Media disruption

Putting all this together, we reach the conclusion that, on the one hand, Google is cool. On the other hand, Google has the potential to destroy the publishing industry, the newspaper business, high street retailing and our privacy. Not that it will necessarily do any of these things, but for the first time, considered soberly, these things are technologically possible. The company is rich and determined and is not going away any time soon. They know what they are doing technologically; socially, though, they can’t possibly know, and I don’t think anyone else can either. These are the earliest days in a process of what may turn out to be radical change. The best historical analogy for where Google is today probably comes from the time when the railroads were being built. Everyone knew that trains and railways would change the world, but no one predicted the invention of suburbs. Google, and the increased flow of information on which it rides and from which it benefits, is the railway. I don’t think we’ve yet seen the first suburbs.

This, the final paragraph from John Lanchester’s article, The search engine that could, the cover story in the A2 section of The Age today. Unfortunately there is not a link at their website. The original article can be found at London Review of Books website where it was published on January 26. The article refers to the excellent book, The Search, How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture by John Battelle (which I reviewed here last year).

Lanchester’s questions, comments and opinions are worthy of consideration. However, his piece is also about Wikipedia, Yahoo, Craigslist, News Corporation and the other global brands leading more and more people online and away from traditional places of social and commercial interaction. Who knows where this will end. Lanchester’s piece is timely and considered. I’m glad The Age has given the space necessary to run the whole piece on its pages – in the UK the Guardian ran an edited version. I’d like a follow up from a local perspective since we’re not feeling the impact here which is being felt in the US, yet.

It would be good to see The Age take a step further and open discussion, maybe through a public forum, on the issues canvassed in the article. This would be a good way for the newspaper to strengthen its community connection and demonstrate its role in the changing world.

In the meantime, I hope that newsagents, the independent small business owners who sell the bulk of newspapers in Australia, read the article and understand the implications for their businesses.

Rich Skrenta has posted an excellent deconstruction of Craigslist – the online classifieds portal many newspaper publishers credit with hurting their classified business. Skrenta’s analysis is more valuable and readable than the spin and bitching passed off as journalism published about Craigslist in some newspapers.

While Craigslist is yet to have any impact in Australia, publishers are prepared, having learned from the experiences of their US counterparts. Fairfax has Cracker, a free classified site with many Craigslist like elements. News Ltd has truelocal and a host of commercial classified websites which I’d expect to see brought together in the next few months. Sensis (Telstra) is even ready with their Trading Post website – even if their value proposition, beyond brand recognition is not that compelling.

As Skrenta points out, Craigslist is the Internet equivalent of the notice board at the laundromat or corner shop, except that entries, notices, are exceptionally well classified.

Interesting legal action has been commenced against online classified business Craigslist by a Chicago fair housing group. Get the Chicago Tribune take on the story here. Craigslist is not alone in publishing ads unvetted. Here in Australia there are many classified sites where this happens including at least one site run by a newspaper.

This story interests me for two reasons: how the newspapers run with the story and how regulators react. The story suits newspapers because it taints Craigslist and similar online classified businesses. This helps their main competitor – newspapers. Some newspapers have recently run hard with beat up stories demonising Craigslist and postings to the site. The internet is an open and rampantly viral place. People approach the space differently to the more regulated space of newspaper pages. One would hope that this is the view the courts will have otherwise consumer will have expensive gatekeepers (publishers) to pay for access which, today thanks to Craigslist, costs less.

I guess it was only a matter of time. ClickzNetwork is reporting: Amazon Testing Contextual Ad Program with Affiliates. Amazon and its affiliate network has the traffic to make this work. It’s another disruption for mainstream media. In the bricks and mortar world department stores didn’t give over their own in store real estate to advertise other businesses.

What interests me in this is that an affiliate makes some money off each click, they share in the Amazon revenue. Newsagents in Australia don’t have such a relationship with publishers. While advertising rates rise annually (and the cover price remains the same for years) their share of revenue remains flat.

The World Association of newspapers has begin a campaign accusing search engines such as Google of exploiting their content. reports at: Financial Times, USA Today and the World Association of Newspapers. I’m curious about this strategy of attacking search engine since they have the capacity to help newspapers reach a new generation with their brand. Search engines like Google and Yahoo understand more about consumer acquisition in today’s world than newspapers.

Industry research specialists Borrell Associates has published a report predicting that in the US online employment advertising will pass newspaper employment advertising by the end of 2007. In 2005 online employment ad spending in the US was $3.5 million a compared to $1.3 million in 2004.

Today, Australia’s own seek.com.au has 103,013 jobs advertised online. PBL has been smart in purchasing a share of this business. While News Ltd has careerone and Fairfax has mycareer, neither enjoys the success of Seek. Seek has been the sole advertising medium for my companies since 2001.

It’s usually at this point in a post that I’d note that newsagents need to act now in response to this move online. The reality is that they are waiting for someone else to act and deliver online relevance to their businesses.

From a report published by Wall Street Journal:

Auto ads, a major source of newspaper-classified advertising, have been slipping steadily for nearly two years. But the slippage may be turning into a landslide.

Last week, Tribune Co. said auto-classified revenue at its newspapers plunged 16% in December. Also last week, Lee Enterprises Inc., publisher of papers such as the St. Louis Post-Dispatch, reported a 15.2% drop in auto advertising for the fourth quarter. On Wednesday, McClatchy Co. reported a 20% decline for December, saying the downturn in car ads had finally reached its West Coast papers, the biggest of which is the Sacramento Bee, in the heart of California’s car culture.

We’re seeing a similar fall here in the buying and selling category – titles focusing on classifieds like Trading Post. I don’t have data for auto classified revenue in Australian newspapers. Anecdotally I’d say it’s down. This is why Saturday sales are challenged as it was usually a strong auto and general classifieds day.

Later in the WSJ article:

Dealers are finding Web ads generate strong responses. “Eight out of 10 customers that walk into our dealership have already looked at our Web site,” says Wes Lutz, who owns Extreme Dodge/Hyundai in Jackson, Mich. Demand from the Internet is so keen that three years ago he designated a new position at his dealership: Internet manager. That person’s job is to reply to all Internet inquiries within an hour.

Mr. Lutz still advertises with the local paper, but not nearly as much as he did 10 years ago. “They’re just really antiquated,” he says. “They’re just stuck in time.”

I was talking to a local car dealer on Friday and his comment was that newspaper advertising is now more about the brand whereas just a few years ago it was about the brand and specific stock opportunities. They have moved their stock opportunities online because online ads are searchable and, he says, because “that’s where they buyers are”.

No better evidence of turning the supply chain on its ear is the news that As The World Turns, the US CBS network soap, which turns 50 this year, has commenced podcasting the audio of each episode. The details are at the CBS website.

Just over a year ago we didn’t know what podcasting was. Suggesting that CBS, or any other network, would do this with any of its shows would have been met with ‘not in my lifetime’ type comments. Podcasting is now a viable channel and a revenue generator for content publishers in TV, radio and print. My, how the world has changed in such a short time. And the pace of change will increase.

Micro Persuasion reports that the New York Times has launched a daily news podcast.

Go here and you can see images and specifications for the Sony Reader referred to in my last post. It’s a sexy looking device … one which Sony hopes will take off for books like the iPod did for music.

The world of publishing stands on the cusp of the greatest innovation since Gutenberg. With cheap, portable electronic readers just around the corner, what is the future of the printed book?

So opens E-read all about it at Guardian Unlimited. It’s an excellent article about where e-book technology is at today and where it is likely to be in the near term. Fascinating reading – especially in the context of recent e-paper developments and other technologies challenging the more traditional news and information distribution model.

Booksellers have to be looking at what has happened to music and is happening now to books. Manufacturers (publishers) need to cut costs out of the supply chain to stay competitive and that’s what is at the heart of this technology. Middlemen like retailers are an overhead to be avoided.

So, News Corp. and Sensis (Yellow Pages – Telstra) are to duke it out for directory business in Australia. These business partners (in Foxtel pay TV) are going head to head according to reports out this morning. Both rely heavily on their print businesses for revenue. Their customers are more wedded to their print product and, at the moment, so are consumers. But that will change. By taking on Sensis, News is speeding up the migration of directory related business online.

The not unexpected move by News demonstrates that News sees an end to classified revenue from newspapers. It also presents a face of competition while maintaining the status quo on advertising costs. I do not expect News to aggressively pursue Sensis on advertising rates and doing so would not make sense. News wants premium advertising rates as much as Sensis. Only an outsider could upset the directory and online classified business. Remember air travel up until the arrival of Virgin Blue. Despite all the bluster about competition, in terms of ticket prices travelers did not see it. I’d suggest the same will be true here with News and Sensis and directory business. Neither company has the slim operating costs necessary to genuinely bring the cost of directory and classified advertising down significantly.

More generally on the move, News is doing here in Australia what it has been doing globally for the last year – making sure its brand has the necessary presence and access points in the mobile online world.

Reports about the move: The Australian (A News Corp. newspaper)

This article from MSNBC sums up why newspapers the world over hate Craigslist.

NEC is in the mix pursuing electronic newspaper opportunities with its organic radical battery (ORB) as reported at tgdaily. It’s very thin, light and bendable.

Plastic Logic has fabricated what they claim to be the world’s biggest flexible organic active matrix display reports editorsweblog (the image above is from their website). The display consists of a flexible, high resolution, printed active matrix backplane driving an electronic paper frontplane.

Once you add good power and the ability to be online all the time you have the newspaper of the future.

This story from the Consumer Electronics Show at Las Vegas about a device from Sony which builds on the e-ink / e-paper (call it what you will) technology. Many are waiting for mobile electronic newspapers and this device moves a step (albeit small) closer to that.

Google has refined its Google base classified advertising offering. Now instead of passing you to the original content site for an ad, they gake you to a Google page. This may mean reduced traffic for the originator. More of the story: here.

The Roanoke Times in the US has launched a daily online video newscast. Called TimesCast, they are putting together a four-minute piece which is a mixture of news and local colour pieces. There is no better way to sort out how to respond to change than by immersing yourself in it as this newspaper is. Check out the video cast here. I’d love to see some Australian newspapers playing in this space if only to produce material for use in store to better promote their product.

Source: www.cyberjournalist.net

News Interactive (part of News Corporation) Ltd has announced the launch of four ad-supported video channels in Australia in partnership with online broadcast network ROO. Content will come from Sky News and 5,000-plus videos delivered daily by ROO.

An excellent article by Joseph Menn of the LA Times about the impact of online classifieds, particularly Craigslist, on circulation and advertising revenue. Craigslist is live in Australia. Craigslist is why we have seen Fairfax play with Bid2Buy, News offer free classifieds (up to a price) and both invest in online businesses.

PaidContent reports that: Disney SVP/CFO Tom Staggs told investors and analysts at CSFB that iTunes has sold some 800,000 downloads of ABC’s “Lost” and “Desperate Housewives.”

That’s a lot of downloads and it will only grow. Yep, a new channel to consumers is open for business.

The Editors Weblog quotes Rupert Murdoch saying: “I don’t know anybody under 30 who has ever looked at a classified advertisement in a newspaper,”. While I don’t disagree, I thought a quick quiz of the under 30s team at my software company was in order. Here is what I asked:

Rupert Murdoch has said that no one under 30 reads classified ads in newspapers? Do you agree or not? What is your experience with classifieds? i.e. – great / cumbersome / so yesterday…

Here are their responses (with names omitted):

Female: Age 27
Only the classifieds in the local leader paper for ads for Garage Sales etc.

Male: Age 28
Only to read my own ad (not a personal) when I place one. Otherwise it’s the net to find anything.

Male: Age 28
I have read them but only if I am looking for something in particular. E.g. Car or House etc. This is in conjunction with associated sites. The sites are better though!

Male: Age 27
Agreed, newspaper classifieds are obsolete! So much easier searching the net and finding exactly what you want.

Male: Age 24
I occasionally read it. I never get anything out of it. I agree to a certain extent. However, you don’t always get ALL the information from the internet. For example, if you were looking for a used car, what you might find in the classifieds you might not find on websites. Same goes for houses. I’ve been hunting for a house and though I look on the internet for possibilities, I still read the classifieds in papers … and I’ve found that some of the houses advertised in classifieds I can not find on the internet.

Male: Age 29
I agree. If I want anything I use the net to find it.

Male: Age 24
I agree with Murdoch. I don’t read newspapers fullstop. Why? Mixture of reasons come to mind ;Time, money, the environment and accessibility to information the internet provides. I think the whole newspaper demographic has changed since the arrival of the www. And the way modern society is today, today’s newspaper is yesterdays news…
My homepage is also a news site – ninemsn.com.au

Male: Age 27
I’m 27 and I don’t read the classifieds. In fact, I don’t even get the paper. I’m more of a ‘catalogue’ type of person. It’s really a matter of need.
If I’m in the market for a house or car, or something relatively expensive, I’ll exhaust every resource before I make my mind up. This includes the classifieds, Trading Post, and the internet. The upside to the internet is that if the item I want can be reviewed, it’s really easy to read other users’ opinions. The paper just does not have such information.

Male: Age 24
I will search the net if i need to purchase something (ebay or tradingpost) and if i need a service like cleaner, gardener I normally check the yellow pages. So no I don’t usually read classifieds in papers.

Male: Age 19
I don’t buy papers or look at classifieds. I’ve been to tradingpost.com.au maybe twice? I agree with Murdoch about this.

Male: Age 29
I regularly read the classifieds in the local papers when looking for local tradeys to work on our house.

Male: Age 24
I don’t read the ads in papers, if I want to read classified ads I always go to www.tradingpost.com.au or eBay.
Even for news I wouldn’t buy a newspaper. My homepage is a news website.

Female: 21
I read MX because I like the stories. I don’t read classifieds as I don’t want what they sell.

Hmm… MySapce.com and other companies recently purchased by Murdoch’s News Corp, connect well with this demographic.

According to the people in my company, Rupert Murdoch was right. I’d also suggest, however, that the under 30s are less likely to purchase most of the items advertisied in classifieds so I think this is more about need of the demographic than a judgement against the newspaper medium.

The next question, of course, has to relate specifically to where under 30s access news and while some above have cmmented on this, a response from everyone would be valuable.

Craigslist has wrecked havoc on newspaper classified business in the US over the last five years. What started as a small San Francisco email among friends has grown into a giant killer by making online classifieds free. (Craigslist is yet to make an impact in Australia even though it has coverage in the capital cities.) Now, this report from Editor & Publisher reports that Craigslist founder, Craig Newmark, is close to launching “a major online journalism project within the next few months that will copy the successful ‘wisdom of the masses’ approach to classified advertising and apply it to journalism”.

Citizen journalism is developing well in the US and Europe. Craig Newmark entering this and allied spaces would dramatically lift the profile and bring traffic.

In the E&P interview Newmark makes comments about journalists which the folks at Fairfax might find interesting given their editorial redundancies.

I’ve just finished reading John Battelle’s book, The Search. Subtitled How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture. Battelle was a cofounding editor of Wired magazine and founder of The Industry Standard, an Internet-focused magazine that closed with the bursting of the dot.com bubble. Beyond being a good history lesson on the business and technology of search, this book provides a timely analysis of the social implications of search engines, be they the engines operated by Google, Yahoo! or Microsoft. It is compelling reading – even more so for those in the cross hairs of online search such as Australian newsagents and especially now with the release this week of Google Base.

The Search economy as now being practiced by Google will prove to be but a shadow of what is to come and Battelle takes us further on the journey of understanding search and which might come on the search road.

Read this book.

Here it is folks the announcement from Google about Google Base. It all sounds quite benign, especially the examples provided. Newspaper publishers will have to react quickly and decisively but even that will be too late. Google Base is the tipping point for classified advertising. It is disruption on a massive scale. Everyone relying on print classified advertising for business needs to be playing elsewhere. Some smart newspaper publishers will embrace and partner with Google Base.

My concern is for Australian small business newsagents, many of whom have no real idea of Google let along Google Base. These folks rely on newspaper sales for 50% of their traffic. 66% of newspapers sold are sold alone. That is, without newspapers their business model is severely damaged. I appreciate that you cannot hold back progress and that Google is doing what Google needs to do for its shareholders. These small businesses need their own response but before they can determine that they need to know there is a problem. Given the history of the Australian newsagency channel publishers have an educative obligation.

Google Base will be huge on all the fronts we know of today and then some.