What a year it's been.

Labels: AP, bing, Business Information, content, enterprise, Google, google wave, media, Microsoft, Murdoch, Social Media, Twitter, Windows 7

Editor & Publisher notes along with many others the announcement by the Tribune Company that it has given its two-year notice to discontinue receiving content from the Associated Press. The E&P article cites the recent rate hikes from AP as a key factor in its decision, but other accounts also highlight concerns raised by other newspapers subscribing to the service regarding AP's cutting back on local coverage and its efforts to create a more competitive position for its own content through non-newspaper outlets that compete directly or indirectly with member outlets. Whatever the exact reasons in these instances, the pullout echoes sentiments surfacing in some of Shore's private research that indicates a growing dissatisfaction with AP as a source of content.

Although some of the growing rebellion against AP services no doubt is fired by cost, content and competition from the membership-driven service, there is another key factor that is driving newspapers to reconsider AP as a source of content: the marketplace. In local newspapers and media outlets there is a dwindling interest in national news as a revenue driver, as 24x7 online and broadcast sources diminish the need of local residents to turn to their hometown papers for this view of the world. There is more money to be had by many of these papers by building up deeper and more engaged local content and by building special interest sections for holidays and other event-driven interests that will attract local advertisers more effectively. Put simply, with dwindling budgets to cover world and national events many papers are making the choice to rally their limited resources around locally focused content and advertisers.

The other key factor in the challenge to AP, though, is that there is an increasing reservoir of options for media outlets that want high-quality editorial to insert into their publications. Link exchanges, content swaps and other cooperative online publishing options enable the online editions of local papers to insert content from other newspapers and media outlets into their own sites and to host their own content elsewhere at partner sites. In other words, when revenue isn't all about what happens on your own Web site but also about driving more traffic to inventory from relationships with online publishing partners there are more options for local publishers to drive up both page inventory and audience engagement. AP delivers content inventory, but not the kind of inventory that's most likely to engage the audiences that value a local newspaper brand in a way that will drive the highest revenues.

While some newspapers seem to question the refocusing of AP's content on more analysis and opinion pieces as an additional point of concern, in general the real issue for most publishers confronting their rising AP charges is that as good as AP news can be it's not what will drive their profits moving forward in most instances. While AP has spent a great deal of legal and marketing effort to shore up the value of the AP brand through copyright protection and brand positioning, it has in many ways failed to identify how a cooperative news distribution service can help its members to generate more revenues cost-effectively. With their members cutting their own collaborative content deals left and right, oftentimes with providers of unique online sources of content, the power of the Web to make these deals work without AP's infrastructure is the chief challenge to AP's future.

All of this argues for a selloff of AP in the next couple of years to an owner that can take advantage of its extensive network of reporters and stringers to package its core assets more effectively to a broader base of clients beyond dwindling newspaper properties. News Corp would be the most likely taker, in part because of Rupert Murdoch's designs already in place to provide better global marketing for Dow Jones resources (already aligned closely with AP in financial markets), though others such as Google continue to be bandied about. The missed opportunity in this, of course, is the opportunity to redefine AP as a new kind of distribution channel for high-quality content based on a new generation of news producers and to enable it to include a cross-platform network of news enthusiasts who will add value to its brand based on their enthusiasm for commenting on news content. If everyone wants to do content swaps and link exchanges, for example, why isn't AP positioned as a channel designed to make that easier?

On this note I think that one of the great missed opportunities for AP has been its failure to adopt a strategy for embracing social media more effectively. While an acquisition of a player such as Newsvine would not have stanched the bleeding based on its core asset issues it would have at least started to position AP as a service that could center communities around key news assets. If audience engagement is the key to online publishing profits, catchy headlines and great ledes are not necessarily going to help your members as much as giving people a good reason to stay on a page - something that good social media can help to do very effectively.

AP's pricing will help to define for its members what AP needs to do to cover costs for existing editorial operations, but that's little more than an opening argument when AP members are looking for concluding remarks as to how AP will help them to drive revenues more effectively. It's probably best at this time for AP to seek a parent aggressively that will help them to maintain their core editorial assets while enabling them to invest in a broader array of content assets and services that will bolster their value over time. By all indications current AP members will not be the ones to sponsor that investment, so it's most definitely time to go find buyers to make those investments while there's still a good opportunity to do so.

Labels: AP, associated press, distribution, media, Murdoch, News, tribune company

There are some basic patterns that seem to repeat themselves through the publishing industry, one of them being the relative attractiveness of subscriptions in a down economy and the relative attractiveness of ad-supported publishing in an up economy. With the global economic cycle already beginning to cut into online advertising money and that money spread across more high-quality online inventory than ever, it's not really a surprise that there's some reaffirmation of subscription models at Dow Jones. As noted in The Wall Street Journal, News Corp Chairman Rupert Murdoch underscored in comments at the Davos World Economic Forum that Dow Jones would be continuing a subscription component to the WSJ's online offering, even as it expands its free offering to a far broader online audience.

Dow Jones has little to lose and quite a bit to gain by trying this "guns and butter" approach to online monetization. With about two million affluents and influential online subscribers, WSJ offers strong demographics to advertisers who would otherwise be left to compare only WSJ's open Web assets with other quality online content. WSJ will hold its own with those competitive products, to be sure, but why toss out higher ad rates if you don't have to? By expanding both search engine exposure to much of WSJ's online content and continuing to build an online club for elites there's reason to think that the Journal is headed towards a comparatively robust year of growth.

The main question is, what will keep the subscribers coming back for more? We've mentioned in earlier posts that the subscription component could be used to leverage WSJ's upscale demographics in any number of social media-oriented efforts, as well as to offer financial analysis tools that would one-up offerings made available by Yahoo! Finance as well as premium offerings from Morningstar and other online suppliers. Whatever the changes they need to be oriented more towards a younger generation's needs if they are to use subscription revenues for anything more than the temporary bulwark that the TimesSelect premium experiment turned out to be.

Any way you look at it it's not clear that there's a core of traditional editorial content from any news publisher that's likely to sustain growth in online subscriptions in the long run. The tricky job that Dow Jones has on its hands is to project the value of its brand more globally via ad-only content whilst maintaining some sense of value in its exclusive subscription product. Dow Jones has much to gain in retaining its subscription model as it expands ad-only content, but they will be challenged to keep the value of the Wall Street Journal brand high unless there are new styles of content that can build on the existing brand's loyalty.

Labels: advertising, Dow Jones, Monetization, Murdoch, subscription

Mercifully the carnival that has been the negotiations for News Corporation's acquisition of Dow Jones appears to have pulled out of town, with factions of the Bancroft family finally wrestled into line with the financial and managerial realities of the deal. One shudders to think as to whether any right-thinking corporation would have considered an acquisition of Dow Jones any time soon after these machinations, so from at least that perspective the shareholders of Dow Jones should consider themselves very lucky indeed. But now that the glow of the spotlight is beginning to die down from this fracas, what's really going to happen with Murdoch's new acquisition?

As we said more than two months ago the benefits of having a global media company as a parent that has strengths in markets where Dow Jones needs to become stronger are the key to the real value in this deal. Murdoch's desire to have a major U.S. gem like Dow Jones in his crown will be overshadowed ultimately by his use of Dow Jones as an international brand that will allow him to become a more dominant player in influencing world markets. This will be especially important in U.K. Asian and Australian markets, where the online expertise and editorial strengths of Dow Jones can be used to build an English language global business media brand more able to dominate regional brands and Pearson's struggling Financial Times.
But it's also likely that the Dow Jones brand will be able to find footholds in other markets over times with Murdoch's leverage.

The missing piece from this empire is a strong presence in real-time trading markets. But given the cutthroat nature of those technology-driven markets that are not easily adapted to the managerial strengths of the Dow Jones organization this may be an omission worth skipping for the time being. As financial markets split into highly automated trading venues and opportunities driven by high-end market analysis tools the opportunity for Dow Jones to make better use of its strengths is not likely to solidify for some time in the wake of Thomson's pending deal for Reuters. A conjectural bid for Bloomberg is not really even worth considering at this point, though in two years' time it might be a reasonable play for NewsCorp if Murdoch's focus on succession takes his portfolio into more diversified channels.

While there is doubtless a fair amount of sadness in some hearts at Dow Jones as a proudly American brand passes to offshore ownership it's also an opportunity to reflect on the need for American business media in general to become more adept at managing international footprints. A weak dollar makes this a difficult time to buy in to those markets, so the wave of international acquisitions of U.S. targets this year at favorable exchange rates makes it that much harder for U.S. B2B media companies to make progress in overseas markets. But times will change - if B2B media companies take on a Murdoch-like view of the world that goes beyond the local golf courses and into more international circles of power. In the meantime congratulations to everyone involved in the Dow Jones deal - I hope that you get a few days off to forget about it all.

Labels: Business Information, Deals Partnerships and Sales, Dow Jones, Murdoch, News Corp

Two weeks ago when we covered the offer by Rupert Murdoch to have NewsCorp take over ownership of Dow Jones there was plenty of froth from the Bancrofts and some media pundits that this was a "no way" proposition, making us just a little nervous about our bullishness on the deal. Two weeks later the Bancroft family has issued their own press release independent of Dow Jones to indicate their intent to provide Dow Jones with new ownership and that they are willing to speak with News Corp as a potential suitor. Murdoch's patience and low-key approach seem to have brought him at least to a place at the table, if not one fully welcomed, as the Bancrofts seem to have concurred with our earlier conclusion that this is the right time to make a sale. While there is always the potential for a surprise bid from the wings it's probable that whatever solicitations the Bancrofts initiate for alternative offers will be more to provide emotional and intellectual backing to the very likely consummation of a deal with News Corp. Investor's Business Daily noted earlier regarding this deal the ancient Chinese military strategist Sun Tzu's writing that exercising patience often leads to victory in war. Perhaps the patience of both the Bancrofts and Murdoch are about to be rewarded with equal measure.

Labels: Bancrofts, Deals Partnerships and Sales, Dow Jones, Murdoch, News Corp