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.
That newspapers continue to lose advertising market share to the Internet is not a revelation. That newspapers are losing share of local advertising is a reason for concern. According to the latest tally, newspapers accounted for 43.7% of the local online advertising pie of $8.5 billion for the first 10 months of this year. This was down from a 44.1% share of a smaller total in 2004. The online revenue of local TV stations, on the other hand, did not decline so precipitously.
Local advertising traditionally has accounted for about 85% of total revenue for newspapers in larger market, even higher for small market newspapers. Local TV stations receive a far higher proportion of their revenue from spot national advertising, while radio stations have tended to be in between, though in most case closer to newspapers than TV. The primary local competitor for newspapers has historically been directories (e.g., Yellow Pages) and direct mail. Increasingly, cable has been able to siphon off local dollars with the capability to insert advertisements down to the neighborhood level.
What must be most unnerving to newspaper publishers and, to a lesser extent other local media players, is that pure play Web sites now have the largest share of local on-line advertising revenue—43.7% by the reckoning of Borrell Associates.
How can this be? Didn’t the publishers take solace in the fact that their local papers had a built in advantage over the upstarts thanks to their identification with the local market? And that all-critical brand equity?
It is becoming evident that the value of ad placement based on search terms, Zip code or Internet address proves more effective for the local advertiser even if the page viewed does not directly contain information that is congruent with the location of the user. That is, the value of the local newspaper or radio station has been that the advertiser had a high degree of confidence that anyone listening to that station or reading that paper was in their local trading area. But online the advertiser may not only be assured that the ad is placed in view of an individual within their target trading area, but may also have specific demographic or other characteristics desirable for that advertiser. Not to mention the added delight of knowing when an ad may have been seen and responded to in the form of a click or more.
Of course, this is true for the online site of any local medium. Too often, however, it seems that while the publisher’s sales force was working on convincing the paper’s current advertisers to try the online version, the new players had no such blinders. They were marketing to anyone, which often meant new service providers and merchants who had not been print advertisers: smaller in size but far greater in number. A version of the long tail effect. And that is where much of the growth is coming from. It’s not just old advertisers in new bottles.
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%.
The challenge of media competition from ground level
This letter to The Wall Street Journal yesterday succinctly sums up the state of competition in the media world today and the rapidity with which the landscape is changing. It helps explain why the National Association of Broadcasters, of all special interest groups, is opposing this particular flavor of radio merger.
XM and Sirius
March 1, 2007; Page B7
The thought that a merger between XM and Sirius could create a monopoly is absurd ("Making Radio Waves," Review & Outlook, Feb. 21). They would offer only one of many content options for consumers. It's a moot point anyway. By the time the merger is completed, satellite radio will have won the battle with radio but lost the war. When I subscribed to XM three years ago, I immediately quit listening to traditional radio. Satellite radio is simply a superior choice. However, now that my 927 favorite songs reside on my iPod, I have little need for radio of any kind. Why scan the dial in hopes of finding a song that I like when my iPod contains only songs that I like?
When I joined the Program on Information Resources Policy (PIRP) at Harvard in 1979, the message that we were delivering to the media companies was that of convergence. It was a tough—no, make that almost impossible—sell. We tried to explain that the future was in digital. And in digital, text bits and video bits and audio bits, graphics bits—they all looked the same. The folks who ran these companies couldn’t understand how television would be any more of a competitor than it already was. They did rally when they saw AT&T make noise about doing an electronic Yellow Pages, but they won that battle (though not the war).
Although there were profound implications for business strategy, we had our greatest impact in the telecoms sector, where the regulatory ramifications of the change from analog to digital were more immediate and the stakes higher. (Anyone here recall Computer Inquiry II? III?) The just mentioned e-Yellow Pages proved just how high the stakes were for classified. Can you say Monster? Craig’s List?
For the media folks, they were probably right in largely ignoring our message, at least in the early 1980s. A few newspaper companies, such as Knight Ridder with Viewtron, made a stab at exploring digital products. But all the technology and economic pieces were not yet in place. Timing may not be everything, but it is important.
Skipping ahead 20 years in one swoop and we can now see the shape of real convergence. Web sites of enterprises that heretofore have been called newspaper publishers are offering the same mix of text, video and audio as are being offered by sites from television stations, cable networks and, yes, radio broadcasters.
Look at USAToday and CNN.The Virginia-Pilot, a newspaper based in Norfolk, VA, has incorporated its HamptonRoads.TV into its site, with its own production capabilities, not just replaying clips from AP video feeds.
And now we even have radio, that last bastion of single sensory output, ramping up for video on its Web sites. “The nation’s commercial radio stations have seen the future, and it is in, of all things, video,” observed an article in yesterday’s New York Times.
“Audiences in Los Angeles, for example, will be able to tune in today to Power 106 for an annual Valentine’s Day event called “Trash Your Ex,” in which jilted listeners are invited to put mementos from past loves in a giant wood chipper — and to let it whir while the disc jockey, Big Boy, urges them on. And for the first time, audiences everywhere will be able to watch streamed video of the event, to be held in a parking lot in Pasadena, on the Web site power106.com.”
Radio, as with other legacy media formats, has had to deal with an erosion of its audience. Of course. The time you have spent reading this entry—multiplied by the millions of people clicking on millions of other Web sites and podcasts—takes time that otherwise may have been spent using traditional media.
To be sure, radio has perhaps suffered less than newspapers and television broadcasting because radio has long been a second medium, used in the background while we do other things. Still, with mp3 players and the like offering some of the same benefits as radio, the amount of time spent with radio has fallen by 14% over the past 10 years (see accompanying chart).
So here is where convergence really starts to get serious: With digital TV sets proliferating, more of what is available on that screen will come via the internet (or perhaps more generically over some TCP/IP-based transmission).Wireless devices, whether 3G or Wi-Fi or Wi-Max—the technologies are not important but the certainty of widely available wireless broadband is—we will increasingly have news and information as well an entertainment and transaction provided in a highly competitive landscape.
The winners and losers are far from being determined. But what is inevitable will be, first, greater fragmentation of the audience over a wide variety of players aiming for sometimes mass and sometimes niche markets. We will see advertisers faced with a greater dispersion of their budgets. And eventually we will have to see a new wave of consolidation to help create some economic rationalization of this scenario. It will continue to put stresses on the regulatory regime, which has been slow to respond to the implications of the changing technologies and media strategies.
I hope to be around to have another retrospective look in 20 years.
In her 1969 book On Death and Dying, Dr. Elisabeth Kübler-Ross (1926 - 2004) postulated the now famous Five Stages of Grief that people undergo when faced with their impending death:
Denial and isolation - The "This won't happen to me! I don't really have to worry" stage.
Anger - The "Why me?" How dare you do this to me!" stage.
Bargaining - The "Maybe I can evade this fate by co-opting or sidestepping it " stage.
Depression - The "It's really happening and I can't stop it" stage.
Acceptance - The "Let it happen; I don't want to struggle anymore" stage.
The news industry is dying. In which of Kübleresque stages is this industry. There have been some major changes this year.
But first, do I exaggerate the patient's condition? I don't think so. Nor do others. Furthermore, when I state that the news industry is dying, no, I don't want it to die. I am just stating the condition of the industry. There will always be a need for journalism, but the question is whether there will be an industry in which journalists can work.
Let's examine the patient. Its vital signs have been fading for decades. Circulations and readership of newspapers and news magazines has been evaporating. Listenership and viewership of broadcast news programs have likewise been are dissipating. These declines had been slow, about half a percent annually, but in the past few years have accelerated to a few percentages annually. The industry's heart still beats, and some industry leaders still to profess its vigor, but now even its core vital signs — its revenues (adjusted for inflation) and its profit margins — the pulse and blood pressure of the industry, have begun to wane.
Many industry executives claim that a transplant into the new-media will save the patient. However, an examination of data shows that their online editions are read by fewer people — and less often and less frequently — than the dying print or broadcast editions. Moreover, ten years into these efforts, the online editions are earning only one-twentieth to one-hundredth per user what the dying print edition earns per reader.
The news industry is in critical condition everywhere except countries that only now are forming their economic middle classes such as China and India; places only now rising to the levels North America and Western Europe reached 90 years ago (during the heyday of newspapers). The patient is dying everywhere else. The industry needs a radical course correction.
The eldest form of mass media will likely be the first to kick the bucket. 'Who Killed the Newspaper?' asked the cover of The Economist weekly news magazine on August 24th. , In a post-mortem a priori to newspapers' death, the magazine (which in a quaint British tradition styles itself a newspaper) The Economist cover story began with an editorial stating:
Newspapers have not yet started to shut down in large numbers, but it is only a matter of time. Over the next few decades half the rich world's general papers may fold.
And later in a 2,900-word special report about the newspaper industry, it noted:
The “Trust in Media” survey conducted by the BBC, Reuters and the Media Center released this week has something in it for almost anyone. I’ve written up one take at my Who Owns the Media Blog, where I conclude that it is a positive sign for diversity of content that there are no dominate, pervasive sources of news and information in the U.S., unlike some other democracies.
It found that the media were trusted a bit more than governments, Fox News was the most trusted medium in the U.S. Al Jazeera most trusted in the Middle East and the BBC (surprise?) most trusted globally. Blogs, says the report, are the least trusted form of news, with 25% of respondents finding them trustworthy.
But the report has some significant markers for looking down the road at where the business of the media is headed. On the one hand, few individual news Web site were cited by respondents as the source they trusted most. On the other hand, given the short time this media format has been around, the Web's inroads may be considered significant.
No surprise, youth use online sources most. Among all those survey over 10 countries, 19% of those 18 to 24 years old named an online source as the most trusted, compared to 3% of those 55-64 years. As significantly, 56% overall valued the opportunity to obtain news online. In the U.S. it was higher, at 60%.
The young male audience, in particular, is moving away from television towards the Internet. Ten percent fewer young males, compared to the average, name television as their most important news source (46% as opposed to 56% overall); and 15 percent say the Internet is now their most important news source in an average week, compared to just 9 percent of respondents as a whole.
In the U.S. as might be expected the important news source in a typical week is television, mentioned first by 50%. But the Internet, mentioned by 14%, has surpassed radio as a news sources (at 10%) and is only 7% lower than newspapers, at 21%.
Fully 20 percent of American men name the Internet as their most important news source.
Figure 1:"I value the opportunity to get news using Internet/wireless technology"
Figure 1, taken from the study, shows the percentage of respondents overall who “strongly” or “somewhat” agreed with the proposition “I value the opportunity to get news using Internet/wireless technology." The greatest disparity is in the age demographic, providing yet further data points that online information is already entrenched and will steadily encroach on older media formats as the population ages.
Vin Crosbie
Dorian Benkoil
Bob Cauthorn
Ben Compaine
