Tag: media business

Optimism amid the newspaper gloom

espnboston_20090828Two pieces of news prompt this post. First, the Associated Press reports that newspaper advertising was down 29 percent in the second quarter of 2009, a devastating decline that is sure to renew questions as to how much longer the traditional newspaper business can hang on. Second, the Boston Globe’s main football writer, Mike Reiss, is leaving for a new ESPN Web site to be called ESPNBoston.

What do these two events have in common? They are further evidence that media organizations whose business models are relatively healthy have an opportunity to invade the turf traditionally occupied by newspapers. That doesn’t offer much hope for newspaper publishers. But it’s certainly cause for optimism among those who want to see journalism survive — and something worried journalism students should take solace from as well.

ESPNBoston, which has not yet launched, is not to be confused with the radio station of the same name — an also-ran with two bad signals, now reduced to spectator status in the sports-talk battle between WEEI (AM 850) and WBZ-FM (98.5). ESPNBoston, writes the Globe’s Chad Finn, is part of a strategy by the parent company to launch regional Web sites in the most sports-crazed parts of the country.

Disney-owned ESPN, among other things, operates wildly successful cable channels, publishes a magazine and produces a Web site that, according to Quantcast.com, attracts between 14 million and 20 million unique visitors each month. I don’t pretend to know what ESPN’s business strategy is for the new local sites, but it seems logical that company executives would be willing to subsidize them for quite a while if they help cement brand loyalty.

Reiss is not the only local sports reporter to leave for sites operated by non-newspaper companies. Previously, the Boston Herald lost Rob Bradford to WEEI.com, and Globe baseball writer Gordon Edes decamped to Yahoo. The Globe and the Herald have always had good sports sections, and their coverage has helped drive a lot of circulation. Their sports sections are still good, but now they must compete with online coverage produced by companies with fewer financial problems than the newspaper business is experiencing.

And sports is just one example. Tom Palmer retired from the development beat at the Globe last year and kept right on doing his thing for McDermott Ventures, a public-relations firm — a relationship that may raise eyebrows among journalism ethicists, but that is sure to becoming increasingly common.

Also in 2008, Boston.com political blogger James Pindell left to head a national network of state political sites called Politicker.com. The project was ahead of its time, and it folded in the midst of last fall’s economic crisis. But the idea lives on: Pindell is now trying a similar project on his own in New Hampshire.

Finally, and not to repeat myself, but one of the more interesting projects under way right now is the redesigned WBUR.org, published by Boston’s public-radio powerhouse, WBUR (90.9 FM); the site combines local and NPR news into a quality online newspaper. Public radio has not been immune from having to make recession-related cuts. But, unlike newspapers, both its distribution model (commuters stuck in their cars) and its business model (listener contributions, corporate underwriting and grants, supplemented with a small amount of taxpayer money) remain intact.

If the next owner of the Globe keeps on cutting, it’s easy to imagine WBUR.org morphing into a real alternative. And, of course, there’s nothing to stop the city’s television news operations from pumping up their Web sites, though they, like the newspaper business, are experiencing tough economic times.

We often hear that if newspapers die, there will be nothing left but amateur citizen-media sites that, for all their strengths, lack the capacity to do the sort of public-interest journalism a democracy needs to thrive. In fact, there is reason to be a lot more optimistic than that. I hope newspaper companies can find a way of combining their print and online operations so they can thrive for years to come. But if they can’t, it won’t be the end of journalism.

Times Co. executives to visit Globe

New York Times Co. chairman Arthur Sulzberger Jr. and president Janet Robinson will visit the Boston Globe on Sept. 9, according to an e-mail sent to Globe staffers that was obtained by Media Nation. The full text of the e-mail follows:

Please mark your calendars!

Arthur and Janet will visit the Globe on Wednesday, September 9th to hold business update meetings that are open to all employees.

The meetings are scheduled for 10:00 AM and 2:00 PM. Each meeting will be held in the Link.

All employees are encouraged to attend. There will be time for Q&A’s.

[Globe publisher] Steve [Ainsley] will begin the meeting with a brief overview of The Boston Globe and Boston.com business plan.

No doubt the number-one question on most folks’ minds will be the status of Times Co. efforts to sell the Globe, Boston.com and the Worcester Telegram & Gazette.

Update: For what it’s worth, Media Nation has received a revised e-mail stating that Ainsley “will hold a series of separate employee meetings in mid-September” in order to “ensure that all employees have ample opportunity to both meet with and
ask questions of Arthur Sulzberger and Janet Robinson.”

Arrogance and anger over newspapers’ decline

us dollar billsNewspapers executives have the right to charge whatever they want for their products, be it the print edition, Web-site access or speciality channels such as Kindle and mobile editions. The public, in turn, has the right to decide whether to buy or seek its news elsewhere.

What news organizations do not have a right to do is raise the price of what they produce by creating artificial scarcity through an illegal cartel.

Thus it was that Los Angeles Times media columnist Timothy Rutten’s latest commentary became the talk of the Twitterverse over the weekend. Jay Rosen, Dan Gillmor, Vin Crosbie and I were among those kicking Rutten’s column around.

Rutten, in calling for an exemption from federal law so that newspaper companies can collude on a plan to charge for online access, made some important points about government’s role in fostering a free and independent press. In particular, he singled out the favorable postal rates going back to the earliest days of the republic as a key factor in the rise of a vigorous Fourth Estate. (Paul Starr, in his 2006 book “The Creation of the Media,” traces those postal policies to Colonial times, and identifies them as an important reason that newspapers and magazines became a mass medium in the United States in a way that they never did in Europe.)

But Rutten undermines his argument with unwarranted arrogance, including flashes of anger, at what has happened to his business. Here is a particularly choice passage:

[I]f Congress acts as it should, it will do so not on behalf of newspapers but for their readers. The press, after all, does not assert 1st Amendment protections on its own behalf but as the custodian of such protections on behalf of the American people.

Stating that the press is the “custodian” of the First Amendment is breathtaking not only for its insular cluelessness, but also because it goes against basic constitutional principles. Rutten should re-read the Supreme Court’s landmark Branzburg v. Hayes decision of 1972, in which Justice Byron White explained in ringing language why it would be wrong to grant journalists a constitutional privilege to protect their anonymous sources:

[L]iberty of the press is the right of the lonely pamphleteer who uses carbon paper or a mimeograph just as much as of the large metropolitan publisher who utilizes the latest photocomposition methods.

I don’t think White got it entirely right — surely certain types of journalism could be protected, as opposed to a professional class of journalists. But he’s inspiring in his assertion that the First Amendment belongs to all of us, and that we the people, not the press alone, are its custodians. Today, of course, the pamphleteers are armed with computers; they are legion, and they are not lonely.

Like Rutten, I want to see the newspaper business find a way out of the mess it’s in. Outside of newspaper Web sites, sources of news that consumers do not have to pay for — principally television and radio stations and their Web sites — do a fine job with the basics of local coverage.

But let’s take the Boston Globe as an example of two entirely different dilemmas. Yesterday’s edition included two stories that required a considerable amount of journalistic enterprise — a deep analysis of Boston Mayor Tom Menino’s development record and an investigative feature into the death of 7-year-old Nathaniel Turner, whose father has been charged with his murder. Those are the types of stories that are too expensive to do in the world of fast, cheap Web journalism.

On the other hand, have you seen the new WBUR.org? Combining news from its local staff with reports from NPR, the station’s Web site has the makings of a high-quality online newspaper. If the Globe started charging for access to Boston.com, maybe the Boston Herald would follow suit. But WBUR (90.9 FM), as a public station with hundreds of thousands of listeners, is going to keep its Web access free — as will New England Cable News and the city’s broadcast television and radio stations. Given that there is a considerable amount of overlap in the Globe’s and WBUR’s audiences (affluent, well-educated, liberal), the Globe would charge for Web access at its peril.

Absolutely no one knows the way forward for the troubled newspaper business. My own hope is that, once the recession ends, newspapers can thrive through a combination of smaller-circulation but more-expensive print editions, subscription fees for non-Web speciality products for the Kindle, cell phones and the like, and a more imaginative approach to Web advertising.

What makes no sense whatsover is the Rutten plan: a backroom deal to charge for something that readers have made clear they are not willing to pay for.

A Taylor-made Globe?

In what may prove to be very good news for readers of the Boston Globe, a group led by Stephen Taylor — a prominent member of the family that sold the paper to the New York Times Co. in 1993 — has, if I’m reading the tea leaves correctly, moved into the pole position to buy the paper.

Beth Healy reports in today’s Globe that Taylor and California-based Platinum Equity have made it to the next round, and that both groups will tour the paper around Labor Day. Meanwhile, a group led by Partners HealthCare chairman Jack Connors and Boston Celtics co-owner Stephen Pagliuca — pointedly described as having submitted “the lowest bid” — will be on the outside looking in. Whether that might change is unclear.

No new owner of the Globe, not even a Taylor, is going to restore the glory days. But the Taylors were very good stewards of the paper, and Stephen Taylor, a former Globe business executive, is said to be one of the sharper members of his family. In addition, a Media Nation source who knows him tells me he’s a good guy.

Connors, too, is a good guy. But he’s also involved in just about every civic and business group in Greater Boston, and it’s hard to believe he could offer the Globe the sort of independent leadership it needs. Given that he and Pagliuca are said to be interested in pursuing some sort of non-profit arrangement, you also have to wonder whether they’ve got enough capital to pull it off.

According to Healy, both the Taylor group and Platinum submitted bids to buy the Globe, the Telegram & Gazette of Worcester and Boston.com for about $35 million (a far cry from the $1.1 billion the Times Co. paid 16 years ago for just the Globe) and agreed to assume $59 million in pension liabilities.

Given that Times Co. chairman Arthur Sulzberger Jr. recently said price will not be the only consideration, I would think a group with deep roots in both Boston and journalism would have an advantage over Platinum, whose executives may be interested mainly in the real estate.

For big-money investors, $94 million is not an enormous sum. I suspect that what will separate the winner from the losers in this deal is the willingness and ability to keep losing money until the paper can be restructured into a profitable business. And yes, I’m confident that someone can do it.

More: Over at Beat the Press, Ralph Ranalli laments the exclusion of the Connors group, arguing that non-profit is the only viable model for the newspaper business moving forward. Ralph and I agree, though, that Platinum would be bad news all around.

Where it all went wrong

I’m no advertising expert, but Steve Buttry’s post on newspapers’ original sin strikes me as being exactly right:

The disastrous error that newspapers made early in our digital lives was treating online advertising as a throw-in or upsell for their print advertisers. Helping businesses connect with customers was always our business. We were facing new technology and new opportunities and we did next to nothing to explore how we might use this new technology to help businesses connect with customers.

We just offered businesses the same old solutions that we offered in print, but pop-up ads and web banners somehow didn’t work as well as display ads. Which was just as well, because we told our business customers the ads weren’t worth much by the way we treated them.

Having blown the online-advertising business, newspaper executives are now going to make up for it by charging for online content — likely with miserable results. (Via Steve Yelvington.)

Monetizing the link economy (not)

PaidContent.org has posted an important analysis by media consultant Arnon Mishkin showing that aggregator sites derive far more value by compiling headlines, ledes and links than do the news organizations that actually produce the journalism.

This isn’t exactly counterintuitive, but it does run counter to what a lot of us had hoped was true. Jeff Jarvis, more than anyone, has popularized the idea of the “link economy.” Trouble is, it may not exist. At the very least, it’s likely a lot more complicated than simply a matter of posting links and assuming the linkee will benefit at least as much as the linker.

Here is Mishkin’s key insight:

Actually, it shouldn’t be surprising to anyone who’s thought about how people have historically read a newspaper: They’ve scanned the headlines and then turned to the sports, movie listings or recipe pages, depending on their real interest. As the saying goes, “People don’t check the news to read about the fire, they check it to learn that there wasn’t a fire.”

Historically, the value of those casual browsers was captured by the newspaper because the readers would have to buy a copy. Now all the value gets captured by the aggregator that scrapes the copy and creates a front page that a set of readers choose to scan. And because creating content costs much more scraping it, there is little rational economic reason to create content.

Mishkin’s post comes at a time when news organizations from the Associated Press to News Corp. to the Boston Globe are dipping their toes in the water with respect to charging for their content. That’s fraught with difficulties, too, although I’m slightly more bullish about the idea of per-click micropayments than I was even a few months ago.

In the long run, we’re going to have to differentiate between good and bad linking. Blogging is the classic example of good linking, since the blogger adds value through analysis and reinterpretation.

But aggregating in a way that removes nearly all incentives to click through to the original news site defines bad linking. The Huffington Post is one example. Newser is an even more egregious example: when you first access the site, you get photos with headlines; click on one and you get a Newser-supplied summary (with more ads); and, finally, with a second click, you jump to the original. Link economy? More like piracy.

No one really knows what the answer is. Mishkin offers some unsatisfying ideas at the end of his post. My own sense is that newspapers need to try a variety of strategies:

  • Charging as much as the market will bear for the print edition.
  • Developing paid online editions for e-readers, cell phones and laptops (i.e., Times Reader and GlobeReader).
  • Removing the “today’s paper” feature from their free Web sites. (I would continue to offer all or most of the content for free, but not in the form of an exact substitute.)

The search for a business model continues. Mishkin has punched one more hole in a fantasy a lot of people, including me, had believed in for as long as we could.

(Via Howard Owens’ Twitter feed. Owens, you may recall, was a top official at GateHouse Media during that company’s legal battle with the New York Times Co. over the Boston Globe’s aggregation practices.)

Sulzberger speaks

Even as a third prospective buyer has emerged for the Boston Globe — and even as the New York Times Co. has finally acknowledged that the Globe is for sale, something that’s been clear for months — the company’s top two executives have broken their silence to say, well, not so fast.

In a story and interview in today’s Globe, chief executive Arthur Sulzberger Jr. (photo) and president Janet Robinson express the hope that the paper is back on the road to health, adding that they won’t sell unless they can find the right deal — both financially and with regard to “the impact of a potential sale on the community,” as Sulzberger puts it.

They also defend their record as stewards of the Globe since 1993, when the Times Co. purchased the paper for $1.1 billion. (The paper is thought to be worth barely a fraction of that today, though that’s also true of the newspaper business in general.) “I think this company has supported the Globe during a very, very difficult financial period. It has supported its journalism, it has supported its business-side operations,” Robinson says.

Sulzberger gets off the best line. Asked whether company officials regret having bought the Globe, he replies, “How far back should we go? Maybe we regret in 1896 that we bought the New York Times.”

My nickel’s worth: I think the Times Co. was a reasonably good steward until about a year ago, when the company’s own troubles, and fears about the fate of its flagship, the Times, led it to start treating the Globe — and Boston — with contempt.

There have, of course, been deep cuts, including the first layoffs in the Globe’s history earlier this year. But the Globe is hardly alone among large regional newspapers in losing its foreign bureaus and in scaling back most of its national ambitions. It remains just about the only paper in its weight class to have a fully functioning Washington bureau.

Still, the lack of communication on the part of the company — most definitely including Sulzberger and Robinson — during the months-long crisis over union concessions led to a sense that management was not willing to share in the sacrifices being asked of its employees. The $20 million in concessions, including $10 million by the Newspaper Guild, the paper’s largest union, were truly draconian, even if they were necessary.

The question, at this point, is how much credibility the Times Co. has left with the community. The best answer is to put out a good paper every day, and the Globe has risen to that challenge. Still, I have to believe that a new start under a new owner would be the best outcome, provided the owner wants to get into the business for the right reasons.

Like everyone else, I’m intrigued by the notion that Partners HealthCare chairman Jack Connors and Boston Celtics co-owner Stephen Pagliuca might lead the Globe into some sort of non-profit ownership arrangement, which Jay Fitzgerald explained in the Boston Herald earlier this week. But Connors is a walking conflict of interest. No one knows if he could separate his own interests from those of the Globe’s journalistic mission.

In other news, the Boston Phoenix’s Adam Reilly has obtained a memo from the Guild reporting that publisher Steve Ainsley has told union official that the paper is heading in the right direction.

And the Herald’s Christine McConville reports that Ainsley told the Guild that the paper will soon start charging for access to the paper’s Web site, Boston.com, confirming earlier remarks editor Marty Baron made in an appearance on “Greater Boston.”

The Globe and non-profit journalism

One of the groups seeking to buy the Boston Globe from the New York Times Co. is considering a non-profit ownership arrangement, according to a report by the Globe’s Beth Healy.

The group — headed by Partners HealthCare chairman Jack Connors and Boston Celtics co-owner Stephen Pagliuca — has “proposed a ‘civic approach’ that would involve a nonprofit foundation to help fund and run the news operation,” writes Healy, citing an unnamed source.

The other bidder is a group headed by Stephen Taylor, a prominent member of the family that sold the Globe to the New York Times Co. in 1993.

What Healy does not specify (and perhaps Connors and Pagliuca themselves haven’t decided at this point) is whether we’re talking about a pure non-profit or a hybrid model.

A hybrid involves setting up a non-profit organization as owner and operator of a for-profit newspaper, an arrangement that has succeeded for the St. Petersburg Times (owned by the Poynter Institute) and, locally, by the New Hampshire Union Leader (the majority owner is the Nackey S. Loeb School of Communications).

Under the hybrid model, a newspaper still has to turn a profit, and the St. Pete Times and the Union Leader have not been immune from cuts. But non-profit owners are generally willing to tolerate far smaller profit margins than large, publicly traded corporations, whose executives have to worry about quarterly reports and the expectations of Wall Street.

The pure non-profit model got its biggest boost earlier this year in a New York Times op-ed piece by Yale investment executives David Swensen and Michael Schmidt. Turning newspapers into endowed institutions, they argued, would insulate them from the economic pressures that are destroying the business. (U.S. Sen. Ben Cardin, D-Md., has filed legislation that would help turn that vision into a reality, though it’s not clear why a change in the law would be necessary.)

As I’ve written before, though, there is a huge problem with the pure non-profit model: in order to take advantage of the the tax incentives that would make it work, the newspaper’s executives would have to stop endorsing political candidates and engaging in other forms of purely political speech. That may work for public radio and public television (after all, the government has been regulating the airwaves since the 1920s), but it would be anathema to a newspaper’s mission.

Another aspect of the Connors-Pagliuca bid that’s unclear is what role the two men see for themselves if they’re not going to be owners in the traditional sense. It all sounds very public-spirited, but I can’t imagine they’re going to invest their time and money without reserving a very large say over how the Globe is run.

Two years ago I explored various ownership options for the Globe in an article for CommonWealth Magazine. You can read it here.

The Times Co. has clearly lost interest in owning the Globe. Check out Adam Reilly’s latest, in which he notes that the company can’t even bring itself to acknowledge publicly that it’s trying to sell the paper, even though it’s, you know, trying to sell the paper.

The sooner this can get done, the better.

Globe may charge for some online content

Boston Globe editor Marty Baron tells “Greater Boston” that the Globe may start charging for some online content. No surprise. It’s pretty clear that the Globe and a number of other papers are going to try paid-content experiments of one sort or another. I don’t think they’re likely to work, but that’s another matter.

Whatever the Globe tries, it should make sure that there are no extra charges for its best customers — its print subscribers. And it should stay away from charging for its daily newspaper content. In other words, create a new product that people who don’t currently subscribe to the Globe would be willing to pay for.

Not easily done, I realize.

Update: Just watched the segment. Baron says the Globe is looking into charging for “premium” or “specialized” content of some sort. Not sure what that means, but directionally it sounds like the right move.