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>> Earl J. Wilkinson
Executive Director and CEO | INMA
The Newsmedia Outlook
Last Moments of Danger, Last Moments of Oppor...
 All newsmedia companies
face economic downturn
 Confusing the worst downturn
in 8 decades
 A lot of hysteria with
jour...
Advertising industry discussions from New York, London impact
others
The megaphones
How discussions in New York and London affect advertising
thinking
The megaphones
Is what’s happening in
U.S./U.K. tip of iceberg?
 Short-term (2009-2011): “no”
 Beyond recession conditions,
horrific na...
What is unique
to U.S./U.K.?
 Debt: Debt loads astronomical: McClatchy, Tribune, Lee, Star
Tribune, Philadelphia, Johnsto...
What is not unique
to U.S./U.K.?
 Capital budgets: Huge capital budgets tied up in printing
presses, not databases and CR...
Vast majority of national newspaper industries will return to normal
Post-recession (2011)
Business
as usual
Symptoms
of c...
Some are seeing symptoms of structural change
Post-recession (2011)
Business
as usual
Symptoms
of change
Internet
disrupti...
Others seeing internet destroy their countries’ business
models
Post-recession (2011)
Business
as usual
Symptoms
of change...
Others seeing internet destroy their countries’ business
models
Post-recession (2015)
Business
as usual
Symptoms
of change...
Others seeing internet destroy their countries’ business
models
Post-recession (2020)
Business
as usual
Symptoms
of change...
 Certain business models
 Certain business
circumstances
 Certain market
environments
 Recession exposes
vulnerabiliti...
Today’s presentation
1. Are we facing the death
of newspapers?
2. Prisms of strategic
planning
3. How can we create new
va...
Prism for planning:
deep hole, shifting sand
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
'50 '52 '54 '56 '58 '60 '62 '64 '66 '68 ...
U.S. advertising and
marketing share 2002-2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2007 2012 (e)
Traditional
...
 Advertising growth will return in
second/third quarters of 2010
 100% broadband penetration
 Doubling, tripling of bro...
Less advertising, smaller companies
Less journalists, more editors
Replacing print complexity with digital complexity
More...
Reformation and
Renaissance of media
Age of Mass Media
 Newspapers
 Television
 Magazines
 Radio
 Outdoor
… we talked to the forest
Age of Niche Media
 Zoned newspapers
 Cable TV
 Niche magazines
 Niche radio
 Outdoor
… we talked to the tree
in the ...
Age of Micro Media
 Blogs
 Social networks
 SMS
 Magazines-on-demand
 Podcasts
 E-mail
… we talked to the
leaves in ...
Power of news on paper
Deep engagement
Deep loyalty and passion
A canvass of emotion
Opt-in medium to bypass avoiders of m...
Marketing: a contest for the
consumer’s attention

In 2009, average consumer will see 1
million marketing messages (3,000...
 How do we evolve from audiences of
geography to audiences of passion
niches?
 What is the best medium to reach
these au...
 Print for mass-market
journalism and passionate
niche audiences
 Web and mobile for timely
news
 Mobile for location-b...
Disaggregating print’s
value propositions
Print bundle protects all
Content Verticals
News
Sports
Business
Features
Advertising Verticals
Classifieds
Local retail
N...
The crumbling bundle
 When newspaper moves
online, the bundle falls
apart
 Each story, each section
stands “naked in the...
 Expense of printing created
environment where Sears
subsidised your Washington
bureau
 No deep link between
advertising...
Content verticals
Breaking news
Investigative journalism
Wire service news
Pack journalism
Local sports
National sports
St...
Why determining your
content’s value is a
top priority today
Why “value of content” is
important to you
1. A proxy for engagement in Digital Age, focuses you on what/how
you market to...
Tipping point on
traditional business model
1. 50%-75% of print advertising
will return
2. Too much abundance and
inventor...
Content’s pure value

Content’s pure value is
declining: denominator keeps
changing

Not all content is of equal
value
...
What publishers tell INMA
Reacting to advertising declines, consumers pay more
 India: radical re-thinking of low print c...
What is the reader perception of the print bundle?
What is the reader perception of disaggregated digital content?
What is...
People don’t pay for
content
Consumers perceive that they
are paying for content

Instead, they pay for access to
conten...
Media share of wallet
1975
$40 per month ($161 inflation-adjusted)
Consumed Media ($23/$93)
58% of content package

4 pri...
Media share of wallet
1975
$40 per month ($161 inflation-adjusted)
Consumed Media ($23/$93)
58% of content package

4 pri...
Media share of wallet
1975
$40 per month ($161 inflation-adjusted)
Consumed Media ($23/$93)
58% of content package

4 pri...
Media share of wallet
1975
$40 per month ($161 inflation-adjusted)
Consumed Media ($23/$93)
58% of content package

4 pri...
Media share of wallet

Who controls access owns
highest share of wallet

Thanks to rising access, time
with content grow...
Audience
+ Content
+ Platform
= Value
How to re-create value
for news content

Carve perceived scarcity from
an abundance of information

Value = audience + c...
Upscale?
Downscale?
Geography?
Interest?
Mass?
Niche?
Micro?
Value equation in
Age of Multi-Media
Uniqueness?
Quality?
Dif...
Principles of monetization
(really, principles of running a multi-media company)
1. Content has different values: surprise...
Conclusions
 Old gets broken faster
than new can be put in
place
 Importance of
experiments aren’t
apparent at the moment
they appea...
 Written in 1979 by Elizabeth
Eisenstein
 How the world looked different before
and after printing press (1500s)
 Bible...
 Living through
1500 all over again
 Easier to see
what’s broken than
what will replace it
 Internet is 40 years
old
 ...
Summary
1. No pending “death of newspapers,” but
clear digital disruption throughout decade
ahead
2. Prism of planning: 10...
>> Earl J. Wilkinson
Executive Director and CEO | INMA
The Newsmedia Outlook
Last Moments of Danger, Last Moments of Oppor...
Wilkinson
Wilkinson
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ISOJ 2010

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Wilkinson

  1. 1. >> Earl J. Wilkinson Executive Director and CEO | INMA The Newsmedia Outlook Last Moments of Danger, Last Moments of Opportunity
  2. 2.  All newsmedia companies face economic downturn  Confusing the worst downturn in 8 decades  A lot of hysteria with journalists writing about journalists  Recession-ridden newspapers  Debt-ridden newspapers  Most debt-ridden newspapers concentrated in U.S., U.K. What I learned from my talks with INMA publishers
  3. 3. Advertising industry discussions from New York, London impact others The megaphones
  4. 4. How discussions in New York and London affect advertising thinking The megaphones
  5. 5. Is what’s happening in U.S./U.K. tip of iceberg?  Short-term (2009-2011): “no”  Beyond recession conditions, horrific nature of certain newspapers in these countries is about debt  Acceleration of trends by consumers and advertisers pre- recession: internet, mobile  Factors: a) trend-lines of demography and literacy; b) broadband internet penetration; c) business models; d) national culture
  6. 6. What is unique to U.S./U.K.?  Debt: Debt loads astronomical: McClatchy, Tribune, Lee, Star Tribune, Philadelphia, Johnston Press, Trinity Mirror, others  Broadband: How high is broadband internet penetration?  Advertising: How mature are advertising markets?  Profitability: Expectation of high profit margins (20%-25%)?  Public perceptions: Poor public perception of news on paper and your brand
  7. 7. What is not unique to U.S./U.K.?  Capital budgets: Huge capital budgets tied up in printing presses, not databases and CRM  Strange internal cultures: Editorial, production cultures dominate over “market culture”  Vertical organisations: 19th century silo’d organisational structures that discourage communication, innovation  Collapse of classifieds: Global tsunami impacting real estate, housing, automotive advertising
  8. 8. Vast majority of national newspaper industries will return to normal Post-recession (2011) Business as usual Symptoms of change Internet disruption Scale of disruption
  9. 9. Some are seeing symptoms of structural change Post-recession (2011) Business as usual Symptoms of change Internet disruption Scale of disruption
  10. 10. Others seeing internet destroy their countries’ business models Post-recession (2011) Business as usual Symptoms of change Internet disruption Scale of disruption
  11. 11. Others seeing internet destroy their countries’ business models Post-recession (2015) Business as usual Symptoms of change Internet disruption Scale of disruption
  12. 12. Others seeing internet destroy their countries’ business models Post-recession (2020) Business as usual Symptoms of change Internet disruption Scale of disruption
  13. 13.  Certain business models  Certain business circumstances  Certain market environments  Recession exposes vulnerabilities Today’s newspaper isn’t universally dying
  14. 14. Today’s presentation 1. Are we facing the death of newspapers? 2. Prisms of strategic planning 3. How can we create new value by linking “audience + content + platform”? 4. How can we determine the value of content?
  15. 15. Prism for planning: deep hole, shifting sand
  16. 16. $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 '50 '52 '54 '56 '58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 Print newspaper advertising in U.S.: 1985 levels (adjusted for inflation: 1968)
  17. 17. U.S. advertising and marketing share 2002-2012 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2002 2007 2012 (e) Traditional advertising Traditional marketing Alternative interactive channels Source: Veronis Suhler 2009 47% 32%41% 7% 27%13% 48% 42%46%
  18. 18.  Advertising growth will return in second/third quarters of 2010  100% broadband penetration  Doubling, tripling of broadband speeds  Market saturation of smartphones  Where does what newspapers do best fit in this world?  Where does advertising fit in this Digital World? Prism for planning
  19. 19. Less advertising, smaller companies Less journalists, more editors Replacing print complexity with digital complexity More sales, more marketing, more research Speed: product development, social media More partnerships, less go-it-alone Assumptions
  20. 20. Reformation and Renaissance of media
  21. 21. Age of Mass Media  Newspapers  Television  Magazines  Radio  Outdoor … we talked to the forest
  22. 22. Age of Niche Media  Zoned newspapers  Cable TV  Niche magazines  Niche radio  Outdoor … we talked to the tree in the forest
  23. 23. Age of Micro Media  Blogs  Social networks  SMS  Magazines-on-demand  Podcasts  E-mail … we talked to the leaves in the tree in the forest (and the leaves talked with each other)
  24. 24. Power of news on paper Deep engagement Deep loyalty and passion A canvass of emotion Opt-in medium to bypass avoiders of media Excellent mass medium and niche medium Tangible influencer of society
  25. 25. Marketing: a contest for the consumer’s attention  In 2009, average consumer will see 1 million marketing messages (3,000 per day)  60% of Americans have home telephone on a “no call” list  Spam filters prevent commercial e-mail to reach consumers  Finland: 400,000 consumers register for list … do not call, e-mail or mail me (10% of population)  Technology now blocks or skips over significant amounts of TV viewing ”Marketing is a contest for people's attention. Thirty years ago, people gave you their attention if you simply asked for it. That's not true anymore.” -- Seth Godin
  26. 26.  How do we evolve from audiences of geography to audiences of passion niches?  What is the best medium to reach these audiences?  How do we balance our mass-market societal role with how technology is re-shaping audiences?  How do we acquire tools to engage with micro-audiences?  Our choice: multi-media providers of content and audience solutions “Newspapers” adapt to the “Age of Micro Media”
  27. 27.  Print for mass-market journalism and passionate niche audiences  Web and mobile for timely news  Mobile for location-based news and advertising  Social networks for granular  New forms of content for engagement: mashups, video  Our USPs are deep content, deep audiences Multi-media provider of audience solutions
  28. 28. Disaggregating print’s value propositions
  29. 29. Print bundle protects all Content Verticals News Sports Business Features Advertising Verticals Classifieds Local retail National The Newspaper Bundle
  30. 30. The crumbling bundle  When newspaper moves online, the bundle falls apart  Each story, each section stands “naked in the marketplace”  Invisible system of subsidisation disappears  Subtle effects on journalism and story selection
  31. 31.  Expense of printing created environment where Sears subsidised your Washington bureau  No deep link between advertising and reporting  Advertisers had no choice  Today, a deep cultural practice nobody thinks about  Effects of printing cost are being destroyed by internet Link between news and advertising being severed
  32. 32. Content verticals Breaking news Investigative journalism Wire service news Pack journalism Local sports National sports Stock listings Weather Puzzles Photography Advertising verticals Property Jobs Cars Private-party Local retail National Matrimonials Brand Price-point All categories The Newspaper Bundle Every unit of content must have value
  33. 33. Why determining your content’s value is a top priority today
  34. 34. Why “value of content” is important to you 1. A proxy for engagement in Digital Age, focuses you on what/how you market to consumer segments 2. Even if you never charge for content, segmenting “content, platform, audiences” forces market approach to growth 3. Places you in context of today’s “abundance of information” 4. Not about “content,” but what content means for growth 5. Goes straight to your differentiating value proposition
  35. 35. Tipping point on traditional business model 1. 50%-75% of print advertising will return 2. Too much abundance and inventory to drive up online CPMs 3. Advertising a smaller part revenue pie, but won’t disappear 4. Consumers will pay, but can’t absorb full cost of journalism 5. We will produce more for audiences that pay and less for audiences that don’t pay Google CEO Eric Schmidt to newspapers this week: You don’t have a new problem. You have a business model problem.
  36. 36. Content’s pure value  Content’s pure value is declining: denominator keeps changing  Not all content is of equal value  Not all platform experiences are the same  Today: dumb conversation about how to get readers to pay for digital content  Tomorrow: understanding how reader perceives content in different platforms (context)
  37. 37. What publishers tell INMA Reacting to advertising declines, consumers pay more  India: radical re-thinking of low print circulation price model  Switzerland: grow online audience, drive e-commerce  United States: doubling of print subscription prices  Indonesia: charging expatriates for online access  Australia: pay walls to deliver online revenue, protect print  United Kingdom: value-added membership formulas
  38. 38. What is the reader perception of the print bundle? What is the reader perception of disaggregated digital content? What is the atomic unit of our content? What are the variable values of our audiences to advertisers? What content drives passion? Important: It doesn’t matter how we perceive ourselves Monetize = back to basics
  39. 39. People don’t pay for content Consumers perceive that they are paying for content  Instead, they pay for access to content  This is nothing new: in past, consumers paid for paper, delivery, theaters, books, CDs/albums … rarely content  “Share of wallet” for media/content access has risen, yet revenues go to access providers
  40. 40. Media share of wallet 1975 $40 per month ($161 inflation-adjusted) Consumed Media ($23/$93) 58% of content package  4 print magazine subscriptions: $10  0 print magazine single copies: $0  1 print newspaper subscription: $5  1 movie in-theater: $3  1 music album: $5 Access ($17/$68) 42% of content package  Cable television access: $7  Land-line telephone: $10  AM/FM radio: $0 2010 $392 per month Consumed Media ($140) 36% of content package  0 print magazine subscriptions: $0  4 print magazine single copies: $20  1 print newspaper subscription: $15  1 movie in-theater: $10  30 iTunes songs: $30  1 video-on-demand: $5  4 iTunes movies: $40  1 Blu-Ray DVD movie: $20 Access ($252) 64% of content package  Cable television access: $69  Land-line telephone: $45  AM/FM radio: $0  XM Radio: $15  Broadband access: $25  Mobile phone access: $40  Mobile data plan: $30  Netflix subscription: $15  1 online newspaper subscription: $8  Xbox 360 Live gold membership: $7  1 iPhone app: $2
  41. 41. Media share of wallet 1975 $40 per month ($161 inflation-adjusted) Consumed Media ($23/$93) 58% of content package  4 print magazine subscriptions: $10  0 print magazine single copies: $0  1 print newspaper subscription: $5  1 movie in-theater: $3  1 music album: $5 Access ($17/$68) 42% of content package  Cable television access: $7  Land-line telephone: $10  AM/FM radio: $0 2010 $392 per month Consumed Media ($140) 36% of content package  0 print magazine subscriptions: $0  4 print magazine single copies: $20  1 print newspaper subscription: $15  1 movie in-theater: $10  30 iTunes songs: $30  1 video-on-demand: $5  4 iTunes movies: $40  1 Blu-Ray DVD movie: $20 Access ($252) 64% of content package  Cable television access: $80  Land-line telephone: $30  AM/FM radio: $0  XM Radio: $15  Broadband access: $25  Mobile phone access: $40  Mobile data plan: $30  Netflix subscription: $15  1 online newspaper subscription: $8  Xbox 360 Live gold membership: $7  1 iPhone app: $2 +51% +271% +143%
  42. 42. Media share of wallet 1975 $40 per month ($161 inflation-adjusted) Consumed Media ($23/$93) 58% of content package  4 print magazine subscriptions: $10  0 print magazine single copies: $0  1 print newspaper subscription: $5  1 movie in-theater: $3  1 music album: $5 Access ($17/$68) 42% of content package  Cable television access: $7  Land-line telephone: $10  AM/FM radio: $0 2010 $392 per month Consumed Media ($140) 36% of content package  0 print magazine subscriptions: $0  4 print magazine single copies: $20  1 print newspaper subscription: $15  1 movie in-theater: $10  30 iTunes songs: $30  1 video-on-demand: $5  4 iTunes movies: $40  1 Blu-Ray DVD movie: $20 Access ($252) 64% of content package  Cable television access: $80  Land-line telephone: $30  AM/FM radio: $0  XM Radio: $15  Broadband access: $25  Mobile phone access: $40  Mobile data plan: $30  Netflix subscription: $15  1 online newspaper subscription: $8  Xbox 360 Live gold membership: $7  1 iPhone app: $2 Newspaper battle Industry battle
  43. 43. Media share of wallet 1975 $40 per month ($161 inflation-adjusted) Consumed Media ($23/$93) 58% of content package  4 print magazine subscriptions: $10  0 print magazine single copies: $0  1 print newspaper subscription: $5  1 movie in-theater: $3  1 music album: $5 Access ($17/$68) 42% of content package  Cable television access: $7  Land-line telephone: $10  AM/FM radio: $0 2010 $392 per month Consumed Media ($140) 36% of content package  0 print magazine subscriptions: $0  4 print magazine single copies: $20  1 print newspaper subscription: $15  1 movie in-theater: $10  30 iTunes songs: $30  1 video-on-demand: $5  4 iTunes movies: $40  1 Blu-Ray DVD movie: $20 Access ($252) 64% of content package  Cable television access: $80  Land-line telephone: $30  AM/FM radio: $0  XM Radio: $15  Broadband access: $25  Mobile phone access: $40  Mobile data plan: $30  Netflix subscription: $15  1 online newspaper subscription: $8  Xbox 360 Live gold membership: $7  1 iPhone app: $2 iPad 3G access content subs e-butler services Kindle 4G Net access 3G television iPad apps Skiff iPad single- copies paid aggregators personal assistant data mash-ups
  44. 44. Media share of wallet  Who controls access owns highest share of wallet  Thanks to rising access, time with content growing exponentially  Subsidies shifting from media (classifieds, advertising, retailer efforts to drive store traffic) to device/access (Amazon covers access fees, subsidizes cost of books)
  45. 45. Audience + Content + Platform = Value
  46. 46. How to re-create value for news content  Carve perceived scarcity from an abundance of information  Value = audience + content + platform  No price tag on content without perceived value in consumer’s mind  “Value” to publishers must have tangible, financial return on investment (ROI)
  47. 47. Upscale? Downscale? Geography? Interest? Mass? Niche? Micro? Value equation in Age of Multi-Media Uniqueness? Quality? Differentiation? Timeliness? Contextual? Print? PC/Web? Mobile Web? Mobile SMS? E-reader? Audience PlatformContent
  48. 48. Principles of monetization (really, principles of running a multi-media company) 1. Content has different values: surprise, delight, inform, utility, context, speed, stickiness 2. Respect the platform for all its unique values 3. Prioritize engaged audiences (requires research)
  49. 49. Conclusions
  50. 50.  Old gets broken faster than new can be put in place  Importance of experiments aren’t apparent at the moment they appear  Even revolutionaries can’t predict the future Nature of revolutions
  51. 51.  Written in 1979 by Elizabeth Eisenstein  How the world looked different before and after printing press (1500s)  Bible translated into local languages  Erotic novels appeared  Greek classics flourished, but for first time people realised they clashed!  Shrinkage of books allowed for portability and cheaper access  As publishing flourished, value of literacy grew Printing press as an agent of change
  52. 52.  Living through 1500 all over again  Easier to see what’s broken than what will replace it  Internet is 40 years old  Access by general public less than half that  Access as part of everyday life a fraction of that Revolutionary times
  53. 53. Summary 1. No pending “death of newspapers,” but clear digital disruption throughout decade ahead 2. Prism of planning: 100% broadband, 100% smartphones, double broadband speed 3. “Newspapers” are evolving into multi-media “newsmedia companies” 4. Value = audience + content + platform
  54. 54. >> Earl J. Wilkinson Executive Director and CEO | INMA The Newsmedia Outlook Last Moments of Danger, Last Moments of Opportunity

ISOJ 2010

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