Category Archives: businessmodels

09.28.16
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US newspapers lost advertising revenue found

And why the answer to the problem is not about scale. 

Thomas Baekdal compares the decline of advertising revenue for US newspapers with the rising ad revenue of Google and Facebook.

Thomas Baekdal compares the decline of advertising revenue for US newspapers with the rising ad revenue of Google and Facebook. Full post at http://bit.ly/2cLUkYb

Everyone in media in the US saw the graph a couple of years ago showing the cliff that the newspaper industry has fallen off with respect to advertising revenue since the beginning of the first decade of the 21st Century thanks to a simple bit of graphing by Mark J. Perry.

Now, media watchers have added the numbers and shown where that money went. Ben Thompson of the Stratechery blog added in Facebook’s revenue rise to show one reason why newspapers in the US are facing even greater headwinds, even as the US economy starts to show a little more life. Thomas Baekdal took it one step further, adding in Google’s revenue. It almost mirrors the decline of newspaper advertising, although Google’s rise seems a bit steeper.

I want to make an important point, though: Google didn’t actually kill the newspaper advertising market. Google replaced it with an entirely different market. It’s the same money, but Google isn’t in the same market as the newspapers. It instead created its own market and brands decided that was a better place to be.

I would also say that Google, via its Android mobile OS, also shifted its advertising model deftly to mobile. When you combine this graph with Mary Meeker’s graph about the attention minutes that people spend, you see why Google’s growth continues.

Mary Meeker's 2016 comparison between the percentage of time that people in the US spend with their mobile devices and the difference in mobile ad spending. Full presentation available here http://bit.ly/2dE9vUO

Mary Meeker’s 2016 comparison between the percentage of time that people in the US spend with their mobile devices and the difference in mobile ad spending. Full presentation available here http://bit.ly/2dE9vUO

In the US alone, Meeker estimates that there is a $22 b opportunity in the difference between the amount of attention that people are spending with their mobile devices and mobile advertising spend.

But it is not all doom-and-gloom. Baekdal also points out:

This is an incredibly important distinction to understand. Google isn’t winning because it’s big or that it has so much more scale. It’s winning because it created a way for people to have high-intent moments, which brands can reach with their ads.

We have shifted from having a single advertising market (all based on low-intent exposure), to having two different advertising markets… and the media only fits into one of them.

I would counter that the old print mass media fit into the scale model. However, there are many other media businesses that were never about scale, and if you look at some of the models that are showing success, they are about finding a committed niche, whether geographical or topical and serving it well. That might be B2B media, such as Rafat Ali’s travel business focused Skift, which just announced a new vertical to tackle, Chefs & Tech. In Tulsa Oklahoma, The Frontier has 500 subscribers, as of April, willing to pay $30 a month for local investigative journalism. De Correspondent in the Netherlands broke 40,000 subscribers last December.

Of course, this is all about reader revenue, not necessarily how to replace the fat revenue that advertising used to deliver to local newspapers. I don’t think that ad revenue will ever come back so we need to find a new model for local news and information, and I don’t think the answer is scale. Media cannot scale cost effectively to compete with Google and Facebook.

As for new models, maybe we already have one in the US, TV, but that isn’t going to go as deeply local as newspapers once did. But I think we’ll see more experimentation in local news media over the coming years supported by truly local entrepreneurs. But sometimes it’s good to know what isn’t working so you can move on to try other things.

08.19.13
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New Bloomberg Media CEO, Justin Smith, rouses the troops

Justin Smith has a great track record of repositioning great media brands for the digital era. His most recent media makeover, The Atlantic is only his latest success story. Jeff John Roberts at paidContent had a great interview and profile of Smith looking at some the secrets behind his success. Smith is a digital evangelist and more. Two-thirds of Atlantic Media’s advertising revenue is digital, and while other media companies have suffered over the last three years, Smith’s Atlantic has been in the black since 2010. 

if there is one thing I’ve learned over the last few years, building a solid media company isn’t just about growing digital as quickly as possible but building successful products regardless of the platform. Roberts puts it this way:

And this is what Smith understands so well about building a media company today: the challenge is not print vs digital or about paywalls, but about using brand power to grab revenue wherever you can. 

As Smith moves on to his next challenge, Bloomberg Media, Digiday has excerpts from an email to his new troops. Smith has always invested in talent, and that was key to his strategy at The Atlantic. As a matter of fact, if there was one thing that ties together a lot of disparate strategies, whether it is Smith’s Atlantic or the revitalised Orange Country Register, it is about about making smart investments to deliver a great product. 

I’ll highlight just a couple of other comments that Smith makes. He has called on the staff at Bloomberg to embrace change and entrepreneurship. In terms of change:

The media industry is bifurcated into two distinct worlds: the struggling traditional segment that longs for a simpler, more profitable past that will never return; and the vibrant, entrepreneurial segment that is reinventing the industry before our eyes. The simple act of choosing to live on the new, wide-open frontier is a powerful step toward success.

And his definition of entrepreneurship is about adaptation and speed:

One definition of entrepreneurship is the ability to evolve your product, business model, technology, or talent base to capture a changing market opportunity. Moving quickly is paramount: the faster you move, the more you learn, and the sooner you can optimize for success. 

Bloomberg was already a strong brand and a source of revenue that most media companies would kill for, the $24,000 annual subscription for its financial terminals. It will be fascinating to see how Smith supercharges Bloomberg. 

09.27.11
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Integrated newsrooms must remember print and digital are different products

I’ve seen integration happen as several newsrooms, and I was at The Guardian as it began integration.* Much of the integration since 2007 has been driven by economic concerns with little focus on products or even efficient newsroom workflow to serve those products. Alan Mutter, who writes the excellent blog Reflections of a Newsosaur, says that as Jill Abramson takes the reins at the New York Times she will have to choose between two irreconcilable paths.

She either will have to cannibalize the flagship print product to build the strongest possible digital franchise for the Times – OR – she will have to concentrate on sustaining the commercial strength of the print edition at the risk of channeling insufficient resources into assuring the strongest possible digital future for America’s newspaper of record. …

The problem for Abramson is that the print and digital media demand significantly differentiated products, which the Times has not been able to produce to date with even its enviable strength.

I think the New York Times has stepped up its game in this respect over the last two years. Andrew de Vigal has done an excellent job honing the multimedia work at the Times, bringing a coherence that has escaped many other newspapers. Aron Pilhofer, interactive news editor at the Times, has done some excellent work in terms of building great projects and doing great journalism with data.

However, I think that Alan hits the nail on the head. Integration makes sense, but it has to be seen in the context of serving different and differentiated journalism products across print and digital media. Torry Pedersen of Norway’s VG has one of the best ways of understanding this. At a conference in 2009, he put it this way:

He then compared newspapers and the web to a bottle of water and a waterfall.  The waterfall represented the web–continues flowing, raw, unlimited and in real time.  The bottled water represented newspapers–limited space, distilled, refined and bottled.

I think this is why The Atlantic and The Christian Science Monitor are navigating the changes in media successfully. They aren’t pitting print versus digital, but strengthening both print and digital products. In 2010, that allowed The Atlantic to turn a profit for the first time in a decade, and it built on that in 2011 even as many other publishers struggled. Yes, The Atlantic beefed up its web presence, but it also put a focus on writing talent. In 2011, it’s profits doubled in print, digital and events. It improved all of its businesses and even built new revenue streams.

More broadly though, one of the things that I see in terms of news organisations is that those who develop not only great journalism projects but also marketable journalism and information products are the ones best navigating the wrenching changes in the journalism business. This is a mix of transaction businesses, such as those at Fairfax in Australia or Schibsted’s digital classified business, Finn. Some of those transaction businesses might be built around data, especially business data. The products also usually include events such as conferences or dinners, cruises or talks with key journalists. As Suw and I build our little consultancy, the real gap in journalism businesses we see is not necessarily of editorial innovation but of product and revenue innovation.

* I get a sense that The Guardian is only now moving through the first process of integration as it unifies its ‘digital first’ strategy largely under the management of print editors.

12.29.10
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iPad magazine sales continue dropping

After some initial very positive sales figures for magazines on the iPad, sales continued to drop for US titles as the end of 2010 approaches, according to a post by John Koblin in WWDMedia.

Vanity Fair sold 8,700 digital editions of its November issue, down from its average of about 10,500 for the August, September and October issues. Glamour sold 4,301 digital editions in September, but sales dropped 20 percent in October and then another 20 percent, to 2,775

iPad sales for Wired, which outsold print copies with the iPad edition in its first month, have seriously tailed off. We now have several months of declining sales for the iPad edition. The iPad as ‘print’ saviour now looks less and less likely. Would a better subscription model help? Would less print-centric thinking help? At this point, the sales figures don’t look to justify the premium ad rates some magazines are charging for the iPad.

Dorian Benkoil writing on PBS MediaShift quoted John Loughlin, executive vice president and general manager of Hearst Magazines:

As Loughlin noted, this is an experimental period, when magazines are learning what they can offer and how much they can charge. Some apps will be breakout hits. A combination of web, apps, mobile and print sales may bolster magazines and give them new life and sustained profitability.

But the excitement over apps has some difficult realities to confront until that day is reached.

I’ve said it once, and I’ll say it again. There are no silver bullets, no single solution that will save publishing. It’s going to take strategic thinking that focuses on building compelling print and digital products and building a multi-revenue stream business or businesses to support them.

11.20.10
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The future of journalism is not in the mythologising its past

When I discovered blogging six years ago, one thing that instantly got me hooked was the conversation and the community. Soon after meeting Suw, I started writing with her here on Strange Attractor about my passion for the future of journalism. After a bit of a downturn in the journalism blogging community a few years ago, I’ve felt a new energy this year. One of the fellow travellers I’ve recently ‘met’ through blogging is Reg Chua, Editor-in-Chief of the South China Morning Post. He blogs at (Re)Structuring Journalism, and he’s been commenting here for several months.

On my last post profiling regional news site TBD, I wrote this footnote:

It’s difficult to make a business built on investigations. Accountability journalism is important, but let’s be honest, investigations have always been an expensive and relatively small part of what we do.

Reg had this to say in a great comment:

And it’s also true that investigations have traditionally been a small part of what news organizations do; there’s a lot of harking back to an imagined past that didn’t exist, where every paper was a paragon of public service and broke important stories of official corruption every day. That’s not to say it’s not an issue that old media is in trouble; only that we should recognize what we did and what we are – because only then can we really move forward.

Spot on. There is a lot of mythologising about journalism right now. Psychologically, I can understand this. Journalists feel threatened, and we’re trying to make the case of how essential we are to democracy. We’re trying to make the case that what we do is indispensable. I understand this, but I think that sometimes this imagined past is getting in the way of creating a new sustainable future for journalism.

I’ve spent most of my career working for news organisations that had a strong public service ethos, the BBC and The Guardian. The BBC is publicly funded, and The Guardian is supported by the Scott Trust. They are unique organisations, and they provided me with unique opportunities to develop the type of journalism I practice. Even with their unique funding, these organisations are under pressure.

The business of newspaper journalism has been severely disrupted, and it will take creativity, honesty and hard work to create new sustainable businesses to support sufficient journalistic capacity to support democratic societies.

10.15.10
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News of the World: 1995 is calling, it wants its digital strategy back

Not to beat a dying horse, but the News of the World doesn’t have a digital strategy for 2010. As I said yesterday, sometimes I’m willing to be generous about News International’s paid content strategy. The Times had to do something. They were losing £240,000 a day last year, and by their own admission, those losses were unsustainable. However, when you hear things like this from News of the World’s Digital analogue editor Rachel Richardson:

The majority of our content will be published on a Sunday. We will update our exclusive stories as they develop through the week. We also offer a comprehensive sport service and update match reports etc frequently. A lot of our content is timeless. Fabulous [celebrity magazine] is a great example of this, so we’re confident our site will be appealing mid-week without constant updates.

You have to wonder what planet she is on. Seriously. Now, it would be interesting to unpack what she means by ‘constant updates’, but this seems like a strategy from another age. The type of gossip that News of the World peddles is a constant stream of whispers coursing through the internet. It’s not something that pauses politely for a print driven publishing cycle. Yes, the News of the World thinks it has exclusives, and too many people living in the silos of newspapers believe it’s not old until it’s told by them. In terms of exclusives, with a few notable exceptions (the Telegraph’s MP expenses reporting being one of them), an exclusive in the online era has a shelf-life shorter than a Z-list reality TV star, possibly shorter. I don’t read celebrity gossip, but I actually don’t feel the need to. It’s so utterly ubiquitous that I absorb it through osmosis. There are so many choices. It’s everywhere. Are they really going to be able to charge to catch up on Sunday’s shock headlines by Wednesday? They already will seem tired by 5pm Sunday night.

Reading excerpts from the transcript of an interview with Richardson what comes through is that this isn’t a business strategy, it’s a sense of entitlement. Yes, it costs you something to make the News of the World, and you think that it has a value that should cost a set price. If everyone was able to price their products at what they thought they should be paid for instead of what people are willing to pay for them, we’d have a much different world.

Bravo for having a launch partner, but their other ads are supplied by ad networks?!? If your content is as exclusive as you say it is, surely there has to be value in building up your own premium ad services. Of course, no one will know whether it is successful because we won’t know the traffic. Murdoch has pulled out of the ABCes, leaving others to speculate. News International isn’t even being forthcoming with their advertisers about their numbers, and their advertisers are punishing them. That’s not strategic. It’s arrogant, or fearful.

There are times when I wonder if News International’s digital strategy is actually designed to fail. I often wonder if Murdoch in a fit of pique will actually just shut down the digital offerings once they have failed to meet his targets. It seems outlandish, but no less so than some of the non-strategic nonsense coming out of News International wrapped in PR assertions as being bold visionary thinking.

06.29.10
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Asbury Park Press blog launches coffeehouse newsroom

Kevin: In a move that echoes the FutuRoom in Prague and its network of news cafés across the Czech Republic, "Freehold InJersey, a community news blog run by the Asbury Park Press and Gannett, has launched a coffeeshop newsroom in conjunction with Zebu Forno Cafe in Freehold, New Jersey". "We hope that having a 'newsroom' in the center of town will encourage folks to drop by, talk to me and the other writers, and participate in a community conversation," said Colleen Curry, the editor of the website and creator of the partnership. It's smart, but the thing that sets the FutuRoom's cafés apart is that they also derive revenue from the cafés so that what was previously a cost centre, a newsroom, becomes a revenue stream.