BuzzMachine

Regional newspapers in the UK are suffering sharply declining circulation.

: Roy Greenslade finds the lessons in the numbers:

This is a truly shocking set of circulation results and confirms that the gentle downward sales trend has turned into a cliff-fall. Of course, there is one central mitigating factor. It is clear that readers are becoming viewers, choosing to read on screen rather than in print. . . .

I fully accept that we are in the midst of a communications revolution and print is suffering from its effects. Britain is hardly alone in that respect. In the United States and in Scandinavia, the same kinds of problems are occurring for paid-for newspapers. But I believe Britain is different in one important respect (and I realise that this is a controversial statement): its regional and local journalism is just not good enough to retain readers let alone win new ones.

It’d ironic, or possibly just odd, that one of the newest papers in Britain, The Independent, is the most stuck in the mud online. They put up pay walls and the editor, Simon Kelner, just decreed that he’d never put stories on the web first, like his competitor, The Guardian, and that he wants to raise the price of the declining print product.

In his Guardian blog, former Daily Mirror editor Roy Greenslade sits Kelner down for a talkin’-to, ink-stained wretch to ink-stained wretch:

News is widely available on the net the instant it happens. Within minutes, comment and analysis of that news is also available. As the minutes pass, the commentaries become yet more sophisticated. At the same time, the conversation between reporters and analysts is already going on. None of us, not even the most dedicated print-lover, not even an admitted flat-earther, can stop this process. It is happening. Newspapers stood aside for a while but many of them - most notably in Britain, The Guardian - have realised that they must take part. They must use their brand’s authority and credibility to build an audience for their websites. If they do not, then they cannot guarantee a future of any kind for any format. It’s not necessarily a case of wanting to say “net first”, it’s a case of having to say it. . . .

Simon, look at your own circulation. Does it not tell you a story? And look also at the very limited use of your paper’s website, due to two obvious factors - a giant pay wall and a continuing belief in maintaining a print-first policy for news. I love print. I love newspapers. But I’m also a realist. It is my firm belief that the way to save newspapers, to ensure that a title lasts into the future, is to embrace the net. That’s a paradox. It is also good sense.

Dow Jones just set up a task force to figure out their future, with a senior executive, Paul Ingrassia, president of the newswires, and heavyweights from the various content companies, including my online pal, Bill Grueskin, managing editor of WSJ.com. Task forces can be hell. When I was there, Time Inc. was ruled by task forces, which were the lowest common denominator of finding reasons why not to do something. But this one sounds different. Every media and news company should have a group assigned to reinvent the company… or else.

I’d like to be a fly on the wall at their offsites. Dow Jones has unique challenges in the financial data business (where the information is a commodity with a shelf-life of seconds); it has unique strengths (no one else has — or, I believe, will — successfully build an online subscription business); it has unique opportunities (imagine what a distributed army of stockwatchers and companywatchers could create).

But it won’t be easy. In today’s report on its rival’s planning, The New York Times had this good bit:

As an example, Mr. Ingrassia pointed to how Dow Jones News- wires now uses breaking-news articles about earnings releases or dividend announcements written by reporters at MarketWatch, an online property. That has freed up wire reporters to write personal-finance articles, like how to use an exchange-traded fund as part of an investment strategy, which Mr. Ingrassia said helped distinguish the company’s offerings.

And this bad bit:

The largest union at Dow Jones last evening expressed concern about the formation of the news strategy project, unsure if this was just another effort to save money, like the smaller format of The Journal that will have its debut next year.

Steve Yount, president of the Independent Association of Publishers’ Employees, Local 1096 of Communications Workers of America and the Newspaper Guild, said in an interview that the union would like a seat on the committee to ensure against this. In a statement, he warned “management must take pains not to mistake attrition for efficiency, or sacrifice quality in the pursuit of cost savings.”

“Too often,’’ he added, “efforts to improve the quality or scope of Dow Jones publications — including the recent start of The Journal’s weekend edition and, before that, Personal Journal — have instead left new ventures with fewer staff and resources than they need or were promised, and came with short-sighted cost cuts elsewhere in the enterprise.”

Often, announcements to better coordinate journalism across various media come with staff reductions.

Earlier this week, for example, The Financial Times said the integration of its print and online operations could lead to the layoff of 50 people.

But Mr. Ingrassia said cost reductions were not the impetus for the news strategy project.

“This is not French for cutbacks,” he said.

No, but maybe it should be German for out-with-the-old, in-with-the-new.

What do you expect in a crumbling industry? See this lede in another Times story today:

The rising cost of newsprint, flat or falling circulation and sluggish advertising growth added up to discouraging second-quarter earnings results for several newspaper industry companies.

While executives blamed a weak operating environment for low earnings, they also vowed to cut costs and focus on Internet activities in the coming months.

If the journalists truly want to be involved in the reinvention, perhaps their starting point should not be trying to preserve the past but instead ideas for the future or else their union’s best hope is to wait for buyouts a la GM and Delphi… if they’re lucky. These strategic task forces can’t afford to be about resisting change. They have to be about making change happen, and quickly.

Mark Thompson, head of the BBC, has warned his staff: “We are going through a big process of change that will continue probably forever.” Kind of sad, really, that change forever wasn’t what news organizations should have assumed long since.

When people ask me for the most forward-thinking news organization in the U.S. that has actually accomplished things in this new world, I point to WKRN TV in Nashville, run by Mike Sechrist, and Terry Heaton’s work with them. They’ve listened to their community via bloggers (in meetups) and shared knowledge with them (teaching them how to shoot video) and promoted them (in the station’s blog) and supported them (with an ad network).

This week, they announced an important next step: valuing the work of these amateurs. Terry reports:

…WKRN-TV announced tonight that it would begin paying local bloggers for approved video stories they submit and running those stories on its Website and in its newscasts. WKRN president and general manager Mike Sechrist told a “meet-up” of local bloggers that he could envision the day when a daily program would be made up entirely of material submitted by the community. . . .

Sechrist told the group of bloggers that they had already had a significant influence on the news programs the station produces, simply by doing what they do. The station has pursued stories first raised in the blogging community and has used local bloggers as a sounding board at various times. . . .

I’m sure that we’ll hear plenty of bitching about this from the trenches of the TV news business, but the truth is this was inevitable. Stations have always employed “stringers” or “freelancers,” but most of their work was raw video that station reporters used to tell stories. This takes the concept a step further and taps into the knowledge, passion, brainpower and, yes, skill of people in the community. This a fruit of the personal media revolution, and it will be interesting to watch. . . .

Bravo.

Forbes’ Paul Maidment bashes the newspaper industry (uh-oh, more competition) following another moribund conference. But he gets it backwards.

If there was a change in print executives’ moods at the conference in Las Vegas, it was that a decade of consolidation and cost cutting to maintain what have been fat industry profit margins are giving way to talk of Internet publishing opportunities. Sigh. Earth to newspaper executives: Google, Yahoo! and Microsoft have, in the meantime, made themselves into media companies that are bigger than any newspaper.

Even the mighty minds behind Google took several years to realize that they were a media company, not a tech company. But they and their fellow West Coasters have invented a new way of presenting journalism, through aggregation rather than creation. They have also invented a new way of consuming it, through search, and have found new expression to an age-old publishing truth–that if you can gather an audience, you can make money. In doing so, they have been ripping out the commercial heart of the newspaper industry, its classified ads business.

No, I say that’s mixed up. Search — namely, Google — and links — namely, blogs — send huge traffic to news sites. Without that audience and attention and branding, the old news sites’ online efforts would founder, taking the mother ships down with them.

In a distributed world, you want to be aggregated. If you’re not aggregated, you’re nowhere. (Not-quite-full disclosure: The news startup I’ve been working on promises to organize the world’s news.)

And Google did not kill the classifieds business. Neither did Craig. The advent of a new, distributed, edge-controlled medium that can put buyer and seller together directly, without the need for a centralized marketplace, is what did in classifieds.

Beware the French strategy of trying to avoid Google. That is like avoiding the newsstand.

Tribune Company just bought ForSaleByOwner.com. That’s a bigger deal than it may appear in the rearview mirror.

When I worked in newspaper companies, I quickly learned that FSBO was a dirty word that made publishers sweat. On the one hand, they wanted all those by-owner ads; they needed to be seen as the marketplace for homes. But on the other hand, the Realtors who paid the big bills hated by-owner ads; their lost customers were their competition. So publishers always danced a delicate two-step, trying hard not to promote the FSBO ads even as they counted the bucks from them. The terrible irony is that the real customers — home sellers — were treated like caged animals by both Realtors and newspapers.

But, of course, the cages are gone and the first to escape were the Realtors themselves. When the web came along, real estate agents realized they could deal directly with customers and no longer needed newspapers to create the marketplace. In fact, newspapers realized that they needed the Realtors’ listings for their own online sites — ads became content — and so the Realtors still ended up holding publishers by their delicates. FSBO was still a dirty word.

I saw this coming a decade ago and argued that newspaper companies should go into the real estate business themselves, becoming brokers to get listings into the closed multiple listing services and putting buyer and seller together directly because the Realtors would inevitably abandon papers. I thought I was going to be fired for speaking such heresy.

But now Tribune is going into the FSBO business.

Isn’t it fascinating how desperate companies are now willing to piss off the channels of sales, distribution, and revenue they so coddled and feared for so many year: ABC tells its affiliates to lump it as it distributes directly to consumers; Warner Brothers tells its network to lump it as it distributes around networks; and Tribune tells its Realtor-advertisers to lump it as it enables sellers to avoid Realtors. The question is whether they spent too long coddling the middlemen and forgetting who the real customer was all along.

Two groups of media’s moneymen held their confabs this week and they each spent some time self-flaggellating, as well they should.

The Times reports from the American Association of Advertising Agencies:

“I think our industry would be better if agencies were as comfortable with change as we like to tell clients they should be,” said Ron Berger, chief executive and chief creative officer for the New York and San Francisco offices of Euro RSCG Worldwide, part of Havas.

“I think our industry would be better if all of the people who speak at industry functions and say ‘It’s all about big ideas’ actually had a few” …

And Jon Fine reports in Business Week on the meeting of the Newspaper Association of America:

This year’s opening event was at the magnificent Field Museum, on a large open floor bookended by two massive dinosaur skeletons. Many attendees joked about this. To the executive to whom I said such an obvious metaphor would never, ever, appear in this column: I lied….

At the podium, Jay R. Smith, Cox Newspapers’ president and outgoing NAA chairman, gives a valedictory with the broad theme of “stop whining.” It begins with and repeatedly uses the phrase, “It wasn’t supposed to turn out like this.” He also says: “The world changed a lot. Newspapers changed a little.” …

And Washington Post Publisher Donald Graham tells the group when discussing newspaper strategy that “the only honest answer is we don’t know how our future will work out.”

OK, let the flaggellating end. Let the overdue strategizing finally begin. The time for mourning the past is long over. The time for shrugging at the future is over, too. You no longer get points for admitting that you’re in a mess. You only get points for taking brave action to get out of it.

The New York Times new lab is hiring a futurist. Laugh if you will. But when you think about it, maybe newspapers should have hired futurists, oh, 10 or two years ago. [See my disclosures]

I just saw a jaw-dropping ad campaign by the Newspaper Association of America — the club of publishers — in Ad Age. It is aimed at convincing marketers that papers are still good places to sell stuff. But the images in the ads are all Monty-Pythonesque: antique, old, quaint, useless. That is precisely the image newspapers should not be projecting. But they are.

The most significant news in Google’s launch of its finance service is that is licensing content from Reuters.

In each of its other endeavors — search, news, shopping, classifieds — Google has maintained an open, albeit uneven, playing field. That wouldn’t work in the case of finance because Google had to integrate data into its presentation and Reuters was wise and happy to sell it to them.

But what this means is that Google is no longer just an aggregator — which, I’ve argued, is a beneficial thing to be for content holders, because an aggregator makes links and links make traffic — but is now a destination that will hold users in and compete with other content.

Yahoo has been in this position for years, after it stopped being merely a directory and source of links (Jerry Yang once said at a meeting I attended that his job was to get people in and out of Yahoo as quickly as possible; that tune soon changed). Yahoo has licensed Associated Press wire content — over the objection of many of its members, for precisely this reason — and built a destination that tries to both keep people in and link out (see its new and rather uninspired local aggregator). The net result is that Yahoo is less effective at creating linked traffic than other portals.

Watch out as Google creeps, as Yahoo did, into the content business and competes with, instead of merely organizing, content. It’s a momentous move.

There’s more bad news in store for newspaper-company stockholders following the Knight Ridder sale. McClatchy is bound to find that the multiple it gets for the 12 big-city and no-growth-market papers it plans to sell will be lower than the less-than-steller multiple it paid for KR itself…. if it even manages to sell all of them.

This will raise the effective price McClatchy paid for the papers left, but it lowers the multiple the multiple analysts and stockholders will ascribe to newspapers. McClatchy is all the more committed to a shrinking industry and this will continue to hit its share price. The cutbacks the surviving, adopted KR papers avoided for the moment will come eventually. And the orphans are sure to be doing their imitations of Oliver at dinnertime soon. Bad news and more bad news.

And I’ll argue that the same effect is waiting to haunt other big, one-size-fits-all media companies as they are saddled with big costs while smaller, nimbler, more effective, targeted, and efficient competitors eat at them. Newspapers are the cash cow in the coal mine.

Janet Whitman explains it in the NY Post:

The dearth of bidders for Knight Ridder, which put itself on the block in November amid pressure from large investors unhappy with its weak stock price, reflects the uncertain prospects for the newspaper industry. Newer rivals such as the Internet are snagging readers and advertising dollars.

That could make it tough for McClatchy to fetch attractive multiples for the papers it hopes to sell. McClatchy acquired Knight Ridder for a multiple of less than 10 times expected cash flow, well below historic multiples 12 to 13 times for newspaper deals.

“We think the multiple paid is unlikely to produce much cheer for newspaper investors,” said Lauren Rich Fine, who follows the publishing industry for Merrill Lynch. She added that it “will likely cap multiples in the group for some time unless fundamentals improve.”

What’s the solution? There are no white knights left. What the industry needs now is tough, strategic management that drives the news business away from its dependence on paper to a very different future in any media. You have to shrink to grow.

: I just came across a media stock blog — appropriately shrouded in black — where the analysts are at war over this deal. The oft-quoted John Morton says it’s bad news; another says the big papers will get a higher multiple (can I have what he’s smoking?).