Cyrillic Partners

A group of journalists/tech consultants has set up a site soliciting ideas to save the classified advertisement section that used to be a mainstay of print revenue.

This idea seems DOA to my mind though. Why would anyone with a good idea actually throw it away by sharing it? So far, the “experts” have come up with ideas insufficient to resurrect a decade-dead advertising medium. It all feels very “well sonny, back in my day…”

It’s a well meaning effort though, with some interesting tidbits on the design and evolution of classifieds, but it’s like trying to bandage a wounded leg just as newspapers are going into cardiac arrest.

Wikipedia offers some interesting stats on the business of classifieds:

In 2003, the market for classified ads in the United States was $15.9 billion (newspapers), $14.1 billion (online) according to market researcher Classified Intelligence. The worldwide market for classified ads in 2003 was estimated at over $100 billion. Perhaps due to a lack of reporting solidarity Market Statistics vary concerning the total market for internet classified ads. The Kelsey Research Group lists online classified ads as being worth $13.3 billion, while Jupiter Research provides a conservative appraisal of $2.6 billion (2005) and the Interactive Advertising Bureau lists the net worth of online classified revenue at $2.1 billion (April 2006).

Newspapers have continued their downward trend in classifieds revenue as internet classifieds grow. Classified advertising at some of the larger newspaper chains has dropped 14% to 20% in 2007 while traffic to classified sites has grown 23%.

There’s some interesting stats here, but the real kicker is the percentage of news Americans consume that comes from a tiny, tiny portion of the media market. Scary.

I’m struck again by the profusion of news items surrounding an industry of interest. I’m writing about green vehicles and trying to give some perspective on the market.

The words are flowing out of my Internet connection like endless rain into a paper cup.  Just in this small niche of the world there are dedicated newswire style blogs such as AutoblogGreen, a quarterly journal and online portal called the Green Car Journal and ample coverage in venture-related blogs such as the extensive list of electric vehicle startups listed in VentureBeat.

How can the “Renaissance Journalist” compete with these focused outlets? Is this even the proper role for a journalist or editor? I recently wrote on this, but am starting to wonder about it.

Will news reporters have a job in the future? Professor Steve Boriss, who teaches a class called “The Future of News” at Washington University in St. Louis and writes on the subject at Pajamas Media: “We will continue to have news middlemen, but those that survive must create real value for their audiences. Editors can create value by aggregating, analyzing, adding opinions, and gathering like-minded audiences for advertisers. Bloggers do the same. But, reporters are repeaters. They, not bloggers, are unnecessary recyclers of news.”

Maybe Boriss knows better bloggers than I do. But I think the premise of his argument is flawed: namely that a journalist’s job is to transfer a record of an event to an audience that cares about it.

It assumes that there is too little information in the world and that a journalist’s job is to be the one that witnesses it. That may have been true thirty years ago, but let’s face it. There’s often too much information available today.

Let’s say you wanted to know if batteries were a good place to invest today. Where would you go for information on that? Going to Google is like sitting down in front of a fire hose and blasting yourself in the face. You could spend days and days sorting through all the different types of investment (public, private, mutual funds, etc…) then what type of battery (lithium-ion, nickel-cadmium, led-acid, lithium-polymer, thin-film, kinetic, etc…), or maybe what sort of company (developer, producer, distributor, integrator) then maybe which of the 100+ companies that do some sort of battery-related thing.

Moving from information to action requires throwing things out as you go along, getting from the fire hose to a nice drinking fountain.  This is what journalists may be best at in the future.

Brian Caulfield, a mentor and friend, let me in on a secret to good magazine journalism: stories should be surprising and have a point of view.

There are two ways to come up with a surprising story. One may “break” news by getting a scoop, or unveil some hidden insight. Scoops are pretty straight forward and the providence of the best magazines and newspapers. Insight is a little trickier to grasp, however.

When we worked together at a business magazine, Brian and I came up with several basic flavors of insight that might be applied to any news story:

1.  Forward Spin: Come up with some analysis of what’s going to happen next. If one company buys another, what might be the next corporate pairing in their market? What will a company’s competitors have to do to counter its new measures? What is this news going to mean for investors down the road? Will the company be able to hit its earnings numbers next quarter?
2. Pearl Necklace: Is the piece of news one in a series of similar events? Is it worth pointing out that deal X is the third such deal that’s happened in the past month or that involved the same investors?
3. Bunch of Grapes: Is this piece of news fundamentally demonstrative of a much larger trend? Is it one particularly succulent grape from a much larger bunch?
4. Lessons Learned: Business person X just did amazing thing Y. If you want to do the same sort of amazing thing, you should take note of these key lessons.
5. Reality Inversion: Take what everyone believes to be true, turn it upside down and look for examples or proof. Everyone believes a recession is bad, for example. Invert this commonly accepted maxim to get that “a recession is good,” then find who that’s true for. Recessions are great for people in the repossession business and generally improve sales at liquor stores. Profile these thriving businesses when a recession hits.

I particularly like the “Reality Inversion” principle for coming up with interesting stories and like to use it to test out various theories and try to use it as frequently as possible.  In a recent conversation with one of my coworkers, I started off by saying: “Well known investor X isn’t really that good.” Which lead to a very interesting discussion of what makes a good investor based on a very different point of view. Even if you end up throwing out the inversion, it forces you to think in creative and different ways.

My team met with Chris Ahearn, a manager at Reuters, who put us wise to Reuters Labs. The site highlights some of the new, experimental tools and services the media giant is playing with.

There’s a lot of pie-in-the-sky technology on the site. I haven’t had a chance to plumb each different technology, but my initial take is that maybe a third of it will catch on with early adopters. Maybe 1/12th of it will ever get into the hands of journalists or consumers.

I’ll be looking at it in depth in the coming weeks.

Howell Raines, former managing editor of the New York Times, opines on the newspaper’s dubious business future unconvincingly in a column in Portfolio Magazine.

He lays out a thin case against being bought out by Rupert Murdoch citing the “jolly pirate’s” use of newspapers and broadcasting “…in a broadly unprofessional way—as political muscle to advance his commercial interest.” There’s no mention of any examples of such behavior, of course, Raines assumes that everyone following the debate feels the same way he does.

I submit this counter argument: If Murdoch is so bad for journalism, why do people still read the papers his company put out? Does he really have the time to throw his weight around by strong arming journalists and editors?

At least one may still trust stories in the Wall Street Journal to be accurate. Raines, as readers may remember, was fired from the NYT for his inadequate oversight of the Jayson Blair fact fabrication and cheating scandal. His “argument” against a Murdoch buyout demonstrates the same loose attitude toward facts that got him fired.

But maybe I’m being to harsh on the guy. It’s obvious he’s living in an outdated paradigm where the New York Times still anchors information trafficking. He writes: “There is no more important question in American journalism than the future of the Times…”

I offer five other, more important questions for American journalism.

Ignoring the fact that ethics and accuracy should have been a more important issue for him during his tenure at the NYT, it’s worth pointing out that the NYT ($2.93B) is smaller than The Washington Post ($6.28B), USA Today publisher Gannett ($6.99B), or Reuters ($7.42B). To be sure, lots of people read it, but fewer than USA Today or The Wall Street Journal. It’s important to journalism like Ford Motor Company is important to the auto industry.

It’s barely worth eviscerating each of his suggestions for an anti-Murdoch NYT future: sell to Google, sell to Bloomberg, focus on just the New York Metro area, replace the board, or go private.

• Google isn’t buying the world’s information, it’s organizing it.
• Why would Bloomberg want the NYT? His company has been focused on data and real-time news: not stuff the NYT has a real lock on. Better bet for Bloomberg would be spinning out some of the financial data assets from McGraw Hill, such as its CapitalIQ product.
• Focusing the Washington Post on Beltway politics makes sense for D.C. but what would a New York-focused publication focus on? New York is too diverse for such a parochial scope. Still, focus is good and the NYT might profit from doing it.
• Replacing the board with pro-journalism people might be an interesting short-term strategy for preventing a takeover, but it doesn’t seem to be a long-term tenable strategy.
• Raines is right when he says going private would have been more likely two years ago. It’s no secret that the buyout business is taking a hit thanks to the credit crisis. But the buyout business isn’t just about leveraging businesses anymore, or streamlining by selling off unnecessary assets. There’s got to be some operational opportunity for growth that somehow can’t be realized under the scrutiny of quarterly earnings. I’m not sure what that would look like for the NYT, but I can’t imagine a PE firm giving the company more free reign than the Sulzberger family…

Raines needs to get off his soap box and exit his echo chamber.

1. Is it worth fighting content commodification? Most local papers feed on content pulled from the Associated Press newswire and offer little in the way of context or local significance. Do people still need a local spin or a verticalization of the content to reflect its impact on their interests?
2. How do you make investigative journalism work now? It’s harder to allocate resources to do the work of investigation with staffs shrinking and budgets tightening. Investigative digging takes time and lots of effort. There’s another factor at work here too. The journalists that remain in the business are often viewed with trepidation instead of trust by would-be sources. The profession regularly ranks just above used-car-salesman on trust polls. A journalist’s best scoops typically come from someone whom she or he already knows and trusts. Maybe this is a sub-point to number one of this list, since it might be considered a side effect of commoditization.
3. What’s the best way to separate signal from noise? Traditional advertising has been, for many companies, supplanted by spending on “public relations.” A large corporation may have more PR executives on staff than any one of the business magazines that cover it. How do you pick out the real news from the processed and packaged crap that’s pushed out to already over-extended journalists? Citizen journalists, bloggers, pundits and others now weigh in on everything, often without adding any new details or context.
4. What’s the best way to monetize online content? Every news publication struggles with this. People don’t want to pay for things online. Online advertising is growing, to be sure, but many small publications are left out when the cost of securing advertising outstretches the benefit. Studies show that most people don’t even see the advertisements served online.
5. What community does a news organization target and how does it interact with that community? The internet has radically changed the way many people classify themselves into communities. Left-handed lovers of Dungeons and Dragons may find others online with whom they have more in common than the person who they live next to. The comment thread underneath stories and social networks aren’t adequate for one major reason: they don’t make money.

Rupert Murdoch, the media mogul extraordinaire, decided to keep the Wall Street Journal behind an online pay-wall, dispelling rumors it would be free after his purchase of the product.

Silicon Alley Insider deconstructs the reasons to keep it a pay-to-read publication:

• Not giving away a growing revenue stream of $75 million + in free money.
• Preserving the brand’s exclusivity.
• Continuing to charge premium CPM rates for a known audience.
• Preserving the value of the print paper for a long as possible (subscribers will be less inclined to drop their subscriptions if they have to pay for the content anyway). Continue Reading »

It has become an all-too-familiar headline: Newspaper shutters as Internet continues killing business. This time it’s the Post family of newspapers in Kentucky. From Businessweek:

Originally called The Penny Paper when it was started in 1881, the paper was renamed The Penny Post by E.W. Scripps, who assumed control in 1883. The newspaper became The Cincinnati Post in 1890, when its Kentucky Post edition began.

The Post newsroom was down to about 50 people at the end, and its daily circulation was less than a tenth of the 270,000-plus it enjoyed in 1960, before changing lifestyles, the expansion of television news, and later, the rise of multimedia news and advertising sources, sapped readership. Cleveland and Columbus, Ohio’s two largest cities, lost an afternoon paper each decades ago. Continue Reading »

United Airlines added a $5 surcharge to each way of the tickets it sells, Reuters reports. The move is designed to off-set increasing fuel costs. We’ve written before about the airline fare hikes and said they were like putting a band-aid on a machete wound. Now is a good time to lock in those frequent flyer tickets you’ve been saving.

Still, Brazil’s discovery of oil off its coast, in the deep waters of the Atlantic, probably won’t help. State-run Petróleo Brasileiro discovered an estimated 5 billion to 8 billion barrels of crude-oil equivalent about 180 miles off the coast of Rio de Janeiro, the WSJ reports. Too bad it’ll take years to get out.

Newspaper circulation is down 3% year over year a new study shows. The one bright spot in this otherwise dismal death-scape is USA Today, which increased its circulation 1 percent.

There’s some interesting data from the story about the correlation between raising a subscription price and losing subscribers: “The New York Times, which has raised its price twice in the last year, in addition to shedding unprofitable sales, lost 4.5 percent of its weekday circulation (to less than 1.04 million) and 7.6 percent of its Sunday circulation (to 1.5 million).”

Hope they made up for the difference with the price hikes.

The study takes into account, for the first time, over-all readership for a company’s print and digital products. The new numbers paint a somewhat brighter picture for the news industry. Many of their readers have migrated to the Internet and consume the news via their desktops at work. It’s still amazing how long it is taking for newspapers to figure out a new approach to the Internet. It isn’t exactly popping the paper product up online that’s working. The best news organizations are leveraging the things that make the Internet a truly different medium that are going to win.