The newsonomics of loss

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

The Bay Area News Group’s announcement Tuesday caused a few ripples, and some head-scratching. “About 120 lose jobs in Bay Area News Group re-branding, streamlining,” read Poynter.

Hadn’t we read that story before? Didn’t MediaNews already reorganize its Bay Area papers? Hadn’t it cut lots of jobs? Didn’t it change its circulation reporting methodology to get one big number for readership — and ad sales? Yes, yes, and yes, plus a litany of other related re-orgs that may have confused us.

In short, Bay Area News Group (BANG), which has had 15 separate titles, announced it was combining 10 of those titles into two new ones (the East Bay Tribune and the Times), closing a printing plant and gaining other production efficiencies. Gone into history will be such titles as the Oakland Tribune, the San Mateo County Times, and Contra Costa Times, along with another 8 percent of the overall workforce — or another 120 or so jobs, 48 in newsrooms.

It’s one sad tale of decline, further decline, and then more. MediaNews’ experience isn’t unlike that of many of its brethren; it just offers a breathtaking vista of newspaper loss — and reader loss. I, too, was inured when I first saw the news break, and a bit confused about what was new news and what was old news. Then, yesterday, Bay Area public radio station KQED’s Forum with Michael Krasny did an hour on the massive new changes, and asked me to participate, along with David Weir (associated with Salon, the Center for Investigative Reporting, and now 7×7), and Newsosaur analyst Alan Mutter.

We heard from a number of callers. A few shared concerns about the news emergency. Some were willing to pay for news; others were devout advocates of the church of free news. One call, though, stayed with me.

A woman named Laurie called, saying she was court-appointed conservator. She talked about elder abuse.

Two colleagues and I have been working for 15 years on a very elaborate scam by a couple of individuals, and they’ve taken hundreds of thousands of dollars, homes and cars; it’s very complex…The news is our last great hope for justice for these elders. The Adult Protective Services has been cut. The two detectives we’ve worked with are being laid off. The DA’s office is too strapped. We’ve been working with a reporter, to get in front of people to show the outrage. The crime just goes on and to see the newspapers get cut back is really hard.

This is loss.

It’s a breakdown in which the press is both cause, given its weakness and lesser ability to call attention to such outrage, and a victim of collateral tech-driven damage. We live in a society that knows how to measure lots of things financially, but less and less non-financially. Sophisticated metrics tell us how well we’re doing with hard value and throw up their hands at things that can’t be measured but are deeply felt.

It isn’t simply the sad loss of middle-class journalism jobs, as lamentable as that is, just as so many other good jobs that have disappeared in recent years. It’s a community loss, and points to the wider impact of news cuts on the society in which we live. That’s often forgotten as we focus too narrow on industry loss.

The Bay Area News Group cutback, in fact, reflects much of what we are coming to miss. So let’s look briefly at this newsonomics of loss, a function of our times, even as much is being rebuilt — and gained — at the same time:

  • Identity: The soon-to-departed (in November) Oakland Tribune is 137 years old. It will be subsumed under the East Bay Tribune nameplate. The East Bay Tribune will stretch from Oakland south to Fremont, a stretch of 27 miles and at least 1.5 million people, many of whom don’t feel connected to the geography Media News now asserts. Newspapers are all about community identity; they have both reflected it and provided rallying symbols of it. Business efficiencies may argue for “East Bay,” but readers’ senses of what’s local are something else again. With this decision, Oakland, for one, has lost something of itself.

    Dori Maynard, president of the Maynard Institute, and daughter of Robert Maynard, who revived the Oakland Tribune before selling it in 1992 to MediaNews, summed it well this week: “It was a newspaper that you had to read and people took pride in reading….My father died knowing that Oakland had a newspaper and that was really important to him……[Former MediaNews CEO Dean] Singleton kept it going for a long time.” (For a contrarian view of how MediaNews damaged the Maynard legacy, check out Zennie Abraham’s SFGate post.)

  • Reporting: Most of the jobs cut in this re-org are on the production and printing side of the business as BANG closes one of its four regional printing plants. However, 48 jobs are being cut from the East Bay newsrooms, about a quarter of the unionized editorial workforce, and that’s got to affect news-gathering. The company has already moved regional production from San Jose to Walnut Creek, to take advantage of a lower-cost union contract. Like most companies, Gannett and Tribune among them, MediaNews is templatizing as many sections (common business and tech sections, for instance) and pages as it can, cutting out production and design, while trying to preserve reporting. Yet, the reporting loss already has been huge, with the best estimates saying that newsroom size of the Bay Area papers overall has been cut in half over the last 10 years. That’s hundreds of reporting jobs, with the once-Top 10 Mercury News now operating in a semi-empty building.

    How much of the reporting that does see the light of day will be “local”? Each of the new consolidated titles — the East Bay Tribune and the Times — will have single metro sections. That means what’s local to reader won’t really be local to another. Regional, while valuable, isn’t local, and in fact, has seemed to be a hindrance to metro papers as they try to find some footing in the increasingly digital news reading world. Is MediaNews’ move here a smart one, or one that makes its new titles even less vital of a read for its audience?

    How many elder abuse-like stories never see the light of day? How many corruptions, large and small, are unfound? We don’t know; we don’t know what we don’t know.

  • Community leadership: Many chains are cutting their executive costs by combining publisher and ad director positions, with the actual duties concentrated on the ad (revenue-producing) side. Both business and editorial oversight of newspapers increasingly happens at the corporate level. BANG appears going down that road as well, though I couldn’t verify how much. Clearly, though, further homogenizing newspaper titles and operations furthers this trend. As community publishers disappear, community groups — from chambers of commerce to Rotaries to library boards — lose a key connection to the paper. A publisher is often the business face, sometimes more popular than other times, but serves as a connection to an important civic institution. Neither editors nor ad directors, no matter how well they perform, can fulfill that role.

While putting a semi-optimistic face on the changes, with talk of rebranding, there is little mistaking what’s behind MediaNews’ moves. Like all newspaper chains, it is struggling with year-over-year ad revenue losses. It is tentatively trying to find some small, new digital circulation revenue. It is experimenting with new tablet products, like its TapIn launch. It is hoping and praying a double-dip recession (“The newsonomics of the next recession“) doesn’t blow it off the financial tightrope it is already walking. Without a permanent CEO (Dean Singleton moved aside in January and has only been replaced by interim Gordon Paris), this company heavily directed by Alden Global Equity is doing everything it can to operate in the black, preventing financial loss, even as all the other losses mount.

In short, it is hunkering down, while it tests some digital initiatives. This MediaNews restructuring, with all its implicit and explicit loss, seems less a strategy than a new phase of a holding pattern, as the old newspaper industry hangs suspended in disbelief and disorder.

At the end of the KQED hour, Oakland Tribune editor Martin Reynolds called in, plaintively responding to several callers’ statements that the quality of local journalism had declined. He acknowledged that much had been cut (the Tribune’s newsroom in 1995 had 40-plus people, and that’s down to a mere dozen today), but talked about the dedication of the current staff and the good journalism they produce.

It was a good coda.

It’s important to mark the multiple losses, and let what has been lost sink in for a short time. Then, it’s important for all the journalists still employed — those remaining at MediaNews’ Bay Area properties, those at the financially reeling Chronicle, those at national model start-ups Bay Citizen and California Watch and those at news staff-building KQED, among others — to do what journalists need to do: Forget the uncertain business around them and report the news as best they can.

Nothing (witness Jim Romenesko passing into semi-retirement this week) lasts forever. But there’s always news that needs reporting.

Oakland Tribune entrance photo by Gretchen Anderson and Tribune shadow logo photo by George Kelly, both used under a Creative Commons license.

NPR tries something new: A day to let managers step away and developers play

Birds flying in formation

“The first version of Gmail was literally written in a day,” said its inventor, Paul Buchheit, in 2009. Of course, Gmail would be developed for five years before Google finally peeled off the Beta sticker.

Whether Buccheit came up with it during Google’s famed “20 percent time” is unclear — the Gmail press release says he did, but Buchheit is said to have dismissed it as “myth.” Nevertheless, Google’s policy is a classic example of a corporate culture that embraces worker autonomy over structure.

Could it work in the news business? NPR is experimenting with something called “Serendipity Day,” wherein everyone on the technology side abandons their day jobs to work on…whatever they want. Bugs that need squashing, scratches that need itching — the ideas that never get to the top of a to-do list. The managers step back, available only if the workers need anything. (I need a designer, I need a room, I need a bagel.) The only rule: In the end, you have to share your work.

“There were no guard rails. Everyone here is really smart, and they’ll find fascinating things to work on,” said Sarah Lumbard, NPR’s senior director of product strategy. “We got everybody together and it was like, Go! The energy level in the room just went through the roof. And the biggest thing we heard from our team is, ‘When are we doing this again?’”

In May, on the first Serendipity Day, 30 employees generated 25 useable ideas, she said. Lumbard calls it super-rapid prototyping: You can only accomplish so much in a day, so no one gets too attached to a project. But it’s just enough time to see the potential of a good idea.

Serendipity Day is actually spread out over three days — and for something labeled as spontaneous, there’s a lot of planning. The staff is given two or three weeks to think about what to build. The ramp-up begins the afternoon before Serendipity Day, and the presentations happen the morning after. That way, all eight hours of the main day are spent building.

Lumbard said the managers had toyed with the idea of adopting Google’s 20 percent time, but they concluded it wouldn’t work for NPR. Google has thousands of employees and extraordinarily deep pockets, which mean it can afford to let employees take a day every week for side projects. Plus, Lumbard says, 20-percent time puts the emphasis on individuality, whereas NPR’s approach values teamwork.

“Pretty much everything we do — this is not surprising for public media — is really done as a team,” Lumbard said.

“That’s where we’ve found the greatest explosion of innovation and creativity, when we bring in the different disciplines together. And we wanted to find a way to create an opportunity where all those people could work together at once. And those groups tend to be working on different rhythms.”

Lumbard said it all started when someone forwarded a fascinating YouTube clip. It’s an animated adaptation of a talk by author Dan Pink on the science of motivation. At the 5:35 mark, Pink mentions Atlassian, an Australian software maker whose quarterly “FedEx Days” challenge workers to deliver something new overnight. (Get it?)

“It turns out that that one day of pure, undiluted autonomy has led to a whole array of fixes for existing software, a whole array of ideas for new products, that otherwise had never emerged,” Pink says in the talk. He argues that motivation derives from autonomy, mastery, and purpose: the desire to control one’s own destiny, to get better at something, and to serve a greater good. FedEx Day — and Serendipity Day — exemplify all three.

An Atlassian employee reflected in a blog post:

When you compare the results with the goals, every FedEx Day nails it insofar as expanding people’s skills and creativity. Of course, it’s awesome when a FedEx Day project grows beyond concept into something fully fledged, but we’re careful to maintain the spirit of FedEx which is about having fun while learning and team building.

Likewise, as Gmail inventor Buccheit wrote in 2009: “The real value of ‘20%’ is not the time, but rather the ‘license’ it gives to work on things that ‘aren’t important’.”

Lumbard didn’t want to get into too much detail about the best ideas from Serendipity Day, since they’re under development now. She said the team worked on everything from improvements to its CMS to new donation models to an aggregation tool that sifts out irrelevant content when one newsmaker has the same name as another.

The next Serendipity Day is scheduled for September, and she hopes to make it a quarterly event.

Oh, and one more lesson: “You have to feed people! The biggest management tool I’ve recently learned is donuts,” she said. “We also did a retrospective on what worked well from everyone’s perspective and what did we need to improve. And one the things we needed to improve is — we ran out of food.”

The newsonomics of what to read next

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

We’d all like to know what comes next. That can be a spiritual quest, a political one, or in the case of news publishers, one that would help them know what it is readers who land on their site would like to read next.

A new batch of news-oriented tech companies are hitting the marketplace, claiming to better understand — and help news publishers act on — what readers are more likely to read next. Know that, and publishers can better satisfy those readers, getting them to click on more pages, providing more ad-targetable data, and growing their businesses on the relative cheap.

It’s another riff on publishers’ renewed concentration on core readers, satisfying them more deeply and getting them to spend more time on site and maybe even pay for a digital subscription. It’s another way of saying we need more revenue per customer (The newsonomics of ARPU). New customers aren’t being minted overnight (most news sites’ unique visitor growth has stalled), so it’s time to improve the experience of current customers.

In macro terms, if the U.S. newspaper industry could use these newer technologies to improve revenue by 10 percent, that would be worth about $300 million a year, collectively. That’s a big number in the new no- to low-growth era we’re in.

Three companies — YieldBot, JumpTime, and Outbrain — are among those who offer news and media companies differing approaches to better reader engagement. Each has its own story to tell, and each is emblematic of a wider trend in the industry: mastering how the digital business is oh-so-different than print.

They have a common belief in the limitation of human intelligence, especially that of the common editor.

The human reader brain, goes the theory, is far more unpredictable than editors ever believed. (And most editors I’ve known have a low, low regard for readers’ brains.) Online, editors and designers have long packaged stories, placing whatever stories seemed relevant to the story being read, either manually or by simple algorithm. Of course, that’s worked — to some degree.

To how great a degree now is increasingly measurable. And these would-be tech partners are telling publishers: you are leaving stories (and money) on the table. We’ll show the real, provable relationships between stories and by adjusting your presentation, you’ll bump up your pageviews — especially among valuable core readers — and make more money.

It’s an evolution of thinking beyond a single edition of a newspaper, read from front page to back, in an orderly fashion. Few people actually read papers in that orderly a fashion, but that’s how publishers and editors thought about it. Then they constructed their online sites the same way, with disproportionate attention to the hallowed home page, some attention to the section “fronts” and less to the “article” pages.

These companies are trying to build divining rods for the digital age.

Now as sideways traffic — greatly multiplied by Google, Facebook, and Twitter links, mentions and touts — has become recognized as the way things really are, publishers need new understanding. There are real, discernible patterns of behavior, if you crunch a lot of data, and these companies can show it to you on graphs, scatter charts, clusters and more. Let your online presentation people link stories or sections they wouldn’t have otherwise linked. Let your audience management people make longer-term decisions about how valuable that Facebook traffic was compared to that Google traffic. Let your ad staff have the ammo it needs to prove out the kind of visitors who are attracted to certain site sections.

“Sure, we’ll show you where your readers come from and where they go off to, but the real question is what they do when they get to your site. What’s happening at this moment,” says Jonathan Mendez, CEO of New York-based start-up YieldBot. Mendez, a self-described “crusader for relevance,” was a principal at ad optimizer Offermatica before it was sold to Omniture in 2007.

L.A.-based JumpTime paints itself as an “optimizer.” It, too, is focused on what happens once someone hits a news site. JumpTime is all about better routing. Using its “Flo-Power” metrics, the company assigns value to different pages not just on the basis of its individual usage, but largely on how well that page performs in redirecting traffic elsewhere on the site. Some pages are freeway cloverleafs, others not so much. “Why would you send someone to a cul de sac?” asks Michele DiLorenzo, JumpTime’s CEO, an MTV business development veteran.

Both JumpTime and YieldBot give you real-time info on which pages are creating high bounce (exit to other sites) rates, for instance. “A page,” says DiLorenzo, “is a determinant of what happens next.” And wouldn’t we all like to know that?

Outbrain takes a different approach to the same issue. It produces seemingly simple modules of what appear to be “content recommendation” links. Aggregate Knowledge, Inform Technologies, and Sphere (first bought by AOL, rebranded and then sold to Outbrain this year), among others, have plowed similar territory, but never got much traction with news publishers. Outbrain says it produces links that are “things of interest, not just related.” It’s another complexity-reducer, applying its algorithms to individual and group reading behavior, maybe offering a Spanish debt story or a how-exercise-will-save-your-life article to someone reading a Jihadists-target-Letterman piece. Counter-intuitive, but customers say it works to juice traffic.

Outbrain is a five-year-old New York-based company, which just launched its mobile product. It enables publishers to optimize site usage, like YieldBot and JumpTime, and also offers several networking features, recirculating both traffic and small revenues among its numerous member publishers. It has the most established base of customers.

Both JumpTime and YieldBot are newer entries, now testing their products in beta with a few major publishers, looking for an edge. Each site offers consoles and tools to manage data, draw intelligence from it and make real-time or over-time decisions from it. JumpTime works on a fee-for-service model, while YieldBot and Outbrain focus on revenue shares.

The mantra of these companies: Counting traffic with Omniture, Chartbeat, and Google Analytics is oh-so-first-generation. They will tell you how people got to your site and where they are going, but it’s tougher to get real, actionable intelligence about what they are doing on your site, and what they might do, given different content choices.

“Publishers don’t know the [relative] value of their assets,” says JumpTime co-founder Anke Audenaert. “Can you imagine operating a business and not understanding the value of your assets?”

Of course, publishers thought they knew that. They thought, though, of value created by whole editions, circulation value and ad value. Now as readers flit from one story/video/blog on one site to another on another site, all of these tech companies are saying, essentially, value has been atomized. Each article or page has a value, and that value grows or diminishes in context to other articles and pages. And you need our algorithm to figure it all out.

Of course, any good algorithm produces a better yield. Outbrain will tell you its algorithm provides a 6-to-8 percent lift in pageviews for sites that properly deploy its boxes of linked stories; some of its customers tell me they’ve gotten that and more. JumpTime will tell you it can improve revenue by 20 percent by maximizing that secret sauce of FloPower, creating that much more engagement.

These companies, and others like them, are in the business of modern divining rods. Divining rods for the digital age.

Mendez says it is all about intent, determining a web users’ intent better — and then satisfying it. “People have a goal-oriented state of mind,” he says Mendez. “Something is motivating them. That intent makes the medium good at demand capture.” He says big publishers, especially, have enough data to help advertisers better target readers; they just need to use it much better. “Media is worth much more than they are getting.”

The (actual) future of the Big Idea

The critics are right: Neal Gabler’s essay in yesterday’s New York Times — the one proclaiming the death of the big idea at the hands of Twitter and Facebook and the Internet in general — is wrong. And we should probably, after giving the thing a slow clap for its bold attempt to transform the Death of the Big Idea into a Big Idea of its own, just dismiss it as so much linkbaitery, and then get on with our (ever more trivial, ever more egotistical, ever more tweet-addled) lives.

But the essay’s wrong, actually, in an interesting way. Gabler is making a big assumption: that the Big Idea is Big precisely because it is, actually, big — largely acknowledged, largely apprehended, largely accepted. “Once upon a time,” Gabler writes, ideas “could ignite fires of debate, stimulate other thoughts, incite revolutions and fundamentally change the ways we look at and think about the world.”

And ideas’ ability to effect that change — their bigness that gives way to Bigness — comes, obviously and necessarily, by way of the media. To get “ideational” influence, Gabler suggests, your idea needs to be featured on the pages of Time magazine, within the segments of 60 Minutes, on the cover of, ideally, The New York Times’ Sunday Review. (The argument makes no mention of the new digital powerbrokers — aggregators and news portals and the like: Nostalgia doesn’t tend to appreciate facts that contradict the need for its own existence.) In the Gablerian information environment, the Big Idea is a function of Big Media: The two both purify and amplify each other, entwined so tightly that it’s hard to tell where the one ends and the other begins.

So it’s a problem, for Gabler, that Big Media is becoming, steadily, less big. There are (again, again) obvious exceptions to the trend of the increasingly long long tail, which Gabler doesn’t name and quite possibly doesn’t acknowledge…but, in general, in this framework, more media choice for consumers means a more fractured media environment for everyone means a more idea-hostile media environment for the culture at large. The logic goes something like this: Internet —> information overload —> informational filters —> media fragmentation —> less collective cognition —> more echo chambers —> more self-absorption —> fewer Big Ideas —> more wanton triviality —> even fewer Big Ideas —> even more wanton triviality —> a “post-idea world.”

In other words, duh-pocalypse is at hand.

Which would all be very alarming and unfortunate, were it not for the flaw in Gabler’s premise: Ideas don’t need the media any more than the media need ideas. They’ve relied on each other in the past, true enough — media as the gatekeepers, ideas as the floods — but the present media moment is characterized above all by the fact that ideas, Big and otherwise, can be amplified independently of traditional media filters. The public, online, is empowered to decide for itself which ideas are worthy of changing the world. The same mechanisms that make a meme a meme can transform a plain old idea into a Big Idea, regardless of what 60 Minutes has to say about it.

And! They can hone ideas collectively — so collectively, indeed, and so gradually, that the biggest ideas can cease to seem like ideas at all. Gabler assumes that ideas are individual things: discrete, definable, the products of individual genius and inspiration. It’s not the theory of relativity; it’s Einstein’s theory of relativity. McLuhan’s notion of the medium. Marx’s economics. Freud’s psychology. Etc. In the past, Gabler notes, wistfully, ideas were empowered not only to “penetrate the general culture,” but also to “make celebrities out of thinkers.” Ideas, in that framing, aren’t just glorified media events; they’re also personal creations that can be directly, and conveniently, associated with the creators in question.

Increasingly, though, the ideas that spark progress are collective, diffusive endeavors rather than the result (to the extent they ever were) of individual inspiration. Ideas increasingly resist branding. The idea of the idea is evolving. We don’t treat Google like a Big Idea — though, of course, that’s most definitely what it is; we treat it like Google. Ditto Facebook, ditto Twitter, ditto Reddit and Wikipedia. Those new infrastructures merge idea and practice, ars and tecnica, so seamlessly that it’s easy to forget how big (and how Big) the ideas that inform them actually are. Increasingly, the ultimate upshot of the Big Idea — the changed world, the bettered world — is bypassing the idea stage altogether. As we build new tools and, with them, a new environment, blueprints are byproducts rather than guideposts. We’re playing progress, increasingly, by ear. And, in the process, we’re becoming less self-conscious about change itself — and about our role in effecting it.

Far from living in a post-idea world, we’re creating a world so thoroughly saturated with new ideas that we’re shedding the need to distinguish them as ideas in the first place. Thought is everywhere; new ideas are springing up every day, and getting tested and tapered and honed; and they are, far from inculcating apathy, inciting revolutions both literal and figurative, around the world and across the web. That’s what Gabler forgets: Ideas don’t need to be branded as such to change the course of history.

Image by Will Hastings used under a Creative Commons license.

This Week in Review: Murdoch and Wall Street, AOL takes a dive, and Tribune takes a stab at tablets

Every Friday, Mark Coddington sums up the week’s top stories about the future of news.

Murdoch passes Wall Street’s test: The fallout from News Corp.’s phone hacking scandal continued to spread this week, with the reported arrest of another former News of the World editor and a report that the ostensibly fired News Corp. British chief, Rebekah Brooks, is still on the company payroll.

Three weeks after testifying before Parliament, Rupert Murdoch faced Wall Street analysts this week in a conference call, telling them that he’s not going anywhere and that the scandal hasn’t done any material damage to the company outside of News of the World. All Things Digital’s Peter Kafka said Wall Street really doesn’t care about the hacking, and Murdoch didn’t say much about the few questions he did get on it.

Murdoch also had to meet with News Corp.’s board, but as The New York Times’ Jeremy Peters reported, the board’s officially independent members include numerous people who have deep personal ties to Murdoch. Perhaps more troubling was a different connection among one of the board members: According to Time’s Massimo Calabresi, one of them is “best friends” with the district attorney leading the U.S. investigation into the company.

The Times’ David Carr uncovered more hints at News Corp.’s enormous political influence here in the States, detailing cases of swift approval of a merger by a Justice Department unit led by a future News Corp. executive, as well as a suspiciously dropped federal criminal case. “The company’s size and might give it a soft, less obvious power that it has been able to project to remarkable effect,” Carr concluded.

At Adweek, Murdoch biographer Michael Wolff went further, reporting that the Justice Department is considering investigating News Corp. on racketeering charges, though Forbes’ Jeff Bercovici doubted that would happen. For a bit more info on the situation, here’s a good Q&A with Nick Davies, the Guardian reporter who’s been all over the story.

AOL’s slap from investors: This week hasn’t been a good one for AOL: After it reported a quarterly loss on Tuesday, its stock dropped by about a quarter by the end of the day. All Things Digital’s Peter Kafka gave a quick explainer of why investors are so down on AOL: What little money they’re making isn’t coming from the all-important display advertising business. Mathew Ingram of GigaOM added more depth to that analysis, arguing that investors are doubting AOL’s assurances that its two big gambles — Patch and the acquisition of the Huffington Post — will pay off.

According to AOL CEO Tim Armstrong (paraphrased by Business Insider), the reason for those problems is that AOL’s advertising side hasn’t scaled well enough. Peter Kafka explained that AOL’s advertising (especially display) is indeed up, though much of that can be attributed to the HuffPo and TechCrunch acquisitions. Forbes’ Jeff Bercovici said AOL’s public image problem has even damaged the previously successful HuffPo, quoting an analyst who called AOL a “dead brand.” Wired’s Tim Carmody decided to unite our two big stories this week and suggested that AOL would be a perfect fit for a purchase by News Corp.

Meanwhile’s AOL’s local-news initiative, Patch, launched a Groupon-esque daily deal service, and Iowa grad student Robert Gutsche Jr. questioned Patch’s standards for separating journalism and advertising — and got the runaround from Patch when he asked them about it. AOL’s new daily tablet magazine, Editions, also drew some criticism, with Fast Company’s Austin Carr perturbed that it’s not AOL-y enough.

A news org gets into tablets: We’ve already seen numerous challengers to the iPad’s early stranglehold on the tablet marketplace, but the Tribune Co. might be the first news company to try one out. CNN’s Mark Milian reported that the newspaper chain is working on an Android-based tablet, which it’s planning on offering it for free or very cheap to people who sign up for extended newspaper subscriptions. It’s already missed a mid-August deadline for testing the tablet out.

Media pundits didn’t think much of Tribune’s reported idea. Wired’s Tim Carmody urged Tribune (and media companies in general) to quit developing tablets, arguing that it’s way too hard to do if you’re a major development company, let alone a news organization. “If major publishers are seriously prepared to blow up their primary revenue stream — print advertising — and slap together a giveaway tablet in order to save money on ink, God help them,” he wrote.

Others echoed Carmody’s arguments: PaidContent’s Tom Crazit called the project “a colossal waste of money for a company trying to emerge from bankruptcy.” Chris Velazco of TechCrunch said the cheap-tablet model (also being talked about by Philadelphia Newspapers) isn’t viable. Gizmodo’s Brent Rose was less restrained: “WHY??” Morris Communications’ Steve Yelvington was a little kinder to Tribune, saying the numbers might add up, but the devil’s in the details.

The Times gets experimental: The New York Times has made strong pushes into news innovation over the past several years, and this week it started another one, launching a new public test kitchen for projects in development. The Lab’s Megan Garber explained what the site, beta620, is all about, but GigaOM’s Mathew Ingram, while applauding the effort, expressed some doubt about whether the Times is really capable of developing a startup’s mindset.

Tim Carmody of Wired, on the other hand, said the startup analogy isn’t the right one for the Times. With these projects, he said, “The New York Times has become an openly experimental public institution. It’s less a cathedral consecrated to its own past than a free museum where patrons are invited to touch and transform everything they see.” Poynter’s Jeff Sonderman had some suggestions for next steps for the Times to take with beta620: experimenting with design, getting away from the long narrative article, and rethinking comments.

The real-name debate: One long-simmering debate I want to briefly catch you up on: Google+ has decided to take the Facebook route of disallowing pseudonyms, adjusting but reaffirming its policy in the face of online criticism late last month and again on Thursday. The outcry continued, voiced most prominently late last week by social media researcher danah boyd, who asserted that “‘real names’ policies aren’t empowering; they’re an authoritarian assertion of power over vulnerable people.”

Liz Gannes of All Things Digital said she understands Google’s motivations for enforcing real names and unifying everything under its umbrella within the same identity, but the idea of doing the latter is awkward at best and frightening at worst. The Atlantic’s Alexis Madrigal, meanwhile, announced he’s changed his mind against real-name policies, arguing that requiring real names online is a radical departure from the relationship between speech and identity in the offline world.

Reading roundup: A few other things to keep an eye on this week:

— Amazon released a version of its Kindle app for browsers, called the Kindle Cloud Reader. GigaOM’s Mathew Ingram said the browser-based e-book app (which bypasses Apple’s restrictions) could be a roadmap for the future, but Wired’s Tim Carmody said it still doesn’t get the web.

— Google announced it’s making its hand-chosen Editors’ Picks a standing feature on Google News. The Lab’s Megan Garber explained what Google’s doing with it. Meanwhile, James Gleick at The New York Review of Books offered a thoughtful piece on Google’s domination of our online lives.

— Adweek explained an underrated obstacle to innovation and progress in news organizations’ online efforts: the intractable CMS.

— Steve Buttry, now with the Journal Register Co., gave his lessons from TBD’s demise on the Washington local news site’s first birthday. It’s short and solid. Enjoy.

The newsonomics of the next recession

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

If the current events of the world are scary for all of us, they’re particularly horrifying for news publishers.

Another recession? Now?

Sure, anyone in business, especially the news business, knows another recession is inevitable. Recessions have always been with us and were, until the massive digitally driven downturn in the industry’s fortunes, the prime way we separated good years from mediocre ones. The next recession, though, we thought might come in 2014 or later — after the news industry had somehow gotten its digital transition act together and found some stable going-forward business model.

Now, it appears that hope may have been an illusion. Newspaper turnaround artists plan, and the gods of finance laugh.

Publishers have been running as fast as they can — and falling farther and farther behind. In the U.S., they’re down in ad revenue down for 22 consecutive quarters, and results aren’t much different in UK, Europe or Japan. Alongside, they’ve seen digital spending speed by, and its trophies going largely to non-news companies. They’ve seen cable TV, broadcast TV, radio and magazines — each of their own routines challenged by the Internet — also pass them. All those runners have been gaining a little — single-digit revenue growth mostly, but growing after the all-consuming downturn of what we thought was The Great Recession. The newspaper runners, falling farther and farther behind, have been down by middle-to-high single digits in year-over-year ad revenue so far in 2011.

If we do tumble into another recession, all bets are off. The wheels may come off the newspaper industry.

That race, however torturous, has been run in the arena of slow economic growth. If, in fact, we do dip or tumble head over heels into another recession, all bets are off. The wheels may come off the wobbling industry.

We won’t know, of course, if we’re in or going into a recession until some time next year, with the standard definition being two or three quarters of economic contraction (or one of my favorite terms, negative growth). Talk to people in the industry, and especially those selling advertising, and they’ll tell you it’s been feeling like the beginnings of another recession for them.

If it does become a wider, real recession, what’s likely to happen to newspaper revenues, budgets and the companies themselves? Speculatively, let’s take a top-line look at the newsonomics of the next recession, an update on what I called in March “The newsonomics of oblivion.”

  • The digital transition is still in its early stages. There’s a lot of transformation underway at newspaper companies. They’re moving away from just selling space to becoming regional digital agencies selling numerous products, to modeling digital subscriptions, to finding mobile revenue streams and more. Today’s conventional wisdom: It’s going to be a digital news world sooner rather than later, and we’ve got to move our businesses there fast as we can, holding on to as much print revenue as possible we transition. Problem: We’re still at the beginning of the transition. No major publisher is driving more than 20 percent of total revenue from digital. In fact, publishers are playing a straddle game — just as the earth underneath is cracking, a dangerous position.
  • In another downturn, the movement of spending away from print to digital is most likely to accelerate. That’s what happened in the recent recession: Digital advertising hiccuped, then quickly outgrew all other forms of advertising. For 2007, when the recession began, it had 7.6 percent of all U.S. ad dollars. By 2010, it had 11.2 percent. That’s a 32-percent increase. Why is it likely that acceleration would continue? Geomentum’s Randy Novak, a major agency buying locally oriented ads, ticks off the reasons: “Digital offers more efficiency…lower CPMs, quicker turnaround/reaction time and precision targeting at scale.” While newspaper publishers are getting about 10 percent of digital ad spending, most of it is going elsewhere — witness the 67.7 percent of the projected $31 billion 2011 U.S. ad spend shared by just five companies, Google, Microsoft, Facebook, Yahoo, and AOL, according to eMarketer.
  • Key categories that have shown some signs of life will cut back. Retail has been struggling back, as budgets had finally stabilized a bit, but if retrenchment is the order of the day, then retail ads — a lifeline as classifieds have disappeared — will take a hit.
  • Classifieds may move to their third — and final — act. Chalk up most of the $20 billion-plus annual U.S. newspaper revenue hit to the cratering of classified. Yet, $5.6 billion remains in classifieds, according to NAA. Recruitment, of course, is gurgling in this employment market. Car sales are likely to slow, and continue to move purely digital. Real estate is still all bunged up, and researching/buying/selling will move increasingly to digital, mobile generally and tablet, the Trulia and Zillow apps early testimony to that.
  • Transition to digital reading may accelerate. So if I take The New York Times seven days a week in print, I pay as much as $720 a year — and get “included” digital access. If I change to Sunday only, or one of several partial print subs, I pay $390 a year — and get “included” digital access. That’s a $330 a year or $27.50 a month in savings. Look for a recession to accelerate that movement. Or maybe, Philly’s Greg Osberg or Tribune’s Eddy Hartenstein will find traction in what seems on the face of it like an odd notion of discounting by half (Philly) or almost giving away (Tribune) a non-iPad tablet if you pay for a longer-term digital subscription. In good times, those plans don’t supplant iPad owner behavior, but maybe parts of younger, less-affluent populations will go for the deal. Of course, iPad sales — projected to hit 100 million worldwide by the end of 2012 — could slow significantly, if this is a deep downturn, leaving newspaper companies even more betweener and betwixter. Biggest question here for newspaper and magazine publishers: how will downturn affect reader psychology in the selling and buying of new digital subs?
  • Consolidation of newspaper properties may gain steam. Media concentration is a logical consequence of economic stress. Those screws just got tighter, and we’re going to see added pressures to consolidate, driven behind the scenes by private equity owners. (Those owners, of course, had hoped to force the digital transition — Exhibit A: Journal Register — and then sell the properties before the next recession.) If revenue growth is going to be harder to find, then the only alternative path to finding any black ink is to cut costs, and roll-up is one big way forward. Of course, we can expect still more operational cutting, including newsroom staff, as all companies once again deal with the specter of ongoing unprofitability. They know their value proposition — offering less deep and broad content is not what you want to do when you’re selling readers on a brand’s all-access reach — is already sorely tested by offering less at higher prices.
  • Investment in digital-only news production will be tested. It’s not just newspaper publishers; anyone seeing new opportunity in new content production has got to be worried. Unless your name is Bloomberg, another recession sends a big chill down your spine. Let’s take Tim Armstrong’s various pushes, for example. AOL, its investor confidence re-shaken this week, is going to have a harder time staying the course with Patch — at best a longer-term investment. Instead, look for more aggregation models to emerge (like AOL’s new tablet “Editions”). Aggregating other people’s stuff is a whole lot cheaper than originating content, and everyone’s going to be busy re-applying that lesson of Web 101.

Overall, what a next recession would do is accelerate most the current trends. We’d see some impact in the fourth quarter, but most of it in 2012, as those budgets are now warily being planned.

We’ll beginning asking the question — again — of which companies can survive and under whose leadership, and ownership. In the U.S., most vulnerable are Lee Enterprises, publisher of 49 mostly smaller-community dailies, and McClatchy, publisher of 30 dailies and the fifth-largest newspaper company in the U.S.

The long game of change has gotten progressively shorter.

Look at the balancing act at Lee, as CEO Mary Junck and CFO Carl Schmidt have walked tightrope after tightrope of restructuring, in an amazing attempt to avoid falling into the net of bankruptcy. Just last week, they got two major lenders, including Goldman Sachs, to agree to a restructuring of debt, but it’s not yet a done deal. How will overall debt downgrades and cascading economic uncertainly affect their latest high-wire act?

McClatchy CEO Gary Pruitt has been doing his own circus act for years now — paying off some debt, feeding the newsrooms increasingly meager diets, cutting costs, trying to eke out a tiny profit and maintaining some of the higher editorial standards in the industry. He’s done that in a slow-growth environment. Are they any rabbits left to pull out of the hat? In fact, where’s the hat?

Other companies are only in relatively better shape. Fourteen U.S. companies shed massive amounts (if not all) of their debt in bankruptcy, though they still face the same operating constraints. A.H. Belo, Scripps, and MediaNews are all largely free of debt but face all the issues noted.

At The New York Times, where some terra firma has started to appear below the sold-off Times building, future cash flow has got to be a big concern. It’s well and good to have recently paid off Carlos Slim’s near-usurious loan early, but how thick is that cushion now? (And guess which Times-hating magnate is sitting across town with $12 billion-plus in cash and equivalents, only about to be a little drawn down by investor clamoring?)

In the U.K., we believe the Telegraph is the only quality daily in London that has been profitable. Throughout Europe, the press — more family-owned than in the U.S. — now comes face to face with red ink, as meager profits have a good chance of turning to operating losses as dependable-if-slowing revenue streams further winnow. In fact, this next recession may could cause far greater change in U.K. and Europe than the last one did.

What caused most of those 14 bankruptcies and extreme cash-flow constraints in the U.S. was debt — debt taken on to buy other properties, which quickly lost value after purchase. In Europe, the market has been more stable, but now job classifieds, which had made up for downturns in real estate and auto, are stagnating.

Gregor Waller, a former top executive at Axel Springer, believes the remainder of the classified business — which still makes up 20 percent of revenues there — is going away. “Eighty-five to 90 percent of today’s classifieds will be gone till the end of 2014 and never come back because of the threshold of insignificance of classifieds marketplaces in newspapers,” he told me this week.

Waller notes how long a period of change we are moving into. “This is not a two-year-dip which will be ended by governmental, debt-financed economic stimulation programs.” In Europe, perhaps to a greater extent than U.S., we see the combined impacts of structural print-to-digital movement against a macro-economy itself in great — and long — upheaval. Waller sees five to 10 years of adjusting governmental budgets to GDP and adapted tax systems, all of which will change the rules of the game in Europe.

The long game of change has gotten progressively shorter. Maybe, we’ll dodge a second recession in the short-term, but the game is the game, and publishers are simply running out of good choices. They’ve been dealt a deck of wild cards, misplayed a few hands and now have fewer chips left to play.

California Watch turns the cafe into a newsroom for a day

California Watch logoOn Monday, reporters from the nonprofit California Watch fanned out across the state, turning coffeehouses into newsrooms for a day. The news organization’s fourth “Open Newsroom” was a chance to escape the insular walls of the office and mingle with readers where they live.

“I always say we’re so old school we’re new school,” said Ashley Alvarado, the community engagement manager for California Watch. “We’re really invested in our readers and we want our readers to direct what we do. And that includes our readers who don’t actually read us yet. If you have that relationship with people, if they start to have brand awareness, know who you are, know that you’re trustworthy, we’re going to start telling much richer stories.”

It’s a zero-cost way for a young and still relatively obscure news organization to do a little self-promotion and pick up story ideas in the process. Since California Watch participates in MPR’s Public Insight Network — a shared database of citizen “sources” who are experts on particular topics — every visitor is a prospective source. It’s not unlike the approach of the Texas Tribune, another nonprofit news startup, whose IRL events have generated buzz and revenue.

The California Watch event has gotten more sophisticated since the first Open Newsroom in 2010, when editorial director Mark Katches needed an office for the day and set up shop at a local coffeehouse. The turnout was modest: “It was a pretty uneventful day at our first Open Newsroom,” he wrote afterward, “although I have to say the lemon scone at Royal Ground Coffee was pretty tasty.”

This time the Open Newsroom was promoted in advance, and the coffee shops got notice of their soon-to-be-newsroom status (lest reporters be seen as loitering laptop hobos). California Watch reps posted a sign at each location advertising their presence.

Altogether 29 reporters, editors, and interns participated, including staffers from California Watch’s media partners and its parent organization, the Center for Investigative Reporting. Alvarado talked to me from LAMILL Coffee in the L.A. neighborhood of Silverlake, where she had stayed late to hear from a cancer-research advocate who lost her fiancé to the disease. Reporters and readers discussed medical marijuana, hospitals, data journalism, Latinos and social media, and preschool, to name a few topics.  Along the way, Alvarado tracked the conversations happening among her colleagues and the public on Twitter and recapped the day with a Storify post.

“I’ve been thrilled with the communication I’ve had with the people today about the kind of interactions they’re having, the kinds of stories that they’re hearing,” Alvarado said. The turnout was big in San Diego, she said, where California Watch’s distribution manager arrived, along with reps from the Union-Tribune and the ABC affiliate, to find a crowd waiting.

California Watch has always been big on the go-where-the-people-are idea. In April, the organization extended its reporting on seismic safety in public schools by distributing coloring books featuring earthquake preparedness tips (Alvarado’s idea). In October 2010, following a series about lead-tainted jewelry, California Watch offered free lead testing to consumers.

“We want to make our news as accessible as possible. And with every story, as much as is humanly possible, we want to take it to our readers,” Alvarado said. “We say, ‘Who’s most affected by this issue?’ And we make sure we get them the information they need to become their own advocates.”

Alvarado expects to host about four Open Newsrooms a year.