Articles about "Business models"


troubled water

‘Riptide’ project explains how legacy media got washed out to sea by digital currents

A massive oral history of the digital disruption of legacy journalism models, released Sunday, contends that big news companies made early, repeated and well-funded attempts to adapt to the digital era but have been overwhelmed by bigger forces.

The work, titled “Riptide,” is likely to be controversial. Its authors — John Huey, Martin Nisenholtz and Paul Sagan — did the study as Shorenstein fellows at Harvard and have published it on the Nieman Journalism Lab site. They interviewed a group of 60 people, noticeably lacking in diversity.

There is very little “mea culpa” and a lot of “it made sense to us at the time” on display. While not elegiac, Huey, Nisenholtz and Sagan clearly tilt to the view — well-articulated by Washington Post Editor Marty Baron — that democracy is damaged as fewer professional journalists do what professional journalists do best.

But the authors are careful also to give attention to the viewpoint of the disruptors — including some like Business Insider’s Henry Blodget – who make the case that a distributed and aggregated system of news works fine, and the withering of traditional journalism is thus no great loss:

There’s a big argument right now about what’s going on in the news business. There are two big different opinions. One is that news is dying. The world is going to hell in a hand basket. Who is going to do the hard reporting? Newspapers are caving in. How is the world going to police itself? That’s one. The other is what’s actually happening: The amount of news that’s being created has been increased by a hundredfold over the last five years. People are absolutely drowning in it. That’s the one I subscribe to.

Anybody with an opinion can tweet. They can blog, or they can go online…. In the old world through 1995, media organizations were the equivalent of a hydrant in the desert. They controlled the vital information flow. They had tremendous power because they were the gateway. Now, we are a hydrant in the ocean. Media organizations are often still coming at it from the point of view of “Wait, we get to choose what’s important. People should consume it because we say it’s important.” The point I’m making here is there is so much out there to consume right now that you actually have to build something that people like. People do not want to have to eat spinach because it’s good for them. They simply won’t. There are too many options.

To the extent that the report has a conclusion, it is fully embodied in Huey’s Riptide metaphor, implying that right now there are scattered successes among newspapers and magazines trying to adapt, but the majority are flailing.

Predicting what will come next, the authors pretty much punt. The fifteenth and final chapter of their essay is titled “Time Will Tell” — a wry nod, as I read it, to a classic cop-out for writers of thumb-suckers. And they give the last word to Slate founder Mike Kinsley and Nick Lemann with a vague optimistic thesis that this will work out somehow.

But that final chapter does harness some forward-looking insights from the interviews. I was particularly struck by Atlantic Chairman and Owner David Bradley’s insights about what is wrong with pinning hope for saving journalism on rich patrons like himself. Doing less with less as revenues slide is a formula for disaster, Bradely argues, and finding a way to again grow revenues again is essential:

(It was) “deeply unsatisfying, to me, to keep putting out something that was failing against any commercial standard. But I also don’t think it’s a healthy thing for the enterprise. You end up with two bad things going on. One bad thing is that it can never grow. No matter how wealthy the fund is or the person is that’s going to subsidize it, there’s going to be a finite amount of money in the trust. It’s going to produce a finite amount of income. You end up creating an enterprise that operates at that level, and then the next year, when things cost more, it will operate at that level but a little more tightly squeezed and the next year a little more tightly squeezed.


David Bradley on his career journey and how he became an online publisher.

We saw that with The Atlantic, with [owner Mort] Zuckerman. He was genuinely generous with the enterprise, but he had a limit of how much he was going to spend on it, which was about $4 million in a bad year. The Christmas party had become a potluck supper, where everybody brings his own. They had not been able to afford the high-end writers. They had lost people like…Nick Lemann had moved on when the contract wasn’t competitive enough. They were increasingly publishing the works of academics who didn’t charge for the pieces or charged at a lower per-word rate.

One thing you end up with is a ceiling on the growth and a meaner and meaner culture. “Meaner” in the sense of tighter, financially. The other thing that happens is, they get whimsical and quirky. Since there’s no external standard to which you have to perform, you can publish whatever you want. You can report whatever you want. You can do the indulgences of the aggregate of your talent base.

There’s something really good about The New York Times waking up in the morning, going, “We’re not breaking the news we used to break. We’re being scooped by these people. Furthermore, we’re losing this talent. Everybody meet in the conference room at 8:15 because we have to figure out what we’re going to do.” Those kind of crisis moments which the for-profit sector forces on you relentlessly.

Bradley’s solution for The Atlantic was to combine his own deep expertise in staging profitable events with former president Justin Smith’s flair for digital innovations. The Atlantic has started growing again, keeping stars of its existing staff, adding many more and now creating new publications like the business site Quartz.

That option may be perfect for the scale of the Atlantic but not so adaptable to a metro newspaper. Washington Post Co. Chairman Donald Graham, interviewed this spring before the sale of the flagship paper to Jeff Bezos, put it this way:

One of the questions that faces places like The Times and The Post, but I want to come back to local newspapers broadly, is…there any kind of a plus to a news organization in having really high-quality reporting and editing? I’m pretty sure the answer to that is yes, but we have not figured it out.

From the digital disruptors, the authors glean several insights on what’s likely not to work for legacy media trying to adapt. Twitter CEO Dick Costolo suggests:

The benefit that the journalists have over the technologists is their ability to do these in-depth, content-rich analyses and essays around things. Instead, they’ve tried to optimize, in many cases, for, “We have to be the fastest and the first and the best distributors.” But the technology’s always going to be the fastest and the first and the best distributors. The technologists are going to be particularly bad at the in-depth analysis and the content and the thoughtful reporting….There haven’t been enough attempts to monetize that as opposed to trying to compete with the technologists at being fast.

And similarly, reporter turned venture capitalist Mike Moritz says: 

I think, on the whole, that media and forms of journalism that have something original to say, have their own content, have stuff that’s really proprietary and have their own voice, as opposed to distributing the wire services or being warmed-over versions of stuff that you can find all over the place — I actually happen to think that they have a far brighter and better future than they ever did.

…Most of the existing media companies who don’t have their own content will go the way of the dodo. No doubt about that. There will be a few that are able to engineer a leap over this gulf. But we all know the industries where the makers of horse carts or locomotives weren’t the leaders in the next form of transportation. It’s no different in the media business.

These thoughts dovetail nicely with the big media story of the day — how Bezos will try to transform the Washington Post and whether he will succeed. Like the authors, Bezos seems to see continued commitment to quality journalism, better integration of engineering into the legacy operation and patient experimentation as the likely path to a strong future. 

My sampling of an advance copy of Riptide focused on what it says about the present and future — but that’s really only a slice of the content. Both the authors’ essays and the interviews devote heavy attention to a 35-year history of digital news efforts, reaching back to the days of teletext and Knight-Ridder’s Viewtron experiment. You can read their synthesis or simply sample interviews — in video or transcribed — and in any order you choose.

It is worthwhile as a first pass at history and ought to be a resource for future scholars of this era, though the progression seems to be anything but linear. I am left wondering, for example, what the dominance of AOL in the late 90s says about the new cast of potent tech companies today. Could Google and Facebook be dimly remembered artifacts 15 years from now?

The conversation continues at a forum at Harvard University Monday evening (available here as a livestream). The authors will interview Tim Armstrong, former Google ad chief now CEO of AOL; New York Times Co. Chairman Arthur Sulzberger; and Caroline Little, a former digital executive at The Washington Post and the Guardian, and now CEO of the Newspaper Association of America.

This got me thinking: If you put Armstrong’s digital advertising expertise behind a better content idea than Patch, drew on the journalism chops of the Times, and had NAA more fully repositioned as an explorer of the future, would that produce the outlines of a bright future for legacy journalism?

We’ll see about that after the event. And time will tell.

(Disclosure: I knew Huey when I was in the magazine business in the mid 1980s just before he joined Time Warner. He also has served on Poynter’s National Advisory Board).

Related: “Riptide is great — but where’s the diversity?” Read more

Tools:
8 Comments
online money

How two small family-owned newspapers in Vermont had success with a paywall

(This case study, the first of an occasional series, was underwritten by a grant from the Stibo Foundation. Poynter affiliate Bill Mitchell did the reporting for the article in 2012, and it has been updated and edited by Media Business Analyst Rick Edmonds, who is general editor of the project.)

Most discussion about online paywalls has focused on the big guys, and more recently, on big chains. The New York Times boasts of dramatic results from the wall it erected in March 2011 and its subsequent success selling all-digital subscriptions and print + digital bundles. Gannett is the largest of the many chains that have followed suit and seen growth in circulation revenues, up in 2012 industry-wide for the first time in years.

More and more smaller and mid-sized news organizations are investigating ways to charge for content online, but it is a more daunting task for small papers, especially independents.

What follows is a close look at the experience so far of one such organization — the family owned The Rutland Times Herald and related Vermont companies. The Herald is the oldest continuously published family-owned newspaper produced under the same name in the same city. (I’m no relation to the Mitchell family that has owned the Herald since 1947.)

The Rutland Times Herald and its sister paper Barre-Montpelier Times Argus have added six figures in annual online subscription revenue while losing less than 9 percent of digital advertising.

The basic metrics

Here are some key figures from the Herald and the Times Argus, which are jointly owned:

  • 18,050: Combined Sunday print circulation
  • 1,815: Combined Sunday digital editions
  • 16,145: Combined daily print circulation
  • 1,833: Combined daily digital editions
  • 9,802: Users registered for access to www.rutlandherald.com or www.timesargus.com (includes print subscribers who register for free, day pass users, digital upgrades and digital-only access)
  • 1,640: Average number of logins per day
  • 721: Users subscribed to e-Edition
  • 502: Average number of daily visitors to e-Edition & mobile edition
  • 31/35: Average page views per visitor to e-Edition / mobile edition
  • 16/25: Average number of minutes on site per visit to e-Edition / mobile edition

How the paywall conversation began

A paywall done right can result in relatively little (if any) loss in advertising revenue and significant increase in digital circulation revenue. Maximizing digital revenue requires striking the right balance between reach (for advertising) and revenue (charged for access to content). A metered approach enables publishers to tweak the dials for each to address local circumstances.

In the fall of 2010, the Rutland Herald and Times Argus were producing online ad revenue in the low six figures. The sites were generating 3.8 to 4.4 million page views a month, and 18 million impressions from banner ads and other, smaller slots set aside for advertising messages on each page delivered.

The Herald company was getting paid for only about 10 million of those 18 million slots, though, with the remainder filled by house ads or other non revenue-producing messages. The Herald was not alone among newspapers publishing a whole lot of house ads, as documented in this study by the Pew Research Center’s Project for Excellence in Journalism.

Furthermore, the excess inventory meant the company could afford to lose nearly half its Web traffic with no impact on revenue. The restricted impressions also created scarcity, which pushed out the much lower revenue Google Ads impressions for retail ads. That’s how it did happen.

The scarcity did, however, result in some difficulty fulfilling very specifically targeted ad buys (many agencies/buyers work in 100k impression chunks, which can be hard to deliver when it’s targeted by a zip code). One answer the Herald came up with was to up ad positions by 20 percent in a redesign, which added a proportional number of impressions.

The challenge: That excess inventory framed the revenue challenge for president and publisher R. John Mitchell: The papers needed some new revenue streams in addition to online advertising.

Charged with addressing this challenge was Mitchell’s son, online manager/state editor Rob Mitchell, who is the source of the information provided in this case study.

Competition

The Rutland Herald and the Times Argus are the leading sources of local news and information in their communities. The state of Vermont is small enough that there is also competition on a statewide basis for news and advertising.

There are three network television affiliates covering Vermont — the CBS affiliate is locally-owned and by far the most competitive statewide, and there are NBC and ABC affiliates that are owned by chains. They compete from the Plattsburgh, NY DMA. There are roughly 38 weekly or bi-weekly newspapers statewide, with about 8-10 in direct competition for news and advertising with the Herald/Times Argus dailies on any given day.

There are eight daily newspapers in Vermont, with varying degrees of overlap in coverage areas and advertising competition. In the last two years all but one of them have gone to a paywall or have previously limited the amount of news they share on their website. In addition to Vermont Public Radio (VPR), there are more than two dozen commercial radio stations, but most of them do not have a robust online presence. VPR does, however.

There is also a nonprofit online news site, vtdigger.org, which reports on statewide policy and political issues. Another competitor for local eyeballs is a startup called Front Porch Forum, which is a town-by-town community bulletin board that sends out a daily email summary of community notices and sells text-based advertising in these emails.

As a result, Mitchell tells Poynter his papers are in constant competition online for such statewide news as coverage of the legislature and the governor. A reader can partially replace the papers’ statewide coverage with free online sources but not always with the same depth or breadth. The papers face some competition for coverage of local boards and/or local sports, and that is evolving because of online-only competition. The local competition is more serious at the pancake breakfast fundraiser level or the youth sports team level, Mitchell says.

He says social media is helping the papers strengthen their role as a definitive source for accurate news. And he points to several events that he says “demonstrated our value in providing well-sourced reporting and calm, accurate narrative in the face of disaster, tragedy and controversy, including a drug-related death, the devastation of a tropical storm, a community revitalization effort and the firing of a popular principal.”

He adds: “We have also pursued two public records cases involving police misdeeds to the Supreme Court of Vermont in the last three years, and may have to take one of them back this year. All this is what we’ve always considered our role, but it’s growing ever more important because of the speed with which rumors can gain traction.”

The Herald experimented with using a simple WordPress blog called Vermont Today designed for quick hit updates and breaking news. It has evolved into more of a driver of social media traffic, while the papers break hard news on their main websites.

Mitchell explains: “There are a few others in different categories like art and sports; we’re building these out slowly, but they are meant to fill the need that people expressed when we put up the paywall — the need for us to continue as a community voice, as a place where anyone can have a forum to speak, that is free. So it’s in a sense a parallel but complementary system.”

Finances

Here’s Mitchell’s take on the money issues:

Our company as a whole has seen a negative trend in revenue since 2007. We have cut expenses by 38% in that time span, but have seen revenue fall by roughly equal amounts with most of that coming in the hard recession years of 2007-2009, and holding stable since late 2010. In late 2008, classified revenue began a free-fall and has never come back. It now accounts for around 10% of monthly revenue on average.

Circulation revenue is more or less steady, although it’s become a higher percentage of our overall revenues. We increased our single copy price in Jan. 2009, but aside from that have not increased delivery rates in eight years. Circ revenue is about 40% of total revenue, while online-only circ revenue is just under 3% of total revenue, but growing.

The first two and a half years of the paywall produced digital-first circulation revenue in the mid six figures. Most of the way through the third year, we are on pace for annual digital circ revenue to grow 11 percent.  Between the first and second year it grew 19 percent..

We have, on average, 4,211 distinct logins a month between the two papers over the last year. Each subscriber – not day pass or library users — can add up to three more email logins to their account – as if they were a family of 4 sharing the subscription. The logins come from a mix of options our readers have:

1. Digital-only subscription: Includes e-Edition, website access, business journals access. In February 2013 we introduced a $1 upsell for the same access to the sister paper to comply with new audit rules.  Most popular options are the 52-week purchase at $2.99 a week and then the 8-week purchase at $3.49 a week. Between the 2 papers we have 914 of these.

2. Digital upgrade: For print subscribers, we offer an e-Edition upgrade at $2 extra a month. We have 132 of those.

3. Day Pass: We offer a day pass for $.99, packs of 5, 10 or 20 day passes at a discount.

4. Library program: We work with 31 school and public libraries on a use program that operates similarly to a day pass. Logins for that library are restricted to a specific IP address and paid for either by donations or a library subscription, which is very affordable. We are working on expanding this to locations beyond our traditional coverage area.

5. Free online access: We offer all print subscribers access to our web sites through a registration process. This is free, does NOT include the e-Edition, but it connects us with more online users, enables us to pull further demographic data, and so forth.

Retail advertising revenue has declined, mostly due to the closure of large retailers in our market zone, and a shrinking share of the overall advertising pie because of online competition. Our particular challenge in this area has been to build options for smaller local advertisers that are affordable but also effective — in short, compete with Google AdWords and their like — and build content that can support ads that the big guys want, too, like video for pre-roll ads.

Print retail advertising plus online banner advertising has remained steady over the last two years, and is now at about 45% of overall revenue. Online / digital advertising currently makes up about 5% of retail ad revenue – more than three years ago, but still a small share.

So as an overall trend, our hardest hit has been from loss of classifieds, with a distant second print circulation revenue, and then retail. We also sustained a $7 million loss, only partly covered by insurance, due to a flood in May 2011, which set us back but also accounts for much of our expense reduction — we had to outsource our printing and lay off 40 employees who had been involved in the press and distribution operations.

(Thankfully several of them were able to move to our contract printer to work). However, we still have a larger-than-standard newsroom for newspapers our size. By comparison, the local Gannett daily has a circulation one-third larger than ours, but a newsroom one-third smaller.

The strategy

Mitchell and his team decided to introduce a paywall and selected Clickshare, a 15 year-old newspaper technology company based in Amherst, Mass. as the vendor to build it.

In October 2010, the papers launched a so-called “hard wall,” requiring a subscription to access most content with the exception of breaking news, obituaries and news or opinion that was available free elsewhere. They eased users into the new arrangement in stages that began with a two-week free trial that required registration but no payment.

The trial did not require confirmation of email addresses or any payment information, which led to a large percentage of fake emails being used as login names, until the trial was shut down after 80 days. After the trial ended, each registration required a credit card to be entered.

The paywall also coincided with the release of an e-Paper, or e-Edition, a Flash-based and interactive digital replica of the print newspapers and the Business Journals (the company owns four monthly business Journals that publish in Vermont and part of New Hampshire).

The e-Edition was designed to give subscribers something extra in return for the paywall, to meet the demand for this version of the paper, and to allow for transitioning remote rural subscribers from print delivery to online-only. The e-Edition was also a step toward a tablet/mobile version of the papers, but at the point of setup, Mitchell reports, adding: “These things were still relatively in flux and we had not settled on the tablet/mobile strategy.” The papers did introduce an HTML e-Edition for tablets and mobile devices in March of 2012.

The costs: Mitchell said Clickshare charged a set up fee of $1,500 plus $997 to synch the paywall system to the papers’ database of print subscribers. Each additional site (the Times Argus site, for example) cost an additional $997. Read more

Tools:
2 Comments
Screen Shot 2013-08-30 at 8.05.51 AM

How taxonomies help news organizations understand and categorize their content

News organizations such as the Associated Press, The New York Times and Thomson Reuters are teaching computers to categorize text and images by building robust taxonomies that their systems use to tag news content.

Adding digital information under the hood in this way helps link stories together and serve up relevant content to news audiences.

In a recent interview with Poynter, Associated Press staffers talked about the AP’s News Taxonomy and why a news organization might consider using it.

What’s taxonomy?

Taxonomy is the practice of classifying information. News organizations do this already: putting articles in the sports section instead of the business section is a way of classifying them. What’s different today is organizations are classifying articles using computers instead of human judgment.

Stuart Myles, director of information management at the AP, led the team that built the AP News Taxonomy with machine-learning and natural-language-processing tools to teach computers how to make decisions instead of having a person read every article or look up a caption on every photo. Once the computer decides the appropriate tags to add, those tags are attached to the article’s or photo’s metadata.

“We’ve created a system of rules that evaluate every single bit of English text we handle,” Myles told Poynter by phone.

AP News Taxonomy contains more than:

  • 4,200 subjects,
  • 2,200 geographic locations,
  • 2,400 organizations,
  • 106,000 people
  • and 50,000 publicly-traded companies.
This word cloud represents the most commonly found terms in the AP News Taxonomy. (Image: Stuart Myles / AP)

In 2006, the AP developed its taxonomy for internal use. Automated tagging began the following year to categorize content coming through the “pipeline” from AP journalists, AP members and third parties. Each day the AP receives approximately 100,000 pieces of content — articles, photos and captions — and automatically applies and publishes metadata directly to every item.

“That’s partly because there’s so much content and partly because we want to get the content out there as fast as possible,” Myles said. “We don’t want to burden editorial with having to approve every single metadata we apply.”

The News Taxonomy makes up one of two parts of the AP Metadata Services. About 18 months ago, the AP began to make an external News Taxonomy service commercially available through the AP Tagging Service when it realized other news organizations could benefit from tagging their articles. Myles said the price list isn’t publicly available.

Users of the Tagging Service feed it news articles through an API, or application programming interface, that allows those users to access the AP’s databases and notifies AP that they’re calling for metadata. Users then get back the relevant metadata based on the AP News Taxonomy.

News organizations can decide how they want to use the metadata. Some use it for archives, others for tagging news articles.

The AP offers the taxonomy and tagging services separately. “We’ve found quite a few people who are interested in building their own tagging system. But they don’t want to build their own taxonomy because that’s a bigger effort,” Myles said. Such organizations can choose to use the AP News Taxonomy and “build their own rules or use someone else’s software to apply it.”

This sample output from the AP Metadata Services Developer Guide displays examples of categories and their IDs for the Geography hierarchy. (Image: AP)

Why use a classification system?

Taxonomies are different across organizations and have varying degrees of human control. But the main reason why companies such as the AP invest in taxonomies is because “metadata is a great way to link things together,” Myles said.

Reasons for using a taxonomy include:

  • Making it easy to recommend stories to users because your system has identified and sorted those stories into categories. Surfacing this content to users encourages them to stay on your website.
  • Taking the subjectivity and human error out of classifying information by automating the system.
  • Eliminating the need for editors to memorize extensive categories and risk forgetting to apply them.
  • Improving search-engine results. “Search engines can only index what’s in the text unless you give them additional synonyms,” Myles said. “We can do that through the taxonomy.” Moreover, if users don’t use the exact keywords to search, related articles can still appear because of metadata.
  • Making categories flexible. Taxonomies can generally link categories with alternative names, name variations and references to a subject that change over time. For example, a sports player can be linked to her team and jersey number — terms that might not be explicit in the story but are directly related to her.

The AP isn’t the only news organization investing in taxonomy. Thomson Reuters runs OpenCalais, which began as a way for finance companies, law firms and investment banks to process tens of thousands of articles per day so their traders could quickly scan through the day’s news. The service is free except for commercial users that look at large numbers of articles per day. OpenCalais has expanded to general news and is a competitor to the AP’s taxonomy.

The New York Times has “news vocabularies” available under the creative commons license, which outlines its taxonomic hierarchy. The BBC also developed a “sports ontology” (which debuted during BBC coverage of the 2010 World Cup) that describes a hierarchy of terms related to soccer teams and players.

The BBC explained the ontology was for internal use to organize its site and manage content dynamically; it had already worked on its taxonomy “for some time” and discussed the benefits with other news organizations at the 2010 News Linked Data Summit, according to BBC Internet Blog.

How does the AP check for accuracy?

Maintaining an up-to-date taxonomy is labor-intensive. Myles, who began his career as a programmer and has also worked for Dow Jones, leads the search-and-classification team under the information-management department, which is made up of 10 people with backgrounds in linguistics and library science.

Every day, they monitor the taxonomy by staying updated on news, determining how to classify new information in helpful ways, updating the rules and making sure those rules are as accurate as possible.

Heather Edwards, manager of the special-projects team at the AP and former taxonomy developer, offered an example to illustrate the accuracy checks built into the testing interface:

She pointed to a story about former Greco-Roman national champion wrestler Dallas Seavey, who became the youngest Iditarod champion in 2012 when the 25-year-old crossed the finish line in Nome, Alaska, after 9 days, 4 hours, 29 minutes on the trail with his sled dogs.

When the AP received this story, the system correctly tagged the article with “Greco-Roman wrestling” and “sled dog racing” but incorrectly tagged it with the term “dogs” in the pets hierarchy, which is used only for domestic pets, not working dogs. Because Seavey was the youngest person to win the Iditarod, the article should have been tagged with “record-setting event,” but wasn’t.

Accuracy is calculated by two measures: precision and recall.

Precision is the percentage of those documents tagged with “Greco-Roman wrestling” that are actually about Greco-Roman wrestling. Take 100 documents tagged with “Greco-Roman wrestling.” If 90 of them are about Greco-Roman wrestling but 10 are not, the precision is 90 percent. Because the “dogs” tag was incorrectly applied, the precision for the “dogs” rule decreased.

Accuracy is mission-critical for many of the AP’s customers. “All terms that are in production need to be operating minimum at 85 percent precision and recall,” Edwards said. Most terms are operating at above 90 percent.

For “Greco-Roman wrestling” and “sled dog racing,” Edwards said, “we have one more example of good content which improved the precision and recall for both of them.”

Recall is the percentage of tagged articles compared to all the relevant documents in the collection. Edwards noted that recall is a “tricky” concept that’s “really hard to calculate” because “by definition you don’t know how many relevant documents are in the corpus. If you knew that, then your rule would be perfect.”

Since the “record-setting event” tag was missing from the Seavey article, the recall for that rule decreased — the rule missed the article even though it was relevant to “record-setting event.”

This diagram shows an example of how the AP News Taxonomy creates a hierarchy of subjects nested within each other. (Image: AP)

The team runs reports daily and weekly to monitor precision and recall. Mindful of external users concerned about privacy or protecting their content, Myles said the AP keeps only a small amount of data for fixing problems.

“We’re not looking at their content, so it’s confidential in that sense,” he said.

If a mistake occurs, customers, editors, and representatives from sales and customer service usually provide the team with feedback to improve the rules, Edwards said.

Whenever the team makes a new rule to classify stories, Myles said there’s a “gold set of articles” against which the team members “rerun all of the content and make sure that we’re still getting the same results so we haven’t introduced some problem by mistake.”

Then, the team compares the results to the taxonomy that was previously applied. They also run the top news of the day through the taxonomy to see if the metadata is applied as expected. The team tests the new rule for up to two weeks before it goes into production, said Edwards. They then monitor it and get feedback from editors and customers.

Although we haven’t yet developed the means to teach computers to read, understand and explain information, taxonomies get us closer to the promise of the Semantic Web.

Some skeptics have concluded the idea of the Semantic Web was a fad, with the concept too difficult to turn into reality. But the money that news organizations are pouring into developing classification tools to better cut through vast amounts of published content suggests otherwise. Once taxonomies become more established, we may see small-to-medium-sized news organizations also adopt them to help organize their content. Read more

Tools:
0 Comments
Digitalnewsroom2

As brands start building digital newsrooms, what do they need to succeed?

Thanks to social media, we’re getting used to big companies talking directly to us instead of just advertising next to what we’re reading.

When you’re consuming content in a stream — as we do when using Twitter, Facebook or one of the many other social networks — a story from The New York Times, an update from your crazy uncle, and a link to a cleverly captioned photo from Oreo all flow in the same river, and get equal weight.

Today, tools such as Twitter and WordPress have led to an explosion of brands producing and spreading content, competing with traditional media for audience attention and employing journalists as creative storytellers.

If all the content marketing statistics floating around the Web are to be trusted, brand publishing is now a staple of the modern marketing diet. This is why the term “brand newsroom” has been floating around advertising circles in 2013 — brands have recognized that in a social-media world, telling true stories is a better way to win hearts and minds than interrupting people with ads.

Traditional media have known for a long time that good publishing requires not just talent but also smart organization. But the new wave of brand publishers are starting at zero. A company whose business is helping people file taxes or making the world’s most-dunkable cookie rarely knows how to create a publishing organization within itself. Moreover, for many of these companies, the word “newsroom” conjures up images of a TV studio with out-of-focus people behind a pontificating anchor, or a cigar-smoking J. Jonah Jameson yelling at frantic print reporters.

The fastest-growing newsrooms of the 21st century couldn’t be more different than such cliches. I wanted to know how brands that have built successful newsrooms have learned, and so I decided to ask some of today’s hottest brand publishers questions about how they’ve organized themselves for the digital age.

Here are some of the answers:

How should a brand newsroom be structured?

The Verge, one of the fastest-growing media properties of the last two years, breaks its newsroom into a three-pronged battalion: a real-time newswire team, a reports team and a magazine-style features team. Each team has reporters, writers, a designer, and editors.

“We model each team after a real-world analogy,” Nilay Patel, The Verge’s managing editor, said in a phone interview. “We need to do the news in real time; that’s why people come back to us. They also want really in-depth news and analysis and reporting, and they love our big features.”

The Verge’s newswire team constantly monitors and reacts to industry news as it happens, while the reports team chases stories, conducts interviews, and goes to events, producing stories with a one- or two-day lead time. Meanwhile, the features team spends months producing big, beautiful long-form stories and videos, which go through multiple design and edit passes.

“As we got larger, we started to hire more specialized talent,” said Adam Ostrow, chief strategy officer and former editor-in-chief of Mashable, which shot from obscurity to become one of the top-trafficked news destinations on the Web in a few short years.

As Mashable’s audience grew, its need for focused reporting and storytelling expertise increased. “We now have senior editors running our Tech, Business, and Watercooler channels and managing small teams of writers that own a respective area of our coverage,” Ostrow said via email.

Despite fears that we live in a “post first, correct later” world, the leaders of these new digital newsrooms repeatedly emphasized the importance of editorial layering — having multiple people review every piece of content. For them, that usually means staffing up with editors who can review stories for style and fit, then having a separate set of eyeballs look at grammar and presentation.

“The staffing will vary depending on the kind of company, but one key role is essential: someone in charge,” said Neil Chase, former New York Times editor and senior vice-president of content for Federated Media. (Disclosure: He also works with me at Contently as a consultant).

That person must be the defender of the publication’s message and voice, the arbiter of quality, and a decision-maker with the power to choose and optimize “the technology, tools and partners needed to produce and distribute content effectively,” Chase said via email.

In a traditional newsroom that would go without saying, but it might be the most-neglected thing I’ve seen among brand publishers that say they want to run a newsroom.

What sets great digital newsrooms apart?

1. Great talent, and a strong, unified voice

There’s no getting around it: great stories are told by talented people, and even the most-talented people tell better stories when they work together. That’s why the best newsrooms invest in talent.

“The most important thing that we’ve found is you have to hire people that have really strong voices,” Patel said. “It’s really about filling in that structure with talent that is native to the platform, native to the audience, and ready to be passionate. They understand that there is right and wrong and the big narrative of news all adds up to something that means something important.”

2. Technology

Look at the fastest-growing media properties of the blogging era and you’ll notice most of them made heavy investments in technology. Huffington Post, Business Insider, BuzzFeed, Bleacher Report, The Verge and others built their own powerful content management systems, while sites such as Mashable scaled up using highly customized versions of WordPress and strong social-media platform integrations. And each has dedicated tech and design resources for maintaining its system.

The main benefit of strong technology is the ability to eliminate repetitive tasks inherent to publishing, such as scheduling, reporting, revising, tracking, composing and post-production. Additionally, companies such as Huffington Post and Upworthy have boosted traffic strongly by split-testing headlines, a process that’s arduous by hand but can be automated with technology.

“One of our advantages has always been that we’re all power users of the tools we write about on the site,” Ostrow said. “Everyone on the team understands how to craft stories that readers will want to share, and how to use social media for newsgathering, collaboration and content distribution.”

3. Data

Vox Media CEO Jim Bankoff said in a phone interview that the best way to operate a newsroom is to be “data informed.” That means striking a balance between monitoring results and chasing the kinds of stories that have done well historically, and trusting years of publishing experience to predict what things people should be interested in.

While the last few years have seen an obsession with real-time data about page views, both publishers and advertisers are increasingly focusing on metrics such as engagement and sharing as measures of success, and leading indicators of audience loyalty and future traffic.

4. The myth of centralization

One myth about the success of great newsrooms persists because of the word itself: that a newsroom has to be a physical room. That isn’t true: a newsroom is an organization, not a place. Some of the most effective newsrooms today are virtual, and almost every successful publisher — from GQ to CNN — employs remote staff and freelancers for reporting, shooting, writing, and editing.

“A lot of people don’t realize we were a completely virtual company for the first four or five years,” Mashable’s Ostrow said. That virtual newsroom grew to about 15 people before the company got its first office, but Mashable still has remote employees and freelancers.

Truth is, publishing is one of the easiest industries in which work can be done remotely. If magazines and blogs can do it, so can brands.

But that doesn’t mean building a newsroom is easy. Fortunately, modern technology has allowed the cookie makers to tell their own stories without buying printing presses and trucks. And if they start thinking about how the best new-media companies would tell that cookie story, they might never have to design another “takeover” ad.

What do brand newsrooms need to succeed?

1. Put quality first.

In brand newsrooms, “speed is often stressed over quality,” Steve Rubel, chief content strategist for Edelman, said via email. “The latter is far more important. Everyone is competing for the same attention bandwidth and that means brands are going up against media pros with decades of experience.”

Digital publishing today is an arms race, with more and more people getting into the game. With content increasingly spreading — or not spreading — because of what people do on social media, the quality of storytelling has to improve. A story must inform, surprise, inspire and delight the reader — and make him or her look good to friends.

2. Have a strong relationship with the business side of the house.

“I share a lot of people with marketing,” said Mollie Chen, editorial director at Birchbox, which produces a monthly magazine and dozens of blog posts every week to grow its beauty-supply subscription brand. “Everyone is by design expected to understand every layer of the business.”

Birchbox’s newsroom success stems in large part from its integration with the core business; in fact, Chen was the company’s first hire. “It’s important to hire people who know how to tell stories,” she said in a phone interview, but added that “nothing gets created in a vacuum. There’s always a consideration of all three of our stakeholders: the customer, Birchbox, and our brand partners.”

3. Iterate.

Ostrow said survival as a digital publisher — whether or not you’re a brand publisher — requires “doubling down on what’s working and moving away quickly from what’s not.”

“One of the things brands forget is iteration,” said Michael Hess of Weber Shandwick, who helped design Verizon Wireless’s news center. “Regular publishers are constantly adapting.”

In a large organization where change is takes even more time, the best way to past this hurdle is to empower the publishing team to make some decisions on its own, he added.

4. Make sure you have things you can talk about without involving the lawyers.

A typical brand’s legal department is more hands-on than a traditional publisher’s. This can cause bottlenecks in the publishing schedule and hamper a brand’s ability to capitalize on time-sensitive events.

“In traditional publishing, you have legal supporting on the back end,” Hess said in a phone interview. “In brand publishing, you have legal approving on the front end.”

To minimize the disruptions that arrangement causes, he said, “you have to have a road map already” that lets you talk about some things without legal approval, letting you keep a consistent stream of stories flowing to readers. For content that still needs sign-off, Hess added, there has to be a clear approval process.

5. Get out of your own head.

“The vast majority of brands today are still leveraging social media as an extension of corporate communications,” said Ostrow. But, he pointed out, most brands’ efforts to “be the next Oreo” have felt contrived.

“I think the biggest things that brands need to think about are the topics and themes that matter to their customers and how can they be a valuable member of that conversation – not just the conversation that is trending at any given moment in time on social media,” he said.

Birchbox’s Chen said brand publishers must have a “willingness to ignore traditional marketing” in favor of great stories the audience actually wants: “Customers are smart. They don’t want to be talked at. They want to be talked to.”

6. Create original material.

Edelman’s Rubel said his top concern for brand newsrooms is that a lack of originality will dilute their efforts.

“There’s too much emphasis on ‘news jacking’ instead of creating content that fills a true void and enriches people’s lives,” he said. “I am concerned we could be seen as ambulance chasers.”

If the goal of a brand newsroom is to gain the audience’s attention, trust, and engagement with that brand, recycling pieces of other brands’ content or inanely riffing off obvious news isn’t going to work. As I’ve written before, in the world of branded content, original always wins.

7. Be patient.

Newsrooms are marathons, not sprints. Even new-media publications that consistently see their material go viral — such as Upworthy, BuzzFeed, and The Onion — needed months to get noticed and years to build trust.

“We worked our way up,” Weber Shandwick’s Hess said. “And we’re getting to a point where the audience is getting much bigger. It’s allowing us to experiment with the kinds of content.”

Becoming a publisher isn’t like an ad campaign or some other short-term initiative — it’s a cultural change within an organization.

“The key question brands must ask here is this: ‘Are we committed to using this investment to the fullest and for the long haul?’ ” Rubel said. “This means all of it – the technology, the people and the processes. If they are committed and patient, then a newsroom is a worthwhile investment.”

Shane Snow is a technology journalist and co-founder of Contently, a New York City-based technology company that empowers brands and journalists to connect and tell stories. He writes regularly for Wired, Fast Company, Advertising Age, and more. Read more

Tools:
0 Comments
online money

What news organizations are learning as they refine their digital pay models

Now that the logic and financial benefit of digital pay plans has been broadly (but not universally) accepted at newspaper companies, a second generation of issues and solutions is emerging.

Listening to the final session at the American Society of News Editors Convention last month on paywalls, I had a sense that the conversation has moved well past the basics of whether or not to charge. And the new discussion comes with its own vocabulary: end runs, free samples, foul balls and protein versus potato chips.

The first three terms are variations on a theme: the potential subscriber needs to have a good sense of what he or she is getting and be approached with an artful soft-sell invitation to pay up.

George Rodrigue, managing editor of the Dallas Morning News, which offers select digital content at a premium price, put it this way at the ASNE session: “We decided early that we were for a hard premium wall in concept … but you need to let them in to sample stuff.”

That is a particular issue at The he Dallas Morning News and the Boston Globe, whose bostonglobe.com is a high-end separate offering while the well-established boston.com remains free: How do you know whether you want to pay for the new premium site until you can see what is in it?

The popular metered model works, in part, because it is a sampler of content, self-selected by the potential subscriber, that gives a good idea of what full access would provide.

I see the same purpose in allowing end runs — a.k.a. workarounds — to protected content. Why can you still view most Wall Street Journal and now Boston Globe stories by pasting the headline in a browser? It is a get-acquainted offer in miniature.

The pillar of the New York Times’ labyrinth of marketing approaches and offer formats is a 99-cent first month of access plan — pretty darn close to a free sample. That sets the stage for gradually escalating the price but establishing a pay-something principle upfront, Tim Griggs of the Times explained at a separate American Press Institute/Poynter event in May.

The Times also scored with a promotion at launch in March 2011, identifying 100,000 heavy digital users and giving them nine-months access courtesy of a sponsorship by Lincoln Motor Company. At the end of the trial, more than 50 percent were converted to subscribers.

Both the Times and Gannett, which has phased in digital pay plans at its 81 community newspapers, do extensive advance research on customer attitudes and reactions to specific offers. Gannett’s Maribel Wadsworth told the ASNE group that it led the company to allow “foul balls” — views beyond the paywall threshold “that are not your final out.” For example, requiring payment for access to a story that a reader comes to via social media may be the wrong time for the ask; invoking it for the second, third or fourth read in one sitting will make more sense to the prospective digital subscriber.

As time goes on, a working definition of what’s worth paying for is being refined as well.  That certainly includes access on as many platforms as the individual wants, “experiences” as well as straight news reports, and tailored offerings for tablet and smart phones that fit the context of where, when and why the devices are typically used.

But there remains the question of what content to showcase. As Rodrigue put it: “Are we driving readers from protein to potato chips?” Conceding that a slideshow of Dallas Cowboys Cheerleader tryouts was among the top trafficked stories ever, he said that paying readers want more serious content as well.

Wadsworth reported that Gannett research supported the same conclusion. Part of the advance work on digital pay was to survey readers in each of the 81 markets trying to define a few topics readers cared about passionately and would pay for.

The expectation, she said, was that food might be big in Shreveport, camping and hiking in Fort Collins, and so on. The surveys did find some of that, but number one on the wants list in most markets was investigative/accountability reporting — “the top passion thing and by a wide margin,” Wadsworth said.

Extensive pre-testing can also yield insight on fine points of deal offers. For instance, Gannett found that two-for-one (buy eight weeks get eight weeks more for free) was more appealing to prospective subscribers than a 50 percent discount (get 16 weeks at half-price).

My sense is that plateaus — the tendency of new digital subscriptions to flatten out after an initial growth spurt — will remain a challenge as digital pay plans mature. Nor does there appear to be consensus about whether free access to all digital platforms for print subscribers, which has worked at the Times and elsewhere, is better than an upcharge for multi-platform users.

Also, I see a bit of paradox around brand as applied to building a base of digital paying subscribers. On the one hand, the robust response seems to back the truism that many digital news consumers prefer and seek out a trusted brand. But if the digital offering has a very different name — for instance Mlive.com for Advance’s Michigan websites — does that undercut the brand connection for prospective subscribers?

While the paywall movement continues to gather steam, the exploration of alternatives has not exactly shut down. Just last week, Google biographer John Battelle and columnist Mathew Ingram proposed a hybrid of micro-payments and crowdfunding in which articles would be priced individually with the cost falling as more readers accepted the offer.

Maverick John Paton’s Digital First is experimenting with a survey asking for user information rather than money as the gateway to protected content. Or the ticket to entry, offered to publishers in a new product called Content Unlock, could be watching an advertising video.

But the majority view now seems to be broad buy-in to the fundamentals of digital pay strategy: it can be a source of added circulation revenue and a way to tap into a new group of subscribers; it can bolster rather than cannibalize print; and it can be done with minimal damage to traffic and ad sales.

An optimist might even argue that the paywall movement, not yet three years old, is so new that establishing a wealth of experience in best practices is ongoing and will yield a bigger payoff in another year or two. Read more

Tools:
1 Comment
Warning Job Loss Ahead

ASNE census finds 2,600 newsroom jobs were lost in 2012

The American Society of News Editors released its annual newsroom census today and found an unexpected acceleration of job losses. Roughly 2,600 full-time professional editorial jobs at newspapers disappeared in 2012, a 6.4 percent decline compared to 2011′s total, leaving industry news employment at 38,000.

That brings the number of reporters, editors and other journalists down almost one-third from a peak of 56,400 in 2000 and down 30.9 percent since 2006. The greatest losses — 13,500 in all — came in the recession years of 2007-2009. But a modest stabilization in 2010 and 2011, when losses slowed to 900 jobs over the two years, now appears to be over.

FULL-TIME PROFESSIONAL NEWS JOBS AT NEWSPAPERS
YEAR         TOTAL        GAIN/LOSS
2007           52,600            -2,400
2008           46,700             -5,900
2009            41,500             -5,200
2010            41,600               +100
2011             40,600             -1,000
2012             38,000              -2,600

 

The census began in 1978 to track progress in making newspaper staff and leadership more diverse. As in recent years, the percentage of minority news staffers held steady at 12.4 percent — essentially showing minorities losing newspaper jobs at the same rate as others.

The census covered calendar year 2012, but the cuts have clearly continued this year.  Recently, the Chicago Sun Times dismissed its entire 28-person photo staff. The Cleveland Plain Dealer and the Oregonian are cutting print newsroom staff, as parent Advance Publications did at The Times-Picayune in New Orleans last year.

Much coverage of the financial crunch that precipitated the cuts has focused on metro newspapers, which must serve an audience and advertisers spread over a large geographical region while facing tough broadcast and digital competitors.

However, this year’s survey found newspapers with circulations of more than 250,000 reporting slight increases in jobs on average. The big losses came at newspapers with circulation between 25,000 and 250,000.

How ASNE got its figures

The census, previously an in-house ASNE project, was conducted this year and last year by a unit of the Donald W. Reynolds Journalism Institute at the University of Missouri, and fully funded by the Robert R. McCormick Foundation.

The procedure involves collecting results and grouping them by bands of circulation, then projecting numbers for those papers not reporting based on the average for the group. Multiple reminder e-mails and follow-up phone calls aim at getting reports from papers that didn’t respond to the initial request.

For several years ASNE has accepted online-only news organizations as members and invited them to participate in the survey. But response has been spotty, leaving ASNE with too little information to estimate how many of the lost newspaper jobs may have been made up by growth in the digital sector.

Also this year, USA Today, The Los Angeles Times and a number of other large papers didn’t compete surveys. And as the industry delivers content on a number of platforms and many large chains consolidate copy editing and design at remote centers, an accurate count of jobs becomes more difficult.

By my reading, besides the L.A. Times, the list of the missing includes The Baltimore Sun, Hartford Courant, Sun-Sentinel (of Fort Lauderdale) and Newport News Daily Press — five of the eight Tribune Co. papers.

Historically Gannett has been a very strong supporter of ASNE’s diversity initiative.  But besides the absence of USA Today, several other large Gannett metros — The Arizona Republic, Indianapolis Star and Cincinnati Enquirer — didn’t report results.

Other prominent papers not reporting include Poynter’s Tampa Bay Times, The Miami Herald, The Times-Picayune, the New York Post and The Richmond Times-Dispatch.

With 978 of 1,382 dailies responding, however, the basic finding of a bigger job decline seems solid.

Clarifying gray areas

I have asked ASNE to double-check its list and will post an update if any of the missing papers failed to show up on the list as a result of clerical error.

“Who counts as a journalist now is complicated,” said Adam Maksl, one of the academics who oversees the work. For this year, Maksl said in a phone interview, papers with regional editing centers were left to make their own call about counting their share of these groups as part of their own news staff.

Clarifying that and other gray areas remains “a challenge for the future,” Maksl said. There probably remains some ambiguity about who in the newspaper’s digital operations (a code-writer, for instance) should count as a journalist. Also, Maksl noted that clerks have traditionally been excluded from the count, but in downsized newsrooms many with that job classification are heavily involved in producing journalism.

ASNE doesn’t include wire services in the survey. Several, notably Bloomberg and Reuters, have been growing editorial staff over the last six years as newspapers decline. (Both Bloomberg and Reuters are sponsors of this week’s ASNE convention in Washington, D.C.).

The digital sector eludes any exact estimate, though some entrants over the last several years — Politico, the Huffington Post and AOL’s Patch — by now have staffs the size of a big-city newspaper.

Less is less

For all the complicating factors, count me as surprised that the reported job losses were so high. As co-author of the newspaper chapter for Pew’s annual State of the News Media report, published in March, I had estimated the loss would be at least as great as 2011′s 1,000. But I didn’t expect more than double that.

I would characterize 2012, looking out to 2013, as a year the industry realized that gains from new digital revenue streams will be slow in coming and print advertising is less likely to stabilize than it is to continue its decline. And for now at least, the new activities won’t be as profitable as the legacy ad business was. Despite a revenue boost from digital pay plans, all that would argue for continued cost-cutting, including more layoffs of news staff.

Thus the report raises some painful, if familiar, questions. What won’t be covered because newspapers have less staff to deploy? How much more can be eliminated without devaluing the paper’s report (on several platforms) and thus its appeal to advertisers?

Working smarter and producing better digital presentations of stories and ads will help, but I am left again thinking less is less. Read more

Tools:
3 Comments
Warren Buffett

Warren Buffett’s big payday, and other notes on Media General’s merger with Young

Few paid much attention to the blandly worded announcement a week ago of a merger between Media General and New Young Broadcasting. That was no surprise — an agreement between two midsize local broadcasting companies isn’t nearly as big a deal as, say, Gannett’s $2.2 billion acquisition of Belo today.

But there were at least three spicy stories lurking beneath the corporate-speak:

Warren Buffett’s Berkshire Hathaway cashed in big

In May 2012 Buffett and Berkshire Hathaway bought all of Media General’s newspapers except the Tampa Tribune.

That deal included two related transactions.

First, Berkshire Hathaway loaned Media General $445 million to refinance a crushing debt load coming due. The initial interest rate was an eye-popping 10.5 percent.

Second, as thanks for saving Media General from that life-threatening financial distress, BH received penny-a-share warrants to acquire 19.9 percent of the company — 4.6 million shares in all.

One benefit of the merger, Media General said last week, is that it will be able to refinance its debt at a considerable savings of interest expense. BH will reportedly be paid “a $44 million premium” as part of the refinancing.

In addition, Media General’s shares jumped more than 30 percent the day the merger was announced and have roughly doubled in value since Buffett’s three-legged investment just over a year ago. That’s a tidy appreciation — to the tune of $25 million — on stock that didn’t cost Berkshire Hathaway much of anything.

Plus BH acquired 63 dailies and weeklies for a bargain price of $142 million and has used them as the base for building a bigger chain, subsequently buying papers in Tulsa, Greensboro and Roanoke.

So, consider the sweet deal a quick demonstration — on a modest scale for giant Berkshire Hathaway — of how Buffett got to be one of the five richest men in the world.

A mystery — who’s in charge here? 

The merged company will retain the Media General name, stay in its Richmond, Va., headquarters, and keep its top executives in place. Of the two companies, Media General has more stations, higher revenue and higher earnings, so it would appear to be the acquiring company or first among equals.

However, privately-held New Young comes to the party with just $164 million in debt compared with Media General’s $601 million, so it is the stronger of the two financially. New Young shareholders will end up with 67.5 percent of the new stock.

And in a phased transition to a new board of directors, New Young will ultimately control six of the new company’s 11 seats.

Both companies should benefit. They gain the mass of a bigger footprint with 30 stations, reaching nearly 15 percent of TV households, and more clout to negotiate lucrative retransmission fees from cable operators. They may turn out to be happy partners, working hand-in-hand indefinitely. But if not, it looks to me as if New Young would be in control.

So why call the company Media General? New Young is a confusing name on its surface. The name has nothing to do with youth — it’s derived from the founder’s name. The “New” part makes a distinction from old Young, whose flagship KRON-TV in San Francisco lost its NBC affiliation a decade ago and whose financial troubles festered for years before the bankruptcy.

There are precedents in the corporate world for the stronger partner keeping the weaker one’s name. When NationsBank acquired Bank of America in 1998, it opted to call the new company Bank of America.

End of an era of family control

Media General’s roots go back to the merger of Richmond’s two papers in 1940. When Media General went public in 1966 and acquired the Tampa Tribune and Winston-Salem Journal three years later, the Bryan family created two classes of stock, giving themselves a majority of the voting shares.

That’s the same structure that keeps the Grahams in control of The Washington Post and Sulzbergers at The New York Times (and prevails at E.W. Scripps and McClatchy).

The two-class arrangement held up until last week when Chairman J. Stewart Bryan III, a young man when he joined the company but now 75, said separate family voting shares would come to an end as part of the merger and that he and the family trust were voting for it.

Long story short, Media General has had ups and downs through those 70-plus years, but was always an able TV operator, with a top-rated station in Tampa and other markets.

It turned out not to be as nimble an operator in the digital era. Its showpiece converged newsroom, launched with fanfare in Tampa in 2000, was a modest success at best, while various digital acquisitions and startups fizzled.

Combine that with its purchase of several TV stations at premium prices in 2006 and deteriorating results from its newspaper division, and the company was on the brink of collapse by late 2011.

In an astonishing earnings conference call that October, analysts (who are typically gentle questioners) seemed to scoff at management’s profit projections and assurances that debt obligations could be met. Mario Gabelli, whose investment funds had held a big minority stake in Media General for several decades, got on the call and bluntly asked whether auditors would certify the company as a going concern.

The sequel was the transaction with Buffett six months later and the separate sale of the Tampa Tribune, which had been losing as much as $2 million a month, to a Los Angeles investment firm.

Through it all, Bryan and the executive team scrambled to avoid bankruptcy at all costs. They won that battle, but until last week the corporation continued floundering in debt.

I’ve had a front-row seat for the company’s fortunes — first as en employee, then as a competitor, and now as analyst — and my impression of Bryan and his team is one of proud Virgina gentlemen, unfailingly polite, sensitive to family honor and appearances.

A more ruthless operator would have cut losses much earlier at the newspapers — The Tampa Tribune especially — and perhaps would have seen the advantages of entering and coming out of bankruptcy protection for a fresh start with little debt. Even with Buffett as the buyer, I’m sure it was painful for Bryan to walk away from the flagship Richmond Times-Dispatch.

In that respect, the merger had another modest benefit: Media General didn’t have a Richmond-based TV station, but New Young brought one to the deal. So the company will regain a journalism foothold in its hometown.

Correction: This story originally misstated where New Young Broadcasting got its name from. Read more

Tools:
1 Comment

NewsRight, ambitious attempt at licensing newspaper content, quietly folds

Nieman Journalism Lab | NewsRight

Analyst Ken Doctor reports at Nieman Labs that NewsRight, an industry-owned agency that has tried to license content to aggregators, has gone out of business.

NewsRight’s own news release describes the dissolution a bit differently saying that its database, existing contracts and brand name will go to collaborator Moreover and that anti-piracy advocacy will pass to the Newspaper Association of America.

The company’s roots were in the AP News Registry, a business development project of the Associated Press. In January 2012, that became NewsRight with AP still lead investor and 28 other newspaper companies taking a stake.  Read more

Tools:
0 Comments

In Fortune, even Web publishers that say they’re profitable don’t share revenues

Fortune | The Atlantic Wire | The New Yorker | TechCrunch | Fast Company

JP Mangalindan looks at the financial health of Web publishers like The Huffington Post, Gawker Media and BuzzFeed. But of the seven companies listed, the piece includes revenue from only one: $12 million at Business Insider last year, a figure that comes not from the company but from a New Yorker profile of BI editor Henry Blodget.

Nailing down just how well each company was doing was a challenge from the beginning, Mangalindan told Poynter.

“The vast majority of these companies are private, and as such, aren’t obligated to break down or disclose their earnings, even when asked,” he wrote in an email. “In the case of HuffPost, it’s owned by AOL, a publicly-traded company, however they do not disclose HuffPost’s exact revenues and profits in their financial statements.” Read more

Tools:
0 Comments
Cuttingcosts2

Fairfax Media CEO suggests deep reductions in legacy costs need to precede reduced print frequency

Talk about digital disruption. The CEO of Australia’s giant Fairfax Media said last week that he is preparing the company to abandon printed newspapers entirely “in three, five or 10 years.”

“Print revenues have been going down and are going down faster now,” Greg Hywood recently told the annual World Congress of the International News Media Association in New York. To the extent print newspapers have a future, he said, they will be “expensive, bespoke and narrowly distributed.”

Pressed on when Fairfax papers in Sydney and Melbourne might reduce frequency to a few days a week, Hywood declined to offer more specifics. He did add, however, that just dropping a day or two might have a minor impact on fixed costs, and “you can lose revenue without comparable savings.”

On one hand, you could view Fairfax as providing lonesome Advance Publications a little long-distance company as it reduces most of its U.S. newspapers to three-day-a-week home delivery. But while Hywood never mentioned Advance, the gist of his presentation was that deep reduction in legacy costs needed to precede rather than accompany reduced print frequency.

Ironically, the same morning Hywood was speaking, Advance announced it was rolling back the controversial print frequency cuts it has made in New Orleans and will be offering a tabloid print edition for street sale on the three weekdays it has stopped printing papers altogether.

The change was packaged as an added offering to readers, but, observing from a distance, it looks to me as though Advance got ahead of itself, especially with the Baton Rouge Advocate, under new ownership, gearing up its investment in a competing daily New Orleans print edition.

Hywood’s blunt assessment of his own company also echoed a longtime view of mine on reduced print frequency and the reciprocal strategy of digital first. It may make sense regardless, but it actually happens only when a publisher concludes print has become barely profitable, if at all, and will never recover positive revenue momentum.

That was the case for the Ann Arbor News in 2009, Advance’s first big move to a three-day-a-week pattern, and the same year in in Detroit, where competing papers in a joint operating agreement were both believed to be losing money. Similar pessimism about print helped drive Clark Gilbert’s reinvention of Deseret Media as a predominantly digital company, and John Paton’s Digital First management of Journal Register and MediaNews.

It’s the business variation on the maxim from my high-school tennis days: “Always change a losing game.” In this case, better the high-risk try at developing sufficient digital revenues than the near-certainty of failure if tweaks to the established way of doing things are too minor and too slow. 

In Fairfax’s case, big negatives seemed to arrive all at once:

  • A base of classified ads, important to its Saturday weekend papers, held on for most of the last decade but now is falling precipitously.
  • The papers had a lot of soft, heavily discounted circulation of the sort American papers began peeling back mid-decade. “We have completely rejected circulation as a valued metric,” Hywood said in New York. “Advertisers want audience, readership and engagement.”
  • The Fairfax papers have strong competition from Rupert Murdoch’s market-leading News Corp. Murdoch won’t say so, but many think one of his objectives is to drive the Fairfax titles out of business.
  • The company’s share price has fallen from $6.10 around the turn of the century, and $5 as recently as 2007, to around 40 cents.
  • Mining heiress Gina Rinehart, often described as the richest woman in the world, has accumulated a 15 percent stake in the company. While a little fuzzy about her intentions, she and allies voted against Hywood’s compensation package at an annual meeting last fall and appear to be positioning themselves to take control.

As a result, Hywood has gone to a full-out cost-slashing mode since becoming CEO two years ago. The moves are similar to those of American publishers:

  • He is in the process of eliminating 1,900 jobs, about one-fifth of Fairfax’s work force. The cuts fall disproportionately on newspaper print operations. Printing and copy editing have been outsourced. “We found that 70 percent of our costs were outside journalism and sales,” Hywood said.
  • Physical space was also deemed excess capacity. “We found that 40 percent of the desks were not being used,” he said. In new quarters, “nobody has an office.” At Fairfax, “you get a smartphone, a laptop, and we make a commitment to you that we measure your outputs, not whether you show up.”
  • Both the Sydney Morning Herald and Melbourne’s The Age switched from a broadsheet to a tabloid format this spring. The papers currently share 60 to 70 percent of content, according to Hywood, and that will go higher.

I found Hywood’s presentation notable for two more reasons. While his initiatives have been predictably unpopular with Fairfax editorial staff and other critics, he can hardly be accused of being a bean counter who doesn’t get journalism. He began his career as a business reporter and economist, won a Walkley, one of Australia’s top journalism prizes and at various times edited each of Fairfax’s top three papers.

Also, Fairfax got a spot on the INMA program despite sentiment among most members that their circumstances are not quite so dire. In a survey, only 16 percent of respondents said that they were certain or very likely to reduce print frequency. Also Earl Wilkinson, INMA’s executive director, while continuing to advocate greater urgency about developing mobile products and digital advertising, is now saying that the industry world-wide will be in a print + digital era for some time to come.

Hywood appeared to recognize that he sounded like an Old Testament prophet. He began his talk by saying that the value of Apple’s current product line will eventually fall to zero and need to be replaced. “This is facing us all whether we know it or not.” Read more

Tools:
3 Comments