Stop the presses #2: A long way to the all-digital future

Posted by Peter Kirwan on 26 May 2010 at 14:45
Tags: Associated Newspapers, Daily Mail & General Trust, Guardian Media Group, News International, Telegraph Media Group, Trinity Mirror

To say the least, the notion of “switching off the presses” is simplistic. There will be complicating factors we can only vaguely imagine. Here are a few that might emerge:

1) Print could generate profits after digital revenue streams mature

Fickle investors who buy shares in the likes of DMGT, News Corp and Trinity Mirror on the public markets will see no reason to halt print production if it remains significantly profitable.

As others go digital-only, quoted groups may hang around, mopping up the last print-based profits. As competition declines, these could prove hard to resist.

The risk, of course, is that these businesses begin to resemble Big Media’s very own rustbelt. The last men and women standing will need to be dedicated to cost-cutting. They will continue to feel the old urge to protect print at the expense of digital.

2) A two-speed national news market?

Focusing 100% on the digital future as soon as possible has its attractions. Pushing all of your resources and talent in one direction could produce impressive results. A big gulf could open up between digital-only and print/digital publishers.

Privately-held operations like Guardian and the Telegraph Media Group may find themselves free to dive headlong into a digital-only future.

3) Are conservative readers more resistant to change than liberal readers?

Some readers will never be ready for the end of print. But does the Daily Mail (for example) attract more late adopters to its ranks than the Guardian?

Logic suggests that liberals are just as likely to resist the passing of the old medium as conservatives. But the Mail’s editorial campaigning against most (all?) things digital suggests that it believes anti-digital sentiment runs deep among its readers.

Demographic trends might encourage some publishers to hold on to print for longer than others. The Sun still sells around 2m copies a day. . .

4) Print as a break-even platform dedicated to marketing the brand

Some publishers may choose to maintain dwindling print editions as a marketing tool, to promote their brands and drive readers to digital sites. For this reason, too, the death of print may be a lingering affair.

5) The ultimate mopping up operation: print editions go free

The experience of the Evening Standard suggests that free distribution could become the ultimate means of extending the lifespan of the nationals’ print editions.

The infrastructure required to distribute in huge numbers will be daunting. So will the costs. But you’d have to bet that someone will try. The Independent could become a test bed for bigger future efforts.

6) What happens to the huge build-out of print capacity?

Good question. In the run up to 2008, News International spent £650m on huge new printing facilities in Broxbourne. John Witherow of the Sunday Times suggests that these presses “were supposed to last 30 or 40 years” (ie: until 2048).

News International spent big. But lots of its rivals invested in new print plants at around the same time.

It’s too early to argue convincingly that these investments represent an industry-wide miscalculation of strategic proportions.

But what does lots of spare capacity suggest? All other things being equal, it suggests that the cost of printing newspapers, on an outsourced basis, at places like Broxbourne, can only decline. This may represent good news for local newspapers who contract out their printing to vast print plants owned by others.

Alternatively, all of that spare capacity might be dedicated to printing huge runs of a few free national newspapers.

There will be plenty of twists and turns on the road to an all-digital future. Yes, a few broadsheets might switch off the presses by 2015 or 2020 or even 2025. But their exit from the market will open up opportunity for others. Taken as a whole, the transition from print to digital still looks like a lengthy affair.

Will the Guardian and Telegraph play nice again?

Posted by Peter Kirwan on 5 February 2010 at 14:28
Tags: Guardian Media Group, Telegraph Media Group

The ongoing spat between the Telegraph and the Guardian has been entertaining. But I wonder whether it might be drawing to a close.

In recent months, the Telegraph has become deeply interested in the Guardian’s financial performance, variously describing this as “grim”, “disappointing”, and “disastrous”.

The Guardian’s apparent inability to impose compulsory redundancies on editorial staff has become a favoured theme. In early December, the Telegraph spoke to one unnamed insider at GNM who described “highly-paid” staff journalists immune to compulsory redundancy as “bed-blockers”.

Another Telegraph story suggested that GNM employs so many editorial staff that “one features writer is reputed not to have had his name in the paper for more than a year”.

To be sure, Telegraph Media Group makes profits and Guardian News & Media makes losses – thumping great big losses. But why is the Telegraph so preoccupied with an unquoted rival whose fate doesn’t matter to investors reading the paper’s business pages?

Perhaps the answer lies in the pages of Media Guardian. In late November, Media Guardian ran a piece that portrayed Tony Gallagher, the Telegraph’s new editor, as the kind of Mail executive who destroys professional opponents after breakfast and eats their body parts for lunch — with fava beans and a nice Chianti.

Awkwardly, the piece suggested that Gallagher, during his long career at the Mail, hadn’t been averse to doing “all the things that the PCC wouldn’t allow you to do now”. One unnamed source told Media Guardian: “I can’t think of anyone in our profession that I would least like to cross the threshold of my home.”

Elsewhere, at the Observer, in early December, Peter Preston offered his best wishes to Gallagher, before going on to argue that the Telegraph’s “perpetual”, “slithering” circulation decline has been a problem since the late 1960s. The implication was that Murdoch MacLennan’s modernization project is pointless.

Sadly, the fun may be about to end. An unnamed source — yes, another one – insists that the Guardian “has no desire to compete in a tit-for-tat way” with the Telegraph.

Is that an olive branch being extended to the Telegraph? Coincidentally, Carolyn McCall, the chief executive of Guardian Media Group, gave an interview to the FT this week in which she suggested that GMG is coming “out of the recession very strong”.

“Yes we have made redundancies,” said McCall, “yes we have got the cost base down to where we want it now. . . They have done it, the GNM management are so on track. The Guardian is in good shape.”

Cumulatively, this sounds like an effort to draw a line beneath damaging coverage of the Guardian’s financial performance.

Whether the Telegraph takes the hint remains to be seen.

Which newspaper bosses will oppose safe harbour for search engines?

Posted by Peter Kirwan on 12 January 2010 at 16:13
Tags: Media, News International, Telegraph Media Group

Our unelected upper chamber is going to work on Lord Mandelson’s Digital Economy Bill, which resumed its second reading in the House of Lords today.

Ralph Palmer, the 12th Baron Lucas and 8th Lord Dingwall (a.k.a. Lord Lucas) has tabled a string of amendments to the Bill. Cumulatively, they suggest ambitions that stretch beyond this peer’s day job as editor and proprietor of The Good Schools Guide.

Most of Lord Lucas’s amendments (and there are a few of them) sound like sensible attempts to blunt the more extreme impulses of the music business.

Lord Lucas has described the major labels as a “powerful, monopolistic” industry that “seeks to punish [consumers] before thinking of how to serve them better”.

Interestingly, the Tory peer is also proposing what sounds like a British equivalent of the “safe harbour” rules that protect search engines from news organisations launching copyright lawsuits in the US.

Specifically, Lucas proposes “a standing and non-exclusive license” that would protect search engines when they “copy of some or all of the content” on web sites and display them in search results.

Here, too, Lucas seems to be siding with the independent little man (in the shape of Google and the web surfing public) against “powerful” (if not quite monopolistic) media barons like Rupert Murdoch and Gavin O’Reilly.

On this basis, we were intrigued to see that the Lords’ Register of Interests lists Lord Lucas as a “significant shareholder” in Archant.

Can we therefore expect that Adrian Jeakings, the recently-appointed chief executive of Archant, will become the first British newspaper boss to state publicly that Google’s use of extracts in search results really isn’t a problem, after all?

Perhaps Murdoch MacLennan, the chief executive of Telegraph Media Group, will emerge to support him.

Certainly, Lucas’s amendment seems to have gone down well at the Telegraph Media Group, which remains famously friendly with Google.

Ian Douglas, the paper’s head of digital production, calls Lucas’s amendment “brilliant”, arguing that it will save “ill-advised newspapers” from spending millions of pounds on suing Messrs Brin, Page and Schmidt.

Equally, if Lucas’s amendment is approved, it remains unlikely that Google-hating newspaper bosses will remain above the fray. The chances of a lawsuit materialising has always been small: but the threat of launching one remains useful.

No doubt this thought has already occurred to lobbyists who ply their trade on behalf of Rupert Murdoch in and around the Palace of Westminster.

The Telegraph should offer its 300,000+ subscribers a free Kindle

Posted by Peter Kirwan on 3 March 2009 at 16:04
Tags: Daily Mail & General Trust, Telegraph Media Group

At Silicon Alley Insider, some interesting maths.

The site’s Nicholas Carlson estimates that it costs $644m to print and deliver the New York Times every year. (Carlson says that one source estimates the figure to be much higher.)

Coincidentally, the Times also has 830,000 readers who have subscribed to the paper for more than two years.

Sending a $359 Amazon Kindle to each of those subscribers, Carlson calculates, would cost the Times $297m. 

Here’s Carlson: “Are we trying to say the the New York Times should force all its print subscribers onto the Kindle or else? No. That would kill ad revenues and also, not everyone loves the Kindle.”

Kill ad revenues? Yes indeed: the Kindle doesn’t carry ads, so every reader shifting over from the print edition would be a reader lost to the ad sales team.

In addition, giving subscribers free Kindles would sever their direct commercial relationship with the newspaper of their choice. Instead, readers would purchase subscriptions via Amazon. (Yes, there’s a revenue split in operation here, although its exact dimensions remain unknown.)

That said, the promotional possibilities seem obvious. At some point, Amazon will want to launch the Kindle in the UK. It might appreciate a partner that can help to underwrite the bill for putting its hardware into the hands of a large audience.

Against that, the calculations on revenue sharing and lost print advertising revenues seem fairly straightforward.

Last time I looked, the Telegraph boasted well over 300,000 subscribers. And if you’re worried about uptake among these presumably conservative readers, think again.

The Kindle doesn’t have cables; it doesn’t require a computer to operate; and users don’t need to buy a separate wireless subscription fee. As the Economist put it recently, the device is “perfect for older people”.

We suspect that the digital natives who occasionally tune into the Telegraph will like it, too.

PS: Last week, New Media Age suggested that the Daily Mail is already in talks with Amazon about selling subscriptions when Kindle launches in the UK. Quite how this will square with the Mail’s ongoing jihad against screen-based media remains to be seen.

The future of newspapers: Metro with knobs on (and a hiring spree at Thomson Reuters)

Posted by Peter Kirwan on 18 February 2009 at 15:41
Tags: Media, Telegraph Media Group

The Independent & DMGT: Anyone for a joint operating agreement?

Posted by Peter Kirwan on 3 November 2008 at 13:38
Tags: Daily Mail & General Trust, Independent News & Media, Telegraph Media Group, Trinity Mirror

Big denials this morning from both Independent News & Media and Daily Mail & General Trust.

James Robinson is taking a bit of a pounding for his story in The Observer suggesting that DMGT is “considering” buying The Independents. According to Robinson’s sources, the strike price could have been £1, with DMGT “taking on the loss-making papers’ liabilities”.

In point of fact, Robinson did a good job of highlighting the tactical jam in which INM now finds itself.

But a DMGT spokesperson told Reuters this morning “We have no intention of acquiring them.”

Meanwhile, an INM spokesperson tells the Irish Times: “Any discussions with UK publishers were solely in connection with shared services.”

Ah yes: shared services. At The Guardian, Roy Greenslade writes dismissively: “It all sounds like out-sourcing to me”.

Er. . . not quite, and not necessarily.

For a start, the idea of shared service suggests a consortium-based approach — rather than the old-fashioned Big Bang approach to outsourcing (which effectively involved dumping unwanted business processes — and employees — in the lap of a single, monolithic, specialist supplier).

Secondly, shared services typically involve high levels of automation (and plenty of underlying investment in IT — although quite how this squares with INM’s proposed €50m cut in capital spending next year remains to be seen.)

At the Irish Times, the implication is that The Independents have sparked an industry-wide discussion about creating economies of scale via collaboration.

Discussions appear to have involved INM and DMGT — as well as Telegraph Media Group and Trinity Mirror.

What might end up emerging here is a UK version of the joint operating agreements that allowed two daily newspapers to continue to operate in many US metropolitan markets from the 1970s onwards.

Interestingly, if you look at the structure of these deals, they were far more than flimsy joint ventures. Getting them off the ground required the Nixon administration to pass The Newspaper Preservation Act of 1970. This was needed to circumvent competition law.

In many cases, there was collaborative selling of classified ads, a lot of shared office space, plus a unified board of directors for the JOA entity. Under the current circumstances, you’d assume that INM is encouraging its partners to think about putting IT, accounting and HR under one roof — for starters.

(The point here is that Robinson’s piece might not be quite so far off the mark as it seems. One outcome could be some kind of semi-merged infrastructure organisation, working across the industry.)

In IN&M’s view, editorial should definitely be involved. There’s talk of creating “more efficient editorial work flows”. No wonder. Beneath the corporate-speak, mind-bogglingly severe cuts appear to be planned.

According to the Irish Times, INM’s UK operation is “expected to seek 100 to 200 redundancies in the coming months — a reduction of up to 40 per cent of its workforce”.

In this context, the prospect of offshoring vast swathes of editorial work to Bangalore or Mumbai has to become very real indeed. The interesting question, I suspect, is whether INM can induce any of its rivals to move in this direction, too.

The upshot? Between INM’s talk of “shared services” and a full-blown acquisition of The Independents lies an interesting bit of territory.

Some of the solutions that end up emerging might not look all that different from a formal corporate merger. (Anyone for a Newspaper Presevation Act 2008?)

At the very least, the hare unleashed by James Robinson this weekend has a way to go before it runs out of breath.

Not only in Kamchatka: What happened when Mr Sabbagh went down to the woods. . .

Posted by Peter Kirwan on 25 July 2008 at 13:54
Tags: Telegraph Media Group, Trinity Mirror

As this week’s events in Kamchatka reminded us, bears have sharp claws and teeth. The latter bite chunks out of investors frequently. And commentators get bitten, too.

The Times has had a torrid time of it in recent weeks. On 16 July, its reporter Robert Lindsay suggested that an analyst had concerns about Trinity Mirror breaking its banking covenants.

Breaking promises to bankers ranks as one of the City’s greatest sins. Accordingly, Trinity’s shares slumped. Acting rapidly, the company pushed out a highly unusual announcement outlining the actual terms of its agreements with the banks.

Next, Sly Bailey reached for her lawyers. What is being coyly described as an “exchange of lawyers’ letters” ensued with The Times.

On 17 July, Dan Sabbagh, the paper’s media editor, wrote up what seemed like a considered account of Trinity’s position.

(That said, Sabbagh did quote Richard Desmond’s mischievous suggestion that he would look to buy Trinity Mirror when it went into administration. The following day, for good measure, he wrote an accompanying piece hinting darkly that it simply wasn’t good enough for Trinity to blame its predicament on “irrational advertisers and an advertising downturn”.)

But this, it seems, wasn’t the end of The Times’s media reporting troubles.

This morning, in a space normally reserved for one of Sabbagh’s jaunty vignettes about the media business, The Times carries a curious legal-sounding clarification.

It suggests that Telegraph Media Group was irritated by a piece by Sabbagh that appeared in the paper’s Media Business section on 4^th July.

Partly or wholly written by m’learned friends, the “clarification” makes it clear that Sabbagh had no business comparing Trinity Mirror with The Telegraph Media Group.

Why not? Well, as the clarification points out, Trinity Mirror has a pension fund of £1.5bn and a deficit against that liability of £125m.

We’re further informed that the Telegraph Media Group has no pension fund liability — and “more than sufficient funds to discharge all of its borrowings whenever it chooses”.

Oddly, I can’t locate the original article via Times Online’s search engine. (Perhaps the Media Business section is filed away in a special cupboard somewhere on the site. Maybe Mr Sabbagh will reply to my inquiring email with a link. . . )

But given that the Barclays are to the Telegraph what Roman Abramovich is to Chelsea Football Club, the clarification does seem a little superfluous.

Funnily enough, it may achieve the opposite effect to the one intended.

Although I haven’t considered the possibility until now, it seems entirely obvious that the Barclays will need to write down the value of their vast property estate during the next year or two.

Whether this will force a change in the tempo of investment at Telegraph Media Group is anyone’s guess.

But in the current market, prospects that once seemed as far-flung as Dr Who’s travel itinerary are rapidly becoming as real as the bus stop at the bottom of the road.

Welcome to The Great Unbundling, Mr Rusbridger

Posted by Peter Kirwan on 25 June 2008 at 17:11
Tags: Associated Newspapers, Guardian Media Group, Independent News & Media, Telegraph Media Group, Times Media

Scientists say that falling in love alters our brain chemistry, and therefore the way in which we perceive the world.

Presumably, it’s the same with losing.

Last week, the Mail Online overtook the Guardian and the Telegraph to become the UK’s most-trafficked national newspaper site.

Now, suddenly, the Guardian is suggesting that it’s becoming increasingly “anachronistic” to compare ABCe data for newspaper websites.

Yes indeed. That’s because the Mail’s great surge in online visitors hasn’t been generated by what Mike Butcher, the author of the piece, would call “news”.

No — it’s all down to Keira Knightley’s “razor sharp” collarbone and pictures of an emaciated and distressed Amy Winehouse wandering around the streets of London in the small hours dressed only in her underwear.

Butcher argues for a purist view. He accuses the Mail Online of playing fast and loose with link bait (which is patently true).

Sites like the Mail Online and The Sun — with its three lane pile-up of tits, bingo and fantasy football — aren’t really news sites at all, he argues. They have more in common with the US celebrity site TMZ.com.

As for The Guardian, well, it seems tempted to pick up its toys and walk away. Now that the Mail Online has bested it, Butcher tells us that:

guardian.co.uk. . . will be more interested in how it is faring against the Huffington Post, a liberal US blog network, than comparing itself to other domestic newspapers.

Of course, tinkering with competitive sets in the wake of commercial defeat has a long and venerable history within sales organizations. It goes on everywhere, and it’s symptomatic of denial.

Commercially, no-one will be fooled. That’s because the web’s animating force is all centripetal, not centrifugal. Competitive sets are getting bigger, not smaller.

In terms of advertising revenues, the Guardian must compete directly with the Mail Online as well as Google, MSN and Yahoo — and a host of others.

In the absence of pornography, violence and racism, the quality of news coverage that brings in the punters simply doesn’t matter to advertisers.

That said, Butcher’s piece does point to something important.

The Mail Online’s successful experiments with link bait are a prime example of what the author Nick Carr calls the “unbundling” of news content.

No longer do we have to pay a set fee to buy a newspaper that contains a mix of highbrow and lowbrow content.

Zooming in from Google in 0.25 seconds, we can get our fix of “+keira +knightly +baftas” and exit just as rapidly as we arrived, leaving any “serious” content undisturbed.

The real question for editors at the Guardian and the Telegraph is how to preserve resources for the news content that Rupert Murdoch calls “boring”. They need to do this in a digital world where 20%-30% annualized growth is a minimum requirement.

The pressure to unbundle, to encourage links with bait, is enormous. It can only grow. For better or worse, it will influence news agendas.

If mentally cordoning off a bit of cyberspace and labeling it “serious news sites only” helps editors to manage the pressures, fair enough.

But let’s not pretend that this will influence the ad market.

Because it won’t.

The Independent: Leader of the reactionary party, and loved by the City

Posted by Peter Kirwan on 5 June 2008 at 14:17
Tags: Daily Mail & General Trust, Independent News & Media, Johnston Press, News Corp, Telegraph Media Group, Trinity Mirror

At the World Association of Newspapers congress in Gothenberg, Independent News & Media reconfirms its web-wary credentials.

Here’s Simon Kelner, editor of the Independent, deploying a line that’s at least a decade old:

“I have the impression that the internet is like going into a bar where everybody is shouting, whereas when I read a newspaper it is much easier.”

Not to be outdone, Gavin O’Reilly also reached into the store cupboard of web scepticism to describe printed newspapers as the “ultimate browser” (oh dear). O’Reilly went on to add:

I find it rather remarkable how unsophisticated the commentary is on our industry today. They [media commentators] seem to support the conventional wisdom that newspapers are soon to become a relic of the past and that opportunities only exist in a digital sense.

For good measure, he compared bloggers who criticize ACAP to the perpetrators of drive-by shootings.

If you work at either of the Independents, frustration would be a legitimate response. And no matter where they work, Digital Bolsheviks who work tirelessly to bring about the dictatorship of the digerati will shake their heads sadly.

But hold on a second. Take a look at activist investor Denis O’Brien’s criticisms of IN&M. Is he worried about a lack of investment in digital publishing? Apparently not. Instead, O’Brien complains that the IN&M board isn’t sufficiently independent.

Is the City concerned about IN&M’s lack of enthusiasm for digital?

Nope. Nine analysts follow IN&M. Seven of them are currently advising investors to hold or buy, or expect the stock to “outperform” the market.

Only half of the 16 analysts that follow Trinity Mirror analysts think similarly. Fourteen follow Johnston Press, but only nine attach a hold, buy or outperform rating to the stock.

Although some of IN&M’s popularity is attributable to the presence of Denis O’Brien on the shareholder register, it’s also true that the City likes IN&M.

It likes the fact that IN&M isn’t very interested in the future of news organizations.

And it likes the company’s exposure to the developing world. Overseas adventures are a tried-and-tested method of generating new revenues. You can’t say that about digital investment.

In a recession, the public markets are no place for revolutionaries. Trinity Mirror has been hamstrung by its quoted status for years. Johnston Press is no longer using its quoted status to consolidate the industry. And IN&M has emerged as the leader of the reactionary party.

Among UK-based quoted news organisations, only DM&GT seems to enjoy some freedom to manoeuvre. News Corp enjoys something similar — largely because, like DM&GT, it has diversified intelligently and is still run by a shareholding figurehead who is more than a creature of the markets.

But for the next couple of years, and possibly beyond that, the best way of fomenting a digital revolution will be to do it privately.

In this respect, the Telegraph and the Guardian are both object lessons. Both are shielded in their own ways from short-term investor demands. Not surprisingly, both sit the top of the online traffic rankings for national newspaper sites.

Conicidence? I don’t think so.

Forget about ABCe; let’s have an old-fashioned fight about traffic numbers

Posted by Peter Kirwan on 23 May 2008 at 11:38
Tags: Associated Newspapers, Daily Mail & General Trust, Guardian Media Group, News International, Telegraph Media Group

The Telegraph.co.uk has ended the Guardian’s long reign as the most widely-read national newspaper website. So writes my colleague Martin Stabe on the basis of ABCe data for April that run like this:

• Telegraph.co.uk: 18.6m unique users
• The Guardian: 18.54m unique users
• Mail Online: 18m unique users
• Times Online: 15.4 unique users
• Sun Online: 14m unique users
• Mirror.co.uk: 4.28m unique users

Now ABCe hasn’t been established as the gold standard of traffic measurement for very long. But already, the new regime has become boring.

Am I the only one who feels nostalgic for the days of near-impenetrable arguments about rival sets of traffic figures propounded by executives who themselves don’t fully understand the data? Surely someone could be persuaded to start an argument?

Admirably, ComScore seems interested in fomenting a barney. Just as ABCe’s hegemony seems to be solidifying, the panel-based traffic counting firm has decided to start publishing monthly figures for newspaper sites for the first time.

ComScore’s traffic analysis of the UK’s nationals for March looks promisingly discordant with ABCe — and (coincidentally) rather positive for News International:

• The Sun: 4.3m visitors
• The Guardian: 3.6m visitors
• Telegraph Group: 2.8m
• Times Online: 2.6m
• Daily Mail.co.uk: 2.4m
• Independent.co.uk: 1m
• Mirror.co.uk: 990,000

OK — more seriously now. . . ComScore’s numbers are scaled up from a “panel” of UK consumers.

The UK bit is important. The Mail Online, for example, ranks high in ABCe, but boasts a large overseas readership. Cut that out influence — as ComScore claims to have done — and the site’s aggregate traffic looks much less impressive.

ABCe’s data is pulled directly from publishers’ server logs. Quite apart from its UK focus, ComScore suggests that its figures are lower than others because:

1) Its panel-based (research) methodology is not skewed by cookie deletion.

2) It counts as one individual the same person hitting a site from different locations (eg: home and the office).

These may well be persuasive arguments. But it’s hard to tell.

As the spat over ComScore’s data for Google’s Q1 clickthroughs proved, ComScore’s problem is a lack of transparency about how its research methodology works in practice.

Coincidentally, the same argument applied to Nielsen NetRatings. The last time I looked at its site, it contained the vaguest of descriptions of its methodology, lost beneath layers of corporate verbiage.

And Hitwise? I like the idea of pulling traffic numbers from ISPs’ servers (which is what the company does). In my humble opinion, Hitwise also does a slightly better job of explaining its methods to the outside world. . .

Of course, all of this is irrelevant if all you need are figures to bamboozle gullible clients during the first 20 seconds of a sales presentation. . .