Tag: business

  • What business are newspapers in?

    What business are newspapers in?

    The problems of The Guardian and other newspaper groups around the world raises the question of what business they are actually in – news or advertising?

    “Going digital only is not an option” was an agenda item for a meeting of Guardian executives claims the Financial Times.

    Digital only however is the option most of the readers are taking with the Guardian’s online channels attracting 9.5 million UK readers a month compared to a print circulation of 6.5 million. The Guardian’s total global online audience is 65 million, ten times the size of the print edition.

    Making matters worse is the trend, according to the UK Audit Bureau of Circulations (ABC), newspaper sales are declining at 16% per year while online readership is growing 14%.

    As the Guardian readership figures show, the number of readers isn’t the problem and the same is true for the New York Times or the Sydney Morning Herald. More people are reading these publications than ever before, but the advertising has gone elsewhere.

    Essentially a newspaper was an advertising platform, the cover price barely covered the costs of printing and distribution while the classified and display advertising provided the “rivers of gold” that made the business so lucrative through most of the Twentieth Century.

    Most of those rivers have been diverted as dedicated employment, real estate, travel and motoring websites have stolen much of the advertising revenue that sustained newspapers.

    As classified advertising platforms, newspapers have reached their use by date and now they have to build a model that is more focused on online display advertising and getting readers to pay for content.

    Getting readers to pay is difficult when the market has been trained to expect news for free or pennies a day, a problem not helped by some newspapers chasing online eyeballs with low quality content.

    Equally difficult is training sales teams to sell digital advertising, too many sales teams have grown fat and complacent over decades of flogging lucrative and easy real estate print ads.

    The challenge for newspaper managements around the world is figuring out how to get the advertisers onto their online platforms and providing a product which readers value and are prepared to pay for.

    It may well be that The Guardian’s management are right, that print does have a role in the newspaper’s future but first they are going to have to define what their company is and what it does.

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  • Running out of luck

    Running out of luck

    Last week I was lucky to get along to Digital Australia and Emergent Asia panel held at PwC’s Sydney office where the panel looked at how Australia’s industries are adapting to the digital economy and evolving Australian markets.

    The outlook from the panel was generally downbeat about the ability of Australia’s business leaders and politicians to adapt to the changes in the global economy although there were some optimistic points about the resilience and flexibility of the nation.

    I did a write up for it on Technology Spectator which is online at It’s Not Good Enough To Be Clever

    The challenge is on for Australia’s business leaders – let’s see if they are up to it.

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  • Australia in the Asian Century – Chapter Six: Building capabilities

    Australia in the Asian Century – Chapter Six: Building capabilities

    This post is one of the series of articles on the Australia in the Asian Century report.

    Of all the chapters in the Australia in Asian Century discussion paper, Chapter Six has probably attracted the most opprobrium because of the fine words which haven’t been matched by government policy and action.

    Parts of this chapter have a strong “school marm” tone as it tries to mandate the composition of company boards or the locations of where students will study. Overall though, most of the objectives are either motherhood statements, impractical or at odds with the actions of both state and Federal governments.

    National objective 9. To build the capabilities of Australian students, Australia’s school system will be in the top five schooling systems in the world, delivering excellent outcomes for all students of all backgrounds, and systematically improving performance over time.

    • By 2025, Australia will be ranked as a top five country in the world for the performance of our students in reading, science and mathematics literacy and for providing our children with a high?quality and high?equity education system.
    • By 2015, 90 per cent of young Australians aged 20 to 24 years will have a Year 12 or equivalent qualification, up from 86 per cent in 2010.
    While these objectives are worthy, there’s little discussion of exactly how this will be achieved beyond broad statements. Again it’s notable that these aspirations are being laid out at a time when funding is being cut and staff retrenched in both state and Federal government education departments.

    National objective 10. Every Australian student will have significant exposure to studies of Asia across the curriculum to increase their cultural knowledge and skills and enable them to be active in the region. All schools will engage with at least one school in Asia to support the teaching of a priority Asian language, including through increased use of the National Broadband Network.

    Says who? Who exactly is going to force a school to engage with at least one school in Asia? These are the sort of broad brush statements that detract from the report.

    These kind of statements are the “thought bubble” approach to policy that marks much of what passes for governance in Australia today and such poorly thought out programs end up at best wasting money. At worst, the unintended consequences of a ‘policy’ thought up on the back of beer mat end up causing more damage than good.

    Such a program could work well if properly thought out and integrated properly into the long term curriculum of the students but it would take proper leadership from state and Federal education ministers.

    National objective 12. All students will have access to at least one priority Asian language; these will be Chinese (Mandarin), Hindi, Indonesian and Japanese.

    This is good and fair, but is something that was supposed to have been put in place thirty years ago. Instead the proportions of students studying Asian languages has steadily dropped.

    As newspapers have reported there are barely a dozen Hindi language teachers in New South Wales, so the priority needs to be training teachers to deliver the courses.

    Such inconvenient logistical problems are an excellent example of those well meaning but poorly thought through “thought bubbles.”

    National objective 12. Australia will remain among the world’s best for research and teaching in universities, delivering excellent outcomes for a larger number of Australian students, attracting the best academics and students from around the world and strengthening links between Australia and the region.

    • By 2020, 20 per cent of undergraduate higher education enrolments will be people from low socioeconomic backgrounds, up from 17 per cent in 2011.
    • By 2025, 40 per cent of all 25 to 34?year?olds will hold a qualification at bachelor level or above, up from 35 per cent in 2011.
    • By 2025, 10 of Australia’s universities will be in the world’s top 100.
    • A larger number of Australian university students will be studying overseas and a greater proportion will be undertaking part of their degree in Asia.
    This objective really smacks of poorly thought out ideas on the run and illustrates starkly the differences between the well meaning objectives and the behaviour of governments.
    It’s almost impossible for ten of Australia’s universities to make it into the more reputable measure of top 100 universities when for the last three decades research and post graduate programs have been slowly strangled by falling government funding.
    Even if a Gillard government were to change that trend, it’s unlikely Australian universities could make up the lost ground in 13 years.
    Mandating that “a larger number of Australian university students will be studying overseas and a greater proportion will be undertaking part of their degree in Asia” is nice but who is going to force students to study overseas and specifically in Asia?
    More to the point, what are notoriously conservative Australian employers going to do with all these graduates of Asian universities?

    National objective 13. Australia will have vocational education and training systems that are among the world’s best, building capability in the region and supporting a highly skilled Australian workforce able to continuously develop its capabilities.

    • By 2020, more than three?quarters of working?age Australians will have an entry?level qualification (at Certificate III level or higher), up from just under half in 2009.
    • Australia’s vocational education and training institutions will have substantially expanded services in more nations in the region, building the productive capacity of the workforce of these nations and supporting Australian businesses and workers to have a greater presence in Asian markets.
    Given the week before the Gillard government cut apprenticeship funding and the NSW government announced it was further emasculating its state TAFE system a few days after the report was released, this objective can be treated purely empty words.

    Business capacity

    One of the reasons why Australia engaged so little with Asia over the last twenty five years is because the business community became focused inwards rather looking for opportunities in foreign markets. So the idea of getting more Asian experience into boardrooms is laudable but the solutions proposed impractical.

    National objective 14. Decision makers in Australian businesses, parliaments, national institutions (including the Australian Public Service and national cultural institutions) and advisory forums across the community will have deeper knowledge and expertise of countries in our region and have a greater capacity to integrate domestic and international issues.

    • One?third of board members of Australia’s top 200 publicly listed companies and Commonwealth bodies (including companies, authorities, agencies and commissions) will have deep experience in and knowledge of Asia.
    • One?third of the senior leadership of the Australian Public Service (APS 200) will have deep experience in and knowledge of Asia.
    This objective has drawn a lot of scorn from the business community and for good reason – how is a Federal government going to mandate that a third of the ASX200 will have “deep experience and knowledge of Asia”?
    While the aim of having a third of the senior public service possessing Asian experience is worthy, this is almost impossible given the deadline for this is thirteen years away, any bureaucrat hoping to have “deep experience and knowledge of Asia” would have had to have been working on it for the last five or ten years. If this program isn’t in place now, it isn’t going to happen.

    Society

    Probably the biggest strength of Australia as a nation is in its diverse and relatively tolerant society so this section of the report is notable for what it misses in opportunities.

    National objective 15. Australian communities and regions will benefit from structural changes in the economy and seize the new opportunities emerging in the Asian century.

    Another worthy aim and its notable that the region cited in the case study is Darwin, a city whose economy is being wildly distorted by the LNG boom which is driving up prices and labour costs. If anything Darwin is an example of Australia turning its back on opportunities and focusing on a quick, resources driven buck.

    National objective 16. By preserving and building on our social foundations, Australia will be a higher skill, higher wage economy with a fair, multicultural and cohesive society and a growing population, and all Australians will be able to benefit from, and participate in, Australia’s growing prosperity and engagement in Asia.

    Cant and motherhood statements as one would hope all government seek to build a fair and cohesive society on our social foundations. It’s interesting that much of the poorly thought out, short term tactics by publicity hungry politicians probably does more to damage Australia’s institutions than other factors.

    Overall this chapter deserves to have drawn the most criticism with its motherhood statements and wholly unachievable aims.

    Most disappointingly, it skates over Australia’s diverse workforce and provides no ideas on how to harness the talents of the country’s ethnic groups in building ties and improving the nation’s skills.

    Image of the Harbin Snow and Ice Festival from EmmaJG on Flickr

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  • Tech’s tough days

    Tech’s tough days

    Today sees another tough day for tech stocks with both Apple and Amazon missing their projected earnings which again finds Microsoft being stood up at their own party.

    For Amazon, along with the costs involved with a new range of Kindles, there’s a huge write down in their Living Social investment, another indicator that the group buying bubble has passed into history alongside tulips, 19th Century Argentinian railway bonds and South Sea investments.

    It’s worrying that while Amazon’s quarterly sales have increased by 23% over last year’s figures to $11.546 billion dollars, their cost of sales has also gone up 23% from $8.325 to $10.319 billion. This is a trend to watch closely over the next few quarters.

    Unlike Amazon, Apple still made a fat profit with income going up to $8.2 billion for the quarter, an increase of 24%. This missed many Wall Street analysts’ estimates.

    Apple’s missed earnings were put down to supply chain constraints and development costs, but what jumps out looking at the cash flow is the six billion turnaround in the company’s Accounts Receivable. One assumes this is the value of pending invoices on the new ranges of iPhones, iMacs and iPads sent out to their sales channel.

    If that’s right, Apple are looking at a big boost in their cashflow next month, although there’s few companies who would like to have five billion dollars in outstanding invoices in today’s economic climate.

    Once again though, Apple have managed to steal Microsoft’s thunder. Despite the glitz and glamour of the Windows 8 launch in New York, Microsoft’s announcement has been muted by the tech and business press’ reaction to the earnings reports.

    What is clear from all three companies though is that hand held devices – the Apple iPad, Amazon Kindle and Microsoft Surface – are going dominate the tech and financial coverage of all three companies for the rest of the year.

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  • Free content’s shaky foundations

    Free content’s shaky foundations

    Musician’s rights advocate David Lowrie has a takedown on his Trichordist of Pandora’s campaign to change the US music royalty payment system through the Internet Radio Fairness Act.

    Pandora and other online streaming services claim the current arrangement is unfair and puts them at a disadvantage to terrestrial AM and FM radio stations. Artists and record labels claim this is just a way to cut rights payments.

    David suggests that Pandora’s founders either lied about the sustainability of their business at the time of their IPO last year or are just being plain greedy.

    Regardless of what is true, or whether David is overstating the case against the IRFA, a truth remains that many Internet business models are unsustainable and Pandora’s may be one of them.

    Most unsustainable of all are those who rely on free content.

    Eventually the market works to filter out those who won’t pay for content – the good writers and artists move onto something more profitable, like driving buses or serving hamburgers, or they figure out they may as well control their own works rather than let some Internet company profit from their talents and labor.

    The website or service offering nothing in return for the contributor’s hard work eventually ends up distributing garbage – Demand Media or Ask are examples of this.

    In a marketplace where crap is everywhere, just pumping out more crap is not a way to make money.

    Those looking at investing in businesses which rely on free content need to remember this, if no-one values the product then you have no business.

    Sadly too many internet entrepreneurs, and corporate managers, believe the road to their wealth is through not paying artists, musicians or writers. They are the modern robber barons.

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