News: Where We Get It, How We Use It



News: Where We Get It, How We Use It

Don Dodge

Microsoft Emerging Business Team

Are newspapers and magazines dying?

I don't read newspapers or magazines anymore, at least not printed versions. I stopped subscribing 8 or 9 years ago. Editor & Publisher , America's Oldest Journal Covering The Newspaper Industry, today published "Winning Online - A Manifesto" which calls for newspapers to band together to achieve the "the migration to common platforms, and the acquisition of the ability to sell top-quality online product to our advertisers." The manifesto says " Newspapers must win online, or face a future of painful contraction."

. . .

The outlook for magazines may be even worse. Newspapers are daily updates and analysis with local content and advertising. Magazines are typically monthly, meaning out of date content, and advertising lacks a local connection, mostly national brand advertising.

In the past I subscribed to Forbes, Fortune, Inc, Red Herring, Venture, Computer World, Computer Reseller News, Byte, and Time. I also subscribed to The Wall Street Journal and my local newspaper. Now I subscribe to none of them. I get my news online.

How about you? Do you still subscribe to magazines and newspapers? I suspect that people who read blogs are a lot like me, they get their news and information online. Leave a comment and let me know your reading habits.

Network television news is also not on my radar. I can't remember the last time I sat down to watch the evening news at 6:30PM. I am usually busy at that time.

The "Winning Online Manifesto" says the trend is clear and immediate action is required to avoid painful contraction, layoffs, and closings.

Newspaper industry leaders are frogs in a pot. The water’s starting to boil, and it’s time to jump. Only 19 percent of 18-34 year olds read a daily newspaper; 44 percent of them go to a web news portal. Broadband penetration has reached 57%. The blogosphere is doubling every 5 ½ months. Search provides instant access to the world’s information. User-generated content has turned the authority model of institutional media on its head. Peer-to-peer networks, tag clouds and reputation engines are fundamentally changing how people engage with content and communications.

The San Jose Mercury News has certainly felt the impact of readers moving online. Remember this quote from my March 2006 post;

At its peak in 2000, The Mercury News had a Sunday circulation of 326,839 subscribers, according to the newspaper. Last September, the company counted 278,470 Sunday subscribers, a drop of about 15 percent. Revenue from the company's help-wanted ads fell to $18 million a year from more than $118 million, according to the paper. The newsroom was whittled to 280 people from 404, a 30 percent decline.

Magazine publishers, for the most part, have already made the transition to online. I still read many of the same magazine and newspaper titles ...but I do it online.

Tony Perkins was one of the first to see the trend and move online. Tony was founder and CEO of Red Herring, a magazine devoted to IPO and technology news. The dot com bubble and stock market crash took a toll on Red Herring, and it ceased operation in February of 2003. Tony had already made the jump the previous year and started "Always On", an online "magazine" for VCs, CEOs, and technology people.

Wait a minute. Are we living in a bubble? Does the majority of society follow the same information consumption patterns? It is natural to assume that most people think and act the same way we do...but it is rarely the case.

To test my assumptions I went to the Magazine Publishers Association website to check out magazine subscription trends. The results surprised me...but after thinking about it...they make sense. Over the past 9 years the top 10 magazines have lost only 10.6% of their readers. Much less than I expected.

But then I examined the list of top 10 magazines; AARP  Magazine, AARP Bulletin, Readers Digest, TV Guide, Better Homes & Gardens, National Geographic, Good Housekeeping, Family Circle, Lady's Home Journal, and Woman's Day. Ahh yes, I do live in a bubble. We do not reflect the demographics of the world at large. It makes perfect sense that these magazines would not lose their readership to the web.

Hmmm..then I decided to scan the top 100 magazines for the titles I used to read. Only one, Forbes was on the list...and just barely at number 100. There was not a single technology related magazine on the top 100. Again this makes perfect sense given the demographics of the target market for these magazines.

My observation is that these magazines and newspapers are living on borrowed time. As their readers die off, so will their circulation. The new generations are consuming news and information in a different way. They have time to adapt...but they better get started.

What do you think? What are your reading habits? How do they compare to your parents reading habits?

Circulation Plunges at Major Newspapers

By KATHARINE Q. SEELYE

New York Times

Published: October 30, 2006

Circulation at the nation’s largest newspapers plunged over the last six months, according to figures released today. The decline, one of the steepest on record, adds to the woes of a mature industry beset by layoffs and the possible sale of some of its flagships.

Overall, average daily circulation for 770 newspapers was 2.8 percent lower in the six-month period ending Sept. 30 than in the comparable period last year, the Audit Bureau of Circulations reported. Circulation for 619 Sunday papers fell by 3.4 percent.

But some papers fared much worse. The Los Angeles Times lost 8 percent of its daily circulation, and 6 percent on Sunday. The Boston Globe, owned by The New York Times Company, lost 6.7 percent of its daily circulation and almost 10 percent on Sunday.

The New York Times, one of the few major papers whose circulation held steady over the last few reporting periods, did not emerge unscathed this time: its daily and Sunday circulation each fell 3.5 percent. The Washington Post suffered similar declines.

The Wall Street Journal’s new Weekend Edition, just over a year old, lost 6.7 of its circulation from a year ago.

Both The Los Angeles Times and The Boston Globe have been in the news lately as potential owners expressed interest in buying them. The Los Angeles paper is owned by the Tribune Company, which is entertaining offers from private equity firms to sell some of its properties, or perhaps even the whole company. Jack Welch, the former president of General Electric, has expressed interest in buying The Globe.

The Philadelphia Inquirer, which changed hands earlier this year and where the new owner is in the middle of difficult contract negotiations with the paper’s unions, lost 7.6 percent of its daily circulation and 4.5 percent on Sunday.

Newspaper circulation has been in a long, slow decline for decades. But the pace of loss seems accelerated now, as the industry tries to adjust to the steady migration of readers and advertisers to the Internet.

Newspaper executives attribute some of the latest losses to intentional cutbacks in the number of copies that are paid for in bulk by third parties, for example to be distributed to hotel guests. These count as paid circulation but are of less interest to advertisers than copies paid for directly by readers.

Though the industry has felt consecutive declines over the last five years, the Newspaper Association of America said that the figures for the latest period were “the largest variance year over year” of which it was aware.

Still, the association said, when newspaper Web sites are taken into account, the number of readers its members reach is up very sharply. Revenues from Web sites are rising quickly as well, but they account for only a small portion of overall revenues, and it could be decades before Internet revenues exceed those from the printed editions of major newspapers.

One of the few large papers to substantially increase its circulation in the latest report was The New York Post, which managed to squeak past its rival, The Daily News, by about 10,000 copies, and trumpeted the news today on a giant billboard in Times Square.

In fact, both New York tabloids reported increases in circulation, with the Post up by 5.13 percent and the Daily News by 1 percent.

Col Allan, editor of The Post, said his paper was doing well because it has a better sense of what readers want and a sense of humor. He said the Post’s circulation figures were firmer than those of other papers in New York because it sells fewer copies in bulk to third-party sponsors.

NOVEMBER 15, 2006

Mark Potts

Recovering Journalist Blog

Newspaper Dead Pool

Let's think the unthinkable: What American city will be the first to lose its daily newspaper?

Gone. Kaput. Out of business. Not even recycled.

It's not that unthinkable. In fact, some people in the newspaper and internet businesses have been quietly talking about it for years. There's no formal Newspaper Dead Pool that I know of, but everybody has their best guesses about which paper's print edition goes over the cliff first. And it will probably happen within a few years—if not sooner.

What would it take to kill a city's last remaining daily? A combination of several factors—and there are multiple variables within each.

Ownership: It could happen with a big, penny-pinching chain owner who just decides that publishing the Daily Bugle no longer makes economic sense. (The big chains have be constantly running these numbers.) Maybe the big chain tries to find a local buyer, but can't sucker anybody foolish enough to take on a sick paper. Or maybe there is local ownership, somebody who bought the Daily Bugle out of civic pride but didn't anticipate mounting losses because of rising costs, withering competition from upstarts like craigslist and continued declines in circulation and advertising. Eventually, somebody has to decide to pull the plug. (It could also be a very smart owner who sees the inevitable and chooses to retain the local franchise with a preemptive strike: replacing the big daily with a bunch of smaller, more focused, more relevant print and internet publications.)

Demographics: There are a couple of scenarios here, too. One argument is that markets with older populations are more vulnerable, as subscribers die off. Another is that a market that skews young already has lost interest in newspapers. High broadband internet penetration is another indicator: that's a market whose audience is largely moving to the Web for news and information, cancelling newspaper subscriptions along the way. All of these already are buffeting the Daily Bugle, and some combination of them will contribute to the Perfect Storm that kills it.

Business conditions: Obviously, a national or regional recession would hasten the Daily Bugle's demise. But so would a local retail market dominated by Wal-Marts and other big-box stores that rarely, if ever, advertise in the newspaper. Big newspapers are losing big advertisers in mass quantities already, and few have figured out a way to replace that revenue with lots of small advertisers. A market with a particularly heavy concentration of national retailers will be particularly vulnerable. Oh, and don't underestimate the effect that bankruptcy of one of the big U.S. automakers could have. That's coming, as well.

Failure to innovate: There are ways to stave off a newspaper's death spiral. Some papers may switch to tabloid formats, go to free distribution, stop publishing seven days a week, outsource their printing and distribution, and move more and more resources to the Web. All of these will postpone the day the Daily Bugle has to stop publishing, even if the product seems diminished from the grand broadsheets we're used to. But failure to take some or all of these steps, aggressively, will hasten a paper's demise.

Will it happen? Will we see a city without a print daily newspaper within a few years? Absolutely. Do I want to guess where? When I'm talking about this with other doomsayers, I vary between guessing a high-tech city like San Jose or San Francisco, or picking somewhere random (but economically fragile and chain-owned) like Kansas City or Cincinnati. Just a guess.

And what will happen after the unthinkable occurs? News and information abhor a vacuum. The gap will quickly be filled by local suburban papers, hyperlocal online sites, alternative papers, local blogs, a rightly scaled urban startup paper, online directory sites, craigslist and yes, even TV news. Not to mention the Daily Bugle's own Web site, which may survive in some form. In fact, all of those exist right now and are already eating away at the Daily Bugle's traditional hegemony. That's one of the factors that argues for this doomsday scenario: newspapers are facing competition from all directions, and readers are happily switching to these alternatives.

Because of that, in fact, the transition might be fairly seamless, after the initial shock. A year or so after the Daily Bugle plays taps, it's possible that not many of its former readers and advertisers will even miss it.

Who killed the newspaper?

Aug 24th 2006

From The Economist print edition

The most useful bit of the media is disappearing. A cause for concern, but not for panic

“A GOOD newspaper, I suppose, is a nation talking to itself,” mused Arthur Miller in 1961. A decade later, two reporters from the Washington Post wrote a series of articles that brought down President Nixon and the status of print journalism soared. At their best, newspapers hold governments and companies to account. They usually set the news agenda for the rest of the media. But in the rich world newspapers are now an endangered species. The business of selling words to readers and selling readers to advertisers, which has sustained their role in society, is falling apart (see article).

Of all the “old” media, newspapers have the most to lose from the internet. Circulation has been falling in America, western Europe, Latin America, Australia and New Zealand for decades (elsewhere, sales are rising). But in the past few years the web has hastened the decline. In his book “The Vanishing Newspaper”, Philip Meyer calculates that the first quarter of 2043 will be the moment when newsprint dies in America as the last exhausted reader tosses aside the last crumpled edition. That sort of extrapolation would have produced a harrumph from a Beaverbrook or a Hearst, but even the most cynical news baron could not dismiss the way that ever more young people are getting their news online. Britons aged between 15 and 24 say they spend almost 30% less time reading national newspapers once they start using the web.

Up to a podcast, Lord Copper?

Advertising is following readers out of the door. The rush is almost unseemly, largely because the internet is a seductive medium that supposedly matches buyers with sellers and proves to advertisers that their money is well spent. Classified ads, in particular, are quickly shifting online. Rupert Murdoch, the Beaverbrook of our age, once described them as the industry's rivers of gold—but, as he said last year, “Sometimes rivers dry up.” In Switzerland and the Netherlands newspapers have lost half their classified advertising to the internet.

Newspapers have not yet started to shut down in large numbers, but it is only a matter of time. Over the next few decades half the rich world's general papers may fold. Jobs are already disappearing. According to the Newspaper Association of America, the number of people employed in the industry fell by 18% between 1990 and 2004. Tumbling shares of listed newspaper firms have prompted fury from investors. In 2005 a group of shareholders in Knight Ridder, the owner of several big American dailies, got the firm to sell its papers and thus end a 114-year history. This year Morgan Stanley, an investment bank, attacked the New York Times Company, the most august journalistic institution of all, because its share price had fallen by nearly half in four years.

Having ignored reality for years, newspapers are at last doing something. In order to cut costs, they are already spending less on journalism. Many are also trying to attract younger readers by shifting the mix of their stories towards entertainment, lifestyle and subjects that may seem more relevant to people's daily lives than international affairs and politics are. They are trying to create new businesses on- and offline. And they are investing in free daily papers, which do not use up any of their meagre editorial resources on uncovering political corruption or corporate fraud. So far, this fit of activity looks unlikely to save many of them. Even if it does, it bodes ill for the public role of the Fourth Estate.

Getting away with murder

In future, as newspapers fade and change, will politicians therefore burgle their opponents' offices with impunity, and corporate villains whoop as they trample over their victims? Journalism schools and think-tanks, especially in America, are worried about the effect of a crumbling Fourth Estate. Are today's news organisations “up to the task of sustaining the informed citizenry on which democracy depends?” asked a recent report about newspapers from the Carnegie Corporation of New York, a charitable research foundation.

Nobody should relish the demise of once-great titles. But the decline of newspapers will not be as harmful to society as some fear. Democracy, remember, has already survived the huge television-led decline in circulation since the 1950s. It has survived as readers have shunned papers and papers have shunned what was in stuffier times thought of as serious news. And it will surely survive the decline to come.

That is partly because a few titles that invest in the kind of investigative stories which often benefit society the most are in a good position to survive, as long as their owners do a competent job of adjusting to changing circumstances. Publications like the New York Times and the Wall Street Journal should be able to put up the price of their journalism to compensate for advertising revenues lost to the internet—especially as they cater to a more global readership. As with many industries, it is those in the middle—neither highbrow, nor entertainingly populist—that are likeliest to fall by the wayside.

The usefulness of the press goes much wider than investigating abuses or even spreading general news; it lies in holding governments to account—trying them in the court of public opinion. The internet has expanded this court. Anyone looking for information has never been better equipped. People no longer have to trust a handful of national papers or, worse, their local city paper. News-aggregation sites such as Google News draw together sources from around the world. The website of Britain's Guardian now has nearly half as many readers in America as it does at home.

In addition, a new force of “citizen” journalists and bloggers is itching to hold politicians to account. The web has opened the closed world of professional editors and reporters to anyone with a keyboard and an internet connection. Several companies have been chastened by amateur postings—of flames erupting from Dell's laptops or of cable-TV repairmen asleep on the sofa. Each blogger is capable of bias and slander, but, taken as a group, bloggers offer the searcher after truth boundless material to chew over. Of course, the internet panders to closed minds; but so has much of the press.

For hard-news reporting—as opposed to comment—the results of net journalism have admittedly been limited. Most bloggers operate from their armchairs, not the frontline, and citizen journalists tend to stick to local matters. But it is still early days. New online models will spring up as papers retreat. One non-profit group, , plans to combine the work of amateurs and professionals to produce investigative stories on the internet. Aptly, $10,000 of cash for the project has come from Craig Newmark, of Craigslist, a group of free classified-advertisement websites that has probably done more than anything to destroy newspapers' income.

In future, argues Carnegie, some high-quality journalism will also be backed by non-profit organisations. Already, a few respected news organisations sustain themselves that way—including the Guardian, the Christian Science Monitor and National Public Radio. An elite group of serious newspapers available everywhere online, independent journalism backed by charities, thousands of fired-up bloggers and well-informed citizen journalists: there is every sign that Arthur Miller's national conversation will be louder than ever.

SATURDAY, 20 MAY 2006

Buffett: Newspapers are "a business in permanent decline"

MediaBlog reader and Buffalo Rising co-founder George Johnson tipped us off to these interesting remarks by Warren Buffett and Charlie Munger during the shareholder Q&A at the recent Berkshire Hathaway 2006 shareholders’ meeting. Here are the two relevant shareholder questions:

Do you think that the media business has become permanently less profitable due to new technology?

WB: People will always want to be entertained and informed. But people just have two eyeballs, and there are only 24 hours in a day. Fifty or 60 years ago, media for most people consisted of the local movie theater, radio, and the local newspaper. Now people have a variety of ways of being informed faster (if not necessarily better), and have more entertainment options, too. But no one has figured out a way to increase the time available to watch entertainment.

Whenever more competitors enter a business, the economics of that business tends to deteriorate. Newspapers are still highly profitable, but returns are falling. The size of the audience for network TV is declining. For years, cable TV was thought to operate in its own world, but that’s changing. Few businesses get better with more competitors.

The outlook for newspapers is not great. In the TV business, a license from the government was essentially the right to a royalty stream. There were basically three highways to people’s eyeballs, and companies like P&G, Ford, Gillette, and GM would pay a significant amount of money to be get on those highways and advertise their products to a mass audience. But as the ways to get in front of people’s eyeballs increases, the value of those highways goes down.

World Book used to sell 300,000 sets per year in the mid-1980s, each for $600. Then the Internet cam along; it didn’t require printing or shipping, and people became less willing to pay for World Book sets. It doesn’t mean that it’s not worth $600. But competition has eroded returns.

CM: It’s a rare business that doesn’t have a way worse future than it has a past.

WB: The thing to do was to buy the NFL when it was first organized. There are now more ways than ever to transit events; value can be extracted from them in different ways.

If you were looking at newspaper publishers as possible investments, what would you use as a margin of safety?

WB: What multiple should you for a company that earns $100 million per year whose earnings are falling by 5% per year rather than rising by 5% per year? Newspapers face the prospect of seeing their earnings erode indefinitely. It’s unlikely that at most papers, circulation or ad pages will be larger in five years than they are now. That’s even true in cities that are growing.

But most owners don’t yet see this protracted decline for what it is. The multiples on newspaper stocks are unattractively high. They are not cheap enough to compensate for the companies’ earnings power. Sometimes there’s a perception lag between the actual erosion of a business and how that erosion is seen by investors. Certain newspaper executives are going out and investing on other newspapers. I don’t see it. It’s hard to make money buying a business that’s in permanent decline. If anything, the decline is accelerating. Newspaper readers are heading into the cemetery, while newspaper non-readers are just getting out of college. The old virtuous circle, where big readership draws a lot of ads, which in turn draw more readers, has broken down.

Charlie and I think newspapers are indispensable. I read four a day. He reads five. We couldn’t live without them. But a lot of people can now. This used to be the ultimate bulletproof franchise. It’s not anymore.

CM: I used to think that GM was a bulletproof franchise. Now I’d put GM and newspapers in the “Too Hard” pile. If something is too hard to do, we look for something that isn’t too hard. What could be more obvious?

WB: It may be that no one has followed the newspaper business as closely as we have for as long as we have—50 years or more. It’s been interesting to watch newspaper owners and investors resist seeing what’s going on right in front of them. It used to be you couldn’t make a mistake managing a newspaper. It took no management skill—like TV stations. Your nephew could run one.

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