Media disruption

Michael Massing’s essay in the current New York Review of Books is worth reading. In The End of News? Massey discusses some of the challenges of news organisations, how those in control of news organisations are reacting, their role in the politics of the day and the devastating impact of cost cutting. Part two, yet to be published, is to look at “how the press will respond”.

The publication of this essay is timely given the cost cutting at Fairfax announced recently. Massing’s work warrants robust discussion and even debate among journalists, editors, publishers and news consumers.

This second last paragraph from the essay could easily be written in Australia and about the Australian situation”

If the newspaper industry continues to shrink in response to the unrealistic expectations of Wall Street, the loss would be incalculable. The major metropolitan dailies, for all their faults, are the main collectors and distributors of news in America. The TV networks, to the extent they still offer serious hard news coverage, get many of their story ideas from papers such as The New York Times, The Washington Post, The Wall Street Journal, the Los Angeles Times, USA Today, The Boston Globe, and The Christian Science Monitor. Even the bloggers who so hate the “mainstream media” get much of their raw material from it. If the leading newspapers lose their capacity to report and conduct inquiries, the American public will become even more susceptible to the manipulations and deceptions of those in power.

This is a long yet thoroughly compelling essay.

It’s tempting to ignore Chris Anderson’s sobering update on sales: box office, newspapers, music, books, radio … all down. Internet advertising … up. Read more here. Ignorance is bliss as they say.

Those of us in the cross hairs of the impact of online advertising, news and information want desperately to read some good news and too often these days the news is about the end of the world as we kow it.

The only way we can future proof our businesses is to find new markets which build new traffic to our shops and businesses. This is hard slog for small business. It takes time and money. But we have no choice. In most cases our suppliers have their own battles with disruption of new technologies impacting their business model to care about small business partners.

So, reading material like this from Anderson reminds me of the frailty of business and the need to move forward every day evolving the business.

The Wall Street Journal reports that CBS and NBC has entered into agreements whereby consumers will be able to access single episodes of prime time TV shows for as little as US99cents each. This is TV executives reacting to disruptive technologies like wireless, video iPod etc. The move will, itself, lead to more change, not only in TV but elsewhere as consumers have more experiences with accessing what they want when they want – and the flexibility of accessing just the bits they want. This move, to free individual product from the aggregated product is somewhat like the Amazon announcement last week.

Three links relating to my last post on the new wireless broadband offering:

ZDNet.

Corante. On media implications.

Disruptivewireless. For balance and (healthy) cynicism.

At Techworld they have a story about what seems to be an amazing broadband product. The developers of the technology claim to deliver 1,000 times more bandwidth than existing WiMax technology. This technology and other similar technology in development, is what will revolutionise how we access news and information since rich, easy to view content will be truly portable.

This technology will be a giant leap from where we are at today. It will introduce just in time publishing opportunities for media companies. (And as we become more news hungry, is a more scared world, being online all the time will be important to us.) It will also make media companies build geographic specific content. It will make us even more mobile device centric.

The biggest shift this type of low cost mobile broadband access could/will bring is a consumer demand for immediate access to news and information rather than static of the more traditional media paradigm. This is where I see an impact in newspapers and to a greater extent magazines – especially the weekly women’s magazines.

And as I write this I’m thinking about this technology coupled with the e-ink/e-paper devices I’ve previously written about and realise a combination becomes the killer app.

The company involved in this latest product is xG Technology. They’re worth watching.

FOOTNOTE: This will be a government and regulatory challenge – especially if Telstra and existing media companies have a say in the matter!

NBC has announced that from Nov. 7 it’s Nightly News will be available from MSNBC. More here. This is symbolically significant move and highlights the importance NBC places on being connected with an online audience.

washingtonpost.com has loaded its first video podcast up to iTunes.

While Craigslist and eBay have been a frustration for newspaper publishers, Google Base will be the biggest disruption of newspaper advertising yet. It will cause an urgent response from publishers. There are several reports online about Google Base including: This report at Business Week. And a more detailed report at searchenginewatch – this includes details of an official Google announcement.

Based on the database entry screens, Google Base is gathering all the data it needs to compete with newspaper classifieds and the major online portals like tradingpost.com.au, reasestate.com.au, carsales.com.au, seek.com.au etc. So, not only will newspaper publishers need to respond but so will online classified portals.

Consumers like free. The obvious pitch of the paid sites and newspapers is the strength of their brand. They’ll say people will use Google Base as an ad-on. Maybe so. At the lower end of the market if Google gets its offering right and can connect with the community it will be game over in terms of online and newspaper models.

In The Australian (a News Publication so you’d expect some knowledge) is this report speculating that PBL and News are considering joining forces to create a “classified advertising superbrand”.

This doesn’t make sense to me. PBL and News have different objectives in terms of their online businesses. News has a print business to support whereas PBL is reasonably new to classifieds and is 100% online. If it did happen the ‘losers’ would be the print classified advertising businesses. Having said that the two have worked together on some significant projects.

3, through a deal with MobiTV, has added seven new channels: Kiss; Shorts TV; CNN; Extreme Sports; ITN; Cartoon Network and Bravo. Punters pay £5 a month for access. (Source: Netimperitive) Interesting in the context of stories from the MIPCOM gathering of TV networks and producers that the mobile TV audience is expected to match that of normal TV within five years. (Source: paidcontent)

A few months ago I was talking with a TV producer who said people would never watch TV on a mobile phone. There are newspaper executives who today say people will never read a newspaper on a mobile phone or similar device. True. The devices and publishers will evolve and meet. Punters are mobile. News and information wants to be mobile. Publishers will adapt. They have to.

My fear is that for retail newsagents their revenue will shift from selling product to being a prepaid top up point so people can access news and information online. This means going from a 25% GP share of sales to <1% share of sales.

Phillips last month unveiled the the Readius mobile e-reader at the Internationale Funkausstellung consumer electronics show in Berlin. More at teleread.

The more companies floating products like this the more we will see content plays focused on the mobile marketplace and this is why those of us depending on traditional media for an income are bracing for disruption. Time to get on a surfboard I think.

This article from PR Week lists 10 media trends to watch. Portability of video content and blogs top the list. This is a good report – good reading for anyone involved in the news and information business.

Google’s announcement last week that it plans to offer free WiFi access in San Francisco is like a small pebble being thrown deftly across a smooth lake. The ripple of the bounces and eventual drop will travel far and be felt for years to come. Whether the offer proceeds remains to be seen. If not this time, major city WiFi coverage is a fait accompli. The only barrier is the economic model.

A WiFi enabled city is a city of opportunity on so many levels. For example, with enough wireless enabled handsets in the city Google will be able to deliver interest based advertising as it does today online. It will know where you have been, probably where you are going and will therefore provide options appropriate to that information. This change to the advertising paradigm is how Google makes its money online. Advertisers pay per click and punters are shows the ads based on what they are interested in. This compares to the traditional advertising paradigm which is not based on demonstrated interest.

The impact of WiFi coverage will be felt, I suspect in stages. The first casualties will be free newspapers, those focused more of delivering advertisements than editorial content of real value. These are local newspapers and the ‘thin’ commuter newspapers. However, commuter newspapers will only be affected in there are better WiFi enabled handsets like the Sony PSP device which offers a better screen and an improved experience. The next casualty will be listings followed closely by trader type newspapers and magazines (Trading Post, Trade A Boat). The final impact will be felt by mainstream newspapers. However, since by then they will be part of the citywide WiFi mix and their over the counter offering will have been rejigged appropriately, the impact should be minimal.

Given that newspapers and magazines are built to generate advertising revenue their brands will adapt to WiFi enabled cities. Some expect this to impact newspaper and magazine sales. Others expect it to attract new business.

The Google announcement, even thought so far away and facing huge hurdles, should be enough for newspaper publishers and the newspaper supply chain to be tuning their businesses already to cope with such a change.

The announcement by Google is disruptive to an already disrupted publishing industry. One hopes that decision makers in Australia are taking notice and engaged in planning for their future in a free WiFi enabled world.

A Guardian/ICM poll shows that a a third of 14 to 21 year-olds have their own online content (blogs etc) Source: Guardian.

To build its connect with a younger audience, Harlequin has struck a deal with Vocel to offer its romance novels and related tontent online and mobile. The eBook is alive and well. Source: CNW Group.

Peter Zollman, founding principal of Classified Intelligence LLC, writes for Newspapers & Technology about the impact of online for newspapers. Zollman’s thesis is that all the online activity is reigniting interest in classifieds and that this helps newspapers in print and online. I’d agree with that. Online brings people to advertising who might otherwise not have taken the step. Then it’s not a big step to use paid advertising. Zollman’s article is a good summary of online US classified plays to be aware of.

PBL has announced this afternoon that it will merge its online advertising business with carsales.com.au. This puts Australia’s #1 auto site within the realm of the Packer media empire. Just a couple of years ago News and Fairfax dominated classified advertising. That dominance is shared with PBL. In fact, PBL is setting the agenda at present.

This move by PBL underscores the need for newsagents to reevaluate their business model. Advertising is moving online. The speed of change is increasing and the deal by PBL will serve to increase this. Newsagents need to be replacing newspaper generated traffic and revenue. The PBL move demonstrates how to do this – pursue opportunities just outside your current area of operation but close enough for you to understand the business.

Newsagents and others relying on newspapers for revenue and traffic cannot sit by and wait for someone else to provide them with a future.

Newspapers in Turmoil is by Brian Lambert and published in Rake Magazine. This article talks about a crisis of quality and purpose and does not cover in much detail the disruption and challenges of technology and mobility. Overall it is a call for quality journalism to lead their future. I agree. Quality newspapers treated with respect through a specialist supply chain will have a longer live than fluff promoted from every street corner with unrelated competitions.

Stephen Baker of Business Week has blogged that seems set to unveil its blog search this week.

The relevance of this is that it makes blogs more accessible to regular punters. This builds traffic and puts blogs on a more even footing with regular news and information websites. This is turn puts pressure on mainstream media to engage in a more immediate and conversational way. While there is a debate over whether blogging is journalism, that it is becoming so easily searchable at places such as Yahoo and Google makes it a medium which competes with news and information websites for eyeball time and that is all that matters.

Australia now has several online general classified offerings and none more interesting than Cracker. This is a Fairfax owned business.

Fairfax publishes newspapers and relies on advertising revenue from these newspapers so it is interesting to watch their Cracker play. Plenty of Cracker content is fed across from Fairfax newspapers. Some Cracker categories connect across to Fairfax commercial websites – Domain, Drive and Mycareer.

It is an interesting strategy, competing with oneself. There is no doubt many businesses have been successful riding a tsunami on a surfboard and from the front. It sure beats getting swamped while your back is turned. The Fairfax strategy is better than what most publishers around the world are doing in response to the online advertising juggernaut.

Cracker looks like Craigslist. However, given the way it attracts new content and is fed content from Fairfax commercial sites, it is of more interest to readers than Craigslist.

In competing with itself, Fairfax is also competing with their traditional supply chain. They are offering an online only service which competes with and leverages off Fairfax products sold through newsagencies and other retail outlets supplies by newsagencies. It would be interesting to see how Fairfax would react if newsagents directly competed with them I this way.

Where the Fairfax model fails consumers is in the areas of high volume classified advertising – real estate, auto and employment. For these you have to use the Fairfax commercial sites and pay their rates – rates which are priced to protect revenue streams newspaper publishers became used to when newspapers were the only medium for such advertisements. The advertising pricing model should reflect pure online play and have no obligation to the broader Fairfax organisation. It’s only this pricing model which will attract consumers without support from existing Fairfax publications and websites.

With other sites now developing free and low cost online only plays which do not hold any obligation to a mainstream media operator (monkey; gumtree) and therefore do not follow a higher price model, Fairfax will be under pressure on its pricing.

The Australian classified advertising space is ripe for fundamental change. Consumers are paying too much for advertising. As news spreads here is lower prices overseas others will enter this space and play and draw attention to our out of date pricing models.

Classified Intelligence reports in a press release that “Google is aggressively moving to include classifieds listings in its organic search results…”

According to CI Google is currently requesting direct feeds from classified advertising websites.

While I don’t know if Google will be given the content feeds they are seeking, that they are pursuing providing advertising content through search results puts the traditional classified advertising supply chain more under the pump.

This is a space we have been playing in, in the back room, for over a year. Our goal is to offer an online advertising solution which newsagents can be part of in some way.

Report in Red Herring about News Corp’s global plans to leverage wireless opportunities for distribution of content. Here’s how the article starts:

Rupert Murdoch’s media empire News Corp. hopes to dominate entertainment content on cell phones by marketing aggressively in 2006 across the company’s global media network, a company executive said on Monday.

It’s part of the company’s plan to hold onto the media landscape as the advertising dollars move away from television and more toward new media like cell phones, the Internet, and video games.

Newspapers should be on that list as well. This move to more deeply engage with wireless as a channel for content is crucial and not unexpected. The News Corp. move will lead others to the well and speed up the disruption being experienced by mainstream media and their supply chain.

Lucy Hood from Fox Mobile Entertainment is quoted as saying: “In 2006 we will distribute globally and market aggressively. We will no longer rely on others to promote”

While newsagents need to discuss newspaper distribution and operational issues with publishers, the more important discussion needs to be about the future of the infrastructure we have established and how this can have a commercial viability with home delivery and retail of newspapers flat or falling.

Stories like this in Red Herring ought to drive newsagents to be working on business plans of their own. The world does not end with the News Corp wireless strategies. It changes is all and the sooner we in the newsagent channel realise that the more focused and productive our discussions with News Corp. and others will be.

According to a report at news.com.

Visit ononemap and you will see another site cleverly using Google mapping technology to navigate real estate advertisements. They take advertisement content from other websites and aggregate it with a cool mapping front end. brilliant.

In yesterday’s edition of Crikey, a daily emailed publication of news and comment, Publisher Eric Beecher commented about newspapers in the context of the appointment of a new editor for the Sydney Morning Herald, a newspaper Beecher once himself edited. Here’s what Beecher had to say:

17. Editing the SMH is about cost cutting, not creative journalism

By Crikey publisher Eric Beecher

The Sydney Morning Herald has a new editor – Alan Oakley, currently editor of The Sunday Age. “I am privileged to take on the best job in Australian journalism,” he said yesterday. “It is a challenging time for newspapers. I will concentrate my efforts to ensure that we are continually meeting the evolving needs of readers.”

Oakley, who is a popular choice, may feel he is taking up the best job in Australian journalism (it certainly felt like that when I had it in the late 1980s), but I suspect it won’t be much fun.

Newspapers like the Herald that depend solely on classified advertising for their profits are on the skids. Fewer people buy them or respect them, and their classified ads are migrating inextricably to the internet because it’s a better, cheaper medium for that kind of advertising.

Unfortunately, this consigns their editors to saying one thing (“I will concentrate my efforts to ensure that we are continually meeting the evolving needs of readers”) but doing another – cutting costs and eliminating jobs. These days, editors of papers like the Herald are more like executioners than editors.

Quality newspapers are a sunset industry desperately trying to prop up their historically high profits by cutting costs. Over the past week in the US, for example, six of the country’s more prestigious newspapers – including The New York Times, Boston Globe, Philadelphia Inquirer and San Jose Mercury News – have sliced hundreds of editorial and non-editorial jobs. And no-one believes this culling was anything other than business as usual for big newspapers.

Fairfax CEO Fred Hilmer said yesterday that Oakley’s appointment means the Herald “is in excellent hands for the future.” Unfortunately, that can only mean that Alan Oakley knows how to wield the knife.

I agree with Beecher’s comments about the viability of newspapers relying on classified advertising. Okay it won’t happen today or tomorrow. It will happen though. The economics of online classifieds make it inevitable. Newspapers cannot compete with the flexible search, production costs and mobility offerings of online advertising. Playing games with giveaways and competitions to drive sales will not fix that. Nor will offering free advertisements. Nor will free newspapers. Newspapers have a bright future if they focus on content.

I worry for the traditional newspaper supply chain in Australia. Newsagents are not prepared for the effects of the changes even though we are in the middle of them already with considerable supply changes impacting our businesses.

I disagree with Beecher’s comments about the viability of quality newspapers. Respected content (news, analysis and opinion) delivered exclusively in a print form will deliver sales of sufficient value to attract certain advertisers. Okay it’s more of a hope than a belief. People like Tim Porter and Jeff Jarvis and others have suggested how it may be achieved.

There is no doubt that this is a time of enormous disruption for newspapers. Denial only makes the road harder to navigate.