The document discusses the challenges facing newspapers from economic downturn and disruption from the internet. It notes that while all newsmedia companies face economic issues, the problems are most severe for newspapers in the US and UK due to high debt loads. It examines factors unique and not unique to the US/UK newspaper industries, and considers different potential outcomes for newspapers through 2020 depending on the scale of disruption from the internet. The document advocates that newspapers adapt by becoming multi-media providers of audience solutions rather than focusing only on print.

1. >> Earl J. Wilkinson
Executive Director and CEO | INMA
The Newsmedia Outlook
Last Moments of Danger, Last Moments of Opportunity

3.  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

4. Advertising industry discussions from New York, London impact
others
The megaphones

5. How discussions in New York and London affect advertising
thinking
The megaphones

6. 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

7. 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

8. 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

9. Vast majority of national newspaper industries will return to normal
Post-recession (2011)
Business
as usual
Symptoms
of change
Internet
disruption
Scale of
disruption

10. Some are seeing symptoms of structural change
Post-recession (2011)
Business
as usual
Symptoms
of change
Internet
disruption
Scale of
disruption

11. Others seeing internet destroy their countries’ business
models
Post-recession (2011)
Business
as usual
Symptoms
of change
Internet
disruption
Scale of
disruption

12. Others seeing internet destroy their countries’ business
models
Post-recession (2015)
Business
as usual
Symptoms
of change
Internet
disruption
Scale of
disruption

13. Others seeing internet destroy their countries’ business
models
Post-recession (2020)
Business
as usual
Symptoms
of change
Internet
disruption
Scale of
disruption

14.  Certain business models
 Certain business
circumstances
 Certain market
environments
 Recession exposes
vulnerabilities
Today’s newspaper isn’t
universally dying

15. 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?

16. Prism for planning:
deep hole, shifting sand

17. $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)

18. 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%

19.  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

20. 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

21. Reformation and
Renaissance of media

22. Age of Mass Media
 Newspapers
 Television
 Magazines
 Radio
 Outdoor
… we talked to the forest

23. Age of Niche Media
 Zoned newspapers
 Cable TV
 Niche magazines
 Niche radio
 Outdoor
… we talked to the tree
in the forest

24. 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)

26. 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

27. 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

28.  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”

29.  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

30. Disaggregating print’s
value propositions

31. Print bundle protects all
Content Verticals
News
Sports
Business
Features
Advertising Verticals
Classifieds
Local retail
National
The Newspaper Bundle

32. 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

33.  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

34. 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

35. Why determining your
content’s value is a
top priority today

36. 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

37. 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.

38. 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)

39. 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

40. 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

41. 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

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: $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

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
+51%
+271%
+143%

44. 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

45. 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

46. 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)

47. Audience
+ Content
+ Platform
= Value

48. 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)

49. 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

50. 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)

51. Conclusions

52.  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

53.  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

54.  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

55. 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

56. >> Earl J. Wilkinson
Executive Director and CEO | INMA
The Newsmedia Outlook
Last Moments of Danger, Last Moments of Opportunity