Tag: media business

Re-Kindling the Globe

Warning: Fuzzy math ahead.

As we know, the most deadly problem the newspaper business faces is that very little advertising has migrated from the print to the Web. A dollar’s worth of print advertising translates to pennies online. Thus we have initiatives like Steven Brill’s Journalism Online aimed at getting people to pay for Web content. As I argued earlier this week, it probably can’t be done.

But we do need to shift to a model by which consumers will pick up a decent share of the cost. Even after the recession, classified ads are not going to move back from Craigslist to newspapers or their Web sites. And with far fewer local businesses, display ads bring in less revenue than was the case at one time.

What are people willing to pay for? A premium, well-edited news package, portable and easier to use than a typical newspaper Web site. The print edition meets that definition, which is why I think the Boston Globe ought to charge a lot more for it, even though it would, inevitably, drive down paid circulation. The logic: As it stands, circulation revenue barely covers the cost of printing and distribution. If ad revenue is not going to recover, then readers are going to have to pay.

But there’s another possibility. Fifteen years ago folks like Roger Fidler, then of Knight Ridder, suggested that portable digital devices he called “tablets” would one day be so cheap that newspapers would give them away so they could shut down their presses. It’s possible that moment has come in the form of Amazon’s Kindle — not as cheap as Fidler had envisioned, but maybe cheap enough.

The Globe’s Sunday circulation is about 500,000. Let’s say around 400,000 of those are home-delivered. What if you gave every one of those households a free Kindle in return for a three-year, seven-day subscription to the Globe?

Let’s do the math, such as it is. A Kindle costs $359. Assume the Globe could get a price of $300 apiece in return for buying 400,000 of them. That’s $120 million. Spread it over, say, six years, and that’s $20 million a year.

The Globe already charges $10 a month for its Kindle edition. If it extracted that from 400,000 households, it would come to $48 million a year in guaranteed income for three years. (And I’m not so sure you couldn’t charge double that.) After that, subscriptions would renew automatically once a year, which is how the few online news organizations that charge for online access (the Wall Street Journal, The New Republic) handle it.

And here’s where the big savings come in: You shut down the presses. Permanently. No more paper, ink, trucks, fuel and the like. No more jobs for a lot of hard-working people, either, which would be a tragedy, but not as big a tragedy as closing the Globe.

I’ve never gotten my hands on a Kindle, but I have played with a Sony Reader, which is a similar device. The portability and the clarity of the e-ink are both well ahead of even the smallest, sharpest laptop. The Globe’s Kindle edition gets mediocre reviews. But with no more print edition to think about, I’m sure it could be upgraded considerably. And with a large regional customer base, it might prove to be an attractive platform for new kinds of advertising.

Can this work? I have no idea. As a last-ditch effort, though, I definitely think it makes more sense than simply closing the print edition and trying to sell ads on Boston.com. If we come to that point, then I definitely think the Kindle would be a better option.

Credit where it’s due: There are very few original ideas out there. Although I wrote favorably about the Kindle as a newspaper platform way back in November 2007 (here and here), I want to point out that Mike B1 floated a proposal very similar to the one I’m making today just recently.

And Tim Allik points out that Silicon Valley Insider, in January, looked at the numbers behind moving the print edition of the New York Times to the Kindle.

Not the worst idea we’ve heard

The Boston Herald’s Jessica Heslam reports that Red Sox principal owner John Henry has broached the idea of taking the Boston Globe off the New York Times Co.’s hands. The Times Co. is attempting to unload its 17.75 percent stake in the Red Sox.

Henry has a proven track record of building value. Any new owner for the Globe is likely to begin with deep cost-cutting. I’d rather see Henry wielding the scalpel than some other prospective owners doing it with a chainsaw.

On second thought: Given the state of the Globe’s finances, maybe I should say I’d rather see Henry do it with a chainsaw than someone else use tactical nuclear weapons.

Why newspapers can’t charge for online content

With the bottom falling out from the newspaper business, it seems likely that owners are going to take another gamble on charging for online content.

The respected newspaper consultant John Morton practically insists on it in the American Journalism Review. Boston Globe columnist Scot Lehigh, whose paper will reportedly be shut down by the end of the month if the unions don’t come up with $20 million in givebacks, is pushing the idea, too.

I am not philosophically opposed to the notion that newspapers ought to be able to charge for their online content. The trouble is that it hasn’t worked before, and it almost certainly won’t work now. It’s not that there aren’t plenty of people who value what newspapers have to offer. It’s that there are too many free sources of high-quality information, even at the local level.

Let me hold off on the Globe for a moment, because this is easier to explain at the national level. Imagine we woke up tomorrow morning and discovered that the “Slate Five” — the New York Times, the Washington Post, the Wall Street Journal, USA Today and the Los Angeles Times — were all charging for online content, either in the form of monthly subscriptions or “micropayments” — that is, click on an article and you’d be charged a nickel or a dime. (The Journal already charges for some online content.) What would we do?

A few months ago I marveled at the Times’ success in attracting 19.5 million unique visitors a month to NYTimes.com during 2008, making it by far the most successful newspaper Web site. I immediately heard from a knowledgeable reader who pointed out that the Times’ site wasn’t even close to the largest news site.

According to Nielsen, MSNBC.com drew nearly 45 million unique visitors in January, followed closely by CNN.com, with 41.6 million. Yahoo News — which does pay for content, and thus can’t be lumped with aggregators like Google News and the Huffington Post, which Associated Press chairman Dean Singleton was bellowing about last week (even though Google is a partner with the AP) — was third with 40.5 million. AOL News (!) came in fourth with 23 million. And then, finally, NYTimes.com came in fifth, with nearly 21.6 million — an impressive jump over its 2008 average, but still well behind its non-newspaper competitors.

Just to take the top two, MSNBC.com and CNN.com aren’t going away, and they’re not going to start charging. Unlike newspapers, MSNBC and CNN already have a reliable source of revenue in the form of cable fees and cable advertising. (MSNBC and MSNBC.com have different ownership structures, so MSNBC can’t be said to “support” MSNBC.com; but NBC holds a significant stake in each.) And both MSNBC.com and CNN.com do some original journalism as well.

Do CNN.com and MSNBC.com offer the sort of depth and analysis that a great newspaper does? No. But consider that the discerning news consumer can also visit the Christian Science Monitor, NPR.org, The Guardian and Guardian America, BBC News and other sites that are now and will likely remain free. All of those sites are non-profits with Web strategies more advanced than most of those offered by for-profit newspapers. The truth is that even for someone who puts a premium on being well-informed, the Slate Five are optional.

Which brings me back to the Globe. In fact, the Globe may face fewer obstacles in charging for content than, say, the Times, because there aren’t that many free sources of high-quality local news. Nevertheless, I still think it’s a losing strategy.

Consider the news outlets with free Web sites. First and foremost there are WBUR and New England Cable News, which, at the moment, have the healthiest business models — listener contributions and corporate underwriting for the former, cable fees supplemented by advertising for the latter. Neither is going to start charging for online content, and both could be in a position to pump up their Web sites if the Globe starts charging.

There are numerous other outlets as well, of course — the Boston Phoenix, the Boston Herald and all of the over-the-air television stations, for starters. (WBZ, with both a television station and an all-news radio station, would seem to be particularly well-positioned.) Moreover, no one should be surprised if people start talking about a non-profit community Web site for Boston along the lines of the New Haven Independent, MinnPost or Voices of San Diego. And we’ve already got one of the best examples of intelligent local aggregation anywhere in Adam Gaffin’s Universal Hub.

But what happens when the Globe has a significant exclusive? Sadly, the answer to that is easy. When the Globe breaks a long, important investigative story, every other news outlet runs stories that begin, “The Boston Globe today reported that …” The quick summary will do for most people. And if you really want to read it, you can buy a copy of the paper. That’s not going to buy many groceries.

So is it hopeless? I don’t think so. I continue to think that there’s a large group of readers who would be willing to pay much more for the print edition — certainly more than the modest price increase that was announced recently. Yes, a substantial price hike would hasten the day when the Globe (and other major dailies) becomes a niche publication for an elite audience. But with advertising drying up, someone has to pay. And if it’s not going to happen online, then it has to be in print.

I also think there may be some promise in coming up with ways for newspaper Web sites to receive revenues from broadband providers. On the face of it, it makes no sense that Comcast and Verizon cable customers have to fork over money to CNN, MSNBC, Fox News and NECN, but Comcast and Verizon broadband customers pay nothing to the Globe, the Herald, the Times and other newspapers.

The logistics of such a system could be extremely difficult. What do you do about the thousands of bloggers who would demand their cut? It would very different from dealing with the finite world of cable channels.

Still, pursuing such new ideas would make a lot more sense than chasing after the dream of charging for online content — an old idea that failed, and that likely would fail again.

Photo (cc) by Tony the Misfit and republished here under a Creative Commons license. Some rights reserved.

College students and newspapers

I’ve received several e-mails today from folks who saw my quote in today’s New York Times and wanted to commiserate with me about my observation that, on the one occasion when I had an opportunity to teach freshmen journalism students, I discovered that very few of them had previously read a newspaper.

It’s true — I’ve got no complaints with the Times reporter, Richard Pérez-Peña, who quoted me accurately. And I didn’t think I was saying anything controversial, given that I was talking about 18-year-olds. But the point I was hoping to make was slightly different from the way it came out.

At the time I was teaching that class, in the fall of 2007, I made it a requirement that my students pick up a Boston Globe every morning. It was not an onerous task — the Globe was distributed free on campus. By the end of the semester, quite a few students told me they enjoyed the experience, and intended to keep reading the paper.

Then the Globe ended free distribution. I don’t think it’s a contradiction for me to say that the Globe, in general, should be charging more for its print edition, but that to stop freebies for college students was not a smart move.

These days there are so few Globes on campus that I would have a hard time even requiring everyone to buy a copy.

Tuesday follow-up. Peter Porcupine asks, Why the Globe and not the Herald? To which I offer several answers: (1) the Globe was distributed free on campus; the Herald wasn’t; (2) even now, it’s harder to find a Herald on campus than a Globe; (3) I wanted my students reading a metropolitan daily characteristic of such papers across the country. Despite my high esteem for the Phoenix, for instance, I didn’t require my students to read that, either.

Herald’s Mashberg has advice for the Globe

Former Boston Herald union official Tom Mashberg has some advice for union folks at the Boston Globe, based on his experience with the Herald’s own brutal downsizing:

[F]rom 2005 through 2007, we struggled as a team to make the terms work. There was pain — many people abandoned beloved careers in print, and many devoted trade- and craft-union employees saw their work disappear entirely. But the same goal was shared by union members and the front office: Provide decent buyouts for the departing, spread the pain of pay cuts across all ranks of labor and management, and act in good faith.

One major difference to which Mashberg (who’s now the Herald’s Sunday editor as well as a former Globe staff member) alludes: Herald owner Pat Purcell universally wins high marks for being open with his employees.

I haven’t always been a fan of the way Purcell has run the Herald (though he certainly deserves credit for keeping it alive). But the secrecy-obsessed New York Times Co. could learn much from the way Purcell has kept the lines of communication humming.

Boston Foundation not so hot to buy the Globe

Last week there was a bit of a buzz over a story in the Boston Business Journal reporting that the Boston Foundation might be interested in playing some role in rescuing the Boston Globe — and possibly even getting involved as part of a future ownership group.

Since then, the Journal has run a correction: “The Boston Foundation said the effort is to address many issues concerning the Globe, and is not intended specifically to organize a group of potential buyers for the paper.”

EveryBlock in Boston

The New York Times today has a too-brief story on hyperlocal Web sites that attempt to aggregate local news down to the neighborhood level. The focus is on EveryBlock, founded by the noted programmer-journalist Adrian Holovaty, best known for creating ChicagoCrime.org and the Washington Post’s Congress Votes Database.

The EveryBlock site for Boston is down at the moment. (Noon update: Now up.) When I’ve checked it out in the past, it has struck me as intriguing, but not ready for prime time. Enter a zip code and you get a pastiche of blogger, media and government information that doesn’t add up to a whole lot. But it’s easy to imagine its growing into something pretty useful.

GateHouse’s Daniels wants it all

GateHouse Media New England president and CEO Rick Daniels has sent out a take-no-prisoners message to his staff that makes it sound like he can’t wait to capitalize on the Boston Globe’s woes.

Daniels, by the way, is a former president of the Globe.

Several sources within GateHouse passed Daniels’ memo along to Media Nation a little while ago. I can only assume that Daniels is itching to get this out there. Anyway, here it is:

Colleagues:

While the severe trials of major daily newspapers are fast becoming old hat, the news from our own backyard since last Friday has been far more jarring. There have been, and continue to be countless stories and posts that report or comment on the fate of the Boston Globe. We don’t know, and won’t for at least a while what the ultimate outcome for the Globe will be. After my many years there, I know there are many talented people working hard to find answers and solutions.

Obviously, what happens to Boston’s leading newspaper and advertising market share leader has a powerful effect on everyone in our business, as well as newspaper readers and advertisers. Whatever becomes of the Globe, our core task is to secure the health and strength of GateHouse Media New England, upon which all of our jobs depend. A few thoughts come to mind that I would like to share. We are working on dates for employee meetings in the near future, and the senior management team and I look forward to discussing the business with you, telling you more about our plans and actions and fielding your questions. Just three core thoughts at this moment:

#1. The Boston Globe is HARDLY alone in being afflicted by a significant decline in advertising. In the 4th quarter of 2008, concurrent with the meltdown in the financial markets, GHMNE saw our revenues worsen from results that were starting to be heartening. The 1st quarter was worse yet. Further, almost every publishing entity with which we share information has experienced a similar trend. As April progresses, we’ll know better if the slightly better results we saw in the first week are merely a blip, or the beginning of a positive trend. It’s pretty clear that we are all a long ways off from satisfactory revenue and cash flow results and whenever the recovery starts, it will be gradual.

#2. To use a stark term, the main objective of virtually all publishers now, and just about ANY business these days is “survival”. Most businesses have implemented the most stringent expense reductions — ever. We have been on this path for a long time, and as we all know, our cost reductions have been aggressive, but the savings have been sizable — and much-needed. In 1st quarter of 2009, our expenses are lower than the 1st quarter of 2008 by about 12%. While these reductions have been essential, they have not even offset ½ the downdraft in advertising, esp. in YTD 2009. We, all GateHouse divisions, and virtually all media companies, will have to continue to push ourselves — hard — and discover ways to tighten up even more. We have, together, and despite earlier reductions, still found ways to put out about 250 print and digital products that — provably — continue to attract a huge base of readers and advertisers. The key will be to preserve enough strength to not only deliver GHMNE’s value proposition — truly unique local news and information for readers and viewers and a large, attractive audience for advertisers — but also capitalize upon major opportunities we see before us.

#3. GHMNE certainly has challenges, BUT we have truly extraordinary opportunities as well. Just a few statistics to highlight our strengths and assets include:

  • GHMNE’s print audiences has grown (per Scarborough) while others have declined
  • 1.7 million weekly readers in MA — almost 500K more than the next closest competitor
  • 2.2 million unique visitors to our sites in March — up 58% from March, 2008
  • Over 20 thousand advertisers in 2008 — from tiny local shops to major national companies

These enviable facts (and so many others that I didn’t cite) are the result of a sustainable business model that is executed by all of us in a spirited and efficient way. We attract a huge base of readers, viewers and advertisers — both in print and online. As for core opportunities, we have — for many weeks now, and even prior to the recent news — been having very substantive discussions with our advertisers to uncover their needs and the opportunities we can seize in addressing their needs. Concerns about the future stability of other media competitors in the Boston market are being expressed to us, more nakedly, urgently and earnestly than ever.

The GHMNE senior management team believes we are likely on the cusp of a major, even “seismic” shift in the eastern Mass media markets that will have untold readers, and millions of advertising dollars up for grabs — but only during a short window that could be limited. Our aim is to grab our FULL share. This will take preparation, cohesion, and continued focus on preserving adequate cash flows when they are very difficult to secure. We have NO doubts we are ready for this test.

In closing, the senior management team wishes you and your families rest and peace during this holiday time, and we thank you for your continued commitment, constancy and support. We look forward to seeing you at upcoming employee meetings in the near future.

Rick Daniels
President and CEO, GHMNE

No doubt there’s a feeling of schadenfreude over at GateHouse’s Massachusetts headquarters in Needham. After all, it was just a few months ago that GateHouse and the New York Times Co. reached an out-of-court settlement over the Globe’s aggressive use of GateHouse headlines and ledes on its hyperlocal Your Town sites — a project headed, ironically enough, by a former GateHouse employee, the Globe’s Bob Kempf.

But all is hardly sweetness and light at GateHouse, as Daniels concedes in his memo. “GateHouse Annual Report a Tale of Loss, Indebtedness” is the headline on Mark Fitzgerald’s piece yesterday on the Web site of the trade magazine Editor & Publisher. And earlier this week, GateHouse announced it would close seven free shoppers in Southeastern Massachusetts and on Cape Cod.

Nevertheless, as a business, GateHouse might actually be healthier than the Globe right now.