There's the usual spate of moans and groans about print profits coming out of the Argyle Executive Forum on Leadership in Media, according to Red Herring, which featured insights from many key figures in today's news media markets. This negative outlook is underscored by News Corp's withdrawal from bidding for New York area newspaper Newsday based on it being "uneconomical" and setting the stage for a potential takeover of the paper by Cablevision. While revenues continue to climb from online content at news outlets classified revenues are still highly vulnerable from online competitors, making it hard to translate growing online audiences into profiles that resemble print.

There's not much new in all of this, to be sure, but I was interested in the following comment from the Argyle conference:

Norman Pearlstine of the Carlyle Group told attendees that newspapers enjoyed a brief period of monopoly that attracted investors and convinced many families to take their businesses public. However, he said, for most of its history, the newspaper business did not enjoy the double-digit margins that characterized the 1980s and 1990s. “At the end of the 19th century there were 29 newspapers in Chicago,” he said.

In other words at the end of the day perhaps the consolidation in the print industry of the past fifty years or so, first in response to rising fixed labor costs and television competition and then from the Web, created an illusion that highly capitalized media operations would yield superior results in an industry that has historically favored diversity in lower-margin operations. By creating larger swaths of exclusivity for fewer brands in major markets, newspapers and other print outlets were able to attract advertisers for several decades and provide reach at the same level of television markets. But in doing so they never really addressed the lack of technologies that could deliver higher margins except through higher production volume. This created an artificial illusion of technology scarcity that helped to drive both margins and the expectations of people creating print content. As long as there was a steady stream of companies to acquire to build up the illusion of scarcity, this worked rather well. But we seem to have come to the end of the run of worthwhile mass market print acquisitions. Big will probably get bigger yet if government regulations allow it, but to far less avail.

By contrast, the Red Herring article highlights how Playboy Magazine was one of the very first to invest heavily in Web technologies and to learn how to make them both profitable and attractive to advertisers and audiences, including heavy investments in online video and multiplatform delivery. The result: a highly profitable and attractive operation that offers some unique appeal to online audiences based on both content and branding. Instead of focusing on acquisitions in a sea of abundant competitors to create more artificial scarcity, Playboy worked to create something more appealing what would create quality that would be hard to replace.

Another important contrast comes from a recent MediaPost article, in which Ken Doctor points out that local newspapers are still doing fairly well, in part because many local advertisers as well as audiences have yet to be able to leverage a confusing array of online options effectively. This creates a real scarcity of audiences focused on local online content that are easy for advertisers to attract with some scale. Online alternatives are catching up fairly quickly in terms of content quality, but until GPS-enabled advertising services grow more sophisticated local print will continue to offer a ray of hope for print.

The bottom line is that it's far from clear that major media outlets as we know them really need to exist as they have for the past fifty or so years much longer. If the historical state of content is a wide variety of focused outlets with relatively low revenues, low volumes and low margins, then maybe what online publishing is beginning to usher in is simply the return of publishing to its more normal state. The difference with current markets is that electronic content aggregation makes it relatively easy for a wide variety of publications to leverage common technology. For example, individual weblogs such as ours use a tiny fraction of the power found in Google's Blogger.com infrastructure. So by focusing their capital mostly on pure infrastructure, Google has created true scarcity of highly scalable publishing capabilities that can service both localized and broad audiences very effectively.

Notably even companies like Google go out and buy market share through acquisitions - online video outlet Blinkx is rumored to be on their short list of short-term possible acquistions -
but these tend to be acquisitions that bring in both unique technologies and unique audiences. Where major media companies look mostly at reducing costs through online and print publication consolidation, the Googles of the world stay focused on creating more unique product value through acquisitions. With such an insistence on sticking with old metrics for performance it's not clear that established media companies can commit their capital effectively to gain a market advantage as long as they continue to focus on creating more artificial scarcity for dated products and dated delivery technologies. In the meantime private equity abounds to fund technology platforms that will take away the best opportunities for a wide variety of producers content with higher margins on lower volume and advertisers pleased with more focused audiences.

In other words, it's very unclear where the news industry goes from this point if they don't want to invest far more heavily in new electronic product development for more focused audiences. With a sour economy making it all the more hard to raise more capital for investment, expect media titans to continue to wrestle with their place in a content market traditionally dominated by smaller, more agile and more innovative players.

Labels: media, Monetization, News, News Corp, newspapers, print

The headline at BtoB Online announcing rosy revenue increases for magazines seemed like great news for the magazine industry, but when you look at the details of statistics from the Magazine Publishers of America’s Publishers Information Bureau there's a far less rosy picture for several major publishers to consider. While Time Inc.'s People showed a reasonable 6.4 percent revenue increase in 2Q07 versus 1Q06 Time magazine was down 16.8 percent, Fortune down 13.4 percent, Money magazine down 8.3 percent, Business 2.0 down 38.4 percent - enough to spark talk of Business 2.0 heading to the dead pool - and the now-deceased Life magazine clocking a 78.7 percent drop in revenues. Overall health, fitness, food titles and hardcore business magazines fared well while older regional and niche titles, small business, consumer-oriented finance and men's enthusiast magazines seemed to fare worst.

Magazine gainers easily trumped losers in overall title count and revenues so there's some good reason for print producers to feel that there is some good potential growth ahead as print becomes the status media of choice for affluent people trying to achieve more and to hold on to what they have through health and diet regimens. But general-interest print publications and publications catering to more traditional home and recreation interests (who has time?)
seem to be fading or growing moderately at best, with few exceptions. This may be a reflection of the current U.S. economy as much as anything else, but it also indicates that print is going to continue to succeed as a status symbol for mostly high end up-and-comers but only when it meets very specific points of pressing concern. In the meantime most entrepreneurial and tech-oriented audiences seem to have migrated for good to online venues.

Where this leaves general interest publishers such as Time Inc. is uncertain. The Web's ability to excel in both general audience aggregation and to dissemble general interests into highly focused niches rapidly via social media and vertical portals puts any traditional publication's strengths in a precarious position. For the most part these publications are going to have to make sure that they are contextualizing their content online as effectively as possible via search engines, social media and personal syndication, with their revenue streams following their content to its most valuable contexts. In print these publications will need to consider how mass customization will enable them to extract editorial value from a range of staffs more effectively through different interest lenses.

In general publishers have to consider how they can use their online portal presences to drive print consumption more effectively. Users need to be encouraged to let publishers know what they'd like to see in print - and to facilitate its delivery along with other editorial content that complements those expressed interests. It is difficult for publishers to out-Google Google in contextualizing online content but for now they stand a chance to do that more effectively for individuals in the print medium

Labels: magazines, marketing, print