Supply + Demand: Making the News Pay

[Today's post is by Diane Martin, Group Account Manager at R+K]

A recent article in Ad Age Media Works--entitled “Wanted: Online Payment Plan for Print”  by Michael Learmonth--is worthy of a quick read (here). There are a couple things to note, none of which have to do with media’s continued denial that the paradigm has permanently shifted.  

First of all, and much more interesting than the whining, is that this article points out how technology enables increasingly rapid paradigm shifts. For example, the online ad market went from $0 to its peak of $20 billion in about a decade.  

Next, the Arkansas Democrat-Gazette example is interesting.  Their attitude and approach resonate with me in that they seem very honest about where they can compete and what their audience wants.  They’ve made it palatable--or at least inoffensive--to pay for an online subscription  – an online subscription of $4.95/mo that is less than half the cost of full-service home delivery at $13/mo.  Perhaps more interesting is the AD-G’s CPM differential for display advertising:  $35 print vs $1 online.  

The paper’s owner and publisher, Walter Hussman has some choice quotes about where and how he’ll compete.  "I always ask people, 'When was the last time you bought something from looking at a banner ad?" he said.  

And he knows that online advertising is not a viable, long-term revenue source for his paper. The article quotes Mr. Hussman on the possibility of losing a few $1 CPMs to Yahoo. “So what? If we want the traffic, we can get it in an instant,” he said. “The traffic does not translate into revenue.” 

Finally, while I’m stunned by the notion of taxation to underwrite a model sorely in need of repair, I’d prefer to address the comments from  Jim Spanfeller of Forbes.com and Robert Thomson of The Wall Street Journal regarding editorial quality. Indeed their organizations put out fine news products. But it appears they believe news organizations such as theirs are the arbiters of journalistic quality, not the readers.  Obviously they need to drink a little of the kool-aid that Charlie Tillinghast, president of MSNBC.com, drinks.  "Consumers won't pay; it's just that simple." They'll read amateur blogs and everything else first before they pay for general news and information. Those are the physics of our business."  

But perhaps the fact that I’m sharing commentary on an article from Ad Age Media Works suggests that Mr. Tillinghast isn’t 100% right – I pay my annual online subscription for Ad Age.

Google says goodbye to print

One of our five marketing themes for 2009 is Testing the Real World (here). The basic idea is that you can fall in love with planning, but don't fall in love with your plan...testing ideas out in the real world will tell you everything you need to know about the validity of your ideas + assumptions...and when the real world says stop, organizations must be able to say 'ok' to themselves.

And so by way of example, Google's plan to expand it's digital empire into print seems to be at an end. They have announced the end of the Google Print Ads application effective February 28. Which is likely fine, given the sorry state of print (as in newsprint) overall (here and here for prior examples + data).

So What?

Google has exemplified the idea of the perpetual prototype...even some of its most popular applications are still listed as 'beta'. But what Google has seen in its 'beta' approach to enabling print ad buying using the same platform as online, is that the market says stop. 

Hats off to Google for having the guts to look beyond the fallacy of sunk costs and put an end to this particular experiment.  

Rest assured there will be more experiments (from the Google blog announcement):

"We will continue to devote a team of people to look at how we can help newspaper companies. It is clear that the current Print Ads product is not the right solution, so we are freeing up those resources to try to come up with new and innovative online solutions that will have a meaningful impact for users, advertisers and publishers."

All the news that's fit to click

Pew research has released a study on news consumption. Statistical support for the obvious is found in tables (like the one below) showing the slow death march for newspapers, the rapid ascension of always on, online sources and the inevitable shakeout by age group, income and education. The young and the less educated (often the same group) consume less news. Who'd a thunk?

(Click to enlarge)

What the report also does is attempt to segment, into four groups, the news sourcing habits as they blend online, TV, radio and print sources.

An interesting contradiction in pre-existing bias for some (and another example of what happens when one relies too heavily on collectivist notions of demographics!) shows up in the political makeup of the Fox news and CNN audiences. Pew reports that 39% of Fox watchers are Republicans and 51% of CNN consumers are Democrats.

Whatever one thinks about segmentation masquerading as insight, one thing is clear in the attitudes of all groups: the credibility of traditional news sources is seen as low whether the source is traditional print and broadcast or among the news aggregators online (which aggregate stories from traditional media outlets' online services).

If traditional news outlets--be they online or off-- are not seen as beleivable by even a slim majority, it begs the question just how influential these influencers really are at an individual level.

A study focussing on a measure of influence might show that the grounds of the fourth estate are filled with gazing ponds. In which case, they may be alot like bloggers and nontraditional news sources!

Full Pew Study here

Interesting makeup of 'news' sources by gender (and interesting definition of news sources) in chart below

(click to enlarge)

Better Dead than (un)Read

Newspapers, as we all know by now, are feeling a world of hurt (here for example or from the Newspaper Association of America for another). The product they sell, mostly local ads, has been diverted to online only ventures. Classified ads represent 63% of newspaper revenue. The news that used to draw an audience is largely available for free online. Combined with the static nature of the medium, newspapers have reduced their size, their employee base and their share of people's attention.

A prescription to save the patient from certain death is written by Doc (all pun intended) Searls (he of last decade's hot book, The Cluetrain Manifesto). On his blog, he suggests that newspapers have two advantages they should leverage:

• Their archives
• Their editorial page

The archive is a wonderful idea, though I suspect it would be a one-time advantage. Perhaps I'm interested in researching old news (like this), but the revenue approach Searl's suggests (targetted advertising) requires a leap of faith that it would outperform the current subscription models... Another challenge: once the archive of one paper is available, how is one newspaper's version of the news in, say, 1945 going to be worth more than another's? All of which sounds a bit like hope and prayer, not medicine...but what is there to lose in trying?

The other thought, making the editorial content the star makes some sense: Put it on the front page. Invite the community to steer the conversation. Have the crazy lady with the letter to the editor about her neighbor's loud parties (or the anonymous 'Sound off' call in) be the headline.

Might get some attention, but even the good Doc has to admit that it doesn't address the chronic problems for newspapers. Self-defined communities expect always-on, near realtime access and interaction. Newspapers move too slow and trade a product--in print--that is priced higher than the online competition...to a diverse community, a single vehicle will have a hard time addressing many conversations taking place online already...newspapers would be late to this game.

Smarter minds are certainly exploring the issue, but I think that a move online is step one (papers need to cut production and distribution costs further, faster, first). Reduce the costs of print by letting individuals print off the news they want on their home printers. Then, take the savings and invest it in their writing, reporting and in enabling interaction...papers will have to compete with everyone else online...For some reporters, the result may end up paying off more in sweat equity than in salary. Competing wiith free is hard work.

Citizen Journalists and attack of the blogs

Over at the Blog Herald, there is a post on using some of old media's best practices to sustain new media's impact (old media, new media...meh).

The catalyst of the post was a report, posted online at a respected technology blog (TechCrunch) claiming that Twitter (see prior post) was testing ads. They weren't. But before it could be retracted, it got lots of attention (among those who hang on every word about twitter and tech anyway).

The blog herald explains how breaking "...a news story first means lots of traffic." (Just as it does to 'old' media). And then it does a decent job of explaining how citizen journalists (i.e., bloggers) might do well to implement best practices...things like research, verifying sources, followups and fact checking...and asking questions. Things that, in theory, journalists in old media do.

All characteristics that, in practice, are recommended for any professional who wishes to be taken seriously.