its own brand, weddings.com. (Good URL.) Each local site is “cityname.weddings.com,” so if you go to the Chicago affiliate at chicago.weddings.com you will find all sorts of wedding information specific to Chicago. Perhaps more importantly, you will find a whole lot of niche advertising. We may be in an economic downturn, but people are still getting married.

Take a look at the site and you’ll see what I mean:

The Knot

On the left, you see the options for Chicago wedding vendors. Clicking through to these vendors, you will find their own full-page ads.

Local Ad in The Knot

The Knot’s advertising section describes the site’s local strategy:

“The Knot offers targeted online marketing programs specially designed to showcase local businesses to qualified consumers in their area.”

“From comprehensive online profiles to direct email programs, each product has been road-tested to provide local businesses with a direct connection to qualified, prescreened consumers in their market.”

But what about the cost of running these sites? Elizabeth Holmes of the Wall Street Journal writes:

“Costs for this kind of expansion are minimal, because the local sites use a heavy dose of already-created national content that is applicable to a wedding anywhere. For example, “8 Top Wedding Cake Q&As” gives guidelines as to when in the planning process to contact a baker or when to cut the cake at the reception. That article is then is paired with a listing of city-specific vendors divided by category.”

This is the way you sell local advertising now. A photographer who specializes in weddings can’t afford to buy an ad in a Chicago newspaper. Even if he could, he would be reaching thousands of people who aren’t interested in his product. With this site, the photographer reaches a targeted audience specifically interested in his work. Put yourself in his shoes: where would you want to advertise?

This is another example of how new companies are moving in on traditional advertising turf. After all, plenty of newspapers have weddings sections. There’s no reason why they couldn’t have established something like this. With Google getting into the local advertising business, and the Huffington Post spreading its wings, we will continue to see the erosion of money spent on traditional media. We have written it before: if we don’t get into the niche advertising business, someone else will.

And that will be a knot you can’t untie.   Link>

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HOW THE DISNEY/ABC DEAL WITH YOUTUBE AFFECTS LOCAL TELEVISION (Steve)
YouTube used to be the enemy. The networks hated it. They insisted on putting their content on their own sites. Even when users would upload short, promotional clips, the networks saw this as a violation of their content.

disney logoDisney/ABC has seen the light. It has struck a deal with YouTube to present short — form content on the popular video sharing site. While it won’t be putting up entire shows (yet), Disney/ABC is at least getting its feet wet with clips and recaps from its programs.

It’s a start. Paidcontent.org reports the sides are discussing a deal that would, indeed, put full episodes of ABC shows on YouTube. Disney/ABC will have full control over the ad inventory. Writes Staci Kramer at paidcontent.org:

“The two companies would share revenue, with Disney controlling the ad inventory; YouTube and Google could get some inventory to sell. As important, YouTube would refer back to ESPN.com, ABC.com and the other Disney sites.”

This would be a major shift in policy regarding ABC programming. ABC has always insisted people visit its website to watch its programming, citing “quality control.”

ClickZ.com writes of the advertising plan:

“The inventory will be monetized, in part, with in-stream ads sold by ABC. Google said Disney Media Networks will “test” pre-roll ads in its video content, and that YouTube’s overlay and banner ad formats will also be available.”

This raises a question: will we see an advertisement before what is, effectively, an advertisement? And will the audience tolerate that?

There is another part to this intrigue: Disney/ABC had reportedly been holding talks with Hulu, and was interested in buying a stake in the video site.

But the announcement of this deal could mean the Hulu talks are done. Kramer says the YouTube agreement precludes a deal with Hulu.

What does this mean for the local affiliates? It is more evidence that the networks are going around you. People don’t watch channels anymore: they watch shows. When a network gets in tight with a mass distribution site, it’s only bad news for the locals. This may be the prime reason why we need to become local media outlets and not just TV stations. As the example from The Knot shows us, there are plenty of local advertising opportunities that go well beyond the news. The networks are evolving. Are you?   Link>

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MEDIA 2.0 101: REINVENTION INCLUDES JOURNALISM (Terry)
Marvin Kalb, George Washington UniversityThe name “Marvin Kalb” was synonymous with network news when I was a young man. He spent 30 years with CBS and NBC and now hosts The Kalb Report, a monthly discussion of media ethics and responsibility at the National Press Club in Washington, D.C. sponsored by Harvard’s Shorenstein Center and George Washington University. Last months’ session was entitled “Down to The Wire: Journalism in Crisis (.pdf),” with guests Jon Klein of CNN, Alberto Ibargüen of the Knight Foundation, Vivian Schiller of NPR, and Tom Curley of the Associated Press.

The transcript is a fascinating view of the old versus the new, with Kalb bemoaning the state of the press and democracy, and the guests defending change. These kinds of sessions are useful in pointing out the assumptions made in certain arguments that are holding us back, and that’s what I’d like to do here, for old school journalism is not above disruption. The canons were not etched in stone by the finger of God. Contemporary journalism is a modernist invention, and we must be willing to accept that, if we’re to be relevant downstream.

Challenging assumptions ought to be the first duty of everyone in a postmodern world, for it is often very revealing. Here’s Kalb:

Joe Nye, has written about the paradox of plenty. And let me quote him for a second. “A plenitude of information leads to a poverty of attention. Attention, rather than information, becomes the scarce resource. And those who can distinguish valuable information from background clutter gain power.”

…how do you help the public work its way through the clutter and get to what is substantive, get to what is news, get to what is important to them to make up their minds about this country?

Ms Schiller responded that Kalb’s question demonstrated a “lack of trust in the intelligence and the discerning power of the audience,” adding “I actually think that most of the listening, viewing, using audience is pretty good at discerning clutter from real stuff and they will self select.” Well said. The assumption of Kalb’s question is that people are incapable of such and need to be guided, which comes right from the lips of Walter Lippmann, the social engineer and dean of professional journalism. Technology is increasingly able to filter the fire hose that Kalb fears, and that will only continue to improve.

The press is sincere in its belief that democracy needs it to sort through this clutter, but that is merely an assumption.

A similar assumption is behind this statement:

Ed Murrow and Walter Cronkite, and there was no question about the trust that they engendered in the American people.

The assumption here is that it was Murrow and Cronkite, not the market with its limited choices, that engendered the trust. All of the network anchors were trusted back then, but what’s ignored in making such a statement is that people really had no other choices to trust. The network anchor chairs were all there was. Of course, newspapers were trusted back then, too, but then came Watergate and the birth of gotcha journalism. Trust went south, and we nostalgically remember a less complicated time.

When AP’s Tom Curley noted that “somebody” would step in to fill the gap in governmental coverage, if newspapers go under, Kalb responded, “but will this someone be a trained journalist who was there to cover news, understands the difference between opinion and the acquisition of hard information?”

The assumption here is that only one “trained” in journalism is capable of covering news, and that’s simply a myth. Kalb then asked if the panel thought “the old values of journalism” would be around in ten years. Klein responded that “the audience is going to demand that those values are preserved because they demand accuracy above all else.”

Klein’s right, but he’s referring to the same audience that has rejected those “old values” as horse poo, because the evidence doesn’t support contemporary journalism’s claims of righteousness. The “audience” isn’t nearly as stupid as we think, and we need to honestly accept their rejection for the sincere criticism that it is. Those old values may not be as valuable as we once thought.

The panel took questions from an audience of journalism students and practitioners. One referenced the “first rough draft of history” often ascribed to newspapers. This student/journalist was worried about the future.

..what will future historians do and the wider public, without this rich contemporaneous depth of coverage of what it was like to live through these times, so we can go back and create a picture of what this piece of history was like to live through if we don’t have those newspapers to draw on?

This argument ignores the broader picture of a history that’s being more accurately written and recorded today, thanks to the marvelous technology of the Web. Rough draft? Who edits that rough draft today? Everybody, that’s who.

Journalism and history have always been problematic for the serious researcher, because history has always been written by the powerful. As the proverb says, “The victor gets to write the history in war.” We’re experiencing the difficulty of that today in the Middle East, because anybody can publish their version of events, which forces a broader spectrum of opinion and limits the ability of anyone to manipulate the truth.

And what is truth, after all, if not the greased pig that professional journalists chase?

(AFTERNOTE: See the Quote of the Week below and read Jack Shafer’s essay on yellow journalism.)   Link>

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AR&D LEADS THE WAY ON RTNDA@NAB PANELS
AR&D is proud to announce that our three leading Media 2.0 executives, Jerry Gumbert, Terry Heaton and Steve Safran will be on panels discussing the critical topic of news reinvention at this year’s RTNDA@NAB convention in Las Vegas. Heaton, Senior Vice President, Media 2.0, will be part of the opening Super Session on Sunday, April 19, at 4 pm. The Super Session is called “Leading News Reinvention,” and will be moderated by CBS News Anchor Russ Mitchell.

The RTNDA describes the session:

“The gloomiest year ever in some newsrooms leads some to wonder whether there is a viable future for broadcast news. Part of the reason for the slump on the business side is the growing lack of relevance of traditional broadcast models to younger audiences. Traditional TV and radio spot advertising is no longer capable of sustaining the operation, capital, and profit needs of many stations. Those stations have looked to change models to support free broadcasting. News managers may sometimes have trouble helping find and adjust to these models. This session will help introduce attendees to what is working in the industry now.”

Jerry Gumbert, President and CEO, will give his insights on “Moving Content Across Platforms.” The panel will be held on Monday, April 20, at 10:30 am. According to the RTNDA website, the session will be:

“A look at best practices and working solutions to keep content moving between your station’s many platforms, rewriting and repackaging to optimize it for the next intended audience. Making the most of the constantly publishing model is the goal of this informative session.”

On Tuesday, April 21, Steve Safran, Senior Vice President, Media 2.0, addresses the important and evolving topic of news ethics in the seminar “The Ethics of Digital Journalism.” The RTNDA writes of the session:

“Fast changing technology means new ways of telling stories and connecting with our audiences, and thus, news challenges and opportunities for ethical journalism. This cutting-edge session will cover a wide range of ethical dilemmas, including Facebook friends, online sponsorships, correcting errors, citizen journalism and user comments, aggregating other sources’ content, and even the ethics of search engine optimization.”

We hope to see you at the Las Vegas Hilton this year. Please drop us a line if you would like to meet with us or simply say “hello.” We’re always excited to talk Web and news.

Email us at:

Jerry Gumbert: jgumbert@ar-d.com

Terry Heaton: theaton@ar-d.com

Steve Safran: ssafran@ar-d.com

For more information, visit the RTNDA@NAB website at rtnda.org/conv09.   Link>

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QUOTE OF THE WEEK
Have the hell-bent professionalization of journalism and the erection of a complex ethical code for its practitioners sapped from newspapers their life force? Can yellow journalism be reinvented—tamed and respiced, perhaps—in a way that preserves its best elements, subtracts the worst, and still glows? Is there a place in the newspaper world for saffron journalism? Jack Shafer from Bring Back Yellow Journalism in Slate.