Category Archives: Newspapers

LocalOnliner Bookshelf: The 2016 Innovation Mission Report Focuses on ‘Culture’

The local media companies have been shrinking and becoming increasingly irrelevant. Yet, they drive on as business entities, raising their circulation prices and reducing their days of operation to cover ad shortfalls. (I mostly stopped writing about traditional local media companies several years ago.)

Can they work towards becoming relevant again? Outside of companies that have major investments being poured into them (i.e. Jeff Bezos’ wonderfully regenerated Washington Post), it is hard to see that they’ll have a lot of money for re-dos.

But money hasn’t been everything. While the Ubers of the world raise billions of dollars to carve out and defend a niche, money wasn’t really much of a factor in the launch phase of many of the most “relevant” companies (Snapchat, Facebook, YouTube et al).

A ‘can do’ culture and clearly stated value proposition and mission is actually the biggest driver of initial success. A newspaper might, for instance, launch a video studio, new ad products, form partnerships in the new “distributed economy,” and even add a Virtual Reality component. But first, it must abandon the old mentalities. As one participant noted, it isn’t just about free food and ping pong anymore.

That’s the fairly obvious but worth repeating conclusion of this year’s Innovation Mission Report, which summarizes the Local Media Association’s seventh annual tour around New York and Silicon Valley. This year, the tour went to Facebook, YouTube, Instagram, Apple News, NYC Media Lab, xAd, E.W. Scripps Company, Cxense, Calkins Media, Newsy, Thumbtack, San Francisco Chronicle, Next¬door, and Tout.

The tour is a lot of fun and the report presents a lot of useful ideas for building an ideal culture, and refocusing on some cutting edge channels. “Local media companies need to act now,” notes the introduction. “They need to think bigger and bolder. They need to dramatically change their culture and continue to diversify their revenue.”

The Remains of The Newspaper Business (and Ken Doctor’s Take)

Newsonomics’ Ken Doctor

Over the past 20 years, we’ve viewed newspapers as “the leading laboratory” of interactive local media. While the funding and execution could always have been greater, newspapers have trotted out project-after-project in hyperlocal, promotions, online video, vertical sites, shopping products, social media and digital agencies.

With the possible exception of the digital agencies, most of these efforts haven’t made much headway. None will return newspapers to a position of local dominance, or help them be especially relevant in the next generation of local marketing. The reality of most of the newspaper industry is akin to the depressing experience of The Independent in the UK, which has seen its single copy print sales fall from 400,000 to 60,000 over the past 20 years, without online revenues even picking up a portion of the losses. While the innovators in the industry will continue to press on, the house is “on fire,” as Jeff Jarvis told attendees at The Mega Conference this week in Austin.

Some think it’s a matter of bringing back the quality of newspapers and letting them shine against the hack-writing of most online outlets. That seems to be working for The Washington Post, which has doubled its journalism core since Jeff Bezos bought it two years ago. The Post, however, has been repositioned online as a national property –one of the few that can qualify as such, along with The New York Times/Wall Street Journal/USA Today and The Guardian. At the local level, newspapers have the chance to produce unique content that is not available anywhere else. But things are looking dire.

Ken Doctor, in his Newsonomics’ post today, suggests the nails in the coffin are the ruthless financiers that have seen an opportunity in the bankrupt industry to suck out exorbitant management fees and merge newspapers together for regional ad clout and new fees. All the while, they are running the titles on empty, with few senior level (i.e. full priced) journalists left. The next recession — perhaps one later this year — will surely knock out the profit margins from the empty vessels and perhaps turn off the lights, once and for all.

If they were ever to be rescued, newspapers “need to think of product development as distinct from the news content itself,” says Doctor. “It is a change in thinking that’s still way too alien to local publishers…..Any company that disrespects its own products, and those who produce them, probably deserves its eventual fate,” he says. Their “financial-driven perspective has led them to believe that it’s mainly cost consolidation — rather than new content-based digital product development — that must be the major strategy of the time,” adds Doctor. “So far, that’s been a losing strategy for readers, journalists, and communities.”

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‘Print SEO’ Efforts Drive Digital Traffic for Traditional Media Advertisers

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Digital conversion services have played a key role in getting print advertisers online. But in a “digital first” world, advertisers want to do more than simply replicate their ads.

Some of the real value is taking the content from their ads; making it searchable; and adding it to new channels, including social media, new display ads, directories and event listings.

ShopLocal and Wanderful Media (which took over Travidia) have played a key role here. Similarly, PaperG and its “Flyerboard” pushed the envelope in working broadly with local advertisers to automatically create new online ad formats.

OwnLocal continues to push hard in this direction, working with 2,400 newspapers in the U.S. and recently, Europe, for its “print SEO” efforts. While digital conversion still represents a large portion of the Austin and New York-based company’s revenue, it is now broadly diversifiying.

Co-founder Jeremy Mims sees an opportunity to broadly collect the data found in print ads to create business profiles, where they can be recirculated for SEM, SEO and business data syndication. Typical placements can be in marketing messages, emails and Facebook pages.

OwnLocal has also begun working in a slightly different way with broadcast TV and radio partners. For instance, with TV stations, it is working to disseminate ad spots across all the video platforms, such as YouTube, Vimeo and MetaCafe.

Local Onliner Bookshelf: ‘Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future’

We’ve all seen that the true tech visionaries defy conventional wisdom to define and create new markets. If Steve Jobs is the Michael Jordan of tech visionaries, than perhaps Elon Musk is the Steph Curry.

Musk has caught everyone’s attention, focusing on the big things that change people’s lives (payments, transport and power). At this point, he’s largely responsible for building everyone’s favorite electric car (Tesla), revolutionizing space transport (Space X), playing key roles in the new generation of electronic transactions (PayPal) and he’s also played, on the side, in solar power (Solar City). His vision for “Hyperloop” supersonic travel recently earned him a 90 minute audience with President Obama.

Business Week Writer Ashlee Vance’s new biography, “Elon Musk: Tesla, SpaceX and the Quest for a Fantastic Future,” is quite a read. Based on over 200 interviews, Musk is shown as a true innovator who paired good timing with a relentless drive and work ethic. The book also details how Musk, like so many tech leaders, was slowed by personal issues and a super competitive nature that seemingly doesn’t know when to stop.

The dual stories of modern space transport and electric car development are properly the focus here. But, of course, I wish the book spent more time on the early Zip2 years from 1995-97, when Elon and his younger brother Kimbal were just out of school and launching Zip2 in Vancouver’s Gas Light tech district with $28,000 of their father’s savings. Zip2 was a pioneer in integrating maps with business listings.

While the Zip2 section is a short part of the 400 page book, many of us in the local community got to know Musk at this time, and some of his signature characteristics (i.e. his charm, his micromanagement of projects, his reputation as a strict taskmaster). Desperate to keep his company afloat, Musk is described by Vance during this period as something less of a visionary than a “huckster.”

After a merger with Barry Diller’s Citysearch derailed amidst angry accusations of misrepresentation on both sides, Zip2 jumped deeper into the arms of its newspaper partners. The newspapers bet on Zip2 to help them become the next generation’s Yellow Pages for local SMBs.

The newspapers’ sales staff was basically unprepared to tackle low-priced digital listings, however, and the papers were also unable to drive enough traffic to the listings. Musk and the VCs and newspapers luckily were able to unload the failing operation to Compaq Computers for $250 million. (Compaq naively thought it would succeed in local sales by leveraging its computer sales network to moonlight as local ad sales people.)

But from nothing comes something. Musk took some of his $22 million share from the Compaq sale and moved on to develop what eventually became PayPal. And then, almost simultaneously, Space X and Tesla.

The book fascinatingly details the deceit and treachery of the VC community and executive colleagues. It also breaks new ground in detailing how Musk went to the brink, spending his $200 million + PayPal fortune on Space X and Tesla. Indeed, he was so broke, he took to flying on Southwest Airlines and had papers drawn up to sell Tesla to Google (Larry Page is said to be a best friend). It was only at the last minute that he was rescued by a major deal with NASA to use Space X rockets.

The book may not have the fluency of the greatest Innovator bios. Some of these would include James Gleick’s Genius about Richard Feynman, Walter Issacson’s Steve Jobs, and Brad Stone’s The Everything Store about Jeff Bezos. But it’s a fascinating, well written and well researched tome, confirming that what it takes to be successful at the highest levels is a thick skin, a mission to rapidly succeed, important champions, independence, and immense capital.

Wanderful Bets on Mobile ‘Cash Dash’

Wanderful Media, the newspaper-owned promotions company, has expanded on its original Find&Save coupon portal, which now includes 500 national and regional merchants, and 18,000 brands. The new expansion efforts are focused on Cash Dash, a geolocation promotions feature found within the Find&Save Apps, and Coffee Table, an iPad-oriented retailer catalog that it acquired at the end of 2014.

The big bet is on expanding Cash Dash, which puts Wanderful’s network – which not only includes Wanderful’s newspaper owners, but also key Yellow Pages and others — into the world of incentive promotions. The original version sent promotions to shoppers while they are at retail stores and presumably, in a shopping context. A typical offer might be “Spend $15 at Walgreens, get $5 back from Find&Save.”

These aren’t real time, card-linked offers, which would provide real time feedback; more comprehensive buying information; and ties with financial institutions. In the interest of simplicity, no credit card is used. Instead, consumers snap a picture of their receipt to validate (and track) their spending on a personalized basis. The new improved version adds additional capabilities designed to add shopper frequency and spending, including a “Cash Cart” that lets shoppers select items from a weekly circular ad to create their own cash back offers.

All of the efforts require consumers to get comfortable taking photos of their receipts, and to remember to do so — something that Wanderful execs say has not been an issue.

Speaking about Cash Dash at BIA/Kelsey’s NATIONAL event in March, Dallas Morning News SVP of Business Development and Niche Products Grant Moise noted that major retailers wanted a one stop mobile promotions solution. “It has driven up to $100,000 in sales for some advertisers,” he said at that time.

Goodbye Pennysaver: Is There Life Left in Shopper Publications?

Is there life left in local, broadsheet “shopper” publications that highlight home and trade businesses and things for sale? Not according to OpenGate, a $3 Billion LBO firm that abruptly laid off workers for Pennysaver USA, the industry’s largest company, which it purchased in 2013 from Harte Hanks for $22.5 Million. At that time, the company had annual revenues of nearly $200 million and had 800 employees in California.

Other shoppers remain in business, such as American Classifieds (Thrifty Nickel) and many locally or regionally-owned Pennysavers. The name “Pennysaver” goes back to the 18th Century, and is not exclusive.

Our guess is that OpenGate didn’t see a clear path to profitability and decided to simply pull the plug (apparently, without paying final wages.) Core advertisers and consumers have many alternative options on Craigslist and other sources, and OpenGate didn’t seem to have a plan that would have upgraded Pennysaver to a hyperlocal, searchable and mobile-oriented model. That’s where things need to go.

We look across the aisle, for instance, to Cox Target Media’s Valpak, a coupons and advertising business. It has thrived on a hyperlocal publishing strategy, and has developed a robust digital strategy. Valpak has just announced a great Apple Watch app. But PennySaver wasn’t going there.

Theoretically, we still find Shoppers an appealing alternative sales channel. They are generally 100 percent commission, and many products could theoretically be added to their bundle (Google, et al). WebVisible, at one time, teamed up with American Classifieds to pursue such a model. PennySaver, itself, teamed up with Antengo, a mobile classifieds service. But that was discontinued when OpenGate came on board.

UT San Diego Sale: Online Isn’t Adding Value to Traditional Media Sale Prices

Today’s announcement that UT San Diego and its eight regional publications will be acquired by Tribune Publishing’s Los Angeles Times for a slightly better-than-fire sale price of $85 million (plus $100 million in pension liabilities) points to several things.

1. The price is probably a flat fee for the brand and expectations of selling regional advertising throughout southern California.
2. Individual components such as subscriber counts include a certain number of online subscribers. But there aren’t many online-only subs in this case.
3. UT San Diego’s various online and mobile services really aren’t factored in.

The U-T reported Sunday circulation of 271,564 for 1Q, 2015. On other days, circulation ranged between 169,484-222,479. The LA Times reported Sunday circulation of 965,598 and average weekday circulation of 650,718 for the six months that ended Sept. 30.

The LA Times will be able to save some costs with the acquisition by cutting circulation, printing, sales and perhaps, content costs. It will also more effectively sell regional accounts to large advertisers, specifically retailers, auto makers and auto dealers and medical. But in the end, online (or mobile) won’t be much of a factor.

That’s a shame. Back in 2002-2004, a former colleague of mine developed a general hypothesis that if a traditional media property could show recurring value in online properties, it would be able to boost its sale price by X percent – probably 20 percent or more. It was a major reason to double down on digital growth. But this clearly hasn’t happened.

I was chatting about this with BIA/Kelsey Chief Economist Mark Fratrik. He notes that online revenues accounted for 16.4 percent of newspaper revenue in 2014, and will be 17.9 percent in 2015. The forecast is for online revenues to grow slightly to 22.9 percent by 2019. This reflects some additional online revenue, but as he points out, it also reflects BIA/Kelsey’s expectations that print revenues will decline.

It is true that online could add value to traditional value property in some cases, says Fratrik. But San Diego is full of online competition from TV station sites, alternative sites and news start-ups.

The Times of San Diego, for instance, now reaches 150,000 unique users a month. Publisher Chris Jennewein – a former leader of UT San Diego’s digital operations – notes that 26 percent of his readers are aged 25-34 and seventy-five percent are under 55. “Our readers probably didn’t read either of the two newspapers to begin with,” he told me this morning via email.

For me, it is a sad situation. I lived in San Diego for 11 years, and occasionally did consulting projects for the newspaper. UT San Diego always had innovative online projects going on, and several strong leaders at the digital helm. It got deeply involved in email marketing services, online directories, Spanish language media, hyperlocal editions, premium iPad editions, video services, mobile headlines, entertainment publications, prepaid deals and loyalty services. But in the end, none of it seemed to matter very much.