Daniel R. Odio from PointAbout was a panelist at the Digital Media Wire’s Digital Media Conference East. You can watch his panel here. You can also view the Table of Contents for all the panels.
Video Track: 4:15pm – Is the Newspaper Dead?
The Internet has shaken up newspapers’ traditional advertising cash cow — classifieds — and forced several well-known newspaper companies to declare bankruptcy in recent months. In March, Hearst’s 146-year-old Seattle Post-Intelligencer announced that it had published its last print edition and was moving to an online-only edition. Is there a future for print newspapers? What is the online model? Can publishers craft a new type of digital business with a robust, community news and information web site at its core? What will be the revenue drivers?
Panelists
Neil Budde, President & Chief Product Officer, DailyMe
Jon Aust, Vice President, NavigationArts
Rick Edmonds, Business Analyst, Poynter Media
Randy Bennett, SVP, Bus. Dev., Newspaper Assoc. of America
Moderator: Mike Vorhaus, President, Magid Advisors
Audio of the Panel:
(You may need to fast forward through the first several minutes of audio before the panel starts)
Here is a transcript of the event:
Subject: Digital Media Conference East
Date: July 15, 2009
Video Track
5. 4:15pm – Is the Newspaper Dead?
Panelists
Neil Budde, President & Chief Product Officer, DailyMe
Jon Aust, Vice President, NavigationArts
Rick Edmonds, Business Analyst, Poynter Media
Randy Bennett, SVP, Bus. Dev., Newspaper Assoc. of America
Ned Sherman – Introducer
Moderator: Mike Vorhaus, President, Magid Advisors
Legend
P – Panel Member
M – Moderator
I – Introducer
A – Audience participant
I: Alright, everyone, we’re going to get started. This is our final panel before to cocktails. We have a real stellar group here to discuss the news business. So, can everyone please have a seat?
So, first off, I have to make a disclaimer and a comment to Randy. Randy, we don’t really believe the newspaper is dead.
This panel is really a look at the future of news media, and, here to lead the panel is Mike Vorhaus, he’s President of Magid Advisors. Prior to that role he was managing Director, who founded the Magid Internet, and New Media Research and Consultation Practice in 1995, beginning with projects with AOL Inside; yes, that was 1995. He’s participated in hundreds of studies fro clients, and personally consults on a number of leading internet and gaming companies, as well as news media companies. He’s very versed on what’s going on with the future of news media, and it’s really a pleasure to have Mike – a fantastic moderator. Thanks Mike for coming.
M: Annette’s skinny enough to get a round like this, but I really can’t. Great turnout, Ned – very impressive. I’ve been to a lot of conferences this year, and you seem to have the only recession-proof conference business in the world (Chuckles). For those of you who didn’t see, Ned went like this. And, if you’re not getting his daily newsletter, if you’re here in Washington, you’re not getting the Potomac Tech Wire, make sure you sign up for both of them on line.
Thanks very much for the introduction. I, too, do not believe newspapers are dead, by a long (…), I’d like to say, though Dennis Fitzsimmons accused me of being anti-newspaper once. And I said, “How many papers do you subscribe to?” And I wanted to ask the audience that, my answer is three, three print papers. So, I want you to raise your hand – you used to, or currently do subscribe to a print newspaper. Now, you still subscribe to a print newspaper. Good, we can see we get some, Oh my god. (Laughter) And who reads news paper websites online everyday? Wow, ok. Well, there we go.
By the way, I want just want to say, by brief disclosure that I do work for a number of the major newspapers – New York Times, Cox, Gannett, Tribune, and probably in the near future, Journalism Online. So, by way of disclosure, I do want to be honest, and say that I do have financial interests on both the print and the .com side of this industry. I also previously owned stock in most of the major newspapers companies. So, I just like to be, because we do some investment advisory work, I like to be in full compliance with the SEC laws.
OK, that’s great. We’ve got a good positive news crowd here, and even a good newspaper crowd here. What I‘m going to do is to ask every panelist, and we’ve gone back and forth by email previously, to just introduce themselves, say a word or two about their organization, whatever pitch they may care to make. This is probably less of a ‘pitchy’ group, I suspect, than of some of the others. And, then we’re going to right to questions. We’re going to get down into the audience really quickly. We’ve got a few prepared questions from the panelists, if you guys are petering out here at 4:15, but I suspect that you’ll have a lot of questions and comments about the challenges and the opportunities, if I may amend Ned’s title for the newspaper today.
Randy, would you like to start?
P: Sure, I’m Randy Bennett, the Senior Vice President of Business Development, at the Newspaper Association of America. We are a trade association that represents most of the daily newspapers in the U.S. I get paid to, “Have to be optimistic about the newspaper business.” We’re, fundamentally, I believe, if you look at the numbers, the medium itself, it’s still very solid – 100M adult readers everyday, 150M on Sundays. We’re ‘Super Bowl’ kinds of numbers. The challenge of the industry today clearly is a financial challenge. That’s a business model kind of challenge, and I think the newspapers will be up to that challenge to figure out how to transition to emerging companies.
M: Randy, were ever you at any papers previously?
P: : I did my career exactly backwards. I started with Knight-Ridder Newspapers back in 1979 with a very early online service called Viewtron. From there I went to what became America Online, and then, in 1990, in the midst of the recession I joined the newspaper industry – exactly backwards, so, any sense of vision I may have had might be suspect, but (Audience laughter.) That’s my story, career. Rick?
P: : (Fairly poor quality) I’m Rick Edmonds, I’m the Media Business Analyst at the Poynter Institute, in St. Petersburg, Florida, which is a non-profit school for journalists. And, hardly, coincidentally, it’s also the owner of the St. Petersburg Times. Then we have kind of a model of how a paper might be run by a non-profit that’s been widely looked at and admired. My job is not to advocate for the industry, it’s a chronicle of what’s going on, and there’s certainly plenty of ground (…). If Randy hadn’t said so first, in a certain (…) I would say, sure, it’s a lot. The industry did $37-38B of advertising last year, only never that did this year. I think there’s a good chance for some bounce back once the recession ends. And, there’s a paradox that the industry has grappled with, and continues to grapple with which is that, it’s (…) this fall, and, there is this movement to online in various ways, and a lot of us here split our time between print edition and the online edition.
Print remains a really effective advertising medium for it’ll reach quite as many people, but for a lot of people, and has premium rates, and you see those wonderful circulars dropping in your lap; and, online advertising just has not developed concurrently with audience to be this strong a financial product, so that’s a work in progress to improve.
M: By the way, if you’re not familiar with the Poynter Institute, I urge you, if you’re interested in this topic, to regularly check out their website. They have a very well known blog at their website, but, also a lot of other great information, they’re really public servants in this industry. Thanks very much. John?
P: : Yeah, I’m Jon Aust, the Vice President of Sales and Marketing at NavigationArts, and, actually what we do is centered around answering that last point that you made with the visitors and viewers of the online properties versus print properties, why is the advertising (…) not following?
So, at NavigationArts, what we are is a web consultancy, we bill ourselves as architects of the user experience. What that really means is, how do you make your web property meaningful, intuitive, and relevant to your user audiences? So, the key there is how do you understand the audience, and key making the online print property well, is understanding those audiences, providing them with relevant content. And then, also, there are some things we talk about it, looking at advertising. We’ve helped the Charlotte Observer, Charlotte.com, the Sacramento Bee, and most recently, the Richmond.com, with theirs products.
M: Excellent. Thank you very much. Neil?
P: I’m Neil Budde, I’m the President and Chief Product Officer for the DailyMe, which is a media and technology company that is focused on personalization of news, and we do that on a tracking behavior of the users, what kinds of stories they read, understanding at great depth, we rank? only what kinds of those stories are so we can create a picture of someone’s news interests are, and use that to tailor their news experience to bring in more kinds of news that they’ve shown an interest in in the past. We do that both on dailyme.com, our own site, and we are taking that technology out to other new sites and licensing it so that they can add similar kinds of capabilities to their sites to make a much richer experience. Our belief is that new sites can grow and prosper, but that they need to engage their users and get them to come back at a regularly frequent basis and spend more time there, and we think the personalization tailoring the site more to their interests is a key component of that.
M: Excellent, Thank you very much. Ok now, we’re ready to come into the audience for questions right this minute. I’m going to go ahead and lay one up here while you’re getting your questions ready. Who’s go a question? Alright, beautiful, love you guys.
Ok, a quick first question from us up here. Looking at the future of newspapers, then talk about the Poynter situation, talk about other non-profits situations, do you see the newspaper companies ending up in ‘always-for-profit’ situations, do you think that some will move into a non-profit situation, do you think there’s a print digital difference in that regard? Would we see print possibly in ‘not-profit’, and, amazingly enough, perhaps digital in profit, at some point? Where is this business model that’s been talked about coming and going, maybe we’ll start with Rick, since Poynter is a non-profit that owns a newspaper. That’s right, you’re artificially a non-profit, right?
RE: We’re a non-profit.
M: A 501(c)3?
P: The St. Petersburg Times is a for profit company that pays taxes, etc., etc. And, actually, one of the issues of the day, it’s whether to simplify tax laws, Congress can do it, the IRS can do it, to make it easier for people who wanted to run the newspaper as a non-profit to do it. Our situation was set up 30 years ago by Nelson Poynter who wanted the paper independently owned, and he had a lot of work with tax attorneys to determine that the education institution was? non-profit development couldn’t necessarily be easily operated and directed that way.
But more to your point, I think that there’s going to be room for both formats; I don’t think we’re going to see an entire shift of the industry non-profit, though part of what is happening right now, is that the philanthropic sector, both foundations and individuals are moving to plug some holes, as newspapers do a little bit less. I think one more thing to say in that regard, is that newspapers are a little more profitable than you think, most of them. It’s newspaper companies that are making less profits, because of lower revenues, can’t handle their debt loads that are typically in a lot of trouble. So, there’s some potential strength there, despite the challenges.
M: Randy, do you want to comment on that, for profit – non-profit?
P: I would agree with that, operating a traditional newspaper company is a very expensive proposition, and I think it’s kind of money need of a foundation is probably prohibitive to support a traditional newspaper, even a scaled backed newspaper operation. Major market newspapers are spending upwards of $20M on journalism alone. So, I think that’s probably unlikely, I don’t hear many newspapers move in that direction. But, as Rick said, I think there are journalistic enterprises that will emerge, that are a part of a non-profit model, that will supplement what the newspapers are doing and find a niche. And, I think we’ll see a lot more of those thrive with going forward.
M: Are there any online currently?
There are a lot not making money – that I understand.
P: Oh, sure, there are locally-based publications, the ‘minnhost.com’ in Minneapolis, ‘Of Wist’ in San Diego. There are lots of local? ones that are running ads as non-profits, and they basically are either only online, or there was some cooperative (…)..
M: Do you two gentlemen have anything to the profit – non-profit discussion that has been held out as possible savior to some papers?
P: Just a point that’s directly to that, but, I think that the profit motive is a strong thing that (…) sustains many businesses. I had the privilege of one of my early jobs was working for the Courier Journal in Louisville, Kentucky, which was owned, at that time, by the Bingham family. It was like working as close to working for a not-for-profit, as possible. They used to run that thing on 3, 4, 5% profit margins. That’s because they cared about their quality of product and the journalism, they put a lot of money back into it. The problem was that the presses were dying, and they needed new presses, and lo and behold, no one would lend them any money to put into that major capital expenditure, and invest in the business, because they were running it on such small profits.
So, I think news still cries out for a lot of investment, and the problem right now for the industry is that because of the debt loads, and some of the other things, when this huge transition period, where it does need to be investing and what it does online, it just doesn’t have as much capacity or wherewithal to be investing it at a time when it needs to. So, I don’t think not-for-profits necessarily are the answer, because I think you still need a lot of capital, and lot of (….) to invest in this business.
M: Please.
P: I’d just like to add to that I think that the proper model can work, but there’s significant risk that we can see, right? So, everybody just raise their hand who subscribes. (…) And for those of you who have kids, of an age, how many of them have actually ever read a paper.
P:? Ever?
M: Not, well (laughs.). On any regular basis.
A: Not for a school project, that doesn’t count. How many of them have actually have read it. Ok, so, what that means tells us that there is, it’s not chasm, it is an abyss, right? So, the new consumers into this industry do not exist past a certain point, they are only in the online world. So, that’s scary. The good news is it’s many ‘x times’ the viewership of visitors that go to the online property. I think the Post had, from statistics we had in March, had nine times the online viewers as they did in print?.
So there is audience there, if you can figure out to leverage it, and the current advertising model that exists online is not cutting it. It doesn’t change, or if these businesses don’t change their model, then you’ve kind of a perfect storm of this consumer end, if you will, an advertising model doesn’t work. Because even though you have some exponential number of additional viewers, the advertising revenue is far less than it is print – that can’t work, that can’t survive.
M: We’re going to come back to the digital. Go right ahead, sir.
A: I’ll show you how to solve that but it’s going to cost a little bit of money. (Laughter)
M: We’re going to get your two top solutions in a minute, actually, and then we’ll consider paying you. Yes, sir.
A: Here’s my question. As a retired IT person that turned into a kind of gonzo journalist where I link to a lot of your stories, and then give my own social and political interpretation, and develop a certain body of ideas into how, over several decades, we got to where we are today. That’s kind of what I do.
Am I helping you, or am I hurting you by competing with you, and have you no basically free entry and no need for capital? I would think that I could help you by enriching the material and helping you increase your market, and could actually develop a new way to become employed in journalism. That’s how I feel, and that’s what I’m working on. But, I think we have to rethink everything, and go all the way back, and rethink what readers are really the ones that want to get something out of it.
How do you feel about the amateur blog, in the risk that they pose, and the benefit that they create, how do you feel about that?
M: Go ahead.
A: I think there’s getting to be a little bit of a shift within the industry. I mean I would say you’re the prototypical blogger, but I don’t know your blog and read it, but the final blogging is to point to, sort of things out here, and get your own take to it, and millions of people enjoy doing it – it’s a (…) of our time.
There was a period not very long ago, when newspaper sites did not provide even hyperlinks in their stories, actually, they’re not (…) in that regard, even yet, and the theory was that they didn’t want people to wander ‘off the reservation’, and might never come back. And that applied to blogs, too. They wouldn’t really make any mention or try to provide any guidance.
I think many newspapers now feel that, at the very least, provided links to blogs of interest in their community, or sometimes, as they say, a somewhat trendy phrase, ‘curating the blogs’, and trying to digest what’s in there, and present that as a newspaper, because that’s some of the rest of what is (…) through is a part of the job you’re doing.
P: Yeah, and I think you know that newspapers, by and large, are embracing local
bloggers to the extent that they’re covering things that newspapers are not covering. They’re getting a perspective on community. I think where the double edge sword is are those blogs, not organizations, who are taking newspaper content wholesale, putting it on their sites, and commenting on it, or linking on someplace else. There is a degree of traffic that moves the newspaper sites out of that, but, there is also the sense that the investments we’re making journalism are being misappropriated by a lot of companies, a lot of bloggers, and, we’re at a point where we need to clean up the farm of journalism. You said that content is being misappropriated, that becomes a problem for the newspaper industry. So, there is a lot of discussions about intellectual property, how you protect it, how you monetize it, and, I think we’re beginning to see activity there; I’m trying to sort of figure that out. But, in terms of just local bloggers who are covering parts of the community, I think Rick is right – newspapers are becoming (…) and creators of open content-like, and a one-stop-shop, and a complete community picture.
I: Explain to me, Randy, why, if I put over a minute worth of Beyonce on the background of the YouTube, they take it down because it’s more that fair use, but I can reprint a 7000 word article from the Washington Post on Facebook? What’s the difference?
P: Well, there isn’t. The question is enforcement, and how do you really go after those people. And, fair use is a question, you know Google News provides headlines and summaries of, is that a legitimate use of newspaper content? Probably, in today’s context that probably is, yet Google is making a lot of money on that, newspapers are seeing a great degree of traffic, but none of the revenue. So, it is a difficult area to enforce, and there is a lot of lack of clarity on the laws, and what really is legitimate now.
M: Blogger comments, are you guys working with bloggers?
P: Yeah, just let me interject here, from an online perspective, as part of a social media strategy, it’s fabulous, for the property. Because, what it does is engage, we’re seeing a significant trend towards hyper localization. So, in your instance, I think you’re focused in a particular (cut off).
A: Actually, I do everything.
P: Right, so you would be in kind of a topic-specific localized environment versus a geographical (…). Point is that it’s conceptually relevant to you and people like you, so that audience, right? And to the extent that you get people engaged, whether it is in blogging or commenting on blogs, that brings people to your site more often, it brings them for longer, and when they’re, then you can expose them to a new type of advertising that can be more effective.
P: I would encourage more new sites to consider rather than (…). People are going to blog on their own independent platforms, but why not give them more of those tools within the environment, in the context of your own news site, so, when you’re citing a story, you’re right there in the environment with it, as opposed to being completely distanced from it. I think both are fine, but there are also opportunities to create within your own site.
M: Short question, short answer. Are you monetizing your blog?
A: The only thing I use right now is Ad Sense. I think we’ve got other things (…).
M: Ho much money a month do you make on Ad Sense?
A: Probably about $30.
M: Thirty bucks a month? And, about how many page views a month do you have? Or uniques, whatever you like.
A: About 6000.
M: Alright.
A: It’s not a lot.
M: No, it’s Jon’s argument.
One of the United States’ premier media commentators in OBS, and a resident here of Washington, Gary.
Gary Knowles: Thanks, Gary Knowles, of Arlen Communications. A question about advertising, so Jon and Neil may be first, but look, hyper local content is always talked about as being the epitome of ways to go after this, yet, local advertisers won’t get this online advertising, yet, they really? get the print advertising in some cases, and they don’t have a lot of freedom. A local franchise of a national restaurant chain put money into local media. So, what’s the advertising outlook look like, and is hyper global, which means (…) are community oriented? They work!
P: So, let’s back up on advertising a little bit. So, first we’ve got to change the way ads look on these properties, and I don’t want to make this a real long answer, but, to simplify it, what most folks have done on their web properties is simply take the print advertising model, and apply it to the web, which is a very visual model, ok?
That does not work on the web, and there are studies that have been done that show that there’s this concept called, ‘banner blindness. So, if you look at somebody who’s reading an article, 80% of people that go to that website, they want to read the text, they’re looking for the news. And, so, they are blind to these banners that are running around. So, what we’ve found is that you have to put value in the ads, not a bunch of graphics. You’ve got to have some text in the ad, you’ve got to have links in the ad, potentially; video seems to be working well, ok.
So, first of all, change the way the ad looks, right? Then, once you have that kind of infrastructure set, now bring in more people to your site, and have them be there longer, and then present them with contextually relevant information, ok? So, if they’re reading an article on topic X, present ads that have some sort of contextual relevance to that. But you have to change the ads first, the way they look right now. And you can’t use kind of like the cheap tricks of bouncing balls and stuff moving, people don’t want to see that. I’ll guarantee you the next time you look at a website for news, just think of it yourself, “Have I looked at any of the ads on this page?”
M: Who’s doing it well? Quick answer, who’s doing it well?
P: Well, folks like the Charlotte Observer.
M: OK, the Charlotte Observer. Go ahead, Rick.
P: Here’s an idea for getting at that, l have one more thing to say, some papers – Charleston, South Carolina, Spokane, several, odd mix of papers, are working on developing so-called ‘local search sites’, which kind of builds off Jon’s insight in a different way, which is people are task-specific on the web. They may be looking for something to buy; they may be looking to read the news. They let the two things (…), which really high concept part of what has gone wrong with newspapers, two things don’t blend so well. So, you can enter a local search site, game?, for the local merchant, maybe surfing with a very simple, nice second video ad – that has some promise. The other thing I want to say about hyper local is, it was ‘hot, hot, hot’ (…) about three or four years ago. For big papers, it’s just too expensive to do. It’s when they’ve needed to cut their staff by large numbers of professionals, it’s on conditions, and all of that, go by the boards. Plus, you’re right, and it’s very hard to get the local merchants in.
And, there’s kind of another odd paradox, which is that while national and international news are readily available on the web for free in all kinds of places, newspaper readers still want to see at least some of that in their local paper. Otherwise, it seems a little bit light on serious.
M: Is hyper local any cheaper, or more feasible online than offline in your opinion, Rick? And, that obviously leads into the question of UGC news, and then (Rick speaks over the Moderator.)
P: Well, I think there are some ways, and you may have some more ideas on this, in some ways, building on a fairly substantial body of semi-professional, non-professional material that seems a little better fit for me online, especially, (…) about supplementing that with the right professional direction, it could be cheaper. But, sending professional reporters to cover local communities, even if they’re the less experienced, less expensive reporters, it gets pretty expensive.
M: Did you want to comment on that, Neil, hyper local?
P: I think that you guys, you usually say in users involved into a greater degree, I think creating any single piece of news content has a certain cost, and the thing in the online world is you can actually do a profit-loss statement on every single bit of content, because you know how many people looked at it, and what ad revenue you got associated with that. And, if you create hyper local, if you have a reporter creating hyper local content that 10 people read, or if you have the same reporter creating something about the city council, in general, that 100 read, you’re clearly going to get 10 times as much revenue from the city council.
So, it’s a lot more challenging that they’re (…) their content is to assign somebody to it. It certainly is feasible, my first job when I was 16 years old was covering three high school football games at night. Now, you might want to know how I did that, well, I went in on Saturday morning and called the coach up and said, “What happened?” (Laughter)
That was sort of the original user-generated content, it was the coach, I was interviewing him and taking it down. I didn’t go to three games, if I was lucky, I went to one, but usually had a camera at that one, and was taking pictures. So, I didn’t pay much attention to it.
M: In some markets, the coach is actually writing the articles.
P: Well, yeah, and so I think community, small newspapers have known for years how to get people to participate and to contribute news, content, whatever you want to think of it, for free or for very little money, and I think that may be more of the model.
M: hold on one second, let’s let Randy respond to that, thank you, sorry.
P: On the other side of that, on the advertising side Google has made a nice little business going after small- and medium-sized businesses, but Google still reaches a very small percentage of all the advertising in the market place. And, I think there is opportunity for newspapers, particularly with the emergence of self-service technology, telesales, to go after those small- and medium-sized businesses with a package that might include SEM or Google, it might include (…) sales to print, it might be, in some cases, selling its Yahoo inventory. I think newspapers have a competitive binge of having those feelings (…) built in with the (…) with different kinds of marketing packages for those small- and medium-sized businesses, and there’s an opportunity there.
M: For those of you who are really interested in the business models for newspapers holding companies, Randy is making an extremely important point. There is an opportunity for local newspapers and their expertise to be agencies, to be representatives, and to be the glam of newspaper, it’s an extremely sophisticated point. I wish I heard it from more CEOs of newspaper companies, rather than guys like us. Sir?
A: Hi, I’m Paul Dempsey with the Institution of Engineering and Technology – partly question, comma, observation. Is it possible, and I’m thinking in terms of both the local media that we’re talking about, and I would also mention media, that one could even start a new business model beyond the not-for-profit into a sponsorship model based around a public service provisioned by the newspaper, so what you start to see in these newspapers is something similar to what we have in PBS, or NPR.
I also may have it in the context of something that has just been announced in the UK, where, if you’re familiar with that, has a license fee for its public service broadcaster that’s been post on every household. They don’t? happen to give part of that license fee to commercial broadcasters specifically to underwrite the cost of providing local news, because they do not believe that it is economic for them to do it within the commercial model. So, we’re starting to see, over there, the extension of this public service idea. Anyway, I’d be interested on your thoughts on that particular idea.
M: Go ahead, Rick. (Laughter)
P: (…) the guy jumps in every time. Yes, several of the more interesting and ambitious news sites, and I mentioned minnpost.com, very consciously have a subscription model of levels of membership, the whole nine yards; it’s sometimes called, ‘tin-cupping’, to ask the people who use and appreciate the product to contribute, and that would be well. As it happens, I had a doubleheader panel gig, because I was down at the House where a couple of members are trying to get agents there, and should there be some government action, and I think it’s not in the American brain, let’s put it that way.
A lot of people, including Randy’s boss, think it’s terrible idea to sort of mix it up with government, but I can tell you that a lot of democracies, good democracies – Sweden, Norway, France, England, that have some form of either subsidy to newsgathering or collect the kinds of revenues that support the BBC and other institutions like that. And, as things have developed, I think that’s far from a ridiculous idea; there are a series of…
M: Sponsorships, memberships, any comments any of you want to make, we’ll get to them. I want a couple of digital questions for our two colleagues at the end.
P: Yeah, Rick, I think that is interesting, cause there’s go to be a solution in there somewhere, and to your point, it is, when you hear it as a citizen, you say, “Yeah, yeah, we Americans aren’t going to do that.” But, we do it now with telecommunications; everybody pays a portion of their telecom bill every month to support rural telecom companies, and things like that; so, the concept does exist and it would preserve kind of that brand of an ‘honest broker’, so to speak, cause that is the one thing that seems to be eroding across the board in terms of news. So, it’s interesting.
M: Sir?
A: Yeah, I just have a question for Randy.
M: Then we need a digital question next.
A: Well, I guess this may be a digital question depending on how you answer it. (Laughter) You have recently partnered with the Martin Agency out of Richmond; I’m just wondering what that relationship entails and what the objectives and goals of that relationship are for your organization.
P: Yeah, and that was actually a relationship that we developed several years ago to create, what we’re calling a “newspaper value proposition campaign.’ And, very smart people at the Martin Agency, they helped us develop a value proposition presentation, essentially to (…) key points, key message points, and develop a very cogent presentation that gives the salespeople across the country, so we’re all talking sort of the same message points. They also created some ads for us a couple of years ago, the key theme being that newspapers are for advertising, are a destination, not a distraction, that people actually go to newspapers because of the interest in the advertising content, unlike other media? words, if they’re trying to avoid it. And, we had a long relationship, but mostly that was kind of, as an agency to help us think through what is the true value proposition of the newspaper, particularly print in this environment, and how do we tell that in an effective way.
M: What do you think of about Auto Trader owned by the Cox Newspaper Company running ads that are specifically calling out the failure of advertising in newspapers; I’m sure you’re aware that they’ve done that?
P: We love it! (Laughter) Yeah, Cox is a very smart company, they’re very diversified, they’re hedging their bets. I think the challenge of newspapers is not to let these other companies position us for it, we had to be much more aggressive in industry. We had not had to be marketers in the past; we had monopolies on the market, but, we had to be much more sophisticated, we had to tell our own story, particularly the advertising community in a much more sophisticated way, and we have found ourselves in the past to being positioned by our competitors. And, we had to shift that around and be more eloquent and sophisticated about how we tell our own story.
M: Is there anybody here, who would 20% more for their newspaper subscription, I would? I think we’re not charging enough to some people in some markets.
P: Well, we’re putting that to the test because many papers are raising their prices fairly aggressively now, and I think they’re finding, of course, some don’t go for it, but’ it’s relatively well accepted, especially as news of the difficulty spreads, that no advertisers aren’t carrying (cut out.)
M: It’s been net positive in most markets, dollar net positive.
P: And, people realize that it costs a lot to print it and distribute it.
P: It also reflects a shift in newspapers’ thinking that not all subscribers or customers are created equal; that you can charge more to a very loyal audience who are willing to pay for that money, and you’re going to lose some subscribers, but you have a very solid base of customers, and you will serve those other customers with other kinds of products in the marketplace.
M: Is somebody focused on DailyMe and NavigationArts? Go ahead, Ned, please, Mr. Sherman.
I: So, last night at dinner, one of the panel? speakers mentioned Craigslist. So you know, Craigslist has built a $100M classified business and, basically killed a $2B classified business. First of all, can you verify those numbers, and, 2), can newspapers, news media, compete with Craig(slist), why can’t they compete with Craigslist, and if so, how can they?
M: We’ll be here for an hour. (Laughter)
P: I’ll give you a quick part of that. So, in advertising online the one area that is growing very, very nicely is classifieds, right – so, Craigslist, or any other means. And, the pure and simple reason is how much easier is it to search online, than it is to read through a newspaper? It’s infinitely easier, so, that is going to continue to be a growing phenomenon, if you will; just because of the simple of it, as search improves, it’ll grow.
M: So, Twitter is a challenge to Craigslist. Randy?
P: So, I sort of disagree to that. Craigslist is not a classified (…). Classified newspapers haven’t migrated on line. Craigslist makes 99% of the money on recruitment advertising which is migrating away from newspapers since the 2000(?).
(…) is free, general merchandise, private party ads that newspapers, by and large, either haven’t had in newspapers or is a very small percentage of your total classified pie. ,
And, I think there is a way that newspapers can go after free, becomes an audience play, that should bring those audiences back into a quality environment with a sophisticated interface, and then you sell around it. You can up sell it into print?, and you can sell advertising things with that audience back, so I think there is a model to go after free classified sites.
M: The guy with a 100 apartment units is not in Craigslist, it’s the guy with four apartment units. Go ahead, in the red.
A: I’m Angela McMillan, we area an association of political consultants, and (…) I’ve
been asking a lot of questions today, sorry. A question about Kindle for newspapers. I think that there’s a really big tactile feel to newspapers, that’s the best part of my day. I open the door, there’s the paper, the coffee’s made, I sit down – it’s an experience of my day. Can Kindle provide that for the newspapers, because part of what’s dragging me down is production costs?
P: I put Kindle with a variety of things there, and there’s kind of a little sleeper called the ‘e-Edition’ that’s catching on, which is a replica of the actual paper, ads, layout, and all, that you can get to your computer – if it costs something, but a lot less. Kindle’s pretty nifty for downloading the New York Times and taking it on a plane when you’re going somewhere. It’s a little easier to handle than the paper. I do agree with you that the tactile quality of the paper for longtime readers is one of the things they like, but surfing different versions of the product to a variety of different devices is anticipating your solutions to the question, that’s definitely one of them.
I: I agree that there’s something nice about reading news articles, and seeing them a organized is something that looks more like a newspaper, whether it’s the e-Editions that literally copy the print edition, or something else that’s more stylistically interesting where you can pick up the context because the front page stories are on the front page and not buried inside, different size headlines, different treatments, etc. So, I think somewhere is some of the E-ink type thing, whether it’s Kindle or some of the other devices, Plastic Logic. There are going to be better approaches, particularly to reading, Reading a story on a webpage is not particularly moderately interesting. One of these we actually offer is automatic printing of your personalized news digest, because we think it’s a lot easier to read.
M: Neil, you and I are showing our age here. The 25-year old would disagree with you.
I: I know, I know. They probably love reading it on a computer screen, or they love reading on their iPhone.
M: It’s habituation, remember black and white TV?
I: Yeah. I think that the thing that’s still not addressed in any pose, is how you replicate the ad model that you had in print. In a print newspaper you crammed in hundreds of ads, not counting the classifieds or the inserts that fell in your lap. You’re not going to get that volume of advertising into a device like that.
A: (Barely audible)
M: Ned, can you repeat that?
I: She said if we don’t have production costs. You’re right. So, if you don’t have to print the newspaper and deliver it to people’s homes, you can get away with less advertising revenue. But if you go from a newspaper that lands on your door, that can take hundreds of ads, and many pages of classifieds, and on some days – inserts, to a device for a webpage where you’re reading a small amount of news and seeing 10 ads, the drop-off in ad revenues is significant. So the question is what experience will get people to the point where they’re seeing enough ads, and generating enough revenue to cover it even with the loss, the reduction in production costs, etc.?
M: Now, we’re going to take one question form the gentleman in the dark blue, and then each one of you – the one thing you would do to help newspapers and print flourish; the one thing you would do – short answers. Let’s go to the gentleman with the microphone.
A: First the question. Lee Abrams is the gentleman? who (….) put together a lot of the top level music formats, rock and roll, etc., then was Program Director at (…).
And, then Sam Zell bought it as Chief Innovation Officer of Tribune. And, probably you’ve read many of his memos that I guess are internal, but really tried to push the envelope and create (…) excitement, especially on the print side. Do you have any comments about what he’s tried to do, and do you think that some of that makes sense?
M: Do any of you know Lee?
P: I don’t know Lee. I’ve read his memos. (Laughter) And, which are somewhat notorious in the business, they’re real kind of jazzed up radio stuff. I get the idea of trying to think about doing things differently, and trying to introduce more excitement into reading the paper. Some of the redesigns strike me as odd, rather that inviting, and, I think it’s all very hard to do in the context of a company that’s making cut after cut after cut to its news staff because of the dead? situation.
P: Yeah, I think Lee is close, and Lee will tell you that he doesn’t always get the right answer for you, he’s really trying to shake up the thinking, the traditional thinking about what newspaper is, and how it how it should look. And, I think he’s done a pretty good job of having shift the culture from Tribune, which used to be a very staid culture, and very ‘buttoned down’ culture, I think that is part of the shift.
Whether or not they’ve got the product mix right, and the designs right, I think time will tell. But, I think he’s mostly there shaking things up.
M: Well, he’s doing that. Neil, let’s start with you – very short answers. The one thing you would do to help newspapers in the traditional environment, and the print environment flourish, and not die.
P: I think it partly goes to the question that was posed, which is try to rethink what is a print newspaper, and what should it be. I’ll touch briefly on that simply because I think one of the concerns since I walked in, I’m in Ft. Lauderdale, and I see one of the Tribune newspapers. It seems like it’s aiming at a young audience as opposed to a traditional readership, and I don’t know that you can attract a young audience to print, no matter what you do. One thing you have to is that you shouldn’t be doing the same thing in print newspaper, as you’re doing online. They shouldn’t just be mirror images of each other. Whether that’s content the way you write, the material you put in there, you should create a print product that’s going to appeal to people, it’s going to tell the stories in different ways perhaps than you do on line, which is more about quick hits and getting fast updated information. It’s about databases and search, and other things; it’s less about a reading experience.
M: Excellent. Jon, one thing.
P: One thing. I would invest in the All My property. (Laughter)
M: Well said! Welcome to Washington, you answer the question you want to answer. (Laughter) Rick, what would you like to say?
P: Let me quote my cousin who was a top editor of a top newspaper until she retired about a year ago, and moved on to other things. She said, “Newspapers need to decide what they do best, and where they really add value, and do lots more of that. And take the stuff that everybody else is doing at all kinds of places and get rid of that.” And I think papers that move to a real high-value content along with the higher charges, along with somewhat more modest ways of operating, are going to be the successful papers you’ll see three-to-five years from now.
M: Randy, what’s the big piece of advice you’re giving out?
P: Invest more in the trade association paper. (Laughter) No, I think the advice we give out is actually what we see happening in industry, is that newspapers are moving from product companies to all these companies. And to identify the audience that they want to go after, and the ones that are of interest to the advertising community, develop the products that are right for that audience, and the right platform, and drill deep, and build a model around them.
M: Excellent. Thank you very much, gentlemen. Thank you. Applause.
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