The Future of Newspapers

Friday, June 11, 2010

Google: The Traditional News Media's Knight in Shining Armor

-DB Ross

The current state of the newspaper industry is uncertain— nobody in the blogosphere disagrees with that. However, the prospect of establishing new business models that monetize online news content is hotly contested. Nowhere is this fact more apparent than in the debate surrounding the role that Google will play in establishing the rules for tomorrow's media.

The stock argument is that Google News will prove to be the final nail on the coffin of the traditional news industry.

However, this might be simplifying the situation a little too much. While the traditional media industry might not like the fact that Google aggregates news content, supposedly infringing on copyrights, it cannot be debated that Google News sends a hefty amount of web traffic to traditional media sites. Furthermore, a the interests of the news industry and Google are far more closely aligned than many may realize.

Google is not trying to kill the traditional news media. In fact, the opposite is happening. Google realizes that it is in the interests of their bottom line to ensure that the news industry is thriving in the future. A news industry that creates top-notch content that consumers want to read benefits Google's advertising potential.

In a recent editorial in The Wall Street Journal, Google CEO Eric Schmidt makes a strong argument that his company is doing everything it can to revitalize journalism. The crux of his argument is the following:

“it is complacency caused by past monopolies, not technology, that has been the real threat to the news industry.”

TECHNOLOGY SHOULD NOT BE SEEN AS A THREAT TO THE NEWS INDUSTRY. How's that for a headline?

This all trickles down to the current situation in the traditional news industry in some palpable ways.

1) Advertising: Currently, traditional news sites do not make nearly as much money off advertising as they need to be. Google knows a thing or two about making money off of online advertising, and they are currently working to develop long term solutions to fix that.

2) Reinventing the Business Model: The writing is on the wall to strongly suggest that the traditional news industry's business model (broadsheet supported advertising, physical distribution, cutting down lots of trees, etc.) is not sustainable. Google is working on the bigger conceptual questions to find a workable approach to tackle the issue.

3) Subscription: In five years, consumers should not expect to get all the news content they could ever possibly dream of for free. The traditional news industry made a bad choice in allowing consumers to get their product for free on the internet. No one should be surprised that free online appears to have a direct correlation with sales of physical broadsheets. Google understands this and it is a big part f their strategy.

Anyone interested in learning more about the nuts and bolts of Google's strategic efforts to revitalize journalism should check this recent article in The Atlantic written by James Fallows. It provides a good overview of the specifics broadly discussed in this post.

Regardless of how committed one might be to closely studying the details of this sphere of discourse, the take home message is simple. Gigantic, powerful, wealthy corporations are not the true threat to the traditional news industry. Rather, gigantic corporations will likely be the traditional news industry's savior.

Sources:

Reddit.com

Zdnet.com

The Wall Street Journal

Google

Wikipedia

Columbia Journalism Review

Newspaper Death Watch

CommittedSardine.com

The Atlantic

Monday, May 31, 2010

The i-Pad: How Can the Newspaper Publishing Industry Cash In?

-DB Ross

The release of the i-Pad is not big news— it's really big news, especially for the newspaper industry. The debate is raging about the significance that this new platform could have on the long term prospects of the newspaper industry.

On one side of the fence are those who assert that the device will be the savior of the newspaper business, and on the other are those who contend that it will only serve to quicken the demise of the ailing industry. In ten years we will all know which camp is correct.

One of the issues in the debate is the question of subscription revenues. Currently, Apple takes a 30 percent cut of subscription revenues for i-Pad content. Needless to say, publishers are not happy about giving that money up. However, Apple's model is still far more appealing than that of the Amazon Kindle, which takes 70 percent of subscription revenue.

A major criticism of the newspaper publishing industry is that it has been slow to embrace the i-Pad. The strategy of the magazine publishing industry is a good example of what newspaper could be doing differently. Conde Nast is eagerly working with Apple to push its content onto the i-Pad, announcing titles it plans to publish on the device. Another key development is the creation of Next Media Initiative, a consortium of magazine publishers working to develop strategies of dealing with the new technology.

The newspaper publishers are not even close to doing something like this. Maybe they should be.

Regardless of all the hype surrounding the i-Pad, the following question need to be answered if its potential to deliver sustainable success for the newspaper publishing industry will be realized:

How does advertising fit in?

Currently, online advertising revenue lags far behind print advertising revenue. The newspaper publishing industry needs to figure out how the i-Pad will change this fact. The advertising potential for this device is huge. If publishers take advantage of the personal nature of the i-Pad, such as its large screen and portability, they might be able to create a new advertising model that really makes money.

In the traditional newspaper industry business model most revenue comes from advertising and this fundamental fact is unlikely to change in the future. The true value of the i-Pad is its potential to serve as a new way to channel advertising to media consumers. At $499 a pop, consumers will not embrace tablet technology overnight.

Just as the traditional newspaper publishing business model has declined gradually, its future business models, centered around new advertising strategies afforded by tablet technology, will rise gradually— a fact that the newspaper business can take advantage of.

Blogger Ken Doctor takes note of this, asserting that the newspaper publishing industry can take advantage of the situation and lead the way for consumers. This means not merely reacting to technological changes as they have in past decades, but defining the rules that consumers will have to play by in the future.

If they do it right, the newspaper publishing industry will see huge growth in the next decade. If they do it wrong, they will likely go belly up.

Sources:

The Poynter Institute

ContentBridges.com

Nieman Journalism Lab

Thursday, May 6, 2010

The New York Times Company: A Corporate Profile

by DB Ross

The New York Times Company founded in 1851, has approximately 12,150 employees and yields sales of over $3 billion per year. While starting out solely as a newspaper company, the organization has grown to become a diversified media company that owns newspapers, magazines, television and radio stations, electronic information services and electronic publishing. The company is made up of three major newspapers: The New York Time s, The International Herald Tribune and The Boston Globe. The company also owns 16 smaller newspapers. The Times Syndicate sells media content such as articles, book excerpts and columns to over 2,000 newspapers and other media clients in more than 50 countries. It is the largest syndicate in the world in text, photos and graphics features.

The organization of the New York Times Company can be broken down into four primary media groups: The New York Times Media Group, The New England Media Group, Regional Media Group and About Group. The New York Times Company began diversifying its holdings in 1944 with the purchase of two New York City radio stations. Since then it has continued this trend. In addition to various media holdings, the New York Times Company also has ownership stakes in interests such as the Boston Red Sox, Monster.com, UCompareHealthCare.com and Baseline StudioSystems.

Though it is significantly diversified, the New York Times Company is essentially a horizontally integrated company. This is because the majority of its holdings are in media companies, not necessarily the distribution channels, the paper production mills etc.

The New York Times Company has a definite global reach. Its products are distributed in countries all over the world in more than 50 countries.

The chairman of the New York Times Company is Arthur O. Sulzberger. Sulzberger got his start as a reporter at the Raleigh Times and has worked his way up to the top of the corporate ladder since 1974.

Michael Golden is the Vice Chairman of the New York Times Company and President and Chief Operating Officer of the New York Times Company Regional Media Group. Golden has been in publishing since the late 70s and also serves on the board of the Associated Press.

According to its website, the top governing principles of the New York Times Company are creating quality content, fulfilling the public trust, treating employees fairly and creating good stockholder value.

In terms of advertising dollars The New York Times Company controls approximately 3 percent of the market share of the American news media. News Corps. And Google hold the top two spots, with 16 percent and 11 percent respectively. Clearly these are the top two competitors the New York Times Company is currently battling.

As any casual observer may already know the New York Times Company has seen profits decline in the past few years. In attempts to revers that trend, the company has capitalized on efforts to seize new opportunities in new technology. Namely: The Internet. It will be interesting to see how the future will play out for the New York Times Company. Will the reputable journalistic mainstay continue to be a strong presence in coming years, or will the company dwindle and die?

Time alone will tell.

Sources:

The New York Times Company

The New York Times

The International Herald Tribune

The Boston Globe

FundingUniverse.com

New England Media Group

Saturday, May 1, 2010

Commodity Profile: The New York Times

The New York Times is regarded by many to be the best newspaper on earth. While others might disagree, there should be no debate that the The New York Times is widely respected for its high standards of journalistic integrity. Critics assert that the ideology reflected in the The New York Times is unfairly liberal but the newspaper itself regards its purpose as a vital one in our democratic society. This is reflected in their mission statement:

To enhance society by creating, collecting and distributing high quality news, information and entertainment.”

The New York Times is an influential paper but its bias can be recognized. A telling example is a 2008 incident in which the paper refused to publish an Op-ed piece by John McCain in response to one the paper published by Barak Obama.

The New York Times is considered influential culturally as well. Its coverage of the arts, literature, film, and drama is extensive. A positive review from The Times can make or break an upcoming author.

The most obvious form this media commodity takes is the physical newspaper itself. The circulation for the physical copy of the newspaper is about 760,000. That's a lot of newspapers, but it is down about 30 percent of what it was in 1998.

The distribution system for the paper is pretty impressive. In most areas it can be delivered to your door by 6:30 a.m. Every morning. If only they brought you hot coffee too.

These days, electronic versions of the paper are becoming more and more popular. Its electronic version has a circulation of only about 90,000. With the cost for the daily paper at $2, rates have increased 38 percent since 2000.

The New York Times makes most of its money from ad revenue. However, ad revenue has decreased 15 percent since last year. That's not good for the paper. surprisingly total profit is down too.

Despite decreasing circulation and revenue of the physical broadsheet paper, NYTimes Digital, a synergy with newyorktimes.com and Boston.com, made an astounding $53.1 million in the first half of 2004 alone.

Newspapers everywhere are aggressively capitalizing on a remarkable new product platform: e-readers. E-editions for The New York Times for platforms such as the Kindle are said to have increased by 40 percent. The New York Times was very quick to introduce an I-pad app for its digital edition. If the I-pad becomes as big as Steve Jobs hopes it will, that may prove significant. However, if in the future newspapers are only available on these devices, the only people informed of the news would be those with enough capital to afford an I-pad. (They're not cheap!)

Currently, The New York Times' website is free. Karl Marxist would probably think its a good thing that so much information is available at no cost to the average worker, but that will soon change. Next year, they plan on charging for all web content.

The New York Times keeps a tight wrap on their product. You need express permission from the company to use or license their stories or photos. They own the content, so you have to play by their rules.

The New York Times makes most of its money from ad revenue. However, ad revenue has decreased 15 percent since last year. That's not good for the paper. Not surprisingly total profit is down too.

In my opinion, The New York Times is at a crucial juncture in history. It is one of the most important papers in the world and wields wide influence over culture and politics. Decreasing circulation and ad revenue are alarming, but aggressive attempts to take advantage of new media platforms may be the savior of The Times. Creating a synergy between the online edition, print edition and e-readers may very well prove to be the profitable new business model to propel The Times into the 22st Century.

To close out, an interesting lecture about the future direction of The New York Times

http://www.youtube.com/watch?v=yHM6o6qPMLw

Sources:

The New York Times

New York Times Company

Reuters

Business Week

Outsidethebeltway.com

Wednesday, April 21, 2010

Newspapers and The Internet: Who Will Win?

-DB Ross

It doesn't take a rocket scientist to figure out that the American newspaper industry isn't exactly doing too well these days. Newspaper readership is down across the board, newspapers around the country are sending their employees to unemployment offices and they just aren't making that much money. Newspaper penetration, the number of households reading newspapers, is down to 18 percent, compared to 33 percent in 1946. Clearly, there's a bit of a trend here.

The question that begs to be asked is: Why is this happening? There are a lot of possible answers to explain for the decline in the newspaper business. This list includes but is certainly not limited to: The horrible economy; competition from blogs; and declining ad revenue just to name a few.

Undoubtedly, the Internet is playing a big role in changing the way people get their news. It is now the third most popular news source for Americans behind local and national broadcast television news. Over 60 percent of American adults now get at least some of their news online.

To better understand the American newspaper industry it is essential to take a look at the major players within the traditional newspaper industry examining their basic business models in the process:

News Corp.
Run by everyone's favorite Australian-American mogul, NewsCorp is a global, vertically integrated company. They have their fingers in a lot of pies all over the world including films, television, newspapers and magazines. NewsCorp is the world's largest publisher of English language newspapers, including the New York Post and the Wall St. Journal.

Hearst Newspapers
These guys are big players in the newspaper business as well, owning 15 daily newspapers. Hearst is also big into magazines with 14 US titles and nearly 200 international titles under their ownership. They are also one of the biggest owners of television stations with 29 stations in the US market.

New York Times Company
The New York Times Company has a heavy hand in the newspaper publishing industry owning 15 daily newspapers. The New York Times, The Boston Globe and the International Herald Tribune are all owned by the New York Times Company.

Clearly, the newspaper industry is controlled mostly by a few large corporations. How are they responding to the changing face of journalism? Are they responding enough? These are questions that will be addressed specifically in future blog posts.

More important is the question of why. Why does it matter if the newspaper industry disappears? What will the consequences be?
Some argue that blogging will fill the void created by the demise of the newspaper industry.

However, many within the field of journalism disagree, citing claims that most blogs rely on reporting from traditional print publications. They say that bloggers, while good intentioned, do not have the same reporting skills as professional journalists and are incapable of achieving the same quality of meaningful analysis. Moreover, they point out that most blogs, even the most popular ones, pay their contributors nothing— leaving no place for the professional journalist with extensive specialized training.

The current debate about the role of the Internet and the demise of the newspaper industry is amazing in the aspect that all of these changes have taken place so quickly. To close out this post and put the whole issue in perspective take a look at this 1981 news report on an early effort to publish a newspaper online. While this could very well be a scene straight out of the movie Anchorman, it is truly a prophetic piece.