Part 1: Converging Forces Make 2010 a Game-Changer for Publishers
It’s no secret that the last 10 years have been tumultuous for publishers. It could be argued that no segment of the publishing industry has been harder hit than newspapers or magazines. In a recent blog post, our friend Paul Gillen perfectly summarizes the media transformation of the last ten years:
“As we head into the second decade of the new millennium (okay, it technically doesn’t begin for another year, but stick with me), it’s worth remembering where media stood just 10 years ago.”
“In January, 2000, few people had heard of Google. Online advertising was banners and e-mails. Big media brands dominated the Web. U.S. newspaper ad revenue would hit record high levels in 2000. Newsroom employment would peak in 2001 as newsstand sales of the top 100 magazines approached 30 million. No one had heard of blogs. People used mobile phones to talk.”
Fast forward to 2009. Last year, people spent six billion minutes on Facebook, downloaded one billion YouTube videos and logged over 1.4 million blog entries every day. The iPhone became the first mobile phone to be used more for data than for voice. The Internet became the second most popular news medium behind television. Wikipedia posted its three millionth article.
“Meanwhile, U.S. newsroom employment fell to a 25-year low and magazine newsstand sales dropped to 63% of their 2001 peaks. Reader’s Digest declared bankruptcy. Comcast said it would buy NBC.”
These most recent declines echo and accelerate a long-term trend of declining readership and relevance for newspapers and magazines. Many argue the first significant blow to the industry came with the introduction and prevailing popularity of 24-hour news channels. For the first time, consumers were exposed to news as it happened, and quickly developed a habit and appetite for such access to information.
The Internet Makes a Dynamic Change
In the mid 1990’s the Internet started to gain mass appeal and usership. As more people gained access and bandwidth speeds increased, the number of users and average time spent online increased exponentially.
A September 2009 report by The Nielsen Company demonstrated that the average user spends over 68 hours of time online each month. Equally interesting, a significant portion of time spent online is focused on social networking and community activities compared to entertainment, as was the case in years past.
In the midst of this dynamic change in the last 10 years, publishers simply could not keep up with the ever-evolving consumer tastes for information consumption. The problem was further compounded by burdensome management, distribution and advertising models that no longer reflected the world around it.
Most importantly, the Internet presented two fundamental paradigm shifts that newspapers, magazines and traditional media at large were slow to recognize and capitalize on.
- Time and Content Standards - The Internet shifted both the standard for what consumers consider “current” and the way in which we consume content. Unique to all other media, the Internet user has full control over what, when and how they view content. They may choose to watch TV shows, search and retrieve news, or engage in social media without the presence of any natural barriers (i.e. cost, distribution). Equally important, the “always-on” Internet is an ideal medium for accessing content in a real-time environment. More recently, mobile phones and other Internet enabled devices have further extended connectivity, reach, and access to online information.
- Targeted Advertising – The Internet creates an unprecedented environment for both targeting and displaying advertisements. In recent years, ad targeting has become increasingly sophisticated, allowing advertisers to segment and display ads based on the category of content, geography, user behavior and more. Further, the circulation is unbound from any of the natural distribution barriers or costs that limit the reach of traditional media.
Is it the Beginning of the End?
With all of these factors in play, it’s easy to conclude that we are witnessing the beginning of the end of these publishing entities. But, I would suggest that for all of the competitive threats the Internet has exposed, it too can be leveraged to create competitive differentiation moving forward.
Over the last few years, newspapers have begun to turn the tide on the declining value of the media. The best of the industry have begun to leverage their assets including strong regional brands, journalists, journalistic integrity, and print and online distribution channels, to create hybrid media offerings that compliment one another. When implemented correctly, these hybrid media outlets produce in-depth pieces that are published in print, expanded upon online, and contributed to by their community of readers. Readers communicate through various channels including reader comments, blog postings, twitter posts, and more.
More recently, many of the larger regional publications have also created a Social Media Director position to recapture the coveted breaking news position. Social Media Directors have been tasked with building a significant presence online through Twitter, blogs and social media channels. They are primarily responsible for unbundling the traditional media in an effort to better respond to the wants and needs of consumers and advertisers alike. An example of this awareness and willingness to move beyond the traditional channels of print and online newspaper site is evidenced when a Social Media Director breaks news on Twitter before it appears on their website or in print.
Leading Social Media Directors are those that are conversational marketing experts, and individuals that understand how to build communities around products.
While newspapers haven’t directly achieved a monetization strategy for this offering, they have come to understand that if you control the conversation, you build a brand presence that warrants advertising in both online and offline channels.
More importantly, they’ve come to adopt and embrace the technology in a way that strengthens the best and most critical differentiators of the industry – local content, and journalistic integrity.
In fact, the journalistic standard is one of the most valued assets of all. For all of the information available on the web, so little of it can survive the test of journalistic integrity. Most bloggers write with bias. Many posts are opinion pieces and some are even quietly sponsored by underwriters with their own agendas. For the casual web user, it can be challenging to find informative and trusted news sources. For this reason, journalism and the role of the newspaper have a place both in print and online.
While newspapers may have arrived late to the web, many recent indicators are trending in the right direction. In the last few years, regional newspapers have consolidated under major corporations and have corrected inefficiencies that have gone unchecked and unmanaged for years. While circulation and advertising revenue may be dipping, more successful publications are turning the corner on profit, the most important metric of all.
Finding a New Role in Media
And with a newfound confidence and understanding of their value and role in media, some are breaking new ground all together. In the last year, the Christian Science Monitor, broke with tradition and shifted from a daily print format to an online publication that is updated throughout the day. They continue to offer a weekly print and daily e-mail edition, but have eliminated the current daily print format. The break from the daily printed edition is proof that the paper understands that the method of delivery and format are secondary to the quality of the news and the market it serves.
Along these same lines, a recent effort by Ruport Murdoch’s News Corp. aims to block Google from indexing pages that will live behind a “paywall.” News Corp., and more recently The New York Times, announced a few months ago that it intends to move most of its content behind a subscription offering and at least in the case of News Corp., subsequently block these pages from search engine indexing.
While many are quick to point out the high failure rate of subscription content, other forces may be at work. Murdoch may be asserting that Google and other engines may need to pay for the privilege to index this “high-value” content so that they can continue to enjoy the revenue they generate from ads published on subsequent search results pages. If successful, Murdoch may grab a piece of the ad revenue slice back for the newspaper industry, and in the same stroke, give Google, and the Internet at large, a taste of its own medicine.
Lastly, and probably most significantly, new platforms are being introduced that will fundamentally change the way in which we subscribe to and read these publications. Electronic Readers, the soon to be released Apple Tablet and accompanying iTunes store have the potential to reinvigorate those print publications that leverage the best of their old school strengths in a decidedly new school environment.
Part 2 of this post will explore how e-readers and the Apple Tablet will revolutionize this industry. Stay tuned.