McClatchy 2Q 2009 Online Results: Revenues Down 2.9% Because of Employment Advertising

Online highlights from McClatchy’s second quarter 2009 results unveiled yesterday:

“McClatchy continues its transition to a successful hybrid print and online company. Our digital audience continues to grow impressively. Average monthly unique visitors to our websites were up 30.1% in the second quarter following 26.7% growth in the first quarter of 2009. Still, the recession is impacting our digital business. Our digital advertising was down 2.9% in the second quarter of 2009, hurt particularly by declining employment advertising. Excluding employment advertising, which has declined nationally both in print and online, our online advertising revenue grew 24.7% in the second quarter of this year.

“Our digital performance has been aided by ownership stakes in CareerBuilder, Cars.com, and Apartments.com, leading companies in the digital classified advertising arena. And our growth in digital retail advertising of 50.7% in the first half of 2009 is fueled in part by our partnerships with Yahoo! and other technology companies.

“As we continue our successful migration to a multimedia company, we are less vulnerable to print declines and the secular shifts of advertising to digital media. Digital advertising represented 16.5% of total advertising in the second quarter, up from 11.8% in the second quarter of 2008. In June, digital advertising represented 17.3% of total advertising.

via McClatchy Reports Growth in Second Quarter 2009 Earnings – Yahoo! Finance.

What it means: McClatchy, the Sacramento newspaper publisher, reported better than expected profits even though ad revenues fell more than 30%. Cost-cutting measures (severe layoffs and salary reductions) contributed to the results. Interesting to see that online revenues are up a very good 24.7% if you exclude employment ads. Also interesting: 17.3% of their total revenues came from online in June.  McClatchy is the third-largest newspaper publisher in the US. They bought Knight-Ridder in 2006.

I Have Seen the Future of Local Media

I have seen the next evolution of local media…

Yes, I have. And why am I so sure? Because I’ve seen it happen before and it’s about to happen again.  I hope you’re sitting down comfortably with a good coffee because it’s a long blog post (more than 2300 words!). But stick with me, it’s worth it!

Let’s go back to 2003. I’m running Yellow Pages Group’s online strategy and business development. YPG owns the leading online directories in Canada. At the time, our focus is on building the best “online directory” site in Canada (called Internet Yellow Pages or IYPs in the US). “Online directories” at the time are characterized by the infamous 4-fields search boxes (category/heading, business name, city, province/state) that basically recreate the print Yellow Pages experience online. Not always a very good user experience but all major directory publishers worldwide offer the same thing. It’s the design standard/convention for online directory sites.

Yellowpages search box 2003

According to general perception then, our biggest online competitor was Superpages.ca, owned by Telus, a major telco from Western Canada. Superpages was entering Yellow Pages Group territories (Toronto, Montreal, etc.) with print books and monopolizing a lot of the attention. In 2003, I had been using Google as my home page for at least three years. It seemed to me like it was the best entry door to Web content and Google’s traffic and revenues had been growing like crazy. Remember, this is pre-IPO (August 2004) and pre-Google Local (September 2004). Except for early adopters, small merchants were not yet talking about Google (that will come post-IPO) and directory publishers didn’t see Google as a threat.

Google Local 2004 search boxes

But consumers were clearly starting to use Google for local searches and every time I used it, I found the experience was satisfying and the results were quite relevant.  I came to the realization that Google had just created a new design convention around “Web search” (simplified user interface, focus on results relevancy) but the train had left the station and it meant the whole industry had to play catch-up. In Canada, Superpages.ca is not important, Google is. Over the next three years, the entire online team at Yellow Pages Group would work at transforming our online strategy around local search. That included the delivery of a streamlined YellowPages.ca user interface (seen here on archive.org when first launched in 2006), an improved search technology, the introduction of enhanced content in search results (via digitized ad content, etc.), better search engine optimization for the site and a content partnership with Google for the launch of Google Local Canada. Over this transformative period, YPG becomes better at being user-focused which is what made Google’s success. Over the same period of time, the whole directory publishing industry worldwide metamorphoses itself into local search hubs.

The rise of social media

Fast forward to September 2006, I start writing about local search and social media. Blogs have been very popular for a couple of years allowing a new level of self-expression. Online social media as we know it today still hasn’t exploded but I get the feeling it’s going to be important. I remember when I first joined Yellow Pages Group (back in 1999 when it was still called Bell ActiMedia), someone told me word-of-mouth was the biggest source of leads for small businesses. That stuck with me. What if social media was able to create this enormous word-of-mouth machine? What if consumers become able to ask questions, share recommendations and have discussions on local places on a massive scale? It could happen but, at that time, I have no idea yet what form it would take.

In 2006, I’m already a heavy user of Linkedin but have missed the boat completely on MySpace. Facebook is growing but is still not open to everyone. They have just introduced their newsfeed feature (more on that later) and Twitter’s will slowly surface in March 2007 at the SXSW conference. In July 2007, Silicon Valley starts to get excited about Facebook. That same week, after studying the activities of famed blogger Robert Scoble, I understand what he’s doing with Facebook and what that means. An individual can become “media” by broadcasting his activities and having many friends/followers/fans. In August 2007, I reflect on the fact that the web is becoming a big word-of-mouth machine because of human activity.

In October 2007, Friendfeed, co-founded by Google Maps lead developer Bret Taylor, launches. They’ve taken the newsfeed element of Facebook and made it a standalone feature calling it a lifestreaming service. In March 2008, Twitter explodes. I write about how they’re slowly becoming “the new Facebook“. In June 2008, following an experiment I did on Twitter and Facebook, I see how practical it is to “ping” your social graph (i.e. your network of friends) when you have questions or needs. It works very nicely when you’ve “collected” hundreds of friends/people/fans around you.

Fast forward to this year. March 2009, Facebook redesigns its home page to make it more Twitter-like, with a focus on the activity stream. Beginning of April, Friendfeed also redesigns its home page and integrates real-time updates. Twitter, Facebook and Friendfeed all feel strangely similar now. I believe we’ve now reached a new gold standard in terms of display and interaction with real-time conversations, which means that consumers will be now be expecting a similar user experience in this context.

Twitter Facebook Friendfeed user interface identical

Small merchants have started creating a presence on Twitter. You can already find bars, restaurants, pizza places, lawyers, plumbers, bakeries, etc. These technology early-adopters are joining the conversation, the same way early small merchant adopters started doing local advertising on Google back in 2003.

New “‘Marketplaces”

With Facebook and Twitter, we’re clearly seeing the emergence of new “marketplaces”, where people and companies/brands meet to discuss, to share links (including news) but also to “buy” and “sell”. To the foreign eye, they’re noisy, unruly and useless but I think they are a modern version of souqs. According to Wikipedia, “souqs were more than just a market to buy and sell goods; they were also major festivals and many cultural and social activities took place in them”. Sounds familiar?

Souq

Flickr picture by khalid almasoud

Need more proof? Michael Bauer found a 1901 New York Times article talking about a new growing technology called the telephone. “No doubt the telephone is used unnecessarily, and sometimes abused. Its sharp alarm jars on the nerves, and its incessant and insistent demands upon the attention of the subscriber who is much in request are (…) very wearing” but it adds “to dispense with it now would be to necessitate the reorganization of our business system”. As Bauer says, “Sounds like a twitter morning.”

Traffic explosion

In any case, consumers seem to love their Twitter and their Facebook. According to ComScore, “Worldwide visitors to Twitter approached 10 million in February (2009), up an impressive 700+% vs. year ago” while Facebook welcomed its 200 millionth active user in April 2009. Again according to ComScore, Google’s monthly searches grew by 42% to 9.1B in the last 12 months in the US (March 08 to March 09). So, they still have an excellent growth rate but I’d be curious to know how many “interactions” (a proxy for searches) happen in one month in Facebook and Twitter. This Techcrunch article gives us a better idea by indicating that “more than 850 million photos (are) uploaded to the site each month”.

twitter-trend-apr09

Fighting yesterday’s battle?

Let’s go back to Yellow Pages publishers. A few weeks ago, RHD presented me their new DexKnows site. I was impressed by the evolution of the site with its simplified user interface (search engine-like) and better taxonomy. But at the same time, as I wrote in my post, “it also made me realize that the industry is still very much looking at Google (or Yahoo or MSN) as the local search benchmark.”  I then wondered out loud: “instead of doing incremental innovation, how do you leapfrog search engines? In other words, what is keeping Google up at night? The answer to that question leads to a possible new strategic direction.  Community, humans, social interactions, marketplaces are what’s keeping Google up at night.” As I said in this interview with Michael Boland from the Kelsey Group, “There have been many recent IYP redesigns that have been drastic improvements but I’ve started to wonder if they aren’t fighting yesterday’s battle. All IYPs are innovating on an incremental fashion but there is no game changing innovation going on.”

Where do we go from here?

What is it then? I think you can guess where I’m going. I know “newsfeeds” are a key element of that brave new real-time world. They’re addictive and allow for content discovery. I know “real-time conversation” is a crucial component as well. After all, social media is all about communication. But I was missing one piece of the equation. That piece was “real-time search”. I discovered its tremendous value when I installed this GreaseMonkey script that integrates Twitter search results on top of Google search results. For timely queries in Google, the Twitosphere offers much better results. For example #1, see this screenshot of a search query when author JG Ballard died a few weeks ago. The Twitter results gave me relevant links to find out more information about his death. You need to scroll down the page to find Google News results that mention the writer’s demise. The screenshot for example #2 was taken when we learned that scientist Stephen Hawking was gravely ill and had been taken to the hospital. Once again, Google failed to provide me timely, relevant results.

What if you were to apply these three fundamental social elements to local media? The newsfeed would allow for publishing of local activities and discovery of new places to go to, important local news and cool people that share similar tastes. The real-time search would allow for structured search on recent activities, showing consumers where the action is happening in their city. Finally, the real-time conversation would enable consumers and merchants to engage in conversation, increasing user satisfaction and generating new leads for businesses. Sounds like this would be a cool and brave new local world isn’t it? This is a game changer and represents a major opportunity for all local media publishers. Ok now, I’m warning you, I’m switching to pitch mode!

Introducing Praized Media’s newsfeed, real-time search and conversation platform

My company, Praized Media, was created to help media companies tap into the growing potential of online word-of-mouth and social media. I believe the future of local media is right in front of our eyes and that if we act now, we can maintain (and even increase) the relevancy of media companies in the next years. We’ve developed four key enterprise-class social modules that can be integrated within an existing platform or be used to create a brand new social destination site.

1) The Local Buzz local newsfeed (integration of a real-time local activity stream including user and advertiser actions, advertising, editorial content, classified ads, weather, events, etc.). Praized will create an activity stream out of your current content and ideally, that feed should be displayed on the home page of your main site.

The Praized Newsfeed  - excerpt

Click for larger view

2) Real-time search integration within existing local search platform. This module provides structured data search results based on the newsfeed activity. It enables the integration of the most recent activities around a specific keyword/merchant name in a specific geographical area. It gives user the freshest results around specific keywords.

Real-time Local Search Integration-small

Click for larger view

3) Real-time users and merchants communication module. This module provides the ability for consumers and merchants to start posting short-form web messages (à la Twitter) in the newsfeed located on your home page. Consumers can “follow” other consumers or merchants and can engage in real-time asynchronous conversations.

merchant message

Merchant Profile Page with Activity Stream - small

Click for larger view

4) Answers (a “local” Question & Answer service, including a social network broadcast mechanism). Consumers can ask questions to the community and to their Facebook/Twitter friends and all answers come back to a unique page. Merchants can even join the conversation!

local-questions-answers-yellow-pages-answers

Click to see actual implementation

What it means: Ten years ago, Google invented a new paradigm for search. The local media industry was blindsided by this upstart which has now become a juggernaut. Back in early 21st century, quick industry reaction would have made the fight more even-handed. Fast-forward to now, Facebook, Twitter and Friendfeed have created a new gold standard for real-time conversations and search. Consumers are using them in drove. Small merchants are creating a presence on those sites and joining the conversation. These sites have become marketplaces but they have yet to fully discover their local angle. The rise of social media online is a game-changing opportunity for local media publishers. People are discussing, sharing and recommending to each other news to read and places to visit. Millions of word-of-mouth conversations about local places are occurring every day on the Web, yet they are not happening on major media portals.

I firmly believe that this is going to be the gold standard for local media and that, in the next three years, all major Yellow Pages, newspaper publishers and possibly magazine, radio and television Web site will serve their content via a newsfeed on their home page. They’ll show real-time community activity that way and will allow conversations between all local stakeholders (consumers, merchants, journalists, politicians, etc.). Praized Media might not power them all but we’ll do our part to make this change happen.

I leave you with this perfect quote from Robert Scoble, famed Silicon Valley thinker. He thinks the future of local is in real-time. He says ” You’ll find all sorts of things this way in the future. How about a restaurant? A plumber? A TV repair shop? A lawyer? Consider that you’re walking down the street with a future version of Facebook or Twitter or friendfeed in your hand. You’re looking for a restaurant. Which is going to be able to bring back the best restaurants that your friends care about? That requires having metadata to study. That’s why Facebook copied friendfeed’s likes so that it can come back and say “there are four restaurants that have more than 20 likes from your friends within walking distance.” Translation: the future hasn’t been built yet. That’s why Twitter has not won the entire game yet. That’s why this is a fun industry to watch.”

Update: many people have asked me for a portable/printable version of the article. I have created an acrobat (.pdf) version that you can download here.

Analysis: "Online news aggregators – friend or foe?"

“Online news aggregators – friend or foe?” via Hitwise Intelligence.

Like many categories, search is one of the main sources that drive traffic to the News & Media category, referring nearly 22% of visits in March 2009. Branded searches for news properties represent a large share of the top search terms driving traffic to the category. Another major source is the front pages of portals such as Yahoo! and MSN, including the personalized versions like My Yahoo and My MSN. In comparison, social networking websites and blogs referred a far smaller share of visits to News & Media websites from links or references posted on their pages.

Mini what it means: as I blogged about a few days ago, many newspaper organizations are questioning the role of Google (and other search engines & aggregators) in the Web ecosystem. Hitwise has data that shows that aggregator (if they respect “fair use”) create traffic value in the ecosystem.  One question mark though: are aggregators building their brands to the detriment of news outlets? I don’t think anyone has answered that question yet.

Shared Link: "Google CEO Eric Schmidt to newspapers: Innovate your way out of it"

“Google CEO Eric Schmidt to newspapers: Innovate your way out of it” via the  Los Angeles Times

In order to move themselves forward, he said, newspapers will have to get used to the idea that they are not just generators of trusted, professional content, but also aggregators of the new kinds of information the Web has enabled — the collectively edited knowledge structures like Wikipedia, and user-generated information like blogs, images and online video.

“In that model, newspapers become platforms for the technology to use their services,” Schmidt said, “to build businesses on top of them, and also to interlink — hyperlink — all of the different information sources that end-users will take.”

(…)

“One of the fundamental problems with the Internet is that it doesn’t respect traditional scarcity structures. It’s very hard to hold information back.” In order to create value from content that can be difficult to control, he said, “We think the answer is advertising.”

Update: Greg Sterling, over at SearchEngineLand, has the verbatim of all questions that were asked by the audience.

Mini-what it means: newspapers have to become curator of content, they have a trusted consumer brand they can use to keep readership. Newspapers have also the opportunity to become news “platform”. Many newspaper groups are playing with the concept of APIs but it needs to become central to their strategy.  Finally, as Schmidt said, because of the lack of scarcity online, advertising will probably be the best way to monetize news.

The Innovator's Dilemma

Yesterday, Sophie Cousineau, a business journalist from Montreal’s La Presse, offered her explanation as to why Barack Obama had to fire Rick Wagoner, the CEO of [praized subtype=”small” pid=”597ce70258167de10a3ead0ceea0179355″ type=”badge” dynamic=”true”] (GM). She talked about some of Wagoner’s past successes but also the fact that he hung on too long to his strategy that centered on SUVs and trucks.

It struck me that with the GM situation, we are facing a perfect example of the innovator’s dilemma. Coined by Clayton M. Christensen in the book of the same name, the innovator’s dilemma is “a theory about how large, outstanding firms can fail “by doing everything right.” The Innovator’s Dilemma, according to Christensen, describes companies whose successes and capabilities can actually become obstacles in the face of changing markets and technologies. ” (source: mit.edu) Christensen also talked about “disruptive technologies”.

In GM’s case, they were so focused on their high-profit margin products (SUVs, trucks, minivans) that they ended up being blindsided when the easy credit required to buy these expensive vehicles evaporated and the price of gas went through the roof.  It also reminded me that sometimes you need to kill your cash cow before someone else does it for you (or said otherwise, it’s better to cannibalize yourself than have someone else do if to you).

Which brings me to traditional media (you knew I was going there, were you?).

Newspapers traditionally have been huge cash-generating vehicles but they now have clearly met disruptive technologies both on the reader and on the advertiser side. Basic news is a commodity and aggregators (like Google News) serve as destination site. On the advertiser front, classifieds revenue has been completely disrupted via the free model (pioneered by [praized subtype=”small” pid=”c51b8fbbdf9041e28ba547a1644985a2c4″ type=”badge” dynamic=”true”]) and online eyeballs do not monetize as well as print readers. That leaves an industry that’s questioning itself with many people wondering what will happen to it in the future.

Directory publishers have very good profit margins but, for most of them, 80%+ of their revenues still come from the print platform. The good news is there hasn’t been too many disruptive technologies yet but you always have to wonder what will blindside the industry. Social media and mobile should be top of mind IMHO.

TV networks and cable providers are still enjoying a successful ride with broadcast/cable television and are slowly starting to think of a post-broadcast world. Disruption there will clearly come from the ability for viewers to go à-la-carte on the Web (either through legit or pirated channels) and link back to their television set. A startup like Boxee is trying to crack that nut.

What it means: the GM and the newspaper industry examples definitely show us that smart people, doing what feels like the right thing, can lead whole industries to catastrophe. What should media companies do? As Clay Shirky said recently “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did…”

The Innovator's Dilemma

Yesterday, Sophie Cousineau, a business journalist from Montreal’s La Presse, offered her explanation as to why Barack Obama had to fire Rick Wagoner, the CEO of [praized subtype=”small” pid=”597ce70258167de10a3ead0ceea0179355″ type=”badge” dynamic=”true”] (GM). She talked about some of Wagoner’s past successes but also the fact that he hung on too long to his strategy that centered on SUVs and trucks.

It struck me that with the GM situation, we are facing a perfect example of the innovator’s dilemma. Coined by Clayton M. Christensen in the book of the same name, the innovator’s dilemma is “a theory about how large, outstanding firms can fail “by doing everything right.” The Innovator’s Dilemma, according to Christensen, describes companies whose successes and capabilities can actually become obstacles in the face of changing markets and technologies. ” (source: mit.edu) Christensen also talked about “disruptive technologies”.

In GM’s case, they were so focused on their high-profit margin products (SUVs, trucks, minivans) that they ended up being blindsided when the easy credit required to buy these expensive vehicles evaporated and the price of gas went through the roof.  It also reminded me that sometimes you need to kill your cash cow before someone else does it for you (or said otherwise, it’s better to cannibalize yourself than have someone else do if to you).

Which brings me to traditional media (you knew I was going there, were you?).

Newspapers traditionally have been huge cash-generating vehicles but they now have clearly met disruptive technologies both on the reader and on the advertiser side. Basic news is a commodity and aggregators (like Google News) serve as destination site. On the advertiser front, classifieds revenue has been completely disrupted via the free model (pioneered by [praized subtype=”small” pid=”c51b8fbbdf9041e28ba547a1644985a2c4″ type=”badge” dynamic=”true”]) and online eyeballs do not monetize as well as print readers. That leaves an industry that’s questioning itself with many people wondering what will happen to it in the future.

Directory publishers have very good profit margins but, for most of them, 80%+ of their revenues still come from the print platform. The good news is there hasn’t been too many disruptive technologies yet but you always have to wonder what will blindside the industry. Social media and mobile should be top of mind IMHO.

TV networks and cable providers are still enjoying a successful ride with broadcast/cable television and are slowly starting to think of a post-broadcast world. Disruption there will clearly come from the ability for viewers to go à-la-carte on the Web (either through legit or pirated channels) and link back to their television set. A startup like Boxee is trying to crack that nut.

What it means: the GM and the newspaper industry examples definitely show us that smart people, doing what feels like the right thing, can lead whole industries to catastrophe. What should media companies do? As Clay Shirky said recently “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did…”

Some Perspective on the Newspaper Industry

Today’s edition of USA Today has a great article summarizing the opportunities and challenges facing the newspaper industry. Some of the important highlights and data points:

  • “At least one city — possibly San Francisco, Miami, Minneapolis or Cleveland — likely will soon lose its last daily newspaper, analysts say.”
  • “About 80% of newspaper revenue comes from advertising, and the Newspaper Association of America expects those sales to drop 9.7% in 2009 to $34.2 billion, after falling 16.5% in 2008.”
  • In addition to the closing of the Denver Rocky Mountain News and the transformation of the Seattle PI into an online-only venture, “The Detroit Free Press and The Detroit News announced plans to cut home delivery to three days a week beginning March 30 and urged readers to go online to follow the news on other days.”
  • “Virtually every major newspaper announced staff cuts.” and “Those keeping their jobs have seen salaries cut.”
  • “Most large publishers also are straining to pay off heavy debt they took on before the economy fell into a tailspin.”

But not everything is doom and gloom:

  • “Nearly half of all adults read a newspaper every day and spent $10.5 billion last year to do so.”
  • “The average newspaper generates about a 10% profit margin.”
  • Newspapers in large urban areas are suffering more than the ones in smaller cities
  • Newspaper organizations are experimenting. Those “include The New York Times‘ plan to enlist journalism students to help cover some neighborhoods in Brooklyn and New Jersey. The East Valley Tribune in Mesa, Ariz., recently began to offer free home delivery four days a week to neighborhoods with families that appeal to advertisers.”

Some additional data

  • Newspapers ” typically charge about $25 for every 1,000 people who might see an ad covering one-third of a page.”
  • “About 85% of a newspaper’s costs go to things such as presses, paper, ink and trucks.”

What it means: it’s the first article I’ve seen in the last few months that’s really balanced and talks clearly about the issues facing the industry, some of the opportunities available and thoughts on the future. A must-read for anyone wanting to catch up to the industry.

New York Times Company Q4 Results: Classifieds and Display Ads Revenues are Down

Before I talk about the New York Times Company results, a quick note. As we plunge deeper into a recession, online and offline media companies are impacted but it’s difficult to tell what will be the overall impact of this economic slowdown.  Since last week, I’ve started discussing quarterly conference calls from media companies in this blog as I feel this is where we can extract the most valuable information in the short term (and I’m a bit tired of Techcrunch covering every little new Twitter application out there…  ) Hope you like this direction!

Now, back to the NYT Q4 results unveiled yesterday (transcript at Seeking Alpha).  Here are some interesting insights from Janet Robinson, President and CEO and Martin Nisenholtz, Senior Vice President, Digital Operations

On advertising revenues:

The NYT saw “a weakening of revenues as the economy declined and advertisers pulled back on placements.” (…) “Total revenues for the company declined 10.8%, with ad revenues down 17.6%”

“Classified advertising declined in all three major categories; real estates, recruitment and automotive.” (…) “Half of the declines are attributable to one category across the company and that’s help-wanted, so it’s a very targeted decline.”

On circulation revenues:

The continued strength of our brand was evident in the willingness of our readers to pay higher prices for our newspapers, which in turn is reflected in the growth of our circulation revenues.” Circulation revenues were up 3.7%

On digital revenues:

“Digital revenues decreased in the quarter, as online marketers reduced display ads in response to deteriorating business conditions.” (…) “For the year, our online ad revenues at the News Media Group grew 8.7% with NYTimes.com significantly outpacing the industry in the growth of its display advertising.” (..) “At the About Group, total revenues decreased 2.9% to $29.8 million, as display advertising softened. Cost-per-click advertising rose in the mid single-digits.” (…) “In total, internet businesses accounted for 12% of the company’s revenues in the fourth quarter versus 11% in the 2007 fourth quarter.”

On display ads:

“The notion that we’re seeing or we have seen an increasing amount of inventory on the marketplace and we’ve seen that pouring on for the last year or so through the social networks and through other what I would call, non-traditional content companies. And then the second thing that has happened this year has been the real onslaught of the advertising network business. There are over 300 ad networks in the space now. And so, the combination of those two things has put some pressure on rate.”

On the future:

“To-date in January, the greatest decline in print advertising has accelerated from what we saw in December, while that of digital is similar to last month.”

What it means: classifieds and display ads revenues seem to be very soft in this economy.  Cost-per-click seems to be holding (we saw the same insight from the Yahoo Q4 call). Online might be holding its own better than print. The increase in circulation revenues makes me think relevant content from trusted brands is still key.

Can a Hulu-Like Play Save the Newspaper Industry?

I was re-thinking about my recent blog post about the importance of Hulu for the TV industry.  A strong “national” brand unifying various media players under the same umbrella while allowing individual players to have their own unique “brands”. For example, you can find The Colbert Report on Hulu but you can also find it on the Comedy Central site.  You can find it on CBS’ TV.com also (powered by Hulu) and on DailyMotion (via an agreement with Comedy Central). You can possibly find illegal versions on other video sites and illegal copies on torrent sites as well. In Canada, you’ll find Colbert on the CTV site.

So, having a “national” hub that aggregates content from, what common sense would call, “competing” players doesn’t prevent other “national” and “regional” brands to co-exist with the same content and it allows TV networks to compete on an equal footing with “national” video portals like YouTube. That works as long as industry players have a stake and a say in the evolution of the “national” hub, and that’s the case with Hulu.

Seemingly unrelated, Google just announced that they were pulling the plug on their Print Ads initiative (where Google was reselling newspaper advertising to their network of advertisers). Many people were watching and hoping this might help support print newspaper ad revenues. It was clearly not going anywhere.  Google said in their announcement “We believe fair and accurate journalism and timely news are critical ingredients to a healthy democracy. We remain dedicated to working with publishers to develop new ways for them to earn money, distribute and aggregate content and attract new readers online.” Yahoo! also has agreements with newspapers to help them monetize their online traffic via a unified ad platform called APT. This seems to be going well but again, newspapers don’t necessarily control their destiny in that agreement.

Now, this got me thinking about the newspaper industry ecosystem in general. Players in this space usually compete with other “regional” players offline (New York Times, New York Post, etc.) but are also competing against “national” brands online, usually aggregators (for example, Google News). I just realized that…

TV industry challenges = Newspaper industry challenges!

I believe it might be time to build a new national brand and platform in the newspaper industry. A “Hulu for news” that integrates national and local news from all major newspaper outlets in the US, citizen journalism content and social media tools. A startup that’s staffed with the most web-savvy new media people, that understand where traditional media comes from and where it’s going but that are not locked in old paradigms. Other interesting technologies for that venture would be the Topix.com platform and content and the Oodle national classifieds platform. This initiative would allow syndicating of news and ad content through widgets and APIs. Content could be displayed on “local” newspaper sites and re-syndicated to smaller sites. I’ve read somewhere about similar past initiatives that failed (can’t find the source now) as offline competition was creating too much of a hurdle for anyone to align. But I think the industry might be at that critical juncture point where they absolutely need to agree to cooperate online while competing offline. Who will take the leadership of this initiative?

Update: Jemima Kiss from the Guardian says “if newspapers start thinking like startups, they might just have a chance.” I agree.

Seth Godin Says "Time to Start a Newspaper". He's Right!

I’m usually not a big fan of Seth Godin’s visions and ideas but in a blog post published yesterday, he stumbles upon a BIG idea. “Time to start a newspaper” he writes in the title of his post. You can stop reading there, the rest of the post is less interesting (he talks about idle real estate agents (?!?) having time to start a paper and he suggests a way to execute the idea), but the title contains a brilliant insight.

Yes, it is the right time to start a newspaper.

Yes. Even if we read dramatic newspaper industry news every week (like Hearst Corp putting the Seattle Post-Intelligencer up for sale “saying that if it can’t find a buyer in the next 60 days, the paper will close or continue to exist only on the Internet.”)

Think about it. Why are newspapers struggling? Is it because the need for local information is going away? Au contraire, I would say the need for local information is higher today. Look at initiatives like Huffington Post (who recently launched a Chicago version of their site) or Outside.in (who aggregates local blog posts) or Silobreaker (an aggregator of online information I covered here) or even unsung individual placebloggers throughout the world! Many people have started to re-think the newspaper industry.

Now, if you work in the newspaper industry today, you might think the sky is falling but once-in-a-lifetime moments like the one we’re going through are usually the best times to change the system. As I wrote last August, “I’m not convinced that most traditional media organizations will just rollover and die. I still see tremendous (but underutilized) assets in most traditional media firms.” I still believe it but your call to action is:

Yes, it is the right time to re-invent the newspaper.

If you could re-invent the newspaper today, what would you do differently?