A while back, Long Island, NY paper Newsday put up a pay wall and asked $5 a month to access its online site. After three months, it had attracted 35 subscribers. Will Americans pay for online news? Well at least in this  affluent part of New York state, the answer is no.

So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com?

The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.

That astoundingly low figure was revealed in a newsroom-wide meeting last week by publisher Terry Jimenez when a reporter asked how many people had signed up for the site. Mr. Jimenez didn’t know the number off the top of his head, so he asked a deputy sitting near him. He replied 35. (observer.com)

Before the Internet, the serious news came to you on a large wad of paper via a kid on a bike. At the risk of dating my self, I was one of those kids, so I know of what I write.  Subscribers contributed enough to cover cost of delivering and maybe part of the printing.  That pocket change paid to the paper boy each month contributed nothing to the editorial and news gathering operations. Advertising was what kept the paper running.  Since most news consumers already pay for the internet delivery channel, and there are plentiful sources of news, is anyone really surprised no one wants to pay to read?

The news business is far from dead, but it’s changed. The cost of delivery has gone to zero as the industry moves to online publications. With site traffic, comes ad dollars, just not as many as when the kid bought ink on dead trees to you. The ad dollars have not gone away, but advertisers have more options than ever and news has to compete effectively to win them. Until newspapers provide more balanced coverage and engage their readers, I doubt they will have much luck selling more ads. Competition can be brutal when readers have alternatives. Back when the kid on a bike brought you the news, the very few.

With traditional print newspapers struggling to turn a profit, many have turned to the Web as a means to stay afloat. While some offer their online content free of charge, other papers have played around with subscriptions by charging readers a monthly fee. But that strategy may backfire, says a Harris poll released Wednesday.

Among more than 2,000 online adults surveyed, 77 percent said they wouldn’t pay anything to read a newspaper’s stories on the Web. And among those willing to pay, 19 percent would cough up between $1 and $10 a month; only 5 percent would shell out more than $10 each month. (Cnet)

EDGEWATER, Colo. — A man who claimed he was attacked and stabbed in Edgewater Monday night has admitted he stabbed himself because he didn’t want to go to work.

Aaron Siebers, 29, reported the stabbing at about 6:30 p.m. when he walked to his job at Blockbuster Video, 1921 Sheridan Blvd.

Siebers was rushed to St. Anthony Hospital where he received stitches to close his wound.

Meanwhile, officers from Edgewater, Mountain View, Lakewood, Lakeside and Jefferson County began a search for the suspects, who had been described as three skinheads or Hispanic males dressed in black. He told police they tried to rob him and then stabbed him with a knife.

Investigators reviewed surveillance video taken at a nearby business. It failed to show an attack where Siebers claimed it had happened.

Now Retail can be stressful at times. Dealing with customers all day can be a demanding situation. But commit Seppuku so you don’t have to report to work? Wouldn’t quitting been easier??

Linky.

In a continuing saga the fortunes of a couple of media titans continue to face hard times –

Conde –

The whole golf section is being revamped to get costs in line with revenue.

A Conde insider tells us that the layoffs came down this morning with little notice, claiming at least ten sales staffers at Golf World and at least one more at Golf Digest. The company “basically gutted [Golf World] and are merging the sales and marketing team with Golf Digest,” our tipster says.

It has been widely reported that nearly every surviving title at Condé Nast has been tasked with cutting 25% of their overall budgets. Condé Nast Editors-in-Chief at each title have been given the leeway to make cuts as they see fit, on their own schedule. The timing of these cuts has been closely guarded until now, and it remains unclear when cuts will come for each title. We will have more as the story develops.

CNN –

Once the unassailable leader in video news content. CNN now is at the bottom of the barrel in the cable news race, finishing dead last no matter how you slice the demographic.

• For the 7th consecutive weekday, CNN finished fourth on cable news in the prime time A25-54 demographic. It was the 77th time CNN finished 4th in that category this year. FNC was way out in front, followed by HLN just edging MSNBC by 1,000 viewers.

• Fox News’ total viewer average during prime time of 2,735,000 beat the other three cable news networks combined. Bill O’Reilly, who had the top show, had more than 1,000,000 in the demo

What’s happening? Well part is that the current recession this go round is impacting everyone. Unlike the last recession that hit IT hard. Or the one previous, that hit manufacturing. This particular downturn is hitting financial markets hard, but is not discriminating. Main street is feeling the effects. Couple that with small business sitting on the sidelines waiting for the regulatory environment to clear and the result is the perfect stom of inaction.

Sources.

Imagine you are a studio exec, who just flew into Bentonville, AR on the corporate Gulfstream. The product manager for Wally World tells you in private that your shelf presence in WM will be cut by half. Do you –

A) Barf up the $250 of Thailand Prawns on the PM’s desk.
B) Quickly recalculate your retirement valuation.
C) Have a stroke right there knowing your life insurance is paid up and the kids will be ok.

A recent shift in merchandising strategy by the world’s largest retailer spells more trouble for DVD sales and the entertainment industry that depends on them for profits.

As part of a larger effort to clean up its aisles and appeal to higher-end shoppers, Wal-Mart Stores Inc. is doing away with display cases to promote the latest hot movie titles.

The move comes as major film studios are reeling from declines in revenue from DVD sales as cash-strapped consumers turn to low-cost rental services and digital downloads for home movies.

“We think the new strategy implies Wal-Mart no longer sees DVDs and Blu-ray discs as traffic drivers,” J.P. Morgan analyst Imran Khan said.

Studio chiefs dispute that conclusion, noting the importance of DVDs as a sales category for Wal-Mart, but none would speak publicly for this story.

Wal-Mart, which accounts for nearly a third of DVD retail sales in the U.S., didn’t respond to inquiries for comment.

Is it really that bad for the studios? Yes. Consider that WM represents a third of DVD sales. WM is equivalent in the DVD game as Tower Records was in the world of LPs/CDs. Losing that shelf space will represent a sizable loss of revenue.

Surprisingly, DVDs and BluRay is a convenient format. You can do a million unit press run, get the best price in town for the press, ride the long tail over 5 years to burn through the stock and only eat up a small pallet in the warehouse. Presuming you keep the disks wholesale wrapped and only box set them as demand needs it.

Disks also represent a decent profit margin for the studios. Much better than returns via NetFlix or Pay-per-View. A magnitude better profit than what the returns are from RedBox. So the Studios have a serious problem on their hands. Keep in mind that BlockBuster is scaling back by about 1/4th their store presence. Used to be Box Office could turn a profit for the studios. Production costs soon made that an impossibility. With the advent of VCR, then DVD/BluRay sales, Box Office paid for production and the studio lives or dies profit wise on the disk sales. Now it looks like that is becoming a problem as well.

What will they do?

WSJ article here.

You have heard us rail here more than once that the Legacy Media are in deep dodo. Whether its content, positioning, cost structure, or technology issues. Well now we can add one more — management issues –

Only 51% of pubs think pay walls will fly

A bare 51% of the newspaper publishers in the United States believe they can charge successfully for access to their interactive content, according to a survey released today. The other 49% of publishers either fear that pay walls will fail or just aren’t sure.

The survey, which was conducted for the latest in the series of industry conferences this year studyng how to monetize the valuable content most newspapers give away for free, shows that publishers who are worried about charging for content have good reason to be concerned.

While 68% of the publishers responding to the survey said they thought readers who objected to paying for content would have a difficult time replacing the information they get from newspaper websites, 52% of polled readers said it would be either “very easy” or “somewhat easy” to do so.

These findings – and the others summarized below – are contained in an exhaustive survey by industry consultants Greg Harmon and Greg Swanson. They were hired by the American Press Institute to conduct the research for an invitation-only meeting of about three dozen industry executives being held today at a hotel in suburban Washington, DC.

Well first, just to get it out of my system, the snarky comment — Well Duh! If you are pitching a crappy product, and you are their editors and publishers, then what do you expect. Of course the public won’t follow you thru a pay wall system to get their news content. Wen your print side won’t even cover the Van Jones Bus Throw or Dear God the shameless ACORN story that is now all over the ‘Net then why should they?

But the publishers are now admitting that they cannot make it over to digital content. 49% of them are saying that they will fade into oblivion no matter what. Well I’ll tell you, if I were a subscriber to a daily today I would want to know that. Why expend money today for a publication that even they know will not be around say 5-6 years from now?

Read the whole thing over at Reflections of a Newsosaur. Pay particular attention to the various schemes that those that are going digital are brewing up.

I have seen this consultant type before. I should not be surprised that they are in the newspaper sector too.

Alan Jacobson is a designer and strategic consultant who advises newspapers. Among the problems he is asked to handle is the collapse of classified advertising revenue. Jacobson believes newspapers do not have to sit passively aside and allow craigslist to take over the classifieds business. Last spring, he collaborated on a manifesto about newspaper design and strategy called RevenueTwoPointZero. One of the most important things newspapers had to do, said Jacobson and his colleagues, was “build a better craigslist.” They went on to explain how to do this in six bullet points:

• Make it easy to use.
• Make it easy on the eyes.
• Make it free.
• Make it make money.
• Make it safe.
• Make it the biggest and best marketplace.

It isn’t trivial to make a website easy to use and easy on the eyes — the first items on Jacobson’s list — but let’s specify that newspapers could do it. Free is a choice. The problem comes with the last three recommendations. Jacobson wants newspapers to make money by advertising next to the free listings. He also counsels them to be aggressive with “upselling.” This is a marketing term that means that means pitching users additional premium services, such as more photos and more prominent placement.

Read the article and look at the graphics of some of the sites this Guru is suggesting. So what do I think is wrong with guy’s suggestions? —

• Upselling works best in person while the standard purchase decision is being made. The upsell completes the customer experience. Problem with his execution is the upsell is up front and the reason the customer came there is discounted.
• Easy on the eyes? Of the two examples given both violate this advise.
• Making it free is table stakes. So being free does not guarantee success.
• Make it safe. Here is where I believe a bone is being thrown. One of the essentials of CraigsList is that its all local. CraigsList deals in markets in the same way that Real Estate is local. CraigsList is not at all like eBay in that regard. So if 90% of the time the buyer and seller are going to meet to complete the transaction is really no different than if it were a garage sale. The horror stories you hear, well consider the categories that most of these originate from and you conclude it was risky business to begin with.

What the gentlemen misses is the metaphor. Look at the classified ad in paper. Its usually a lede then a description then facts on the item. Look at CriagsList. The link is the lede. No BS. No upsell. Just the lede. Click on it and you get the rest. CL just stole the paper’s concept. So now this fella suggests running away from that concept. Some 200 years of success should not be ditched lightly.

I don’t wish to disparage Mr. Jacobson but I have to tell you I have seen plenty of corporate rainmakers in my career. They usually come in with a fancy introduction, a nice suit and a ‘formula’ that will lead anyone to success. All they have to do is follow the System. Now sometimes it works, but often times it does not. Local conditions on the ground not conforming to the basis for the formula working being the primary problem. There is one other problem with using rainmakers. They are taken like a pablum for what ills the company. Which for much of the Journalism set is the fact that they have so distanced themselves from their end customer they are no long relevant to the local conversations. No formula overcomes that problem.

Top shelf periodical Business Week never had much of an online focus. The result? The mag’s owner McGraw Hill may be selling for it just a buck just to offload BW’s accumulated liabilities.  The lesson is simple. If you rely in dead trees to distribute your content, you’ll soon be just as dead as the trees you killed.

McGraw-Hill could reap just $1 from a sale of Business Week, according to people familiar with the 80-year-old financial magazine’s losses.

The publisher has appointed Evercore, the boutique investment bank, to sell the business after concluding it was non-core, two people familiar with the decision said.

McGraw-Hill, which owns the Standard & Poor’s rating agency and a large educational publisher, would only say it was “exploring strategic options” for Business Week. Evercore did not return calls. (FT)

Mike Masnick of Techdirt wrote a thought provoking post on the possibilty that PR people will replace journalists today.

There are plenty of new entities springing up everyday online that do investigative journalism — and do it well. On top of that, we noted that especially in the political realm, where partisans had tremendous interest in digging up dirt on opponents, we had little fear that investigations would take place. And while the initial investigations could be biased, getting the info out there would allow more non-biased parties to sort through the details and figure out what is and what is not true.

Romenesko points us to a column by Tim Cavanaugh taking this concept one step further: suggesting that a subset of PR people may end up taking on the role of investigative journalists. Now, I’m sure plenty of journalists are cringing at the concept — and certainly, as someone who gets bombarded daily with idiotic story pitches that are spun to such ridiculous levels I can only laugh at them (as I hit delete), it makes me cringe a bit. But some of his points are worth thinking about. (Techdirt)

I think that  the change has already begun. It will be complete when the directives and paychecks “journalists” receive come from the same place. The examples for our supposed impartial press operating a s PR people are abundant. Consider this current example:  Today it was announced Time Magazine’s cover will feature an Obama for the 17th time in 12 months! Yet not a single mention of the president’s flip flopping, numerous blunders and gaffes has appeared in its pages. That same magazine relentlessly pummeled Mr. Obama’s equally imperfect predecessor in every issue it printed for the prior 12 months. The only thing that makes a PR person different is that Time is not on the Obama’s payroll (or is it?).

The internet freed information and made it much easier for the unwashed masses that have not attended journalism classes to be their own filters. Transparency may have become the biggest enemy of the old media. Instead of recognizing this, the old media blames the net for stealing its content. The press  still misunderstands the internet’s efficiency in delivering this information in a random access format and  on demand and how that has changed the game.  While access became more transparent, the transformation of jouranlists to PR operatives accelerated.  In this role, journalists have had no trouble exploiting the internet to deliver their message, they’ve just found fewer readers willing to pay for it. Funny thing, many financially failing news organizations who carried Mr. Obama’s water are now asking  for their check.

When you hear a newspaper executive claiming that his industry is an essential bulwark of society and that it stands threatened by a new technology that is, as of yet, unready to shoulder the same responsibility, you may be inclined to empathize. And indeed, that much is true enough as it goes.

But when that same newspaper executive then goes on to claim that this predicament has occurred through no fault on the industry’s part, that they have merely been undone by new technologies, feel free to kick out his teeth. At that point, he’s as fraudulent as the most self-aggrandized blogger.

Anyone listening carefully may have noted that I was bought out of my reporting position in 1995. That’s fourteen years ago. That’s well before the internet ever began to seriously threaten any aspect of the industry. That’s well before Craig’s List and department-store consolidation gutted the ad base. Well before any of the current economic conditions applied.

In fact, when newspaper chains began cutting personnel and content, their industry was one of the most profitable yet discovered by Wall Street money. We know now – because bankruptcy has opened the books – that the Baltimore Sun was eliminating its afternoon edition and trimming nearly 100 editors and reporters in an era when the paper was achieving 37 percent profits. In the years before the internet deluge, the men and women who might have made The Sun a more essential vehicle for news and commentary – something so strong that it might have charged for its product online – they were being ushered out the door so that Wall Street could command short-term profits in the extreme.

Such short-sighted arrogance rivals that of Detroit in the 1970s, when automakers – confident that American consumers were mere captives – offered up Chevy Vegas, and Pacers and Gremlins without the slightest worry that mediocrity would be challenged by better-made cars from Germany or Japan.

In short, my industry butchered itself and we did so at the behest of Wall Street and the same unfettered, free-market logic that has proved so disastrous for so many American industries. And the original sin of American newspapering lies, indeed, in going to Wall Street in the first place.

When locally-based, family-owned newspapers like The Sun were consolidated into publicly-owned newspaper chains, an essential dynamic, an essential trust between journalism and the communities served by that journalism was betrayed.

Economically, the disconnect is now obvious. What do newspaper executives in Los Angeles or Chicago care whether or not readers in Baltimore have a better newspaper, especially when you can make more putting out a mediocre paper than a worthy one? The profit margin was all. And so, where family ownership might have been content with 10 or 15 percent profit, the chains demanded double that and more, and the cutting began – long before the threat of new technology was ever sensed.

But editorially? The newspaper chains brought an ugly disconnect to the newsroom, and by extension, to the community as well. A few years after the A.S. Abell Family sold The Sun to the Times-Mirror newspaper chain, fresh editors arrived from out of town to take over the reins of the paper.
They looked upon Baltimore not as essential terrain to be covered with consistency, to be explained in all its complexity year in and year out for readers who had and would live their lives in Baltimore. Why would they? They had arrived from somewhere else, and if they could win a prize or two, they would be moving on to bigger and better opportunities within the chain.

So goes David Simon’s prepared remarks before the Senate Committee on Commerce, Science, and Transportation Subcommittee on Communications, Technology, and the Internet Hearing on the Future of Journalism, May 6, 2009. What is telling is that he clearly points out that its is not so much that reporters stopped producing a good product (though there is a case to be made here too. But that’s another post.) but that the Suits sitting the boardroom shifted from being concerned about journalism and more concerned about the results required to satisfy the Wall Street institutions.

Let me tell you, the man has a case. Nor is Journalism the only industry to fall prey to this. I worked in telecom for 30 years. You can see the shift in the old headquarters of the regional Bells and independents. Paintings of the CEO’s of those firms on the wall with a small plaque with their name and educational attainment. Picture after picture with names like MIT, Princeton, Georgia Tech, Cal Tech, Worcester Technical, engineering schools all. As you get to the present day the paintings turn to pictures. But something else changes too. The schools are Northwestern, SMU, U of Penna, Harvard, Ball State, business schools all.

That transition marks a change from being concerned about the product you deliver to the profitability that can be obtained, usually at any expense to customer service and product quality. We are poorer for it. But don’t blame the companies, they are just reacting to consumer demand for better - cheaper. Sadly the cheaper is delivered but the better ends up lost in the soup of corporate dysfunctional desires.

But the prescription is probably not workable either —

But a non-profit model intrigues, especially if that model allows for locally-based ownership and control of news organizations. Anything that government can do in the way of creating non-profit status for newspapers should be seriously pursued. And further, anything that can be done to create financial or tax-based incentives for bankrupt and near-bankrupt newspaper chains to transfer or even donate unprofitable publications to locally-based non-profits should also be considered.

Lastly, I would urge Congress to consider relaxing certain anti-trust prohibitions with regard to the newspaper industry, so that the Washington Post, the New York Times and various other newspapers can sit down and openly discuss protecting their copyright from aggregators and plan an industry wide transition to a paid, online subscriber base. Whatever money comes will prove essential to the task of hiring back some of the talent, commitment, and institutional memory that has been squandered.

Absent this basic and belated acknowledgment that content has value — if indeed it still does after so many destructive buyouts and layoffs – and that content is what ultimately matters, I don’t think anything else can save high-end, professional journalism.

Problem one is the legacy news orgs need to ditch the millstone that is the printing press. It is an albatross of capital absorption that has lived past its time. Better to provide a subscription - Kindle model similar to what telecom does with cell phones (as much as I hate it, its viable.)
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