How newspapers can face online rivals: Is it too late to cooperate?
In the same vein as my prior posts on media, the issue of splintering audiences are a problem for music, television, and print. The could there be a need for all media to operate on a consolidated number of platforms? One for print media, one for music (iTunes anyone?) and one for television? Is it economically feasible, what does it mean for competition among labels? Big questions here...all I know is that litigation won't do a thing to slow down the digitization and capturing of data on devices.
How newspapers can face online rivals
Is it too late to cooperate?
Bambi Francisco [MarketWatch] | POSTED: 05.23.06 @09:31
In 1846, as the new technology of the telegraph system was catching on, newspapers pooled their resources to create a more efficient news distribution system.
Jim Kennedy, vice president of strategic planning at the Associated Press, which was born out of those efforts, says newspapers are facing a similar challenge today. "Fast forward 168 years later," Kennedy told attendees at a recent Las Vegas gathering, "that's the situation we face today."
Translation: It's time for newspapermen to stop fighting among themselves and cooperate if they want to survive in the era of splintering audiences, and search-engine news gateways, such as the popular news services created by Yahoo Inc. (YHOO) and Google Inc. (GOOG).
Yahoo News has held the No. 1 news property spot on the Web for the last eight months. It commanded 25.7 million unique visitors in April, up 10% from last year, according to Nielsen//NetRatings.
Google News was the No. 11 news site last month, with 9.7 million unique visitors, up 19% from last year.
Meanwhile, Knight Ridder Digital saw its audience base grow 13% to 10.6 million unique visitors while Associated Press grew a paltry 1% to 6.1 million unique visitors.
AP's Kennedy was spoke Friday alongside Tom Mohr, President of Knight Ridder Digital and Colby Atwood, vice president at Borrell Associates, a consulting firm specializing in local media. The panel was part of the Interactive Media Conference, hosted by Editor & Publisher and Mediaweek.
The panel was titled "5-year forecast: See the Future Today," but from the comments made on stage, it might as well have been "The final days of newspapers."
For offline newspapers, the writing is on the Web.
Email delivery of national and niche news on our computers or on our BlackBerry devices has made it less of a priority to pick up a printed newspaper, especially when traveling. Why bother with the added weight?
In 1949, newspapers accounted for 37% of the advertising market in the U.S., according to Atwood. Today, they account for 17% to 18%.
Given the choices people make on the Web, newspapers -- try as they might -- likely never will come close to having the same market share online that they once had in the offline world.
Atwood said that, surprisingly, newspapers still account for 35.8% of the online local ad marketplace, which he estimates to have been $2.4 billion in 2005.
About 90% of advertisements in newspapers are local. Increasingly, those offline dollars are seriously at risk.
"There's a big race to go after local ad dollars," said Atwood. "I'd say newspapers will likely lose their share," he said. "They're not as well organized as the large dot-coms."
Newspapers playing nice?
Having spent more time at Silicon Valley conferences with Internet companies and startups, I have to say that this gathering was relatively sobering. Attendees included executives from newspapers and publications with an online presence who wanted to know how to survive against the rise of social networks, vertical or niche-oriented Web sites, and those darn search engines, Google, Yahoo, and Microsoft (MSFT).
Don't get me wrong. The panelists were not sounding the death knell of newspapers. But they were provocative in their identification of the problems plaguing the newspaper industry and suggestions for potential solutions.
Mohr's presentation, in fact, came off like a rallying cry. Like Kennedy, Mohr encouraged the news organizations to work together to create economies of scale that take advantage of the same technology, in effect a co-op for newspapers.
"How are you going to get companies, like Dow Jones, to work with AP and Knight Ridder?" I asked Kennedy? "And, what's the incentive for us?" I added. (Dow Jones & Co. owns MarketWatch, the publisher of this column.)
News organizations could theoretically send their feeds into a system own by Associated Press, Kennedy explained. There would be technology to rank those stories based by authority.
I didn't have the heart to tell Kennedy that newspaper companies don't have much of a competitive advantage over engineering-powerhouses when it comes to creating search technology. But I did ask how he would propose this theoretical newspaper system measure "authority?"
"That's the question," said Kennedy. "We all need to think through how content is ranked."
Even with such a co-op, Google News would still exist, I argued. That is, of course, unless news organizations could show that their ranking system would be immeasurably better, which I'm a bit skeptical about.
Another suggestion, offered by Mohr, was to have newspapers operate on one technology platform to create efficiencies of scale. Of course, Mohr would like all newspaper companies to let go of their proprietary platforms and use Knight Ridder Digital's.
Both ideas -- a news search engine and one federated technology platform -- sound interesting. (Other ideas floated about, for anyone interested, included having newspapers step up their search-engine optimization efforts and buy keywords to drive up traffic.)
But it seems they all might be too little too late. Atwood said it best after wrapping up his opening remarks. The "consequences for mass media are... umm, well... troubling."
Bebo gets funding
Benchmark is taking another crack at social networks.
The venture capitalist invested in Friendster back in 2003, when social networks were just getting noticed. But Friendster has not been the success Benchmark would have liked. Instead, News Corp's (NWS) MySpace has become the No. 1 social networking site, and is one of the premier online destinations, rivaling portals.
Not to lose out in this social-networking bonanza, Benchmark just invested $15 million in Bebo, a social networking site that's growing faster than Friendster, and is popular in the U.K., Australia, Canada and New Zealand.
Bebo operates a lean house, with only seven employees in the U.S., and now three more in the U.K. It's profitable on sales that are below $10 million annually. But if Bebo's traffic follows in the footsteps of MySpace and Facebook, ad sales could surge. Facebook is expected to generate about $60 million in sales this year.
Watch for my video interview with Michael Birch, founder and CEO of Bebo on Tuesday.
Separately, if you want to get a job with a technology company outside of college, one way to do so is to create a technology and then sell it. That's what five fraternity brothers did. They started HipCal and sold it to Plaxo.