Media Watch pointed to the CommsDay "riposte" to the ABC's definitive article listing the issues around NBN. [Part 2 of article]. Written 14-march-2013.
Here's my analysis of Grahame Lynch's "50 problems". Commsday comments in this colour.
[18-Mar: Apologies to Grahame for misspelling his name]
For completeness, some disclosure: I don't work for, or hold shares in, a Telco, NBN Co or one of their suppliers or contractors, nor am I a member or supporter of any Political Party. Neither do I support the Labor NBN plan over the Coalition's unannounced NBN. I hold the position that either Policy with deliver better broadband access. My interest is for a clear and informed debate on what I consider the defining Technology of the 21st Century for national Business Productivity and Competitiveness.
Showing posts with label media. Show all posts
Showing posts with label media. Show all posts
2013/03/14
2009/08/07
Rupert Murdoch - Fool or Genius?
Does Rupert Murdoch know something the rest of us don't?
The recent news is that News Ltd would start charging for on-line access to its newspapers.
Not a good idea.
Experienced Journalist & commentator, Alan Kohler also thinks so...
First, Rupert is not in the business of selling 'news', quality journalism or not.
He sells Advertising.
Just like Google and friends. But apparently not nearly as well as they do on-line.
There are people who sell 'news', and they are going strong.
Organisations like Reuters, Associated Press, Bloomberg, AAP, ... The wire-services.
The same ones that sell to Google, businesses, TV and Mr Murdoch's newspapers.
News Ltd doesn't sell journalistic content (news): like every major newspaper, it has always given away its content. Exactly the same as Free-to-Air radio and TV.
The "value proposition" to most newspaper customers, News & Stories, is a Free Good.
Major papers actually cost their publishers to sell. Newsagents typically keep the full "cover price" of the local major papers. Perhaps this is why Fairfax Ltd lists "Newsprint and Ink" as its single biggest expense.
Publishers make their money from the advertising they sell (Classified and 'Display' or general).
They set their advertising rates on the estimated number of readers - not copies sold/distributed. (There's a whole industry 'auditing' circulation & readership).
Small advertisers will always be 'price-takers', while the large regular advertisers can negotiate.
On-line breaks many/all the Newspaper assumptions:
Browsing the 1200+ entries for 'newspapers' in the Australian Yellow Pages, these groupings seem apparent:
A newspaper without content, pure advertising, the ideal for the business side of newspaper.
Second, a long time ago newspapers were the source for capital-N News - timely, important, factual.
They broke stories, 'scooped' one another, had many editions during the day and dealt in "the facts m'aam, just the facts" as Joe Friday might say.
The sort of thing shown in 1930's Black and White movies.
By the 1970's, newspapers had comprehensively lost the race as the first news source.
"Watergate" showed they could still 'scoop' other media with investigate journalism, but the Vietnam War played out on the nightly TV news.
When Ted Turner started CNN, the game changed - Free-to-Air was usurped.
The 1991 Gulf War had CNN "reporting live from Baghdad" and assumed the mantle of "first news source".
These days it is a tussle between Cable News and on-line services to be "first".
And that race has always led to problems with accuracy and false/fabricated stories.
An editor who is under pressure "to be first" can be manipulated into publishing without good fact checking. When there was considerable effort & expense in rolling the presses, the downside ensured more caution. In the on-line world, nearly all barriers to production are eliminated alongside "instant" publication. An editorial mistake is much more likely and potentially much more damaging to a large publisher, the Drudge Report non-withstanding.
Newspapers have been providing Opinion & Analysis for a couple of decades.
Any pretence they are cutting edge or breaking stories in real-time is a "fools paradise" and delusional.
News Ltd has great content produced by many great people and serves a faithful cohort of consumers. It just isn't 'news' they are selling.
Third, there are many good free alternatives for news, on-line and not, to newspapers.
Google pays for wire-services and gives away the content.
Publicly funded media - radio, TV and on-line - have a mandate to provide services with public monies. The BBC and Australian ABC have large news rooms and international reporters.
The ABC alone has 700 people in its News Division providing current content for all its outlets.
How does a newspaper, with at best 300 journalists, compete with a better resourced competitor who's content is free?
Not on news - only with other types of content and other incentives - like DVD's and special offers...
Fourth, there are just 3 workable Revenue Models.
Revenue options are:
subscription/donations and cover-price + advertising.
(pre-paid vs 2-part charging)
There are only 4 Revenue Models possible in this scheme.
Fully free can't self-support itself, so there are only 3 workable models.
Murdoch is complaining the Revenue Model that has worked well in the physical world for approaching a century doesn't work on the Internet. Who'd have thought?!
The wire-services thrive and on-line advertising is booming.
The only people out of step are the firms running newspapers.
They could have acted in 1995 to move their advertising on-line, but didn't.
Were they blinkered or lacked 'vision'?
Was it a sound business decision based in part on not canabalising their main cash flows?
Things are how they are...
There seems little to be gained from now analysing the reasons for non-action.
There are other issues that have to be resolved when moving to on-line services.
Lastly, What would work?
This is an argument in three parts: as a society we need 'quality journalism', news rooms aren't cheap, and are there models we could follow?
The media as "The Fifth Estate" is an important and necessary part of any Democratic government. A Free Press is a necessary part of Open and Transparent government.
But whither Investigative Journalism. There is a lot of TV reportage of politicians doing 'door stops' or in stage-managed events. And a lot of 'tabloid journalism' on TV.
Would Woodward and Bernstein now be funded for their lengthy Watergate investigations?
Would any editor allow it to be published these days?
I think Watergate is less likely to be reported these days for many reasons and the Drudge Report and other gossip sources do not fill the gap.
"Quality Journalism" has to be nutured & supported for us to have stable, prosperous societies.
The ABC states it has 700 people in its News Division.
On-line sources suggest major newspapers have ~300 journalists in their newsrooms. [This information isn't in the Annual Reports I scanned.]
What would it cost to run such a news room?
$30M a year in wages, $10M in wire-services, $10-15M for bluidings and systems.
Marketing & Sales probably $30M. Accounting and collecting subscriptions: $5-10M.
Publishing on-line would add another $20-30M, with an overall 30% Gross Margin required to fund upgrades, depreciation and dividends.
Perhaps $150M/year in revenue, or $3M/week.
The Sydney Morning Herald has an audited circulation of 210-360,000 and readership from 850,000-1,100,000 [without SunHerald, $1.80 and 480,000/1.25M]
Previous comments: "Internet Changes Everything: Newspapers".
Even if you achieved 500,000 individual subscriptions, a weekly price of $5+, versus the $1.40/weekday and $2.40 Saturday for the paper version.
I believe that's far beyond the consumer 'price point' for a single publication.
So what models are out there that might work?
'Cable TV' provides content aggregation, common marketing services & subscription and billing.
It has severly impacted Free-to-Air TV over the last 4 decades for many reasons.
One of the big factors I believe is allowing content providers to focus on their strengths and the Cable Service Provider (Foxtel in Australia) to focus on the technical and retail/customer relations and support business.
The public are offered content aggregated into affordable and desirable 'packages'.
They can decide the utility to them of each package and compare the cost to other forms of entertainment. A$30-$50 seems to be the price point.
Cable TV for content providers removes barriers to entry and avoids competition between technical delivery methods. The customer wants the service and isn't interested in the technology per se. This model allows & promotes small, new entrants with serving specialist or highly targeted niches.
The revenue returned to content providers is unknown to me. Large studios are not 'price takers' and have significant negotiating power as 'headline products'.
Presumably small niche providers get a return based on consumer views.
This shared infrastructure and 'content packages' seems ideally suited to on-line delivery of paid content - which doesn't have to be limited to news or 'quality journalism', but certainly includes them. Plus we have the natural providers already operating with large, high-quality customer lists: Cable Service Providers.
The technical implementation for an "on-line Channel Service" is simple. Though the ABC iView experience suggests that collaborating with ISP's and allowing unmetered content is necessary. [Australian ISP's impose download quotas on broadband].
Customers already have some sort of PC (Windows, Mac, Linux, ...) and look after their own broadband connection.
A controlled, universal 'player' is required - happily companies like VMware already provide, free, a basic product that work across all platforms, the "VMware Player", which can run pre-built systems with embedded applications, "Virtual Appliances".
The only necessary work is tailoring a VPN or similar and distributing the required registration/connection keys. Foxtel already has the infrastructure in place to source, distrubute, service and support hardware & devices.
That's not a big leap...
And one where services can be packaged in a series of packages with many different price-points.
All those free Community papers, plus a Major Metro Papers: $5/month?
Add a speciality or trade paper, all the Major Metros, a financial services 'feed' and an alert service like 'Media Monitors' for a company of 75 people: $lots.
How does this proposal site with the Newspaper assumptions:
On top of this, additional options allowing subscribers to pre-pay to view or print normally inaccessible content. The Channel Service Provider doesn't become a credit provider - in fact gains by holding the prepaid money - which it never need return and might even expire, like pre-paid mobiles.
Importantly, 'micro-payments' are avoided. They are very, very hard to get right and consequentially expensive. That's why we've never seen Visa and Mastercard move on this market.
But moving 1cent 'funny money' from your pre-paid balance to a vendor - very cheap.
It's the basis of prepaid mobiles.
With the business-friendly upside of all the unused payments that expire - a tidy 5-10% profit.
In summary: Do I think Murdoch is wrong-headed in charging for access to his newspapers?
Absolutely.
Do I think an on-line service offering this facility effectively, efficiently and profitably can be constructed?
Absolutely.
Will anyone read & respond to this piece and the proposal?
Who Knows :-)
The recent news is that News Ltd would start charging for on-line access to its newspapers.
Not a good idea.
Experienced Journalist & commentator, Alan Kohler also thinks so...
First, Rupert is not in the business of selling 'news', quality journalism or not.
He sells Advertising.
Just like Google and friends. But apparently not nearly as well as they do on-line.
There are people who sell 'news', and they are going strong.
Organisations like Reuters, Associated Press, Bloomberg, AAP, ... The wire-services.
The same ones that sell to Google, businesses, TV and Mr Murdoch's newspapers.
News Ltd doesn't sell journalistic content (news): like every major newspaper, it has always given away its content. Exactly the same as Free-to-Air radio and TV.
The "value proposition" to most newspaper customers, News & Stories, is a Free Good.
Major papers actually cost their publishers to sell. Newsagents typically keep the full "cover price" of the local major papers. Perhaps this is why Fairfax Ltd lists "Newsprint and Ink" as its single biggest expense.
Publishers make their money from the advertising they sell (Classified and 'Display' or general).
They set their advertising rates on the estimated number of readers - not copies sold/distributed. (There's a whole industry 'auditing' circulation & readership).
Small advertisers will always be 'price-takers', while the large regular advertisers can negotiate.
On-line breaks many/all the Newspaper assumptions:
- no intermediaries with good 'passing trade' to find customers
- exact counts, not estimates, or readership
- exact counts of advertiser hit-rates (count links followed)
- targeted/niche audiences, not "broad spectrum" mass market
Browsing the 1200+ entries for 'newspapers' in the Australian Yellow Pages, these groupings seem apparent:
Business, Trade & Industry, Lifestyle, Sports, Political, Special Interest, Community/Local, Regional & Rural, Ethnic, Language and Religious,and versions of the "Trading Post".
A newspaper without content, pure advertising, the ideal for the business side of newspaper.
Second, a long time ago newspapers were the source for capital-N News - timely, important, factual.
They broke stories, 'scooped' one another, had many editions during the day and dealt in "the facts m'aam, just the facts" as Joe Friday might say.
The sort of thing shown in 1930's Black and White movies.
By the 1970's, newspapers had comprehensively lost the race as the first news source.
"Watergate" showed they could still 'scoop' other media with investigate journalism, but the Vietnam War played out on the nightly TV news.
When Ted Turner started CNN, the game changed - Free-to-Air was usurped.
The 1991 Gulf War had CNN "reporting live from Baghdad" and assumed the mantle of "first news source".
These days it is a tussle between Cable News and on-line services to be "first".
And that race has always led to problems with accuracy and false/fabricated stories.
An editor who is under pressure "to be first" can be manipulated into publishing without good fact checking. When there was considerable effort & expense in rolling the presses, the downside ensured more caution. In the on-line world, nearly all barriers to production are eliminated alongside "instant" publication. An editorial mistake is much more likely and potentially much more damaging to a large publisher, the Drudge Report non-withstanding.
Newspapers have been providing Opinion & Analysis for a couple of decades.
Any pretence they are cutting edge or breaking stories in real-time is a "fools paradise" and delusional.
News Ltd has great content produced by many great people and serves a faithful cohort of consumers. It just isn't 'news' they are selling.
Third, there are many good free alternatives for news, on-line and not, to newspapers.
Google pays for wire-services and gives away the content.
Publicly funded media - radio, TV and on-line - have a mandate to provide services with public monies. The BBC and Australian ABC have large news rooms and international reporters.
The ABC alone has 700 people in its News Division providing current content for all its outlets.
How does a newspaper, with at best 300 journalists, compete with a better resourced competitor who's content is free?
Not on news - only with other types of content and other incentives - like DVD's and special offers...
Fourth, there are just 3 workable Revenue Models.
Revenue options are:
subscription/donations and cover-price + advertising.
(pre-paid vs 2-part charging)
There are only 4 Revenue Models possible in this scheme.
Fully free can't self-support itself, so there are only 3 workable models.
Murdoch is complaining the Revenue Model that has worked well in the physical world for approaching a century doesn't work on the Internet. Who'd have thought?!
The wire-services thrive and on-line advertising is booming.
The only people out of step are the firms running newspapers.
They could have acted in 1995 to move their advertising on-line, but didn't.
Were they blinkered or lacked 'vision'?
Was it a sound business decision based in part on not canabalising their main cash flows?
Things are how they are...
There seems little to be gained from now analysing the reasons for non-action.
There are other issues that have to be resolved when moving to on-line services.
- Paper is simple and always "Just Works', modulo getting wet.
Attempts to stream printed news electronically have been widely successful outside of offices. Radio serves the travelling public well. Printed media is cheap, available and can be forgotten without dire consequences. Some section of the population may read the news on their Kindle or iPhone on their morning commute, but it won't be a large audience.
Neither will there be much call for $10 newspapers... - Serving "The Diaspora": An important function of newspapers is allowing non-resident locals to "keep in touch with home". Australia shows that people may permanently emmigrate and never return home, but still identify strongly with their country of origin. This fuels our strong ethnic newspapers. For people who've only moved towns, a daily or weekly "fix" of their hometown newspapers fills a strong need. They even pay a premium.
- Niche buyers. Most buyers throw most of a newspaper away. They are very specific & selective in their needs and uses of the massive content provided. There are better ways to serve many of those niches on-line. Like classified advertising is better served by e-bay and 'trading post'. It's fast, current and cheap - plus very efficient for the reader. The service does the searching and the reader can be contacting a seller within minutes of loading the site.
- Network effects and the tipping point. When a product has reached around 40% market penetration, it 'suddenly' becomes popular and quickly saturates the market. This happened in 1984 with Group-3 fax and then around 1996 with The Internet/World Wide Web. Newspapers need to be keenly aware of their competitors - when the end comes, it may be frightenly fast.
- Copyright and Libel Laws. The journalists union has spent a very long time negotiating what rights the publisher & content-creator have. This all has to be done again in an on-line world. The other side of the coin is commercial protection of journalists against Libel or defamation actions. The publisher wears the risk once the editor decides to print. Those named know that a newspaper can afford to and will defend itself. If journalists are personally exposed to litigation, justified or not, they will sensibly withhold contensious pieces. Why wreck your life for a decade or more, as happened to Chris Masters over the "Moonlight State" and other pieces? For many, the price is too high.
Lastly, What would work?
This is an argument in three parts: as a society we need 'quality journalism', news rooms aren't cheap, and are there models we could follow?
The media as "The Fifth Estate" is an important and necessary part of any Democratic government. A Free Press is a necessary part of Open and Transparent government.
But whither Investigative Journalism. There is a lot of TV reportage of politicians doing 'door stops' or in stage-managed events. And a lot of 'tabloid journalism' on TV.
Would Woodward and Bernstein now be funded for their lengthy Watergate investigations?
Would any editor allow it to be published these days?
I think Watergate is less likely to be reported these days for many reasons and the Drudge Report and other gossip sources do not fill the gap.
"Quality Journalism" has to be nutured & supported for us to have stable, prosperous societies.
The ABC states it has 700 people in its News Division.
On-line sources suggest major newspapers have ~300 journalists in their newsrooms. [This information isn't in the Annual Reports I scanned.]
What would it cost to run such a news room?
$30M a year in wages, $10M in wire-services, $10-15M for bluidings and systems.
Marketing & Sales probably $30M. Accounting and collecting subscriptions: $5-10M.
Publishing on-line would add another $20-30M, with an overall 30% Gross Margin required to fund upgrades, depreciation and dividends.
Perhaps $150M/year in revenue, or $3M/week.
The Sydney Morning Herald has an audited circulation of 210-360,000 and readership from 850,000-1,100,000 [without SunHerald, $1.80 and 480,000/1.25M]
Previous comments: "Internet Changes Everything: Newspapers".
Even if you achieved 500,000 individual subscriptions, a weekly price of $5+, versus the $1.40/weekday and $2.40 Saturday for the paper version.
I believe that's far beyond the consumer 'price point' for a single publication.
So what models are out there that might work?
'Cable TV' provides content aggregation, common marketing services & subscription and billing.
It has severly impacted Free-to-Air TV over the last 4 decades for many reasons.
One of the big factors I believe is allowing content providers to focus on their strengths and the Cable Service Provider (Foxtel in Australia) to focus on the technical and retail/customer relations and support business.
The public are offered content aggregated into affordable and desirable 'packages'.
They can decide the utility to them of each package and compare the cost to other forms of entertainment. A$30-$50 seems to be the price point.
Cable TV for content providers removes barriers to entry and avoids competition between technical delivery methods. The customer wants the service and isn't interested in the technology per se. This model allows & promotes small, new entrants with serving specialist or highly targeted niches.
The revenue returned to content providers is unknown to me. Large studios are not 'price takers' and have significant negotiating power as 'headline products'.
Presumably small niche providers get a return based on consumer views.
This shared infrastructure and 'content packages' seems ideally suited to on-line delivery of paid content - which doesn't have to be limited to news or 'quality journalism', but certainly includes them. Plus we have the natural providers already operating with large, high-quality customer lists: Cable Service Providers.
The technical implementation for an "on-line Channel Service" is simple. Though the ABC iView experience suggests that collaborating with ISP's and allowing unmetered content is necessary. [Australian ISP's impose download quotas on broadband].
Customers already have some sort of PC (Windows, Mac, Linux, ...) and look after their own broadband connection.
A controlled, universal 'player' is required - happily companies like VMware already provide, free, a basic product that work across all platforms, the "VMware Player", which can run pre-built systems with embedded applications, "Virtual Appliances".
The only necessary work is tailoring a VPN or similar and distributing the required registration/connection keys. Foxtel already has the infrastructure in place to source, distrubute, service and support hardware & devices.
That's not a big leap...
And one where services can be packaged in a series of packages with many different price-points.
All those free Community papers, plus a Major Metro Papers: $5/month?
Add a speciality or trade paper, all the Major Metros, a financial services 'feed' and an alert service like 'Media Monitors' for a company of 75 people: $lots.
How does this proposal site with the Newspaper assumptions:
- intermediaries with good 'passing trade'
Exactly what the Cable TV companies do. - exact counts, not estimates, or readership
Page counts and the precise subscriber unequivilacly identified & grouped.
Near-perfect marketing information, and a perfect, undisputed source of revenue figures for 'page hits' revenue scheme. - exact counts of advertiser hit-rates (count links followed)
You don't have to sell advertising, and many content providers would not,
But if, like the Trading Post, you did... Trivial. - targeted/niche audiences, not "broad spectrum" mass market
Tailored content per source, niche & specialist sources, remembered preferences and interests... Near perfect for subscribers and providers alike. - Normal print-media space restrictions are lifted: Content providers can provide additional "in-depth" material easily & cheaply.
- Individual content providers can use the Channel Service to provide archive, search and print-on-demand services. Leaving each party doing what they do best.
- 'Leakage' of content can be controlled with the Virtual Appliance.
It may be configured to only allow 10 pages a day to be printed... With extras purchased. - Anyone interested in expensive periodicals, Academic Journals or hard-to-find books?
With controlled access and clear charging regimes in place, there is no issue about denying or destroying copyright.
In another day, this might have been called "Your Local Library".
On top of this, additional options allowing subscribers to pre-pay to view or print normally inaccessible content. The Channel Service Provider doesn't become a credit provider - in fact gains by holding the prepaid money - which it never need return and might even expire, like pre-paid mobiles.
Importantly, 'micro-payments' are avoided. They are very, very hard to get right and consequentially expensive. That's why we've never seen Visa and Mastercard move on this market.
But moving 1cent 'funny money' from your pre-paid balance to a vendor - very cheap.
It's the basis of prepaid mobiles.
With the business-friendly upside of all the unused payments that expire - a tidy 5-10% profit.
In summary: Do I think Murdoch is wrong-headed in charging for access to his newspapers?
Absolutely.
Do I think an on-line service offering this facility effectively, efficiently and profitably can be constructed?
Absolutely.
Will anyone read & respond to this piece and the proposal?
Who Knows :-)
2009/07/02
Internet Changes Everything: Newspapers
The News Broadsheet was a pivotal element of the 1776 American Revolution, eventually becoming enshrined in the First Amendment to the US Constitution.
Newspapers were integral to the Twentieth Century rise and evolution of Western Democracies. Without "frank and fearless" reporting (and an engaged electorate), governments can quickly spiral out of control.
We're now 15+ years into the "Internet Revolution", so where are Newspapers in their journey on-line? Significantly, nobody seems to have discovered a "secret sauce" to generally monetise News and the work of Journalists in the way that Amazon and Google etc have monetised books and on-line ads. Those who make money from writing seem to do so from direct subscriptions - the on-line form of "newsletters".
In my first job, there was a direct and obvious connection between the 5g +/- 0.01g of sugar being analysed and 'the business': Our analyses determined payments for 500 or 1,000 tonne lots. Getting it wrong wasn't an option. My place in the scheme of things was self evident.
The world of Software and I.T., even after 60 years, still doesn't have that direct & obvious link.
I.T. shares many traits with Journalism:
Getting even rough numbers to judge demand and price-points seems very hard.
For any on-line business to succeed, revenues have to support costs. While serving bit-streams may be considerably cheaper than printing & shipping paper, what will people pay for it and how do you get money off them? How do you draw in more subscribers - what are your Marketing & Sales channels?
Newsagents keep the full "cover price" of most newspapers. For magazines and most other products, the publisher gets half with the distributor & newspaper splitting the rest.
The content of newspaper, News etc, is why people buy newspapers.
The price people are willing to pay for the whole paper indicates the "ultility" they get.
But how do you arrive at a value-in-use of just the News component?
Are there synergist effects in operation?
The output of Journalists, "News", is essentially a "Free Good" to both consumers and the business. To the publisher, each newspaper printed is only a cost - which they actively attempt to minimise, whilst revenues are from advertising and independent of pages printed. The connection is the "rate card" - people will pay more in advertising for wider circulation & readership. The connection is anything but direct and immediate. Meanwhile, "content" (& "classified" adverts) brings in readers, but the supply-demand curve is generally unknown.
Makes the economics of "free" community publications more obvious. The distribution costs are only slightly more than to newsagents and the claimed readership is maximised.
It also says why businesses are so very happy with "advertising only" publications, like "Trading Post". Pure profit and no content producers to wrangle! These business translate on-line very well - but lose all "display advertising" to corporates like retailers looking for mass market advertising.
Audited Circulation figures aren't too hard to come by and "The Press Council" publish a good snapshot of the whole Print Media scene, but there are only tangential references to journalist "head counts". Fairfax journalists feel pressured by staff cuts and are taking action.
To come up with viable business models for on-line News, especially when competing with "Free" on-line services like Google or Free-To-Air broadcasts (radio & TV), you need both sides of the Accounting Equation:
Profit = Revenues - Expenses.
Other marketing data is needed to determine whether Size Matters (only one global Google and Amazon) or Little & Local works or some combination in between...
Whatever the result, there is one guaranteed loser: newsagents.
They are the traditional Marketing & Sales Channel for newspaper.
What becomes of them in an on-line world?
Can their access to "passing trade" and existing business relationships be leveraged?
What we do know is that people are very happy with "Free" on-line content: using search engines to point to unbilled on-line newspaper articles.
Newspapers initially tried to force reader registration, even though content was "free" people went elsewhere. Fees were charged to access "archives" or additional material made available to paid subscribers.
News Ltd's upcoming experiment in charging for on-line content will be watched very carefully throughout the industry.
What would it cost to run an adequate newsroom? Do the 15 journos of brisbanetimes.com.au reported by the Press Council provide adequate local coverage? Various sources suggest major metropolitan news have 200-300 journalists, while the national broadcaster, the ABC, have 700 people in their "News Division" (which is how many journalists?).
Any 24/7 operation requires shift-work. To provide a minimum staffing of 2 people, needs a team of ~12. Numbers build very quickly as more sections & coverage is needed.
Fairfax's Annual Report (2007) says they made a profit of ~A$500M ($447M EBITDA) on A$2.3B sales.
Around one third of sales were from New Zealand. Overseas and non-print revenues were unclear.
The Australian Digital operation made A$37M on sales of $137M.
Their ~10,000 employees were their largest single expense: A$700M.
Paper and ink came in second at A$270M.
Sales and Promotions were A$88M.
Communications: A$17.5M
I.T.: A$15M and
News services: A$12M
Fairfax reports $8B of Assets - $6B of which is "intangibles" - "goodwill" and "value of mastheads". They've around A$850M in Property, Plant & Equipment - the physical assets needed to produce newspapers.
But how many journalists were there and what does a single "high-quality" newsroom cost to run? That's not going to change for an on-line News service.
What will an average subscriber pay for an on-line News service?
What additional content are needed, and what synergies exist?
How many on-line subscribers will sign-up for each different offering?
Can the existing subscribers be converted to on-line subscribers? What would help in the transition?
What are the different attributes that subscribers value and what premiums will they pay?
This says that monetising on-line News services may be hard and their general lack says solutions are still not obvious.
Other comments, observations and relevant factoids:
Newspapers serve important subsidiary functions, like being "the paper of record" for Births, Deaths and Marriages as well as public events, political speeches and disasters, crises and more.
"Public Notices" of many types are published - from bankrupts to probate on wills to personals.
Newspapers have come to be the definitive textual mass-communication device.
There appears to not yet be any on-line equivalent.
In the USA, recent failures of long-running mastheads says there isn't that much time left to find a good answer.
Circulations:
The SMH sells ~212,000 copies Mon-Fri (@ $1.40), 364,000 on Sat ($2.40) and [Sun-Herald] 505,000 on Sun. ($1.80). It has increased circulation in recent years. No figures available for pages of advertising sold.
The Melbourne Age has comparable sales figures, though Sunday sales are roughly half the SMH.
'Readership' of the SMH is estimated at 853,000 Mon-Fri and 1,116,000 Sat.
Papers are shared around.
These figures suggest that newsagents & supermarkets make around $1.5M/week for Mon-Fri sales and the same again on weekends. Removing that income stream would leave a very unhappy sales channel...
Payments and Subscriptions types:
What do Newspapers do?
What comprises 'stories'?
The value to the reader is collection and pre-screening: reducing a mountain of data and facts to quickly and easily accessible information. Journalists classify and prioritise stories, letting the reader minimise time used and maximise information found.
This "Usability" principle extends to presentation, layout and story structure.
The fonts and columns widths are chosen to best suit human factors.
Modern printing added pictures to text - an important aid to readers and writers alike.
The use of white space, headlines and graphics/pictures increase readability & accessibility.
Stories follow the "inverted pyramid" - the most important facts first, tailing off. It means readers can quickly scan articles and find the most relevant/useful to them, and sub-editors can easily trim articles to fit by removing trailing paragraphs.
It is instructive to read a 100-yo paper without these modern features - they look dense and impenetrable. The small number of pages would've been a blessing.
Professional Journalists bring special factors to collecting stories:
The users of News services look for many different benefits and uses:
"non-News" Newspaper functions that Online services may need to duplicate:
Newspapers were integral to the Twentieth Century rise and evolution of Western Democracies. Without "frank and fearless" reporting (and an engaged electorate), governments can quickly spiral out of control.
We're now 15+ years into the "Internet Revolution", so where are Newspapers in their journey on-line? Significantly, nobody seems to have discovered a "secret sauce" to generally monetise News and the work of Journalists in the way that Amazon and Google etc have monetised books and on-line ads. Those who make money from writing seem to do so from direct subscriptions - the on-line form of "newsletters".
In my first job, there was a direct and obvious connection between the 5g +/- 0.01g of sugar being analysed and 'the business': Our analyses determined payments for 500 or 1,000 tonne lots. Getting it wrong wasn't an option. My place in the scheme of things was self evident.
The world of Software and I.T., even after 60 years, still doesn't have that direct & obvious link.
I.T. shares many traits with Journalism:
- Both are "Performance Disciplines", like Music, Art, Surgery and Gymnastics.
- "Effortless Performances" (as in 'making it look easy') take a lot of skill and experience. The public and more often now, management, have little appreciation of the process & skills.
- Input Effort and Results bear no discernible relationship.
- Quality is Everything, but seems impossible to measure.
- Although both are central and necessary to the businesses they support, they are managed as "Cost Centres", with seemingly no attempts at connecting outputs with Profit.
- Both deal in intangible and invisible "stuff" - information. Often with tight deadlines and very fast decay in product "usefulness".
- Both share a central problem: Effort/Inputs are decoupled from Income/Results.
Getting even rough numbers to judge demand and price-points seems very hard.
For any on-line business to succeed, revenues have to support costs. While serving bit-streams may be considerably cheaper than printing & shipping paper, what will people pay for it and how do you get money off them? How do you draw in more subscribers - what are your Marketing & Sales channels?
Newsagents keep the full "cover price" of most newspapers. For magazines and most other products, the publisher gets half with the distributor & newspaper splitting the rest.
The content of newspaper, News etc, is why people buy newspapers.
The price people are willing to pay for the whole paper indicates the "ultility" they get.
But how do you arrive at a value-in-use of just the News component?
Are there synergist effects in operation?
The output of Journalists, "News", is essentially a "Free Good" to both consumers and the business. To the publisher, each newspaper printed is only a cost - which they actively attempt to minimise, whilst revenues are from advertising and independent of pages printed. The connection is the "rate card" - people will pay more in advertising for wider circulation & readership. The connection is anything but direct and immediate. Meanwhile, "content" (& "classified" adverts) brings in readers, but the supply-demand curve is generally unknown.
Makes the economics of "free" community publications more obvious. The distribution costs are only slightly more than to newsagents and the claimed readership is maximised.
It also says why businesses are so very happy with "advertising only" publications, like "Trading Post". Pure profit and no content producers to wrangle! These business translate on-line very well - but lose all "display advertising" to corporates like retailers looking for mass market advertising.
Audited Circulation figures aren't too hard to come by and "The Press Council" publish a good snapshot of the whole Print Media scene, but there are only tangential references to journalist "head counts". Fairfax journalists feel pressured by staff cuts and are taking action.
To come up with viable business models for on-line News, especially when competing with "Free" on-line services like Google or Free-To-Air broadcasts (radio & TV), you need both sides of the Accounting Equation:
Profit = Revenues - Expenses.
Other marketing data is needed to determine whether Size Matters (only one global Google and Amazon) or Little & Local works or some combination in between...
Whatever the result, there is one guaranteed loser: newsagents.
They are the traditional Marketing & Sales Channel for newspaper.
What becomes of them in an on-line world?
Can their access to "passing trade" and existing business relationships be leveraged?
What we do know is that people are very happy with "Free" on-line content: using search engines to point to unbilled on-line newspaper articles.
Newspapers initially tried to force reader registration, even though content was "free" people went elsewhere. Fees were charged to access "archives" or additional material made available to paid subscribers.
News Ltd's upcoming experiment in charging for on-line content will be watched very carefully throughout the industry.
What would it cost to run an adequate newsroom? Do the 15 journos of brisbanetimes.com.au reported by the Press Council provide adequate local coverage? Various sources suggest major metropolitan news have 200-300 journalists, while the national broadcaster, the ABC, have 700 people in their "News Division" (which is how many journalists?).
Any 24/7 operation requires shift-work. To provide a minimum staffing of 2 people, needs a team of ~12. Numbers build very quickly as more sections & coverage is needed.
Fairfax's Annual Report (2007) says they made a profit of ~A$500M ($447M EBITDA) on A$2.3B sales.
Around one third of sales were from New Zealand. Overseas and non-print revenues were unclear.
The Australian Digital operation made A$37M on sales of $137M.
Their ~10,000 employees were their largest single expense: A$700M.
Paper and ink came in second at A$270M.
Sales and Promotions were A$88M.
Communications: A$17.5M
I.T.: A$15M and
News services: A$12M
Fairfax reports $8B of Assets - $6B of which is "intangibles" - "goodwill" and "value of mastheads". They've around A$850M in Property, Plant & Equipment - the physical assets needed to produce newspapers.
But how many journalists were there and what does a single "high-quality" newsroom cost to run? That's not going to change for an on-line News service.
What will an average subscriber pay for an on-line News service?
What additional content are needed, and what synergies exist?
How many on-line subscribers will sign-up for each different offering?
Can the existing subscribers be converted to on-line subscribers? What would help in the transition?
What are the different attributes that subscribers value and what premiums will they pay?
This says that monetising on-line News services may be hard and their general lack says solutions are still not obvious.
Other comments, observations and relevant factoids:
Newspapers serve important subsidiary functions, like being "the paper of record" for Births, Deaths and Marriages as well as public events, political speeches and disasters, crises and more.
"Public Notices" of many types are published - from bankrupts to probate on wills to personals.
Newspapers have come to be the definitive textual mass-communication device.
There appears to not yet be any on-line equivalent.
In the USA, recent failures of long-running mastheads says there isn't that much time left to find a good answer.
Circulations:
The SMH sells ~212,000 copies Mon-Fri (@ $1.40), 364,000 on Sat ($2.40) and [Sun-Herald] 505,000 on Sun. ($1.80). It has increased circulation in recent years. No figures available for pages of advertising sold.
The Melbourne Age has comparable sales figures, though Sunday sales are roughly half the SMH.
'Readership' of the SMH is estimated at 853,000 Mon-Fri and 1,116,000 Sat.
Papers are shared around.
These figures suggest that newsagents & supermarkets make around $1.5M/week for Mon-Fri sales and the same again on weekends. Removing that income stream would leave a very unhappy sales channel...
Payments and Subscriptions types:
- Pre-paid or billed subscriptions. Like Home Delivery
- On-demand use: Ad-hoc or occasional purchase
- Prepaid access to articles.
- Business or family sharing. Limited copies shared between many.
- Public access - libraries.
- "Media Monitors" - clipping services across many sources relevant to a business.
What do Newspapers do?
- Inform
- Educate
- Entertain, and
- Surprise and Delight.
What comprises 'stories'?
- facts
- expert analysis
- commentary
- opinion, and
- interviews
The value to the reader is collection and pre-screening: reducing a mountain of data and facts to quickly and easily accessible information. Journalists classify and prioritise stories, letting the reader minimise time used and maximise information found.
This "Usability" principle extends to presentation, layout and story structure.
The fonts and columns widths are chosen to best suit human factors.
Modern printing added pictures to text - an important aid to readers and writers alike.
The use of white space, headlines and graphics/pictures increase readability & accessibility.
Stories follow the "inverted pyramid" - the most important facts first, tailing off. It means readers can quickly scan articles and find the most relevant/useful to them, and sub-editors can easily trim articles to fit by removing trailing paragraphs.
It is instructive to read a 100-yo paper without these modern features - they look dense and impenetrable. The small number of pages would've been a blessing.
Professional Journalists bring special factors to collecting stories:
- access to people & organisations, like police, politicians, CEO's, ...
- funding for travel, communication and fees - like FOI requests or corporate data.
- Researchers, archives and access to expensive subscription services.
The users of News services look for many different benefits and uses:
- text, images, audio and video
- Mobile access
- Alerts and "Instantaneous news items" (the latest stories)
- Distraction, Relaxation and passing-time (as in commuting)
- Social settings - Cafe and Brunch
- Search and information: Browsing classified and focused searches
- distribution format. PDF's or HTML?
How do I read it on the train?
Does it read well on a laptop or iPhone? - enforcing DRM. How to limit copying? What to do if copied illegally?
- on-going subscription rights:
If I've bought a "paper" once, do I have permanent access to it, even after my subscription ends? - Competing with Free-To-Net services. Seems hard, have to provide additional value.
- Catering for local community news
- Accepting input from the general public.
- The Blogosphere and non-professional writers. They can't be held to journalistic standards and ethics, can't be reprimanded or censured and will publish/repeat unsubstantiated gossip and rumour.
"non-News" Newspaper functions that Online services may need to duplicate:
- "paper of record" function: Public Notices, Births-Deaths-Marriages
- Mass-market display advertising.
- Marketing and Sales channels. How to grow new business?
- Access to Printed copies - eg. weekly summaries.
- Searchable service provider directories and classified adverts.
Implies RSS-style alerts & monitoring.
- Monetisation. Advertising, subscription or sponsor based? Other?
- Niche marketing. By location, interest, community, employment sector.
- Tiered Subscriptions: free, basic, premium, target area, search tools, ...
Profits can be maximised by segmenting services with multiple price-points. - Organisational access.
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