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It comes every day. Relentlessly. News with no indication that the trends set in motion by silicon is slowing. Indeed, they are picking up speed.
“It,” is the creation of new media outlets, forms and channels. It is good news for anyone who is concerned that the old media limited access to content. It is bad news for those whose livelihood depends on the older media structure.
Here are just two data points, both brought to our attention by The Wall Street Journal (read it online for $50 annually or in print for $200 annually, your choice).
On Feb 8 the Journal featured on its front paper “Unlike Big Dailies, A Paper Prospers In Bismarck, N.D.” Focusing on the Bismarck, ND Tribune, the Journal’s storyline is that “The paper is among a tier of papers with circulations of 50,000 or less that is proving relatively resilient in the face of a prolonged slump among larger papers.
On Feb 21, the Journal lead with another media story: “Online Video Goes Mainstream, Sparking an Industry Land Grab.” The gist of this story is that there are companies that now make it “easy for any producer -- from home-movie buffs to television networks -- to distribute their videos to multitudes of Web sites.” And that is not just technologically possible, but with a revenue model.
Now, what is the link between these two media stories? The Journal celebrates newspapers whose circulation “is holding steady” while big city circulation is plummeting. It mentions that Bismark’s population grew 11% between 1990 and 2000. Despite that, circulation was lower in 2005 than in 1996. For The Bismarck Tribune’s parent company, Lee Enterprises, advertising revenue was up 4.7%-- but that does not mean linage was up. Even Knight-Ridder, top heavy with the more rapidly declining big city papers, could claim 2.8% ad revenue growth in 2005.
More telling in the Journal’s “glass half full” story was the signal in the last paragraph. Scheel’s, a local sporting goods chain, and major local advertiser with 3000 employees, reported that a survey it conducted of its employees found that almost none of the under 40 years old subscribed to a daily newspaper. It concluded with: “At the same time, the response rate to the company's newspaper ads is half of what it was 10 years ago, he says. So increasingly, Mr. Scheel is skipping newspaper ads and reaching out to customers directly through email.”
Meanwhile, according to Parks Associates, someone in more than 10 million U.S. households watches an online video at least monthly. Even more download videos. The market for using the Internet to access video thus stands in direct counterpoint to the newspaper trends. Brightcove is one of the start-ups positioning itself to facilitate a wealth on online video. (Time Warner’s AOL and IAC/InterActiveCorp are among the investors). The model is simple. Anyone with video content—The New York Times and Reuters are two, but so also is tiny Bollywood & Beyond, Inc. in discussions or any amateur film maker-- can sign on. Any Web site that wants to link to the available content fills out on online form and, voila, can offer syndictaed video appropriate for its site. Brightcove sells advertising that runs prior to the video. The revenue is sliced among the video provider, the Web site and Brightcove.
Of course, there is nothing new and insightful here about the long term declining fortunes of the traditional newspaper industry and the prospects of all things digital. Big yawn. No, the message today is two-fold. First is the rate at which the changeover is happening. There are Brightcove-type initiatives being uncovered virtually every day. Just another that I came across recently was the movie “Waterborne,” which was reportedly the first full length feature with an original release on Google Video. It reportedly had 25,000 downloads in its first two weeks, at $.99 to $3.99 a pop, followed by an advance purchase of 15,000 DVDs. The independent producers had previously rejected at six figure advance from a distributor to maintain full ownership rights.
Unlike the dot-com era, these ventures come grounded in realistic business models based on reliable trends such as the growth in broadband. (Though, as an aside, successful attempts to legislate the benign sounding network neutrality policy could set back some of the high bandwidth –need plans).
Second, no matter what spin even The Wall Street Journal tries, the forces and trends at play cannot be buried. The only way the Lees, McClathchys, Gannetts and Knight-Ridders of the publishing world will stay profitable is by raising rates, at the risk of accelerating loss of advertisers and buyer, and by cutting costs. They have been doing both. In the short term it can produce favorable returns for investors.
As I noted here before and will say again, newspaper publishers, as well as other traditional publishers and radio and television broadcasters, are going to have to reinvent themselves while they still have strong cash flow and resources.
“It,” is the creation of new media outlets, forms and channels. It is good news for anyone who is concerned that the old media limited access to content. It is bad news for those whose livelihood depends on the older media structure.
Here are just two data points, both brought to our attention by The Wall Street Journal (read it online for $50 annually or in print for $200 annually, your choice).
On Feb 8 the Journal featured on its front paper “Unlike Big Dailies, A Paper Prospers In Bismarck, N.D.” Focusing on the Bismarck, ND Tribune, the Journal’s storyline is that “The paper is among a tier of papers with circulations of 50,000 or less that is proving relatively resilient in the face of a prolonged slump among larger papers.
On Feb 21, the Journal lead with another media story: “Online Video Goes Mainstream, Sparking an Industry Land Grab.” The gist of this story is that there are companies that now make it “easy for any producer -- from home-movie buffs to television networks -- to distribute their videos to multitudes of Web sites.” And that is not just technologically possible, but with a revenue model.
Now, what is the link between these two media stories? The Journal celebrates newspapers whose circulation “is holding steady” while big city circulation is plummeting. It mentions that Bismark’s population grew 11% between 1990 and 2000. Despite that, circulation was lower in 2005 than in 1996. For The Bismarck Tribune’s parent company, Lee Enterprises, advertising revenue was up 4.7%-- but that does not mean linage was up. Even Knight-Ridder, top heavy with the more rapidly declining big city papers, could claim 2.8% ad revenue growth in 2005.
More telling in the Journal’s “glass half full” story was the signal in the last paragraph. Scheel’s, a local sporting goods chain, and major local advertiser with 3000 employees, reported that a survey it conducted of its employees found that almost none of the under 40 years old subscribed to a daily newspaper. It concluded with: “At the same time, the response rate to the company's newspaper ads is half of what it was 10 years ago, he says. So increasingly, Mr. Scheel is skipping newspaper ads and reaching out to customers directly through email.”
Meanwhile, according to Parks Associates, someone in more than 10 million U.S. households watches an online video at least monthly. Even more download videos. The market for using the Internet to access video thus stands in direct counterpoint to the newspaper trends. Brightcove is one of the start-ups positioning itself to facilitate a wealth on online video. (Time Warner’s AOL and IAC/InterActiveCorp are among the investors). The model is simple. Anyone with video content—The New York Times and Reuters are two, but so also is tiny Bollywood & Beyond, Inc. in discussions or any amateur film maker-- can sign on. Any Web site that wants to link to the available content fills out on online form and, voila, can offer syndictaed video appropriate for its site. Brightcove sells advertising that runs prior to the video. The revenue is sliced among the video provider, the Web site and Brightcove.
Of course, there is nothing new and insightful here about the long term declining fortunes of the traditional newspaper industry and the prospects of all things digital. Big yawn. No, the message today is two-fold. First is the rate at which the changeover is happening. There are Brightcove-type initiatives being uncovered virtually every day. Just another that I came across recently was the movie “Waterborne,” which was reportedly the first full length feature with an original release on Google Video. It reportedly had 25,000 downloads in its first two weeks, at $.99 to $3.99 a pop, followed by an advance purchase of 15,000 DVDs. The independent producers had previously rejected at six figure advance from a distributor to maintain full ownership rights.
Unlike the dot-com era, these ventures come grounded in realistic business models based on reliable trends such as the growth in broadband. (Though, as an aside, successful attempts to legislate the benign sounding network neutrality policy could set back some of the high bandwidth –need plans).
Second, no matter what spin even The Wall Street Journal tries, the forces and trends at play cannot be buried. The only way the Lees, McClathchys, Gannetts and Knight-Ridders of the publishing world will stay profitable is by raising rates, at the risk of accelerating loss of advertisers and buyer, and by cutting costs. They have been doing both. In the short term it can produce favorable returns for investors.
As I noted here before and will say again, newspaper publishers, as well as other traditional publishers and radio and television broadcasters, are going to have to reinvent themselves while they still have strong cash flow and resources.
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