future-of-journalism

ORIGINAL URL:
http://netb2b.com/article.cms?articleId=30158
Published Dec. 11, 2006
in B&B, "The magazine for marketing strategists"

The coming collapse and rebirth of newspaper journalism

By Paul Gillin

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Paul Gillin is a writer, content marketing consultant and author. His
book, The New Influencers: A Marketer.s Guide to Social Media, will be
published by Quill Driver Books in the spring of 2007. His blog is at
http://www.paulgillin.com/. He's a former editor-in-chief of ComputerWorld
magazine.
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The near-total collapse of the American newspaper industry as we know it
is inevitable. Anything newspapers could have done to stop it should have
been done years ago (Slate recently wrote that newspapers saw this coming
in the mid-70s). All the social, demographic and economic trends are lined
up against the industry. Over the next decade, there will be agonizing
rounds of layoffs, consolidation and bankruptcies. It will be painful to
watch, but it will be a necessary process for the industry to reinvent
itself.

In this essay, I.ll outline the reasons I believe this and propose a new
and very different model of publishing and journalism that will take hold
as this cycle plays out. This will be a very exciting evolution but it
will be very painful, too.

A broken business model

First, some background and assumptions. The business model of metropolitan
daily newspapers was developed over 150 years ago to support a delivery
method that is becoming irrelevant. Huge staffs of people were needed to
create content, turn it into type, print it on paper and distribute it on
a timely basis. It was very expensive, but it was necessary because there
was no alternative way to deliver information on a daily basis.

Large editorial staffs were needed to create proprietary content. A few
alternative sources of content were available, such as news wires, but
there was almost nothing at the local level. In any case, running wire
copy didn.t differentiate a newspaper from its competition, so staffs of
salaried reporters were needed to turn up original news. At some
newspapers, these staffs can run to several hundred people.

Newspapers had to maintain large circulation operations and massive
subscriber lists in order to justify their ad rates. Circulation is
expensive. While renewal rates for daily papers have always been high,
it.s costly to acquire new subscribers through advertising and direct
mail. For most papers, the cost of circulation didn.t come close to
matching the small revenue it generated. Circulation revenue at newspapers
has also been falling in recent years due to price cuts and competition,
further squeezing margins.

Capital costs inherent in buildings, presses, paper, ink and people to run
all those machines were astronomical. Labor unions added to those costs.
In some cases, the unions have succeeded in preserving jobs that were
automated out of existence years ago. People go to work and literally have
nothing to do.

Add it all up and a metropolitan daily newspaper must employ several
hundred people to produce the product. Newspaper advertising is very
expensive because of the large fixed costs. The Chicago Tribune, for
example, charges $755 per column inch in the daily paper ($1,135 on
Sunday). That business works as long as advertisers are willing to pay for
it and for many years they have. That.s because newspapers were one of the
most effective means for businesses to reach consumers in certain
geographies.

The upside, though, is that newspaper model has traditionally been
profitable and predictable. Once a newspaper achieved dominance in its
market, it was practically unassailable. As consolidation reduced the
total number of daily newspapers (there are about 1,500 in the U.S.
today), competitive pressure eased and the winning papers were able to
drive their ad rates higher. Until the mid-1990s, this was a pretty nice
state of affairs. Even the Internet didn.t put much pressure on
newspapers, at least during its first decade.

That is all about to come to an end. The business model of metropolitan
daily newspapers is poised for a collapse that will be stunning in its
speed and scope. The cause is Web 2.0 and the vastly superior economics of
that emerging business.

A new model

A recent story in Business 2.0 magazine revealed the income of some
popular bloggers. Read this article if you want to understand the emerging
economics of blogosphere. This new medium is far more cost-efficient than
the ones it will replace.

.Blogs today benefit from what might be termed uneconomies of scale,. the
Business 2.0 article says. .They are so cheap to create and operate that a
lone blogger or a small team can, with the ever-expanding reach of the
Internet, amass vast audiences and generate levels of profit on a
per-employee basis that traditional media companies can only fantasize
about..

Take the Fark.com example. The site generates 40 million page views a
month with a staff of one full-time person and two contractors. Its only
real operating costs are bandwidth charges. It produces almost no original
content and has no capital costs. Members contribute their own content, so
no editors are needed. The site almost runs itself. Yet this could
approach $10 million in revenue before long.

Another example is Craigslist.org . It.s is the fifth most popular site on
the Internet, with global reach and an estimated four billion page views a
month. It is absolutely killing the newspaper classified ad business. One
published report estimated that Craigslist had cost San Francisco
newspapers $70 million in revenue in just one year. The entire staff is 23
people.

Digg.com, with less than 20 employees, has more Web traffic than The New
York Times, according to Alexa.com. Other popular mainstream publications
are even farther behind.

all part-time. Google Blogoscoped, which is the best independent source of
information about Google, is run by one person in his spare time. It.s
averaging four million page views a month. Gizmodo grew to become one of
the top five blogs on the Internet with only a single contributor.
Digg.com, which is barely two years old, is already among the top 25 sites
on the Web. Its traffic outstrips all the largest media sites. It has a
staff of 15.

Outsourcing everything.

None of these sites is making piles of money yet, but that.s only a matter
of time. Michael Arrington is pulling in $60,000 a month writing
TechCrunch. BoingBoing.net is on target to gross more than $1 million.
Fark.com founder Drew Curtis says he.s on track to soon log sales of
$600,000 to $800,000 per month.

Companies like John Battelle.s Federated Media and Nick Denton.s Gawker
Media are figuring out the business side. And it.s not like these blogs
have to make a lot of money to keep going. Adrants.com generates over
$100,000 a year in advertising and that.s plenty to keep Steve Hall
plugging away at his one-man operation. He.s got almost no costs and he.s
getting paid to do something he.s passionate about.

How do these keep their overhead so low? They outsource everything.

Editorial content is outsourced to an army of individual enthusiasts and
bloggers who find interesting information on the Web and feed it to the
site operators. Editorial expenses, which account for about a third of the
operating costs of a daily newspaper, are practically zero.
Circulation is outsourced to Google and links from other sites. In fact,
there really is no concept of circulation in these new media because
there.s no way to .own. the reader. This is a very different model from
conventional publishing, which relies heavily on subscriber lists to
validate advertising rates. The Web approach is much less controllable but
also much cheaper.

Production is outsourced to Typepad, Blogger or any number of other hosted
services at minimal cost. There.s no need for designers because everything
is templated. Some sites practically run themselves. Bandwidth costs can
be steep for popular properties, but that.s true for newspaper websites as
well.

Sales is outsourced to Google Adwords, Federated Media or other sales
agents. This may change in time, but for now, most Web 2.0 companies can.t
be bothered with a captive sales force.

Marketing and promotion aren.t even done. In the new Web, your marketing
is your content. People either link to you or they don.t. This creates a
lot of pressure on the site operators to be fresh and innovative, but
that.s not a bad thing.

This model is so compelling that it will almost completely upend the
existing mainstream media model.

Newspaper death spiral

New competition from Web 2.0 companies along with continuing demographic
shifts are about to send metropolitan daily newspapers into a spiral of
decline from which few will emerge intact. Why now? People have been
wrongly forecasting the death of newspapers for years. Why is this time
different?

The first decade of the consumer Internet was very different from that
which we're now entering. Web 1.0 was the display Internet. It was a
decade when organizations put their brochures online and users got
comfortable with the idea of a global network. Search tools were
rudimentary, Web content was difficult to create and interactivity was
limited. The brands that dominated the pre-Web days were able to extend
their brands online. While a few important new sources of information did
emerge, media giants like CNN, The New York Times, The Washington Post and
the Associated Press continued to dominate online media. There was little
threat to their underlying businesses.

That's all changed. It's now easy for individuals to create Web content.
Computing power, storage and bandwidth costs are declining rapidly. The
open-source software movement has dropped the price of software to near
zero. Search engines have become a more effective marketing channel than
e-mail. Google AdSense and affiliate marketing networks can generate
income for website operators, even at low traffic levels. Today, a small
group of people with a few thousand dollars and a good idea can build a
self-sustaining web franchise in a matter of months. You couldn't have
done that five years ago.

Layered on top of that is a demographic shift that is about to move a
large new group of Web-savvy consumers into the economic mainstream. This
new generation simply doesn't have the loyalty to established media that
their parents do. And they don't read newspapers at all.

The spiral begins

So here's where the spiral begins. Newspapers' profitable classified
advertising business will be all but gone in 10 years, a victim of the
vastly superior results and economics of search-driven online advertising.
Display advertising will be under intense pressure from alternative media,
including not just Web sites but an emerging class of small print
publications and supermarket advertisers that serve local audiences (print
publishing is getting cheaper, too). The department stores and cell phone
companies that sustain newspapers' display advertising business will apply
intense pressure on papers to bring down their prices.

Newspapers will be forced to lay off staff in order to maintain margins.
Cuts in services will lead to cuts in editorial coverage, making papers
less relevant to subscribers. As circulation declines, advertising rates
will have to come down to remain competitive. This will put more pressure
on margins, leading to more layoffs, more cost cuts, more circulation
declines and more pressure on margins. Once this spiral begins, it will
accelerate with breathtaking speed. And it has already begun.

Experience has shown us again and again that business models based on
vertically integrated, proprietary products quickly collapse when
confronted with competition that is open, standardized and much less
expensive. It's happened in consumer electronics, telecommunications,
computers and household appliances and there's no reason it won't happen
in media. Advertisers will rebel at having to pay newspapers' high fixed
costs when they can get the same audience through other channels at a
fraction of the cost.

The sole advantage that newspapers have is their reach in local markets.
Small businesses that sell aluminum siding, flowers and cleaning services
have have few alternatives to newspapers for their ad dollars. That, too,
is changing. The declining cost of electronic composition and offset
printing is leading to resurgence of local newspapers and Web 2.0
technology is making it cheap for citizens to launch their own community
websites. Search engine makers are figuring out how to provide value in
local search. These forces are converging to attack newspapers' last
refuge.

In 10 years, probably a third of metropolitan daily print newspapers will
be gone. Some will go entirely online, while others will merge with
regional competitors. What will replace them? And what will the new
journalism look like?

Rebirth

What emerges from the rubble of the newspaper industry will be a fresh,
vibrant and very different kind of journalism. It will make a lot of
traditionalists uncomfortable. It will force us to re-examine our
assumptions about everything from readership to libel law. But it will
ultimately be an evolution of the profession into something that is
richer, more inclusive and much more dynamic than anything we have ever
known.

Print newspapers are modeled on assumptions that were defined by physical
constraints but which are outmoded and irrelevant online. Basically,
information is scarce and publishing is archival. In most metropolitan
areas, the newspaper has been the principal or only source of news for
many years. This required editors and publishers to take a very serious
view of everything they set into type. Layout, headline selection, story
lengths, story placement and design were critical considerations in a
space-constrained world. The importance of a story was reflected by its
location in the paper or on a page, the weight of the headline and the
number of column inches dedicated to it.

Once a story was in print, it was permanent. This necessitated an almost
obsessive attention to detail and fact-checking. All facts had to be
assembled before the story was written. Often, multiple editors were
assigned to review and challenge information in the article. If
information wasn.t verified, it wasn.t published.

Structure was critical. Because stories were cut from the bottom,
newspapers invented the .inverted pyramid. style of writing, in which more
important information was placed higher in the story. Good information was
omitted because there wasn.t enough space.

Online publishing changes all the rules

Of course, all that is irrelevant online, and the new journalism will be
based on an entirely different set of assumptions. Any report may be
quickly and easily updated and corrected. Search engine results and
referral links are the principal drivers of readership. Layout is almost
irrelevant to a web site. Blogs have no hierarchy at all. Stories can be
as long for a short as they need to be, or can even be composed of many
links to other content. Stories may appear in many places at once and even
in many forms, depending on how they are tagged. Readers are able to
comment upon and contribute to articles. Graphics, audio and video
illustrations are easily linked to text. If something is wrong, you can
always go back and correct it.

In short, the online world challenges nearly every assumption of
conventional newspapering. It will dictate a very different approach to
journalism.

For one thing, the craft of journalism will evolve to include far more
aggregation and organization that has in the past. Editors will assemble
their reports from a vast library of resources located across the
Internet. Some information will come from paid staff writers, others from
freelancers and still more from reports and opinions published by
independent third parties and even competitors. Editors will still have a
critical role, but their value will increasingly be in assembling and
organizing information for readers who don.t have the time to sort through
the vast Web.

The craft of reporting will become faster and more iterative. Rumor,
speculation and incomplete information will be published far more readily,
on the assumption that errors can be corrected. Stories will, in essence,
be built in real time and in full public view. Reporters will file copy
directly to the Web, often without a review by an editor. Readers will be
a central part of the process, correcting and comment upon articles as
they are taking shape. Reporting will become, in effect, a community
process.

This new model will be very disruptive and very controversial. The idea
that a news organization would publish information it did not know to be
true flies in the face of all of our expectations. The concept of actively
involving readers - who have no formal relationship with the news
organization - in the reporting process will be too much for some editors
to accept. There will be hand-wringing over fears of libel suits and
other litigation. It is going to be an unholy brawl.

But this is where journalism will go, and it is happening now, every day,
on blogs and community media sites across the world. There authors
knowingly publish information that is unverified and unreliable. They do
so with the expectation that their readers will set them straight and that
the truth will be arrived at through a process of publishing and
correction. More than half a million blog posts are logged every day, yere
there has not been a single successful libel suit resulting from any of
them. Libel law, after all, is based on the expectation of archival
permanence. Nothing is permanent Online.

The future is taking shape

New models are already being tested at community-journalism sites like
Backfence, iBrattleboro.com, Northwest Voice and Korea.s OhMyNews.com.
The Washington Post recently reported on a Gannett experiment to reinvent
news journalism in Fort Myers, Fla. More will follow. Many more.

Journalism will become much more local. As the cost of publishing falls to
near zero and citizens become more comfortable with the tools of
publishing, thousands of mini .newspapers. will form around different
geographies and topics. Aggregation sites will emerge to sift through and
organize the reports and conversations going on in these small
communities. Many of these sites will involve human editors who understand
the needs of their audience and monitor online activity on their behalf.

This will be nothing less than a complete rebirth of journalism around the
concept that information is plentiful and cheap. Instead of 1,500 print
newspapers, there will be perhaps five to ten national .super-papers. and
many thousands of regional and special interest community news sites. The
process of getting there will be wrenching and controversial, but the new
model will create a more dynamic and diverse information landscape than we
have ever known. It will be incredibly exciting. I hope to be around for
the ride.

BtoBonline.com Privacy Policy. Copyright 2006, Crain Communications Inc.

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This article above is copyrighted material, the use of which may not have specifically authorized by the copyright owner. The material is made available in an effort to advance understanding of political, economic, democracy, First Amendment, technology, journalism, community and justice issues, etc. We believe this constitutes a 'fair use' as provided by Section 107 of U.S. Copyright Law. In accordance with Title 17 U.S.C. Chapter 1, Section 107, the material above is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this blog for purposes beyond fair use, you must obtain permission from the copyright owner.

// posted by newshare @ 9:49 AM

The principal argument of media against micropayments has always been that selling items "by the drink" rather than by the box or bottle or case is less profitable than forcing people to buy a bundle of things they don't want in order to get what they do want. That's the principle behind cable tiers. But in this Wall Street Journal column, William M. Bulkeley argues the Internet is gradually trashing the bundling business model. This suggests newspaper companies must become adept online to referring their users to information from anywhere -- and providing a mechanism to charge them for it. Does this make the newspaper an "information valet"?

ORIGINAL URL:
http://online.wsj.com/public/article/SB116476484421135261-XJJx6MSqQiQi__Zd6zvx_vxSswg_20061228.html

ORIGINAL HEADLINE:
The Internet Allows Consumers to Trim Wasteful Purchases

By WILLIAM M. BULKELEY
November 29, 2006; Page B1

Photography and publishing companies shouldn't be surprised when digital technology upends their industries. After all, their business success relied on forcing customers to buy things they didn't want.

Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus to get the good stuff. Inevitably, their industry revenues are shrinking now that consumers can use digital technology and the Internet to select only what they want.

Marketing 101 says success comes from selling things people want. But advanced marketing calls for companies to leverage the relationship to get the buyer to pony up for other products -- or at least for extra product. When customers find a way to avoid buying the excess baggage, they change quickly.

Take the film business. Eastman Kodak and Fuji Photo Film had a highly profitable duopoly for 20 years before digital cameras came along. They never dreamed customers would quickly abandon film and prints. But customers are happy to pay for new digital cameras because the cameras let them pick the good pictures without having to pay to print out a roll of mostly mediocre shots. Now film sales are dropping 20% or more a year and Kodak has reported losses for eight consecutive quarters while closing plants around the world and laying off thousands of people.

Manufacturers have misunderstood this frustration with waste in their sales. The film industry's photo-processing partners, like Walgreen, even gave away a second set of prints for sharing -- although the average roll of film contained few shots that anyone wanted. When printing a snapshot was the only way to see a picture or share an event, customers seemed happy with the system.

Now, it turns out customers really didn't want all of the little four-by-six prints they stuck in shoe boxes. Shutterbugs today store their pictures in computers or post them on MySpace without ever printing them out.

Frank Baillergeon, an Eagle, Idaho, photo-industry consultant, says prints will never come back in fashion because people prefer digital images directly implanted on coffee cups, photo books, personal calendars and the like. Kodak is scrambling to find new revenue sources in the digital era.

Music buyers have made a similar conversion. Compact discs, which usually contained eight to 12 songs, are losing customers to listeners who download one song at a time. "When there are new releases, you can just buy the songs that you want," says Emily Schlossman, a 14-year-old from Newton, Mass., who buys almost all her music from iTunes.

Buyers' newfound ability to avoid paying for things they don't want helps explain the drop-off of advertising for traditional media. John Wanamaker, the 19th century Philadelphia department-store magnate, once said, "I know half my advertising money is wasted, but I don't know which half." The newspaper, radio, television and magazine industries have thrived on advertisers not being able to know.

But when Bill Gross pioneered search-related advertising in 1998, where advertisers only paid when a customer clicked through to their site, advertisers started to change strategies. Now, virtually all mass media face declines as both consumers and advertisers shift to digital technology. Readers get what they want by selecting articles or time-shifting shows. Advertisers get what they want by paying only for searches. Some readers still want everything in the newspaper and some advertisers still will spend a lot to build their brands. But the numbers are smaller than they used to be.

So far, the Yellow Pages industry is holding on. Companies that publish these local business directories collected $14.5 billion last year in the U.S., charging tens of thousands of dollars apiece to businesses that only reached a fraction of the hundreds of thousands of people who have the book in their homes. Most businesses have to buy ads in two or more local Yellow Pages because they don't know which one their customers read.

Neg Norton., president of the Yellow Pages Association, says its surveys show that the number of Yellow Pages searches in the U.S. has held steady in recent years, dropping less than 3% since 2003, to 14.5 billion last year.But some advertisers are defecting to the Internet to get a more targeted way to reach their audience. Greg Keane, president of Titan Moving and Storage, in Allston, Mass., says he has cut his Yellow Pages ads to one-quarter page from a full-page. "It has become clear that someone who wants to find my company just clicks on the computer," he says. He says he knows that all the money he spends now on his Web site reaches viewers who want movers.

Email comments to bill.bulkeley@wsj.com . Lee Gomes is on vacation.

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The article above is copyrighted material, the use of which may not have specifically authorized by the copyright owner. The material is made available in an effort to advance understanding of political, economic, democracy, First Amendment, technology, journalism, community and justice issues, etc. We believe this constitutes a 'fair use' as provided by Section 107 of U.S. Copyright Law. In accordance with Title 17 U.S.C. Chapter 1, Section 107, the material above is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this blog for purposes beyond fair use, you must obtain permission from the copyright owner.

// posted by newshare @ 8:30 AM

By Jeff vonKaenel
(jeffv@newsreview.com )

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The author has published alternative weeklies since 1973. Presently he is CEO and majority owner of the Sacramento News & Review and weeklies serving Chico, Calif., and Reno, Nev. The following is an excerpt of a longer essay on the future of newspapers available at the website of the News & Review. Here's the
URL: http://www.newsreview.com/sacramento/Content?oid=oid%3A254407
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I believe by taking the long-term approach to business, daily newspapers should have been working much harder to move their newsgathering operations online. How will they pay for themselves? I think we all need to grab our shares of the advertising market. But I also believe that subscriptions eventually will play a big role in supporting strong, daily online newspapers.

The conventional wisdom today is that people won.t pay for information online. They.re used to getting it for free. It.s a good argument, but I don.t think it holds up. Reliable information is extremely valuable. People need it to move through life.s difficult choices; they need it to be relieved of the difficulty of everyday life through entertainment.

That.s why I think it.s a myth that people won.t be willing to pay for credible information. Right now, only the Wall Street Journal and the New York Times (in part) have been successful in getting people to pay for online content. Not long ago, the Los Angeles Times quietly withdrew its requirement that users pay to view its entertainment news online after too few signed up. But I believe people will change their habits, and mechanisms that provide easy ways for people to pay for online content will be developed. It.s just a matter of time and effort.

Jeff vonKaenel published his predictions in November of 1996.

Not that long ago, the conventional wisdom held that no one would pay for television. Cable companies proved that wrong. Everyone also believed that people wouldn.t be willing to pay for software. Microsoft showed us all that wasn.t true.

With the demise of daily newspapers, some $50 billion worth of advertising money will be freed up. My hope is that this wealth will fertilize and support new advertising and circulation strategies as news operations move online.

Newspaper companies are struggling to try to keep their businesses alive. Just the other day, seven media giants representing 176 newspapers made a deal with Yahoo to provide news to the millions who use that service. But my fear is that as long as newspaper executives continue to manage their companies for short-term profits, their efforts are bound to fail as too little, too late.

Ten years ago, I predicted that the Internet meant the death of daily newspapers. Although it appears that prediction is becoming a reality, I see cause for optimism. I believe the economics of the Internet make it possible to finance strong, local journalism online through a combination of subscriptions and advertising revenue. Because of the way many of the major newspaper companies relentlessly have pursued profit at the expense of journalism, I believe they will not be the ones left standing.

I.m hoping for new leaders to emerge. Leaders who believe in the importance of journalism. Leaders who believe in the importance of telling stories that make a difference in people.s lives. Leaders of a rebirth of local online newspapers that operate 24-seven, with lower costs, greater immediacy and stronger impact. I.d like to imagine that we can return to the time when there was more than one local daily newspaper in a town. There are so many stories that need to be told.

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The article above is copyrighted material, the use of which may not have specifically authorized by the copyright owner. The material is made available in an effort to advance understanding of political, economic, democracy, First Amendment, technology, journalism, community and justice issues, etc. We believe this constitutes a 'fair use' as provided by Section 107 of U.S. Copyright Law. In accordance with Title 17 U.S.C. Chapter 1, Section 107, the material above is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this blog for purposes beyond fair use, you must obtain permission from the copyright owner.

// posted by newshare @ 3:50 PM

A couple of papers that have gone ahead and created an Iliad-ready edition,
looks like for free:

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/pm/ixpm.xml

http://www.shm.com.cn/special/node_6290.htm

Some commentary on the subject of newspapers on Iliad:
http://www.mobileread.com/forums/showthread.php?threadid=8004

A blog entry on new news technologies including DeTijd's Iliad trial:
http://www.editorsweblog.org/analysis/2006/11/prototypes_reveal_contours_of_future_ele.php

Another with more specifics on the DeTijd trial:
http://buziaulane.blogspot.com/2006_12_08_buziaulane_archive.html

IBBT presentation on same:

http://www.ebf-eu.org/documents/presentation_epaper_EBF_05102006%20-%20nico.pdf
(See especially section 6 financial models)

// posted by newshare @ 3:49 PM

By the Numbers

65 days
Watching television, up from 61 days in 2000

41 days
Listening to the radio, up from 39 days in 2000

8.1 days
On the Internet, up from 4.3 days in 2000

7.3 days
Reading newspapers, down from 8.4 days in 2000

9.5 days
Reading books and magazines, down from 10 days in 2000

ORIGINAL URLS:
http://www.burlingtonfreepress.com/apps/pbcs.dll/article?AID=/20061215/BUSINESS/612150319/1003/NEWS05
http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20061215/NEWS04/612150354/1024/NEWS04
http://marketplace.publicradio.org/shows/2006/12/15/AM200612154.htmler

$936.75/person/year:
http://www.jsonline.com/story/index.aspx?id=542306

Consumption of media rising for Americans

By Stephen Ohlemacher
The Associated Press

December 15, 2006

WASHINGTON -- Americans spend more time watching TV, listening to the radio, surfing the Internet and reading newspapers than anything else, except breathing.

Media use has risen every year since the start of the decade, helped by faster and easier ways to get information and entertainment, according to statistics in a new government report.

Next year, Americans are projected to spend more than 9 1/2 hours a day with the media, though hours spent doing two things at once, such as watching TV and using the Internet, are counted twice in the report.

"There are more TVs than people and there's a TV, in many houses, in every room," said Patricia McDonough, senior vice president at Nielsen Media Research. "For teenagers, being on the Internet and watching TV at the same time are not mutually exclusive."

Americans spend an average of 4 1/2 hours a day watching television, far more time than they spend on any other medium. Next come the radio and the Internet. Reading newspapers is fourth, passed this year by Internet use.

McDonough said an increasing variety of cable TV channels has cut into broadcast viewers, but it has helped increase overall viewership.

"Before, if you looked at kids' TV programming, it was on Saturday morning," McDonough said. "Now there is always targeted programming available for anyone in the household."

McDonough said she expects overall viewership to continue increasing as baby boomers get older. The oldest of the post-World War II generation turned 60 this year. "People who are 50 watch TV more than people who are 20," McDonough said. "That will continue to drive this."

The data on media use are part of the Census Bureau's annual Statistical Abstract of the United States, a 999-page book of numbers quantifying just about every aspect of American life, to be released today. The Census Bureau assembles the statistics from government and private sources so researchers, academics and businesses can find them in one place.

Many of the media numbers are from the Communications Industry Forecast & Report by Veronis Suhler Stevenson, a private equity firm serving the media industry. Next year, Americans are projected to spend an average of 3,518 hours using the media. That's up from 3,333 at the start of the decade.

The number of hours projected for next year in different categories:

--1,555 hours watching television, up from 1,467 in 2000. The estimate includes 678 hours watching broadcast TV and 877 watching cable and satellite.

--974 hours listening to the radio, up from 942 in 2000.

--195 hours using the Internet, up from 104.

--175 hours reading daily newspapers, down from 201.

--122 hours reading magazines, down from 135.

--106 hours reading books, down an hour.

--86 hours playing video games, up from 64.

Many people use multiple electronic devices at once, increasing media consumption, said Leo Kivijarv, vice president of research at PQ Media, a research firm. Also, new technologies make it easier to use electronic devices just about anywhere, from wireless Internet in airports to iPods and DVD players in automobiles, he said. "We're not limited to just watching and using media in the home, as we were the past," Kivijarv said.

-----

How will you spend your time next year?

About 5 months of it will be used for consuming media, according to new
statistical projections

By BILL GLAUBER
bglauber@journalsentinel.com

Posted: Dec. 14, 2006

You are an American and you surf the Internet, listen to music, watch television (oh, boy, do you watch TV), play video games and even read books, magazines and that old standby called a newspaper.In addition to watching TV, Americans will get their media fix in several ways in the coming year, often using more than one at a time, according to new data.

It turns out that in 2007, American adults and teens will spend an estimated 3,518 hours - or nearly five months each - and $936.75 a person in media consumption. Those numbers are provided in a communications industry forecast that is included in the U.S. Census Bureau's "Statistical Abstract of the United States: 2007."

The book is released today. It provides a snapshot of America by the numbers, everything from population to politics to the economic facts and figures of a country in constant change.

But of the more than 1,400 charts and tables included in the book, the most provocative numbers might be the ones under "Media Usage and Consumer Spending: 2000 to 2009." The numbers are so stunning that the U.S. Census Bureau highlighted them in a news release to announce the publication of the 126th annual statistical abstract.

The bureau's news release notes "people will spend 65 days in front of the TV, 41 days listening to radio and a little over a week on the Internet in 2007. Adults will spend about a week reading a daily newspaper, and teens and adults will spend another week listening to recorded music." The data comes from "Communications Industry Forecast," an annual report issued by New York-based private equity firm Veronis Suhler Stevenson.

"You don't sleep, you don't work, you're just consuming media," quipped James Rutherford, the firm's executive vice president. Rutherford explained how it is possible that Americans can consume nearly 10 hours of media daily, while sleeping eight hours and working another eight hours.

Call it multitasking.

"One of the things to realize about that number is that it is not 10 consecutive hours a day; there are several of these hours spent in tandem," he said. "If you drive to work, you drive listening to a radio and drive by a billboard and you consume two media. You might be sitting at home, listening to music, watching television, flipping through a magazine, and you might even surf the Internet with music or TV on in the background."

Rutherford said the country is certainly a "TV-addicted society," but even those numbers are changing, with viewers projected to log more time with cable and satellite TV (877 hours) and less time with broadcast TV (678 hours). In the future, Rutherford said, "mobile media," which includes ring tones for cell phones and alerts for scores of sporting events, is going to "grow the fastest."

"You'll have little short videos that will be broadcast over a mobile network, and people can see the latest funny dropped pass or the big play from a sports event," he said.

Robert Thompson, director of the Center for the Study of Popular Television at Syracuse University, said he was surprised Americans don't consume even more media. "If you try to find the times in your life where you are completely media-free, it is very unusual," he said. "Public space is almost completely awash in media."

Want to unplug from media? Good luck, Thompson said. "You're going to have to make a real effort to do that," he said. "You could make the argument that we're being bombarded by media 24 hours a day. At any given time, you've got cell phone signals, satellite signals literally in the air 24 hours a day."

----------------------------------------------------------------

The article above is copyrighted material, the use of which may not have specifically authorized by the copyright owner. The material is made available in an effort to advance understanding of political, economic, democracy, First Amendment, technology, journalism, community and justice issues, etc. We believe this constitutes a 'fair use' as provided by Section 107 of U.S. Copyright Law. In accordance with Title 17 U.S.C. Chapter 1, Section 107, the material above is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this blog for purposes beyond fair use, you must obtain permission from the copyright owner.

// posted by newshare @ 6:16 PM

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003086961

Published: September 04, 2006 1:30 PM ET
Editor & Publisher Online

SPECIAL: "Winning Online" -- A Manifesto

By Tom Mohr

(Tom Mohr is the former head of Knight Ridder Digital. He now heads the
"innovations laboratory" at the Cronkite School of Journalism at Arizona State
University.)

NEW YORK -- Newspapers must win online, or face a future of painful
contraction.

To win, industry leaders must adopt a Marshall Plan embodying two key
objectives: the migration to common platforms, and the acquisition of the
ability to sell top-quality online product to our advertisers. To fulfill these
objectives, the independent companies of a proud industry must aggregate into
an industry-wide network. In this network, each company must cede some control
over its digital future into a .Switzerland. organization that manages the
network.

This will require a degree of cooperation and trust rarely seen before in the
newspaper business, and therefore will only be achieved through the active,
visionary leadership of the industry.s captains. But, if they pursue this path
and plug into the power of network economics, they will tap into $4 billion of
revenue upside for the industry by 2010.

The low rumble of shifting ground is palpable. Not only is the shift towards
online; it is, in tandem, a shift away from print. Not dramatic yet,
perhaps.but clear. And the impacts continue to ripple. As I write, the
newspapers of the former Knight Ridder are soon to be parts of nine different
companies. Tribune Co. faces a boardroom battle which challenges its very
survival as an intact firm. Wall Street analysts have cooled on the industry.s
prospects. Academics in journalism schools despair the future of the craft in a
post-newspaper world.

I believe newspapers. social purpose.the building of civil society in cities
and towns across America through the daily output of good journalism.is worth
fighting for. Securing the future of the industry.s social purpose requires
securing its financial future. And I have concluded that depends on an
industry-wide understanding of seven key points:

-- Local newspapers will not be the innovation source for top online products.

-- "Local. is not, in itself, defensible online.

-- The big money is not in newspaper websites, but in gaining access to
top-tier product via partnerships with vertical online leaders.

-- Moving newspaper websites onto common platforms will deliver improvements in
quality, cost reduction, traffic and revenue.

-- When networked, newspapers bring critical assets to the table that
strengthen their competitive position vs. online-only players.

-- The window of opportunity is closing; failure to act will compromise the
future of the business.

-- Ultimately, the key is leadership at the highest levels.

1. Breakthrough online innovation won.t come from newspapers

It is instructive that after twelve years of the consumer web, not a single
example of breakthrough online innovation has emerged out of a newspaper
company. Not in recruitment. Not in auto. Not in classifieds. Not in shopping,
directory, new ad models, or content aggregation. The Real Cities ad network,
created by Knight Ridder, comes close, but lacks the scale or technology to
earn the title .breakthrough., as would Advertising.com or Google AdSense.

There are two simple reasons: skill and scale.

As historical print media companies, newspapers don.t boast a critical mass of
the world.s best mathematicians, computer scientists and computer programmers
in their organizations. Nor are they led by CEO.s with operational experience
in online or technology. Online is a technology play first, a media play
second. The truly breakthrough online successes.Google, Yahoo!, MySpace,
Amazon.com, Monster, eBay, Wikipedia, Shopzilla, etc..have emerged from teams
led by internet-savvy visionaries and loaded with tech DNA.

And newspapers. sense of scale is bounded by circulation footprints. Even
newspaper companies with multiple newspapers tend to have a sense of scale that
follows a polka dot pattern across the United States. Yet when you talk to the
upstarts who have created successful start-ups, you realize that from the
moment they first step into the garage to begin their work, their vision is for
global scale.

Let.s look first at the consumer side. True, some newspaper websites, such as
washingtonpost.com, are outstanding. But when we scan the industry as a whole,
many sites fall well short of the bar in a Web 2.0 world. Many lack basic
features like article commenting, RSS feeds, .related links., user blogs, and
rich features at the channel level (calendar functionality in entertainment,
stock portfolios in business, etc.).

This feature gap has contributed to a consumer indifference problem. In a
recent study completed by the Outsell research organization, in critical
information areas such as .Where I get my news right now. and .Where I get my
news first thing in the day., newspaper websites fell behind not just Google,
Yahoo!, AOL and MSN, but even .Other online sites..

The difficulty is that in all but the largest markets, the technology
investments required to deliver best-in-class feature functionality are simply
too rich for individual local markets to bear, given the limited local revenue
opportunities.

As important as newspaper websites are, the direct revenue opportunities they
enable (classifieds on homegrown platforms, display ads, email marketing and
content syndication) comprise perhaps thirty percent of the total online
revenue opportunity for newspapers. The real money for newspapers is in
providing advertisers top-tier vertical online solutions.

And in this arena, newspapers have been on the sidelines. In every ad vertical
that matters to the newspaper industry, vertical .category killers. such as
Monster, CareerBuilder, Craigslist, eBay, PriceGrabber, Shopzilla, Cars.com and
AutoTrader have emerged to predominate. None has been created by a newspaper
company. In a handful of cases, a handful of newspaper companies have taken
ownership stakes or set up partnerships.

But when we consider the percentage of top-200 newspapers that have access to
top-tier online products via ownership of or partnership with online vertical
leaders in all the relevant verticals (not just recruitment and auto), the
coverage is staggeringly inadequate. This is why online revenues comprise only
5 1/2 % of total newspaper industry ad revenues today.

2. .Local. is indefensible online

Over the past 50 years, newspapers have benefited from near-monopoly status.
Their dominant leadership in driving results for local advertisers has provided
the financial capacity to deliver highly compelling daily local news to
consumers, which in turn has driven high circulation and market penetration,
supporting high advertiser ROI in a virtuous cycle of self-reinforcing
benefits.

But in itself, .local. is indefensible online. All online success stories
benefit from network economics. Network economics is characterized by two
benefits: the network effect and scale economics. With the network effect,
every member in the network gains increasing benefits as membership grows,
causing membership to grow faster. In turn, the central costs of technology are
spread across a wider and wider revenue stream. MySpace, Google, PriceGrabber
and eBay all exhibit this distinguishing characteristic. Scale economics refers
to the leverage of size: bargaining power with vendors and partners, and the
ability to gain a network-wide view of performance to identify best practices.

Individual newspapers, acting alone, can.t gain the leverage of network
economics. Even the largest newspaper company in the U.S. (Gannett) ranks
seventh in combined monthly unique visitors vs. other online news sites, and
has only limited network leverage. However, the newspaper industry as a whole
boasts 56 million monthly unique visitors, fully a third of the entire U.S.
monthly Internet audience.

If we were to build an industry-wide network, we would leap to the lead in
combined monthly unique visitors vs. other online news sites, and gain the
critical bargaining power that would open the door to sharp deals with vertical
online leaders in all the ad verticals that matter.

3. The big money is in vertical partnerships

At Knight Ridder, fully 70% of its online revenues came from branded online
vertical products (CareerBuilder, the Classified Ventures products, and
ShopLocal). The remaining revenue directly leveraged the traffic and content on
our newspaper websites. primarily display advertising and content syndication.

It.s interesting that online revenue comprised about 7% of total revenue at
Knight Ridder, 1½ points higher than the industry average of 5½%. The
difference may well reflect the disproportionate value of branded vertical
products in driving incremental revenue opportunity.

Here.s another indicator. Thirty-three percent of Knight Ridder.s recruitment
revenues were online in the first half of 2006, compared to about 20% for
another large newspaper company I spoke with. I believe the 13 point difference
has nothing to do with sales execution, but rather is reflective of the fact
that Knight Ridder could offer CareerBuilder-- a branded, top-tier online
product.to its advertisers, while the other company lacked access to a top-tier
brand.

A back-of-the envelope analysis shows $3.3 billion of the total $4 billion
incremental opportunity by 2010 is in partnerships with online leaders (#1, #2
or #3 in their verticals, and the search portal players). This is the
difference between baseline industry growth (my analysis, with help from NAA,
Merrill Lynch and Universal McCann estimates) and growth powered by top-tier
online product, if available to most newspapers in the industry.

The point is intuitive: advertisers pay for results. Results come from top-tier
products that drive consumer behavior. Access to top online products will only
come from deals with existing vertical online leaders. And if partners can work
with newspapers efficiently, through a single .Switzerland. organization (let.s
call it Switzerland Inc.), deals can get done.

There is little doubt that newspapers provide potent benefits to any potential
partner. CareerBuilder.s brand position has been strengthened immeasurably in
the past few years by its weekly branding on the front of jobs sections in
Gannett, Tribune and Knight Ridder markets across the country. But to get
favorable terms with regard to wholesale prices, channel conflict and branding
requirements, you need scale.

Take the case of Philadelphia, which recently cut a deal with Monster. I'm sure
Philly cut the best deal it could, given the circumstances. But let's be clear:
from Monster's perspective, the deal must have been a tactical one. I doubt
Philly comprises more than 5% of Monster's world. On sticking points such as
sales channel conflict with the pre-existing Monster sales team in Philly, or
the wholesale price, how sharp was Monster's pencil? But if the newspaper
industry were networked, a different approach would have been possible: "our
network offers you 1,800 recruitment salespeople in 180 markets across the
U.S." That's a strategic conversation.

That.s the power of a network.

4. Newspapers gain by moving onto common platforms

Newspaper online infrastructures dot the United States like a thousand points
of light. It is a massive waste of financial and intellectual capital. As
Knight Ridder proved, multiple newspaper websites of all sizes (from the Biloxi
Sun Herald to the Philadelphia Inquirer) can sit on common platforms and
deliver Pulitzer Prize-winning quality.

What, specifically, is meant by common platforms?

They include a common content management system, common classified marketplace
solution, common ad serving capabilities, a common ad network, shared content
and feature functionality within key channels, a common underlying technical
infrastructure and common supporting financial systems, metrics and analytics.

I do not mean one site for the newspaper industry. Nor do I mean that every
site would look the same. As is true today, the consumer would go to the unique
URL they.ve always known, and see the unique newspaper.com site they would
expect to find. Content would be prioritized and managed locally. Producer
tools would offer templates that reflect usability best practices, but allow
unique presentation and design.

However, there would be standardization where standardization adds value.
Producer tools, ad positions, measurement tools and metrics, ad serving
infrastructures and classified marketplace solutions would all be standardized.
There would be one ad network for national advertising. And business
development, shared content management and channel services in channels like
travel, business and technology would all be centralized. Underneath the hood,
the platforms would be built on a common, massively scaleable infrastructure to
allow efficient addition of markets. A Switzerland Inc. would manage both the
technology and the network, with all the inherent relationships involved.

Let.s face it. Making such a move is a monumental effort involving operating
risk, loss of full local control, significant switching costs and real
transition pain. The infrastructures currently in place are the product of
years of blood, sweat and tears. Managing this kind of industry- wide change is
a bold and daunting challenge. Is it worth it?

Collectively, the move to common platforms could drive roughly $700 million of
the $4 billion in 2010 incremental revenues, plus significant cost reductions.
This is driven by four key benefits.

-- Common platforms can be built to best-in-class standards, driving traffic,
page views, ad impressions and revenue, since the investment is once for many.

-- Costs for each newspaper fall as the network grows, because the central
technology costs can be spread across the network.

-- With common platforms, a network view of member performance is
possible.enabling identification and evangelization of best practice, lifting
all boats.

-- Perhaps most importantly, common platforms deliver bargaining power.

The bargaining power benefit is worth elaboration.

With scale, newspapers can take on some of the most vexing dilemmas they.ve
faced in the online era. For instance, Yahoo! News gains about $6.00 per
thousand page views today. But those page views are driven by content provided
largely by AP and newspapers. I roughly estimate that the combination of AP.s
revenue from the deal (expressed in revenue per thousand Yahoo! page views) and
the revenue newspapers gain from the Yahoo! News click stream is little over
1/10 what Yahoo! receives. Bad deal.

But what if 2/3 or more of the U.S. newspaper industry sits on one platform,
managed by Switzerland Inc.? What if Switzerland Inc. decides to deny Yahoo!
and perhaps Google access to newspaper industry content for three months,
followed by a negotiation for better terms?

That.s the power of a network.

5. Newspapers bring critical assets to the table

While newspapers acting alone are ill-positioned to succeed online, they bring
potent assets when plugged into a network. In aggregate, newspaper websites
reach 1/3 of the entire U.S. internet audience on a monthly basis already, in
many cases with suboptimal websites.

Newspapers deliver three benefits:

-- Strong local brands, with the capability to drive audience

-- Trusted, compelling local content

-- Large local sales organizations and relationships with advertisers

In a network, these assets become decisive advantages. Online-only players must
justify investments in local brand, content and sales assets based solely on
online revenue opportunity. Newspapers can leverage these assets across both
print and online.

That.s not to say that these benefits are fully optimized. Sales teams need to
learn how to sell online products much more effectively than they do today.
Newsrooms need to learn how to deliver breaking news and updates throughout the
day, and how to create compelling multimedia projects with frequency. But at
least an organizational foundation is in place to engineer these improvements.

6. The window of opportunity is closing

Newspaper industry leaders are frogs in a pot. The water.s starting to boil,
and it.s time to jump. Only 19 percent of 18-34 year olds read a daily
newspaper; 44 percent of them go to a web news portal. Broadband penetration
has reached 57%. The blogosphere is doubling every 5 ½ months. Search provides
instant access to the world.s information. User-generated content has turned
the authority model of institutional media on its head. Peer-to-peer networks,
tag clouds and reputation engines are fundamentally changing how people engage
with content and communications.

Safa Rashtchy, Senior Internet Analyst for Piper Jaffray, has advanced the
notion that these shifts in consumer behavior have precipitated a nascent shift
in the marketing mix. He sees search at the center of a new marketing mix.
Acknowledging a debt to his framework, I would expand the .center. somewhat to
include all intention-based advertising (search, lead-generation advertising,
and e-commerce).

Increasingly, smart advertisers are placing their first dollars in
intention-based advertising. That.s because these ad dollars target consumers
who demonstrate through their actions an expressed interest in the product or
service being advertised. While traditional media are not completely replaced
by intention-based advertising, they suffer lost market share.

These changes have begun to restructure consumer consumption habits and
advertiser behaviors. Circulation has declined 12% since 2000, and the rate of
decline is increasing. 3,500 newsroom professionals have lost their jobs, about
7% of the industry total, since 2000.

It is not beyond the pale for the $49 billion (2005) newspaper ad business ($47
billion of which was print) to begin to see accelerating declines in print ad
revenue over the next five years. My rough projection is for 2010 print revenue
to be just under $3 billion below its 2005 level. This loss must be offset by
online. The $4 billion incremental revenue from a network ensures sub-two
percent revenue growth from 2006 . 2010. Not robust, perhaps, but certainly
much better than the alternative.

This migration path is difficult. The benefits of today.s actions will be seen
in two to three years. It.s important to start now.

7. It.s all about leadership

Newspaper leaders are moving in the right direction.

A small consortium of newspaper companies is in discussions regarding a Yahoo!
partnership involving classifieds, local news, and vertical ad packages. AP
seeks to launch tools that support the standardization of metadata taxonomies
across newspapers so that articles can be efficiently filed, archived,
retrieved and shared across the network. Lee Enterprises. recent acquisition of
DotConnect Media puts it in the ad network business. Tribune and Gannett are
pursuing ad network and vertical partnership opportunities. McClatchy has
indicated that they wish to move the Real Cities ad network towards a common ad
serving platform.

As laudable as these steps are, they are just a subset of the network
opportunity. Pursued separately in loose consortiums, they are like trying to
get a gaggle of geese to march in a parade. We need to think bigger and bolder.
A strong Switzerland Inc. that brings together all of these initiatives
maximizes integration and bargaining power.

It won.t be easy. To create a Switzerland Inc., thorny strategic issues must be
addressed. These include divergent newspaper company objectives, competitive
dynamics, network ownership and governance issues, and affiliate structure. The
tactical concerns are no less daunting, including newspaper sales territory
overlaps, wholesale pricing, channel conflict with the vertical partners. own
sales organizations, and branding requirements. There are migration planning
issues, and antitrust considerations.

But it.s worth it. Not just in strengthened stock prices and reductions in
layoffs. This is a fight for the future of quality news.and for finding new
ways to enrich the shared life in an online world.

Conviction in the vision must be deep, for it will be tested. Inevitable
miscues will challenge resolve. But if industry leaders conclude that success
online is vital-- and that it will only come by plugging into network
economics-- then we can have great confidence in the future of the newspaper
business. Committed leaders make change happen. No matter how hard that change
may be.

© 2006 VNU eMedia Inc. All rights reserved.

--------------------------------------------------------------------------------
Tom Mohr (letters@editorandpublisher.com) was president of Knight Ridder
Digital until its sale to McClatchy in June. He is now director of the New
Media Innovation Lab at Arizona State University and an executive in residence
at Charles Venture Partners, where he evaluates start-ups in the media space.
His email address is: mohr4fun@gmail.com.
----------------------------------------------------------------

The article above is copyrighted material, the use of which may not have specifically authorized by the copyright owner. The material is made available in an effort to advance understanding of political, economic, democracy, First Amendment, technology, journalism, community and justice issues, etc. We believe this constitutes a 'fair use' as provided by Section 107 of U.S. Copyright Law. In accordance with Title 17 U.S.C. Chapter 1, Section 107, the material above is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this blog for purposes beyond fair use, you must obtain permission from the copyright owner.

// posted by newshare @ 4:14 PM