Wednesday, February 24, 2010

Don’t know about Aardvark? You should.

Q. Why did Google buy Aardvark for a reported $50 million?

A. Because the highly addictive social network is a nearly perfect multi-platform, interactive ecosystem. As such, it sets the standard – for the moment, at least – for interactive publishing. If you want to understand the evolution of the media, you need to see it and use it. Then, try to figure out how it applies to your business. Google bought the young company to learn from it – and to be sure that no one else got it first.

Q. Huh? What’s Aardvark?

A. Aardvark is a free service – whose URL is Vark.Com – that lets you ask a question on the web or your iPhone in natural language, as opposed to key words. Most queries are answered remarkably fast and remarkably well by fellow users. Barely two years old, the service had 90,361 users in October, 2009. Its web traffic has dropped since then, but the drop coincides with the launch of its free iPhone app, which the Silicon Valley company says is more popular than its website.

Q. How does it work?

A. A user registers for an account and types in a question, which is sent to people who designate themselves as experts in things ranging from books to fashion to technology. Experts send answers back. When someone in Oregon asked “How do I link together two channels of audio in Final Cut Pro so that I can change the volume of both simultaneously?”, someone in Germany responded within minutes, saying “Select the two audio tracks, then select ‘Modify: Stereo Pair’ in the menu bar or hit Option-L.”

Non-expert users can peruse the latest questions and answer them, too. For example, I was able to point someone to the State Department website that tells you how long you have to wait for a passport to be issued. If you are curious about the answer to a question that someone else has asked, you can tell Aardvark to send the answer to you when it comes in. Users also can tell Aardvark to send them future answers to questions in their areas of interest.

Q. What kind of questions do people ask?

A. As you can see from the pie chart below provided by Aardvark, the queries tend to be seeking recommendations for restaurants, products, services and travel. A large number of queries deal with computer programming and problems.

Q. Why do you say it is addictive?

A. Because it is. But don’t take my word for it. In a research paper prepared for presentation to the upcoming WWW21010 developer conference, Aardvark reported that 87.7% of questions got answered. Three quarters of users who asked a question also answered a question and 70.4% of answers were deemed to be “good,” as opposed to “OK” or “bad.”

Q. Are there more questions or more answers?

A. Interestingly, the average Aardvarker asks 2.5 questions but answers 4.3 questions, according to the company.

Q. What is the revenue model?

A. There isnt one yet, but Google will take care of that in due course.

Q. Any further questions?

A. Ask Aardvark.

Monday, February 22, 2010

‘Tip jar’ vanishes at Miami Herald website

In an utterly unsurprising development, the tip jar quietly has disappeared from the Miami Herald website.

Guffaws and groans greeted the paper’s decision in mid-December to add a heartfelt plea for voluntary donations from readers to the bottom of each of its web pages. But the plea and the link to an accompanying payment page were nowhere in evidence on the website over the weekend.

The now-missing plea, which thoughtfully was archived by Editor & Publisher, said, in part:

Thank you for helping to make South Florida's most-read news destination on the web…. If you value The Miami Herald's local news reporting and investigations, but prefer the convenience of the Internet, please consider a voluntary payment for the web news that matters to you.”

Although a number of publishers have attempted – with varying degrees of success – to charge for some or all of their online content, the Herald is believed to be the first major newspaper to try the tip-jar approach.

Industry surveys have shown that the average number of subscribers at paid newspaper sites is equal to 2.4% of the paper’s print circulation. Newsday famously admitted that only 35 web visitors have coughed up the $5 a week now required to view its site.

Herald officials steadfastly refused to detail the response to the novel program, which debuted in mid-December. However, Herald editor Anders Gyllenhaal said shortly before Christmas that “the first few days of this experiment have elicited an encouraging steam of gifts, ranging from $2 to $55.”

The paper published a short article on Saturday saying it decided to discontinue the program, without explaining the reasons for the decision or the amount of money that had been raised. UPDATE: In an email at mid-day today, Gyllenhaal said the paper felt the request for reader donations conflicted with a campaign for Haiti earthquake relief that has raised more than $1 million.

In his pre-Christmas column, Gyllenhaal said the idea of seeking voluntary donations was inspired by the offer from an online-only reader of the paper’s free website, who wanted to send the Herald a check to support future investigative reporting. While the paper at the time did not have a mechanism for accepting such payments, management decided to test the waters by soliciting voluntary donations.

Judging from the comments attracted by Gyllenhaal’s column, the program was not universally embraced.

“I thought those advertisers actually paid you guys to put all this stuff up that we have to see if we want to look at this site,” said a reader identified as jstella. “Silly me.”

“Yeah, I'm going to tip a for-profit business,” said a commenter identified as lucky0111. “I'd rather burn my money.”

Wednesday, February 17, 2010

Freelance unions to the rescue, sort of

Two unions are offering succor to self-employed journalists in a brutal environment that has vaporized thousands of jobs and driven freelance rates to zero – or something awfully close to it.

One union is fairly well established and the other is just getting on its feet. But neither appears likely to ever help solve the principal problem that unions were organized to address: Raising wages.

Still, the groups are doing what they can to make the lonely freelance life a bit easier. In other words, they are like chicken soup when you have a cold: While they won’t cure you, they couldn’t hurt.

The granddaddy of the freelance union movement for journalists and other creative types is the Freelancers Union in New York. Founded as a non-profit organization in 1995, a spokeswoman for the union says its membership has doubled to 132,000 in the last two years.

Meanwhile on the Left Coast, the Media Workers Guild of Northern California has been trying for more than a year to build a Freelancers Unit.

The unit, which represents the first effort by the Newspaper Guild to address the needs of journalists who are not employed at any news organization, has only 62 members. But a spokeswoman says there are plans to step up recruiting in a market where thousands of journalists in the last few years have been forced into involuntary freelancer-tude.

The greatest good that either unit has achieved to date is the establishment of reasonably priced health insurance for members of the New York union who live in that state. And it appears to be quite a respectable accomplishment, too.

Jacklyn Kessel, a spokeswoman for the New York union, says its $388-per-month health policy is approximately a third the cost of similar point of service (POS) plans offered by other vendors in New York State. If you want to know about POS insurance, please click here.

The bargain insurance, which uses the Blue Cross-Blue Shield provider network, is sold by a for-profit subsidiary of the non-profit union. Although the for-profit structure is required by state insurance regulations, the union says it does not intend to make a profit off the business. This may help to explain the lower rates.

The New York union is looking into expanding health insurance to other states and the California group says it will try to offer a group policy as soon as it gets enough members to gain a decent discount from an insurance company.

Meanwhile, boosting pay – the really big objective for any union – is not on the agenda on either coast.

“We're very concerned about the low rates freelancers get paid,” said Sara Steffens of the California union in an email, but antitrust laws prohibit “independent contractors from banding together to set minimum rates.”

For the same reasons, the New York group says it never has tried to organize members to demand higher pay – and never will.

So, the best the unions can do at the moment is to list chiseling publishers on what the California group calls its “Wall of Shame.”

That certainly won’t stop journalists from being exploited. But, like chicken soup, it might help them feel a little better.

Tuesday, February 16, 2010

A preposterous argument for plagiarism

The ease with which content can be remixed these days not only has eliminated every technological barrier to plagiarism but also enabled some jaw-dropping justifications for this utterly indefensible practice.

A preposterous example of the pro-plagiarism argument is the case of a 16-year-old German writer, whose novel won wide acclaim before it was learned that she had copied whole pages from another book.

“There’s no such thing as originality, anyway,” said the author, Helene Hegermann, according to an article on Friday in the New York Times describing the controversy over her book, “Axolotl Roadkill.”

Amazingly, the author’s brazen argument was accepted by a judge for one prestigious prize for which the book was nominated. “I believe it’s part of the concept of the book,” said judge Volker Weidermann.

Talk about ethical roadkill.

To be sure, plagiarism wasn’t invented on the Internet. It probably goes back to the time that one cave artist copied another’s image of a mastodon in what arguably might have been the origin of language. Modern technology has just made plagiarism easier.

Copying, cutting and pasting are so quick that you don’t have to think about it. And that’s the problem. If you come across a passage you like, you can snip it, verbatim, right into something you are writing. If you like a photo, you can copy it, PhotoShop it a bit and stick it right on the page. You even can skip the PhotoShop part and use it exactly as it was published in the first place.

Because it takes considerably more effort to remix music and video, the outcome rarely is identical to the original, buttressing the case for those who say ideas can’t be owned by anyone and, therefore, are free for the taking. If the miracle of the modern media is that everyone has more or less free access to all manner of information, then how can anyone argue in favor of the archaic doctrine of copyright or against the anachronistic concept of plagiarism?

To muddy the waters further, there is the slippery legal concept of fair use, which says a certain amount of copyrighted information can be used without penalty by journalists reporting a story or by reviewers appraising an artistic effort. The problem with fair use is that the only way to determine if use was fair is if the owner of the copyright sues the allegedly offending user. Because fair-use cases are difficult and expensive to adjudicate, most copyright owners don’t bother, giving users ample room to stretch the boundaries of what is fair.

There are many who see nothing wrong with appropriating intellectual property created by another, noting that imitation is the sincerest form of flattery. Further, people publish things so widely and freely on the web that it is easy for a “flatter” to rationalize the “imitation.”

While the digital media may have made the motivations, rationalizations, opportunities and tools for ripping off content more plentiful than even before, the practice is intellectually dishonest.

No technological advance can alter the fundamental difference between right and wrong. It is wrong to steal someone’s bicycle and it is wrong to steal someone’s ideas or work product in order to represent it as your own.

If for some reason the foregoing ethical argument is insufficient, then consider this: Because the web is open, easily accessible and readily searchable, it is more likely than ever that cheaters will be discovered faster and more surely than ever before. As Exhibit A, consider this case in yesterday’s news of a New York Times reporter who evidently cut and paste items from the competition.

In other words, cheating is not only dishonest but it is also stupid. Credibility takes a lot of time and work for someone to establish. Once it is lost, it is enormously difficult – if not impossible – to get it back.

Friday, February 12, 2010

Maybe others should copy early LAT deadlines

Newspaper traditionalists recoiled when the Los Angeles Times announced a few weeks back that it would move its front-page deadline to the shockingly early hour of 5:25 p.m. from the prior 11:25 p.m.

Although I shuddered along with those who worried about the paper’s ability to cover late-breaking news, the initial results have persuaded me that most newspapers would benefit from the discipline of earlier deadlines.

Why? Because it would force them to put more thought and planning into their coverage.

As revolutionary as forethought might be in some newsrooms, the smart front pages produced at the LAT since the tighter deadlines were implemented suggest that early closes could lead to more of the deep, interpretive coverage that newspapers are uniquely equipped to deliver.

By playing to print’s singular capability to illuminate complex and subtle subjects, publishers can strengthen the competitive stance of the products that generate the vast majority of their revenues.

And that would be a good thing, too, because print cannot possibly match the speed, drama and timeliness that CNN or Twitter can bring to any breaking story.

Unfortunately for newspapers, too many editors and reporters feel their front pages have to match the evening news, instead of setting the agenda for the day on which they appear.

This anachronistic thinking leads to stale and unimaginative front pages that tend to reinforce the growing public perception that newspapers are stale and unimaginative products.

The early deadlines at the LAT, which took effect at the beginning of this month, are the not the result of a brave or noble experiment aimed at improving the quality of the product.

Rather, they result from harsh economic realities that caused management to decommission the Orange County production facility to save some $10 million a year.This forced the LAT to shave six hours off the deadlines for the A section, which is the fattest part of the paper and takes the longest time to print.

It still is possible to get late news into a separate section of the Times called LATExtra, which goes to bed at the same 11:25 p.m. as the front page used to close. Because press capacity is limited to 24 pages, it is not possible for the larger A section to printed at that late hour.

The new deadlines were put in place after the LAT in August began printing the Wall Street Journal at its main plant. Insiders say it was the shutdown of the satellite facility - not the WSJ job - that required the deadline shift.

So far, the LAT appears to be making lemonade out of this lemon. It rose to the unwelcome challenge by moving away from reactive and episodic coverage and replacing it with enterprise reports that tell readers things they couldn’t have learned by watching last night’s news. What a concept!

Page-one coverage since the commencement of the early deadlines has included cutting-edge coverage of the Toyota recall saga, a solid backgrounder on the political complexity of Yemen, a thoughtful analysis on the politics of the federal budget, an alarming piece on the plight of the endangered brown pelican and several human-interest pieces. The well-varied mix, however, was light on local enterprise stories.

As long as there is sufficient staffing to continue the production of quality articles, the LAT should be able to shine on most routine news days.

The test will come when the paper has to deal with a major, late-breaking news story like the assassination of Bobby Kennedy, who was gunned down after midnight in a hotel kitchen.

The LAT did a terrific job with the Kennedy story on that awful night in 1968. Could it do as well tomorrow?

Wednesday, February 10, 2010

How one enterprising journalist hit it big

The entrepreneurial business model for journalism may not succeed as often as we would like, but it worked perfectly for Michelle Leder, who just sold her home-brewed publishing business to a $2.2 billion company.

You may not have heard of Michelle Leder or her website, Footnoted.Org, which she started in 2003 in her suburban home in Peekskill, NY. But dozens of billion-dollar, hedge-fund managers know Footnoted.Org very well.

And they have come to rely on the site in the last 6½ years for the juicy tidbits that Leder mines out of the ponderous financial disclosures that publicly held companies are required to file with the Securities and Exchange Commission.

While those turgid tidbits might bore ordinary mortals senseless, they represent valuable and actionable business intelligence that can help traders make or avoid losing millions.

Fortunately for Leder, a 43-year-old lifelong business journalist, her work didn’t merely attract the attention of the Wall Street crowd. Her growing following also captured the interest of Morningstar, the giant, Chicago-based publisher that sells nearly $500 million a year in research and advisory services to large and small investors.

After Morningstar representatives contacted Leder last year to see about using some of her content in their products, one thing led to another and, well, Morningstar yesterday bought Leder’s business for an undisclosed sum.

“I am very excited about this,” said Leder, who will become a Morningstar employee but continue to share in the future revenues generated by Footnoted.Org. “Not only will I get some cash and continue working with them, but I am really excited about having the resources to grow a business I believe in. It’s just really cool.”

Cool, indeed. And it’s also a perfect example how of a modern journalist no longer needs a job at a major media outlet to build a satisfying and remunerative career.

Whether you have a job or not, the secret to journalistic success in the future is to become an entrepreneur by developing a specialty (or two or three) and then working tirelessly to brand yourself as a recognized expert in the field.

The low costs of online publishing make it easy to hang out your shingle on any conceivable subject and then to leverage the viral power of the web to build an audience. From there, you can go on to writing freelance articles, authoring a book, speaking, teaching and maybe even selling doggie T-shirts.

But it isn’t easy, as Leder is the first to point out. “This has not been an instant success,” she said in a telephone interview. “I have been plowing away at this for a long time.”

Prior to starting Footnoted.Org in 2003, Leder was a reporter and editor for 10 years at newspapers in Florida, Connecticut, and New York. She found her calling as an SEC maven when she began digging into government filings to investigate questionable accounting practices at a Florida bank.

Her skill at parsing arcane documents led her to write a book called Financial Fine Print, which was published in 2003. She started the Footnoted site to promote the book and has been scouring SEC filings ever since.

I met Leder several years ago, when she was seeking ways to make bigger money off her all-consuming project. We discussed and soon rejected the hope of building a significant revenue stream from online advertising. Instead, we agreed that her primary effort ought to be selling subscriptions for premium content to hedge-fund managers. And that’s what she did.

(To be clear: I am not trying to horn in on the credit. Leder did this all herself.)

Leder won’t say how many investors are paying $2,500 a year for her premium service, but it is a safe bet that the willingness of her subscribers to write those fat checks is what persuaded Morningstar to write its check to Leder.

Now, Leder is looking forward to a wider audience for her work – and all the future financial goodness that may mean. “I am generating maybe 500,000 page views a month, while Morningstar does 200,000 a day,” she said. “They have a hell of a lot more people to market to than I will ever have.”

Before she can get around to that, however, Leder and her two-person staff have a pile of SEC documents to plow through.

Monday, February 08, 2010

Why it’s perfectly OK to blog for free

In response to my recent posts saying journalists should insist on being paid properly for their work, several people have asked how I justify blogging for free. Good question. Easy answer:

Blogging for fun and profit – or, ideally, for both – is a victimless pursuit. But it is unethical to abet the exploitation of fellow journalists by working for publishers who pay nothing or something awfully close to it. Allow me to elaborate.

Writing a personal blog, though demanding if you take it seriously, is fun. It is a socially acceptable way to get things off your chest and cheaper than going to a shrink.

Blogging also can be profitable, if the blogger gets hired to teach, consult, speak, write articles or author a book. In the interests of full disclosure, I have done everything but publish a book. However, I am working on a book now and would be happy to hear from any potential publisher.

The point of blogging is that it is something you do for personal satisfaction and/or personal gain. In other words, it’s a lot like building birdhouses or baking cheesecakes.

If you build birdhouses, you can give one to a friend or try to sell some at a craft store (note the $75 price tag on the example above). But no one would hand a bunch of birdhouses to the local Home Depot so it could sell them and keep all the money. You might take a cheesecake to your church bake sale, but you wouldn’t wheel a rack of them into the Safeway and tell the manager to sell them and pocket the profits.

If a clear-thinking journalist would not donate birdhouses to Home Depot or cheesecakes to Safeway, why would she give her professional services for a pittance – or, worse, nothing – to an organization that was taking advantage of her to make money?

Some helpless-sounding people feel they have to give away their work to gain the “exposure” they hope will earn them paying gigs. I say that’s unethical, because it takes work away from journalists who not only want to get paid but – damn it – need to get paid. It’s just that simple.

Friday, February 05, 2010

Journos aren’t helpless against market forces

Without question, there never has been a bigger response to this blog than the one that greeted the piece the other day encouraging journalists to demand to be paid decently for their work.

The preponderance of comments – which apparently were authored (for free) by starving journalists – was quite favorable. Thanks, guys.

But the most interesting reaction came from people (here and here) who said journalists should quit bellyaching and continue working for free because they happened to be on the losing end of the supply-demand curve. Well, anti-bellyachers, I wholeheartedly disagree. And here’s why:

If journalists want themselves and their work to be respected, they are going to have to keep bellyaching – and withholding their services until they are properly compensated. It’s right to be paid a decent wage for your work. Walmart knows it. Starbuck’s knows it. And it’s high time that exploitive online publishers know it, too.

The nut of the anti-bellyacher argument is as follows:

It’s a shame that the old media can’t afford to retain many journalists. It’s a good thing that so many new media sites are emerging to showcase their work. Because there are more journalists available to work than dollars to pay them, journalists should accept the fact that the market is against them, quit bellyaching and get back to working for free — or something awfully close to it.

I readily stipulate that the traditional media businesses are hurting and that web start-ups provide a welcome outlet for latent journalistic expression. But I don’t accept the argument that journalists are powerless against the market forces arrayed against them.

The way to address the supply-demand imbalance is not to submit to ever-lower prices for your work, but, rather, not to work at all. If the supply of willing hands contracts, then publishers will have to pay up to fill their pages.

Empty pages mean diminished page views. Diminished page views mean reduced advertising revenue. Lagging traffic and sales will get the attention of the websites that exploit journalists.

It’s a tough call for anyone to balk at a too-small paycheck when the alternative is no pay at all. If selling your services at a discount is what you have to do to make ends meet, then by all means do it. And don’t give it a second thought.

But journalists have nothing to lose by not working for free. When you say no to exploitation, you have everything to gain in terms of enhanced self-respect.

Wednesday, February 03, 2010

Why many newspaper pay sites may fail

If modern publishers shared the smarts of Benjamin Franklin, one of the shrewdest of their number who ever lived, they might today be selling content successfully on the web.

“Gentlemen,” intoned Franklin, urging fellow patriots to sign the Declaration of Independence in the sweltering summer of 1776. “If we don’t hang together, we most assuredly will all hang separately.”

While Franklin evidently wasn’t the first person to utter the immortal line widely attributed to him, things would have gone better for todays publishers if they emulated his wisdom when they began trying to sell their valuable content.

Instead, newspapers are embarked on a scattered number of half-baked, one-off pay schemes that for the most part are doomed to fail. It didn’t have to be that way. But the outcome isn’t particularly surprising, given the inability of publishers to successfully collaborate, even though this is the most difficult time in the history of their business.

Newspapers lost their last chance to hang together when it became clear yesterday that the wheels seemingly have come off Journalism Online, the ambitious, global pay-wall initiative launched last year by serial entrepreneur Steven Brill.

After a year of trying to persuade publishers worldwide to join the universal content-vending system that he envisioned, Brill told the New York Times the only committed client he could identify was a Lilliputian daily in Lancaster, PA. Brill said more affiliates are on the way for a service he christened Press+.

While Brill barnstormed unsuccessfully in support of his idea, papers great and small embarked on – or at least started the final boarding process for – a plethora of pay schemes that they each cobbled together for themselves.

The profusion of pay plans has produced a welter of home-grown offerings that will be alien, confusing and generally repugnant to consumers who have been gleefully consuming content for 1½ decades without having to pay for it.

Fortunately for piqued consumers, they can quickly click to any of the thousands of free sites that will be eager to welcome them. Newspapers won’t be so lucky.

The value of Journalism Online – and the similar but different ViewPass project I abandoned last fall when it became clear the industry could not rally around a common pay platform – is that either would have been a widely available, highly visible system that surfers would recognize all over the web.

These trusted, ubiquitous brands would have made it easy for consumers to buy content at any participating site by simply clicking a button to activate a previously authorized credit card.

Instead of coalescing around one or two universal payment systems, the publishers elected to fire off in all directions:

:: The New York Times will wait until next year to introduce a metered system that requires visitors to pay after taking advantage of a still-to-be-determined number of free peeks at the site. The solution may work great for NYTimes.Com, but there appears to be no plan to extend it to other publishers.

:: Newsday already has implemented a protocol that requires visitors to subscribe in order to read anything more than the few paragraphs running in the clear on its site. The scheme, which has resulted in a 41.5% drop in site traffic since it debuted in the fall, has gained a whole 35 subscribers willing to pay $5 a week. This system might work for Newsday, which is giving free online access to anyone who subscribes to its print product or the cable services owned by it parent, CableVision. But the plan doesn’t seem the least bit extensible to other papers.

:: At least three dozen small- and medium-dailies around the country have deployed individual systems to sell some or all of their content for prices ranging from $1 a year to $400 a year. The response? On average, an amount equal to only 2.4% of the print subscriber base of the papers is paying for online content. Inasmuch as there is no common thread among the various solutions, there’s scant chance an industry standard will emerge.

While publishers in certain isolated markets may employ successfully Newsday-like plans to stanch the erosion of their print circulation, none of the schemes to date is helping turn interactive content into the potent new revenue stream it ought to be.

Had publishers agreed to build a unified pay system, they could have created a marketplace to syndicate articles among themselves and to target articles to readers according to their interests. Newspapers could have collected premium prices for ads served alongside the targeted content and might have been able to curb a bit of copyright poaching, too.

But the publishers never got it together. Now, they’ll be hanging separately.

Tuesday, February 02, 2010

Gannett profit slide points up industry peril

Gannett Inc., long regarded as one of the most parsimonious newspaper publishers, may be running out of expenses to cut.

But this is no reason for the company’s oft-furloughed employees to cheer. Quite the opposite.

Gannett’s inability to reduce costs fast enough in recent years to sustain its traditionally high operating margins illustrates the grave challenge facing the newspaper industry:

Unless ad sales rapidly and vigorously rebound, the unavoidably high fixed costs associated with printing and delivering newspapers eventually could eat publishing companies alive.

To be sure, Gannett and most other publishers are far from going out of business. Almost all of them still continue to generate profits that put most other companies to shame.

But the rapidly declining profitability of Gannett and many of its peers suggests that they may be running out of ways to stay ahead of the enormous fixed costs that threaten the long-term future of newspapers.

Fixed costs are the costs you have to pay to be in business regardless of how much business you have. Apart from the variable cost of newsprint, it essentially costs a publisher as much to be equipped to print and deliver 100,000 newspapers as it does to print 75,000. Most fixed costs don’t go away when revenues fall by 30%, as they have at Gannett since 2006.

While publishers can trim so-called elastic costs by eliminating the op-ed page or shrinking the news staff, they can’t avoid the inelastic expenses required to operate complex manufacturing plants that are used only a few hours a day to make a highly perishable product that must be delivered on a demanding schedule by fleets of human-piloted vehicles.

If sales cannot cover fixed costs and a business runs out of variable costs to cut, then the business at some point won’t be able to make a profit. Absent profits, a company eventually goes out of business.

Precisely because Gannett has been so vigilant over the years about controlling such variable costs as headcount, pay and news hole, the company appears to be coming up against the reality of unavoidably high fixed costs faster than less-thrifty publishers who had relatively more fat to cut out of their organizations when ad sales collapsed. Here are the details:

While Gannett’s revenues topped out at $8 billion in 2006, the company’s sales were $5.6 billion in 2009, a plunge of 30.1% in just three years.

As much as sales slid, the drop in profitability was worse. The operating profits of the nation’s largest newspaper publisher plunged 51.6% to $1.1 billion in 2009 from nearly $2.3 billion in 2006. The trend, which accelerated in the last two years, is illustrated in the chart below.

Operating profits also are known as EBITDA, which stands for earnings before interest, taxes, depreciation and amortization. EBITDA reflects the amount of money a company makes on its actual operations, without respect to the numerous adjustments that can either increase or decrease the net earnings which are the focus of most business stories.

Gannett reaped $31 in EBITDA for every $100 sales in 2005 but its operating profits were only $20 for every $100 in revenues in 2009. Most companies would be tickled to have EBITDA of 20%, but that number looks fairly anemic when a business is accustomed to getting 31%.

Companies count on operating profits for a variety of purposes, like paying taxes, servicing debt, funding dividends or launching new digital products. If EBITDA falls way short of expectations for way too long, the economics of a business are unhinged.

Even though most news reports yesterday about Gannett’s 2009 earnings highlighted the improvement in its net income in the latest quarter, the steep EBITDA decline in the last two years suggests that the company, like most other publishers, is running out of ways to trim expenses as ad sales decline.

Given the inability of the company to sustain its margins as sales fell, it seems fair to hypothesize that profits will continue to erode if ad sales don’t recover or the company can’t develop significant alternative revenue sources.

“We are a leaner, stronger company as we move into 2010,” said Gannett chief executive Craig A. Dubow in a conference call with securities analysts to discuss the companys financial health.

Leaner, yes. But stronger? That remains to be seen.

Monday, February 01, 2010

Stop the exploitation of journalists

It’s time for journalists to stop participating in their own exploitation by working for a pittance – or, worse, giving away their valuable services for free.

Apart from the sheer righteousness of being paid an honest dollar for an honest day’s work, journalists need to stand together – and stand tall – to reassert the stature of their profession.

The reason is simple: If they don’t put a value on what they do, then no one else will, either.

Last time I checked, the prevailing way to express value in our modern economy is via the transfer of m-o-n-e-y. In a minute, I will share a simple spreadsheet to help you calculate your own worth as a journalist.

But first, I am urging everyone to join in my new year’s resolution to just say no to people who invite you to work for nothing or something awfully close to it.

I hear from people almost every day who want to commission an article or reprint a post in exchange for the ephemeral compensation known as “exposure.”

Amazingly – or, should I say, outrageously? – most of the requests come from people who themselves are being paid for their work at either a for-profit or non-profit organization.

Instead of simply declining, I tell them something like this:

Quality journalism takes training, time and tenacity. Although it’s easy to fill space with words, pictures and videos that are produced quickly and on the cheap, down-and-dirty “journalism” is the intellectual equivalent of empty calories.

The more empty calories you consume, the unhealthier you get. It won’t be good for our democracy – let alone our self-esteem as journalists – if we attempt to nourish vital local, state and national conversations with the journalistic equivalent of Ding Dongs and McNuggets.

The dangerous devaluation of journalism is the direct result of the contraction of the traditional media, which have idled tens of thousands of experienced journalists in the hopes of approximating their exceptional historic profitability.

The market is flooded not only with sidelined veterans but also with hungry, young journalists trying to land their first gigs (see also Journicide: A Looming Lost Generation of Scribes).

This makes it easy for countless new media ventures, and even some of the older ones, to pick off writers, photographers and videographers on the cheap. Such was the case last year when a freelancer got a measly $31.50 for a photo that ran on the cover of a Time magazine issue ironically devoted to “the new frugality.

The only way for journalists to fight back is to demand to be paid what they’re worth.

Having articulated the principle, the only thing left to consider is the practical question of how much to charge. There is no one-size-fits-all answer, because – as always has been the case – there is a wide disparity in pay among journalists.

A fortunate few make hundreds of thousands of dollars a year and an even smaller number make millions. They have agents to handle their finances, so there’s no need to worry about them here.

For those of you without an agent, I have prepared a simple spreadsheet that you can use to calculate your worth as a journalist.

Follow the template (left) to build a working model for yourself. Here are some notes to help:

The section called “Professional Services” (lines 2-9) tries to account for all the time you spend on a story – not just reporting and writing but also scouting up ideas, writing pitches, to-ing and fro-ing with editors, travel time and all the rest.

The calculation called “Overhead” (line 10) helps compensate you for the considerable burden of being self-employed. And it is a burden. When you are self-employed, you have to buy your own computer, pay your own phone bill, buy your own health insurance and pay what otherwise would be the employer’s share of state and federal payroll taxes. Round numbers, this means you should charge 20% on top of your professional fee to cover those expenses.

The “Expense” section is there to remind you to include not just the value of your labor but also the very real costs associated with fulfilling an assignment. While the categories are self-explanatory, lots of people neglect to charge for mileage. I have used 50 cents a mile, which is the charge established for this year by the Internal Revenue Service. (It changes annually, so remember to check in the future.)

Once the spreadsheet is ready, the single most important question is what hourly rate to plug into cell C3. Here’s how to think about what the number should be:

The Newspaper Guild publishes a list of newsroom salaries here for a number of organizations around the country. While some of the information is not up to date, the Guild says that scale today for a journeyman reporter at the Pittsburgh (PA) Post-Gazette is $29.33 per hour. (Fun fact: This is $2 an hour more than the Associated Press paid its janitors in 2007.)

As it happens, $29.33 is almost exactly four times the minimum wage in Pennsylvania. You can establish a fair and defensible hourly rate by multiplying the minimum wage in your state by 4. The U.S. Bureau of Labor Statistics conveniently publishes the minimum wage in each state here.

If you want to price your services on a per-word basis, fill out the “Professional Services” section of the spreadsheet and divide the total cost of your professional services and overhead (line 11) by the number of words you plan to write (line 12).

The 35-cent-a-word charge in the sample spreadsheet seems awfully low to me. So, feel free to raise the hourly or per-word rate as you see fit.

Whatever you do, though, don’t sell yourself short, because journalists can’t protect society if they can’t protect their own careers.