Daily paper going the way of the milkman

Daily newspaper delivery will go the way of the milkman in a growing number of communities in 2012 and beyond.

Barring a miraculous turnaround in the economy, a sea change in the thinking of media buyers or a late-breaking proclivity for print in the sub-geezer population, publishers in ever more communities are likely to reduce the number of days they provide home delivery – or print a newspaper altogether.

Nowhere is the demise of daily delivery more dramatic than in Michigan, where more than two-thirds of the households will be unable get seven-day service after the end of January.

The rationing began with a bang in 2009, when the two Detroit dailies, the Free Press and the News, stunned the industry by cutting home delivery to just Thursday, Friday and Sunday. Although the Motown metros continue to print every day of the week, anyone wanting a paper on non-delivery days has to fetch one at a retail location.

Unsurprisingly, the Monday-Friday circulation of both Detroit papers plunged between March, 2008, and March, 2011, according to the Audit Bureau of Circulations. The daily circulation of the Free Press in the period fell 54.7% to 168,985 and the daily sale of the News tumbled 51.7% to 90,914. Even though Sunday home delivery continued without pause, the circulation of the Freep (the only title publishing on that day) is down 21.6% at 475,543. The Freep, which is owned by Gannett, and the News, which is owned by MediaNews Group, are partners in a joint operating agreement.

The daily drought is scheduled to widen to other Michigan communities in February, when the Grand Rapids Press, Kalamazoo Gazette, Muskegon Chronicle and Jackson Citizen Patriot reduce home delivery to Tuesday, Thursday and Sunday from their current seven-day schedules. Just as in Detroit, single copies of each newspaper – all of which are owned by Advance Newspapers – will be available to consumers who take the trouble to track them down. In cutting back home delivery, the Advance emphasized the intention to attract more traffic to its statewide digital portal, MLive.Com.

While determined readers for the time being still can buy a daily paper in Detroit and Grand Rapids, there has been no such option since mid-2009 in Ann Arbor. That’s where Advance replaced its seven-day Ann Arbor News with an “online digital media company” called AnnArbor.Com, which puts out print editions on just Thursday and Sunday. Since the change, daily circulation for the print product has slid by 30.8% to 30,422, according to ABC.

If Michigan is ground zero of the un-daily-ing of newspapers, it is far from alone. Johnson Newspaper Group knocked two days off the seven-day print cycle of some of its titles in Upstate New York. Media General cut the publication of its smaller seven-day papers in North Carolina to three days a week. GateHouse Media did the same in Kansas.

Anecdotally, we know there are many more cases across the country. We just don’t know how many. Although you would think that ABC, the industry-supported group that audits circulation, and the Newspaper Association of America, the industry’s principal trade group, would want to keep an accurate count of something as important as the dwindling number of daily newspapers, they profess not to know.

There is no doubt, however, why publishers are throttling their once-prized print products:

A relentless decline in newspaper advertising sales has halved industry revenues since a record $49.4 billion was collected in 2005. Although final ad figures remain to be calculated for 2011, projections based on year-to-date performance suggest that sales last year probably didn’t top $24 billion. This has been catastrophic for publishers historically accustomed to hefty, double-digital bottom lines.

In five-plus years of ever more vigorous retrenchment to salvage some degree of profitability, publishers have trimmed staff, crimped newsholes and outsourced everything from call centers and accounting to production and delivery. With scant behind-the-scenes economies left, publishers now are being forced to make the most conspicuous cuts of all: Reducing the number of days they publish or deliver papers.

The good news, given the increasing shift of consumers to digital media consumption, is that de-emphasizing print necessarily forces publishers to focus on their web, mobile and social efforts. The bad news is that most of them to date have not made impressive strides.

On average, the industry reaps less than 14% of its ad revenues from digital media, according to the NAA. That’s not nearly enough to keep publishing companies healthy if print revenues continue shrinking, as they seem likely to do in the immediate future.

Publishers cutting daily delivery realize the strategy works only if they can build their digital divisions faster than their print businesses shrink. While publishers know this is risky business, the smart ones know there is no Plan B.

© 2012, Editor & Publisher

Newspaper shares plunged 27% in 2011

In a year when the stock market flailed mightily to end up almost exactly where it started, the shares of the publicly traded newspaper companies plummeted an average of 27% in 2011.

Of the 11 publicly held newspaper companies, the stock of only one – the broadly diversified News Corp. – gained ground in the last 12 months. The stock of the publishing-cum-broadcasting company rose 10.7% in 2011 despite the phone-hacking scandal that resulted in the closing of the News of the World and led to questions about Rupert Murdoch's stewardship of the business and the arrests of a more than a dozen former editors and reporters.

The shares of all the rest of the newspaper publishers, as detailed below (click to enlarge image), fell by double-digit rates, ranging from an 11.4% drop at Gannett to a 71.3% plunge at Lee Enterprises, the latter of which averted a potential default by refinancing its debt in the final weeks of the year.

If you take the increase in News Corp.’s stock price out of the mix, the average plunge in newspaper share value last year was 30.1%. This compares with a 5.5% increase in the Dow Jones average of 30 industrial stocks and the flat performance of the Standard & Poor’s 500-stock index, which gained a meager 0.04% after a year of dramatic market swings.

Minus the $45 billion market capitalization of News Corp., the total value of the shares of the 10 other publishers at year’s end was a bit over $10 billion, or less than three-quarters of the $13.9 billion that Gannett alone was worth at the end of 2005, the year the industry set a record for the most advertising sales in history.

Newspaper stocks are significantly underperforming the market for the following reasons:

∷ Newspaper advertising revenues have fallen continuously since peaking in 2005. As reported here, newspaper advertising probably will come in at no better than $24 billion in 2011, or half of the record $49.4 billion in 2005.

∷ Tumbling ad sales mean leaner profits. Average pre-tax profit margins for newspapers, which peaked at 28.5% in 1999, still were a sturdy 24.2% in 2005 but fell to 14.9% in the first nine months of 2011, according to the International News Marketing Association, a trade group.

∷ Eroding profits make it increasingly difficult for publishers to mange the unsustainably high levels of debt that most of them shouldered before ad sales began contracting. (Even though A.H. Belo and E. W. Scripps have no debt, their shares, which fell respectively 45.4% and 21.1% in 2011, could not escape concerns over the long-term future of the industry.)

∷ In hopes of cutting expenses fast enough to shore up their shrinking profitability, publishers are reducing staff, cutting newshole and even eliminating publication days. Consequently, newspapers are not investing in developing the products and services that would enable them to compete with the growing number of digital competitors lusting after local advertising dollars.

In other words, Wall Street is worried that publishers don’t have a plan to protect the diminishing value of their franchises at a time that appealing new technologies and media formats are siphoning readers and advertisers away from their core products.

Newspaper job cuts surged 30% in 2011

The number of jobs eliminated in the newspaper industry rose by nearly 30% in 2011 from the prior year, according to the blog that has been tracking the human toll on the industry for the last five years.

Meanwhile, a separate analysis confirms what most of us already suspected: The proportion of cutbacks was higher in newsrooms than it was for the industry as a whole – twice as high by the calculations I will share in a moment.

First, let’s take a look at the surprising surge of job cuts in 2011, a year that many newspaper people had hoped would be a time of relative stability after five years of successive revenue declines. Instead of steadying, advertising sales slid throughout 2011 and likely will come in at less than half of the record $49.4 billion achieved as recently as 2005.

As publishers scrambled to bring costs in line with diminishing revenues, 3,775+ newspaper jobs were eliminated in 2011, according to Erica Smith, the author of the Paper Cuts blog. The toll this year is nearly 30% greater than 2,920+ cuts Smith reported in 2010.

Smith says “+” because many publishers tend to fudge the numbers when they announce staff reductions. The best Smith can do, as she is the first to admit, is tally whatever hard numbers she gleans from the press – or contained in memos that land in her email. Because many announcements don’t contain numbers, she adds a + to the statistics she assembles.

Given this limitation, it is fair to conclude her statistics understate the number of people who have lost their jobs. But the trend she faithfully has been reporting is unmistakable.

Since Smith began her running count of publishing layoffs in the middle of 2007, 39,806+ newspaper jobs have been eliminated. This represents 11% of the all the jobs in an industry that, according to the Census Bureau, employed 360,633 individuals in 2007.

The worst newspaper layoffs occurred in 2008 and 2009, when, respectively, 15,993+ and 14,285+ pink slips were issued. Newspaper ad sales, the primary source of industry revenues, plunged 17% in 2008 and 27% in 2009, according to the Newspaper Association of America.

While the layoff rate dropped to 2,920+ in 2010, things went in the wrong direction this year, as the rate surged to 3,775+ jobs with two weeks left on the calendar (though most publishers presumably will hold their fire over the holidays).

With publishers trimming expenses to keep pace with contracting revenues, Smith’s site shows that layoffs hit every level of every department. As in prior years, the positions zapped in 2011 range from senior managers and ad reps to advertising artists and pressmen.

Bunches of jobs have been eliminated over the years as publishers consolidated production in shared facilities or outsourced such functions as ad production, call centers and even copyediting and page make-up.

Nowhere has the toll been higher than in newsrooms, where staffing has slipped each year since 2005 to successively new modern-day lows.

Nearly 1 in 3 newsroom jobs have been eliminated since the number of journalists peaked at 56,900 in 1989, according to an annual survey by the American Society of News Editors. At the end of 2010, only 41,600 scribes were left on the industry’s payrolls.

If only a fifth of the cuts identified by Smith in 2011 were in newsrooms, then barely 41,000 journalists will be left at America’s newspapers at year’s end. With the ASNE reporting that 52,600 journalists were on the job in 2007, then the projected newsroom headcount at the end of this year would be 22% lower than it was in 2007.

In other words, the decline in newsroom employment has been twice as great since 2007 as the 11% drop in over-all industry employment.

This also means (as illustrated below) that newsroom staffing now is at the lowest level since the ASNE inaugurated its newsroom census in 1978.

Digital giants closing in on local media

Next year will be the year that the big technology companies go after local publishing and broadcasting businesses more fiercely than ever before. Most local media companies have no idea what’s about to hit them – much less a plan to respond.

Google already has feet on the street from Portland to New York City to sell search advertising and directory listings to small and medium business (SMBs). It is only a matter of time until the company targets ever-smaller markets like Cincinnati. Oops, it looks like it already has. Sales to local SMBs are absolutely the last stronghold for newspapers and Yellow Pages. If Google (and others) move in effectively with low-cost, high-touch services, then local publishers – who long have enjoyed the mastery of their domains and the pricing power it afforded – will be in a world of hurt.

Amazon is well on the way to doing to local merchants and big-box stores what it already has done to bookshops. Not satisfied with introducing the Kindle Fire as a hand-held reading and shopping machine, the company has launched a new mobile app called Price Check that lets you scan a barcode at Best Buy (or any other place) to get a better buy from Amazon before you leave the store, thus skipping the checkout line and avoiding sales taxes in many jurisdictions. Main Street and Big Mall merchants are the primary buyers of local newspaper, radio and television advertising. If Amazon and other digital disruptors (like the nifty Decide.Com price-comparison service) seriously disenfranchise bricks-and-mortar retailers, then local media will suffer right with them. (See also such former major retail advertisers as: Circuit City, CompUSA, Mervyns, et. al.)

Microsoft this month grabbed a lead in the eventual disaggregation of local broadcast and cable TV audiences by adding a host of popular programming services, including Netflix and ESPN, to the Xbox network that reaches some 35 million households. Impressive as the new voice- and gesture-controlled Microsoft console is, the big kahuna – Apple – has yet to roar. Steve Jobs is reported to have said in his dying breath that he had cracked the code of delivering a great experience to the big screen in the living room. Given his iTrackRecord, it’s hard to bet against him, but Google, Sony, Amazon, Netflix and a host of others will. When someone gets Internet-powered TV right – and someone most assuredly will – then local broadcast and cable TV audiences will shatter – and their business models will follow. For an example of how this might play out, consider this: The terrestrial AM-FM radio audience is barely a third as large today as it was in 2000, according to Bridge Ratings, an independent analytics service.

With revenues expected to reach “only” $2 billion this year, Facebook hasn’t siphoned away many local advertising dollars. Yet. But the intoxicating "ME"-ness of its content is carving heavily into the audiences of all traditional media, with Alexa.Com reporting that the average visit to Facebook lasts 21 minutes while the average session at, say, a newspaper website runs 3.5 minutes. It is axiomatic that advertisers will follow audiences, especially since Facebook allows marketers to specify such things as the Zip Code, age, education, marital status, sexual orientation and other specific interests of the target consumer. As is the case with Google’s outrageously profitable AdWords system (which delivers a significant share of the $36 billion in ad revenues the company is likely to book this year), marketers can opt to pay only when someone clicks on a Facebook ad, creating not only superior efficiency but sophisticated analytics that trump “Mad Men”-style marketing with free, actionable and real-time metrics. Not a local media company in the land can compete with the breadth and granularity of the Facebook platform. But, it gets worse: It's only a matter of time until daughters and sons inherit the body shop or mattress business from their dads. Once they do, these next-gen business leaders will turn to Facebook – and not the local media – to find customers among their friends and the friends of their friends. By comparison, the high-priced advertising alternatives offered by most local media companies will be, well, mighty unfriendly.

This is the known territory that local media companies will face in 2012 and beyond. But, as the noted deep-thinker Donald Rumsfeld once said, there are unknowns to contend with, too.

The unknowns are game-changing innovations we can’t conceive. Depending on your generation, try to remember what the world was like before radio, VCRs, mobile phones, the Internet or iPads. These compelling breakthroughs blasted out of nowhere and into the mainstream, roiling everything in their path.

Now, imagine all those things happening at the same time. That’s what the world will look like until further notice. And most local media companies aren't ready.

Making Facebook work for publishers

Last month, we discussed the generous contribution publishers have been making to the dramatic growth of Facebook, a wondrously addictive medium that seems to be commanding ever-greater amounts of time from an ever-larger number of consumers.

Today, we’re going to talk about how newspapers can get Facebook to work as effectively for them as most papers have been working for Facebook.

With roughly half of the U.S. population having at least a passing relationship with Facebook, it is understandable that publishers not only have scrambled to cover the social network’s swift rise but also scurried to create their own environments on Facebook, which they faithfully promote on each and every one of their web pages. Several publishers even have outsourced to Facebook the authentication and publication of comments on their sites.

To date, however, all the free ink and all the free links provided by publishers have produced much more benefit for Facebook than newspapers. Even though the viral nature of Facebook undoubtedly has boosted web traffic for publishers, the financial return in this relationship has been stacked decidedly in Facebook’s favor.

Because newspapers have done almost nothing to monetize their investments in Facebook, Twitter and the various other social sites they nourish with links and content, the social media revenues realized by the newspaper industry this year will amount to no more than a rounding error in comparison to the $4 billion in keyword ad sales that Facebook is expected to book in 2010.

This lopsided arrangement has got to stop for two reasons. First, the social media have such large and deeply engaged audiences that newspapers must find a way of making money off this disruptive new media ecosystem. Second, newspapers need new revenue sources because their core businesses are shrinking.

Fortunately, publishers already know how the media business works: Produce valuable content. Assemble a desirable audience. Sell access to the audience. Make a profit. Repeat.

The way to do this with Facebook is by doing Four Things at Once:

• Discover audiences and their interests. This involves continually searching for Facebook pages, Twitter feeds, YouTube videos, blogs and other media that are operating in the big, wide web beyond your Newspaper.Com site. Leverage the socialness of the social media to ask open-ended questions and run polls to discover what’s on the minds of people in your communities.

• Acquire content and audience. This includes not only promoting the content you produce but also encouraging user-generated content and aggregating content from other digital publishers. Because links are the sincerest form of flattery on the web, the people you link to often will link back to you. You also can build your following by following the people who follow you.

• Share news, videos, contests, offers and more. The magic of the social media is their viral nature. Leverage that behavior by producing a continuous stream of engaging activities that encourage friends to invite friends to read a story, respond to a poll, register for a sweepstakes or share a free music track.

• Make money. While publishers generally have demonstrated some facility with the three previous activities, they have failed miserably at making money off their efforts. The direct ways to monetize the social media are to use them to run ads on your Facebook page for your clients (it can be done without running afoul of Facebook rules but read them carefully) and to create an e-marketplace for selling everything from merchandise to movie tickets.

The most intriguing and perhaps most productive approach for making money off Facebook, however, is for newspapers to take over the social media marketing and advertising campaigns for businesses in their markets.

Fortunately for publishers, this happens to be one of the primary pain points for local businessmen. A recent survey by Forrester Research, the market research company, found that 77% of the mangers of small and medium businesses are concerned about building their social-marketing presence. But nearly all of them say they are so bewildered about what to do and so overwhelmed with the ordinary chores of running their businesses that they want someone to help.

Following the steps discussed above, publishers rapidly can become the trusted social-marketing sherpas that local businesses want. Because social marketing is a never-ending chore of discovering and acquiring audiences and content, such services represent a rich source of new and recurring revenues for newspapers. Social campaign management can be combined with additional services, including direct marketing; web and mobile site hosting, and ad placement on such third-party sites as Google and Facebook.

The few newspapers that have moved wholeheartedly to this so-called agency approach are diversifying their client bases and strengthening their revenues streams at the same time they are reducing their dependence on the sagging print-advertising business. It has made Facebook their new best friend.

© 2011, Editor & Publisher

Newspaper ad sales head to new low: $24B

Newspaper advertising sales this year will come in at less than half the record $49.4 billion achieved as recently in 2005, according to an analysis of the year-to-date performance of the industry.

With industry revenues declining in each of the first three quarters of this year, publishers are unlikely to surpass a collective $24 billion in revenues for 2010. Here’s the math:

After slipping by 9.5% and 8.9% in the first two quarters of the year, print ad revenues took a turn for the worse in the third period, tumbling by 10.8%, according data complied by the Newspaper Association of America.

If you add the total $17.1 billion in sales reported by the industry in the first nine months of this year to the $7.3 billion in revenues achieved in the final quarter of 2010, publishers would be looking at $24.4 billion in revenues for 2011. Given the weak performance in the first part of this year, it is hard to believe newspapers will do as well in the fourth quarter of this year as they did in 2010. It won’t take much of a sales slide in Q4 for 2011 revenues to come in under $24 billion.

The last time newspaper revenues were this low was 1984, when the industry had $23.5 billion in sales. Adjusted for inflation, that sum is equal to $48.7 billion in 2010 dollars.

Although this was the year many publishers hoped the business would stabilize, sales continued to deteriorate alarmingly in almost every category in the first nine months:

:: Retail, the most significant remaining revenue category for newspapers, dropped 8.8% to $8.4 billion in the first nine months of 2011 from the same period a year ago.

:: Classified advertising, which has been battered by online competitors and prolonged weakness in the employment and the real estate markets, plunged 12.9% to $1.2 billion in the nine months.

:: National advertising fell by a bit less than 11% to $2.7 billion in the nine months.

The only bright spot was digital advertising, which climbed 8.3% over the prior year to $2.3 billion.

Unfortunately, digital advertising contributes only a slender 14.3% of publisher revenues. While this is an improvement over prior years, it must be noted that the percentage of the digital revenues is boosted as much by the decline in the denominator (total sales) as by the increase in the numerator (digital revenues).

Barring a Christmas/Hanukkah/Kwanza sales miracle in the fourth quarter, 2011 will go down in publishing history as the most disappointing for publishers since the wheels started coming off the industry in 2006.

This year was the year that many publishers believed an improving economy would halt, if not reverse, the revenue slide that commenced in the spring of 2006 and hasn’t abated since. Technically, the economy did rebound in 2011, though not from the perspective of the millions of unemployed individuals and foreclosed homeowners. But the uptick, such as it was, bypassed newspapers.

Given the disappointing way things turned out, most publishers are bracing for further deterioration in 2012 – and nipping and tucking their budgets as the new year approaches. Not a fun way to spend the holidays.

Romenesko didn't do anything wrong

Twelve years ago, the Poynter Institute hired Jim Romenesko to aggregate interesting and important stories about the world of journalism. Yesterday, he was pressured into premature retirement for leaving out a few quotation marks while doing it.

What the hell was Poynter thinking? The priggish and self-righteous individuals who hustled Romenesko out the door for this flimsy technical infraction owe him a major apology.

Romenesko pioneered a legitimate new journalistic format – and became a daily reading requirement in the process – by aggregating links to articles across the web that would, and should, be of interest to journalists and those of us who care about how our news is produced.

After arising every morning at an ungodly hour at his home in suburban Chicago, Romenesko culled key articles from the web and then published them in a terse, reader-friendly format that included a headline, prominent links to the original story and a few lines describing the article and why it was important.

Evidently weary of all those early wake-ups, Romenesko planned to retire by year’s end from the blog he created and sold to Poynter a dozen years ago. Instead, he resigned under pressure late yesterday for the goofiest reason you could imagine.

The kerfuffle that led to Romenesko’s abrupt departure from his eponymous blog was triggered by an inquiry from the Columbia Journalism Review that accused Romenesko of failing to put quotation marks around some passages from articles that he abstracted on his blog.

While it indeed would be an ethical and a journalistic breech for a writer to lift sentences and paragraphs from another article and pass them off as his own, Romenesko did no such thing. The whole point of his blog was to aggregate articles from other sources. The format of his blog left no question that he was abstracting the work of others and prominent links to the source of every item left no doubt as to their origin.

Even in the absence of quotation marks, no reasonable person – repeat, no reasonable person – could possibly conclude that he was doing anything other than what he did.

And he did it very well. At a time when the economic foundations and practice of journalism are being rocked by new technologies and disruptive publishing models, Jim Romenesko has been the cop on the beat, reporting the news and trying to keep us all honest.

He did an outstanding job. And he deserved a far better send-off than this.

Publishers need to focus on Facebook

Facebook is perhaps the most disruptive of the many powerful forces to rock the traditional media since the Internet burst into the common consciousness in the mid-1990s.

So, stop thinking about Facebook as one of the many projects on your endlessly expanding digital to-do list and start focusing single-mindedly on ways you can turn this captivating new medium to your advantage.

The addictive appeal of the leading social network is shifting ever-greater amounts of audience away from the traditional media channels. Facebook now claims 750 million “active” users around the globe and attracts nearly 1 billion page views per month. In mid-2010, Facebook surpassed Google as the most-visited site on the web, according to the Quantcast analytics service.

Being the rational business people that they are, marketers – the folks formerly known as your advertisers – are following the crowd to Facebook by establishing their own direct relationships with customers. Coca-Cola, to pick just one brand, has more than 34.4 million Facebook fans. A recent survey by Duke University found that corporate marketing officers expect to allocate no less than 18% of their budgets to social media within five years. That’s triple the amount they spend today.

Although Facebook is privately held and does not report its financial performance, the company is widely believed to be on track to double its advertising sales this year from $2 billion in 2010. Shares of the company have been valued in excess of $70 billion in the private equity market and many analysts believe Facebook could be worth more than $100 billion if it goes ahead with an expected initial public offering next year. Google at press time had a market cap of $170 billion.

Facebook’s power is not that it is about big ideas, world affairs, shocking crimes, important government actions or even the lives of the rich and famous. Facebook’s appeal is that it is all about You and the Things You Care About: Your friends, your love life, your family, your faith, your school, your job, your hobbies, your shopping, your games, your music and your movies.

The objective proof of Facebook’s emotional pull is that it is, by far, the stickiest site on the web. Visits to Facebook average 26 minutes per session, as opposed to 6.7 minutes for Twitter and 3.6 minutes for Yelp, according to Alexa.Com, the web analytics service.

By contrast, the average visit at newspaper websites is about 3.5 minutes per session, according to the Newspaper Association of America. If you add together all the visits to all the newspaper websites in the United States in a given month, the total is barely 10% of Facebook’s traffic.

Although the bad news is that Facebook has the capability to divert readers and advertisers away from newspapers and other traditional media, the good news is that this new format is still young enough and malleable enough to allow traditional media companies to elbow into the action to leverage the medium to their own advantage.

Unfortunately, the main thing publishers have done to date about Facebook is to contribute to its exponential growth by:

:: Providing abundant free ink to not only Facebook but also the popular movie about it – “The Social Network” – that came out last year. While the company, the social-networking phenomenon and the movie are all legitimate news fodder, the coverage unquestionably contributed to a major surge of interest in signing up for Facebook.

:: Plastering Facebook “share” logos on nearly every page of their web and mobile applications. While this practice may or may not draw a material number of additional eyeballs to publishers, it most certainly generates a ton of traffic for Facebook.

:: Increasingly adopting the Facebook system to authenticate individuals who want to leave comments on newspaper websites. While some publishers believe people behave more civilly in forums when their Facebook identities are known, a byproduct of this new service is that it also produces a rich new stream of viral content and page views for Facebook.

:: Devoting scare newsroom resources to building, tending and promoting newspaper-branded pages on Facebook. While a Facebook presence can be an important way for publishers to extend the visibility of their brands, a well-run newspaper page on Facebook has the added advantage of producing more traffic, more page views and more ad inventory for you know who.

There’s nothing wrong with newspapers participating in the Facebook ecosystem, if those activities are part of a thoughtful and strategic plan to benefit the publication. Because such plans to date generally have been in short supply among editors and publishers, newspapers at the moment are doing more for Facebook than they are doing for themselves. And that’s not good for newspapers.

In this space next month, I will discuss ways you can go from working for Facebook to have it work for you. Meantime, please pay close attention to Facebook, so You can see how it potentially will affect Your Business.

© 2011, Editor & Publisher

Paid news potential limited on tablets: study

The potential for selling news through applications on iPads and other tablets appears to be “limited,” according to a study released today.

Although consuming news on a tablet is one of the most popular activities discovered in a survey of 1,200 tablet users, only 14% of them had subscribed to a paid news app, according to a study by the Pew Research Center’s Project for Excellence in Journalism in collaboration with The Economist.

Of those who haven’t paid directly for a news app, “just 21% say they would be willing to spend $5 per month if that were the only way to access their favorite source on the tablet,” said the study. “Of those who have news apps, fully 83% say that being free or low cost was a major factor in their decision about what to download.”

The disinclination to pay for the news caused the researchers to conclude that “the revenue potential for news on the tablet may be limited.”

The study found that 11% of U.S. adults have acquired tablets since the iPad was launched in April, 2010, with 90% of tablet owners using them to consume news. Fifty-nine percent of the respondents said the tablet has taken the place of “what they used to get” from a print newspaper and 57% said apps have taken the place of TV news.

On a positive note, 43% of the respondents said they now spend more time consuming news than before they bought their tablets.

Can investors get News Corp. under control?

At long last, some of the public shareholders of News Corp. this week will try to put some discipline into the management of the scandal-ridden company that Rupert Murdoch built.

Regardless of what the investors achieve – if they get anywhere at all – a lot of damage already has been done by the slipshod way Murdoch runs his sprawling media empire.

The California Public Employees Retirement System, which is the nation’s largest pension fund, on Friday became the latest investor to say it would vote against the re-election of Murdoch and his sons, James and Lachlan, to company’s board of directors.
 Cal-PERS is joining several other institutional investors who are opposed to the continued tenure of not only the Murdoch trio but also most of the rest of the leader’s hand-picked board.

It’s not clear whether the outside shareholders have the votes to change anything at a corporation where Murdoch effectively controls 40% of the shares. But adult supervision most certainly is in order, because News Corp. seems to be operating with only the sketchiest of business plans and no effective executive oversight of his many far-flung initiatives.

As a consequence of this stunning inattention to discipline and detail, the company appears to have devolved into a free-wheeling, cut-throat and paranoid culture that reached its logical conclusion in the phone-hacking scandal at The News of the World, where deceit and naked ambition trumped common decency, good judgment and even simple compliance with the law.

Further proof of the anything-goes atmosphere at News Corp. was supplied last week when the Guardian (which first revealed the NOWT scandal) reported that the folks running the European edition of the Wall Street Journal evidently sold access to its news columns and created back-channel payment networks to lift the otherwise sagging circulation of the paper by some 16%.

Absent investor intervention, these embarrassments are unlikely to modify the modus operandi of the spoiled and self-indulgent Murdoch, who has shrugged off numerous costly missteps over the years because his voting control is so absolute that he effectively answers to no one.

Giving credit where it is due, Murdoch built his late father’s newspaper in Adelaide, Australia, into a world media colossus now valued at $44 billion. But he was more lucky than smart to stumble into satellite TV in Europe and build the Fox broadcast network in the United States as broadband television accelerated in the latter part of the last century.

In recent years, the magic vanished. After paying $5.6 billion for Dow Jones in 2007, Murdoch was forced to write off $2.8 billion of the value of the transaction within two years. Apart from Murdoch's lust to own the Wall Street Journal, what was the business rationale for paying aggressively for a newspaper at a time of secular decline in the industry? What financial logic, if any, supported the hefty price that Murdoch shelled out?

In June of this year, News Corp. took a $545 million bath when it sold MySpace, the social networking site, for $35 million after acquiring it for $580 million in 2005 – when Facebook was but a gleam in Mark Zuckerberg’s eye. How did News Corp. run into the ground the market leader in the hottest media space since the Internet emerged in the mid-1990s? Was there ever a thoughtful plan to leverage the MySpace investment? When the plan – if there was one – faltered, did anyone do anything about it?

Although Murdoch reportedly plunked as much as $30 million into the high-profile launch of The Daily, a clunker that was billed as the first iPad news product, Bloomberg News revealed last month that paid circulation averages about 120,000 a week, or a quarter of what the company has said it needs to break even. Anyone at News Corp. who tried to download the balky app prior to launch would know it technically wasn't ready for prime time. Anyone at News Corp. who took five minutes to page through the editorial product could see it was abysmally thin gruel. How did it get out the door? And what, if anything, is being done to fix it?

With the embarrassing NOWT and Euro-Journal scandals representing not only considerable financial loss but also significant potential legal exposure, it’s no wonder that the public shareholders are worried about the haphazard management of the company. The mystery is why no one ever acted sooner.

Engagement: The new digital metric

Everyone knows you have to measure things correctly to manage a business well. But the converse of this axiom is that you can get into a lot of trouble if you measure the wrong things.

Unfortunately, this has happened in the newspaper industry with respect to the digital media. Now, it has got to stop.

In a misguided effort to apply the historically successful print business model to the digital media, publishers have spent nearly two decades trying to assemble the biggest audiences they can on their websites and, of late, their Facebook pages and Twitter feeds.

But large and undifferentiated audiences don’t matter in the digital realm as much as ones that are homogeneous, engaged and readily targetable for advertisers.

Smart digital publishers who have assembled groups of loyal and like-minded readers are selling contextual advertising for $15, $30 or more per thousand impressions at the same time generic inventory goes for $1 per 1,000 hollers at entirely too many newspapers. Which business would you rather be in?

Smart digital publishers have found that the key to boosting CPMs is passionate audience engagement. The concept was defined as follows in a 2008 white paper by a consulting firm that calls itself, perhaps ironically, Web Analytics Demystified:

“Visitor Engagement is a function of the number of clicks (Ci), the visit duration (Di), the rate at which the visitor returns to the site over time (Ri), their overall loyalty to the site (Li), their measured awareness of the brand (Bi), their willingness to directly contribute feedback (Fi) and the likelihood that they will engage in specific activities on the site designed to increase awareness and create a lasting impression (Ii).”

While it might be fun to do the above math for the typical newspaper website, here is an easier way to see how engaging newspaper sites are.

In each of the last nine months through June, 2011, the Newspaper Association of America has reported that the average visitor spends about 3.5 minutes per session on the industry’s websites. By contrast, the average visit at Facebook in June, 2011, was 11.1 minutes, up 33.7% from 8.3 minutes in same month in the prior year, according to ComScore, which tracks statistics for both NAA and Facebook.

Engagement is rising at Facebook because it has created a compelling place for people to get and give information about everything from what’s in the news and what’s on sale to the hottest new music and where the gang will meet for drinks after work.

While newspapers can’t possibly compete head-on with Facebook, they can play to the passions of their readers – and those they would hope to attract – by creating optimized online, mobile and social products across a wide variety of topics ranging from gardening to small business.

The power of engagement is illustrated in these examples from The Story So Far, a must-read discussion of the economics of digital media that was published in May by the Tow Center for Digital Journalism at Columbia University:

:: The high school sports site at the Dallas Morning News captured an average 14 page views, as compared with news at 2.8, weather at 4.8 and general sports at 7.7. Last year, the site brought in $700,000 in revenues, according to a Morning News executive quoted in the report.

:: PBS.Com found that its most dedicated users – who lingered on the site for an average of 13.5 minutes vs. an overall average of 3 minutes – were also its most productive donors. “Such users were 38% more likely to donate money to PBS than less-engaged users,” said the Columbia report. When the PBS team discovered their super-users loved video, they stepped up promotion and now are selling video advertising for $30 per thousand views.

In the pre-digital era, newspapers could charge premium prices for advertising to large audiences “because advertisers could be persuaded to buy access to a big audience they didn’t know much about,” said the Columbia study. “Today, advertisers have far more choices and far more information.”

The chase for online traffic has put news organizations “on a sugar high of fat audiences and thin revenue,” continued the researchers. And that is strategically misguided at a time when user loyalty and passion will be the keys to building healthy and profitable digital publishing businesses.

The longer editors and publishers are rewarded for super-sizing audiences instead of building engagement, the longer they will be heading in the wrong direction.

The metrics for an engagement-focused incentive plan include:

:: Rising time on site, not merely increasing the numbers of unique visitors or page views.

:: Increasing ad rates, not just gross sales volume (though ever-higher sales must be included in any sensible plan).

Remember, you can only manage things right if you measure them correctly. Now is the time to start.

© 2011 Editor & Publisher

How newspapers are losing next-gen readers

A new study shows the dramatic degree to which consumers under the age of 40 have repudiated newspapers.

The must-read report, which was released Monday by the Pew Research Center’s Project for Excellence in Journalism, found an alarming disconnect between younger and older consumers in the value they put on newspapers as sources of information about their communities.

Pew split the 2,251 respondents to its poll between those aged 18 to 39 and those 40 and older.

When asked by researchers to identify their preferred source for crime news, 44% of those in the 40-plus category named newspapers, as compared with just 23% for the younger cohort.

As illustrated below in the click-to-enlarge table, the story is the same on all but one of 16 coverage categories included in the poll, which ranged from restaurants to zoning. Some of the most lopsided responses were in the areas of community events, local politics and the arts.

In what may be a sign of the desperation of the population in this time of high unemployment, the only area where young and old alike turned with equal frequency to newspapers is hunting for information about jobs. Even there, only 17% of each age group considered newspapers the first place to look.

Pew also found this sobering statistic: Fully 69% of respondents said it would not “have a major impact” on their ability to keep up with news about their community if their local paper no longer existed.

Time for a sales tune-up

Though newspaper ad sales have been sliding steadily for 5½ years, many publishers have yet to take a deep look at the four components necessary for a healthy and forward-looking revenue program. They are Products, Process, People and Pride.

If your sales are not where you want them to be, this is what it will take to fix them:

Products

Only $3.50 of every $10 spent by local businesses on advertising goes to traditional newspaper advertising, according to a national survey conducted by Borrell Associates.

With merchants of all sizes moving away from costly, reach-based media like newspapers and toward the inexpensive and targetable digital media, it is unrealistic to believe newspapers can maintain their share of the local ad spend by simply improving the way they sell their flagship print and web products.

As the Borrell survey found, $1.50 of every $6.50 not spent with newspapers goes to maintaining a company’s presence on the web and in the social media. Another $1.50 is split between Yellow Pages and radio. One dollar goes to direct mail and another dollar is divided evenly among broadcast television, cable TV and billboards. The balance goes to everything from signage to Little League T-shirts.

To reach advertisers where they are – and where they increasingly will be in the future – publishers must offer a wide variety of marketing and customer-acquisition services. These include but are not limited to, web and mobile site development and hosting; search-engine optimization; online ad placement on third-party media like Google and Facebook; print and electronic direct marketing, and social media marketing on Facebook, Twitter, Google+ and whatever comes next.

Without a comprehensive, digital-rich product portfolio, newspapers will be left with shrinking scraps of business as their advertisers shift more of their dollars to pixels from print.

Takeaway No. 1: Salesmanship can’t substitute for products that don’t meet customer needs.

Process

Owing to the premium prices newspapers historically have charged for advertising, publishers almost always have offered high-touch, and therefore high-cost, customer service.

The classic newspaper sales cycle includes the free production of spec ads, multiple (often in-person) sales calls, unlimited copy tweaking before ads go to press and even costly outings for clients.

But these practices are becoming increasingly unaffordable at a time that newspapers are battling not only declining ad volume but also extreme price competition from a growing array of digital competitors. Google and Facebook require advertisers to buy, build and monitor their ads entirely on their own, while leaving a credit card on file so they can be billed in real time.

Newspapers can’t go cold turkey on cold-calling customers, especially when they need to educate them about the broad product suite suggested above. But publishers can take the time – and invest the funds necessary – to streamline back-office and production systems to free reps to sell, instead of processing paperwork, policing billing and tinkering with ads.

In many cases, this means automating antiquated ordering, production, scheduling and billing systems. In most cases, it means differentiating the duties of ad staffs so sellers can sell and production specialists can take care of the rest.

With duties carefully aligned and assigned, managers will have better visibility into the productivity of each employee, making it possible to address inefficiencies and deficiencies.

Takeaway No. 2: Sales people need to sell, not shuffle papers.

People

People are the strength of every organization and newspapers can’t afford weak people at a time they must be more nimble than ever at diversifying their ad bases by introducing new products.

To build strong organizations, publishers have to establish – and enforce – clear performance metrics, because you can’t manage what you can’t measure.

While sales productivity is one of the easiest things to measure, it will take more than holding reps and managers to gross dollar targets. Their incentives must require them to recruit a certain percentage of new advertisers and to demonstrate their ability to sell new products.

To make reps as successful as possible, publishers need to provide them with the product s and sales training they need to be comfortable and competent in selling print, online, mobile, social and direct-marketing media.

When training fails, managers have to move people into positions where they can make a more positive contribution – or out of the organization to make room for someone who can.

Takeaway No. 3: If people are your strength, you need strong people.

Pride

In a talk not long ago to newspaper executives, television sales guru Jim Doyle chided the group for allowing “others to position your product” as a tired and ineffective medium. He is right.

With a full suite of advertising products, a newspaper can be a powerful marketing partner for almost every business in town.

Takeaway No. 4: You can’t sell with confidence without conviction in the product.

© 2011, Editor & Publisher

Abramson faces toughest test of any NYT boss

Jill Abramson will have a tougher job than any of her predecessors when she becomes executive editor today of the New York Times, because she is being thrust into completely uncharted territory where she will have to choose between two irreconcilable paths.

She either will have to cannibalize the flagship print product to build the strongest possible digital franchise for the Times – OR – she will have to concentrate on sustaining the commercial strength of the print edition at the risk of channeling insufficient resources into assuring the strongest possible digital future for America’s newspaper of record.

Although it would be nice to have it both ways, that is not going to be possible in a time that resources are unlikely to increase – and, in the worst case, could shrink – at the most well-endowed newsroom in the land, where the editorial payroll tops 1,000 individuals.

The problem for Abramson is that the print and digital media demand significantly differentiated products, which the Times has not been able to produce to date with even its enviable strength. While the Times is formidably staffed to produce its estimable print edition, its digital business has not gotten the same resources and attention as the print product.

If the Times is to be as powerful a digital force in the future as it historically has been in print, it is going to have to create a plethora of highly differentiated and optimized web, mobile and social products that go beyond the current mission of previewing or recycling what appears in print, because there’s no reason to buy the print edition if you subscribe to any of its digital feeds. Further, as detailed in a moment, there’s reason to wonder about how many people will be willing to pay for its digital products.

If the existing editorial staff is cleaved to put more resources into creating highly optimized digital media, then the print report necessarily will suffer. If the paper continues concentrating on print, it likely will be out-maneuvered by digital competitors who are 100% focused on being successful in those media – and completely unabashed about aggregating content from the Times to achieve their goals, as Abramson’s predecessor, Bill Keller, noted in a widely discussed column earlier this year that oxpecked the Huffington Post for overzealous pursuit of the practice.

If unfavorable economic circumstances force cuts in the Times newsroom that are anything like those suffered at almost every other paper in the land (including its parent company’s publications in New England, the Southeast and California), the choices that Abramson faces will be starker – and more painful. But, make no mistake: The dilemma will persist even if Abramson keeps the cost-cutters at bay.

Abramson’s situation is not unlike that facing most publishers, who, on average, derive 90% of their revenues from the circulation and advertising sold in connection with their flagship print products. (The public affairs department at the NYT company failed to reply to calls and emails seeking the precise percentage of digital revenues at the Times but a bit of reverse engineering of the company’s financial statements finds that its entire publishing division derived 10.3% of its revenues from digital media in the second quarter of this year.)

With most demographic and commercial trends suggesting that print readership and advertising revenues will continue to decline as the Boomer generation rides into the sunset, newspapers today rely on the print product not only to keep the lights on but also to fund the innovation they hope will successfully transition their franchises to an increasingly digi-centric world.

But the stakes in this balancing act are higher for the NYT than most publishers because the growing success of its digital product – it is the top pure-play news site in ComScore rankings – could cut deeply into the sale of the print version of the national edition that is responsible for some 60% of the newspaper’s circulation.

The most recent audits show that total average circ for the Times is 916,911 on weekdays and 1.3 million on Sunday, meaning that 550,000 daily subscribers and 780,000 Sunday readers live out here in the hinterlands where it costs nearly $1,000 a year to buy the national print edition of the Times.

It’s a fair bet that the people who faithfully read the national print edition of the Times are not only thoughtful and wealthy but also increasingly comfortable with consuming news on such devices as computers, smart phones and iPads.

The more they doodle with the various digital incarnations of the Times, the faster the national readers will realize that nearly the all the news that fits in print is not only immediately at hand in pixels but also available before the presses even start to roll.

Out here on the Left Coast, I scan the stories in the next day’s NYT on my iPhone before I go to sleep. When I fish the fish-wrap edition out of the blue baggie on my doorstep in the morning, the news looks awfully old to me. Like most modern individuals who care about what’s happening in the world, I check NYTimes.Com and other sites throughout the day to catch up on the news.

So, why spend $1,015.56 a year for the print edition at full cover price plus 8.5% sales tax in San Francisco, when you can get the all-you-can-eat digital package for $455 a year?

Or, you can do what my 72-year-old brother in law does in Michigan. A distinguished and erudite lawyer who retired a few years ago as the head of a major Chicago firm, the first thing he used to do every morning – rain, sleet or snow be damned – was jump in his car to buy the New York Times.

Even though he managed to avoid using Dictaphones, Selectric typewriters, PCs and cell phones throughout his career, he got a Nook about a year ago, which he now uses for everything from reading books to surfing the web to doing Sudoku.

“I don’t have to buy the Times any more,” he says. “You can read 20 articles a month for free on their website and catch up with summaries of the rest on Huffington Post.”

If the New York Times could lose him as a paying customer, it could lose anyone.

That’s the challenge Abramson faces in her new job.

Newspapers need a jolt of Silicon Valley DNA

I started my career as a newspaperman, became a Silicon Valley CEO and work today as a consultant helping media companies understand technology and helping technology companies understand the media. Here’s what I have learned:

The talented people in these seemingly disparate industries are remarkably alike but the cultures of the businesses are completely different. And here is why this matters:

:: The tradition-bound and risk-averse nature of the newspaper culture is the single greatest reason publishers are losing relevance, readers and revenues while competing digital products run circles around them.

:: With new technologies, media formats and business models emerging at an ever-quickening pace, newspapers must learn to think and act like start-ups – or risk falling to the margins of the media world.

In other words, newspapers need some fresh DNA that will make them think and act more like techies and less like, well, newspaper people.

The good news for newspapers is they have an abundance of the most important asset every business needs: Great people.

Just like tech companies, newspapers are filled with exceptionally large numbers of highly intelligent, highly creative and highly motivated individual contributors whose ideas, talents and egos must be channeled efficiently into creating a product that not even the brightest among them could produce on his or her own.

Although the people working at newspapers and tech companies are more similar than you would think, their business cultures are polar opposites of one another.

Newspapers are all about faithfully and efficiently producing a well-defined product according to time-honored standards and procedures. In other words, the culture values tradition, consistency and predictability, which, by definition, are inhospitable to change – particularly the sort of disruptive change that the web, mobile and social media require.

Newspaper folk essentially come to work every day to do their best to fully optimize a product that serves a clearly identified audience, that has a clearly defined revenue model and that, until the last few years, has been a stunningly profitable business.

Tech companies – which are unencumbered by tradition, institutional inertia and frequently even a clearly defined product for the first few years – are created expressly to do something that no one else has done before.

When techies come to work, everyone in the company – from engineers to marketers to sales people – is eager to debate such fundamental questions as: What’s our product? Who will buy it? How will we sell it? How will we make money? The debate persists (almost to a maddening degree) until the product is launched – and generally continues afterwards, especially if the marketplace fails to embrace the offering with sufficient zeal. Techies will tinker until they either get it right or run out of venture capital.

Although everyone marvels at how Microsoft, Google and Facebook rocked the world and turned corporate masseuses into millionaires, the preponderance of tech start-ups actually fail, because they prove to be far less clever than the founders and funders thought they would be. But failure is an option in Silicon Valley, because you learn as much from hitting the wall as from your successes. Maybe even more.

It takes a certain mind-set to take the entrepreneurial plunge. Techies embrace uncertainty and shrug off failure in a way that would unhinge most ordinary people. They are perfectly happy blowing up what they did the day before to try a better (or at least different) idea.

This sort of restless and relentless experimentation has produced all the technologies that have changed the way consumers get and give media – and the way advertisers increasingly are attempting to reach customers. A good deal of the success of the digital media has come at the expense of newspapers, which simply have not acted rapidly or boldly enough to create products and services to meet the needs of modern readers and advertisers.

Publishers have not failed to embrace disruptive experimentation because they are not smart enough to do so. The video embedded below is proof that the folks at Knight Ridder in 1994 had a pretty good idea of what the future might hold. But the newspaper business historically was so successful that publishers didn’t need, or want, to change much about it. Consequently, risk-taking and experimentation took a back seat to business as usual.

With print circulation and advertising revenues falling to ever-lower lows for each of the last five years, newspapers now must find new ways to cost-effectively create content; build new web, mobile and social audiences, and monetize their traffic as profitably as Facebook and Google do.

To do that, they will have to bring the creative chaos of Silicon Valley into every corner of their businesses. This means launching multiple, carefully planned initiatives across the full array of print and digital media. To be sure, this must be done with discipline and care.

Sometimes newspapers will get it right. Sometimes they will get it wrong. And, every now and then they will hit a home run. But they won’t win if they don’t play.

© 2011, Editor & Publisher

How harsh should an obit be?

It’s ordinarily an honor to merit an obituary in the New York Times, but it didn’t work out that way for Sherman White, who was treated rather roughly in his sendoff for a 60-year-old mistake.

The obit for the former college basketball star pubished on Friday underscores the need for sensitivity and balance when journalists try to squeeze a lifetime into a few hundred words – especially when some sort of wrongdoing has characterized that life.

Unfortunately, discretion took a holiday at the NYT after Sherman White died at the age of 82 on Aug. 4 in New Jersey.

As the Times reported in considerable detail in a 634-word obit, White was an all-American forward at Long Island University who was destined for a promising professional career when he was convicted in 1951 of shaving points in a betting scandal. After serving nearly nine months in jail, he was banned for life from the National Basketball Association, though later played for the Eastern Pro League.

It is not until the 13th paragraph of the 16-paragraph obit that the Times reveals that White was more than a disgraced basketball phenom. In fact, the Times reports, he spent a considerable amount of time in the last 60 years working with kids in the hardscrabble community where he grew up to keep as many as he could on the straight and narrow.

Contrast White’s portrayal in the NYT with a column about him published earlier last week by Tara Sullivan of his hometown newspaper, The Record in Bergen County, NJ. While Sullivan doesn’t mince words in recounting the scandal, she provides a full and inspiring account of what White did for the next six decades.

“Rather than dissolve into a sad, post-prison life,” wrote Sullivan, White “found his place on the playgrounds — talking, mentoring or coaching the young players in his shadow.” And she quoted one of the youthful athletes he once coached, who called White “a giant of a man” who “helped develop so many young boys into men.”

Not surprisingly, the tone and emphasis of the two articles led to two entirely divergent headlines, which, as we all know, heavily influence the way stories are remembered.

At the NYT, it was “Sherman White, Star Caught in a Scandal, Dies at 82.” At The Record, it was, “Sherman White rebuilt a life and left a legacy.”

While both versions of White’s life indisputably contain the essential facts, The Record provided readers with a more authentic picture of the man than the New York Times. As such, The Record deserves our gratitude and the Times owes its readers – and White’s family – an apology.

Get ready for mobile payments

It’s not a matter of if, but when, your ever-smarter smart phone replaces currency and credit cards as the way you pay for everything from a latte to a load of lumber for the deck you have been meaning to build.

The arrival of mobile payments will restructure the way marketers interact with consumers, leading potentially to epic shifts in the balance of power and dollars from financial services like Visa and American Express to technology providers like Google and Verizon.

It also is almost certain to lead to further disruption for media companies, unless they can figure out a way to nose into the action – which already is well under way.

The mobile payments revolution will be enabled by a technology called Near Field Communications (or NFC), which adds a micro-range radio to the cellular, wifi and Bluetooth arrays already packed into every smart phone. (More on NFC here.)

While only a smattering of Android devices today are equipped with NFC, there are hopeful rumors in the ever-breathless Apple press that the next-generation iPhone will have the feature when it debuts later this year.

Whether Apple takes the plunge now or later – thus leveraging the 125 million credit cards already on file at its successful iTunes service – the company will join a frenzied land grab including the following players:

:: Google Wallet, which will be seamlessly integrated with the Android operating system that ComScore says powers more smart phones (40% of the market) than its closest competitor, the iPhone (27% of smart phones).

:: Isis, a collaboration among Verizon, AT&T and T-Mobile (the latter of which AT&T is seeking regulatory approval to acquire). These mobile providers, who utterly dominate the U.S. market, are partnered with Discover, MasterCard and Visa.

:: Visa Wallet, a parallel effort by Visa to partner with its network of member banks to create a branded payments app.

:: Serve, the American Express equivalent of the Visa Wallet effort, which has entered not only into partnerships with Verizon and Sprint but also the fast-growing Foursquare mobile check-in platform.

:: Verisign and the other point-of-purchase equipment companies who make the gizmos used to swipe cards. Verisign has a mobile banking suite that it markets with a variety of tech and banking partners.

In a way, mobile payments already have arrived.

You can flash a barcode on a mobile phone to complete a purchase at most Starbuck’s, but it’s a far more complicated process today than it will be in the future. Now, you have to establish a Starbuck’s account by handing your credit card to a clerk, who loads the funds on a Starbuck’s card. Then, you have to download a Starbuck’s app and link it to your Starbuck’s account. Finally, you have to fuss with the phone when you make a purchase to generate a barcode that can be read at the register. If you run out of money, you have to slap some plastic on the counter to recharge your Starbuck’s card.

In the future, this rigmarole will be unnecessary. Sitting on a bus or walking through the park, you will be able to virtually create and manage accounts with individual merchants, simply waving your phone and confirming a transaction whenever you happen to be in a store. More likely, you will have a generic buying account that works with all merchants. Once established, you will be able to top it up from time to time for use at a gas pump, vending machine or furniture store. You might even be able to wirelessly lend a friend $100.

Paperless banking almost is upon us. Chase has an app that allows you to deposit a check by merely taking a picture of it with your Android or iPhone.

Once the mobile payments ecosystem fully evolves, currency and plastic may well become relics of the past.

For consumers, this will provide greater convenience and arguably more security than ever.

For the winners in the land grab, it will unlock vast new markets, potentially shifting revenues from banks and credit card companies to companies like Google, Apple and the mobile carriers.

For marketers, the systems will capture a wealth of information about purchasing patterns, including who, what, when and where people bought something. Even when this data is collected without identifying individuals by name, the volume and specificity of the information will enable marketers to sharpen their messaging and tactics.

Going to the next level, sites like Blippy.Com encourage consumers to disclose and write reviews about their purchases. If such platforms take off, they will provide merchants with the ability to link specific individuals with particular purchasing patterns, enabling brands to reach consumers with unprecedented precision.

At the level beyond that, it seems entirely possible that a significant number of consumers would be willing to have all their purchases tracked in return for such incentives as discounts or frequent-shopping points that can be redeemed for cash or products in the future. This, of course, would enable the Holy Grail of target marketing: Putting the right offer in front of the right person at the right time.

Although the outlook is unclear, there can be no question that mobile payments will revolutionize marketing by creating an ocean of real-time, granular and precise consumer data.

This matters to publishers and broadcasters, because it means that marketers in the future probably will vector ever more of their advertising dollars into direct connections with consumers, instead of mass media.

As mobile payments combine with the power of digital publishing, masses of eyeballs – which happens to be what traditional publishers and broadcasters sell – will diminish in importance in the typical advertiser’s media mix.

Where does this leave the traditional media companies?

Because rich data – not mass audiences – will be the name of the game in the future, every local media company should be gathering as much data as possible about every household and individual in the community it serves.

The most immediate opportunities to do this are through newsletter programs, contests, site registration and smart mobile apps. Obviously, all of these tactics require close attention to government and corporate privacy policies.

The other thing media companies need to do is pay close attention to the evolution of the mobile payments ecosystem. Then, when the time is right, they need to buddy up with the likely winners.

Will business model ‘stabilize’ for newspapers?

Quizzed by securities analysts last week about his company’s disappointing financial performance, the best McClatchy boss Gary Pruitt could say was that he hopes the newspaper “business model will stabilize” at some unspecified point in the future. But it will not.

And it had better not, if Pruitt intends to save what’s left of his newspapers, where relentless cost cutting has halved the headcount of his flagship Sacramento Bee to some 700 increasingly nervous souls in the last three years.

“It feels like the 19th inning, but we are not sure,” the chief executive of the nation’s third-largest newspaper chain said Friday after reporting that his company’s sales in the first half of the year slid 9.6% to $618 million and his net profits in the same period plunged 68.5% to less than $3 million.

“I do think the business model will stabilize,” he continued. “I am hopeful we are much closer to the end than to the beginning. But I can't give you a read more than that.”

Sorry, folks, but it is unrealistic to think the newspaper business model will stabilize, because we are in the midst of profound and fundamental changes in the way people get information – and marketers connect with them. The model cannot stabilize, either, because the traditional strengths of the newspaper business have been turned into liabilities in the new order of things.

If Pruitt and his fellow publishers don’t intelligently de-stabilize their businesses to modernize them, they run the risk of seeing further deterioration of their once-formidable franchises. Like most other publishers, Pruitt already has lost a lot of ground: The market capitalization of his company, which peaked at $3.5 billion in 2006, now is less than $200 million.

This is why the newspaper business is not going to stabilize:

:: Because people can acquire content from any number of sources on any number of platforms at the time and place they want, there is increasingly less utility in the print product, which necessarily is a static (and often out of date) aggregation of a small subset of all the news, information, entertainment and commercial content available in the ever-expanding digital universe. Despite the diminishing importance of the legacy product among most consumers, the newspaper industry still depends on print circulation and advertising to provide 90% of its revenues.

:: The proprietary production and delivery platforms that previously provided publishers with unrivaled market share and pricing power now represent unavoidably huge fixed costs that put them at a distinct competitive disadvantage to the proliferating digital platforms. Even though roughly 1 out of 3 newsroom jobs has been lost at American newspapers in the last decade, publishers still pay far more to produce content than most digital competitors. Sadly for those of us who treasure quality journalism, the high cost of producing original content has turned the medium’s most cherished competitive advantage into a liability from the standpoint of hard-eyed financial analysis. The same can be said for owning printing presses and large fleets of delivery trucks.

:: While the monopoly or near-monopoly status historically enjoyed by publishers allowed them to charge formidable advertising rates for access to the substantial audiences they aggregated, the increasingly sophisticated digital media make it possible for advertisers to finely target their pitches to specific audiences – and sometimes even individuals – at a fraction of what they have to pay for a newspaper ad. While newspapers depend on selling un-targetable print ads at the rate of $12 (or more) per thousand in order to support their high fixed costs and double-digit profit aspirations, un-targeted banner ads can be bought by the fistful on the web for $1 per thousand – or less. With all due respect to the quality of the typical newspaper ad environment, it is hard to believe this differential pricing can be sustained over the long term.

In light of the above, it is futile to merely “hope” the newspaper business will stabilize. The hopelessness of hope is perhaps best illustrated by the fact that half of the industry’s revenue base vaporized in the last 5½ years while publishers were hoping for a different outcome. Barring a miracle, industry-wide ad sales, which were $49 billion in 2006, are unlikely to top $23 billion in 2011.

Given that despair is not an acceptable option, what are publishers to do? They must begin intelligently, and speedily, de-stabilizing their enterprises by:

:: Accepting that the old business model is winding down.

:: Understanding that consumers and advertisers are forsaking one-to-many media like newspapers in favor of some-to-one media like Facebook and one-to-one media like the wondrously individualized smart-phone experience. (See also this slightly out of date but still relevant post from 2007.)

:: Embracing digital technology to create truly new products and platforms for delivering content, building audience and then monetizing those efforts through advertising or other means. This explicitly means going far beyond porting print content to a Newspaper.Com website and upselling web banners to print advertisers.

:: Considering such previously unthinkable measures as reformulating content strategies, pulling back on seven-day-a-week printing, cutting ad rates and entering into partnerships with digital competitors that previously may have looked more like enemies than friends.

:: Leveraging their formidable strengths – brands, market presence, content-creation capabilities and sales forces – to move smartly into the future.

There is a way forward. But it will take vision and work, not just hope.