Paul Wallbank – Brilliant Communications

Category: old media

Delivering products
Once upon a time the local plumber got to work by bicycle, then he got a jalopy and now he shows up in a van or a hotted up ute. The plumber and his customers don’t care about the way his services are delivered.

A hundred years ago the retail industry was dominated by corner stores that customers could walk to, they received their deliveries by horse drawn carts and made deliveries on bicycles.

Then along came the motor car, which changed shopping habits and delivery methods.

Fifty years later the corner stores were a dying breed as they were replaced by supermarkets which customers could drive to and they took their deliveries by truck.

Today the retail industry is changing again, as the Internet changes shopping habits and society in ways similar to the motor car.

A similar pattern of change happened in the media sector; the evening paper died as commuters switched to cars and reading the Tribune on the tram or train home became less relevant.

Morning papers survived as people took deliveries to read over breakfast before driving to work.

At the same time radio and television became the dominant way most people got their news.

Even more the retail, the web has dramatically changed news distribution methods.

As the effects of Fairfax’s restructure sinks in, there are a group of people who don’t seem to want to accept reality – newsagents.

Mark Fletcher’s initial post about Fairfax’s restructure on his Australian Newsagency Blog attracted some harsh comments;

“Whilst the print media is arguably in decline I consider this post to be scare mongering……Fairfax will be here in print for years to come and to say or suggest that some days of the week will be or may be cut is pure conjecture at this point.”

” I am in semirural metropolitan Sydney. We have just added another 100 customers to our delivery run. Majority dont like reading their news online – old habits die hard. I hope that Fairfax dont abandon them. They like getting their newspapers in print.”

“Hi i will not pay to read online why it is all free, but will buy paper”

Focusing on print condemns those newsagents to the fate of the corner shop.

What is missed in the discussions about the future of the media is that medium is not message – people want relevant content delivered in the most convenient way.

This is true in every business. What we do is not really related to how we deliver the product, if we’re tied to one way of getting our services to a customer then we’re in trouble.

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June 19, 2012
Disrupting the markets
Generally it’s not a good idea to have nearly a hundred slides in a presentation, but Mary Meeker’s overviews of the tech industry are so rich in data it’s impossible not to spend a weekend looking over the entire sldieshow.

Last week Mary gave her presentation at the All Things Digital conference and as usual she identified a range of trends and issues in the technology industries.

Smartphone upsides

Still the early days of smartphone adoption, with 6 billion mobile phone subscriptions worldwide but only 954 million smartphones activated.

This adoption is driving mobile revenues with income growing at 153% per year. Although as she shows later, this is not necessarily good news for everybody.

Print media’s continued decline

A constant in Mary’s presentations over recent years the key slide in has been ad spend versus usage across various mediums.

In this year’s version we still print still vastly over represented with 25% of US advertising while TV remains static, although Henry Blodget at Business Insider thinks the tipping point might be arriving for broadcasters.

Online’s thin returns

One of the things that really jumps out is how thin onlie revenues really are. In annual terms services like Pandora and Zynga are making between 6 and 25 dollars per active user over a year.

These tiny revenues indicate the problem content creators have in making money on the web, after the gatekeepers like Pandora or Spotify have taken their cut, there isn’t much left to go around.

Facebook and Google are also encountering problems as users move to mobile where revenues are even smaller than those from desktop users. This is constraining both services’ earnings growth.

Disrupting markets and governments

Mary’s presentation goes on to look at the disruption web and mobile technologies are bringing to various markets – it’s a good overview of whats changing right now and the products driving the changes.

It’s not just markets that are being disrupted with Mary also looking the US’s budget position and entitlement culture. This in itself is a massive driver of change which will have a deep effect on our lives regardless of where we live.

Are we in a bubble?

Mary finishes up with a look at whether we’re in a tech bubble or not.

Her view is that we are and we aren’t – there are silly valuations of companies in the private market however the poor performance of tech stocks on the stock market indicate the public aren’t being fooled.

One telling statistic is the only 2% of companies have accounted for nearly all the wealth creation of the 1,720 US tech IPOs between 1980 and 2002. There’s little to indicate much has changed in the decade since.

The optimism in funding new businesses is based in the disruption they are bringing to markets and industries – you only need one eBay or Google in your portfolio and you’re a legend, if not filthy rich.

Both the economic and technological changes are disrupting our own businesses and this is why its worth reading and understanding Mary Meeker’s presentations if only to be prepared for the inevitable changes.

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June 4, 2012
Product Review: Australian Financial Review iPad app
I really wanted the Australian Financial Review’s iPad application to be great as the country desperately needs good reporting on the platforms people are using. Unfortunately Fairfax’s misguided commercial judgement gets in the way of delivering a killer app.

Many publishers are putting faith in iPad applications, seeing them as an opportunity to catch a market that is fleeing paper publications for their online equivalents.

To meet this demand, the Australian Financial Review has released their iPad application with a free fourteen day trial and plans starting from $59 per month for the digital editions.

It’s telling the subscription plans favour those buying the paper editions as the feeling from using the iPad app is that Fairfax’s management would rather you bought the paper.

This continued focus on print shows in the news not being updated – a reader of the app in an airport lounge at 6am will find little different logging at lunchtime or in a cab on the way home in the evening.

Clinging to the old news timetable is admirable but it means the AFR isn’t taking advantage of its marketplace strengths or the talents of its staff.

One of the reasons the iPad has become so popular as a reading device is the rich, relevant content publishers can display, for instance The New York Times iPad app, their stories on the Syrian massacre in Al-Houla link directly to Youtube clips from local news sources.

So it is disappointing is that the AFR hasn’t harnessed the multimedia advantages of the iPad. For instance Canberra correspondent Laura Tingle’s political stories don’t even link to Laura’s video page on the service.

Similarly a story on BHP won’t have any links to the AFR’s profile of BHP, its stock price or financial results. These are features that could make the AFR’s a killer application for anyone wanting to understand the Australian business scene.

Compounding the issue is Fairfax’s unfortunate policy of reluctantly linking to outside sources – this short sighted view devalues all Fairfax’s online efforts as it detracts from the authority of their broadsheet and business publications. This again is true in the AFR iPad application.

Overall, the AFR’s iPad app is a missed opportunity which is a shame as the Australian business sector desperately needs good reporting delivered through the tools today’s executives and investors are using. Hopefully the next version will do better.

The Australian Financial Review online subscription was provided by Fairfax and the AFR. I have free subscriptions available for the best two comments on the blog this week so fire away with your views on this post or others.

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May 29, 2012
Can Warren Buffett save local news?
Warren Buffett’s purchase of local newspaper chain General Media Publications last week raised eyebrows and the question about the future of local newspapers.

Local news has bucked the trend of the big four gatekeepers taking over – most of us expected Google and Facebook with their local business listings, search and community functions to take over the market just as the web has stolen the income streams of the bigger metropolitan mastheads.

What’s more, us digerati believed social media services like Facebook and Twitter would give us most of the information about what is happening in our communities and make the role of the local newspaper redundant.

This hasn’t happened and there’s several reasons for this – a key one is current web services are great at connecting disparate communities but don’t do a good job of connecting local groups.

A bigger failure is both Google and Facebook blew the opportunity to dominate local news.

Basically, local news isn’t sexy, it’s much more of an ego stroke to be treated like a rock star at a conference or to negotiate a billion dollar purchase of a social media application.

Late nights reporting goings on at the local council or chamber of commerce isn’t sexy. So Facebook and Google’s executive focused on the shiny things.

That failure to execute by the big players has largely left the market to the incumbents and their income is largely untouched – Media General’s income is largely static, unlike the declines being seen by big city mastheads.

A similar phenomenon is at work in other markets, in Australia Fairfax’s regional newspaper division is far more profitable than any other sector while competitor APN makes a good return from their publishing activities in smaller communities.

Interestingly almost all of the local news incumbents are saddled with debts or poorly thought out ventures that absorb the profits coming in from their core operations.

Part of the profitability is because local newspapers are established brands. Locals know they will get news about their community that is immediately relevant to them.

For local businesses, they still have to advertise in the local press as that’s where their market is. Local customers might be reading about Federal politics, Kim Kardashian or Occupy Wall Street on the web, but they are still turning to the district news to find out what’s going on in their immediate community.

How this pans out for Warren Buffett is going to be interesting, Berkshire Hathaway tends to run a lean management philosophy in its businesses and this might be one of the saving attributes for their local media investments.

Stripping out the million dollar men who infest the top levels of the newspaper industry and investing in content – both online and in print – may well be the key to success of the local news industry.

Key to the local news success will be energising the advertising sales teams – there’s little point in skilling up journalists in new technologies or getting editors to “think digital” if the salespeople are stuck in the mentality of display print ads being the only thing that matters. This is the same challenge metro newspapers face.

Strong local media matters in both country and suburban communities. It’s essential to the spirit of the local town and a healthy local media is always a feature of a prosperous community.

One of the promises of the Internet is that local groups could seize back the news about their towns and suburbs, this doesn’t appear to be happening. Maybe it’s going to take Warren Buffett to fix it.

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May 27, 2012
Grappling with the online news beast
The head of Google News, Richard Gingras, last week discussed how the news industry is evolving at Harvard University’s Nieman Foundation.

Much of Richard’s discussion centred around disruption – the newspaper industry was disrupted in the 1950s by television and by the 1980s most print markets had seen several mastheads reduced to one or two.

The remaining outlets were able to book fat profits from their monopoly or duopoly position in display and classified advertising.

By 2000, the web had killed that business model and the newspaper industry was in a decline that continues today as aggregator sites like Huffington Post steal page views and Google News further changes the distribution model.

One of the problems for the news industry is how different the online mediums are from print, radio or television broadcast. The struggles of media startup The Global Mail is a good example of this.

In the middle of last year news started trickling out that one of the Australian Broadcasting Corporations’s top journalists, Monica Attard, had left the broadcaster to set up The Global Mail, an online news site funded by Wotif founder Graeme Wood.

The site launched on schedule in February 2012 and underwhelmed readers with pedestrian content and a confusing layout. By May, Monica Attard announced she was leaving the organisation she’d founded.

Tim Burrowes of the media site Mumbrella examined why the Global Mail is struggling, his Nine problems stopping The Global Mail from getting an audience details how the site doesn’t use online media effectively.

At heart is a fundamental mismatch between the methods of journalists raised in the “glory days” of print and broadcast journalism against those of the online world, not least the much harsher financial imperatives of those publishing on the web.

One key problem it the TL;DR factor – Too Long; Didn’t Read. Where online readers tend to leave stories after around four hundred words.

Richard Gringas is quoted as encountering this problem when he worked at online magazine, Salon.

At Salon, articles were paginated, but only 27% of readers made it to the end of the four-page articles. Compared to competitors, Richard was told, this was a good benchmark. But with fresh eyes, he was astounded that a product was being produced with the knowledge that the vast majority of the audience would not consume the entire piece. Richard loves the long form, but if the objective is to convey information, we need to think about the right form for the right medium at the right time.

So “long form” journalism has to be written the right way and it has to be backed up with good visual components and have “short form” versions suited to the more impatient readers who make up the bulk of the web audience.

The New York Times made a step in this direction with their iEconomy series on how the US middle classes have been displaced with manufacturing’s move to China.

An even better example of journalists using the web well is The Verge’s Scamworld where an online expose of Internet get rich quick schemes and the conmen behind them.

Scamworld shows us what skilled journalists can do online. The amazing thing is the site’s new steam is tiny compared to those of established outlets like the New York Times, Guardian, Fairfax or those of News Corporation.

This failure to execute by incumbent news organisations isn’t because they are lacking talent – every young, and not so young, journalist has been required to have multimedia skills and the ability to file stories in multiple formats for at least a decade.

Old Media’s problems lies in the mindsets of senior journalists, editors and their managements who are locked into a 1950s way of thinking where fat advertising revenues funded the adventures and expense accounts of roving reporters who tough as nails editors occasionally bullied into filing stories.

That model started to die in the 1980s and the Internet gave it the last rites.

Richard Gringas’ discussion at Harvard shows news and journalism isn’t dead, but it is evolving. Just like many other disrupted industries, the news media has to adapt to a changed world.

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May 14, 2012