Dorian Benkoil senior consultant at Teeming Media. An award-winning journalist and editor, he was a foreign correspondent for AP and Newsweek, and international and managing editor for ABCNews.com. At ABC News he moved to the business side, handling sales integration and business development, before joining Fairchild Publications as General Manager for their Internet division, becoming editorial director for mediabistro.com, then a consultant for Teeming Media in New York. He graduates this year with an MBA from Baruch's Zicklin school of business. Learn more about him at Benkoil.com or his blog - MediaFlect.com.
Robert Cauthorn is a journalist, former vice president of digital
media at the San Francisco Chronicle, and was the third recipient of
the Newspaper Association of America's prestigious Digital Pioneer
Award. He launched one of the first five newspapers web sites in the
world and is generally considered to have delivered the first
profitable newspaper web site in 1995. Cauthorn has been in the middle
of the transition from old media to new and is recognized as
frank-talking critic when he believes newspapers stray for their
mission. In mid-2004 he became the president of CityTools, LLC a new
media startup based in San Francisco.
Ben Compaine has divided his career between the academic world and private business. He was a journalist when manual typewriters were considered state of the art, but also led the conversion of his college newspaper to cold type. He has started and managed weekly newspapers. His dissertation at Temple University in 1977 was about the changing technologies that were going to unsettle the landscape of the staid and low profit newspaper industry. Since then he has focused his research and consulting on examining the forces and trends at work in the information industries. Among his most well-known works (and the name of his blog) is "Who Owns the Media?".
Vin Crosbie has been called "the Practical Futurist" by Folio, the trade journal of the American magazine industry. Editor & Publisher magazine, the trade journal of the American newspaper industry, devoted the Overview chapter of executive research report Digital Delivery of News: A How-to Guide for Publishers to his work. His speech to the National Association of Broadcasters annual conference was one of 24 orations selected by a team of speech professors for publication in the reference book Representative American Speeches 2004-2005. He has keynoted the Seybold Publishing Strategies conference in 2000; co-chaired and co-moderated last year's annual Beyond the Printed Word the digital publishing conference in Vienna; and regularly speaks at most major online news media conferences. He is currently in residence as adjunct professor of visual and interactive communications and senior consultant on executive education in new media at Syracuse University's S.I. Newhouse School of Public Communications, and meanwhile is managing partner of the media consulting firm of Digital Deliverance LLC in Greenwich, Connecticut.
About this blog
Two forces have shattered the news media. Technology is the first. Although media technology is undergoing its greatest change since the day in 1440 when Johannes Gutenberg first inked type, for more than ten years now the news industry has mistaken new technologies merely as electronic ways to distribute otherwise printed or analog products. Estrangement is the second. The news media has lost touch with people's needs and interests during the past 30 years, as demonstrated by rapidly declining readerships of newspapers and audiences of broadcast news. How we rebuild news media appropriate to the 21st Century from the growing rubble of this industry is the subject of this group weblog.
I’ve said (and perhaps blogged — who can remember) that while I find Twittering for its own sake inane, from a societal perspective utility will come when enough people Tweet that a cloud is created to monitor the zeitgeist. So, let’s say a few hundred, or thousand, people give their thoughts on the Pope from inside his talk at Yankee Stadium. Or a bunch of people from a disaster zone (this is not them asking for help — which is also valid — but rather getting an idea of the general tenor of a situation): panicked; need help; all’s fine; more food. And so on. Amalgamate them and we can start to get a sense of what folks think or feel, at least feel enough to Tweet.
Today, BuzzMachine pointed to Twisorti, which parses for emotive words like “love” or “believe” or “wish”. It’s a start of the kinds of intelligence that will become the semantic Web. Imagine if the application were smart enough to not only search for specific words, but look at Tweets in general, and see what trends and thoughts are emerging, in general. Cross-reference that with search or SMS messages … well, you get it; it becomes a read on “society” — or at least the society that’s using the technology. (And of course, if we want to put our marketing hats on, a way for brands to monitor messages, at some point.) Even better is if and when the cloud can include not just Tweets, but all the bursts from everywhere. Like, whatever becomes the main competitor to Twitter. (Because, as we noted earlier, Twitter has a problem that may hinder its survival.)
We know—or thought we knew—that Bill Gates and Steve Ballmer are smart fellows. But smart, as in understanding software architecture or how to manage a company or develop products is a different kind of smart than strategic smart. Apparently Messrs Gates and Ballmer don’t have the smart big acquisition gene.
I say this as an outsider. I don’t have access to the crunched numbers and five year outlooks no doubt ginned up by the Microsoft investment bankers. And, to be sure, many business pundits have a similar pat justification, all along the lines that both Microsoft and Yahoo have persistently tried to best Google but failed. “No one can compete with Google on their own anymore,” says Jon Miller the former chairman and chief executive of AOL. “There has to be consolidation among the major players.
Suddenly Microsoft, just a few years ago the bad boy of the computer galaxy, is—what—the white knight? Mark Read, director of strategy for the WPP Group, which owns ad agencies like JWT and Ogilvy & Mather, opined, “It is good for investment. It is good for competition.”
A combined Microsoft and Yahoo, notes The New York Times, would beat Google in Web traffic and come closer in ad revenues. Most importantly, the pair would give Google a greater challenge as it tried to enter display advertising, because Yahoo has the largest share of that market.
But wait a second. What does a merger with Yahoo really do for Microsoft—to the tune of a cool $44 billion? Lets look at some numbers.
Google has grown dramatically, going from zero to $17 billion in revenue. It is highly profitable, a bit (well, $200 million) over $4 billion in 2007. Very impressive. But Microsoft had almost 3.5 times that revenue -- $58 billion—and four times the profit-- $17 billion.
So what does Yahoo bring to the party? Not even $7 billion in revenue and a piddling $660 million in profit. It brings a search engine that’s technically pretty good. But Microsoft already has a comparable piece of technology. Yes, most of its revenue is derived form online advertising, nearly twice that of Microsoft.
And what’s the synergy of Microhoo? (or Yahsoft?). Not much that is obvious. Microsoft forecasts at least $1 billion in annual cost savings for the merged entity, from synergies in areas such as combining engineering talent.
Sure, a merger of this magnitude—pegged to cost savings rather than market opportunities-- would make sense if Microsoft was a struggling enterprise. It's not -- and a 29% profit margin at that. It has $21 billion in cash and short term investments. Assuming it actually realized the savings—so what? Microsoft already has the resources to compete with Google—if it is possible at all.
Then what does a Mircohoo end up with? Despite trying, Microsoft has not come up with a strategy to erode Google’s dominance in search and online advertising. Its share of the search market ended last year at 9.8%, down from 12% in mid-2006. Yahoo does better, but fell from an estimated 28.8% mid-2006 to 22.9% last year.
Now, let’s see. We take Microsoft’s failed strategy and add it to Yahoo’s failed strategy... and the best they can come up with is some savings effect, as the combined entity slides further behind.
I understand that the hope is that the two combined would bulk up to a third of the search market—perhaps in aggregate enough to prime the pump to attract more advertisers. But Yahoo alone had nearly a third of the search business in 2005 and that did not keep it from sliding downhill since then.
The combination of Time Warner with AOL in 2001 has been a disaster. However, it was primarily the outlandish $112 billion price tag, negotiated at the peak of the Internet bubble, that made it ridiculous. The notion of an old time content company wanting to modernize by associating with the new media start-up had some strategic sense, even if the conflicting cultures and stratospheric valuation doomed the combination. I could understand the potential synergies, even if not to the degree that could justify the cost.
I can also understand Microsoft’s necessity to segue from the operating system and packaged software business to a greater reliance on Internet-derived revenue. It knows it needs to modify its current business model. But I can think of better uses of $44 billion to get there. Glad I sold my Microsoft stock last year.
That question, raised indirectly last night at the Hearst-funded new media discussion at Columbia J-school, sent a chill down my spine. Iranian born blogger and iconoclast Hossein "Hoder" Derakhshan, talked a lot in ways that took shots at conventional wisdom. He talked about "the tyranny of the popular," how in a world of Digg and Delicious and other "most e-mailed" and other popularity features, we find ourselves under constant pressure to get on those lists to get our stuff viewed. (Wikipedia book Author Andrew Lih countered that he sometimes searches Digg in a way that helps him find the least popular to get emerging or unheralded info about the online crowd-sourced encyclopedia). He talked about corporate censorship in journalism, how someone reporting for a mainstream news org can have a perfectly valid journalistic idea kyboshed for reasons having nothing to do with the validity of the idea, but rather because it may not conform to pre-conceived notions or myriad other issue.
An audience member, at the microphone, asked if there were government bloggers. I think he meant to ask if there were government bloggers in Iran. But he could equally have been asking about the U.S. Are there government bloggers? What's to say there aren't? We've seen reports of government employees staging press conferences, pretending to be things they weren't, putting out video news releases as if they were news reports. So who's to say there aren't bloggers claiming to be independent who are in fact working for the government? Some would say that government bloggers could be a good thing, if they're open about it. Why not? If government people blog in ways that shows their viewpoints, and those viewpoints can be picked up – or picked apart – by others, that only adds to the conversation. It's just a more modern equivalent of the press release or press conference or other attempts to influence news coverage or the conversation. Inevitably, something delicious would find its way to a government blog.
At a time when companies are increasingly going direct to consumers with their media, circumventing traditional media and the need for conventional coverage or conventional ad buys, it seems only logical the government will do so as well. (If there is some sort of Justice or Defense or State department blogger or bloggers I'm not aware of, by all means, chime in.) Companies that have tried to do Web media without disclosing that they were from a company have been burned. Government should heed the same lesson.
Fresh data that has surfaced over the past few weeks has reinforced previously observed trends in media advertising and usage. But they have also raised some red flags or sounded warning bells or whatever imagery you’d prefer. Yet amidst the downers there are some positive signs. The transition from legacy media formats to digital formats continues to show a mix of threats and opportunities.
First is the continued downward spiral of advertising in daily newspapers. Nothing new here. But the rate of decline may be accelerating. For the fourth quarter of 2006, total ad revenue at newspapers-- including online revenue-- was down 3.7% from the same period a year earlier.
This past February, individual newspapers and groups reported some dramatic year over year declines: USA Today down 14% while parent Gannett was down 3.8% overall. The Tribune Co. and McClatchy both reported 5% losses. The New York Times Co. was down 6% and The Wall Street Journal off by 10%. Even publishers of smaller city papers, where the losses have been more modest in the past, were afflicted. Media General, which publishes papers in Tampa, Richmond, VA and Winston-Salem, NC, was down almost 6%.
And this is in a period where advertising expenditures in general were reasonably robust. One can't attribute this to a recession. The New York Times reports that publishers “blamed the declines largely on the continuing shift of classified advertisers from print to online, especially to mostly free sites like Craig’s List. In some cases, particularly in Florida and California, they traced the weaknesses to volatile real estate markets.”
Meanwhile, one bright spot for newspapers, online advertising, is showing some signs of slowing as well. Online ad revenue, though up 31.5% for newspapers last year to $2.7 billion, still accounted for only 5.4% of newspaper ad expenditures. Most threatening is that newspapers are facing growing competition from other Web sites aimed at their local market strongholds. Google and Yahoo have already been offering key word search-related advertising that can be geared to local advertisers. But now other local media—TV and radio stations, city magazines—are beefing up their Web sites to help shore up their own advertising woes. Radio stations, faced with declining time spent listening are putting video on their Web sites, along with streaming audio of their programming, to attract larger audiences and selling local advertising.
Perhaps most ominously for all the local media is that the largest share of advertising as well as the fastest growing, are “pure play” sites. That is, they are not related to existing legacy media but exist solely on the Web. This might include Craig’s List as well as local news sites such as Buffalo Rising and Dallas’ Pegasus News. As seen in this table from Borrell Associates, about 38% of local online adverting goes to these nontraditional sites—and their share is rising.
There is a small note of good news. A Nielsen/NetRatings study (commissioned by the newspaper industry trade association), found that online visitors to newspapers Web site rose by 5.3% in the first quarter of this year. According to this source, that is the steepest quarterly rise since the numbers were first tracked in 2004. This translates to 59 million visitors to newspaper Web sites.
And another report that might lift the spirits of newspaper publishers came from the Poynter Institute last month. A study tracked the eye movement of 600 test subjects as they read whatever they wanted from their regular newspaper and their newspaper’s Web sites. The most relevant finding for here is that a much larger percentage of story text was read online than in print.
On average, online readers read 77% of what they chose to read, while broadsheet readers read an average of 62% and tabloid readers read an average of 57%.
Vin Crosbie
Dorian Benkoil
Bob Cauthorn
Ben Compaine
