Monday, February 28, 2005

Mondo combos bombo ad biz

The planned confederation of the Federated and May department stores is not good for newspapers, which sell the lion's share of the combined $1.15 billion the merchants spend annually on advertising.

The pending merger is but one of several mondo combos that are putting nearly $7.4 billion in ad revenues in play, as illustrated in the table below. This represents about 3% of the total U.S. ad spend of $245.5 billion in 2003, the latest year for which figures are available. Sales figures were provided in the newly released Fact Pack from Ad Age.

When the the Federated deal closes, experts believe, several stores will be shut in the interests of efficiency, including -- although I find this hard to believe -- maybe even The Saks on Fifth Avenue! Fewer stores presumably would mean fewer dollars spent on attracting customers. Still, it's safe to assume a significant portion of $1.15 billion will be continue to flow after "May" day.

The outlook is less encouraging for the pending Kmart-Sears matchup. Kmart's ad budget, most recently reported at a bankruptcy-impaired $273 million, is a fraction of the $1.63 billion shelled out in all categories by Sears. Most observers believe Kmart pursued the deal because it sees big upside in selling the leases to several Sears sites. Fewer stores equals fewer ad buys.

Taken together, the ad budgets of the four retailers total $3 billion-ish. About two-thirds of those budgets go into the coffers of newspaper companies, representing maybe 4.5% of the industry's total sales of $45 billion.

Even as newspapers ponder the future of their relationships with the retailers, they already have lost their second largest advertiser, AT&T Wireless. Until it was acquired by Cingular earlier this year, the Ma Bell cellular spinoff had been spending $510 million annually on newspaper advertising alone (not counting TV and other media). Pre-merger, Cingular shelled out $645 million in advertising. Color much of that billion "gone."

The Cingular-AT&T deal is but the first of the telecommunications mergers likely to zap an enormous amount of ad-buying power.

SBC, which spends $1.5 billion a year on advertising, is buying the remains of AT&T, which itself is spending more than a billion a year. In all likelihood, the sum of the post-merger ad budgets will be considerably less than the $2.5 big ones flowing into the market today.

The story is the same but the numbers are smaller in the pending Sprint acquisition of Nextel. Sprint spends $477 million on advertising vs. an estimated $150 million by Nextel. Post-combo, look for the total to be lower.

Merger fever is fueled by the desire of top executives to get big, grab market share and cut costs, sort of like, say, Wal-Mart.

Oddly enough, the boys in Bentonville don't hold much with advertising. At the same time Federated-May spent 3.83% of their combined $30 billion in sales on advertising, Wal-Mart's ad budget reportedly was $428.6 million, or a meager 0.16% of its $262 billion in sales.


Saturday, February 26, 2005

Fee, fie, faux self-flagellation

Our mightiest newspapers turn into fumbling klutzes when they write about the industry's drooping credibility, swooning circulation and eroding advertising share.

Inevitably and embarrassingly, they fail to address these problems with the rigor and intellectual honesty they typically train on topics that don't directly involve their economic self-interest. Coincidence? Perhaps.

Instead of dealing forthrightly with what ails it, this introspectionally challenged industry over the years has developed a highly stylized form of faux self-flagellation. It goes like this: Editors and publishers wail that they have a problem, flail themselves for needing to fix it and then sail ever closer to the edge of the world without changing a damn thing.

Recent outbreaks of Faux Self-Flagellation Syndrome were observed in San Francisco and Washington, D.C. This tale of two cities is also a tale of two guys named Phil. You can't tell the Phils without a scorecard, so here goes...

Phil A, the Phil of the first part, is Phil Anschutz, a man determined to make a small fortune in the newspaper business by starting with a large one of $5 billion, give or take. Phil A is said to be reclusive, because he isn't doing a reality show like Martha or Donald. I just think he's out of sorts, because two-thirds of his former net worth was wiped out when the Bubble erped.

Phil B, the Phil of the second part, is Phil Bronstein, a former globe-trotting, pistol-packing, once-nominated-for-the-Pulitzer Prize journalist who achieved early fame in San Francisco for breaking the ankle of a political hack he sucker punched during a lively discussion at his newspaper's conference table. Phil B gained later fame as Mr. Sharon Stone when he was bitten by a Komodo dragon while tiptoeing through its cage at the L.A. zoo. More recently, he appeared in a series of TV commercials, where, playing the role of editor of the San Francisco Chronicle, he vowed, once and for all, to make the city safe for gourmet dining. Did I mention that Phil B actually is the editor of the Chronicle, the nation's 11th largest newspaper?

Phil A and Phil B wound up on a collision course when Phil A last year bought the San Francisco Examiner, where Phil B previously had been editor. Phil B moved to the Chronicle in 2000 when his employer, Hearst, bought the Chronicle. Still with me?

Since buying the San Fran Ex, Phil A has been operating the newspaper as a free tabloid, challenging Phil B and the Chronicle for readers, if not advertising market share. Encouraged by the rising circulation of the unsolicited free newspaper he dumps at a growing number of high-demo homes in the city by the Bay, Phil A decided to take his show on the road, launching a new giveaway tab in Washington, D.C.

The appearance of the upstart Ex on its doorstep inspired the Washington Post to mobilize a correspondent to look into the state of the newspaper business. Following is the lead paragraph of his penetrating findings:
The venerable newspaper is in trouble. Under sustained assault from cable television, the Internet, all-news radio and lifestyles so cram-packed they leave little time for the daily paper, the industry is struggling to remake itself.
In comments buried in the predictable yadda-yadda of this article, Phil B improbably became the first editor of a major American newspaper to effectively endorse not only the free distribution of the print product but perhaps its outright abolition.

"I could argue pretty forcefully," quoth the Post quoting Phil B, "that the free model and the non-newsprint model is what we're looking at in the future."

The comment is remarkable not only for Phil B's boldness but also for the fact that his embrace of the free newspaper model is not mentioned at all in the lengthy story on free newspapers that ran in his own (not-free) newspaper just days before the Post article. What was good for the Post, evidently, wasn't worth a gander for Chronicle readers -- or advertisers.

Will all due respect to Phil B, we don't have to stop the presses just yet. Newspaper executives can save the industry if they quit trying to preserve, protect and defend the comfy mass media business model that has carried them into the handsome offices, salaries, stock-option plans and retirement accounts they enjoy today.

The one-size-fits-all media model, which was great while it lasted, won't work in a multichannel, multimedia age of instant communications and nearly infinite choice. It needs to be replaced. Newspapers, like other legacy media companies, now have to learn to efficiently capture audiences where they find them by creating smart, new, media-agnostic products that leverage their prodigious brands, market strengths and advertising relationships -- while they still have them.

This is not tinkering. This is radical change that will cost time and money and likely lead in the near term to lower profits and, most likely, lower share prices. (You could argue that a truly rational market would applaud a strong strategic initiative, but that's probably hoping for too much.)

The problem is that the smart men and women who run newspapers -- even the ones who, like me, have journalism degrees -- can read their bonus plans and do the math. Senior executives are not going to take the radical steps necessary to save their institutions until enlightened investors adjust their expectations -- and modify executive compensation programs to protect the innocent.

Until everybody gets real, the newsrooms, the suits and even the stock market will continue dancing around the frightening, festering story that dares not speak its name.

Thursday, February 24, 2005

Atlanta descends to 'tunnel vision'

In the latest intrusion of captive-audience advertising on our otherwise peaceable lives, five flat-screen TVs soon will be bolted in every car of Atlanta's subway system.

The first known transit-TV system is the brainchild of New York's The Rail Network Inc., which has inked a 10-year deal to bring tunnel vision to the Metropolitan Atlanta Rapid Transit Authority, whose appetite for cash clearly outweighs any sense of decency.

Like it or not, MARTA passengers soon will be force-fed news from WSB-TV that is larded with "advertising in amounts consistent with network television's morning or evening news broadcasts." Early sponsors are MetroPCS, Chevrolet, Cadillac and American InterContinental University.

Choo-choo TV will feature closed captioning in English and Spanish, and audio will be available to passengers equipped with FM receivers on either their radios or cellphones. Rail Net plans to hand out 230,000 free FM radios to help commuters tune in. Commuters will be encouraged to use headsets, so as not to disturb fellow travelers.

In addition to underground video, the service will offer three music channels and will carry text service messages and even emergency bulletins, as necessary, from our vigilant friends at the Department of Homeland Security.

Apart from the inordinate nusiance value of this nascent medium, I have serious doubts about its effectiveness.

As a long-time subway rider in my native Chicago, I suppose I was subliminally aware of the hemorrhoid and career-college advertisments plastered in each clattering car. But the ads didn't make an impression, because I was in the merciful state of suppressed intellectual arousal that helped me tune out the jerks of the train. And the sight, sounds and smells -- ohmigod, the smells! -- of the jerks riding on it.

Setting aside my concerns over the video pollution imposed on my fellow commuters, how will Rail Net prove the efficacy of this new medium? You can say X number of people crammed into car 6789 at 5:15 p.m. last Thursday, but how will you ever know if anyone was watching?

This idea doesn't track.

Wednesday, February 23, 2005

Cell security, defying even duct tape

Paris Hilton generated a few amusing headlines by having her cell phone hacked, but security poses a serious challenge to our mobile networks and their potential to become a major content-delivery medium. Unfortunately, duct-taping your cellphone won't save you.

"The proliferation of mobile devices provides a number of new entry points for hackers to gain access to private, corporate and even government networks," said Tony Cooper of Deloitte in an interview in Information Week, where he noted that cellphones significantly outnumber PCs. "As the latest mobile-phone virus attack proves, it's no longer a question of if, but when."

Tony was referring to a version of the Cabir virus that turned up in two Nokia 6600s on display in a store in Santa Monica. The infestation is believed to be the first sighting in the United States of a virus that previously had been spotted in the UK, China and at least eight other countries.

Early versions of Cabir mischievously drained phone batteries. Later variants now target phones with the Symbian and Microsoft operating systems, destroying files and forcing handsets to dial premium numbers.

While the cellular industry has been focused on fancier, multi-purpose phones; building market share, and developing faster networks, it largely has overlooked the seemingly obvious problem of data security.

The next-generation EDGE (Enhanced Data Rates for Global Evolution) cellular platform can deliver data three times faster than a state-of-the-art GSM/GPRS network. But EDGE systems have several security holes, including unauthenticated base stations and no native support for encryption capabilities, according to SC Magazine. Although it is possible to secure mobile transmissions with 64-128 bit encryption, the slow transmission rate will gum up downloads.

Beyond Cabir, the Symbian and Microsoft operating systems are susceptible to such malware as Skull Trojan, Mosquito Trojan, Brador Trojan, Lasco Worm and several more. Doubtless, the list will continue to grow.

Augmented with web, music and video capabilities, cell phones in the future have the potential to become the medium of choice for instantaneous and individualized entertainment and information. But content creators won't turn loose their wares on a leaky network.

Insecure cellular networks also will kill the idea of loading credit card and other valuable information on cell phones to enable instant commerce.

Solve the security problems, and there is a lot of money to be made. Seems like the guys writing the viruses ought to wise up and switch sides.

Print barely gets the time of day

Wealthy Americans, the group most likely to be devoted to newspapers, magazines and books, spend an average 10 minutes watching TV or listening the radio for every minute they peruse print.

That's what International Demographics, an independent research firm, found in a nationwide study of households whose incomes were $75k or greater, a cohort representing roughly the top 25% of the economic pecking order. Median national income is about $40k.

Generally speaking, higher-income families are somewhat older and better educated than the population at large. You would figure, therefore, that their noses are stuck in the New Yorker, Fortune or, at least, the Sports Illustrated swimsuit edition. But you would be wrong.

The survey of 86 markets in every state found that the average high-income respondent spent 43 minutes a day reading, vs. 2.41 hours listening to the radio, 2.28 hours watching TV and 1.04 hours on the Internet.

Individuals also reported being exposed to 1.33 hours per day of outdoor advertising. It seems highly unlikely that these folks just sat around staring at a billboard puffing smoke rings over Times Square, assuming they are allowed to do that any more. So, the study has its limitations.

We are left wondering: When people say they are on the Internet, are they reading the Los Angeles Times, communing on IM, shopping on eBay or looking for love? Does "radio" time include listening to Shostakovich on a CD, Stern on Sirius or Snoop Dogg on an iPod? Could you be listening to the radio at the same time you are paging through Barron's or Huck Finn?

We need to do more work to determine which way the media wind is blowing. But you don't have to be a weatherman to see that it blows ill for print.

Monday, February 21, 2005

Way beyond the blue light, Wal-Mart TV

Wal-Mart operates the nation's fifth-largest TV network, reaching a captive audience of 130 million viewers every four weeks, according to a terrific article in the New York Times.

WM-TV features sports snippets, music shorts, movie clips and company propaganda for five minutes of every hour. But, mostly, it runs advertising -- "millions" worth of it, says the NYT -- from the likes of Kraft, Univeler, Hallmark and Pepsico.

In an effort to approximate a "friendly corner grocer" gemutlichkeit, Dove's "Real Beauty" campaign features Wal-Mart employees. Frito-Lay goes for the hard sell, giving step-by-step directions to the chip aisle and reminding soccer moms to grab a snack pack on the way to the game.

Advertisers pay between $137k and $292k to run a spot for four weeks on WM-TV, depending on the length of the commercial and the number of stores targeted in the campaign. With CPMs ranging from $1 to $2.25, advertisers not only reach lots of eyeballs for not much cost but presumably earn brownie points with Wal-Mart's notoriously hard-nosed buyers.

Research purchased from Nielsen by WM-TV found that the average shopper watches the channel seven minutes per store visit, an increase of 44% from a similar study in 2002. Wal-Mart plans to get more in shoppers' faces in the future by replacing its relatively small existing TVs with 600 new 42-inch plasma screens.

Wal-Mart's apparent success is an excellent example of why merchants are migrating away from the mass media. Let us count the ways:

1. Wal-Mart boosts sales and saves on advertising by pitching directly to its customers while they are in the store and ready to buy.

2. Wal-Mart and its advertisers can track ad effectiveness and shopping patterns on a granular basis, the better to fine-tune future marketing programs. In the fullness of time, Wal-Mart could move to premium-priced, pay-for-performance advertising, even dumping advertisers whose spots don't pull.

3. Wal-Mart turns advertising, historically a significant cost item, into a profit center.

We've come a long way, baby, from the blue-light special.

Sunday, February 20, 2005

If the bull's eye fits, wear it

"This is scary stuff and should not be dismissed," says Miles E. Groves, the economist whose meticulous research goes directly into the "in box" of just about every leader in the newspaper industry.

The "scary stuff" is that newspapers -- again -- lost advertising market share last year, falling to about 18% of roughly $250 billion in total annual ad outlays. As recently as 2000, newspapers controlled 21% of all U.S. advertising dollars.

A 3% reduction in market share amounts to $7.5 billion in vaporized revenues. To put things in perspective, that amount of dough would let the New York Times Co. purchase 18 more About.Coms, if it were so inclined. Looking at it another way, $7.5 billion is enough to pay the salaries of 150,000 reporters making $50k per year.

There are many reasons for the slide in the industry's market share, ranging from the ill health of the airline industry to the consolidation of retailers to competition for classified ads from Craig's List, Monster and eBay.

But Miles believes one of the biggest factors in the erosion is that the industry's traditional advertisers have a hotline to their consumers over the Internet and no longer need the newspaper to reach them.

"The telephone company, utilities, banks, mortgage companies, major retailers -- and a list that continues on indefinitely -- now use the web as a direct connection to their customers," says Miles. As these companies get better at what's called customer relationship management, the need "for mainstream media" will diminish, says Miles.

Online banking, as but one example, has been the fastest-growing Internet activity in the U.S. over the last five years. Today, 53 million Americans, or 20% of the population, use some form of online banking service, according to Pew's Internet & American Life survey.

Newspapers and other media will be useful in trying to lure Wells Fargo customers to the Bank of America (assuming they didn't merge while I was writing this). But a bank is not going to buy much newspaper advertising to pitch to its own clientele when it can reach them more efficiently on the web.

Most companies selling things are investing heavily in developing faster, better and cheaper ways to reach the right customer with the right proposition at the right time. Beyond ATM and credit cards, we haul Safeway, Blockbuster and even hardware store membership cards in our wallets. Every swipe brings our unique customer profile into sharper focus.

If newspaper companies want to survive, they have to join the game, says Miles. Newspapers must leverage their formidable print and online strengths to develop direct-market products to deliver qualified prospects to web-savvy advertisers. "Media companies that are not part of the evolving story will suffer, as marketing dollars go to those venues that can help," warns Miles.

If newspapers don't get serious about target marketing, they will be the ones wearing the bull's eye.

Friday, February 18, 2005

\/\/h3r3 t3h l337 /\/\337 2 $p33k

Don't worry. You haven't had a stroke or blown your motherboard. The above headline is written in "leetspeak," the current lingua franca of the IM set.

The word "leetspeak," which is derived from "elite speak," uses keyboard symbols for letters, letters for numbers and typos instead of correctly spelled words. Thus, the above headline, which was rendered in l33t$p33k, translates to: "Where the elite meet to speak."

Got it? Groovy.

This information comes from the hip dudes at Microsoft who thoughtfully have published a new lexicon to help parents translate the shorthand that kids use when chatting on Instant Messenger or email. (This presumes, of course, that you are fast enough to sneak up on your kid before she shields the screen.)

D k3wl n00w w4r3z R @ th1$ $1t3.

UPDATE: Our friend Matthew Sheffield has referred us to a neat site that will translate leetspeak into English and vice versa.

7h4/\/x, /\/\477.

Thursday, February 17, 2005

It's 'About' time at the New York Times

With the New York Times planned acquisition of About.Com, it's now clear the top newspaper companies recognize the need to diversify more aggressively into new media.

Writing the check is relatively easy. The hard part will be making the deals play -- and pay.

The purchase of About.Com for $410 million, or 59% of the price paid by seller Primedia in go-go '00, marks the third acquisition this year of a major Internet title by an old-line publishing company. Earlier, Dow Jones bought Marketwatch and the Washington Post acquired Slate, as detailed in this roundup.

Each of these transactions should deliver not only audience and advertising synergies, but also the much-needed Net knowhow resident in the acquired teams (so long as they are not pruned too heavily to pay for the acquisitions).

It was clearly logical for Dow Jones to buy Marketwatch, as they both cater to similar audiences and ad markets. Slate comports comfortably with the WashPost-Newsweek weltanschauung. But the rationale for the About deal, while a colorable case, is a little less forthright.

The About-NYT merger is explained in the Times as follows:
By adding About's 22 million monthly users to the Times Company's 13 million monthly users -- from the New York Times, the Boston Globe and more than 40 other web sites -- the company...would have the 12th-largest presence on the Internet. "This scale is important as content companies compete for market share in readership and advertising," said Martin A. Nisenholtz, named by the Times
Company yesterday as senior vice president for digital operations.
As further reported by the Times itself, however, the demographics and business models of About and the NYT sites are significantly different, making it questionable as to whether their audiences and advertisers really will cross-pollinate.

The About crowd is younger and less wealthy than the visitors to the other NYT sites and there is little audience overlap between the two properties, according to the Times. If you believe the glass is half full, then you will see this as a positive; if you are not so inclined, you won't.

One indisputable plus is that About has built its business on cost-per-click advertising, where marketers buy results, not bellybuttons. The Times, like all newspapers, needs to migrate ASAP to pay-for-performance advertising. About's ability to generate $40 million in revenues will provide valuable expertise to the Times, even if it only contributes 1% to the mothership's top line.

As either Lao-tzu or Yogi Berra once said, the journey of a thousand miles begins with the first step. That seems About right.

Open season for full-monty blogs

Many blogs have outed many people in the short history of open-tsoris journalism, but it was not until now that we have had our first full-frontal outing.

It happened in the case of Jeff (Whatever His Name Is) Gannon, the suck-up correspondent who pitched a softball question in a White House news conference, only to be exposed by alert bloggers as a right-wing shill really named James Dale Guckert.

Soon after Gannon/Guckert was exposed as a man of dual identities, he was outed by alert bloggers as the registrar of several gay-sounding web URLs.

No sooner was Gluckert/Gannon connected to these sites, then another alert blogger posted several screen shots that seem to expose Gannon/Gluckert in all his full-monty glory, save for a few Photoshopped figleaves. (For the pruriently inclined over the age of 18 who are not offended by nudity and six-pack abs, XXX marks the spot where almost all of it hangs out.)

Although this body of work is offensive to anyone but the decorously impaired, it is the logical representation of the free, easy and unfettered speech enabled by modern technology. Indeed, it is a perverse measure of the new paradigm's success that self-appointed, self-righteous and occasionally self-serving “journalists” of all stripes can not only inform but occasionally infest the public discourse.

The liberation and democratization of the media should be a time of giddy delight for those of us who endorse the broadest expression of free speech. Instead, open-source reporting has turned into open season.

I am appalled with the speed and degree to which participatory journalism has been perverted into a series of increasingly acrimonious tit-for-tat vendettas. If the right wingers get one guy, then the left wingers have to get a right winger, and on and on.

We can do better than this.

Wednesday, February 16, 2005

Feeding a cornered dinosaur

Knight Ridder took a juicy morsel out of the shrinking turf of the San Francisco Chronicle today by purchasing a small but potent group of free newspapers in the high-demographic territory between San Francisco and San Jose.

The Palo Alto Daily News and its affiliated properties, which were acquired by Knight for an undisclosed sum, are not big enough to tip the scales in the competitive Bay Area market. The deal is significant, however, because it means that the Hearst-owned Chronicle now is completely cornered.

To the south and northeast, the Chron faces Knight's excellent dailies in, respectively, San Jose and Contra Costa County. MediaNews Group owns the significant newspaper franchises immediately to the north in Marin County and across San Francisco Bay in Alameda County. Farther north, the New York Times owns the paper in Santa Rosa.

The Chron stands alone only in San Francisco, unless you count the free San Francisco Examiner, which is giving the Chron a run for its readers, if not exactly poaching any of its advertisers.

The Chronicle can continue to claim the largest circulation in the Bay Area with Sunday circ of more than 540k copies (vs. 298k for the San Jose Mercury, the next closest), but its readership is hundreds of miles wide and not very deep. To maintain its gross circulation numbers, the Chron has to ship copies as far as the Oregon border, Reno and even Hawaii.

This makes the newspaper a fairly inefficient purchase for all but the largest national or regional advertisers, the very marketers whose budgets, as previously reported, are switching increasingly to targeted media that can deliver empirically quantifiable results.

The Chronicle, therefore, has the same problem as a dinosaur: A large body to support with a dwindling food supply.

When I joined the Chron as city editor in 1984, we had aggressive plans to publish zoned editions in the surrounding counties to compete with the independent papers that had not yet been acquired and professionalized by the likes of Knight, MediaNews and the New York Times. Those plans were nuked, because the Chronicle was not master of its own domain.

The Chron, then owned by descendants of the founding DeYoung family, was a 50-50 partner in a joint operating agreement with the Examiner, which at the time was owned by Hearst. Although the newspapers shared equally in the profits of the joint venture, the Ex was a dying afternoon newspaper whose circulation was less than a third of the Chron's. Even though the Chron was delivering the lion's share of revenues supporting both papers, Hearst vetoed the Chron's suburban strategy, because it would do nothing to reverse the Ex's circulation slide.

Of course, nothing could save the Ex. When the Chron went up for sale in 1999, Hearst bought it for $660 million and then paid a local group $66 million more to take over the tattered Ex.

And that's how Hearst came to be the rightful owner of a hungry, cornered dinosaur.

iPods shock radio jocks

“I just hope the radio business lasts until I retire,” a successful 49-year-old broadcasting executive told me the other day.

That seems like a pretty glum outlook for a guy working in a medium that achieved record sales of $20 billion last year and is patronized by 94% of Americans, who, on average, tune in nearly 20 hours a week.

But our friend is right to worry about the future of his industry, because young people, increasingly tempted by iPods and other electronic distractions, are tuning in a lot less often than they did back in the 20th Century. At the very same time, restive advertisers are wondering when and if their spots are being run -- and whether anyone is really listening.

Put it all together, and it's enough to make anyone pray for the health of the Social Security system. Here's the story:

Although 94% of Americans still say they listen to radio at some point in the week, the youngest listeners are tuning out. People aged 12-24 listen to radio a hefty 20% less than the national average (16 hours a week vs. 19.75 hours), according to Radio Today, an audience survey produced by Arbitron, the independent ratings agency. The trend is not good, either. Young people listened to radio 6% less in 2004 than they did in 2001, according Radio Today.

As any parent knows, radio has plenty of competition in a modern kid's room. In a survey of youngsters between the ages of 13 and 17, the Roper Youth Report in 2003 found that 73% had TV in their rooms, 65% had portable CD or tape players, 44% had video games, 32% had cable TV, 21% had cell phones and 17% had computers. (UPDATE: New Gallup numbers in 2005 found 64% of kids had TV and 28% had computers.)

The Arbitron and Roper studies were completed before the iPod craze took off. Back in 2003, when the iPod was a mere gleam in Apple's eye, only 6% of kids aged 13 to 17 had a portable MP3 player.

With 22 million iPods and MP3 players now in the hands of American consumers, 19% of them are plugged into the ears of people under the age of 30, according to a new study from Pew Internet & American Life. "iPods and other MP3 players have broken into the mainstream in a new way," says Pew. "We're projecting a lot more growth, probably an acceleration of growth."

The iPod explosion is going to get a big push this year (and beyond) from the mobile phone industry. Responding as fast as they can to iPod-mania, the major cellphone makers are building quality music players into many of the 725 million new units expected to ship in 2005.

Just this week, Sony Ericsson promised Walkman-brand phones and Nokia teamed with Microsoft to help mobile subscribers port music from their PCs to their phones. As reported previously, Motorola will deliver the Holy Grail by summer when it embeds a genuine iPod in some of its phones.

iPods don't merely compete for listening time. They redefine it, thanks to the ease with which you can search, download, program and play the music (or chat) you want to hear when you want to hear it.

Although iPods are causing the most static, satellite radio also is nipping at the conventional radio audience. MX Radio boasts more than 3 million subscribers and Sirius is projecting 2.5 million customers by yearend.

As if competition alone were not enough to endanger the $20 billion radio advertising market, the efficacy of the medium itself is being questioned by some advertisers. This is ironic in light of the fact that industry revenues hit an all-time high in 2004.

Still, marketers say radio's audience measurement, schedule integrity and accountability are worse than those of broadcast TV, cable, newspapers, magazines and the Internet, according to a study released last week by Arbitron and the Radio Advertising Bureau, a trade group.

Translation: Advertisers worry that they are not getting what they pay for.

With audiences shrinking and advertiser confidence eroding, it's no wonder that our friend, the radio exec, is counting the days to retirement. Until then, he'll keep hustling ads.

And a piece of every commission check will go to buying tunes to fill the iPods he bought his kids for Christmas.

Thursday, February 10, 2005

Down, boys! Down!

Like a pack of so many alpha males, the top dogs in online media are fiercely streaming new products onto the Internet to mark their territory. The problem is that the stuff doesn't work, frustrating users and devaluing their reputations.

Take the new "local sites" from Yahoo and Google. Please.

Both companies recently trotted out search sites that are supposed to steer you to the closest pizza parlor or hardware store. The idea is that the proprietors of said businesses will purchase keyword ads to promote their pepperoni or power-tool specials. Suffice to say, these early endeavors need lots more work.

At Google's "beta" local site, I got 10 completely irrelevant listings when I hunted for "The Aviator," the Howard Hughes biopic. My luck was a bit better when I looked for "digital camera" and provided my home address. In that case, only 6 of the 10 listings were completely irrelevant. Though the first two listings were on point, they would have sent me across town, if I didn't know any better. In fairness, the third entry did point to a camera shop less than a mile from my door. But I already knew that.

In searching for "The Aviator" on Yahoo's local site, I got four utterly random listings that had nothing to do with the movie or any relation to each other. Six of 10 listings for "digital camera" actually were for camera shops, but not one of them was for the one nearest my home.

The new local sites aren't the only points of failure.

When I used Google's new mapping function to look for Lawrence, KS, I got a great, detailed map of Lawrence, but when I zoomed out to locate the town on a map of the whole state, Lawrence was gone. When I asked for the location of Fowler Creek Road in Sonoma, CA, I didn't get a map showing me the road, but I did get a bunch of irrelevant ads, including a listing for a Thai restaurant three counties away.

As previously discussed in this space, Microsoft's heavily promoted new search engine performs about four times worse than Lycos, Dogpile or Yahoo. And A9.Com's semi-illustrated Yellow Pages are incomplete, inconsistent and oftimes irrelevant.

Each of these companies would tell you that these are "beta" sites, or works in progress requiring further testing and refinement.

In the olden days of technology development, beta products were confined behind the firewall for use by in-house testers. Products were not publicly released until it was reasonably believed that they would work as advertised.

This all changed during the Bubble years, when "time to market" was prized over stability, functionality and common sense. The bubble burst for a lot of reasons, but one of the principal ones was that people stopped believing Silicon Valley's fairytales.

Companies like Microsoft, Yahoo, Google and Amazon are too big, too important and, arguably, too competent, to degrade their reputations by hustling half-baked junk into the marketplace. Why are they doing this?

Wednesday, February 09, 2005

Can't fool all the people all the time

There is great jubilation and great consternation in the media community over the prospect that 70% of Americans will have broadband Internet connections in their homes by the end of this year, if the present trend continues.

Internet slowpokes became a minority in 2004, as competitive pricing and easy-to-use technology encouraged 55% of the population to step up to DSL or cable modems. If you extrapolate the adoption curve, then it is fair to conclude that 70% of households will be hooked to fast pipes by the end of this year and 90% of homes will be broadbanding by the end of 2006, if "broadbanding" indeed is a verb.

Media people are happy about this, because broadband provides a fatter pipe to deliver:

Advertising. Valuable new things to read. Advertising. Valuable new things to view. Advertising. Valuable new things to hear. And advertising.

Did I mention advertising?

Some media visionaries are worried that not enough stuff is being produced to satisfy the growing appetite of the increasingly wired public. "More than one in four consumers surveyed already watch online video each week," says Michael Zimbalist, president of the Online Publishers Association. "Our research suggests that they have an appetite for more."

But other media visionaries are worried about overdoing it. "Rich media is becoming the standard ad vehicle on the Internet," says consultant Neil Perry, whose remarks were quoted by Ad Age. "Too much of a good thing can kill a golden goose."

Neil didn't mention the silly Lincoln Fry promo from his alma mater, McDonald's. But if it isn't a goose killer, then I don't know what is.

The Lincoln Fry campaign, kicked off with the obligatory Super Bowl ad, is based on a mythical couple who come across a french fry shaped like the head of Abraham Lincoln. Viewers were directed to a web site featuring an extended video in which the spud-struck couple becomes increasingly protective of the prized fry. The excruciatingly thin plot is elaborately and expensively executed with a fake blog, downloadable wallpaper and other nonsense.

Apart from reminding people in a deeply subliminal fashion that McDonald's sells french fries, I am not sure of the point of this offbeat promotion. Mercifully, the campaign will end when the Lincoln Fry is auctioned off on on Feb. 12, Lincoln's birthday.

Given that proceeds will go to charity, it's nice to know bids now surpass $30,000. It's also frightening to know that bids now surpass $30,000.

The real test of an online campaign is whether it draws eyeballs to a web site, where consumers can be encouraged to part with their money at the sponsor's place of business. By that measure, this promotion appears to have flopped, ranking in the mid-400,000s of web site popularity on Alexa.Com.

In so doing, this Small Fry promotion proves that Honest Abe got it right when he said: You can't fool all the people all the time.

Tuesday, February 08, 2005

Missing ink: National-ad erosion quickens

Another data point in the long-term erosion of ad support for newspapers has been provided by Lauren Rich Fine, the top media industry analyst at Merrill Lynch.

The majority of national advertisers are "shifting from print and TV towards cable and the Internet," reports Lauren, who huddled recently with 15 traditional print advertisers representing such industries as autos, food, consumer products, beverage, telecommuncations and pharmaceuticals.

One auto maker is putting 7% of its ad budget into the Internet, while a consumer product/drug company and a food/beverage company each were dedicating 5% of their ad funds to the web.

These budget allocations are substantially higher than the amounts national advertisers historically have earmarked for the web. Internet advertising represented 3.7% of the roughly $8 billion spent in newspapers by national advertisers in 2004.

Given the velocity with which advertising is moving to the web from traditional media, Lauren has increased her prediction of future online market share. She now believes 4.6% of all advertising will be online in 2005 and 7.4% by 2009. These projections are boosted from her earlier forecasts of respectively 4.2% and 5.3%.

Here's what's driving the change, says Lauren:
As advertising shifts from an investment to an expense within organizations, the need to measure returns and/or lower costs has heightened. This has pushed marketers more toward the Internet, direct marketing, sales promotion and branded entertainment [product placement].
Beyond these general industry trends, Lauren is concerned that several recent, high-profile mergers will hasten the reduction in ad dollars headed to newspapers and broadcast TV.

The combination of Kmart and Sears will siphon a chunk out of the retail sector that represents 14% of national advertising in the United States. Two cellular mergers -- Cingular plus AT&T Wireless and Sprint plus Nextel -- will trim expenditures in the telecommunications sector that represents 5% of national advertising. Pharmaceutical advertising, which represents another 5% of the national ad mix, also could be reduced by troubles surrounding certain proprietary drugs.

There are a couple of bright spots. Wal-Mart, which traditionally has not been an avid newspaper advertiser, "ascribed some of its success in December sales to its renewed ad campaign," says Lauren. Also, Priceline and Netflix "are now using traditional media to augment their online efforts."

Lauren says she is struck by the "bipolar response" of the newspaper industry to new media. "On the ad side, they get it. Newspapers have done a pretty good job of setting up an online presence and do a fairly good job of getting their fair share of classified advertising online while trying to protect print," she says. "On the editorial side, there insular attitude that good writing and reporting will keep folks in print, with online as really an afterthought."

Although the guys running the business side of newspapers may say that they "get" the challenge, it is not clear that they are acting decisively enough to save the value of their franchises.

There has been a major, permanent structural shift in classified advertising, thanks to the likes of Monster, Craig's List, eBay and other online competitors. Many of those ads are gone and they aren't coming back.

With advertisers accelerating their demand for verifiable, interactive media, newspapers will have to develop new types of direct-response, online programs to attract and retain them. These include, but are not limited to, direct-marketing programs, couponing and much more.

If the newspaper industry thinks it is controlling ad erosion, it is suffering from a profound case of self-denial.

There's just no denying it.

Monday, February 07, 2005

Lycos beats big guys in search derby


Lycos emerged as the most efficient place to search for information in my side-by-side comparison of the principal search engines.

Second place was shared by Dogpile and Yahoo. The other contenders, respectively ranked from best to worst in performance, were Alta Vista, Search Scout, Google, Ask Jeeves, Amazon's A9, Yahoo's Y!Q and Search.MSN.

Lycos and Dogpile ought to do better, because they synthesize searches from a number of sources. Accordingly, they handily beat such big names as Google, Amazonand MSN at what, presumably, ought to be their own game.

Lycos is an amalgam of HotBot, Raging Bull, Tripod, Wired and other search engines, according to its web site. Dogpile, the first runner-up, sifts through the results of Google, Yahoo! and Ask Jeeves.

My search bakeoff was inspired by the hubbub in the last few weeks surrounding the new stuff being rushed to the market by Microsoft, Yahoo and A9.

MSN just debuted its search engine, which, as will be demonstrated shortly, is not ready for prime time. Yahoo introduced Y!Q, a "first-of-its-kind contextual search technology," whatever that means. And A9 lately has added all sorts of embellishments, including a semi-illustrated Yellow Pages that lets you see an exterior photo (or not) of some of the businesses listed in it. (See post below.)

When I installed the new Y!Q search tool in my browser, I was instructed to test the new functionality by asking: "What is the gas mileage of my Toyota Sienna?" Not so amazingly, the rapid response provided perfectly relevant answers in a logical, efficient order.

When I asked Y!Q for the gas mileage of the gigantic new CXT pickup truck from Navistar, I found no useful links in two pages of results. "Could Yahoo be cooking the results?" I wondered.

Thus, I decided to ask each of several other search engines the following questions:

§ What is the gas mileage of my Toyota Sienna? (Answer: 18 city, 24 highway.)

§ What is the gas mileage of the CXT? (Answer: 6-10 mpg, with a tailwind.)

§ How many gallons needed to paint a room? (Answer: A gallon covers between 360 and 400 square feet.)

§ What number president was U.S. Grant? (Answer: 18.)

§ Value of euro? (Answer: It costs about $1.30 to buy one euro.)

§ What is length of Brooklyn Bridge? (Answer: 1.3 miles.)

§ Names of the Ashcan artists? (Answer: Robert Henri, Thomas Eakins, Thomas Anshutz, George Wesley Bellows, William Glackens, George Luks, Everitt Shinn and John Sloan.)

§ How many calories in a fried-chicken leg? (Answer Between 250-300. Not sure why the experts can't agree, but I am going for the lower number.)

Here's how performance was scored:

If the correct answer was in the top position in search results, the site got a 1. If it was in the second position, it got a 2, and so on. If the correct answer was nowhere to be found in the first two screens of results, the site got a 20. Therefore, the lowest score is the winner -- like in golf.

The results of the site searches were averaged for each search engine, resulting in the composite score in the table below. As you can see, Lycos, Dogpile and plain-Jane Yahoo (not Y!Q) outperformed the others by a significant margin and MSN came in a distant last.

The performances of About and LookSmart were so embarrassing that I left them out.

Sunday, February 06, 2005

A9's photo mania lacks focus

You can't find a picture of the Statue of Liberty in the semi-illustrated Yellow Pages recently introduced by A9. If you squint, however, you can see a nice shot of the China Shalom Glatt Kosher restaurant hiding behind a tree on Columbus Avenue.

The new semi-illustrated Yellow Pages, which are in beta mode, are plagued by woeful incompleteness and inconsistency, which presumably can be ironed out with a massive investment of time and money. But I don't know if it is worth it.

Amazon has sacrificed a quality user experience in its haste to demonstrate its technological daring. It needs to put its priorities back in focus.

If you are looking for vegetarian restaurants in Chicago, you would rather have a complete list of all possible venues, instead of the paltry three choices provided by A9. Not only are all three restaurants on the same block, but only one of them was visible in the accompanying pictures.

Even when you do turn up a picture in the semi-illustrated Yellow Pages, it may not be relevant. I found several listings including the names "Brooklyn Bridge," "Statue of Liberty" and "New York Stock Exchange," but got no useful pictures of any of the Big Apple landmarks.

As you can see from the photos below, the NYSE is illustrated by the picture at the left, instead of the more appropriate one at right. The garbage bags in the corner of the left-hand picture lend a wry editorial touch.

Thursday, February 03, 2005

A graphic worth 1,000 words

The neatest coverage of the State of the Union address was this graphic in the New York Times, which showed the extent to which certain words have been invoked through the Bush presidency.

Sorry the graphic is so hard to read, but this is the best you can do with Hello and Picasa2. You can see a bigger version at the multimedia sidebar at this link on the NYT site.

Social Security, freedom, taxes and terror (natch) were in this year, while compassion, balanced budget and weapons of mass destruction were mentioned either once or not at all.

Osama bin Laden was snubbed altogether and Saddam Hussein was downgraded to two lousy mentions from his previous major billings in 2003 and 2004. Sic semper tyrannis!

Wednesday, February 02, 2005

Why Johnny can't surf the web

A flotilla of heh-heh stories appeared this week in reponse to a study that showed teenagers are less likely than adults to be able to successfully complete a series of commonplace web-surfing tasks.

Excuse me, but this is no laughing matter.

A study by the Nielsen Norman Group, an internationally recognized group of web-usability consultants, found that teens assigned some basic web tasks got them right 55% of the time, while grown-ups succeeded 66% of the time. Participants in the study were dispatched to search for data on sites ranging from MTV to the California DMV.

"The teens' poor performance is caused by three factors," says Jakob Nielsen, the author of the study. "Insufficient reading skills, less sophisticated research strategies and a dramatically lower patience level."

What's funny about an illiterate, unsophisticated generation of twitching kids?

All the news that's fit to parse

I am overloaded with information about information overload, so I thought I would unload on you.

If it makes you feel better, info-overload actually has been around for a long time. "The multitude of books is a great evil," said Martin Luther in 1569. "There is no measure or limit to this fever for writing. Everyone must be an author; some out of vanity...others for the sake of mere gain."

The indomitable churchman, it should be noted, was a prolific author himself.

The book Information Anxiety reports that the Internet is doubling the production of information every four years, adding:

In one year, the average American will read or complete 3,000 notices and forms, read 100 newspapers and 36 magazines, watch 2,463 hours of television, listen to 730 hours of radio, buy 20 CDs, talk on the telephone almost 61 hours, read 3 books, and spend countless hours exchanging information in conversations.

And that was written before 10 million iPods were sold.

Let's face it: We can't keep our mouths shut, our ears un-speakered, our mitts off the keyboard and our hands off the remote control.

So, the helpful folks who know how to do such things believe that we may be able to train computers to slice, dice and customize information for us. Then, we would know what to read, write and think.

The vision of a bold, new world of automatically culled and exquisitely personalized information is brought to a computer screen near you by a fascinating, persuasive and alarming Flash video entitled EPIC. By all means, view it, even if it means hitting the traffic-clogged host site a few times to get through. (If all else fails, the script is posted below.)

Produced in their free time by Robin Sloan of Al Gore's and Matt Thompson of the Fresno Bee, the film is presented as though it were a historical documentary prepared in 2014. It tells how Google and Amazon merged to create a powerful Evolving Personalized Information Construct (hence, the name EPIC), which locates and packages information in a manner tailored to your unique profile and preferences.

The appeal of optimally personalized news is that you wouldn't waste time wading through extraneous information or contrary opinions. In the world of machine-hewn information, you could luxuriate in an orgy of Super Bowl XXXXVIII hype and not be troubled with any unsettling stuff from Iraq, or wherever the crackdown on evildoers takes us in 2014.

Machine-crafted news is a chilling idea. Without the benefit of an edited eye, readers will be overwhelmed with data, factoids and other miscellaneous information, but left without the slightest clue as to how to determine its context, accuracy or validity.

The choices for info-overloaded readers will be grim: Accept the automated news feed and hope for the best. Spend time trying to tease fact from fiction. Or -- this is likely to be the most popular -- fergedaboutit.

There is one other potential alternative: The Robin Good blog, edited by Luigi Canali De Rossi, suggests that over-optimized info recipients could hire newsmasters to help them. Newsmasters are defined as professionals who parse through the reams and streams of data produced every hour to find relevant information and analysis that they conveniently convey to their readers.

Back in 2005, we called them "journalists."

Welcome to the world of Googlezon

Here is the script of the EPIC movie, as transcribed by co-creator Robin Sloan:

In the year 2014, people have access to a breadth and depth of information unimaginable in an earlier age.

Everyone contributes in some way.

Everyone participates to create a living, breathing mediascape. However, the press, as you know it, has ceased to exist. The Fourth Estate’s fortunes have waned. Twentieth Century news organizations are an afterthought, a lonely remnant of a not-too-distant past.

The road to 2014 began in the mid-20th Century.

In 1989, Tim Berners-Lee, a computer scientist at the CERN particle physics laboratory in Switzerland, invents the World Wide Web.

The year 1994 sees the founding of Its young creator dreams of a store that sells everything. Amazon’s model, which would come to set the standard for Internet sales, is built on automated personalized recommendations -- a store that can make suggestions.

In 1998, two Stanford programmers create Google. Their algorithm echoes the language of Amazon. It treats links as recommendations, and from that foundation powers the world’s most effective search engine.

In 1999, TiVo transforms television by unshackling it from the constraints of time -- and commercials. Almost no one who tries it ever goes back.

That year, a dot-com start-up named Pyra Labs unveils Blogger, a personal publishing tool.

Friendster launches in 2002 and hundreds of thousands of young people rush to populate it with an incredibly detailed map of their lives, their interests and their social networks.

Also in 2002, Google launches GoogleNews, a news portal. News organizations cry foul. GoogleNews is edited entirely by computers.

In 2003, Google buys Blogger. Google’s plans are a mystery, but their interest in Blogger is not unreasonable.

The year 2003 is the Year of the Blog.

The year 2004 would be remembered as the year that everything began.

Reason Magazine sends subscribers an issue with a satellite photo of their houses on the cover and information custom-tailored to each subscriber inside. Sony and Philips unveil the world’s first mass-produced electronic paper. Google unveils GMail, with a gigabyte of free space for every user. Microsoft unveils Newsbot, a social news filter. Amazon unveils A9, a search engine built on Google’s technology that also incorporates Amazon’s trademark recommendations.

And then, Google goes public.

Awash in new capital, the company makes a major acquisition. Google buys TiVo.

2005 – In response to Google’s recent moves, Microsoft buys Friendster.

2006 – Google combines all of its services - -TiVo, Blogger, GMail, GoogleNews and all of its searches into the Google Grid, a universal platform that provides a functionally limitless amount of storage space and bandwidth to store and share media of all kinds. Always online, accessible from anywhere. Each user selects her own level of privacy. She can store her content securely on the Google Grid, or publish it for all to see. It has never been easier for anyone, everyone to create as well as consume media.

2007 – Microsoft responds to Google’s mounting challenge with Newsbotster, a social news network and participatory-journalism platform. Newsbotster ranks and sorts news, based on what each user’s friends and colleagues are reading and viewing and it allows everyone to comment on what they see. Sony’s ePaper is cheaper than real paper this year. It’s the medium of choice for Newsbotster.

2008 sees the alliance that will challenge Microsoft’s ambitions. Google and Amazon join forces to form Googlezon. Google supplies the Google Grid and unparalled search technology. Amazon supplies the social recommendation engine and its huge commercial infrastructure. Together, they use their detailed knowledge of every user’s social network, demographics, consumption habits and interests to provide total customization of content -- and advertising.

The News Wars of 2010 are notable for the fact that no actual news organizations take part.

Googlezon finally checkmates Microsoft with features the software giant cannot match. Using a new algorithm, Googlezon’s computers construct news stories dynamically, stripping sentences and facts from all content sources and recombining them. The computer writes a news story for every user.

In 2011, the slumbering Fourth Estate awakes to make its first and final stand. The New York Times Company sues Googlezon, claiming that the company’s fact-stripping robots are a violation of copyright law. The case goes all the way to the Supreme Court, which on August 4, 2011 decides in favour of Googlezon.

On Sunday, March 9 2014, Googlezon unleashes EPIC.

Welcome to our world.

The "Evolving Personalized Information Construct" is the system by which our sprawling, chaotic mediascape is filtered, ordered and delivered. Everyone contributes now -- from blog entries, to phone-cam images, to video reports, to full investigations. Many people get paid too -- a tiny cut of Googlezon’s immense advertising revenue, proportional to the popularity of their contributions.

EPIC produces a custom-content package for each user, using his choices, his consumption habits, his interests, his demographics, his social network – to shape the product.

A new generation of freelance editors has sprung up, people who sell their ability to connect, filter and prioritize the contents of EPIC.

We all subscribe to many editors; EPIC allows us to mix and match their choices however we like. At its best, edited for the savviest readers, EPIC is a summary of the world -- deeper, broader and more nuanced than anything ever available before.