Anchorage Daily News homepage _ via Newseum.

Alaska newspaper sale: a second look at money, logic behind purchase

The news out of Anchorage Tuesday afternoon had one of those story lines too good to check — plucky little digital upstart Alaska Dispatch is buying the legacy Anchorage Daily News for $34 million from The McClatchy Co.

Well, yes. But several accounts, including those of The Associated Press and Reuters, neglected to mention that Alaska Dispatch owner Alice Rogoff is married to multi-billionaire David Rubenstein, co-founder of The Carlyle Group private equity firm. The Dispatch, in its thorough takeout on Rogoff, noted that she is wealthy in her own right. Her father was an engineer and businessman who invented a key component of GPS systems and cell phones.

So the financial story is that another rich person has bought another hometown paper.  A little twist was that the Anchorage Daily News was not for sale until Rogoff made her offer. McClatchy shares took a modest bump up the morning after the sale, indicating the stock market is good with this kind of sell-off. We seem to be entering a period where newspaper groups are quite willing to dispose of some titles as The New York Times Co. did with its regional newspapers and The Boston Globe.

Also, unlike other well-off buyers like John Henry in Boston, Doug Manchester in San Diego and Glen Taylor weeks ago in Minneapolis, Rogoff comes with her own news operation. It is a substantial one with about 30 employees overall and a newsroom of about 20.

The buyers said in their announcement that it will take at least six months to put the Dispatch and the Daily News websites together. That is only one of the intriguing questions as the acquisition goes forward. My email request to Rogoff asking for an interview was unanswered. So here are a few issues I think will be worth watching:

Who is in charge?

Rogoff will likely become publisher, and I am guessing that Tony Hopfinger, editor and the founder of Alaska Dispatch before she acquired a controlling interest, will be the top editor of the merged operation. But the pair will need to decide whether the print paper needs its own experienced leaders with daily print backgrounds on both the business and the news side.

A metro or a statewide focus?

Rogoff is a self-described enthusiast for the whole state, regularly flying her own plane to remote locations. The Dispatch has a section on Arctic Region news and Rogoff holds a yearly conference pulling in leaders of Iceland and other far north countries. Hopfinger has written extensively about Alaska’s rural indigenous population and was co-author of a book about Big Oil’s domination of the state.

That’s not to say the Daily News doesn’t have its own generous ration of state news like a series on Alaskans and alcohol. Ideally the merged operation will simply publish more good stuff.  But I do wonder how the eclectic interests of the Dispatch will mix with the daily grind of cops, courts and sports news of the Daily News.

Conflicts of interest?

Pando Daily’s David Sirota weighed in with a piece noting The Carlyle Group’s huge presence in Alaska. So will how will Rogoff’s paper and digital editions cover that story? If she is smart, and by all accounts she is, she will take pains not to mandate favorable coverage of her husband’s firm.

John Henry, for example, has taken pains to say that The Boston Globe’s exhaustive and often critical coverage of his Boston Red Sox should go on unchanged. That is probably an easier call, however, for a sports franchise than a big business with plenty of public entanglements.

My read is that Rogoff like others in the new wave of local owners is motivated by a passion for the place and the conviction that it deserves a first-rate, vital newspaper organization. But drawing the line between caring and pushing pet causes remains an occupational hazard for sole proprietors. Rogoff’s background as a journalist and publishing executive (assistant to former Washington Post CEO Don Graham and a decade as chief financial officer of U.S. News and World Report) gives her an edge in making the right calls.

Profits?

Wealthy owners can put investments both in journalism and in digital transformation ahead of high short-term profits in a way publicly-traded companies cannot. In announcing the acquisition, Rogoff said she will do just that.

Assuming the Daily News is like other McClatchy papers, it runs with a relatively high operating margin of 15 to 20 percent. Executives have been forthright in saying that they would prefer not to be making the cuts in news staff and news space to keep earnings up. But paying interest and reducing debt accumulated from the 2006 purchase of Knight Ridder has been essential to keeping the company out of bankruptcy and in family control.

Rogoff, the pilot, may want to embrace Washington Post owner Jeff Bezos’ felicitous phrase that he brings “financial runway.” She can reinvest as makes sense.

The $34 million sale is representative of the better prices being paid recently for newspapers, having improved from 3 times EBITDA (earnings before interest, taxes, depreciation and amortization) several years ago to 5 times EBITDA. It probably is a reasonable estimate that the Daily News is making an operating profit of around $5 million.

Print + digital or digital + print?

I subscribe to the view, articulated 18 months ago by Earl Wilkinson, executive director of the International News Media Association, that digital isn’t going to wipe out print anytime soon (or vice versa). We are in  a print+digital era, likely to last at least a decade.

The Dispatch/Daily News deal is entirely consistent with that principle. In this instance though, the digital side is challenged with making print work. Call it a digital + print venture. So maybe that initial story line, if misleading financially, is on target going forward. Add Rogoff’s play to the list of notable newspaper experiments (Deseret News, Digital First, Advance) in trying to achieve a business and journalism model with just the right balance.

Related: Online publication buys McClatchy’s Anchorage paper Read more

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Monday, Mar. 24, 2014

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At Newspaper Association of America conference, content — and passion — make a surprise appearance

I went to last week’s NAA mediaXchange conference in Denver anticipating I would hear plenty of talk of big data, native advertising, mobile apps and social media. And I did. A less expected discovery: the concept of focusing coverage in a given paper’s print editions and website on a handful of “passion topics” particular to that community is picking up steam.

Make no mistake. Advertising sales and revenue are still the main event when 1,000 business side execs and vendors gather. But having attended many an NAA or investors conference where news and journalism made only a cameo appearance, I am heartened to see distinctive content given its due as a strategic investment in the industry’s future. Read more

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Monday, Mar. 17, 2014

Young woman in office working on desktop

Time to ditch uniques and page views for engagement in measuring digital audiences

When Nieman Lab’s Josh Benton asked me in December for a New Year’s prediction, I leaned toward the bombastic and led my wish list for 2014 as follows:

Ditch uniques and develop a better metric. Then-Newspaper Association of America president Mark Contreras was right when he made this case four years ago. It still hasn’t happened. One- or two-time visitors are not a business opportunity — they are an accident.

So we are two-and-a-half months into the year, and I am sorry to report that uniques and its evil twin, page views, are still with us — offered as the basic yardstick for digital audience for both individual sites and whole industries.

But I took cheer last week when three separate sources made the case that attention and engagement matter more.

Chartbeat CEO Tony Haile led off with an iconoclastic essay for Time.com titled “What You Think You Know About the Web Is Wrong.”

Chartbeat’s existence and success are themselves indicators of the imperative to get beyond clicks. Chartbeat’s products are real-time measures of traffic, time on story and time on site that editors rely on for decisions on how to play pieces and how long to leave them up in a prominent position.

In my recent profile of USA Today, I found that its national news desk, like many other digital operations, keeps a billboard-size display of Chartbeat indicators in plain view.

Haile’s whole piece is worth reading. His lead graf postulates:

We confuse what people have clicked on for what they’ve read. We mistake sharing for reading. We race towards new trends like native advertising without fixing what was wrong with the old ones and make the same mistakes all over again.

He continues his case that attention should trump visits and clicks:

At the core of the Attention Web are powerful new methods of capturing data that can give media sites and advertisers a second-by-second, pixel-by-pixel view of user behavior. If the click is the turnstile outside a stadium, these new methods are the TV control room with access to a thousand different angles. The data these methods capture provide a new window into behavior on the web and suggests that much of the facts we’ve taken for granted just ain’t true.

Other highlights:

  • An internal Chartbeat study of 2 billion visits found that stories with strong news content far exceeded clickbait in time spent.
  • Many people who share stories on social media do not actually read them. Ditto the recipients. The same internal research found that only eight of 100 articles read were accessed by Facebook and only one in 100 via Twitter.
  • Banner advertising is not as dead nor are native ads as vibrant  as current coverage would have you believe. Part of the reason, Haile said, is that nearly two-thirds of those accessing a home page go “below the fold” of the first screen to see what else is being featured.

Jeff Jarvis, with whom I don’t always agree, played off Haile’s piece in a BuzzMachine post on:

What the right metrics for media ought to be….How do we create positive feedback loops that improve the news not degrade it as uniques, page views and other relics of mass media have done?

Drawn from his persistent efforts at City University of New York to birth sustainable local news sites, Jarvis considers time spent (maybe efficiency summarizing news should matter too), then suggests several other measures of engagement: outcomes, follows, bookmarks, citations and embeds.

Finally my colleagues at Pew Research (whose annual State of the News Media report will be out a week from today) offered a study documenting what you might expect — direct visitors to websites spend more than double the time there than those who come via a Facebook referral, search or other side doors.

As this post is being edited and produced, I am on my way to Denver for the annual Newspaper Association of American mediaXchange conference. I will be moderating several panels and auditing the rest.

The great metrics debate is not formally on the agenda but may come up in segments on big data, a new American Press Institute study of audience behavior tracking news and another panel on advertisers’ perspective.

If I hear something new, I will report on it when I’m back. Read more

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Friday, Mar. 07, 2014

A USA Today newspaper box is shown in Charlotte, N.C., Tuesday, Sept. 29, 2009. (AP Photo/Chuck Burton)

USA Today’s two-year strategic overhaul gains traction

(This case study, the fourth in an occasional series, was underwritten by a grant from the Stibo Foundation.)

USA Today has probably changed more in the last two years than in its previous 30.

Always a circulation-driven enterprise, the paper now has a radically different audience strategy, substituting mobile app traffic for the rapidly falling readership of its legacy print edition and folding a new condensed USA Today section into the largest 35 of Gannett’s 81 community newspapers.

Publisher Larry Kramer and his hand-picked editor, David Callaway, brought several decades of digital experience to the formidable task of finally breaking away from a print-first culture in the USA Today newsroom.

That these things happened has been reported by the company in recent presentations to investors, in two stories by the Wrap’s Sharon Waxman and in a nice summary piece this week by David Cay Johnston at CJR.com.

How it all happened is quite a tale as well — a combination of bold moves and smart mid-course adjustments, a case in point of digital transformation generally but also one that required shedding the particular baggage of USA Today’s brief but turbulent history.

In spring 2012, Kramer, 62, founder of MarketWatch, was wealthy from its 2005 sale to Dow Jones and enjoying semi-retirement pursuits like consulting, writing a book on digital news and teaching at Syracuse University’s Newhouse School.  But he was intrigued by the pitch to take over USA Today.

“The brand was wonderful, still very strong,” he said in a phone interview, but at the same time “everyone was worried.”

In particular, the newsroom was only nominally digital, Kramer said, and it was past time to integrate USA Today with the rest of Gannett’s news-gathering. “That was an attractive challenge.”

By Kramer’s assessment, USA Today was early and successful with the design of mobile apps, “but just not very digitally savvy….The content was mostly wires. Then the USA Today version of the story later was dated (as far as attracting digital traffic) by the time it came out.”

“There was no editor and no publisher at the time,” he said, and the operation was “fairly adrift.”

A second part of Kramer’s diagnosis was that despite years of top-down pushing to build a digital presence, “the newsroom hadn’t gone along.”

So one of his first decisions was to bring on board Callaway, his stable mate at MarketWatch for a decade as editor. “There were no high-ranking digital people, and in my judgment, one coming in at a lower level would get eaten alive. People thought of David as a business specialist, but I knew he could do general news, too.”

USA Today creates a national news desk

“We began working right away on creating a national news desk for the entire company.” Physically, Kramer said, the operation, which now has grown to 45 editors and writers, is arrayed in an outward facing circle, looking at big-board display of traffic metrics. When an important story breaks, they turn around, huddle at a table in the center and coordinate plans. Then they go back to their desks with plans for USA Today itself, the community newspapers and Gannett’s large television group.

These days, Kramer said, 90 percent of breaking stories are USA Today staff written and that has helped drive traffic growth for the site since search engines value original content over generic wire coverage that might be found in a variety of places.

Callaway told me that, in the last 18 months, USA Today has advanced to fourth place in digital traffic, trailing only Yahoo, CNN and NBC.

Part of the trick, Callaway said, is to differentiate print and digital to match reading habits on the platforms. For instance when USA Today in print ran a lengthy narrative of how General Motors came to order a massive recall, the condensed digital version was a timeline of nine things GM knew and when they knew them. Even more recently, USA Today digital has produced stories like “Five things that happened in Ukraine over night.”

USA Today has also dipped into the “personal brand” approach to building traffic, notably in media where Rem Reider was added as editor and columnist and Michael Wolff writes flamboyant-by-design commentary.  (Kramer added that increased media and tech coverage has also helped raise visibility with advertisers). Prominent columnists like sports Christine Brennan and Washington Bureau Chief Susan Page turn up with increasing frequency on cable TV.

So why didn’t all that happen earlier? Kramer cited USA Today’s early history, a decade of borrowing reporters and editors from community papers which continued to pick up their salaries. That fostered a relationship that was “respectful but not endearing,” Kramer said. The community papers “with aspirations of covering national and international news themselves,” were dug in, insisting on independence.

That began to change with offers of modular USA Today sports reports and a USA Today news page, paving the way for the special sections introduced over the last six months, six to 12 pages on weekdays, bigger on Sundays.

Special USA Today section for community papers

Versions of that plan had been on the shelf at Gannett corporate for some time, Kramer said. But suddenly it was a solution to a pressing problem.  The company had introduced paywalls throughout the chain along with big price increases for bundled print + digital subscriptions.

The company had recognized the move would raise questions about the volume and quality of news in papers that had been much slimmed down over the years. Indeed digital-only subs attracted fewer readers than hoped and moving new subscribers to print + digital from introductory to full rates was also proving difficult.

So a new bonus section of USA Today content provided a potential solution and has tested out well in every market. Kramer credits Bob Dickey, head of the community publishing division, with an important wrinkle that helped seal the deal for subscribers on the fence.

With national and international content largely moved to the USA Today section “that added space for local news to the papers” in the A-section.  Dickey, Kramer said, “encouraged every paper to have an explicit plan for using that space and to promote it as well.”

It may seem a little ironic then that digital guys Kramer and Callaway’s most visible initiative, the so-called Project Butterfly is a print one. But Kramer said as he got deeper into his job, he had plenty of reasons to pay close attention to print.

While building digital, Kramer said, “I realized that I needed to preserve print circulation as long as I could. We still get a lot of revenue from print (circulation and advertising).” Print advertising, way down after the recession, grew in 2013 and stands to benefit in 2014 from the enormous added circulation of the inserted sections.

“This brings in 2.5 million more readers daily and the same or more on Sunday,” Kramer said. So if, for instance, “Procter and Gamble wanted to congratulate one of the Olympic athletes it sponsored,” they could now put that message out to a huge print audience overnight.

Elephant in the room: hotel circulation

Also overhanging USA Today was a fundamental challenge the digital era had brought to its longtime print circulation strategy. The core audience had always been business travelers, served with copies at their hotel door or in airports. But rather quickly, beginning in the mid 2000s, the typical business traveler began carrying a laptop or mobile device and could access a variety of reading options, including his hometown paper.

By the time Kramer came on board, hotel distribution was already beginning to shift from at-the-door delivery to a stack available to those interested by the elevators or in the lobby.

Also, Kramer said, the long-run of USA Today’s distinctive TV-style boxes was winding down (though they had a certain legacy standing, dating back to the Al Neuharth start-up days). “Some were only selling a paper or two a day.”

For a fix, Kramer instituted a series of interlocking moves. Exploiting new Alliance of Audited Media (AAM) rules, he began counting downloaded mobile apps as part of total circulation. So even as paid print plummeted, the total increased (despite USA Today’s site bucking the paywall trend and remaining free).

Gannett also negotiated with AAM to treat the USA Today section inserts as a “branded edition,” which can be a condensed version of the original under the auditing agency’s rules. So USA Today will be adding hundreds of thousands of new subscribers as Project Butterfly rolls out during this six-month period and the next.

USA Today’s paid print had already fallen in just a few years from 1.7 million to 1.2 million in the period ending in September of last year. And, clearly ready to accept bigger print losses, the company doubled the single-copy price that month to $2.

“No one carries eight quarters around in their pocket,” Kramer said, and in fact not all that many had been feeding four quarters into the boxes for a single-copy purchase. So the price increase became the occasion for pulling the boxes in and eliminating the considerable cost of stocking them.

Now, Kramer said, USA Today has evolved to having most single-copy sales in stores and newsstands. And home delivered subscriptions, hit with a smaller price increase than single copies, now make up the majority of USA Today’s paid print for the first time in the publication’s history.

USA Today has received attention for a deal with the Hilton chain in which the Web version of the paper is prominently featured as guests plug into a wireless connection in their rooms. But don’t look for hotel distribution to go all-digital anytime soon.

Hilton, Kramer said, “has the same wi-fi provider everywhere but not every chain works that way.” Besides, he said, “hotel lobbies are still a place many people like to use newspapers.”

Bringing TV to the party, selling more digital ads

Part of the content “integration” Kramer and Callaway are aiming for involves Gannett’s 43 TV stations, a total expanded with the acquisition of Belo’s properties. On the one hand, the stations provide an increasing volume of video for USA Today’s site and apps. Conversely, the new national news desk now pump out content to the TV stations as well as the community papers that they can adapt.

Both cited an investigative piece last fall, timed to the NSA snooping revelations, about as Callaway put it, “how police are tapping into your phones.” It was a big front-page splash for the national edition but also easy for the community papers and TV stations to make their own with some localizing.

Business changes on the digital side have been less conspicuous. Previous management had pushed for vertical sites on all of USA Today’s color-coded topics. Sports, travel and tech remain, Callaway said, but the rest have been pulled way back, allowing more staff to rove over a variety of topics rather than narrowly focus on one.

In digital advertising, Kramer said, “the big decision was to get rid of roughly 75 percent of the ad units.” The objective was to cut back on cheap remaindered space and make most ad availabilities prominent, scarce and premium-priced. But, he conceded “that has been painful at first…not all of our advertisers were ready to produce those kinds of ads.”

Coming next in 2014 will be offering the condensed USA Today section to non-Gannett newspapers. “We have had a half-dozen major inquiries,” Kramer said, and refining the idea will move to the front burner as the community paper rollout is completed at the end of this month. Kramer likes to refer to this as a “network/affiliate” model, analogous to NBC offering its content both to stations it owns outright and to affiliates, with advertising opportunities divvied up so each side benefits.

Another likely 2014 project will be launch of a weekend edition of USA Today, since the national news desk is a seven-day operation and is preparing the condensed version for Saturday and Sunday papers already.

Kramer used the boxing term “the tale of the tape” as an indicator of success to date. Which is to say that print and digital audiences and advertising are all up. The company stopped reporting USA Today revenue and earnings separately around the time of the great recession of 2008 and would not provide me with current figures.

But I’m not sure last year’s or even this year’s bottom-line results are all that important. Like Digital First and Advance, Kramer is walking the walk of disruption and the real test will be whether the gain outweighs the pain and transitional expense in three to five years.

Besides, the overdue full integration of USA Today into the rest of the company appears to be nearly complete, so it may make progressively less sense to view USA Today’s revenue contribution in isolation.

A skeptic’s view

While I found Callaway and Kramer candid, I also realize they were spinning the positives. Analysts and investors have liked what they are hearing and Gannett stock has had a long upward run — probably mostly due to broadcasting results and expansion, though change on the publishing side has been well-received as well.

But might I be missing some blemishes? I asked Jim Hopkins, an often fierce critic of the company who shut down his Gannett Blog after a six-year run about a month ago. In a return e-mail, Hopkins credited Kramer and Callaway for “pumping up the circulation numbers,” integrating USA Today into the rest of the company, and having “sped up the assembly line so more content is now appearing faster online and in digital apps.”

But Hopkins did voice a reservation:

I don’t see any significant improvement in the quality of editorial content.
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Monday, Mar. 03, 2014

Marc Andreessen (AP photo)

What Marc Andreessen got right and got wrong in his future of news manifesto

When the history of journalism’s turnaround is written some years hence, I think 2013 and 2014 will go down as years when Internet billionaires, the new Carnegies and Rockefellers, stepped into the fray in a big way — Jeff Bezos, Pierre Omidyar (and let’s not forget more traditional rich guys John Henry and Warren Buffett).

Now comes Marc Andreessen, Netscape founder and venture capitalist, with a take on the future of the business that is wildly optimistic, dare we say, irrationally exuberant.

His essay last week on where news is headed, well summarized in a Wired piece and readable itself, projects exponential growth in market demand. Andreessen sees solid Internet businesses with strong financial backing coming into their own even as legacy platforms continue to falter.

Much of his analysis is persuasive if not totally original. He is surely right that rebundling of news is booming. New aggregation sites with a social media twist, led by BuzzFeed, are working ingenious variations on the first wave like The Huffington Post. Google, Facebook and Yahoo — the biggest of the digital bigs — are redoubling efforts to build a branded news presence of their own.

And I can’t quarrel with three concise paragraphs capturing how newspapers and magazines have been battleship-slow turning themselves around:

There are some artifacts and ideas in the journalism business that arguably are counterproductive to the growth of both quality journalism and quality businesses. It’s why some organizations are finding it so hard to move forward.

An obvious one is the bloated cost structure left over from the news industry’s monopoly/oligopoly days. Nobody promised every news outfit a shiny headquarters tower, big expense accounts, and lots of secretaries!

Unions and pensions are another holdover. Both were useful once, but now impose a structural rigidity in a rapidly changing environment. They make it hard to respond to a changing financial environment and to nimbler competition. The better model for incentivizing employees is sharing equity in the company.

Andreessen’s final section, advocating the standard right stuff — including vision, nimbleness, experimentation and an entrepreneurial mindset  – is stylish, canny and upbeat.

The best approach is to think like a 100% owner of your company with long-term time horizon. Then you work backward to the present and see what makes sense and what remains. Versus, here is what we have now, how do we carry it forward?

So the theory is solid. But the facts and numbers? Not so much.

Andreessen casually asserts “the demise of scads of newspapers.” Assuming he hangs with a Silicon Valley crowd, who endlessly repeat the dying industry meme, the mistake is understandable. But very few American papers of any size have closed in the last decade and most of those have been the weaker title in two newspaper towns. Add in Newsweek, if you like (though it has been reconfigured and plans to return to print this month) or some international titles like FT Deutschland.

What would be truer would be to say that nearly all American newspapers, and many abroad, have been significantly shrinking in revenues and news effort during the last decade. And they face more of the same in the near term until they can generate enough digital and other revenue to cover continuing print advertising losses.

A second of Andreessen’s assertions had my jaw dropping:

The total global expense budget of all investigative journalism is tiny —  in the neighborhood of tens of millions of dollars annually.

How’s that? ProPublica alone has a budget north of $10 million, the great majority of it directly applied to investigative reporting. The Texas TribuneThe Center for Investigative Reporting and The Center for Public Integrity all operate on a similar scale. And that’s not counting the New York Times, the Guardian and another 1,350 or so American dailies.

Andreessen may be thinking only of very high-end investigations like the WikiLeaks and Snowden disclosures. But surely the Bergen Record and The Wall Street Journal exposes on the Christie administration bridge traffic debacle qualifies. While local broadcast fare, helping the little guy straighten out problems with shoddy contractors and unresponsive bureaucrats, is not my favorite, I’d count it too as investigative reporting,

Andreessen would be right to say it does not take billions and billions of dollars to do the world’s investigative reporting. But the total is certainly hundreds of millions, not tens.

A major order-of-magnitude issue also afflicts Andreessen’s central contention — that the news industry can grow 10 times to 100 times its current size over the next 20 years.

He is talking about the whole world, a potential market, he says, of 5 billion people.  Give them all a smart phone and an iPad, and consumption will rise. And the new era of news has ample room for many aggregators, many tech innovators and many vendors — all turning profits.

But I cannot get to 10 times, let alone 100, unless 240-hour days are right around the corner. There is only so much time, and only so much time for consuming news, even with double screening. And part of the news industry’s problem is competition for that time from non-news entertainment content and diversions like games and Facebooking.

The Wired piece and several contributors to its comment chain say that for venture capitalists like Andreessen market opportunities are never just big, they are huge. By his own description, he is “more bullish (on the business) than almost anyone I know.”

In sum, Andreessen’s interest is a plus just by itself. His ideas are useful. He makes a good case that the news business will soon clearly be recognized as expanding not contracting. But apply a generous discount to Andreessen’s measuring-the-market numbers before you take them to the bank.

We’ve asked Andressen through his company Andresseen Horowitz if he’d like to write a post for us on his views. Although we haven’t heard back, that invitation remains open. Read more

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Monday, Feb. 24, 2014

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NAA: ‘Print only’ still more than half of newspaper audience even as digital grows

A new analysis of the most recent newspaper audience reports suggests a surprising split in reading habits. Digital audience continues to grow. Mobile audience is growing quickly. Mobile-only audience, though much smaller, has grown to 7 million.

Yet more than half of newspaper audience — 54 percent as measured by Scarborough research in 150 large markets — still read their local paper’s news report only in print.

There is an important qualifier to that finding. The 54 percent may consume a substantial amount of national news on various digital platforms, but even with the growth of print + digital access subscriptions, they do not visit their hometown paper’s website.

John Murray, the Newspaper Association of America’s vice president of audience development, generated a number of other headline findings in his analysis published on the NAA site (members-only) earlier this month:

  • Total daily circulation was up 3 percent year-to-year and Sunday circulation 1.6 percent among 541 daily papers reporting results to the Association of Audited Media (AAM) for the six-month periods ending Sept. 30, 2013 and September 30, 2012.
  • The daily circulation gains were entirely driven by digital gains at the largest newspapers. Sunday gains also reflected the heavy use of “Sunday Select” products — packets of inserts to non-subscribers — by larger papers. At the great majority of newspaper organizations reported digital audience did not offset print circulation losses.
  • Print circulation continues to decline as a share of total circulation — now 71.2 percent daily and 74.9 percent Sunday. A year earlier, print was 85 percent of the daily total. That is to say that the industry — especially the largest papers — is using changed AAM rules to substitute digital audience for print.

I wondered, given the much lower cost of digital ads, whether the substitution maneuver contributes to continuing print and total ad losses, roughly 6 percent in 2013 if recent reports by public companies are representative.

To an extent that is true, Murray told me in a phone interview, but perhaps not as much as the raw numbers would suggest. In the first place, advertising is concentrated in Sunday editions and a few weekdays. Sunday-only and three-day print subscriptions keep those numbers higher than an overall daily average.

Run-of-the-paper ad rates do not correlate closely with circulation declines. Pre-printed insert revenues do, Murray said, but advertisers have been accepting of the “Sunday Select” products as an equivalent.

Overall, Murray’s paper concludes, these results show differing audience strategies, including discrepancies among papers in what they choose to count in their AAM reports: 

Newspaper readers are increasingly using digital products with the most substantial increases among the mobile platforms…The majority of newspapers are posting smaller declines in traditional print circulation (than national and other large papers). Most offer digital products to their readers that are similar to the largest newspapers, but they are not necessarily reporting use of these platforms in their AAM total circulation metric….

AAM circulation data is more insightful, expansive and transparent for individual newspapers due to changes in reporting rules. These changes also mean that using AAM “total circulation” as an exclusive metric across the industry is an exercise in looking at the sum of disparate parts. But a closer examination of the elements, supported by readership data, does confirm a steady transition to digital reach among newspapers and a healthy print readership base for readers and advertisers.

My takeaway is similar. The transition to digital and to mobile-only users continues to advance at a rapid pace. Indeed it has probably gone further by now than the studies in Murray’s analysis suggests. The digital audience is younger and newspapers have it in their power, especially as they improve smartphone news products, to speed the growth of that share.

But remaining print readers, described by some as hardcore and by others as geriatric, are slower than I would have thought, to read a newspaper organization’s report in both print and digital. The Scarborough report Murray highlights finds only about 30 percent of a given paper’s audience uses both print and digital (versus 15 percent digital-only and 55 percent print-only).

You can look at that division from a half-empty or half-full perspective. I agree with Murray that print continues to hold a smaller-than it-once-was but well-defined, upscale audience. These readers are attractive to advertisers. As the success of increased subscription prices shows, they are also willing to pay more than newspapers had traditionally asked.

On the other hand, advertisers may be quicker to move, in whole or in part, to digital than newspaper readers. As digital-only options proliferate, advertisers most likely will continue to scale down print budgets, to pay for more of the new. Read more

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Wednesday, Feb. 05, 2014

Tuesday, Oct. 18, 2011 in New York. (AP Photo/Mark Lennihan)

As The New York Times debuts its template for native ads, will other newspapers follow?

When The New York Times offered the first native ad on its website Jan. 8, reviews were mixed. Some thought the Times offered too much of a good thing with a half-dozen disclaimers that the story-like piece was advertising. Others opined that despite all the labels, the Times was stepping down the road to perdition hosting paid content from computer giant Dell.

I’d say each side has a point, but the bigger question is whether the Times way, like its approach to a digital paywall three years ago, will set the pattern for the newspaper industry’s belated foray into the hot native format.

In a brief phone interview, Caroline Little, president of the Newspaper Association of America, agreed with my assessment that newspaper organizations are eagerly exploring the possibilities but have barely started yet with native ads and other forms of sponsored content. And the hard breaking news of the typical website will pose a particular challenge to creating sponsored ad messages that fit right in.

Several weeks after the launch, it has become a lot clearer what the Dell campaign is all about. It is not a single ad placement but a whole series of loosely related articles that touch on how the company defines itself and the services it offers.

Also the messages link out to New York Times news stories the company likes.

Check this entry from last week.

You may first notice the excess of caution in labeling/transparency.

• The top of the page says “paid for and posted by Dell.”

• In case you missed that there is a prominent blue bar immediately below with the Dell logo.

• Next to writer Michael Keller’s byline is another small Dell logo.

• In the right hand rail, there are short summaries of three “More paid posts from Dell.”

• A mid-story interstitial links to three New York Times archive pieces “selected by Dell.”

• At the bottom of the post are two additional summaries titled “More posts from Dell’s Tech Page One.”

• The URL for the ad begins with “paid post.”

• Finally, in small type at the very bottom is this declaimer:

This page was produced by the Advertising Department of The New York Times in collaboration with Dell. The news and editorial staffs of The New York Times had no role in its preparation.

So I think we’ve got it — this story about whether government can be more entrepreneurial — and everything else on the page — was paid for by Dell.

What is native about the ad is a little more subtle. Though the typeface is slightly smaller and different from that used in a typical news story, they are very close to the same. So it looks like a New York Times story.

A short bio of author Michael Keller shows he has published in respected venues and pretty much fits the profile of a freelancer that Times might employ. I was also amused to see that the post follows some quirks of New York Times style, including calling California Congressman Michael Honda “Mr. Honda” on second references. (Who can forget the apocryphal story that the Times once called singer Meat Loaf “Mr. Loaf”?)

Also The New York Times redesign of its website coincides with the introduction of the native advertising program. So the Times can align the look (and content management) of the placements much as have digital startups like BuzzFeed or digital magazine successes like Forbes or Atlantic’s Quartz.

Like Forbes, Quartz and BuzzFeed, the Times has its own in-house “content studio,” which actually produces the native ad posts.

As was the case with the Times metered paywall and digital-print bundled subscriptions, few newspaper organizations will have the resources to do all that by themselves. But if the rollout is smooth and the growth curve is strong, those who have been waiting and seeing may well mimic the Times’ pattern — relying on vendors for many of the details.

As the native ad story unfolds, I would suggest keeping three considerations in mind:

• Native ads fit into a currently popular style of public relations, advanced by the Edelman firm and others, that classifies three types of media presence — earned, owned and bought. “Earned” in PR parlance is pitching a story idea and getting one or many outlets to cover it. “Owned” is story-like content on a company’s own site (Pepsi’s coverage of entertainment is a leading example). And “bought” is purchased digital space on a site, designed so the message is likely to be read. In a successful campaign, the three categories align and amplify each other.

Dell, which has its own newsroom and managing editor, Stephanie Losee, is a hawk on clear labeling, as is the Times. The American Press Institute’s white paper on sponsored content and native ads, published in November, includes this exchange with Losee:

Q: Have you encountered any challenges or issues you didn’t expect? If so, what are they? What could news organizations do to fix the problem?

A. I’ve never encountered a problem. I’ve only watched other companies or publications encounter problems — usually when they use sponsored content to put something over on audiences. Transparency is vital.

• Not every potential native advertiser is a Dell and not every outlet will be as starchy about labeling as the Times. But lest they lapse, the Federal Trade Commission has given notice that it is watching and ready to pounce on deception.

The FTC concluded its daylong workshop in early December with officials saying they still had lots of questions. The agency hasn’t been heard from on the topic since. My guess is that the FTC will flag some individual cases of misleading practice long before issuing any kind of general directive on labeling native ads.

For its part, NAA is also taking a cautious approach to the transparency issue. In a report on the workshop, Legislative Counsel Sophia Cope wrote:

NAA will engage with the commission to discourage agency actions that would unduly burden newspapers as they explore this new source of advertising revenue….NAA will continue to share guidance for increased transparency as it emerges across the advertising and publishing industries.

Which is to say that the industry group does not yet have guidelines for labeling as do the Interactive Advertising Bureau and  American Society of Magazine Editors. While advertorials and special advertising sections have been around for decades, digital presentation of such messages is uncharted territory.

• Native advertising will be an attractive opportunity but not easy to pull off for newspapers. It is not so clear that Dell and other such brand advertisers will want metro and smaller papers as a showcase for their messages (which would need to be adapted in look and tone if so).

Nor is it clear that local or regional advertisers will have elaborately structured PR/messaging campaigns like Dell’s.

Some organizations — notably The Wall Street Journal and Dallas Morning News — are already in a version of the sponsored content business, selling their own archived stories to brands for use on “owned” sites.  The Chicago Tribune and Los Angeles Times offer a version of sponsored content under the label “brand publishing.”

So look for 2014 to be a year the industry is moving to try to find its share of the action. But as in other digital opportunities, this may prove a race against time as competing native ad venues are already up and running and ready for more of the premium-priced placements.

Related: Understanding opportunities and challenges in sponsored content (Replay chat) | Sulzberger: ‘Our readers will always know that they are looking at a message from an advertiser’ | Federal Trade Commission will put native advertising under the microscope Wednesday Read more

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Friday, Jan. 17, 2014

Magazines, including a Rolling Stone issue featuring president-elect Barack Obama, are displayed at a newsstand Wednesday, Jan. 14, 2009 in New York. (AP Photo/Mark Lennihan)

Magazine industry ad decline slowing, but 4th quarter not good

The final tally came in this week for print magazine advertising in 2013. It is the typical good news/bad news scenario.

Ad pages — the industry’s traditional measure — were down 4.1 percent for the year. That could be read as a step forward from 2012 when the decline was 8.2 percent.

Quarterly year-to-year comparisons had improved through the year, with the third quarter off just 1.8 percent compared to a year earlier, the best performance in two years. But the fourth quarter headed back the wrong way, off 4.8 percent, indicating marketing budget cuts at year’s end and perhaps a below par holiday season.

The weak fourth quarter at magazines suggests that newspaper ad results for the period, which will be reported by public companies in February and for the industry in March will probably soften too.

We will return to the overall measures in a minute, but here is a tasty tidbit.  Can you guess which category of magazines did best, bucking the negative trend and finishing up 11.2 percent in pages for the year? (I couldn’t).

The winner, according to a compilation by Media Life Magazine was men’s titles. Men’s Health and Men’s Fitness were both up by more than a quarter for 2013. Details, Esquire and GQ, all had gains of 10 percent or better. Maxim (-16.8 percent)  and Playboy (-5.4 percent) were down, reflecting declining circulation as their genre of photo offerings are now readily available online, in varying degrees of raunch, for free.

Among the weakest performers were the three surviving newsweeklies — Time (-11.4 percent), The Economist (-16.1 percent), and The Week (-19.7 percent).

So among print magazine readers, at least, abs and prostates are hot, news not so much.

The Media Life list is detailed and can be scanned to see how your favorite titles or categories did last year.  Entertainment and celebrity magazines were strong; high-end general titles like The New Yorker, New York and The Atlantic were off.

A few notable growth categories of the last decade — like food and shelter — have now leveled off and saw a small decline in ad pages

Media Life is directed at media buyers. That group includes young professionals at ad agencies and specialized boutique firms. The buyers are notorious for moving as a herd, so being a hot title begets still more business and comparatively weak performers are scorned.

The Publishers Information Bureau, source of the statistics, also now provides an estimate of revenues. They were better than the ad page counts for almost every title and came out even or just up for the industry compared to 2012.

This measure also does not include digital advertising. That’s not an area of strength for magazines, which even more than newspapers continue to lose ad share to the digital giants and other digital-only offerings.

Tablet editions, though a small contributor to magazine finances as yet, continue to grow both audience and advertising. A separate study commissioned by the bureau’s parent association, MPA, found that the 69 magazines that measure iPad ad units increased the units by 16 percent in 2013.

The limitations of considering just ad pages as a measure of financial health disadvantage organizations furthest up the curve in digital transformation. For instance, The Atlantic’s traditional monthly print magazine was down in pages 16.8 percent for the year. But the company’s broader portfolio includes a hugely successful conference business and the strong launch of the digital-only Quartz business news site.

Especially if the tablet use is included, magazine audience is stable or up slightly for the year.  However, as numerous reports including Pew’s State of the News Media 2013 have noted, single copy sales, the highest margin circulation revenue, have crashed.

Travelers, especially those looking for something to watch or read on a plane, are increasingly choosing digital alternatives, rather than the old routine of buying a handful of magazines before they board.

Curiously, the print revenues of all magazines — $19.7 billion for the Publisher Information Bureau titles — is just ahead of those of daily newspapers. Those were $18.9 billion in 2012 but sure to decline more when 2013 full-year results are compiled. Read more

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Wednesday, Jan. 01, 2014

Finance and markets headline

For newspaper stocks, 2013 was a surprisingly good year

Despite yet another year of falling revenues, publicly traded newspaper companies saw their share prices rise sharply during 2013.

Yes, the overall market was strong — with the S&P index up 29.5 percent and the Dow Jones up 26.5 percent.

Yes, as I and others have noted, local broadcasting is thriving with two of the next three years bringing political and Olympics advertising bonanzas and retransmission fees a continuing windfall. Gannett, E.W. Scripps and Journal Communications all benefited from their TV holdings. Read more

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Monday, Dec. 16, 2013

Newspapers will lose a half of their share of digital advertising in the next five years, Borrell Associates forecasts. (Depositphotos)

Forecast: Papers will lose more than half their share of digital ads in next 5 years

With all the talk of newspapers as dinosaurs, you might be surprised to know that they will close 2013 retaining their position as the leader among legacy platforms in share of digital advertising revenue, according to Borrell Associates’ annual review and forecast.

But as Borrell looks ahead, the industry’s digital ad prospects are alarmingly weak. By 2018, the consulting firm predicts, newspapers share of all digital advertising will fall by more than half — from 7.1 percent in 2013 to 3.3 percent in 2018. Read more

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