Rji-pej-report-video

Here are Bill Densmore's contemporaneous notes of today's video stream:

FILE NOTES OF TOM ROSENSTEIL, MARK JURKOWITZ AND MIKE FANCHER.

Tom Rosenstiel: The Wired Magazine utopian view. The mass market at the front end of the tail, where big media was would fragment. But you would be able to reaggregate a mass market. “Well that’s one thing that hasn’t happened. What happened online is people migrated from legacy platforms to the same brands online and you had many organizations that actually saw their audience grow for the first time.” NYTimes has 20 million to 50 million unique visitors to its website every month. “The NYTimes audience is substantially bigger than it has ever been and maybe by a factor of two or three” . . . “that was one unintended, or unexpected consequence, when people choose, they choose familiar brands.”

Advertisers didn’t migrate. “The web turned out to be not a good platform for traditional advertising and I think there are three big reasons for this:”

n Advertisers no longer need the media to reach their audience – Craig’s List is example. More than 75 percent of classified advertising that was in newspapers in the year 2000 has gone – vanished. That was about 40% of newspaper revenue and the most profitable.

n Scarcity – no limition on the number of websites, so the amount of money you can charge for a website ad is small and it is decreasing. The CPMs for local display advertising has dropped by 15-20 pecent. There’s little you can do about that problem of scarcity if you are selling generic ads that are not personalized or customized.

n The interface, the way people connect online is antithetical to the old form of advertising. It is a lean-forward experience. When you find through search the estory or content you are looking for, and you click on it, thekind of advertising associated with news – banner and pop-up – the impulse is this is not helping me find the content that I have finally arrived at. “We’ve got lots of research that suggests people don’t like pop-ups ….. they are not user friendly.” Old legacy media was more of a lean-back media experience. When people turn the page and see an ad, it is another form of content, they look at it and they appreciate it.

People are doing two things on tablet that they are not doing on computer. Tend to go via apps and bookmarks and are not tending to search as much. On tablets and to some extent on smart phones people are reading long-form.

FANCHER: With the opportunities to be seized will the culture of news organizations allow those opportunities to be seized. Neither new media nor old media are making money in this new environment. PEJ surveyed newspapers of all sizes about their business modesl and Jurkowitz is providing a summary of what they found.

JURKOWITZ: PEJ’s plan was to enlist a number of newspaper companies to provide proprietary and confidential revenue data about digital revenue that would provide an empirical grounding for what was happening. For much of 2011, he visited seven companies to get their cooperation. “Those were long meetings,” he said. People talked candidly about the institutional dynamics of trying to make the transformation. “This is the idea I think we need, but I’m having a hard time selling it internally,” he says he was told. People in positions of authority weren’t necessarily communicating.

“We then received from about 40 newspapers this proprietary digital revenue data,” he says. They focused on the adveritisng-revenue side (rather than online subscriptions.) “The numbers were pretty grim,” he said. For every dollar gained digital seven was being lost in print. Now it is to 1:10. Most newspapers were still selling most of what they were selling digitally, were the old legacy products – classifieds and banners. Mobile was being sold small and the sales staffs weren’t geared up to sell them.

They then went back and interviewed executives at six originally companies and seven more, a total of about 25% of the nation’s circulation. They asked: “Name the single biggest obstacle your company has toward making a transition to a new digital model.”

Ten of the 13 described a culture war. “A still seething tension internally between those pushing for a more digital future and, for want of a better world, people still steeped in the legacy culture,” he said. In most cases the problem was on the business side, among the sales staff, not in the newsroom. This internal battle was not resolved, Jurkowitz was told. That’s when they seized on that as a critical find of their report.

Success path

JURKOWITZ: Of the news organizes that were showing some success, most were trying to work on the “digital agency” model – helping advertisers by being a consulting services to local advertisers to build their own online presence. They were also aggressively retooling their sales staffs. They were used to selling the print cash cow. “Print dollars are still representing about 85% of the revenue, so sales staffs want to go where the money is.” There has been figurative bloodsheet --- where 50% of sales staffs had to be turned over.

ROSENSTEIL: If you were a startup, you would be trying to create brand. Newspapers have that, and they have demographics as well. The other big issue is cost, if you can move to a digital landscape, you can theoretically save a lot of money. The problem is how do you save any costs? You can stop printing or delivering on all but the most profitable days, but the worry is you could kill the newspaper outright if you did that. There is potential for costs savings still out there. And as a No. 1 brand in a market, there is the potential to move quickly if you begin to sell digital advertising.

“Advertisers are as bewildered by all of this as news organizations are,” says Rosensteil so there is an opportunity to provide that consulting.

FANCHER: Has anyone studied what the news and information consumption experience is or ought to be.

ROSENSTEIL: They can see from trial and error what’s working. “Are people doing serious research on this beyond what they can collect in their own market?” They aren’t seeing it.

FANCHER: Is that a culture issue at the highest levels of the industry in that this is an industry that has never done much investment here (in market research)?

ROSENSTEIL: “There is a culture of risk aversion, replication and …. And looking to research gathered by somebody else … just looking at a few experiments that you try in your own business … the notion of fail early and often, as in Google, does not exist in the news industry because from about 1900 to 1989, this was an industry that was increasingly profitable year after year even after, at midpoint in those years, the audience started to shrink a little bit.”

FANCHER: Working collaboratively between industry and universities like this might be an area of opportunity?

ROSENSTEIL: “The industry lacks a lot of the competencies that it needs to move forward. Those competencies exist in the university, if they can be applied fast enough.” The problem is there is a perception that the university does not move fast enough.

FANCHER: “Well, them’s fightin’ words in these parts. We should have an interesting disussion.”

JURKOWITZ: This is an industry that is finally talking to each other a lot more than ever before. “Once we issued this report, we heard from a lot of people … .there is some degree the putting the brain power together, but it is still largely is that working for you will it work for me.”

FANCHER: Hard to move to an open and honest discussion. News and information professionals have been through a rough time – there is a fear factor.

Now turning to Cinnamon Melchor of the AKQA Digital Agency about culture. She works for a digital agency in San Francisco. (She is doing a later session about how the mobile space is changing communication).

MELCHOR: She is surprised at the flogging of the advertising staff.

General discussion about how do you deploy limited resources.

Next Mike Jenner, Houston Hart professor at Mizzou-RJI who has done research on revenue models in the industry.

JENNER: He sees there is now urgency in news organizations as they see their business burning. There is culture challenge. But if print is still the oxygen it is hard to say we’ll stop selling print. There’s a lot that can be done to help cross the bridge. Clayton Christiansen’s Innovators Dilemma talks about that. Ad staffs and publishers are having a hard time letting go of $10 bills and chasing $1 bills.

FANCHER: How do you deal, especially in the newsroom, with what is good enough? 

JENNER: We spend up the line up about as fast as we can speed it in most newsroom and I worry that we have cut it too deeply and I worry that these brand sthat still have magnetism for some reasons are not going to be worth monetizing any longer because they have lost so much. Good enough does not mean forget about verification or being adequate.

ESTHER THORSON: “Every time you cut your newsroom you cut your newsrooms … and that is the exactly last opposite to what the newspaper has done. … .that is not observable without doing the mathematics.” She says there are two key problems with the business end of the news industry --- one is no tradition of marketing decision making – doing important research, what does it mean and then testing. “Every industry in the world does that except the news industry,” she says. It needs management training so the industry can do management decision making. This is one of the types of needs that RJI is moving to promoting.

Concerning advertising: “It is just wrong to say to an advertiser I need to sell you some digital or print …. They need services that work for their business.” The sales staff has to match opportunities with advertiser needs. “Forget just saying, I have to sell digital . . .. they only way we sell product is integrated marketing communication and that means multiple media and not just what the newspaper is selling.”

FANCHER: Not turns to Jen Reeves to ask her about what’s happening with mobile and digital on broadcasting. He asks her about going to communities and training citizens to use new-media tools, but is she doing it with advertising staffs. And how do you scale it up.

REEVES: RJI-related newsrooms have been trying to hold training sessions. There is zero fear this year in an election year because there is so much revenue. Innovation happens when there is fear. And a challenge is how far should she as a journalist be pushing sales. “We have gone to our sales department ideas . . . and the move onto the next car dealership, and that’s reality.”