How to make readers pay for news

An idea is gaining momentum: online readers must open their wallet. In recent weeks, several suggestions for moving from wish to implementation have popped up. The latest one comes from Google. The company proposes to give a boost to its not-so-successful Checkout service by harnessing it to online newspapers interests. Quite a change here. Only a few months ago, Google’s haughty advice to the newspaper industry was : You’re on your own guys ; Darwin is in charge here ; adapt or face extinction. Last November in Paris, I personally witnessed Googlers’ poor performance in front of media barons — an embarrassing mixture of unpreparedness and arrogance. Some of us felt really sorry the search giant screwed up so badly.

Google was slow, but it finally got it. It understood that its position — “Thank us to the billion clicks a month we send to your sites, we bring value to your businesses, the rest is your problem” — was no longer defendable. Google can no longer ignore the dramatic deterioration of the news media sector. 
Here are key figures for the US market:
- The best recent period was 2005 ; that year, US newspapers reported a total advertising revenue of $49.4bn. 96% from print (35% from classifieds) and 4% from online. Since then, between 2005 and 2008, things changed dramatically :
Total ad revenue :…….. -23.4%
Print:………………………..-26,7% (and a drop in classifieds of -42.4%)
It looks like this :

Now, to get a more precise and recent representation, let’s compare the last available quarter (Q2 2009), with the recession’s impact, to Q2 2005. Here is the evolution over four years :
Total ad revenue:……………-44%
Print:…………………………….-47% (classifieds dropping by : -64%)

An important precision for the online ad revenue: it peaked in Q4 2007; since then it has dropped by 23% in Q2 2009. More

Indian Press: The Price Problem

Here is the Indian newspapers price problem: at the kiosk, you face a multitude of titles (roughly 4700 dailies across the country) including about 60 in English. Prices range from 1 to 3 rupees ($0.02 to $0.06). Even by Indian standards those are untenable rates: they cover only about 10% of variable costs. Finnish newsprint and German printing presses come at Western prices. Just for comparison, based on the Economist Big Mac Index, an Indian newspaper is roughly seven times cheaper than an American one; it is twenty times cheaper than a French daily.
Now, how do you significantly raise prices in a country where a decent meal costs about $2 ?

That question led to a heated debate at the last INMA South Asia Conference, in New Delhi. (INMA is the International News media Marketing Association). I was invited to talk about the migration from print to digital  — which, let’s face it, is not on the top of the publisher’s mind in a country where internet penetration is about 7% of the total population (details here) –  but India media moguls are keen to prepare their industry’s future.

The Indian press is staring at a difficult question. A few years ago, when we met for the first time in Chicago, Times of India’s CEO Ravi Dhariwal explained its newspaper was virtually free, with a price (3 rupees, $0.06) carefully adjusted to be slightly above the price of the scrap paper collected by poor people in the street of Delhi or Mumbai. Things have changed. As one of the publishers explained last Friday in Delhi: “We have built a bubble which is about to burst. Against all fundamentals, we have been pursuing circulation figures at any cost. Our model no longer works”. Around the table, the consensus was the price of papers had to go up significantly, probably by a factor of 2 to 5.

Well… Let’s consider a few impressive fundamentals. Circulation numbers are commensurate to India’s 1.2 billion population.  According to the Indian Readership Survey, Dainak Jangran, a newspaper unknown to Western radars as it is published in Hindi, has 55 million readers in 19 editions. The Times of India is the world’s biggest English speaking newspaper, with a circulation of 4 million and a readership of 14 million. More

Web + Print: A Powerful Combo

In today’s context of massive revenue depletion, everyone (almost) agrees on one thing: digital media revenue sources will have to be diversified. There is no magic bullet, no dominant model that will guarantee, by itself, a sustainable revenue stream. Time to think the hybrid way.  Free will coexist with paid-for, different users (occasional vs. intensive) will be discreetly assigned different revenue models, platforms will diversify as technical standards for publishing or transactions emerge, opening new fields for monetization. Old churches and ideologies will crumble.

The biggest stimulus for such creativity is the collapse of the internet advertising model. On average, CPM (cost per thousand viewers) have dropped by 30% – 40% during the last twelve months and very few expect a recovery.  As far as booking rates are concerned, they are dropping as well. It is frequent to see only a mere 30% of pages inventories actually sold to advertisers. Unlike prices, this latter percentage is likely to bounce back at the first sign of economic relief.

But the classical advertising model’s weakness is more structural. The “old” banners / display stuff doesn’t fly as expected. People simply don’t click enough on those items and even sophisticated targeting yields minor relief. The only “healthy” segment is search ads, but it is dominated by the Google Way — a massively deflationary one. Successful medias will be the ones who manage to shake off the old cobwebs and proceed to rethink their relationship with the advertising sphere. It will be fairly easy for social or non-hard news sites, but true information content vehicles are likely to struggle with ethical issues…

As far as platforms are concerned, last week, we looked at smartphones: they’re on their way to become the main vector for news, whether it is for text or video. Numbers looks good: last year, according to IDC, on the 1.19 billion mobile phones sold worldwide 155 million (13%) where smartphones. In 2013, says IDC, 1.4 billion handsets will be sold, among them 280 million (20%) smartphones. And if anyone harbored any doubt regarding the ecosystem’s health, just consider the 65,000 applications available for the iPhone and the state of the competition. As explained in this Fortune magazine story, the sector is red-hot: since the iPhone introduction in june 2007, Blackberry quarterly sales have more than tripled. Even Google joined the fray with Android phones — and following a trajectory than will put the search engine to a collision course with Apple (see Jean-Louis’s column War in the Valley; Apple vs. Google).

Coming back to the title of today’s column, let’s talk about paper, the pulp, dead tree version. I can see many reasons why some sort of paper version can help. More

Media: What’s left for the brand ?

A well-established brand is supposed to be a key asset. Everybody keeps dreaming of building a long-lasting brand with lots of positive attributes. How true is it for media ? In the rapidly changing environment, in the massive shift towards electronic media (and the vaporization of value that goes along with it), how relevant is the notion of media brand?

Quite important, actually. Brand management must be handled with great care, especially when business models are threatened. The brand becomes a critical line of defense, and a strategic component to build upon. There are conditions, though, to the survival of media brands — and to the emergence of new ones. More

The News Cycle Heartbeat

How do mainstream media and blogs interact? How do they feed each other ? Everyone in the newsmedia would love to get a better view of the mating dance. A few weeks ago, scientists at the Cornell University unveiled a thorough analysis of the relationship between the two universes. Borrowing from genomics techniques, they dug into a huge corpus of politically-related sentences and tracked their bounces between mainstream media (MSM) and the blogosphere.

Their dataset:

  • About 90 million documents (blog posts and news sites articles) collected between August 1 and October 31, 2008, i.e. at the height of the last US Presidential race.
  • 1.65 million blogs scanned.
  • 20,000 media sites reviewed, marked as mainstream because they are part of GoogleNews.
  • From this dataset, researchers extracted 112 million quotes leading to 47 million phrases, out of which 22 million were deemed “distinct”. These phrases were important enough to be considered as news.
  • The phrases where political statements or sound bytes pertaining to the political race  and uttered by the two candidates, their running mates or their staff.
  • Processing these 390GB of data took about nine hours of computer time (using a complex set of algorithms, involving “markers”, as in genetics).

The findings, in a nutshell:

  1. Mainstream media lead the news cycle. They are the first to report a quote, the story behind it, the context, etc.
  2. The 20,000 MSM sites generate 30% of the documents in the entire dataset and 44% of  the documents that contained frequent phrases.
  3. It takes about 2.5 hours for a phrase to reverberates through the blogosphere.
  4. The phrases that propagate in the opposite way (from blogs to MSM) amounts to a mere 3.5%.
  5. A news piece decays faster on the MSM than on the blogosphere.

The comparative curve looks like this :

For those who want the complete analysis, the full report is available here.

As expected, this research triggered controversy. More

The end of the breaking news — as we know it

In the internet storm sweeping the media, breaking news is, without a doubt, the main casualty. This branch of the information stream is the most likely one to endure a kind of “commodity syndrome”. The breaking news circa 2010 will be ubiquitous, instantaneous and simultaneous. Its value, its market price actually, will tend to zero as a result.

Two forces are at work, here: the professionalization of the blogosphere and the impact of Twitter. Dealing with this is critical for the survival of traditional media. Let’s have a closer look. More

The real cost of genuine journalism

Updated with a video on PolitiFact Guide to Fact-checking

The idea for this column came to me last March; I was flying back from Stockholm. Schibsted, the Norwegian media group I work for, had asked me to be part of the jury for its yearly Schibsted Journalism Award. I was both honored and curious to be part of such a delicate process. The group’s publications, in Scandinavia and abroad, submitted entries in several categories: best storytelling, best innovative entry, best scoop. Altogether, 27 entries were compiled in a hefty kit sent by Fedex to each member of the jury; the kit included a couple of binders — facsimile of original pages, translation in English, CDs, memory stick, etc. Serious work. Then, we gathered in Stockholm to select the nominees and the winners.

Of course I’m bound to secrecy, I’m not going to be specific about the discussions.  But I feel an urge to write about the event because I was surprised by the level of journalistic ambition
demonstrated by many of the entries. Among them were several investigative pieces: a bribery scandal in Russia, a huge Bank fraud in Norway, or revelations of a hidden part of Norwegian war history, just to name a few. We were faced with difficult choices — happily.  On my way back to Paris, I thought this was the perfect illustration of how, true, genuine journalism differentiates itself from blogs — even good ones, simply because news organization will invest time and money in the genuine article, so to speak.

To make my point, I’ll just focus on the cost, yes, in euros or dollars, of such journalism. It could sound like a trivial way to assess editorial performance but I believe money remains a much-needed fuel for good journalism. More

Brilliant insights at the NYT

“If they start making products people don’t want, and start losing users, then Apple’s strategy will run into problems.” You can see the full NYT Business section story here. My wife and I love to read the papers in the morning. French-born, we still marvel at this American icon: the newspaper route, the nice deliveryman in his beat-up truck throwing the paper on our doorsteps in the wee hours.

But enough Norman Rockwell.

‘Who is this guy?’ My spouse is pointing at the NYT story. I had avoided it because we’re a couple of days away from Apple’s WWDC. Every year, in San Francisco, Apple holds the Worldwide Developers Conference for individuals and companies writing programs (applications) for its computers and, now, its smartphones. The rumor mill makes too much noise. Writers, bloggers, anal-ysts, pundits and kremlinologists attempt to top one another with predictably bad results.
Still, who is this guy? Is Brigitte referring to the article’s author, Brad Stone, a respected writer, or to Benjamin Reitzes, the Barclays Capital analyst quoted above? The doubt points to an all-too-common problem with business writing in our Valley: Cut-and-Paste stories, formulaic and, if not content-free, bland and devoid of insight or explanatory value. More

New Journalistic Storytelling

From multimedia productions, to Computer Assisted Reporting

Last Thursday, I presented a series of great news related multimedia productions before a group of students of the Sciences Politiques School of Journalism where I happen to have a small gig.  I was curious to see their reactions. Too often, journalism students are mostly interested in the pursuit of a “voie royale”. This is especially true of those following a high-end academic path such as “Sciences Po”; they yearn to write for big newspapers, especially on noble beats such as foreign policy and politics. Fine. Grand ambitions are healthy.
Last year, as I was coaching another group on the handling of daily editorial meetings for a fictitious newspaper, I started to worry. In the real world, their editorial output would have been boring, un-commercial. Many in that group of students found me of the utmost vulgarity as I discouraged front-page stories covering elections in Zimbabwe, for example. Instead, I tried to ingrain into their well-wired brain the charms of explanatory journalism (I was fresh coming out of six years at 20 minutes, which was, after all, a solid success — 2.7m readers — and based on a good journalism mix).

This year’s group is different. They are two years younger, hence more realistic about their professional future. I helped them build a decent blog titled “Matière Crise” featuring untold (as much as they could) aspects of the economic crisis. They did fairly well, I think. For the last sessions, we decided to look into the best alternative ways to present news. More

Providing oxygen to publishers

22% of Internet users in the United States said they stopped their subscription to a printed newspaper or a magazine. Why? Because they could access the same content online, according to a study released last week by the Center for the Digital Future. And it was only one in a string of bad news for the industry. Most of these items came from the US but, to a large extent, apply to European media as well.

Newspapers need to regroup and take a breath. Both in Europe and in the United States. They need protection. Not the temporary protection of a bankruptcy, but a durable one based on alternate business models and a drastic change in their capital structure. More