Dept of Small Numbers: The Guardian’s analysis of Murdoch’s paywall traffic

Posted by Peter Kirwan on 8 December 2010 at 11:04
Tags: Media, News Corp, News International

The Guardian’s analysis of behind-the-paywall traffic at The Times and The Sunday Times, reported exclusively by Press Gazette this morning, offers something new: an assessment of how many subscribers are actually visiting the sites.

The official numbers for pure-play digital subscriptions from Wapping, published in early November, told us something about conversions. Likewise the recently-publicised survey stats from Oliver & Ohlbaum, based on a November survey of newspaper readers, which suggested that 14 per cent of Times newspaper readers had reacted to the paywall (imposed on 2 July) by subscribing in some way.

Conversion rates are important. But so is usage, which acts as a slam-dunk proxy for reader loyalty. Loyalty directly influences renewals. And renewals - rather than expensively-acquired new subscribers - are the secret sauce of any subscription business. Unfortunately, the GNM/Hitwise numbers don’t look encouraging in this respect.

In early November, News International revealed that:

100,000 joint digital/print subscribers. . . have activated their digital accounts to the websites and/or iPad app since launch.

Well, yes. But how many of these cross-media subscribers delved beyond the paywall at thetimes.co.uk and thesundaytimes.co.uk during September?

According to the GNM/Hitwise study, the number was 26,000. However you look at it, these sites don’t seem to have been a hit with devoted users of print and/or iPads. A majority of print subscribers seem to have activated their online sub. . . and not returned to the site.

Perhaps this is predictable. But how much interest have pure-play digital subscribers shown in Wapping’s paywalled sites? These are the punters who should be showing the greatest loyalty, accessing paywalled content on a regular basis.

By the end of September, when the Guardian performed its study, The Times’s paywall had been up and running for three whole months. Judging by the numbers released by News International in early November, The Times and The Sunday Times had been selling, on an averaged monthly basis, around 13,000 micropayment deals (“single copy or pay-as-you-go customers”) plus a similar number of pure-play monthly digital subscriptions across all platforms (web, iPad and Kindle).

Now let’s take these average monthly sales figures and then slice them to fit within the timeframe used by GNM’s researchers. The numbers suggest that The Times and The Sunday Times sold 26,000 pure-play subs (monthly and £1-per-day passes plus Kindles and iPad subs) in July, and the same again in August and then September.

Of course, it would have been ideal for Wapping if all of these subscribers visited the sites at least once during September. On this basis, the maximum number for pure-play behind-the-paywall visitors in September would be 79,000.

This target is toppy: it comes with a few provisos. Some of the £1-a-day punters, for example, will have purchased access twice, or more, during September. We should also subtract a small number of eccentric Kindle-heads and an unknown number of standalone iPad subscribers. (News International didn’t start bundling web access with iPad apps until the second week of October.)

So: at this point, what would you expect thetimes.co.uk and thesundaytimes.co.uk to be doing in terms of pure play (no newspaper subscription) visitors during September? Clearly, 79,000 would be way too much. So how about 60,000 paying punters a month? Or 50,000?

Er, no. According to GNM/Hitwise, during September, thetimes.co.uk and theesundaytimes.co.uk attracted 28,000 punters who had paid for pure-play access.

The numbers suggest the existence of a problem. So far as I can see, there are at least four possible explanations for it:

1) Pure-play customers are churning away from the paywall in large numbers, buying £1/month “introductory” subs and then cancelling their direct debits soon afterward.

2) Subscribers are subscribing, and churn is running at acceptable levels, but users have little reason to return to the paywalled sites. Perhaps their isolation from the rest of the web is causing even committed users to neglect them.  Whisper it who dares: Jeff Jarvis may be right about the power of the link economy. In the long-term, these apparently weak visitor numbers suggest that disappointing renewal rates lie in wait.

3) Perhaps The Times’s iPad app has taken off like a rocket, providing compensatory ballast for poor website numbers in that obfuscatory 2 November press release from Wapping. If this explains September’s poor numbers on the web site, it may also explain why Rupert Murdoch has committed so much resource to The Daily, the iPad-only US news service that News Corp  is expected to launch in Q1 of next year.

4) The data from Hitwise/Experian is incorrect. It’s beyond my pay grade to comment on this possibility. But traffic numbers are always vulnerable to challenge. . .

By contrast with these negative findings from GNM, it’s worth noting the optimism of Jonathan Miller, the much-lauded ex-boss of AOL who now runs News Corp’s digital operations. At a conference last week, Miller suggested that The Times and The Sunday Times are on an “immediate path” to compensate “within months” for the decline in ad sales that followed the imposition of paywalls.

“There’s a transition there that’s tough, which unfortunately means not every company can do it,” Miller said. “We’ll make it, but in all honesty because we can afford to.”

You’d need to be confident to bet against Mr Miller. On the other hand, he may be merely buying time before News International adopts the freemium model of the Wall Street Journal, or the metered model of the Financial Times. Doing so would end Wapping’s self-imposed isolation from the link economy and offer The Times and The Sunday Times a low-cost marketing platform that could better engage potential subscribers.

The numbers from GNM suggest that this might be a sensible route forward for Wapping.

DMGT 2010: A weak and narrow recovery takes shape

Posted by Peter Kirwan on 25 November 2010 at 13:31
Tags: Associated Newspapers, Daily Mail & General Trust, Northcliffe Media

What’s not to like about DMGT’s final results for the year to October? A few things. Although the overall numbers suggest a welcome improvement, classified ad markets remain broken, online and in print. After the steep declines of 2008-2009, this recovery still feels very weak.

In addition, digital strategy isn’t delivering much joy. Revenues at Mail Online are growing fast, but remain vanishingly small. Meanwhile, the standalone classified sites into which DMGT has poured so much effort remain becalmed.

Associated Newspapers

Like-for-like revenues for the year to October 2010 look relatively strong, increasing by 5%, with ad revenues rising by 6% YOY. DMGT is suggesting that the combination of buoyant print display and free-to-air site growth shouldn’t be underestimated:

Underlying revenues were up 5% or £39 million with improved revenues in display advertising, digital and developing revenue streams offsetting decreases in circulation and classified advertising.

Once again, retailers were in the engine room, increasing spend by 14% YOY. Online advertising sold through the newspaper titles’ companion sites increased by 54% to £12m. (Credit for this performance is attributed squarely to Mail Online, which grew its traffic by around 70% YOY).

All well and good. But Associated is still living with the legacy of being slow to build up sales efforts at its newspaper sites. There’s no harm in ambitious talk from Martin Clarke. Yet £12m in digital revenues remains peanuts compared with the cost of underwriting Paul Dacre’s editorial vision. Much more work and investment is required.

Neither has this rising digital tide lifted all of DMGT’s digital boats. The digital classified operations formerly known as Associated Northcliffe Digital — which focus on Jobs, Property, Motors and Travel — could only manage a 1% rise in revenues, to £95m.

Northcliffe Media

Here the picture is uglier. Like-for-like revenues declined by 6%, with ad revenues down by 7%.

There are some interesting contrasts here. As we’ve seen, retail advertising grew by 14% at Associated. But at Northcliffe’s local newspapers, where retail is now the largest single ad category, it fell by 4%. The two-speed retail advertising economy persists. But for how long will retailers continue to prop up the nationals’ print editions?

It’s desperately difficult to be optimistic about classified. Last year, property ads grew by 5% at Northcliffe. With house prices teetering on the edge of a precipice, this feat may not be repeatable. Vast debts, mortgage rationing and unemployment worries will persist for much of the population.

And who among you would place bets on recruitment markets reviving? This will happen if the private sector compensates for public sector job losses between now and 2015. George Osbourne suspects that this will happen. DMGT (and the consultancy firm PwC) seems less convinced.

The City should be heartened by what’s happening to operating profits at Associated (up from 7% last year to 11% this year) and Northcliffe (up from 7% to 10%). But the mood is grimmer than you might expect: this morning, DMGT’s shares lost 4% of their value.

That’s because much of this improvement has been driven by cost-cutting (a few hundred more Northcliffe staff lost their jobs last year). This recovery itself feels anaemic, and may be more reliant upon a narrow base of advertisers than DMGT admits.

The central questions remain: What will happen to print display and online display during a second recession? And: will those classified revenues ever come back?

Like everyone else, Northcliffe is trying to reposition itself to capture what remains of the latter. This means permanently driving down the cost of advertising — and the cost of editorial (or getting rid of editorial altogether). Talking to analysts this morning, Martin Morgan, chief executive of DMGT, suggested that Northcliffe is doing all of these things, via its hyperlocal network Local People:

“We’re going to be taking the technology platform we’ve built (for LocalPeople) and merging it with the ThisIs sites

“So local people can concentrate on finding a garage, finding a plumber in such a way that provides a long tail of local advertisers - people who aren’t advertising in the local press, we think we can get them in.

“News has its place but news alone is not going to produce that flow through to looking at ads. Investment is going to go heavily in to local information content.”

Local information content? It’s an awkward term for an awkward thing: the absence of journalism.

What would Paul Dacre say if The Guardian became a fully-fledged charity?

Posted by Peter Kirwan on 9 November 2010 at 14:27
Tags: Associated Newspapers, Guardian Media Group

In the middle distance, a different kind of Guardian Media Group appears to be taking shape.

The Sunday Times reports that GMG investments like EMAP and Trader Media Group, as well as wholly-owned subsidiaries that operate radio stations and classified websites, will be hived off into “an investment portfolio from where they could be sold over time”.

So what? Well, it’s what insiders call the “direction of travel” that’s important here. At some point in the future, we may wake up to find that The Guardian is being run by a charitable foundation that looks rather like The Wellcome Trust.

This weekend’s apparently innocuous restructuring news feels like part of this process. In this respect, it resembles the 2008 decision to re-cast The Scott Trust as a limited company (which left the way open to selling EMAP and Trader, and banking the cash, without incurring a huge tax bill).

From one perspective, charitable status looks like a sensible way to run a news organisation, especially one that remains committed to a future that’s web-based and ad-funded. GMG’s current range of investments is illiquid. An all-digital existence, mostly financed by ad revenues, will be highly cyclical. Setting up a cash-rich foundation seems like a logical response.

Yet there are potential problems. Among them is the likelihood that free market-loving rivals, like Paul Dacre, would view this transformation as an unacceptable triumph for the subsidariat.

At the moment, Guardian Media Group’s corporate structure is tricky to interpret, and therefore to criticise. It’s neither wholly a charity, nor a business; neither fish nor fowl. The notion that The Guardian should be “profit-seeking” rather than merely profitable captures this ambivalence. Setting up a charitable foundation to stand behind The Guardian would give free-marketeers a much bigger barn door at which to take aim.

As a result, charitable status could become a hyper-political issue (rather like the BBC’s tax-funded existence). If The Scott Foundation (as it might be called) exists solely to prop up a commercial enterprise that competes aggressively with its rivals, it would be reasonable to expect criticism. Some might regard the result as a sham charity, rather like the ones that run private schools in this country.

The parallel isn’t entirely pointless. During the Blair-Brown years, political pressure was applied to these sham charities. In return for a soft-touch regime, they were encouraged to open up their facilities for the benefit of surrounding communities.

If similar pressure was applied to The Scott Foundation, or if it decided to fund external causes as a matter of course, what else might take the trustees’ fancy?

After lobbying from a culture secretary, it might make sense to donate £25m to local TV start-ups. Or invest in cross-industry technology platforms. Alternatively, it might be a good thing to subsidise hyperlocal bloggers, or organisations that protect free speech and press freedom.

Almost without exception, you can see where this is heading. Plenty of possibilities exist, but many of them will be accompanied by political pressure, and the inevitable allegations of economic favouritism, political bias and social engineering.

Converting a national newspaper into a charity might sound like a good idea. In reality, it’s unlikely to be an easy road.

Return of the prodigal: Why advertising will make or break Wapping’s paywall

Posted by Peter Kirwan on 3 November 2010 at 12:43
Tags: Media, News International

There are reasons why business ventures that make an initial fist of it get three years to prove their long-term viability. In the first year, you make mistakes. In the second year, you correct them. In the third year, you get realistic year-on-year comparatives. These tell you whether the business is a keeper or not.

This is a gross simplication, of course. But it’s worth remembering this kind of timeline given the first paywall metrics from The Times. The numbers emerged yesterday, courtesy of a statement (thanks to Paid Content for publishing it; Wapping didn’t) and an interview with James Harding, the editor of The Times, on Radio 4’s Today programme.

The numbers, compiled after 4 months of charging, go like this:

• 100,000 print subscribers have activated “free” (bundled) digital subscriptions.
  From News International’s statement: “In addition to the digital-only subscribers, there are 100,000 joint digital/print subscribers who have activated their digital accounts to the websites and/or iPad app since launch.” (NB: This equates to around 70% of print subscribers.)

• 105,000 “digital products” have been sold.
  The statement again: “Around half of these [ie half of 105,000] are monthly subscribers. These include subscribers to the digital sites as well as subscribers to The Times iPad app and Kindle edition. Many of the rest are either single copy or pay-as-you-go customers.

One intriguing question here is how many of the c.50K pure-play digital subscribers are iPad/Kindle users. News doesn’t say, and the tittle-tattle is variable. Roy Greenslade says “close to” 45,000 subscribe via iPad (although it’s not clear whether this includes freebie trials). At the Indy, Ian Burrell says “somewhere around” 30,000. Beehive City hazards a guess at 20,000.

Another question: among those users who have signed up for 105,000 “digital products”, how many casual day-pass users exist? Again, the tittle-tattle is variable. The FT suggests 35,000 day passes have been sold. The Guardian’s Dan Sabbagh says the number of day pass users (not the same thing) is “roughly… 5,000-10,000”.

A few souls have been brave enough to try to make sense of these numbers from a revenue perspective. At Beehive City, Tim Glanfield projects annualised revenues for Year1 of £4.3m plus around £300,000 annualized from short-term day passes:

Well if for example the Times iPad app at a generous estimate has 20,000 paying subscribers it would be reaping a monthly return of £200,000. If we assumed (again generously) that the there were 20,000 further monthly web subscribers paying £8 a month (£2 a week) they would bringing in another £160,000 a month … so in total from ‘monthly subscribers’ the digital products would be making £360,000 a month.

At the Guardian, Dan Sabbagh adds in some leaked info that’s not part of the News International statement, and halves the guess of £12m in Year 1 revenues he offered up just 15 hours earlier. Here, then, is Sabbagh’s latest effort at triangulation:

iPad + “small number of” Kindle subscribers: 10,000-15,000, say 12,500 paying £120/year. After Apple’s 30% commission, this may = £1,050,000

People paying online #1 (Monthly digital-only subscribers): Sabbagh assumes 37,500 of these, paying £8.66 a month = £3.9m.

People paying online #2 (“Slackers”: day payments): “Let’s assume that there are, in any one month, 5,000 slackers who pay £1 and sign off. Annualise this and you get a slacker base worth only £60,000 a year.”

Add it all up, and Sabbagh projects annualised Year 1 paywall revenue of £5.5m. By this morning, this figure had become the conventional wisdom.

Accordingly, a couple of questions now loom. Assuming industry-standard churn rates (Sky loses 11% of customers each year) can The Times and The Sunday Times continue to add £5m-worth of revenue to existing renewals for the next couple of years? And if the sites can do this, what will be the cost of acquiring those subscribers? (Notably, Adam Tinworth is very sceptical on both counts.)

The second question has been almost entirely absent from the discussion of Wapping’s numbers. It’s this: how effectively can News sell advertising against these subscribers? Greg Hadfield might be a former news editor of the Sunday Times, but he is surely correct to point out that News International now holds “an enviable amount of data” on 200K digital readers:

“For the first time the Times knows who its readers are – if those digital customers stick with the Times for 30 years, imagine how valuable they are over the lifetime of their relationship with the newspaper.”

Of course, these subscribers are only valuable in this sense if you can sell lots of high-priced advertising against them.

So if £12m-£15m in subscription revenues are a possibility during Year 3, the decisive factor in determining the future of Wapping’s paywalls might not be subscriptions at all.

It may turn out to be how successfully News International can emulate FT.com by selling at CPMs that blow free-to-air news sites out of the water.

You can run from the need to sell online display advertising, as several News International executives, including Les Hinton, have done. But Wapping’s paywall numbers suggest that none of us can ultimately hide from the need to fix what’s wrong with it.

What is “sustainable” at a loss-making national newspaper?

Posted by Peter Kirwan on 6 October 2010 at 16:19
Tags: Guardian Media Group

Like many of the old guard Fleet Street commentators, Stephen Glover frequently talks nonsense when confronted by financials. This is the same man who wrote a 328pp book about launching and running a national newspaper that failed to mention revenue or profit in any substantive way.

Like the rest of us, however, Glover abhors a vacuum. So now that life has calmed down at the post-crash Guardian Media Group, he’s trying to stir things up a bit.

Writing at the Independent, Glover latches on to a £96m write-off at EMAP and another at GMG’s Trader Media Group. He announces: “Guardian Media Group’s investments have plainly not been going entirely swimmingly.”

Well, no. But (sigh) there’s a recession on. Media bosses are writing down the value of their businesses in line with a stock market that typically behaves in a manic-depressive fashion. As Glover knows perfectly well, write-downs are not a reliable way of interpreting the performance of a business.

EMAP has restructured its debts and remains highly profitable. I wouldn’t bet against David Gilbertson succeeding with his ambition to flog costly bundles of data and journalism to B2B subscribers.

And Trader Media Group? Again, look at the numbers. According to Hitwise, Trader Media Group owns 40%+ of the UK market for digital classified car advertising. 62% of its revenue and 75% of its profits are digital. Last year, it generated revenues of £250m and EBITDA of £116m. This isn’t a business: it’s a cash machine. Trader Media’s very big debts are being paid down rapidly.

Having puffed up a few familiar-looking clouds of anxiety, and blown them in the direction of Kings Place, Glover moves on to some familiar “what if” scenarios:

Though GMG is very far from the edge, it may not have sufficient resources to prop up its heavily loss-making national newspaper operation ad infinitum.

and:

Maybe GMG will be able to bankroll its national papers for ever. Personally, I wouldn’t count on it, especially if more of its investments go wrong.

Count the words that add a conditional flavour to proceedings: “though”, “very”, “may”, “ad infinitum”, “maybe”, “for ever”, “personally”, “wouldn’t”, “especially if”. I make that an average of three provisos per sentence.

Early on in the piece, Glover notes how Carolyn McCall, the chief excutive who left in late June/early July, declared that GMG’s “financial position is secure”. Now, he suggests, senior executives at GMG and the Scott Trust are in “a sort of denial” about The Guardian’s continuing losses.

What’s changed? Here’s the thing:

The trouble is that there seems to be no one in the Scott Trust or Guardian Media Group or on the papers themselves able or prepared to stand up and say what is blindingly obvious to everyone else in Fleet Street – that these newspapers are continuing to live dangerously beyond their means.

Mmm. We’ll have to leave the question of whether or not The Guardian is living beyond its means — and doing so “dangerously” – to another day. Regular readers will know my views on that.

Interestingly, however, Glover’s column does highlight — probably unwittingly — something important. That’s the absence of a voice like McCall’s at GMG, trying to set the agenda in public.

This, of course, is usually the job of a chief executive. Andrew Miller, GMG’s former CFO, has been doing that job at GMG for three months. A cursory search of Google suggests that so far, he hasn’t said a word to the outside world about the future of The Guardian, The Observer or GMG.

There are a few good reasons why Mr Miller might want to get out a bit more, and talk about his ideas.

Last time I checked, the official whisper from inside The Guardian was that job cuts are no longer on the agenda, and the paper’s losses are returning to a “sustainable” level. Not all staffers buy that, of course. Some worry whether there’s more carnage around the corner.

The problem is that no-one at the paper knows how to measure the shortfall between the current situation and job security. The Guardian, The Observer and guardian.co.uk turned in an operating loss of £38m last year. No-one believes that is sustainable. But what is? £20m? £10m? Is breakeven the target? Should The Guardian and its stablemates be subjected to a kind of golden rule — like the one that used to govern public finances — that would place a limit upon losses across the business cycle?

And yes, fretting about the appropriate size of all-digital newsrooms seems to be an increasingly popular pastime. Ben Evans of Enders Analysis recently published a provocative note report on just this subject. He predicts “10-20 years of pain” inside downsizing newsrooms. Henry Blodget has been irritating the New York Times Co in similar fashion.

Over to you, Mr Miller. Unfortunately, you’re running a business that’s structured in an idiosyncratic way. Not everyone finds it easy to understand. Equally unfortunately for you, that business is an important component of national life.

Although you’re under no obligation to communicate with the outside world, doing so will help to fend off the pot-stirrers.

In addition, of course, Amelia Fawcett, the chair of GMG, has helpfully described you as an executive who knows “how to drive successful digital transformation” and “ensure a sustainable future for our journalism”.

No pressure, then. . .

Ad revenue recovery: Different strokes for different folks

Posted by Peter Kirwan on 13 August 2010 at 14:25
Tags: Associated Newspapers, Daily Mail & General Trust, ITV, Johnston Press, Northcliffe Media, Reed Elsevier, Trinity Mirror

Retailers & national newspapers: Too big to fail?

Posted by Peter Kirwan on 11 August 2010 at 12:43
Tags: Associated Newspapers, Daily Mail & General Trust, Media, News International, Trinity Mirror

Is the advertising recovery we’re witnessing as unbalanced as anything that occurred in the City of London during the run-up to 2008?

That’s what I’m starting to wonder. Take DMGT’s Q2 numbers, which disclose that retailers once again outperformed the broad advertising market, increasing their expenditure Associated Newspapers by 19% YOY. Overall, ad revenues at Associated climbed by 15% during Q2.

At Associated, retail is almost certainly the largest vertical sector in terms of ad revenues — bigger than cars, telecoms and IT or financial services. Anecdotal evidence suggests that retailers have become similarly important at Trinity Mirror’s nationals and The Sun.

The slide at the top of this post, taken from a recent presentation by Guy Zitter, the MD of Mail Newspapers, shows that retailers bought roughly £80m-worth of display advertising from The Mail and Mail On Sunday last year. This year, the retailers’ contribution could rise to £100m. This represents a big proportion — perhaps one-third — of the display ad revenue generated by Zitter’s newspapers.

Drill down a little deeper, and you find that almost half of Mail Newspapers’ retail advertising — nearly £40m-worth of it last year — came from supermarkets. Remarkably, the supermarket have more than trebled their expenditure at DMGT during the past five years.

A few obvious questions, then. What is propelling this huge expansion in retail advertising? Food price inflation? The simple fact of intense commercial rivalry? Or is press advertising itself a bargain that retailers crave to consume? (Perhaps it’s not the latter: Zitter’s presentation also proudly points out that the Mail and Mail On Sunday have been increasing revenue per page at a rapidly increasing rate — well beyond the rate of inflation — for at least the past decade.)

Moreover, the supermarkets have behaved like no other sector during the recession. Unlike everyone else, they continued to spend more and more on press advertising. (Other retailers, by contrast, slackened off a bit, but certainly didn’t hit the breaks in panic mode.) Among the nationals, the supermarkets’ behaviour put a floor under the worst effects of recession, blunting its impact.

In the end, the really important question for publishers is how much longer the big retail chains will be able to increase their expenditure at this rate.

No-one knows. And therein lies the problem. If the supermarkets’ priorities change in the context of a double dip recession, or for any other reason, things could very rapidly start to look ugly for the national press.

Look further ahead, and a bigger challenge looms. Most retail advertising is tactical, price-based, stuff designed to pull shoppers through the doors. When it comes to this kind of advertising, the web hasn’t dealt a death blow to newspapers. Quite the opposite, in fact.

But mobile advertising could be a very different proposition. Geolocation-based offers that appear on shoppers’ handsets as they wander down the High Street, or in advance of a planned shopping trip, won’t spell the end of newsprint. But they will hit newspapers where it hurts.

Rupert’s Spaghetti Junction: News Corp now boasts four ways to sell paid digital content

Posted by Peter Kirwan on 15 June 2010 at 12:52
Tags: BSkyB, News Corp

If you needed an indication of where News Corporation is going, yesterday brought it: a £7bn+ bid for 60% of BSkyB, coupled with two smaller deals designed to make newspapers palatable to the company’s shareholders.

A spoonful of sugar makes the medicine go down; or as the Americans would say: offense and defense. It’s all very reminiscent of James Murdoch’s speech in Barcelona last year — the one in which he argued that TV is a “big opportunity” and newspapers will play a smaller role in the company’s future.

Rumours about News Corp and BSkyB have been swirling around for a long time. Buying Skiff and taking a minority holding in Journalism Online are far more obscure deals, but just as intriguing in their way.

Five or six weeks ago, after listening to Murdoch talking about “final discussions with a number of publishers”, I suggested that he might still be planning a consortium-based approach to paywall publishing.

Alliances remain possible, but yesterday’s news suggests a go-it-alone approach. In any coalition of the willing, News Corporation will be first among equals. That’s because News Corporation now owns a significant slug of the relevant technology. Indeed, Murdoch now has at least four different approaches to paid content from which to choose:

1) Skiff

Bankrolled by Hearst but now owned by News Corp, Skiff is a hugely ambitious effort to build a shared end-to-end software platform for digital publishers.

You name it, Skiff has a solution for it. This company has spent four years (and $35m of Hearst’s cash) developing industrial-strength software for publishing paid content in digital formats. Its specialities include digital content production, wireless delivery, advertising platforms and revenue collection (which is where it might be able to help with paywalls).

Those who have witnessed Skiff’s demos speak positively. When I interviewed him last year, Gil Fuchsberg, the company’s chief executive, argued that the company stood to benefit as the world’s “enormous base of print media consumption” shifts toward digital outlets.

2) Next Issue Media

A low-profile coalition of US newspaper and magazine publishers including Conde Nast, Hearst, Meredith, News Corp and Time. Occasionally described as “Hulu for magazines” (on the iPad).

Next Issue Media was formed late last year to ensure that the technology industry doesn’t dominate the transition to tablet-style devices. The consortium’s job is to select the technology that publishers will use to publish content, sell advertising and generate reader revenues on tablet-style devices and smartphones. Paywall technology is part of its remit: the consortium plans to open a “shopfront” selling apps and subscriptions that will rival iTunes.

Has News Corp become frustrated by the slow pace of development at Next Issue Media? It’s possible. Last week, Paid Content disclosed that the consortium is still looking for a boss six months after its launch. As Rafat Ali put it: “Now, who needs a third-party company, and for what?”

3) The Wall Street Journal’s digital commerce platform

Running the world’s largest subscription-based news site implies a legacy of clever software. But the Journal hasn’t been directly involved in what Rupert Murdoch recently described as his effort to rope rival publishers into “an innovative subscription model that will deliver digital content to consumers”.

Les Hinton, chief executive of Dow Jones, recently suggested that News Corp’s digital guru Jonathan Miller — who orchestrated the deals with Skiff and Journalism Online — is firmly running his own operation. “That’s a News Corp project which Robert [Thomson] and I aren’t directly involved in,” Hinton told Paid Content. “We look after our little operation with the Journal.”

Little? Hinton’s modesty is unnecessary. What the Wall Street Journal doesn’t know about paywalls, it can find out very quickly. Whether or not its technology suits other News Corporation publications, its expertise should prove valuable.

4) Journalism Online

Founded by the US magazine entrepreneur Steve Brill and former Wall Street Journal publisher Gordon Crovitz, Journalism Online is a subscriptions platform designed to be used by a vast number of paywalled publications. Customers sign up for “a single protected account” with one username and password.

Journalism Online says it will help publishers — 1,500 have signed letters of intent — to offer micropayments, time-based “micro-subscriptions”, bulk subscriptions and combined print/online subscriptions.

Here’s how the company describes its own efforts: “16 targeted strategies — such as metering, segmented content, and topic-based packages for readers — that will convert publishers’ engaged readers into paid subscribers without turning away casual visitors.”

What will News Corporation do with all of these different approaches? The executive who has been given the job of rationalising this Spaghetti Junction of software and relationships is Jon Housman, one of Jonathan Miller’s apparatchiks at News Corp’s Digital Media Group.

Housman already has fingers in a couple of relevant pies. On News Corp’s behalf, he sits on the board of Next Issue Media. In addition, Housman has strong ties with the Wall Street Journal. (He became managing director of the Wall Street Journal Europe in 2005, before Murdoch acquired it).

No doubt News Corporation will let a thousand flowers bloom (for a while at least). As Rupert The Dealmaker knows, it’s important to have options.

Yet News Corp is now deeply involved in the software business, where acquiring — and trying to merge – competing platforms usually turns out to be a nightmare. Early decisions about what to keep and what to axe can help, but even this doesn’t guarantee success. Getting all of these assets to work in concert won’t be easy.

Reasons For Saving Radio 6, No.158: Shaun Keaveny on Adrian Chiles & GMTV

Posted by Peter Kirwan on 11 June 2010 at 13:38
Tags: ITV, Media

The reasons for saving Radio 6 keep piling up.

This morning, I found myself listening to the station’s presenter Shaun Keaveny playing Velvet Underground and The Gang Of Four. . . before the 9am watershed.

As if that wasn’t good enough, Keaveny does media analysis, too.

This morning, the laconic Northerner picked apart ITV’s announcement that it would be replacing GMTV with a new show fronted by Adrian Chiles and a “glamorous female co-presenter”. (You can listen to this yourself, on iPlayer, here: the segment in question begins after 1hr 25 mins. . .)

“Do they have to be glamorous?” asked Keaveny. “Are they going to looking at her journalistic CV or is it just onscreen chemistry they’ll be looking at? Which translates to: can we disseminate rumours that they’re sleeping together?”

Next, Keaveny pinpoints ITV’s odd suggestion that the new show will contain more “male-friendly features”. Keaveny suggests that “Arm-Wrestling For Pints” might be among them.

New studios are being built for the £1.5m launch, he points out. At this point, surrealism takes over entirely (so it’s best to simply quote verbatim):

“It’s going to be presented by Adrian Chiles, who they’ve spent do much money on, they’re making the most of it.

“It’s going to be presented from the White Cliffs of Dover, which will be sculpted Rushmore-style into the shape of Adrian Chiles’s face. Apparently.

“And the studio will be situated in his mouth, which I can’t wait to see. It’s going to be spectacular.”

Where to start with Keaveny’s critique? It’s a sharply-turned satire on celebrity egotism, tabloid collusion, and broadcast sexism. Want to criticise the BBC for paying ridiculous amounts to Jonathan Ross? Ah, but perhaps we should also be looking at how much ITV pays Adrian Chiles. . .

No doubt ITV’s new morning show will be great.  Me? I reckon I’ll be sticking with Shaun Keaveny on BBC Radio 6. . .

Guardian Media Group: How City fund managers and cost-cutting saved Mr Marx’s cash cushion

Posted by Peter Kirwan on 9 June 2010 at 14:26
Tags: Guardian Media Group, Media

Tomorrow, when Guardian Media Group publishes its annual accounts for the year to March 2010, those who regard The Guardian as a perverse charity that distorts competition will argue that not much has changed.

They might even point to an increased pre-tax loss at GMG — courtesy of paper-based write-offs — as evidence of deterioration.

The truth, of course, is that things are slowly improving (at GMG and everywhere else).

At first glance, this might seem hard to credit. After all, we already know that this year’s operating losses at Guardian News & Media (home to The Guardian, The Observer and guardian.co.uk) are going to be similar to last year’s £33.7m.

Inside King’s Place, they’re describing this as “heroic” given a 13% YOY decline in revenues.

You’d have to be a loyalist to swallow that. GMG was late waking up to the impact of recession. In the words of one executive, its national newspapers “veered off course” in terms of sustainable losses during the second half of the Blair-Brown boom. (Last year’s operating loss wasn’t an exception: in 07-08, GNM lost £25m at the operating level.)

Internally, GMG executives talk about how these losses reflect “necessary” investments in digital publishing. No doubt that’s partly true. But by this time last year, it seemed legitimate to ask whether the company might run out of ready cash. If the recession had gone on long enough, and if GNM had taken no action, it could have panned out that way.

Tomorrow, however, GMG will reveal a balance sheet containing £261m of cash (including GMG’s investment fund). That’s down only marginally on last year’s £268m. At a company where cash lubricates cross-subsidy, this really matters.

This year, like last year, GMG raided its savings to pay for those chunky losses at GNM. Yet GMG’s investment fund delivered a stellar return of 15% or so during the 12 months to March. The losses and gains more or less cancelled each other out, leaving GMG’s cash holdings much the same as they were last year.

Guardian journalists might feel sickly raising a glass to the fund managers who invested £200m on GMG’s behalf. Yet without the help of Carolyn McCall’s friends in the City, things would have been a whole lot worse.

Of course, GMG hasn’t given itself over entirely to rentier-style capitalism –- not yet, anyway. GNM alone has seen £26m-worth of cost-cutting during the past year.

Some of the benefits of cost-cutting will only emerge in next year’s accounts. Revenues have started growing again. Both of these factors should narrow next year’s losses at GNM. The road may be starting to rise in front of Alan Rusbridger.

More broadly, GMG is under less strain. Next year, it won’t need to bear the losses generated by local newspapers (£6.7m in 2008-2009, and almost certainly more in the 2009-2010 accounts that will be released tomorrow). It also looks as if GMG Radio generated a small profit in 2009-2010, compared with last year’s operating loss of £6.6m.

The group’s cash cows are also looking better than they did this time last year. Internally, for example, there’s optimism about the prospects for selling GMG’s 50.1% stake in Trade Media Group in two years’ time.

In 2007, the last time Trader Media Group was valued in a transaction, it was worth some £1.3bn. At GMG, they’re hoping that the business will be worth more in 2012 than it was in 2007.

EMAP has been stabilized, too. On debt, the banks have been placated. This, it seems, has been achieved without diluting GMG’s holding in the business. Here, the mood music suggests a sale or flotation by 2015. Before then, EMAP could grow by acquisition, although a further cash injection could be required if the company wants to play a major role in consolidating B2B publishing markets.

There’s still plenty of red ink sloshing around. Yet Mr Marx’s cash cushion feels plumper than it did a year ago. Assuming that we don’t descend into a 1980s-style perma-slump, GMG appears to have passed the point of maximum danger.

This, in turn, provokes a question. Who will GMG appoint to succeed Carolyn McCall as chief executive?

The big tasks facing the new boss include steering through the sale of Trade Media Group and bulking up EMAP.

On this basis, I suspect that GMG and The Scott Trust don’t need a web entrepreneur, a bureaucrat or a technocrat.

What they really need is a financial brain. After a year in which City fund managers played such a big role in calming frayed nerves at King’s Place, that would be entirely appropriate.