Saturday, April 4, 2009
Friday, February 27, 2009
All of this so unnerved the American Society of Newspaper Editors that it canceled its annual convention saying '"the challenges editors face at their newspapers demand their full attention.”'
The newspaper industry's problems are real, but the causes vary from newspaper to newspaper and so do the implications for the industry's survival.
The closing of the News is likely to be followed by the closing of the Seattle Post-Intelligencer, leaving each of those cities, like most cities in the United States, with a single newspaper. This is sad, but not surprising to economists who have long understood that exempting from anti-trust laws newspapers in Denver, Seattle, and a handful of other cites only delays the inevitable.
The exemptions, called Joint Operating Agreements, are granted by the U.S. justice department if competing newspapers in the same market can prove that one would fail without the agreement. These agreements allow the newspapers to save money by combining sales, production and other business operations, but they must continue operating separate newsrooms.
Newspapers argue that JOAs benefit to their readers by preserving two editorial voices with diverse views and information about the issues of the day. But Robert Picard at The Media Business points out that newspaper companies had other reasons to seek these arrangements:
Joint operating agreements have been seen by many in the industry as a way of keeping two newspapers operating within the same city, but JOAs have been a continual failure since they were authorized in 1970. The biggest problem is that JOAs ignore the basic economics of newspaper publishing and merely provide benefits from a newspaper antitrust exemption that allows collusion on advertising and circulation prices, market division, and other acts prohibited by federal law. Those benefits were never enough to “save” papers in the long run, but allowed publishers to gain a limited period of time to try to squeeze more money out of the operations.
The failure of the News was probably inevitable, and I expect the Post-Intelligencer will soon suffer a similar fate.
The News' demise was certainly hastened by the loss of audience and ad revenue to new forms of media exacerbated by the general economic collapse. But even though the loss is sad, it doesn't have much to teach editors at other newspapers who are staying home this year as they try to sort their way through all of this.
Wednesday, February 18, 2009
But by concentrating on newspapers, the chart paints a misleading picture of digital competition to attract audiences interested in news.
The New York Times has the largest number of visitors in the Nieman chart, but its website ranked 5th among Internet news sites in October 2008 behind MSNBC, CNN, Yahoo News and AOL. The Times had about 20.3 million unique visitors that month, barely trailing AOL but far behind the other three sites. Yahoo News was in third place with 37.3 million unique visitors, so the Times would have needed 85 percent more visitors just to catch up.
I don't have access to data for the entire period listed in the Nieman chart, but the October 2008 figures are probably representative of the real online market for news. Large newspaper web sites compete with broadcasters such as Fox, ABC, NPR and the BBC, and with Internet only sites such as Topix, Google and Yahoo news, or the Huffington Post.
There is some evidence of how this really works in the chart, but it's not explained. In July 2007 The Times, NBC, and MSNBC announced a deal to share political coverage on the web. One goal was to increase each company's audience for news.
Apparently, it worked. The Nieman chart shows a sharp increase in visitors to the Times site over the next three months. The increase resulted in a substantial lead over its nearest newspaper rivals that persisted through December of 2008.
Meanwhile, the October 2008 data shows election coverage by two of the Times' longtime print rivals -- The Washington Post and USA Today -- produced substantial increases in visitors to their web sites. But neither came close to matching The Times and its partners on the web.
The chart posted by Nieman reflects a wider mindset in the newspaper part of the journalism industry that just won't go away. The mindset is mistaken -- this is a different market, with different rules and different competitors, and it should always be talked about that way.
Monday, January 5, 2009
The result was always the same. I learned something, usually more than just one thing, that was important and useful. Barry Litman made my work better. It wasn't just me. He made everyone's understanding of media economics better.
So it came as a shock to hear that Barry, 59, died Dec. 26 after battling cancer.
Barry was one of the first classically trained economists devoted to understanding producers of and audiences for newspapers, television broadcasts, and film. You cannot call yourself a student of media economics if you don't know his work.
Barry and a doctoral student completed the first study linking the quality of news to the financial performance of newspapers.1 He later helped update the fundamental model of newspaper competition developed in the 1970s to reflect three decades of changing technology and markets.2 He then took an overused, ill-defined buzzword -- convergence -- and gave it meaning by showing how people select news from different media based on differences in characteristics like speed of delivery, convenience, and quality.3
Barry developed a model predicting what will happen if people can't get reliable information from the media about urgent topics like birth control, showing they will instead assemble an understanding from whatever sources they can find.4
He identified a major flaw in the long line of studies examining diversity or its absence in media content, refuting the underlying assumption that there is an unlimited demand for diversity.5 Barry offered a more realistic model showing that the desire for diversity is balanced against the desire for other characteristics of content, always within the limits of available time for reading, watching and listening.
Barry helped examine the creation of the Fox network, showing how a confluence of regulatory and economic factors made possible the enormous gamble for News Corp.6 The study is a valuable reminder that what now looks like a taken-for-granted success was anything but that at the time. In another study, Barry and his co-authors showed why networks prefer programs that are predictable, making truly innovative television the exception, a finding that holds up well in the cable universe.7
Barry was a professor at Michigan State University for more than 30 years, one of a handful of faculty who made the College of Communication Arts & Sciences the center of gravity for understanding media economics.
This spring, as always, I will teach a graduate course where Barry's work appears multiple times. I like to quote Barry because it always makes me sound smart. This semester won't be nearly so much fun. Mostly, I'm going to think about what we've all lost.
Barry's obituary is available here, and an announcement from the college can be read here. A Facebook page to post memories of Barry can be found here.
1Litman, B. R., & Bridges, J. (1986). An economic analysis of American newspapers. Newspaper Research Journal, 7(3 spring), 9-26.
2 Bridges, J. A., Litman, B. R., & Bridges, L. W. (2002). Rosse's model revisited: Moving to concentric circles to explain newspaper competition. Journal of Media Economics, 15(1), 3-19.
3 Litman, B.R. (2006). The convergent society and the media industries. In Bridges, J. Litman B. R., &Bridges, L.W. (Eds.), Newspaper competition in the millennium (pp.23-32). New York, Nova Science Publishers.
4 Litman, B. & Bain, E. (1987). Information search and banned product advertising: An indifference curve approach. Current Issues and Research in Advertising, 39-59.
5 Litman, B. R. (February 1992). Economic aspects of program quality: The case for diversity. Studies of Broadcasting, 121-56.
6 Thomas, L., & Litman, B. R. (Spring 1991). Fox Broadcasting Company, why now? An economic study of the rise of the fourth broadcast "network." Journal of Broadcasting and Electronic Media, 35(2), 139-158.
7 Litman, B. R., Shirkhande, S., & Ahn, H. (2000). A portfolio theory approach to network program selection. The Journal of Media Economics, 13(2), 57-79.
Wednesday, September 24, 2008
Professor, Department of Communication and School of Journalism
Michigan State University
Newspapers are struggling with how to attract online visitors. This reflects the need to replace readers who are leaving the print newspaper, but more importantly, increasing online visitors will be essential for attracting advertisers to newspaper Web sites. Traditionally, advertisers follow audience and not the other way around.
As a result, how newspapers can gain online visitors remains the primary issue deciding the future of newspapers. A one-size-fits-all solution is unlikely to emerge. The key to attracting visitors will vary from market to market and from demographic group to demographic group.
* The high profit margins that news organizations have enjoyed during the last 40 to 50 years cannot be maintained when advertisers can go straight to consumers rather than using media, and when competition for people’s time has become so intense. Companies will have to adjust profit goals or they will cease to exist. In times of industry restructuring, potential profit margins shrink and surviving restructuring requires higher levels of investment.
* News organizations will need to create multiple forms of financial support. This can range from e-commercial to selling specialized information to small audience segments. The exact form of new revenue sources will vary from market to market and will need to be determined through experimentation.
* The digital media distributed through the Internet does four things well: 1. It provides depth of news and information at low cost. 2. It delivers news and information quickly. 3. It is multimedia. 4. It is interactive. Newspapers will need to use all of these Internet strengths when generating content on their sites.
* The ways news organization can best use the Web’s strengths for delivering journalism and attracting audiences remain unclear. The immediate future will require news organizations to experiment with a variety of content to discover how to best serve their audiences.
* This experimentation must be combined with formal and informal evaluation of reader feedback. Newspaper companies need to conduct periodic market research about the news and information their audiences need and want, the best ways to present that news and information, and types of interactivity their audience members want and need. But the companies also need a continuing, formal system for acquiring feedback from a wide range of audience members.
If you visit the Lasvegassun.com, you will find news stories, blogs, photographs, and video about events and issues that concern the city of Las Vegas and surrounding areas, just as you will you will on any modern newspaper web site. The more experimental work can be found on the multimedia page.
The Sun also emphasizes “evergreen” content about the city. This includes a video history of Las Vegas and interactive maps of downtown Las Vegas, the Strip, and the Valley. The maps allow you to see what the city was like at various times, along with important events and entertainers from that time. The map includes icons representing important buildings. If you click on an icon, a popup will reveal information about the location, size, and history of the building. In some cases, you can see video of the building’s implosion.
Out of fairness, it should be mentioned that Lasvegassun.com has some advantages not enjoyed by all news organizations. In addition to the Web site, Greenspun Media includes the Las Vegas Sun, seven weekly newspapers in the Hometown Community News group, several local magazines, such as Las Vegas Magazine and In Business Las Vegas, and a low-power TV station. These media provide a wide range of community content that can be leveraged online.
Tuesday, August 12, 2008
Yesterday, I argued the paper's plan to delay online publication of some stories makes economic sense because revenue per reader is still very small online. The paper did not say it would never publish the stories on its website, just wait until the stories had a chance to circulate in print.
The new memo says these stories will instead "appear online concurrent with print publication." The memo also clarifies the kinds of stories that will be published immediately on the web, such as breaking news or time-sensitive stories that help readers plan for a night out.
The original plan made sense because it tried to separate readers into groups based on the amount of revenue the paper earns. Print readers are far more valuable than readers on the web. Publishing a story in print first might therefore limit the number of readers who abandon print to read the story on the web.
The new plan to publish stories "concurrently' may have a similar effect if some stories don't appear on the web until the paper's print deadlines. Print deadlines are often very late at night, when many readers are either watching television or getting ready for bed.
Meanwhile, columnist Will Bunch at the rival Philadelphia Daily News has a good suggestion for using web videos to promote stories the Inquirer wants to delay publishing online, building anticipation to increase readership once the article finally appears.
Bunch, unlike many others who responded to the original memo without much thought, gets this one. It's all about the revenue, ...
Monday, August 11, 2008
Times media columnist David Carr sought out an entirely predictable quote from a former newspaperman turned "Web evangelist" denouncing the Philadelphia Inquirer for delaying online publication.
But the Philadelphia Inquirer's new policy to publish "signature investigative reporting, enterprise, trend stories, news features, and reviews" in print first, and then online, makes good economic sense.
Many newspapers still make startlingly small amounts of revenue on the web. I suspect that is the case at the Inquirer, so delaying publication of their best material is a smart move entirely consistent with the economics of new media.
It's the revenue, ...
A bit of arithmetic using statistics from an industry survey shows some newspaper web sites were earning only $0.33 to $0.83 per visitor for the entire year in 2006.1
I presented these calculations last week at a conference, and the next day heard an executive at a major metropolitan newspaper cite figures for their current web operations. The paper earns less than $4.00 per visitor each year. Revenue per reader in print is probably much higher at all of these papers.
Publishing a story online probably increases the number of readers compared to a story published only in print. But some print readers will also move online to read the story, reducing the revenues earned in print.2
This means any online gains in readers and revenue have to be large enough to offset losses of print readers and revenue. And the very small online revenue numbers suggest this is unlikely to happen if the story is published both places at the same time.
So the Inquirer is probably doing the right thing economically. Withholding publication of expensive to produce investigative and enterprise stories will limit the immediate loss of print readership. Meanwhile, the paper plans to keep publishing breaking news on its website, which is probably what most online readers are looking for in the first place.
Several newspaper and television employees responsible for publishing online and in mobile media spoke at the conference, and all complained about having small staffs. The majority of journalists at these organizations still work in the print or broadcast part of the operation.
But this is also sensible so long as revenue per reader or viewer is much higher for distribution in print or over the airwaves. Keeping web operations small when online revenues are also small shows these companies are economically rational.
That may not satisfy the naive view that Carr promotes in his column, but it should make everyone at the Inquirer and elsewhere feel a little better about what their bosses are trying to do.
1 Newspaper Association of America: Newspapers Online Operations – Performance Report 2006.
2 Wildman, S.S. (in press). "Interactive channels and the challenge of content budgeting." The International Journal on Media Management.