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