Monday, September 24, 2012

How confident are publishers, really?

I can’t figure out what to make of the strangely inconsistent findings in a pair of new polls measuring the degree of confidence that publishers have in the future of newspapers. Can you? Here is what we know:

On the bullish side of the ledger, a survey released recently by the University of Missouri found that two out of three publishers are “optimistic” about the future of the newspaper business.

On the bearish side, a separate online poll conducted by newspaper broker John Cribb has found consistently over the last four years that only one out of three publishers wants her or his kid to go into the newspaper business.

So, the question is this:  If the outlook is so positive, why don’t more publishers want their progeny to follow in their footsteps?  Comments gratefully accepted below. 

As you consider your answer, here are a few more intriguing tidbits from the polls:

In a survey of 458 newspapers representing a third of the industry, the Missouri study found executives at papers with less than 50,000 in circulation to be far more optimistic than those at larger papers.

Of the 109 respondents who said they are “very optimistic” about the future of newspapers, 63% worked at papers of less than 25,000, 20% worked at papers of 25,000 to 50,000 in circulation and only 17% worked at papers of greater than 50,000 in circulation.

The disparity suggests that the newspaper business is healthier in small and medium markets than in metropolitan areas, where costs are higher, ad sales are weaker and digital competition is keener.

With respect to the future of the legacy product, 62% of all respondents to the Missouri survey said they do not envision a day when they no longer will put out print editions and 77% of respondents said their companies had not considered cutting back on the number of days they print papers during the week.

The Missouri poll was the first such effort by the Reynolds Journalism Institute, which intends to repeat the survey in subsequent years to begin tracking publisher confidence. 

In a parallel initiative, newspaper broker John Cribb has been measuring the attitudes of publishers over the last four years in an online poll. 

Unlike the Missouri poll, which quizzes a systematically selected sample of publishers, the Cribb survey depends on voluntary participation by people whose responses are solicited via email.  Although Cribb’s methodology is less scientific than the Missouri effort, his poll has produced remarkably consistent results in the last four years, thus meriting our attention in the absence of any other known long-range sentiment surveys. 

Starting in 2009 and continuing to this year, Cribb has found that only one publisher out of three wants her or his offspring to go into the newspaper business.   At the lowest point (2010), only 31% of publishers thought newspapering would be a good career for their kids.  The sentiment in 2012 was the highest in four years, with 36% of respondents saying they would encourage their children to go to work at a newspaper.

In another gauge of confidence, Cribb has been getting consistent responses from publishers over the last four years on the question of whether they would like own another newspaper.  On average, only half of them said yes, with the appetite for acqusitions peaking at 52% in 2009, bottoming out at 46% in 2010 and standing at 49% today.    

Because Cribb does not ask the same questions that Missouri asks about the long-range outlook for the business, there is no way to see how over-all confidence has trended in the last few years.  If the Missouri study goes forward as planned, we will get  a better idea of which way the wind is blowing.

Meantime, we’re left wondering why more publishers aren’t eager to have their kids enter a business they think is so promising.  Do they just want to keep all the fun for themselves? 

Wednesday, September 19, 2012

Is there a tomorrow for USA Today?

USA Today celebrated its 30th anniversary last week with a plump commemorative edition and a meh facelift, but can it survive another 30 years? As a digital brand, potentially.  As a print publication, probably not.  

The third-largest newspaper in the country by circulation, USA Today admittedly is in a class by itself, as the only general-interest national newspaper.  Its weekday distribution of 1.8 million trails the 2 million-plus circulation of both the Wall Street Journal, which specializes in business and financial news, and the New York Times, which is the house organ for global leaders in government, business, academia and the arts. 

As USA Today commences its fourth decade, there is reason to wonder if its business model will be viable for another 30 years, given that it has lost its utility to its primary targets: business travelers and the advertisers seeking to reach them. Further, nearly two-thirds of its coast-to-coast circulation is built on free copies distributed by hotels and other businesses, meaning that barely more than a third of its readers actually think enough of the paper to pay for it.  

Before we get into any of this, however, let’s give the publishing venture – and the visionary who started it – their due. 

USA Today was launched in 1982 by Al Neuharth, the swashbuckling chief executive of Gannett who forthrightly titled his subsequent autobiography “Confessions of an SOB.” He paid such meticulous attention to the details of the paper in its early days that he once famously ordered the news editors to remake the paper to move the picture of a bunch of cheerleaders higher on the front page.  “Always put the [bleep] over the fold,” he barked at the editors, referring to a colloquial term for the female bosom that rhymes with “grits.”  But I digress.  

Although the print incarnation of USA Today seems somewhat retro in the age of iPads, Androids and Kindles, the original publication, in certain ways, presaged the web before we knew there was going to be one.  At a time when newspapers were filled with long, gray columns filled with long, gray stories punctuated by an occasional black-and-white photo, USA Today was packed with brief articles, punchy headlines, color photos and an unprecedented array of infographics that made it a breeze to surf before we knew what surfing was.  Traditional journalists, like me, scoffed at the idea that readers would prefer pie charts charting national pie preferences over 12 inches of yadda-yadda copy about how a certain committee tabled a certain study of some arcane topic for further study. But history proves that we were wrong.    
As detailed amusingly in the 1987  book “The Making of McPaper,”  Neuharth’s immodest goal was to publish a newspaper you could get almost everywhere in the United States, and he achieved it by overcoming a host of technological and economic barriers to arrange the simultaneous printing of identical-looking editions at dozens of sites.  To do this, he employed presses at both Gannett papers and those of other publishers – but only after forcing them all to add unprecedented color capacity and enforcing previously unimaginable standards for the quality of the results. 

Although USA Today was an entity of a publicly held company, Neuharth brilliantly concealed from shareholders the magnitude of the losses the start-up undoubtedly incurred.   One of his best ideas was to require individual Gannett papers to, ahem, donate staffers to the USA start-up team while continuing to pay them as though they were covering City Hall or selling papers in their home markets.  This strategy, of course, did not relieve local publishers from achieving the ambitious profit targets prescribed by Gannett’s exacting bean counters.  It therefore would be fair to say that Neuharth pioneered the modern art of doing more with less.  

In the days when “targeting” newspaper circulation meant landing a paper on someone’s doorstep instead of under the bushes, Neuharth decided to aim the circulation of USA at well-compensated and expense-account-packing business travelers, who might find themselves boarding a flight in Chicago on Tuesday, waking up at a hotel in Knoxville on Wednesday and planning a trip to Houston on Thursday.  To help travelers orient themselves to wherever they might be – or wherever they were going next – USA Today put a detailed, full-color weather map on the back page of the first section, ran a daily digest of major news from all 50 states, and published perhaps the most comprehensive collection of sports results in the land.  The concept helped to fill the paper with ads for airlines trying to attract customers with such amenities as – and I am not making this up – the quality of their free, in-flight meals. 

But that was then and this is now.  Today, every major domestic airline but Southwest has nixed even free peanuts, and travelers pack not only expense accounts but also smart phones, tablets and laptops that track the weather, get all the news from home and let them watch video of everything from their kid’s Little League game to cricket in Pakistan.  In other words, the onetime value of USA Today to the business traveler has been all but usurped. At the same time, profit-starved airlines are putting most of their marketing muscle into jockeying for position on pricing engines like Expedia and Kayak, instead of buying half-page print ads to stress the charms of their flight attendants. 

The future of the print edition of USA Today is periled further by the fact that nearly two-thirds of its readership consists of free copies dropped outside of hotel rooms, given away at businesses or handed out to students.  Only 36% of its papers each day are purchased by individuals who actually pay $1 to read it, according to the most recent report from the Audit Bureau of Circulations.  Fully 52% of USA Today’s circulation goes to hotels, which purchase copies at deeply discounted rates as an amenity for their guests.  

While a few hotels charge guests for delivering the paper to their rooms, most provide it for free.  How long will hoteliers spend money to put the paper in front of rooms at night and pick up abandoned copies the next morning – especially when they can charge $15 a day for Internet access, so busy executives can check the weather and hometown news on their own mobile devices?  Acting in concert or individually, a handful of hotel executives could wipe out the preponderance of the papers circulation overnight.     

Far from being strategically concentrated in any given geographic area, USA Today’s circulation literally extends from sea to shining sea.  As such, the paper is the antithesis of the sort of efficient and highly targeted advertising that a growing number of national (and local) brands prefer.   Though USA Today managed to wrest a healthy number of  congratulatory ads out of its vendors to fatten the commemorative edition, the paper is facing the same secular headwinds as every print or broadcast medium that relies on selling advertising by reach, instead of by the each.  

The flip side of the paper’s success in establishing a national footprint means that USA Today is saddled with an enormous – and largely unavoidable – cost structure. Though USA Today was an industry leader in outsourcing printing and distribution via a national network of production partners, there are no easy ways to materially trim the costs of printing and distributing 1.8 million papers a day.  While Neuharth could subsidize the launch of USA Today 30 years ago with the strong and steady profits reliably produced Gannett’s other newspapers, those publications today are battling weak ad sales and high operating costs of their own. 

A major and ongoing dividend of the long-running investment in the print version of USA Today is that it prepared Gannett to compete in the digital age well ahead of most newspaper publishers. Not only was the graphics-rich meme of USA Today readily  exportable to the web, but the brand also possessed the sort of high visibility and built-in recognition that other publishers could only envy.  

ComScore, the independent ratings service said that the 34.1 million unique visitors to the USA Today websites in May made it the fifth busiest of the general news sites. As large as its audience is, USA Today has more work to do to capitalize on the opportunity. 

Coinciding with its birthday, USA Today put its web and mobile offerings in new and appealing Zite-lite packages. The actual content contained in those new packages, however, consists  of a thin mix of aggregated and featherweight articles that seem to have been chosen more for their pageview-generating potential than for their journalistic significance. The result is that the aggregation is less complete than you get at Huffington Post, less illuminating than you get at Real Clear Politics, less stimulating than you get at Drudge Report and less newzy, breezy and sleazy than you can get at TMZ.  

The next iteration of USA Today clearly is a work in progress, evidently hastened to market in time for the 30th anniversary by publisher Larry Kramer, the founder of MarketWatch who was recruited in May to run the organization. Even though there’s still a bit of time for Kramer to determine how to leverage the waning power of the print brand in the digital world, there can be no doubt that my esteemed friend knows there is little time to waste. 

Monday, September 10, 2012

Print ads fell 25x faster than digital grew

Print advertising revenues at newspapers in the first half of this year fell 25 times faster than digital sales grew, demonstrating the feebleness of the industry’s response to the shifting (shifted?) media landscape. 

In the fist six months of 2012, the aggregate print sales of the nation’s papers fell by $796.8 million, or 8.0%, from the prior year, according to data released last week by the Newspaper Association of America, an industry trade group.  At the same time, the NAA says, digital sales grew by $31.4 million, or 1.9%, from the same period in 2011. 

Thus, print sales in the first half of this year plunged 25 times faster than interactive revenues grew, notwithstanding the so-called “digital first” strategy – whatever that means – articulated by almost every publisher and editor. 

It's not that people aren't buying digital advertising.  

In the first three months of this year, total ad sales across all digital media in the United States climbed 15% to a record $8.4 billion, according to the Internet Advertising Bureau, an industry-funded trade organization. 

In the very same period, however, interactive ad sales at newspapers rose only 1.0% to $816 million, capturing a mere 9.7% share of the market. As discussed previously here, newspapers controlled as much as a 17% of the digital ad market in 2003 and had a respectable 15% share of sales as recently as 2007.  

Part of the shrinking share properly can be attributed to the dizzying growth in the last decade of the number of players in the digital advertising marketplace.  But an equally significant part of the problem is that newspapers unimaginatively tried to export their formerly successful print business model to the digital realm. 

Since the debut of the web, publishers for the most part have had two ideas, which were based on the reach advertising model that served them so well for many generations:  Charging a hefty fee for the dissemination of print classified ads on the web and selling print-like, run-of-site banner ads by the thousands. 

Although print advertising carried the day for newspapers for fully 10 years after the Internet entered the public domain in the mid-1990s, newspaper ad sales began falling dramatically after hitting an all-time high of $49.4 billion in 2005.  In 2011, by contrast, combined print and digital sales totalled a bit less than $24 billion. And the decline has continued all of this year. 

Owing to the meltdown that occurred over the last seven years in every category of print advertising (see the comparison below of first-half advertising between 2005 and today), publishers have ever-fewer customers for the anachronistic digital products they have on offer. 

This phenomenon is illustrated vividly in the staggering collapse of the classified business, which has shrunk by some 80% since 2005.  Part of the classified decline, of course, resulted from the Great Recession that we have yet to fully exit. But, as discussed here, there also have been major structural shifts in the ways that consumers consume and marketers market. There is scant reason to believe the classified business will return to its former glory when the economy resumes operating at full speed. 

Next on the chopping block could be local retail advertising – the last significant remaining revenue stream for newspapers – for the variety of reasons discussed here, here, here and here.      

While the newspaper business has been shriveling, the native digital media have concentrated on developing not only huge audiences but also huge databases of information about those audiences. Now, they are selling access to the data about those audiences in a number of cost-efficient and highly targeted ways.  As but one example of the phenomenon, see this.

Because newspaper companies lacked the creativity and/or conviction to develop competitive digital formats in the nearly two decades since the Internet materialized, publishers today are struggling to pivot to a new business model that they call “digital first” – whatever that means – while managing through the seemingly relentless decline of their existing one.  

Mastering either of those tasks individually would be daunting.  The challenge of doing both at the same time is nothing less than epic. 

Friday, September 07, 2012

'How did L.A. Times get a grant when I can’t?'

Second of two parts. This first part is here

For 24 years, hundreds of Los Angeles high school journalists have learned about reporting, writing and life itself by volunteering at L.A. Youth, a free newspaper read by an estimated 350,000 teens a year. 
But the non-profit publication may not live to celebrate its 25th birthday, says founder Donna Myrow, because she cant raise enough money to fund its annual $500,000 operating budget. 
Myrow’s dismay was understandable last month when she received an email from the Ford Foundation rejecting a requested grant of $72,500. But her disappointment quickly turned to displeasure when she remembered that the very same foundation gave the Los Angeles Times $1 million in May to hire four new reporters for a two-year period.   
“Am I sour grapes? Yes, I am,” said Myrow, whose office is a short drive from the headquarters of the Times, which has donated printing for her paper since its inception. “I got funded by Ford as recently as 2011, but now they say they there’s not enough money to go around. How did the Times get a grant when I can’t?” 
As discussed here yesterday, the newspaper’s parent, the Tribune Co., has amassed $2.4 billion in cash since going into bankruptcy in late 2008.  The foundation separately gave the Washington Post $500,000 to hire additional staffers, even though its parent company generated $525 million in pre-tax profits in the last 12 months and has $688 million in cash in the bank. 
Donna Myrow is far from the only non-profit journalistic entrepreneur rankled by the foundation’s charitable gift to the Times. She is different from many of her peers, however, because she put her concerns on the record in a recent telephone interview. Others were more circumspect.  
“I am certainly not going to say publicly that I am upset” by the gift to the Times, said the founder of another non-profit news organization who hopes to attract future charitable support and doesn’t want to offend any potential benefactors.  
But he was upset, because he, like many entrepreneurs trying to make ends meet at prospective or existing non-profit journalistic ventures, knows that one organization’s success in attracting support necessarily comes at another’s expense. They also are aware that the chances of winning support are shrinking all the time, owing to two reasons: 
First, the resources of most charitable organizations declined in concert with the downturn in the economy in the last four years.  Although the Ford Foundation endowment was a hefty $10 billion at the end of 2011, that sum was more than $8 billion lower than its all-time peak in 2000, according to its annual report.   

Second, the demand for funding has increased, owing to the number of new non-profit journalistic start-ups seeking to fill the void created by the contraction of the legacy media. 
While there is no authoritative census of the number of non-profit journalistic ventures in the country, the anecdotal evidence shows a significant increase in the number of people plunging into such activities.
Professor Charles Lewis of American University, who co-founded the Investigative News Network, reports that there now are 65 groups in his confederation of non-profit news organizations, as compared with “roughly half a dozen” known ventures prior to 2004.  A project a couple of years ago at the Graduate School of Journalism at the University of California at Berkeley identified more than 200 grassroots blogs and media enterprises in just Northern California. 
For operators of long-running efforts like L.A. Youth, the diminishing availability of philanthropic support in recent years has caused sleepless nights and budget cuts. Those hoping to launch new non-profit ventures are challenged not only by the paucity of financial support but also by the complex and opaque process established by the Internal Revenue Service to determine which organizations qualify for non-profit status. 
Absent IRS designation as a qualified 501(c)3, non-profit journalistic start-ups have trouble raising money from individuals and foundations, because donations are not tax deductible.  The news organizations have to be careful in selling ads or running subscription drives, so they are not construed as for-profit businesses – and, thus, become ineligible for tax-exempt status before their applications even come up for consideration.  
To make matters worse, the IRS has put a hold for several years on a number of applications from aspiring news non-profits.  
One of them is The Lens, which hopes to help fill the void that will be created as the New Orleans Times-Picayune next month trims its print publication schedule to three days a week from seven.  The Lens application for non-profit status has been on hold by the IRS since 2009, though it is able to take charitable donations through an affiliation with the Center for Public Integrity.  
Other applicants in the queue at the IRS are the San Francisco Public Press, which has been waiting for two years, and the Arlington (VA) Mercury, which has been waiting for 12 months, according to Current.Org, a publication from American University. 
The reason these and other applications have been delayed is that the IRS does not consider ”journalism” to be a defined non-profit activity.  News organizations that to date have gained non-profit status have had to adopt “education,” which is a duly recognized non-profit activity, as their mission. 
With all the organizational and operational hurdles in front of them, it is perhaps understandable why news entrepreneurs like Donna Myrow were taken aback by the decision of the Ford Foundation  to help the Los Angeles Times and Washington Post,  instead of one of their own.  
Explaining the decision, Joshua Cinelli of the Ford Foundation said his organization is backing the metros precisely because of their size.  Small, entrepreneurial news organizations, he added, “have less reach than more established institutions.” 
Steering clear of the question of who ought to get funded, Kevin Davis, the chief executive of the Investigative News Network, said he was troubled by the limited amount of philanthropic support available to experiment with new ways to produce “investigative and public-interest journalism” at a time the traditional media are scaling back.   
“Investigative journalism never was a money-maker,” he said.  “It was a function of prestige and public service” on the part of media companies when the print and broadcast media were more prosperous than they generally are today.   “Because there aren’t a lot of new business models and revenue streams to support journalism, philanthropy – whether in big or small sums – is going to be required for the foreseeable future.”
The question for philanthropists worried about journalism is how to make the best use of what they have to spend.  Should they put their limited resources into supporting existing infrastructure like the L.A. Times and Washington Post? Or, should they give the money to grassroots organizations and untested upstarts, who may – or may not – successfully deliver the next-generation model for journalism?  
As for the Ford Foundation, Cinelli says it intends to do both.   

Thursday, September 06, 2012

Does L.A. Times qualify as a charity case?

Of all the troubled news organizations in all the land, the Ford Foundation recently gave the Los Angeles Times $1 million to hire four reporters, even though the newspaper’s parent company amassed nearly $2.4 billion in cash during its 3½-year bankruptcy.
While there can be no doubt that the foundation has the best of intentions – or that the Times will endeavor to make good journalistic use of the money – the gift raises two questions:
Can a non-profit foundation appropriately give money to a for-profit company? We’ll discuss this in a moment.  
Was the gift to an operating unit of the cash-rich Tribune Co. a better use of the foundations money than helping other applicants for Ford funding?  We’ll explore this tomorrow.  
Here’s the background: 
Reacting to the loss of nearly one out of three journalism jobs at the nation’s newspapers in the last decade, the Ford Foundation forthrightly decided to address the problem by giving $1 million to the LAT to cover ethnic and prison issues, and to give the Washington Post $500,000 to beef up “government accountability” reporting. 
The decision of a major foundation to put major bucks into major mainstream publications speaks volumes about the state of the once-powerful newspaper industry.  
But it also raises questions about whether the donation, regardless of its good intentions, lives up to the letter and spirit of the federal tax code, which empowers the Internal Revenue Service to grant non-profit status to religious, educational and other organizations that operate in the public interest without seeking to make a profit.  
The answer is yes, because the grant “is fulfilling our mission to educate the public” under Section 170(c)(2)(B) of the IRS code, said Ford Foundation spokesman Joshua Cinelli. “We essentially will firewall this grant so that it can only be used for the intended purposes.” 
But a program officer at a different journalism charity said he was “befuddled” by the gift. 
“I have tried to figure out how they can give money to someone who is not officially designated by the Internal Revenue Service as a 501(c)3  charity,” said the officer, who spoke on background so as not to offend people with whom may have to work in the future. “It’s not something we are thinking about doing.” 
A 501(c)3 organization, whose name is derived from the section of the tax code that enables it, is the most common type of non-profit organization. The organizations are important structures for funneling private donations into everything from cancer research and symphony orchestras to educational institutions and the occasional start-up news organization.  Here’s a quick look at how they work:
Gifts to 501(c)3 charities can be taken as a tax deduction by the donor.  While 501(c)3s are not allowed to make a profit, the organizations are exempt from paying taxes on any money they make.  These tax advantages are designed to promote charitable giving and to encourage so-called exempt organizations to put all of their resources into the work they do.    
The Ford gifts to the L.A. Times and Washington Post are unusual in that they benefit for-profit businesses. And that seems at odds with the IRS requirement  that recipients of charitable gifts be engaged “primarily in activities that accomplish exempt purposes specified in section 501(c)(3).”  An organization, “will not be so regarded,” continues the IRS, “if more than an insubstantial part of its activities does not further an exempt purpose.”
Even though the LAT is receiving $1 million from the non-profit Ford Foundation, “we don’t have a non-profit business model,” said spokeswoman Nancy Sullivan. “We are a for-profit company.” 
In fact, the Tribune Co., which is the parent of the newspaper, reported to a federal court in August that it has accumulated nearly $2.4 billion in cash since filing for bankruptcy in late 2008. The company filed for Chapter 11 after it was unable to pay nearly $13 billion in debt loaded on the company in an ill-advised take-over engineered by real estate speculator Sam Zell. 
Some of the cash in the TribCo’s piggybank results from the profits its newspapers and broadcast properties made while operating with Chapter 11 protection from its creditors.   And some of the cash results from interest and other payments it did not have to make to creditors as the result of the bankruptcy filing. 
Although the Post itself has been losing money all year, its parent, the for-profit Washington Post Co., generated $525 million in pre-tax profits in the last 12 months and has $688 million in cash on its balance sheet, according to Yahoo Finance
The reason the Ford Foundation gave the L.A. Times $1 million to hire reporters was to encourage coverage of important subjects – like ethnic communities, immigration matters and prison issues – that otherwise would not get covered, said spokesman Cinelli.  The Times, he added, was chosen over other potential recipients because of its strength and reach.     
“This is an effort to support thoughtful and meaningful journalism reaching the broadest possible audience,” he said. “In this period of transition for the traditional media, where do you do that? If it’s a zero sum game about where publishers put money in the newsroom, then those folks will do what it takes to sell papers and keep the lights on.  We know many publishers would hire extra entertainment reporters while cutting coverage of the transit and school beats. So, we wanted to do something about that.”
As luck would have it, the L.A. Times hired three new entertainment reporters within weeks of receiving the Ford Foundation grant.  “People come and go all the time,” said spokeswoman Sullivan, adding that it would be unfair to make a connection between the Ford gift and the new entertainment hires. 
While there seems to be  scant chance that the new Ford-funded reporters will undertake any direct commercial activities, their work presumably will contribute to the newspaper’s profits by helping to induce advertisers to buy space on its website or by giving consumers a compelling reason to plunk down $1 to read the newspaper. 
Cinelli said stories by Ford-funded reporters will be freely available for reuse by anyone without copyright restrictions and will have to be available for free on the newspaper's website.  But he said  Ford will have no control over what the journalists write – or whether they could get pulled off their beats to help cover breaking news.   
Given the seemingly practical impossibility of sequestering the activities of the Ford-funded reporters, can they really be isolated from the absolutely appropriate profit-making mission of the Times? 

Wednesday, September 05, 2012

Newspapers getting outsmarted on mobile

Apple and Google, the two biggest powerhouses in Silicon Valley, have stepped up the battle to make their smart phones smarter so they can grab ever-larger shares of the local advertising market. 

Their efforts are a major threat to newspapers hoping to capitalize on the enviable power of their local franchises to become significant players in the vigorously growing mobile space. Unfortunately, newspapers are woefully behind. 

Mobile matters, because advertising purchases on handheld gizmos are expected to climb 4.5 times from last year’s levels to $7.7 billion by the end of 2016 – a sum equal to approximately a third of the combined ad sales of all the nation’s newspapers in 2011. 

BIA/Kelsey, the private research firm providing the above forecast, believes that half of the sales will come from location-targeted local advertising, a compelling format that pushes messages to specific individuals in order to pull them into nearby businesses.     

With more than half of Americans now equipped with smart phones and more page views likely to be consumed on small screens than on PCs within 18 months, competition revved to a new level over the summer among the many technology companies hoping to grab real estate, mind share and future revenues in the fast-evolving mobile marketplace.

The scramble kicked off in June, when Apple decided to boot Google’s long-dominant mapping software off the new iPhone scheduled to debut in the fall.  Google responded within days with an improved version of Google Now, a voice-activated digital assistant for its Android devices that emulates – and in some circumstances surpasses – the revolutionary Siri assistant that Apple put on its iPhones last fall.  At the same time, Google completed its acquisition of Motorola Mobility, providing the search king for the first time with the same end-to-end control over software and hardware that Apple has long enjoyed.  

The result of these major strategic initiatives is that your next smart phone will move from being a collection of individually helpful but largely unconnected applications to being increasingly dominated by a single master app that seamlessly and intuitively integrates the essential functions you commonly use.  As master apps become more powerful – this won’t happen all at once – they will marginalize the value of free-standing, single-function apps like those offered by newspapers. 

Smarter smart phones will anticipate your needs and advise you at every point of the day by accessing your calendar, indexing your searches, learning what you like to read, tracking your purchases and monitoring your location. 

In the not-too-distant future, your phone automatically will wake you in time to get to your first meeting, taking into account weather and traffic conditions.  It will guide you to the nearest Starbuck’s, where your standing order will be ready and the device automatically will pay for it.  The phone will route you around traffic jams and, at your command, tell your host how late you expect to be.  During the drive, the phone will read aloud your incoming texts, emails and voicemails so you can dictate immediate replies.  

Meanwhile, the phone will be aggregating and curating information in real time on topics it has learned you like, ranging from the latest news to cheap flights to Maui.  The phone will follow your voice commands to read the items you select and then fetch any additional information you request, alert colleagues to important articles, add items to your read-later list and nag you when you don’t read them. 

Over time, the phone will learn so much about you that it will be able to send you advertising, daily deals and other commercial information that are tailored to your evolving interests and specific location. And a great deal of that advertising will be from the local businesses that historically advertised in newspapers.  

The revenue potential for this intimate and immediate form of advertising is why Google and Apple are racing to make their phones as intuitive and helpful as they can be. Facebook, Twitter, Microsoft, Foursquare and dozens of smaller wannabes are in the hunt, too.

Meantime, the mobile app at the typical newspaper is as static, unintuitive and non-transactional as a brick.  

The only thing most newspaper apps can do is post the publication’s editorial output for the prior 18 hours. As this content gets sucked into the master apps running next-gen smart phones, the traffic at these single-purpose news apps is bound to shrink. Publishers, of course, can block the export – but only at the risk of further cutting their traffic. 

Even worse, most publishers never invested in capturing the sort of detailed information about individual readers that is the coin of the realm for modern digital advertising.  Stuck for the most part with selling run-of-site banners by the thousands, publishers have neither the data nor the technology necessary to deliver individually targeted or geo-aware advertising.  

Unless something changes incredibly fast, newspapers will miss the next big thing in media.

©  2102 Editor & Publisher