Society for News Design

Society for News Design
Magazine

Society for News Design
Power points
Understand what’s happening
in the media business
in {11} steps
By Ken Doctor

Society for News Design
Ken Doctor, a former Knight Ridder news executive,
now advises companies on strategy and writes about
the print-to-digital news transformation.
He is president of Content Bridges (www.contentbridges.com),
where he blogs regularly. In addition, he acts as lead
news industry analyst for Outsell, Inc. ( www.outsellinc.com),
a market research and advisory company that focuses
on the entire information industry, worldwide.

Society for News Design
Sometimes it’s hard opening up the morning
paper, or Yahoo or Google News, for fear of seeing
more stories about the imminent demise of the
newspaper business. You know them all too well:
more staff cutbacks, print circulation down; younger
readers moving online in big numbers; ad dollars
migrating to companies that didn’t even exist a decade
ago. We’re in uncharted territory. Call it Terra
Incogdigito. From a mainly print/somewhat digital
land to a new one that is mainly digital/somewhat
print.

Society for News Design
In this strange new land, readers (and viewers) of
news have unprecedented access to news and
information, from their neighbors’ blogs to coverage of
India by Indian (and British, and Japanese and
American) journalists. If you’re not in the newspaper
business, it’s a wonderful time — more empowerment,
more news, more viewpoints. If you’re in it, you’re
wondering how you’re going to maintain your staffs as
revenues flat-line and new business models prove as
hazy as a day in Shanghai.

Society for News Design
Consider these 11 points just a starting point in
looking at the bigger picture. Some show in stark
terms the predicament of the news industry.
Others point directionally to where news users are
going — and where the money and the jobs may go
as well.

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{1}
A long decline
in readership

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The Skinny: About four in 10 U.S. households now take a
daily newspaper. It’s a number that has been affected by
Internet usage, but it’s also one that’s been slipping for half a
century. Back in 1950, household penetration was greater
than 100 percent — evening papers and multiple titles in lots
of cities meant lots of readership. In the chart, you can see
the continued slippage of the Internet decade.

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What’s Next: The major selling point of dailies is the mass
market they serve advertisers. As that mass thins, and
advertisers find more online spending options, newspapers’
ability to “price up” gets more difficult.

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{2}
An aging
readership

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The Skinny: Take a snapshot of the print
business today, and you see a wealthy, but
challenged, industry. Consider
demographic trends, and you see why the
stresses are more worrisome going
forward. At the top, the chart shows
preference for news delivery medium by
age. Sure, readers of all ages take in all
media. But, as you can see on the left, it’s
the 50-plus readers who show the greatest
preference for newspapers and for TV. It’s
no surprise that 18-39 and 18-49 readers
show greatest affinity for online delivery
overall.

Society for News Design
What’s Next: Extend these trends
forward and you see that the old saw —
young people get real jobs, get married,
have families and subscribe to print
papers — is unlikely to last. Younger
readers appear more agnostic about the
brand of who’s bringing them the news —
they are not biased against Old Media
brands — but they’re more comfortable
with online deliver

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{3}
Growth in
new media

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What’s Next: The 2006 numbers show an even
greater disparity. Online growth rates move in
strong double digits while legacy news and
information companies struggle to stay even.
Growth and amount of revenue matter in lots of
ways — giving companies war chests for
investment and development.

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The Skinny: The growth is coming in new
media. The chart (for 2005) shows the
relative revenue growth of just two (but
significant) companies, Google and Yahoo,
as compared to the (then) top 10
information companies in the world.
Google and Yahoo’s new revenue exceeded
those top 10, $4.7 billion to $3 billion.

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{4}
More
competition

The Skinny: Go back 10 years and daily
newspaper competition could be
summed up on one hand: TV and radio
broadcasters, maybe some suburban
competition, and rambunctious direct
mailers. Fast forward, and you can’t fit
all the competition in one picture.
Classifieds players, large and small,
gobble and nibble at recruitment, real
estate and automotive revenue. Big
search aggregators take audience. And
now communications companies like
Verizon and Comcast are becoming
“content” companies.

What’s Next: The Internet has broken
down many traditional definitions. Anyone
can be a publisher now. Anyone can deliver
the information. And anyone can connect
buyers and sellers more efficiently. For such
enterprises as newspapers used to doing it
all themselves, the new era means the need
to partner and move much more quickly
into the marketplace. Recent agreements
with Google and Yahoo in ads and stories
point in that direction.

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{5}
Flow of people
to the Web

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The Skinny: One billion people out of the world’s six-billion
population are Web-capable, with marketers talking about
The Next Billion. A few numbers provide a snapshot of
where we stand, circa 2007. Newspaper readers are baby
boomer-centric, with the only older audience belonging to
TV News, at four years older. Only 50,000 daily newspaper
journalists are responsible for getting the news out to 300
million Americans through newspapers. And that number
appears to be dropping more than 2 percent a year. But
teens — digital natives — are consuming more media than
ever. And it’s the Web children — Yahoo, eBay and Google,
among others — who are winning the numbers race.

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What’s Next: Numbers do matter, especially over time. In
news company plans, we can see trends addressing the
numbers. Companies seek to create better online products
for younger readers, engage community members to
replace journalists and to mix in the magic the Googles and
Yahoos have found.

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{6}
Flow of money
to the Web

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The Skinny: The days of the general news source are
receding. News of the moment — especially national and
international news — is everywhere. Between the Web, TV,
radio and cell phones, we live in a news bubble. We don’t find
the news; it finds us. Specialized news and information — from
personal finance to health to family to education and beyond
— is what a lot of us want. And the Web is great at finding
needles in info haystacks. Take personal finance, as shown
below. Already, the Web is the number one place Americans
go for personal finance information. The same holds true for
health and travel information. Note that while newspapers
have remaining strength here, their online products fare
poorly, not translating the brand customer experience from
print to online. We see that trend across the board, with
“online newspaper sites” a sixth- or seventh-place source.

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What’s Next: Advertising money inevitably follows
readership. Readers spending money on investments,
on travel and on health care are prime targets for
advertisers. As those readers migrate away from print
and TV, so will advertising dollars.

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{7}
Print vs.
online revenue

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The Skinny: Newspapers depend on advertising for about 80
percent of their revenue. So while the online reading trend is
troublesome for print circulation, the digital advertising
revolution is more worrisome. While publishers overall in the
information industry (think science, technical, academic, market
research, etc.) now derive some 42 percent of their revenue from
digital products, newspapers still take in less than 10 percent of
theirs from online. In addition, an online customer is just not
worth what a print one is. Time, Inc, CEO Ann Moore recently
said that a Sports Illustrated subscriber was worth $118 per year to
her company; a SI.com visitor only $5. It’s that disparity in
revenue models that leaves print publishers perplexed as they
contemplate the print-to-digital transformation.

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What’s Next: No one is sure what will happen to ad pricing.
On the one hand, online is an efficient medium, delivering
customers well. That may push rates up. On the other, it is an
efficient medium with lots of competitors, pushing rates down.
On the horizon: BT, or behavioral tracking. We’ll see advertisers
using BT to deliver ads to you that better match your buying
needs, reducing waste.

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{8}
How people
use the Web

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The Skinny: Newspapers have been the
ultimate, portable, browsable medium. But
the world has zeroed in on that ubiquitous
search rectangle. Top three web activities: e-
mail, search and news.

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What’s Next: For journalists of all kinds —
editors, writers, designers — the key to online
presentation is understanding and working the
triangle. That means designing products that
assume search, assume sharing of material and
know that news still matters. Those products will
be very different than the too often repurposed,
too often static online newspaper pages of today.

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{9}
Holding on
to local news

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The Skinny: National and international news
may be commoditized, and niches may be
targeted by many start-ups. Local, though, is a
bastion of old media, newspapers and TV. Why? It
costs a lot of money to gather and produce the
news and information. In the chart above, you
can see that online players have not yet been
successful here.

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What’s Next: Newspapers see Local as their last
bastion — the place they still dominate and may be
able to extend that dominance online. Many
companies are redeploying resources to focus on local
and hyper-local, some using community-generated
publishing platforms in addition. Online, the trick is
how to gather and present local data — think school
scores, recreation activities, crime reports,
neighborhood characteristics — in ways that win and
keep readers.

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{10}
A new
two-way street

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The Skinny: It’s a new Pro-Am World out
there. The Web offers more than the old one-
way conversation. The “people formerly
known as the audience,” as press critic Jay
Rosen has called them, want to talk back, talk
to each other and participate. MySpace and
YouTube have opened many eyes, and now we
see the sprouting of geographically oriented
online communities. Above is YourHub.com, a
user-gen site started by the Denver Post and
Rocky Mountain News, and now being
franchised to other cities.

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What’s Next: Expect to see most newspapers
trying something in the user-gen space. Keys are a
robust platform that makes interaction easy and
fun and adding calendar/events functionality that
makes frequent visits valuable.

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{11}
Time to
reimagine

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The Skinny: News content used to be the proverbial
birdcage bottom. Now it has enduring value, part of a long
tail for research. Google’s Archive Search, though only semi-
developed, is surfacing news stories long hidden from most
users. “More Like This” boxes, after several starts and stops,
are coming of age with such products as Sphere’s boxes
connecting news, blogs and archives on top news sites.

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What’s Next: Many lines are being blurred. The listy,
linear nature of much presentation may seem very old
school soon, and those with experience re-imagining
the Web experience should find many opportunities.

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End.

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