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Seeking Alpha: Why you should invest in newspaper stocks

September 10th, 2009 | No Comments | Posted by in Editors' pick, Newspapers

‘Newspapers: Not as Bad as Advertised’ proclaims the headline of Glenn Rogers’ Seeking Alpha post.

Succinctly summarising the problems facing the news industry, Rogers then goes on to recommend buying newspaper stocks.

If you believe that some of these companies can adapt and survive, there are reasons to invest, he says:

  • The New York Times and Gannett (for example) ‘have both been cutting costs dramatically for the past several months and they are well-positioned digitally to benefit from the online consumption of news';
  • “[E]ven if they are not successful in attracting subscriber income they are well-positioned to benefit from what I believe will be a gradual recovery in the advertising market in general over the next several months.”
  • Gannett in particular offers a number of spin-off technology solutions to large companies; while the Times has a number of businesses outside of the newspaper.

Sound investment advice or newspaperman sentimentality? Either way, Rogers’ post does look at some of the non-traditional revenue streams and business elements that could help existing media companies weather the economic and structural storms.

Full post at this link…

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Jon Bernstein: Why ITV’s micropayment plan is unlikely to make the Grade

July 15th, 2009 | 3 Comments | Posted by in Comment, Online Journalism

ITV management had better hope Ben Bradshaw’s deeds are as good as his words, because its faith in an another revenue-generating scheme looks misplaced.

Bradshaw, the recently appointed Culture Secretary, told the Financial Times earlier this week that the BBC’s refusal to relinquish licence fee money to aid other broadcasters with a public service remit was ‘wrong-headed’. He said the corporation’s hierarchy would have to come to its senses sooner or later.

While the BBC fights the good fight against ‘ideological’ forces such as these, part of the network gave airtime to a would-be recipient of top-slicing: ITV’s executive chairman, Michael Grade.

On BBC Five Live last Thursday, Simon Mayo asked Grade about the YouTube Susan Boyle affair (some 200 million video views to date).

After describing YouTube’s proposed revenue-share for the Boyle clips as ‘derisory’, Grade insisted ITV wouldn’t get caught out again:

“We are working on it and watch this space, but we’re all going to crack it, either when the advertising market recovers or a combination of advertising and micropayments which is 50p a time or 25p a time to watch it.

“We may move in time, in the medium term, to micropayments, the same way you pay for stuff on your mobile phone. I think we can make that work extremely well.”

(You can listen to the interview on the iPlayer until midnight Wednesday 15 July. Grade interviews starts around 1 hour, 22 minutes.)

Despite Grade’s confidence there are grave doubts that paying per clip is going to work. Here are four reasons to worry:

1. Micropayments don’t work for perishable goods
It’s an argument that has been made against charging for news stories, but it is equally applicable when you are talking about clips from a reality TV programme.

Quality drama may have a shelf-life and an audience willing to pay for it, but a water cooler moment from reality TV? Not likely.

The Susan Boyle phenomenon still feels vaguely current, but it is a passing fad.

If you’re unconvinced take this quick, highly unscientific test: would you pay 50p to watch the machinations of ‘Nasty’ Nick Bateman from the first series of Big Brother?

The correct answer: who’s ‘Nasty’ Nick Bateman?

2. Micropayments put people off
Writing back in 1996, social scientist Nick Szabo introduced the idea of mental transaction costs. He argued that no matter how small the payment, it still incurs effort on behalf of the potential buyer to work out if he or she is getting a good deal.

He wrote:

“The reason we don’t do the things is that they’re not worth the brain cycles: we have reached the mental accounting barrier.”

And that in a nutshell is why micropayments are doomed to failure.

It’s a theme Chris Anderson touched on in his recently released book ‘Free: The Future of a Radical Price‘. He wrote:

“It’s the worst of both worlds – the mental tax of a larger price without the commensurate cash. (Szabo was right: Micropayments have largerly failed to take off.)”

Unsurprisingly, Anderson advocates free as a preferable alternative to micro, but he’s not alone. New York professor Clay Shirky is with him.

In fact Shirky has been saying much the same thing since the beginning of the decade and his 2003 essay ‘Fame vs Fortune: Micropayments and Free Content‘ has become something of a set text.

3. Micropayments only work if you control distribution
ITV’s Grade rightly cites mobile phones as a great platform for micropayments.

The network operator controls what is available via the handset, limiting availability and ensuring prices won’t be undercut.

Further, the operator offers a simple and largely pain-free way of paying for goods by adding the cost to a monthly bill or subtracting it from a top-up on a pay-as-you-go phone.

But the web is different – it’s anarchic, open, a free-for-all.

Nobody controls distribution and despite efforts to chase down copyright abusers, there will always be someone ready to undercut your micropayment with an even smaller charge – free.

Opponents of this reading cite Apple’s iTunes Music Store as proof that micropayments can work on the net. But, as Shirky argued earlier this year, the fee-per-track model works because this is a rare example where no alternative exists.

“Everything from Napster to online radio has been crippled or killed by fiat; small payments survive in the absence of a market for other legal options.”

Further, Apple does control part of the distribution, successfully creating a market for the must-have iPod.

So despite Grade’s assertion, it’s unlikely any micropayment system on the internet will turn out ‘the same way you pay for stuff on mobile phones’.

Incidentally, it will be worth watching to see how the smartphone redefines this divide between the largely ordered phone network and the web.

4. YouTube clips drive traffic first, revenues second
If you think about a clip on YouTube as a direct money maker, you’ve got your priorities wrong.

It’s about reach, exposure and promotion. It’s about creating a buzz and driving traffic back to the core.

Did the Susan Boyle clip achieve this? No question.

For starters, video views at ITV.com were up 528 per cent year-on-year and advertising slots for the duration of the ‘Britain’s Got Talent’ season sold out.

Meanwhile, such was the interest around the show, the final was seen by 19.2 million people – ITV’s highest audience since England vs. Sweden in the 2006 World Cup. More eyeballs this year promises high advertising yields next.

In short YouTube kept its part of the bargain.

Would all that have happened had ITV charged 25p a clip? Would 200 million people have checked it out? Will a pay-per-clip Britain’s Got Talent be a winner?

The twist in the tale is that Grade, who steps down as executive chairman at the end of the year, won’t be around to find out.

Jon Bernstein is former multimedia editor of Channel 4 News. This is part of a series of regular columns for Journalism.co.uk. You can read his personal blog at this link.

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Jon Bernstein: What if the business model for news ain’t broke?

July 8th, 2009 | 16 Comments | Posted by in Comment, Online Journalism

In what may feel like a twist of logic too far, there are a growing number of non-media companies who are adopting the Fourth Estate’s digital business model.

That’s the ad-funded, free-to-the-consumer model.

You know the one.

It’s at the root of the crisis afflicting the newspaper industry around the world, an industry which is trying desperately to make money online. Or at least not haemorrhage it.

To believe the unholy trinity that is News International, Daily Mail and General Trust, and the Guardian Media Group, the media model is unworkable, unsustainable and it’s got to go.

The three are not sure if it should be replaced by paywalls, micropayments, subscriptions or something else entirely.

But what they are agreed on is that it cannot be business as usual. Because that business is going under.

So why do we find the likes of Facebook, Digg and the mighty Google – and perhaps soon Amazon- adopting the ad-funded model to support services and software.

Take Gmail. It’s not a media entity, it’s email, but it is ad-supported.

One answer is that that advertising is the last, desperate (and largely) failing attempt to generate some money, given nobody wants to pay for their products. In short: free reigns.

On that latter point, Wired’s editor-in-chief Chris Anderson is likely to agree.

His new book ‘Free: The Future of a Radical Price’ – appropriately available to read and listen to online without charge – celebrates ‘freeconomics’, but has a much more positive take on its effect on the business world.

The reason, he says, people are convinced that ad-funded won’t work is because they are applying the conventional rules.

Offline – in newspapers, magazines, billboards, TV and radio – advertising is predicated on scarcity not abundance. Ad sales people trade on ‘space’ and the less there is the higher the yield.

So when there is infinite space online, their greatest selling tool disappears.

Right? Wrong.

Anderson argues that there is another kind of advertising which is epitomised by Google’s text ads:

“Google doesn’t sell space. It sells users’ intentions – what they’ve declared to be interested in, in the form of a search query.

“And that’s a scarce resource. The number of people typing in ‘Berkeley dry cleaner’ on any given day is finite.”

Google’s CEO Eric Schmidt – admittedly a man with a vested interest – estimates that the potential market for online advertising is $800bn.

“That’s twice the total advertising market, online and off, today,” notes Anderson.

So why is his tone at such odds with that of the media he is writing about?

Perhaps it has something to do with the production-cycle of book publishing. This book was in train before he had even finished writing the much-admired The Long Tail.

Clearly much of his thinking predates the collapse of Lehman Brothers which sealed our current economic fate.

His penultimate chapter, presumably added very late in the day and titled ‘Coda: Free in a Time of Economic Crisis’, is an acknowlegement of that, although not a denunciation of his core argument.

Just maybe, it’s the down-in-the-mouth media owners who are out of time, not Anderson.

Maybe this rush to find other ways to monetise will be a passing phase and when the economy picks up so too will online advertising revenues.

After all, what’s the alternative?

Pay walls may work for niche information but not for mainstream news and exclusives. That’s something that even the Wall Street Journal, poster child of the paid model, accepts.

Interviewed earlier this year its executive editor Alan Murray said:

“Look, if it’s a big news story, if we report a takeover and – we could hold that behind the pay wall. But if we do, BusinessWeek or someone else will simply write a story saying ‘The Wall Street Journal is reporting x’ and they’ll get all the traffic. Why would we do that?

“So if it’s that kind of a big, broad-interest news story, we’ll put it outside the pay wall and go ahead and take the traffic ourselves, thank you very much.”

Jon Bernstein is former multimedia editor of Channel 4 News. This is part of a series of regular columns for Journalism.co.uk. You can read his personal blog at this link.

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FIPP 09: Lévy’s forecast gloomy but print magazines still important for luxury brands, says Gucci Group media director

May 6th, 2009 | 1 Comment | Posted by in Advertising, Events, Magazines

There aren’t enough ad dollars on the planet for everyone, Stevie Spring, chief executive of Future, said, in her opening remarks for yesterday’s session at the 37th FIPP World Magazine Congress that looked at ‘what advertisers want’.

Magazines are ‘all having to fight much much harder to grow our share of media spend,’ she added. So, she asked, just ‘what the hell’ did advertisers want from magazines?

Nikolas Talonpoika, worldwide media director for the Gucci Group said that he thinks online will see a decrease in advertising spend from the luxury sector.

Magazines are still the most important part of the Gucci Group’s print advertising spend, Talonpoika told delegates.

While acknowledging that this year is tough and ‘lots of titles will disappear this year, Talonpoika was optimistic for the role that print magazines will continue to play.

Unilever’s CMO, Simon Clift said that for his company the ‘lion’s share’ of advertising is in television, and only 13 per cent of its overall advertising budget is spent in print – but said the magazines accounted for 90 per cent of that print spend.

Clift said that his company – which, with its £41 billion turnover, is seeing three quarters of its growth in developing and emerging markets – is thinking about different ways to promote its products via print.

For example, one Greek newspaper was once printed entirely on aromatised paper for one particular washing product campaign.

Clift said that consumers were not beginning to ‘define the agenda’ and that Unilever was looking for new ways to promote brands via editorial or advertorial content.

Clift argued that these methods ‘can build integrity rather than compromise it,’ he argued. Joking that advertising was something editors have to put up with, he said advertisers don’t want to see a publication damaged by the advertising. ‘A successful parasite doesn’t kill its host,’ he quipped.

It was about creating interesting content, he said ‘whether it comes from an editor or an advertiser’ “When those things [editorial and advertising] are parallel it magnifies and develops our message,” he said.

Dove is the Unilever brand which is most advertised in magazines, and a product which is an example of a cross-media promotion: online, in magazines and on television.

In the previous session, Maurice Lévy, chairman and CEO of the Publicis Groupe, spoke of the world ‘the ad agencies have to live in now, where a couple of words on a search engine page is sometimes considered by our client as more effective than a wonderful TV spot.’

Newspapers and magazines could not expect to retain their share in the advertising market, despite analysts’ more optimistic predictions for 2011, he said.

“We have to change and we do change each day. You have to adapt yourself to this new world,” he said.

“It’s not yet time for obituaries,” he claimed. “I’m a little bit shocked when I see print media forever discussing their own death,”

“Please always remember the small guy in the digital world – Bill Gates. He repeated loud and clear ‘content is king’ (…) and you [the magazine industry] own it.'”

“Would you go as often on the internet, if you could not find newspapers and your favourite magazines online?” he asked. “I don’t think print media is dead, quite the contrary,” Lévy added.

“Think what semantic can do when combined with marketing. Now is time to innovate.”

“You have to look at this as an opportunity to leverage new opportunities with the strength of your brand and your audiences,” he said.

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Where do news agencies fit into the online advertising model?

March 18th, 2009 | No Comments | Posted by in Advertising, Multimedia, Newspapers

It’s interesting to note Google’s latest advertising move, as reported by the Guardian, and background summed up here, in links, at this link.

The Guardian reported: “Google is ramping up its efforts to make money from its controversial Google News service by striking deals with eight European news agencies, and launching a contextual ad service to display adverts around their stories.”

“The contextual ads will also run alongside content from existing Google partners AFP, UK Press Association, AP and Canada Press,” it also reported.

It reminded me of a chat I had with senior members of the digital team at the UK’s Press Association (PA) in early February, but never published. Now seems a good time to share that information. Colin Ramsay is head of the PA digital sales team and Chris Condron is the head of digital strategy at the PA.

They told me that selling commercial video with advertising is an increasingly important venture for the agency.

“One of the key areas is that we need to move our position up the chain a bit,” Ramsay said. “Rather than be a news feed supplier, we want to fully understand what our service can do for our customers and how we can link that commercially,” he said.

“One of the things we really want to do is develop and leverage strong relationships with traditional media, and also expand in digital marketplace. There are lots of new and emerging customers for us to have dialogue with,” Ramsay said.

The Press Association can offer content in new ways, on new platforms, he explained, adding that video is ‘a key area’.

“I think we’ve got a lot of opportunities around commercial video,” he said, which could include developing relationships with new advertisers.  Blue chip companies are particularly important as potential advertising clients, he said.

More and more video ‘is a key part’ of PA’s provision, which could be integrated with different editorial packages, Ramsay said, adding that there is now less emphasis on text provision.

Different types of video and advertising provision means new as well as existing partnerships, he said.

“We’re in the process of analysing the commercial market,” he said. “For first time we’re looking at the advertising market and where is developing the most revenue.”

“What we want to be able to do is develop zones or microsites which allow our customers to attract new audiences and dervive new revenue streams and which we can share in.”

“It’s going to be a very exciting year for PA, in how it develops and competes – we then become an extra resource for our customers,” Ramsay told me.

Head of digital strategy, Chris Condron, addressed editorial issues: “One of the key things is the scale,” he said. “PA is 140 years old – the reason it was set up in first place is because it made economic sense for each newspaper not to send people to same place,” he explained, as background.

While ‘times are tough,’ he said that one of the ways PA is ‘looking to be even more helpful, or relevant’ is to find strategies the company ‘can use straight away’.

For example, provision of a news channel for Virgin Media is a different kind of service, with different kinds of advertising opportunities. “The core values remain, but it [approach] is a lot more flexible,” Condron said.

It’s not just commercial companies they want to supply video to: “The newspaper companies have showed interest in further video provision, and with the BBC not going into local video, newspapers are delivering their own video,” he said.

That’s an example of where the barriers between broadcasters and newspapers are breaking down, he illustrated.

“They’re [newspapers] really focused on where the users are, and what the users want and it’s our job to help them do that.

“I think it’s fair to say it’s tough times – we’re focused on being as helpful and useful to our core customers as we were in the past,” Condron added.

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paidContent.org: CondeNet cuts staff across all departments

November 12th, 2008 | No Comments | Posted by in Editors' pick, Jobs

US digital arm of Conde Nast is to make job cuts ‘across the board’ to prepare for further downturn in the advertising market.

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Reuters: UK online ads up 21 per cent despite fall in overall ad market

October 7th, 2008 | No Comments | Posted by in Editors' pick

The UK internet advertising spend is up 21 per cent, although the overall advertising market went down. The Internet Advertising Bureau said yesterday that expenditure on the web went up to 1.68 billion pounds ($2.95 billion) in the first six months of the year, while the total advertising market was down 0.7 percent year on year.

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Growing effect of online advertising in US, OPA study suggests

August 28th, 2008 | No Comments | Posted by in Journalism

Online advertising is going to overtake radio in the advertising market, MediaGuardian reported today.

Richard Wray’s article stated that while Carat – part of the Aegis marketing empire – had reduced its forecasts for the global advertising markets for 2008/9, it also said online advertising will continue to grow, overtaking radio as the third most popular advertising medium after TV and newspapers and magazines.

MediaGuardian’s report is interesting to look at in the light of statistics made available last week by the Online Publishers Association (OPA).

The US-based figures suggest that ‘consumers on all three types of local media sites – newspapers, television stations and magazines – are more likely to take action after viewing a local advert than visitors on all other local content sites’.

As part of the OPA study, JupiterResearch surveyed 2,069 US online consumers ‘who qualified as Local Online Content Users, by currently using online yellow pages, newspaper, TV, magazine, city guides, user review sites, portals or classifieds for local information.’

Here’s the breakdown:

Per cent of consumers taking action after viewing local adverts

  • Local Newspaper Site: 46%
  • Local Television Site: 44%
  • Local Magazine Site: 42%
  • User Review Site: 39%
  • Portal: 37%

Click here to view the full report and follow this link for the press release.

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links for 2008-06-30

June 30th, 2008 | No Comments | Posted by in Uncategorized
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