Newspapers, Advertising

Burn At Adjoining Stakes

 

Newspapers thrash and wail as they are burned at the stake of change. Most were too dumb to arrange for a quick garrote before the flames started, and now the crackle, smoke and sizzle of dying assumptions is the chorus to their final screams.

 

Which keeps them too preoccupied to do some basic reporting and look at the next stake over, where the print advertising business is the unwilling guest of honor at a final barbecue of its own.

 

When it’s not busy holding the most publicized secret meetings since Eliot Spitzer and Friends, the Newspaper Association of American collects data. Some recently released stuff gives details on advertising, the source of almost all the money in the newspaper game.

 

According to NAA’s figures, the value of print advertising in 2005 was $47.408 billion. In 2008, that was down to $38.704 billion – a drop of more than 18 percent over the three-year period. That’s bad enough, but the NAA’s figures show an accelerating year-to-year decline.

 

In 2006, the decline was 1.7 percent. In 2007, that had increased to 9.4 percent and by 2008 it was 17.7 percent. In the first quarter of this year, the rate of decline for print sales was 29.7 percent, and even online sales declined 13.4 percent.

 

While print journalism wraps itself in the First Amendment to cover an otherwise naked lust for the First Annuity, equally profound changes have been rocking advertising.

 

First, if all those print ads are not being placed, it means lots of folks are not being paid to create, produce and place them. You know, the folks in the advertising business. Which in turn means that the advertisers themselves are getting along without those mass-market print ads.

 

Well, yes, there was a severe recession that now seems to be ending, but the betting is that neither mass-market print journalism nor mass-market print advertising will rebound to track with the economy.

 

And the reason for both is the same, although it’s small comfort as they crackle and pop on adjoining stakes. They are no longer needed.

 

Individual consumers want to read only news and ads of interest, but the technology of our past didn’t permit that, except in a clumsy way. That meant herding both news and ads into special sections of a newspaper or to niche magazines or direct-mail demographics.

 

In all cases, the consumer got some of the wanted information along with lots of the unwanted, while the advertiser got some potential customers along with lots of those who just weren’t interested. And both paid.

 

The internet changed that in important ways. First, the consumer decides what interests them and now has the tools to exclude what doesn’t, which goes for both news and ads. Second, for both news-providers and advertisers, there is an instant-feedback loop that tells publishers exactly what got read and what didn’t and advertisers not only what got read, but whether or not that resulted in a sale.

 

You can’t do that with mass print journalism and the advertising that once supported it.

 

So both consumers and advertisers have stopped paying for news and eyeballs they don’t want and can’t use.

 

What, if anything, either group will pay for in the future has yet to be confirmed. In the meantime, if you’re looking to invest in a growth industry, get into stakes and kindling. It’s a booming business.

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Barn Doors and Newspapers

 

 

Alarmed after finally noticing that readers and advertisers were out of the barn, the American newspaper industry has thought long and hard about what to do.

 

The emerging consensus is that it needs to design a better barn door.

 

Most designs lean heavily on subway turnstiles for inspiration – no pay, no service. It’s a concept simple enough for most newspaper executives to understand, which is a large part of its attraction.

 

Where the emerging designs are weakest is in a nagging little detail – getting readers and advertisers now frolicking in the fields of hypertext to want to come back in the barn.

 

As posted on Poynter Online’s Romenesko, a May 8 MediaNews memo from Dean Singleton and Judy Lodovic to their many minions embraces the turnstile, noting “First, we continue to do an injustice to our print subscribers and create perceptions that our content has no value by putting all of our print content online for free. Not only does this erode our print circulation, it devalues the core of our business - the great local journalism we (and only we) produce on a daily basis.”

 

Although coming from MediaNews brass, the sentiments are a safe bet to get embraced at other media companies, where doing an injustice has also become unpopular at about the same pace as it became unprofitable.

 

The memo goes on in MarketSpeak, but one quote stands out “To be clear, the brand value proposition to the consumer is that the newspaper is a product, whether in print or online, which must be paid for.”

 

Newspapers are compilations of the news of the day, whether that is a change of government or the price of broccoli. For readers, they compiled events and information that would be difficult or impossible for most readers to match. For advertisers, they compiled an audience, some of whom might be thinking of broccoli with dinner tonight.

 

Both readers and advertisers might grumble, but they paid up because there was no other practical way.  They stayed in the barn, and when they strayed with alternative media or direct mail, they came back.

 

That’s changing.

 

For readers, gathering – and often, publishing -- information is easy, quick and cheap. The old saw “Freedom of the press belongs to he who owns one,” is true with a vengeance. Just about everyone owns the means to distribute information widely, which is the same tool used to gather it.

For advertisers trying to peddle broccoli, it’s no longer required to pay for all the readers who don’t cook, or those who do but hate broccoli. Online ads after the first click are by definition viewed by those who might be interested in whatever you’re trying to sell. And if you have your own web site, regular customers will come to you for information instead of you sending it unbidden to them.

 

Newspaper brass should ponder that scribes in centuries long past once had a lucrative trade, since they could both read and write and a largely illiterate population had to use them to communicate at a distance. And then change in the form of widespread literacy came along.

 

Scribes disappeared.

 

Change has come again.

 

Newspapers. . .?

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Newspapers And Digital Pixie Dust

 

 

If you think the problem with newspapers isn’t the news as much as the paper, today’s announcement by Amazon of the Kindle DX is encouraging, kind of like hearing that one of your hangmen discovered a previous commitment.

 

Aimed by Amazon’s Jeff Bezos as a better alternative to ink-on-paper newspapers, magazines and maybe textbooks, the pencil-slim tablet slightly smaller than a sheet of typewriter paper boasts a 9.7-inch diagonal black-and-white display and a $489 pricetag. (Two earlier, smaller and cheaper Kindle versions aimed more at books, although they included newspaper content.)

 

The idea behind all Kindles is that you pay a small amount to download what interests you and mechanical production/delivery costs for the information providers largely disappear. Since newspaper production can be 20 percent and more of fixed costs, publishers are tempted to jump into Amazon’s lap with tails at full wag.

 

New York Times Company Chairman Arthur Sulzberger Jr., there for the Kindle DX unveiling with Bezos, called it "an important milestone in the convergence of print and digital."

 

The publishing industry buzzed with talk of subsidizing Kindle costs in return for multi-year subscriber commitments, taking the mobile phone industry as an example. And other equipment manufacturers hastened to remind that their own digital reader widgets were also in the running.

 

Now let’s insert some of the “balance” so beloved by traditional reporting.

 

Here’s a widget that costs as much as a cheap notebook computer and has lots less functionality. It may sell as well as mobile telephones that only make phone calls, assuming you can still find any for comparison.

 

Newspaper and magazine publishers hope you’ll stop getting news and information for free from the web and start paying for it on this widget. It’s the same strategy employed by smitten young things who move in with their boyfriends while their mothers wail “he won’t buy the cow if he gets the milk for free!”

 

Textbook publishers hope you’ll stop paying outrageous prices for new text books and buy them via Kindle. Already grumbling about used textbook sales, they know deep in their hearts that no student will ever find a way to copy and distribute the information illegally. They know because the entertainment industry told them it never happens with music and videos.

 

Maybe those hopes will come to fruition and maybe the whole idea of a newspaper, magazine or textbook will adapt to the digital age.

 

Or maybe it will develop that publishers as we know them once prospered because they owned the very, very expensive and therefore rare means of production and distribution. Advertisers paid hefty fees to in effect “rent” those production/distribution machines to reach readers, providing almost all the money in the game, grumbling but quite aware that for many markets, it was the only game.

 

The advent of technology supporting personal computing devices and the internet changed all that forever, and sprinkling digital pixie dust on old economic models does not guarantee that they’ll fly, even when Tinkerbelle is Jeff Bezos and Neverland is an Amazon subsidiary.

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SOME INTERESTING OBSERVATIONS on the Death Star looming over print journalism and how the survivng mammals might prosper scurrying among the dinosaur bones may be found at http://www.technologyreview.com/blog/pontin/

That's Technology Review published by MIT and the author is Jason Pontin, editor in chief and publisher.