Archive | January, 2013

Oh God What’s Going On (With Newspapers)?

31 Jan

Again, calm down. It’s true – newspaper ad spending has gone down 3.5% since last year due to the ever decreasing readership of print dailies. And I hear you when you say the trend of switching ad spending from traditional measured media over to unmeasured media has hit newspapers hardest of all. I won’t deny it. And when you tell me many of these newspaper companies are in unimaginable debt – finding it hard to even pay interest on debts acquired when overpaying for newspapers in the 90′s – even I must admit things look bleak for newsprint as a medium. But there is still a future for newspapers, just maybe not in “paper.”

You ask me “how did we get here? Why are these papers having trouble keeping in the black?” I’ll get to that, but first I’ll tell you how these papers used to run. In the olden days (the 1980′s), newspapers only got 20% of their revenue from circulation – the other 80% came from selling advertisements. From full-page spreads to the tiny classifieds (which actually earned more money per ad unit than any other part of the paper), advertisers were willing to pay top-dollar for ads to appear in those pages, next to content produced by a sprawling newsroom of professional journalists. By doing this, newspapers were generally able to achieve profit margins of 25%, even after the high costs of employing writers, operating a press, and distributing papers by personal delivery, one of the most expensive forms of distribution.

So what happened? The internet happened. First came Craigslist and Monster – free, and more importantly, more efficient ways of doing classifieds. This cut revenue from all areas of the classifieds – especially for job search and cars. Then newspapers started putting their stories online for free and charged low, low rates for online ads. By the time most papers put up paywalls and really started focusing on digital, people weren’t willing to pay for something they had gotten for free, and advertisers were used to low rates as well. Newsrooms had to be cut down and many papers had to turn to centralized printing presses to stay afloat through economies of scale. Print advertising still made up for 80% of revenue, but with circulation dropping, papers couldn’t charge as much for ads. This combined with the massive debts acquired during the 90′s, when they assumed a 25% rate of return when buying other firms, to create the bleak financial situation we see now. With dwindling readership, states are even considering eliminating the “paper of record” system used for public notices, one of the last untouched sources of revenue for papers.

But again, don’t panic. I know that was tough to read, but I’ll bring you back. You see, there is still hope. Though late to the game, newspapers are starting to find their place in digital. Some have gone completely digital, while more have chosen hybridization – only publishing in print on days when people read the paper most. And people are becoming more okay with the idea of paying for an internet site. “A month’s subscription for the price of a Starbuck’s coffee” is starting to sound reasonable. And innovation is starting to be seen in other areas. For example, The Missourian, in conjunction with other Mid-Missouri papers, is working on a new way of doing classified ads online to compete with Craigslist. Though people would still have to pay for it, they would have access to search functions and be free of scammers, spammers, and poorly written pages. So while newspapers are going through an especially tough transition period, don’t worry your head about their future. They’ll make it.

-Joe Simmons

Oh God What’s Going On (With Media)?

31 Jan

Calm down. I get where you’re coming from – you see the figures saying measured media spending is stagnant, with newspaper and national spot radio spending dropping (3.5% and .6% respectively since last year), and you panic. It’s a natural response. After all, total ad spending rose 4.8% in 2011, but spending across all traditional measured media went down .2% – so where did the money go? Have no fear – it didn’t just vanish. That money is being spent on unmeasured media – advertising vehicles such as paid search, online video ads, and targeted Facebook ads. And therein lies the biggest change in today’s media landscape – the shift of ad spending from traditional measured media to unmeasured media (which currently accounts for 40% of all US ad spending).

If it will make you feel any better, you aren’t the first to weather a large change in the media landscape. It’s always been changing, albeit at a slower rate. Back in the olden days, the 60s, ad agencies used to get away with simply taking an advertiser’s money, creating an ad, and charging the advertiser 15% to throw it into whichever medium they could. Sure the advertiser got little information and input on who the ad reached and could only take educated guesses at their RoI, but hey, it was the 60s, and they were happy with that. Until the 80′s that is. Companies such as Horizon and Empower popped up with a new way of doing things. They looked at advertising less through the eyes of the creatives and more through the eyes of the accountants. They focused on the efficient use of those ad dollars, providing further insights and services designed to give the advertiser more information on what they got for their money. And for a fraction of the fee. The world of media was flipped around and given a shot of adrenaline. And everyone agrees it’s better for it.

So don’t worry too much about it. This is just another such change. There are plenty of jobs opening up – new jobs, exciting jobs! Heck – when you look at the top earning digital agencies of 2009 (according to Ad Age), many of them weren’t even around seven years ago! Agencies that are taking advantage of search and social media, most of which didn’t exist a decade ago, to earn billions of dollars helping advertisers reach consumers in more interactive, meaningful ways.

And on the consumer’s end, media is far from dwindling. People spend record amounts of time with media – up to 11 hours and 40 minutes a day with various types from mobile to television. And while your beloved, familiar TV is still on top of the game at 40% of all consumed media, it’s being enjoyed by today’s multitaskers alongside phones and laptops (77% of people use TV with another form of media).

So when you see the traditional business models of newspaper, local radio, and perhaps network TV fall, don’t panic. It’s an opportunity! As long as people are enjoying media in one form (or 100 forms), advertisers will want to reach them – and the world of media will thrive. Be looking for these new opportunities and don’t be married to one medium. Be like Oprah.

Oprah connects with consumers through any medium she wants, be it through syndicated television, her own magazine, her website, an iPhone app, even her own cable network. It doesn’t need to be a traditional medium – as long as it connects her to her audience, it’s all the same to her. So whether you are a consumer, advertiser, or a media professional, don’t worry your head about the future of media. There are some major changes coming, but the future is bright, and you’ll be fine.

-Joe Simmons

Response to Dan Potter

31 Jan

Listening to Dan Potter talk yesterday was a little upsetting. As a journalism student I have always thought of “the death of the newspaper” as something distant and far off, like running out of oil and being forced to use all electric cars. However, after hearing Dan talk about the grim reality of the failing newspaper industry, I had to face the harsh reality that the newspaper industry is really changing. 

I am a bit old school in my news consumption: I love listening to public radio and enjoy reading a physical newspaper (largely for the crosswords). However, I do resort to online news outlets when in need of breaking news, or when looking for more information on a particular news event. I would be extremely sad to see the physical newspaper disappear entirely, but I also understand the financial necessity to make a change. 

I believe a good alternative would be to publish physically weekly, rather than daily, and publish daily online. Readers could have the option of buying an online only subscription, or an online and physical subscription. Either way, readers should be required to have a subscription to access the articles from The Missourian. Maybe as a payoff for avid physical-newspaper readers, they could offer some kind of join-discount rate for buying both a physical and online subscription. 

When Dan talked about the lack of profit being made by The Missourian, it made me realize that the newspaper industry must change its business model to survive. I am sure we will se large changes in newspapers nationwide in the next few years, and I am very interested to watch how it all plays out. I sometimes feel that it is a battle between digital news outlets and the newspaper industry, but I feel in order to survive, these two industries need to form a partnership. 

For newspapers, moving forward means correcting past mistakes

31 Jan

You can fault the newspaper industry for lots of things. In many cases, they missed the boat on many technological advances, put too much content online for free and are reluctant to altering their reporting to a web-first strategy.

But you can’t fault the industry for failing to take responsibility for their mistakes. Dan Potter’s lecture was refreshingly honest about where the industry went wrong. No Wall-Street-investment-bank-style denial of all guilt circa 2010 here.

Potter openly admitted that newspapers got it wrong when it went to putting their content online. Only now are many organizations beginning to charge for online subscriptions. When newspapers began selling advertisements online, nobody knew what price to ask for, so an arbitrary price was set that we now know was far too low. At the time, online advertisement was merely seen as supplemental to their print revenues. But now, as print revenues are shrinking and dollars from classifieds have all but disappeared, newspapers are realizing they can’t sustain themselves on digital advertising alone. And it’s too late to substantially raise the online ad prices  Unlike 30 years ago, newspapers aren’t the only way for businesses and brands to reach their audiences. If newspaper online ad prices skyrocket, businesses can turn to Google, Facebook and other online sites for cheaper digital paid placement.

The biggest change for newspapers is not that the internet, a new-ish tool, is providing competition. Newspapers have survived and thrived through the advent of radio and the introduction of  television. Instead, it’s that newspapers no longer have the power and market monopoly they once had. There are no barriers to entry for hyperlocal bloggers wanting to report on things happening in their neighborhood. For legacy organizations with long traditions, it can be hard to see readers and advertisers slowly turning to other sources.

Newspapers are labor intensive and incredibly expensive to run. But newspapers are also still better at gathering city, regional and community news than any other news organizations. Brian Brooks likes to tell prospective students, the newspaper in any city usually employs more journalists than all the radio and television stations combined. Newspapers might not always be papers. But they can easily be news organizations, so long as they embrace, not reject, the innovation the media industry will continue to see in coming years,

-Laura Davison

A Dying Art or a Deflating Balloon?

31 Jan

Since my first day in Journalism 1010, I’ve heard professors and professionals say that newspapers are dying quickly. Plenty of headlines in today’s news aggregates paint a slow and terrible death for big-time newsrooms around the country – The New York Times, being one of them, is facing another round of layoffs1. To most, the industry seems to be sinking. The keyword there is “seems.” After hearing Missourian General Manager Dan Potter lecture about the newspaper business, I’ve come to the conclusion that newspapers were just too big in the first place.

Mentioned extensively by Potter was the newspaper’s advantage, and now disadvantage, with locality. Newspapers were financial powerhouses 30 to 40 years ago. There was very little competition and a high demand for information since the Internet was not in existence. Circulation revenue was high and newsrooms were filled with reporters and editors interested in spreading news to their communities. Newspapers are now competing with cheaply run digital aggregates. Social media, such as Facebook and Twitter, make it easier and faster for viewers to consume news. These digital alternatives leech off of legacy media outlets to gain more popularity with the younger generations.

Today’s standard model for a newspaper’s funding is 80/20. This means that 80 percent of funds come from strictly advertising, either traditional or digital, and the other 20 percent comes from circulation revenue. Most newspapers like the Missourian depend primarily on this model, but there’s one particular newspaper that runs on a slightly stronger model. That newspaper is The New York Times. It runs on a 50/50 model, which means that 50 percent of funding comes from advertising and the other 50 percent comes from circulation. Potter explained that the NYT costs more to subscribe to and has a strong readership, which few newspapers have. An interesting fact was that for every traditional advertiser that a newspaper loses, it’d take 100 digital advertisers to regain the loss.

As sobering as it seems, I believe newspapers are getting what they deserve. This day and age proves that if one cannot operate social media and compete in the digital realm, that newspaper will lose viewers and possibly funding. I foresee more layoffs and business reduction as the years progress. As cliché as it sounds only the strong will survive.

1: http://www.politico.com/blogs/media/2013/01/highlevel-layoffs-loom-at-ny-times-153952.html

Author: Matt Mazick

A blog to checkout.. The News0saur

30 Jan

This writer has a lot of great information about the industry.

http://newsosaur.blogspot.com/2012/11/online-sales-are-flat-lining-at.html

This is a great primer on the newspaper industry

30 Jan

Businessweek has this great article on the changing profitability of newspapers.

http://www.businessweek.com/articles/2012-03-05/confirming-wall-streets-misgivings-about-newspapers