The Newspaper Biz

Citizen Journalist: There's No There There

The near-ubiquity of Internet access, combined with the development of inexpensive tools for publishing and sharing content, has helped spark the rise of sites devoted to what is variously called “citizen journalism,” “public journalism,” “we media,” or “participatory journalism.” The sites generally divide into two major segments: those devoted solely to hyper-local news (e.g. Baristanet.com, focused on Montclair, NJ, and surrounding towns) and those with a national focus (e.g. AssociatedContent.com, Newsvine.com, NowPublic.com, and news.MySpace.com). The primary focus on news is what differentiates these sites from those such as the HuffingtonPost.com and DailyKos.com, which essentially are blogs that feature opinion that sometimes takes news as a jumping off point. On a local level, there are more than 2,000 so-called “place blogs” in the United States that offer hyper-local opinion. There are at least 200 hyper-local news sites.

Recently I’ve spent a good bit of time looking at the national news sites, and here’s my quick take on them:

Content for the national sites comes from users, although most content that could be characterized as “news” is copied from mainstream media such as the New York Times, the Associated Press, and MSNBC. Two of the major national sites derive their income from banner advertising and classified ads supplied by Google. It is unclear how NowPublic earns income because there are no ads on the site.

In North America, AssociatedContent.com is the leading national site for user-generated content, according to Alexa.com, which ranked it on Nov. 6, 2007, at 2,386. U.S. users account for 56 percent of AC’s users. That compares with rankings of 4,871 and 13,165 for Newvine.com and NowPublic.com, respectively. U.S. users account for 50 percent of Newsvine users and 39 percent of NowPublic users.

Associated Content, which was launched in 2004 and has received $5.4 million in funding from SoftBank Capital, differs significantly from the other sites in that it actively recruits people to write or submit video or audio about specific subjects -- not all of which would be considered “news.” It calls itself a "user-driven information portal" whose articles are "optimized for discovery and revenue generation." In other words, Associated Content’s goal is to create a database that will attract Google searchers and the revenue associated with them rather than serve as a destination site in and of itself. Associated Content also licenses its content to other online publishers. Contributors are paid based on keyword optimization and the quality of their work (generally $1.50 per thousand page views). AC’s content is almost entirely user-generated, in contrast to that of NowPublic and Newsvine, which consists to a great degree of stories copied from mainstream media outlets.

Newsvine, founded in 2006, recently was acquired by MSNBC Interactive, a joint venture of Microsoft and NBC Universal. The majority of its content is copied by its users (“seeded,” in Newsvine parlance) from mainstream media such as the New York Times or MSNBC with users comments appended. Newsvine’s top contributor of actual user-generated news is a penny-stock promoter whose handle is QualityStock.net and whose contributions are press releases about obscure stocks. Interestingly, on a recent day when MSNBC headlined a school-shooting massacre in Finland, the top story on Newsvine was an Associated Press feature about bananas washing onshore in the Netherlands. Newsvine, which carries little advertising, offers banners at various rates, with a CPM on the low end of $10 for a 125X125 unit and on the high end of $20 for a 300X250 unit.

NowPublic.com was founded in 2005 by Michael Tippett, founder of one of Canada’s first Internet companies. It has raised a total of $12.5 million in funding, with $10.6 million of that coming this year from Rho Ventures/Rho Canada, Brightspark, and the Working Opportunity Fund. NowPublic, which claims 131,678 contributors in 4,458 cities, eschews the local news approach in favor of what its CEO, Len Brody, calls “hyper personal” content. Brody also refuses to characterize NowPublic’s contributors as “citizen journalists.” Instead he refers to the site as “crowd powered.” As is the case with Newsvine, most of NowPublic’s user-generated content consists of stories copied from mainstream media and posted on the site with comments by the posters. NowPublic does not pay its contributors. In February it announced a deal with the Associated Press in which it makes its original content available to the AP. It seems likely that it has made little revenue from that deal because most of NowPublic’s original content consists of commentary on news sourced from mainstream outlets such as wire services and newspapers.

Of these three sites, I believe Associated Content has the best business model, although it isn’t really a site for user-contributed news. Much of its content is evergreen stuff (e.g. how to groom a cat, paint a house, etc.) I think Newsvine and NowPublic, almost all of whose “user-generated news” is really stories copied from mainstream media, are in a very risky place because of two developments. One is the imminent launch of Attributor, which will allow content providers such as the Wall Street Journal and the Associated Press to track usage of their content on sites like Newsvine and NowPublic and extract a fee or demand its removal. The other is the effort underway by the World Association of Newspapers in association with London-based Rightscom to create a different tool that accomplishes the same objective.

So, in sum, citizen journalism doesn’t seem to be happening on a national level, if you define journalism as reporting news and not merely commenting on it. I’m curious as to how the backers of these sites, many of whom are prominent in the so-called cit-j movement and quite arrogant in their advocacy of it over the so-called mainstream media, will explain away the fact that these sites couldn’t exist without the MSM stories their users cut and paste.

Time to Consider Home-Delivered Free Dailies?

The youth-oriented tabloid distributed in or around a mass transit system has gotten most of the attention in the free daily world. For one thing, it’s the model used by Metro International, the world’s largest and best-known free daily publisher. It’s also the model in use in major US cities such as Boston, Chicago, New York, Philadelphia, and Washington, DC, all of which have extensive mass transit networks and large populations of young people.

But should publishers be paying more attention to the adult-targeted, home delivery model, most closely associated in this country with Philip Anschutz’s Clarity Media? After all, most US and Canadian cities don’t have robust mass transit systems. And most established publishers have yet to offer an alternative to those adult readers who have been dropping their subscriptions at a steady rate over the past few decades.

The fear, I’m guessing, is that developing a product that would more clearly meet the needs of a traditional newspaper reader who is dissatisfied with the bulk and format of the traditional broadsheet daily would lead to a faster erosion of that daily’s subscription base.

It might be instructive to look at how someone outside the newspaper industry approached a similar problem. In a June 21 story, the New York Times reports that TGI Friday's, faced with the same decline in sales experienced by others in the casual-dining industry, decided to introduce smaller portions at lower prices. The result: the number of customers increased at Friday's during the last 16 weeks by 1.4 percent, the Times reported, compared with same period year earlier. For the entire casual-dining industry, guest counts were down by 2.8 percent during period.

As Jim Smith of Morris has noted, the San Diego Union Tribune’s Today’s Local News has 70,000 circulation, most of that home-delivered. Might that be an interesting model for paid daily publishers to consider adding to their product portfolios? After all, if you are a paid daily publisher and someone is looking to eat your lunch, shouldn't it be you?

Why Buy the Cow?

The Baltimore Sun's Jay Hancock, in an April 8, 2007 column, asks a question that newspaper publishers seem assiduously to avoid. "Why," he asks "do newspapers pay the Associated Press to distribute their expensive, hard-won stories to radio, TV, Yahoo and other enemies of newspapers?"

If you are reading this, you know that the Associated Press (we used to sarcastically call it the Amalgamated Plumbers in my days as an editor at the Charlotte Observer) is owned by its newspaper members. Its board of directors is a Who's Who of the newspaper business, counting among its members Gary Pruitt of McClatchy, Mary Junck of Lee, George Irish of Hearst, and Bo Jones of the Washington Post, to name just a few.

While it has its own reporting staff, the biggest portion of news that goes out daily over the AP "wire" (a wonderfully anachronistic term) comes from its members. Those members contribute news to AP, and they pay AP for access to content from AP reporters and other newspapers.

That all makes sense. But why do its newspaper members permit AP to sell newspaper content to the likes of Yahoo? Yahoo's business model, in part, involves attracting inquisitive people who might otherwise buy newspapers to its website to search for the news they would have found in the newspapers they no longer are buying. Why buy the cow, as my grandmother used to say, if you can get the milk for free?

The Buggy Whip Business

The recent report on the state of the American news media by the Project for Excellence in Journalism paints another dismal picture of the newspaper industry. Circulation continues to decline. Classified advertising still moves online. The average age of the newspaper reader inexorably climbs.

In this environment, one of the ideas bandied about for solving the industry’s problems is for newspapers to leave the field of battle and become non-profit institutions. However, that only further shelters publishers from the need to innovate -- something they foolishly avoided during many years of monopoly markets and amazing cash flows that now are coming to an end.

A major step forward is “Newspapers Next,” a $2 million project by the American Press Institute that recommends an approach called “disruptive innovation.” It is encouraging that Newspapers Next calls on publishers to identify “nonconsumers” and “unsatisfied needs” of readers and advertisers and develop products to address them. But Newspapers Next stresses innovation for innovation’s sake. And it fails to ask newspaper publishers to take the essential step of defining the business they really are in.

That very same failure is what famously put the buggy whip manufacturers out of business. The classic business school story is that, with the advent of the automobile, they continued to act as if they were in the buggy whip business. But if they’d defined themselves as being in the “acceleration” business they would have adapted and survived long enough to worry with the rest of us about the fate of Chrysler, Ford, and General Motors.

Newspaper publishers who insist they are in the news business are like the buggy whip manufacturers of yore. No better are those publishers who claim to be in the “information business” or mumble words like “platform agnostic” to indicate they really have gotten the new media religion. “Information business” suggests a focus on the product rather than the customer -- a perspective that is partially responsible for getting us the mess we are in. And “platform agnostic” indicates a focus on only one of a publisher’s two sets of customers -- the reader.

So what business are newspaper publishers in? If a newspaper is to make maximum use of some or all of its most important assets -- a powerful brand, a relationship with advertisers, the ability to generate content, and a delivery force -- I would argue it must understand it is in the business of aggregating audiences for advertisers.

Other advertising-supported media reached that conclusion years ago, as evidenced by their migration from mass to niche to meet advertiser and user demand. The Lifes and Looks of our childhoods gave way to successful magazines as narrowly targeted as Bassmaster and Vegetarian Times. The big three networks now share the television set with channels aimed at African-Americans, Hispanics, golfers, and gays. Radio formats and time-of-day programming are highly targeted. The Internet was born as a niche media form. But newspapers (with the arguable exceptions of national titles such as The New York Times, the Wall Street Journal, and USA Today) remain geographically focused rather than demographically targeted.

Audience aggregation is not as noble a reason for being as defending democracy or rooting out evil. But one doesn’t obviate the other. The New York Times, for example, aggregates a very attractive national audience of affluent and influential readers. Its advertisers so prize that audience that they spend the money required for The Times to support a $200-million-a-year newsgathering operation that provides the content to aggregate those readers. And Metro International aggregates an audience of more than 20 million readers in more than 100 cities worldwide with a free daily newspaper aimed at 18- to 34-year-olds. Metro is not The New York Times, but with its abbreviated content, easy-to-handle format, and free distribution, it informs and engages young people who otherwise wouldn’t be reading a newspaper.

The audience aggregation approach should be embraced by editors as well as newspaper publishers. That’s because it argues for newspapers to develop new products, outside the core newspaper itself, for the audiences that the newspaper doesn’t reach. Newspaper companies shouldn’t tart up their flagship brands with a few Spanish-language pages, an expanded gossip section, or a Su Doku puzzle in a misguided attempt to stem the flight of readers. Such changes to good newspapers are likely to hasten the departure of traditional newspaper readers, who are a valuable, albeit ever smaller, audience to aggregate.

So how does a newspaper publisher become an audience aggregator? The first step involves a visit to the research department, whose manager often is as lonely as the Maytag repairman, called on primarily to update the media kit. Most publishers know the characteristics of the audience they are reaching -- how many people, in what areas, of what sex, and of what age and education level. But the really important research query is about the audiences the newspaper isn’t reaching. How many 18- to 34-year-olds live in the market? Is the number increasing or decreasing? What percentage read the newspaper? How many singles are in the market? How many new movers? How many Hispanics, African-Americans, etc.? In recent years many newspapers have engaged in audience segmentation research, which identifies different groups of newspaper readers. But here we’re talking about identifying instead demographic or psychographic groups that aren’t reading the newspaper and must be aggregated some other way.

Step Two is finding out whether advertisers want to reach these unserved audiences and how they go about it now. If your advertisers aren’t interested in reaching young people, for example, is that an audience you want to spend the money to aggregate? And if advertisers already have a method of reaching that audience, what can you offer that is better or more efficient? Few of the newspapers that have closed in the last 100 years died for lack of readers. Most failed because advertisers found a better or more efficient way of reaching the readers they delivered. This is a step, by the way, best carried out by business analysts rather than sales people, whose optimism and drive -- great qualities in closing a sale -- make them less than objective at gathering data.

Step Three is to find out how to best aggregate desirable audiences not served by the core newspaper. This also requires research. If new mothers need information about child care, would they like to get it on the web or via a mailed newsletter or magazine? Is there a large population of new movers interested in advice on home furnishings, renovations, and lawn care? Is that group best addressed with a monthly tabloid newspaper, a website, or a semi-annual home furnishings fair? Is there a population of young people who don’t read the newspaper and aren’t exposed to local advertising on the national web sites they visit? Is that group best reached with a free daily newspaper or an exclusive arrangement to distribute product samples or show advertising videos at local nightclubs? Or perhaps both? A publisher that defines itself as being in the audience aggregation business is able to contemplate these and many other possibilities long seen as outside the scope of the traditional newspaper business.

Steps Four through Eight are the sort of development process familiar to most consumer products companies -- developing a prototype, then testing it with consumers, then testing it with advertisers, then devising a distribution method, and finally building a P&L to see if the return on investment justifies the effort.

If all of this sounds simple, well, to some degree it is. It doesn’t require mastery of business school jargon or swearing allegiance to the concepts of the latest author of an airport book on business success. It does require a senior manager to champion the effort, a well-funded research team, the willingness to take measured risks, and the willingness to fail. But most important, it requires the willingness to rethink your notions about what business you really are in.