Friday, May 25, 2007

A Future for Newspapers

A Future for Newspapers
May 24, 2007; Page A17
Wall Street Journal

New technology is mucking up the media, and newspapers seem to be taking the brunt of it. Craigslist and eBay took away classified ad sales, direct advertisers are allocating budgets to search engines and circulation is receding faster than Bruce Willis's hairline. Investors seem to prefer the safety of television broadcasters and cable companies, with their nice, government-mandated franchises and pipes that reach directly into homes.

Media, after all, is about owning a pipe -- some conduit between the creation of news or entertainment and the eyeballs that consume it. Media companies sell the owners of those eyeballs lots of things we weren't even sure we needed. The higher the ad rates, the better the business. The pipe reaches the consumer directly, keeping competition at bay. The tighter the pipe, the less the competition.

For broadcasters, the pipe is spectrum given or bought from the Federal Communications Commission under the guise that spectrum is scarce. For cable operators, it is often the sole cable franchise in a town. For phone companies, it's those regulated copper wires, some of which are so old they have Alexander Graham Bell's teeth marks in the insulation.

And newspapers? Where's the pipe? What conduit to readers do they control? Well, there is the guy that drives up and somehow misses your driveway every morning. Or the sidewalk newspaper dispenser where the homeless man buys one copy and steals the rest so he can peddle them on street corners. So unless you are the only paper in town (ask Warren Buffett how much he makes on monopoly papers like the Buffalo News), there is not much of a pipe to control. Instead, reputation, quality news gathering, trust and credibility maintain the franchise, something The Wall Street Journal and the New York Times enjoy on a national level and the Washington Post and others have locally.

But so what, it's all over, right? The Internet has destroyed newspapers' business model. If Google News doesn't kill them, blogs certainly will. Hmm, maybe not so fast.

Last I checked, the Star Trek Holodeck, despite a Wikipedia entry, is still fiction. No one is teleporting a newspaper to your home anytime soon. Unlike music which can be copied once and stolen a million times, newspapers live in the material world. Thankfully, as an author, it's the same for books. Even a 30-inch screen can't match the readability of what cheaply spits out of a printing press. I really believe that the copy protection mechanism for newspapers is their consumer interface, in the form of ink spurted on newsprint. Newspapers are scrambling to embrace the Web. Paid subscriptions, blogs, it's all a grand experiment on how to monetize their expensive news-gathering organization. But thanks to a form that's hard to duplicate, newspapers still have time.

In the meantime, rather than just charge for content, I'd be licensing every type of newfangled software and Web service until I could come up with a tight community of interest around my newspaper, local or national. Don't just start the discussion, keep it. This means comments, reviews, personalized newsfeeds, social networks of like-minded readers, whatever. Give advertisers a little "link love" so they don't stray to generic search engines. Google, Microsoft and others dropped over $10 billion to buy online ad-delivery companies in the last few weeks alone. The value is there: Newspapers aren't in the printing business, they're in the ad business.

Technology is making things even more difficult for television and video as well. As technology advances, broadcast pipes leak like a sieve. TV these days, like it or not, is like music. The good news is that it's delivered electronically. The bad news is that it's, well, delivered electronically. Six megabit broadband and 250 gigabyte hard drives are wresting control from those who think they have it. Broadcast is about central control: pumping out signals from giant antennas in the middle of town or from cable "head ends." The Internet is about moving packets around from hop to hop until it gets where it needs to go. No central control.

The real dark cloud is technology known as peer-to-peer (P2P) bubbling up from the underground that leverages this architecture. Here's how it works: I might have a copy of this week's "American Idol" on my hard drive. You want a copy, you stream it from my PC, not FOX. Then you share it with five or six people that are close to you geographically so it gets to them quickly. They share as well, and on and on. Live video streams like a virus, which means once started you can't stop it.

Cable may be the first to get flushed. The industry pays bribes in the form of franchise fees to local municipalities to be the only game in town. Telcos like Verizon and AT&T have lobbied hard to change video franchising rules. Verizon has had some success in Texas and, on March 1, the California Public Utilities Commission streamlined the rules to open up video distribution to competition. New services like Verizon's FiOS fiber to the home may finally become a reality. Another pipe in town! Add to that the proliferation of municipal Wi-Fi rollouts and other entrants like Craig McCaw's ClearWire. Price war anyone? The fact that Comcast and TimeWarner are carrying more debt than a condo-owning subprime borrower means this could get ugly in a hurry.

But what about guys who own networks and create shows? Are they safe? Well, if they decide to harness technology, they can license channels like ESPN and/or shows like "Grey's Anatomy" to all comers on the distribution side. But this is easier said than done. Network affiliates still think in 10 p.m. time slots and cable operators insist on exclusives. P2P -- the same stuff Skype uses to bypass the old phone network -- may change the definition of a TV network.

BitTorrent and eDonkey are the top P2P networks and half the usage is for TV shows. P2P hogs something like 35% or more of all Internet traffic. Thirty-five percent! But to replace cable, it has to be real time, and there are tons of real time P2P players, especially out of China: TVU, SopCast, PPMate. As I write this, I'm watching ESPN on my PC, denying Disney another outrageous $2.30 per month they charge me via Comcast. Just as the iPod opened up stolen music to the masses, devices like Apple TV mean I can stream to my wide screen. Is this Napster redux? It might well be. TV is no longer the safe cuddly business it once was.

Lots of painful restructuring is still ahead. But it's worth noting that Rupert Murdoch would bid to expand his newspaper empire. Perhaps he sees the same pipe-busting in the future of TV.

Mr. Kessler is the author of "The End of Medicine" (HarperCollins, 2006).

BoSacks Speaks Out: MRI Audience Numbers

BoSacks Speaks Out: OK, Call me a skeptic, call me a curmudgeon, you can even call me a dinosaur, but don't call me a believer in the lost city of Atlantis or absurdly grotesque phantom circulation figures. Even if it's true that that the statistics say that Handgun Magazine gets 47.1 readers per copy, it ain't so. That is more than one new person reading each printed copy every day of the month. Are these office copies left in some doctor's office? Perhaps they are from the firing range. I get it, it's the guys sitting around the 'ol cracker barrel sharing their single copy of the magazine. Sorry, I just don't buy the premise.

"I'm not going to lie. . . The only stat that counts is if you win games. I understand that, but still, I don't want my stats to look bad or not be up to par."
Michael Vick

First Half 2007 MRI Audience Numbers Released

By Bill Mickey

Small-circ enthusiast magazines have astonishing reader-per-copy rates.

Top-line spring readership data detailing circulation, audience and readers per copy for 254 titles for the first half of 2007 were released yesterday by media and consumer research firm Mediamark Research Inc. (MRI). The data presents an interesting opportunity to examine the relationships of these numbers. For example, according to MRI's data, there is a huge disparity between readers per copy figures for small enthusiast magazines and large mass-market titles.

The widest stretch from circulation to readers per copy, according to MRI, belongs to Handguns, which has a circulation of 114,000 and an astonishing 47.15 readers per copy, bringing total audience to 5.4 million. And, in general, the smaller enthusiast publications dominate in readers per copy, with the top ten titles in this category below 300,000 circulation.

But MRI arrives at the reader per copy category by dividing audience figures, which MRI generates, into circulation figures, which ABC or BPA provide. "We're pulling the audience [data] from our own study. We're pulling the circulation from either ABC or BPA, and we're dividing the readers that we obtain from our survey by the claimed circulation," says Julian Baim, chief research officer at MRI. "Handguns, for whatever reason, that number is on the exceptionally high side. We measure audience and then we take the circulation statement from either ABC or BPA and we take one and divide by the other."

Baim says that MRI measures audience by surveying consumers across a number of factors, including subscribers, single-copy purchasers, pass-along readers and public-place readers.

The figures in the report do not include electronic or digital copies of the magazines as reported on ABC statements. And Circulation figures are based on ABC and BPA publishers' statements.

Also interesting to note: AARP The Magazine, the largest circulation magazine in the U.S. at 23,171,000, has an audience of 31.5 million. Yet Meredith's Better Homes and Gardens, at a 7.7 million circulation, has an audience of 38 million. This is because AARP is almost flat in their readers per copy category at 1.36, according to MRI figures, while Better Homes and Gardens has almost 5 readers per copy.

In a separate release, AARP The Magazine compared its 31.5 million audience reach to YouTube (30 million U.S. audience), iPods (30 million units sold) and The Oprah Winfrey Show (30 million viewers).

Wednesday, May 23, 2007

BoSacks Speaks Out: Shred Of Dignity

BoSacks Speaks Out: Isn't life strange? Just when I think I have it all figured out, which is on most days, something happens to let me know that I have a lot more to learn. In this case it is the reactions of some of my readers to comments made in the press by Samir Husni. I have received many letters, some in support and most in an opposite camp, but all reacting the story about US magazine outing falsification in celebrity journalism.

I thought it was an interesting set of journalistic circumstances, and surely worth reporting on, which I did. But I really didn't expect the negative reactions to Samir's comments. Here is another take on the ongoing dialog. I will reprint some of the letters in the next few days. I would be very curious as to your reaction. Here is a link to the original story Tab Wars: Breaking News or Faking News? What do you think?

"Heav'n has no rage, like love to hatred turn'd, Nor Hell a fury, like a woman scorn'd"
William Congreve

Shred Of Dignity
Posted by Matthew Rettenmund
Us Weekly has launched a new feature called "Faux Biz," exposing patently untrue (but commercially compelling) stories in tabloids like Life & Style, In Touch, Star and OK! I love it. It's like when I was a kid and first became aware of commercials for Coke that slagged off Pepsi, and as a publishing professional, I feel like a hetero hubby witnessing a catfight. Me-OW.

Aside from the thrill of bloodsport, Us editrix Janice Min's position is that the feature is being done to underscore Us's journalistic integrity. But Us seems to be calling bullshit on all of its celebrity-magazine competitors...could "Faux Biz" not be construed simple competition-bashing?

In this article, Min's position is crystal-clear: "When the business of reporting on celebrities is attached to these copycat publications that fabricate stories, yes, it was a conscious decision to clarify Us's position." She goes on to make a distinction between making and faking news while acknowledging that she isn't exactly working for The New York Times. "Us Weekly is fun, it's addictive, it's light, but it's definitely a news magazine, and it absolutely covers the celebrity industry."

I think she has a valid point. Hard-news sources tend to disdain popular culture and the cult of celebrity to the extent that basic journalistic standards are cast aside. How many times have I read legit reviews or summaries of the ups and downs of the famous that are riddled with glaring factual errors? All Min is saying is that Us's subject matter might be fluffy, but there is no reason its contents should not be truthful. Gossip is not a lie; I define it not by the correctness of its facts but by its focus on other people's business.

Original Min

I was shocked to read (in the same article) "Mr. Magazine" Samir Husni's take on "Faux Biz," on celebrity magazines and on magazines in general. I lost a lot of respect for his opinion-and that's saying a lot considering he's quoted in almost every article about magazine publishing.

First, he claims that "Faux Biz" is bad for magazine publishing because it's about warring publishers and not the reader. I don't completely agree, but it's not hard to imagine readers becoming disenchanted. For one thing, I'm sure even a lot of adult readers don't quite understand the rivalry between similar titles.

But if Min might be taking her magazine more seriously than anyone else does (as it should be), Husni has no respect for it at all. "[P]eople are not picking up those magazines looking for the need to know the truth. Magazines are more like Prozac for the readers, these are disposable items."

He is basically saying Us Weekly is no better than Weekly World News, a faux-biz tabloid that has argued in court that nobody is expected to believe its contents.

Yes, but did Britney find it?

I find this shocking. For every interesting point Min brings up (she thinks celebrity journalism is to women what sports journalism is to men), Husni comes back with a complete disregard for the industry he studies. Calling tabloids like Us soap operas in print, he says, "The whole thing is like a movie, it's Hollywood in print, and do you believe every movie you go to watch?"

This is an ignorant point of view. First, no, I don't think people read Us Weekly to get hard news, and yes, Us itself gets things wrong. But I definitely think that people reading Us have an expectation that while not all of the claims made by the celebrities inside may be true, the editors of the magazine are not willfully making things up or printing completely unsourced statements. The worst part of what he is suggesting-that there is no room nor is there a need for truth in celebrity magazines-is that even though the people in Us and In Touch and the others are real human beings, he feels it's perfectly okay to make up stories about them for the entertainment of the masses. It's all "fun," in his opinion.

This contempt for celebrity (and celebrities) is at the heart of why serious news organizations are always getting it wrong in regard to those kinds of stories. Is it really such a bad thing that the editor of the #1 celebrity magazine is embracing the truth along with humor and gossip?

Husni's comments are only valid from a strictly business point of view. If the human factor and if the ethical factor are removed, what he says might be true-that Us calling out its rivals might just make its own readers curious to give them a try, that warring magazines might turn off consumers, that readers at once crave and look down on the media. But it's irresponsible and the height of cynicism to make every decision based on what the market wants. Without a modicum of decency and civility and humanity, magazines will serve no other purpose than to shred our idols, pulping our collective dignity.


"Any event, once it has occurred, can be made to appear inevitable by a competent historian."
Lee Simonson

The Digital Media Empire
by Joe Marchese, Tuesday, May 22, 2007 12:16 PM ET

THE DEATH OF PRINT NEWS is inevitable. Even with the timeline still very much in question, news printed on dead trees with ink that will come off on your hands, containing stories you'll never read, or interesting ones that were restricted by arbitrary print deadlines, already out of date in an age of instantaneous digital information access, sooner or later will go the way of the VHS. So what? If traditional media empires were really only differentiated by their logistical ability to distribute a physical good by a certain time every morning, then FedEx and UPS would have put News Corp. and Time Warner out of business a long time ago. Delivering the news means infinitely more than pushing paper. The pains currently being experienced by print news media are merely a result of massive economic misalignments as people adopt new methods of consuming news media -- while the appropriation of advertising dollars to new news media lags woefully behind. There are two main reasons for this. First, the development of advertising distribution technologies significantly trails news media distribution technologies. It's not advertising technologies' fault; even the most creative people need to see what new media distribution and consumption look like before they can invent methods for monetizing the medium. How long was search around before search advertising hit its stride?
The second major pain point for traditional news media outlets is the layer of complexity caused by major media organizations' dependence on brand advertising and brand advertisers' reluctance/inability to spend appropriately through new media. Not only are advertising/monetization technologies extremely insufficient to support "media empires" in their current form, but there needs to be a sea change in industry thinking, in the form of an entirely new currency and marketplace for media publishers to extract the full value of their services to people and advertisers.

At a macro level, people having roughly the same consumption demands, and having numerous options for satisfying those demands, should result in marketers continuing to dedicate a similar level of resources to influence people's consumption choices. This will mean leveraging decades of knowledge developed regarding brand building and brand equity. If the medium providing that influence opportunity is digital, then marketers' resources (re: dollars) will follow. And if the number of opportunities for delivering brand message through digital media is reduced and/or efficiency in message delivery is increased, then the market price for these opportunities will increase so that total dollars dedicated will remain constant (in the hypothetical "long run").

The ability for digital media to deliver influence opportunities (what markets have always bought) will rely solely on its ability to provide the same value it always has to the people. The real value-add services provided by a digital media empire will be the same as those provided by a "traditional" media empire: to satiate the need for information while maintaining journalistic integrity. The traditional media organizations have decades of experience doing this. Dow Jones and the New York Times have the organizational DNA necessary to continue to deliver the news, even if it doesn't mean delivering newspapers.

There will be extremely tough times ahead as traditional media organizations attempt to continue operations while a significant portion of consumer attention shifts to a digital medium that's only driving a small percentage of revenue. There will be the need to drastically shift operational expense structures. But the only people that can really destroy the true value of today's news media giants are the shareholders of said giants, by attempting to gut operational budgets to adjust to the short-run monetization capabilities of today's embryonic digital media economy.

Simply because the market has not figured out the appropriate currency and monetization method for digital distribution of news does not mean that the true societal value of the news organization has suddenly eroded. It just means there is a new storm to weather and climate to adapt to. And the prize for the fortitude and foresight needed to weather, and even take advantage of, the storm is the formation of the first digital media empire.

Joe Marchese is President of Archetype Media, developing the next generation brand advertising platform, and aiming to bridge the gap between Madison Avenue and Silicon Valley.

Ann Moore: 'Everybody Stay Calm'

"There is no sadder sight than a young pessimist, except an old optimist"
Mark Twain quotes (American Humorist, Writer and Lecturer. 1835-1910)

Ann Moore: 'Everybody Stay Calm'
Time Inc.'s CEO on Why Change Is Hard and Why Print Is Undervalued
By Nat Ives

New York ( -- Ann S. Moore, the top executive at Time Inc., the country's largest magazine publisher, today said that leading her company through its transformation into a multimedia player has been wrenching, both professionally and personally.

"Steering an organization through change is hard," she said. "You cannot lead change alone. You have to pick people who are different from you. You must nurture healthy debate." Distressing press coverage Press coverage of some elements of the transformation, like the closure of several news bureaus around the country, has also distressed Ms. Moore a bit.

"I'm so disappointed when I read in the press what a goofy thing it was to do to close six bureaus around the world," she said, suggesting that the move was about real-estate cost more than reducing editorial assets. So the question, in her lights, shouldn't have been, "Why would you shut People magazine's Austin, Texas, bureau?" "The question should have been, 'Why did she have a bureau in Austin?'" But all that said -- and with layoffs, several magazine shutdowns and a batch of magazine sales complete -- Time Inc. and the magazine business retain bright futures, said Ms. Moore, the company's chairman-CEO.

She spoke at a breakfast arranged by the Magazine Publishers of America. "You know, everybody stay calm," she suggested. "This is a great business we're in." Digital revenue growingAs proof, Ms. Moore described growing revenue at Sports Illustrated, for example, after "a decade of was pretty much flat." That's partly due to SI's success online, she said, pointing out that the brand's revenue contribution from digital has grown from 5% in 2005 to 13% last year to a projected 18% in 2007.

People magazine's website, only recently reclaimed from AOL, is growing wildly as well and now draws more unique visitors than any other entertainment site except TMZ, she said. "Trust me," she added, "there is a profitable business here." Ms. Moore also tackled a recurring topic of speculation, whether Time Warner may eventually spin off some or all of the magazine unit. "Despite what you read, we are not for sale," she said. In any case, she argued, the Bear Stearns report that has recently kept the subject alive undervalues Time Inc. "If you're going to spin me off, you better get a good price," she said.

Tuesday, May 22, 2007

Are Your Shoes Tied? Then You're Smarter Than Many Print Execs

"If you do not have brains you follow the same route twice."

Greek proverb

Are Your Shoes Tied? Then You're Smarter Than Many Print Execs
Ron Burkle, in Buying a Chunk of Primedia, Takes on an Industry That's Being Killed by Half-Wit Overlords
By Simon Dumenco

Who or what is really killing print? Craig Newmark? Blogs? YouTube, maybe? The internet in general? Or any of the other usual suspects?

Prints charming: Is Ron Burkle the savior print needs?
Photo Credit: Bob Riha

Nah, print is killing print. More specifically, a handful of half-wit overlords at many -- if not most -- big print-media companies are killing print.

I was thinking about this last week when the news broke that supermarket magnate (and Bill Clinton buddy) Ron Burkle had agreed to buy Primedia's enthusiast-media division, with its mostly cheesy 76 specialty magazines (such as Soap Opera Digest and Muscle Mustangs & Fast Fords), for $1.2 billion. I was a bit choked up (read: I felt ready to vomit) at the prospect of that epoch-ending transaction. You see, Primedia and I have a little history. As a former Primedia employee (back when the company still owned New York Magazine, and I was an editor there), I was around for the company's initial public offering, which I was graciously allowed to buy into at $10 a share.

Last week's price? Two bucks and change. Primedia announced its IPO back in 1995, when it was still called K-III Communications. At the time a Broadview Associates analyst declared that "K-III is at the forefront of the convergence between traditional and electronic media."

Ha! Not exactly. The corporate endgame, inspired by the lead investor, billionaire Henry Kravis, was always to sell out -- after asset-stripping via draconian budget cuts that (whoops!) invariably damaged editorial and business franchises throughout the company. K-III/Primedia was run by often underqualified, opportunistic M.B.A. types who had little interest in quality journalism or even, really, the webby future. Speaking of her corporate-level colleagues, one disgusted publisher at a Primedia-owned title at the time said to me: "They send these boys to Harvard and they can't even tie their own shoes!"

Primedia's stock did briefly run up, thanks to the 1999 arrival of NBC executive Tom Rogers (now chief of TiVo), who briefly seduced Wall Street with overheated Web 1.0 pronouncements. But when Rogers' "vision" turned out to involve mostly bleeding print publications dry while making room for bone-headed acquisitions such as short-lived (the "first apartment-building specific portal"!) and amateur-hour information site (which is now underperforming for its equally clueless current owner, The New York Times Co.), Primedia's stock cratered -- and never recovered.

Now, you could say that Primedia quickly became the laughingstock of the industry. Only problem is, the print-media business was filled with laughingstocks (remember Gruner & Jahr USA, which specialized in ruining storied brands such as McCall's?) and continues to be to this day.

An internet-company executive I know says of his vague and mysterious job: "I create value." That's an M.B.A.-enabled, blowhardy thing to say, of course, but he means it -- and when he says it, it occurs to me new-economy guys like him are at dead odds with many print-media executives these days, who seem to specialize in destroying value, even as they pay lip service to the "convergence of traditional and electronic media."

Worse, the print-media industry is not only filled with f--k-ups, it coddles them. In what other industry, for instance, would David Pecker, chief of tabloid publisher American Media (Star, National Enquirer, etc.) -- who has mocked his bond holders by time and again missing the deadlines for reporting his company's sorry-ass earnings -- still have a job?

I'm talking industrywide mismanagement among print-media companies -- both glossy and newsprint. I'm talking Detroit-in-the-'70s, with no Lee Iacocca in sight.

Maybe Burkle, coming as he does from outside the media business, fancies himself a potential industry savior.

Godspeed to you, Mr. Burkle. If you can tie your own shoes, you're that many steps ahead of the game.

Print Publishes Counting On the Web

"Advertising in the final analysis should be news. If it is not news it is worthless."
- Adolph S. Ochs

Counting On the Web
Fernand Zacot/Getty Images

By Jennifer Saba

Editor and Publisher Magazine
Published: May 22, 2007 10:17 AM ET

NEW YORK Arthur Sulzberger Jr., chairman of The New York Times Co., was attacked by media hounds last year when he casually remarked that he didn't much care if his flagship paper appeared only on the Web in five years. While Sulzberger knows that pulp isn't going to the scrap heap any time soon (and he has long avowed that he is "platform agnostic"), his comment still managed to stir debate over pushing more resources to the digital side in hopes that it can serve as a lifeboat for a slowly sinking industry.

As print-ad revenue stalls (flat is the new up!), online revenue is growing by leaps and bounds. Much has been written, including in these pages, about the need for online revenue to represent more of the top line. But how can this happen? There is still no universally accepted norm for measuring Web audience, targeting techniques are still not widely adopted, and experiments in paid content are so few and far from resounding successes.

Web audience, at the moment, is counted in myriad ways with mixed results. There are some in the advertising community who maintain that audience data, just like circulation, should be audited. Ultimately, advertisers pay based on the cost per impression, but overall Web traffic still provides a good measuring stick.

Meanwhile, more publishers are recognizing the beauty of online by targeting ads to those readers who might be more inclined to buy a product or service. Behavioral targeting -- or as one executive who spoke to E&P called it, "BT" -- is a way to add effectiveness, and advertisers are willing to pay more for the direct hit.

The New York Times and The Wall Street Journal are the two major players currently charging for content on the Web in a serious way, with a degree of success. But as publishers keep announcing plans to establish newspapers as the hyper-local authority, there might be more room for Web sites to charge for specific content.

Running the numbers

Audience numbers, often slippery, can get even more so when applied to the Internet -- that great measurable medium boasting reader data that was once expected to be as cleanly sliced and diced as a tomato under a Westhof knife.

But last year, two sites saw their audience data reduced to a pulpy mess when third-party online audience measurement outfits slashed the number of unique users at and Nielsen//NetRatings (owned by E&P's parent, The Nielsen Co.) initially counted pop-up windows that had snuck into's traffic. ComScore Media Metrix then re-evaluated how it counted global traffic, which affected sites including

This, of course, raised nowhere nearly the same stench that settled on newspapers when a handful of metros fraudulently pumped up their circ. But there were reverberations. Advertisers and publishers alike are taking note of how online audiences are measured, and that can have future implications for newspapers badly in need of explosive growth in online revenue.

A quick primer: Web audience data can be tracked internally either with custom-made tools or with software from companies like Omniture, which ticks how many people come to a particular site by analyzing server logs. The software "tags" each Web page to show who's visiting.

There are third-party research firms -- the two major ones being Nielsen// NetRatings and comScore Media Metrix -- that also track audience data. Both research firms measure Web audience by surveying a randomly selected panel of Internet users. Members who participate download software that follows Web use either at work or at home. Audience numbers are then extrapolated.

Since readers can be counted in a variety of ways to varying results, advertisers are starting to call for more transparency about the data-gathering process.

The Interactive Advertising Bureau (IAB), an organization that represents more than 200 members responsible for selling over 85% of the online advertising in the U.S., said that big-name advertisers -- among them Ford, BMW, HP, Pepsi, and Visa -- will demand audited numbers from Internet publishers this year.

"There is an inconsistency in the numbers," says Sheryl Draizen, the IAB's senior vice president and general manager. "That's why it's an issue. We will never understand where the difference comes from unless there is transparency in the methodology."

Besides, she points out, "Every other medium that deals with audience metrics gets audited."

The Audit Bureau of Circulations is following suit -- surely sensing the decline in paid print circulation and newspapers' mad dash for the Web -- and is making a push for newspaper Web sites, along with others, to join the auditing process through its interactive division, ABCi.

"In general we have seen a modest uptick from our membership in Web site verification," says Neal Lulofs, vice president of corporate communications at ABC. He says that roughly 60 newspapers of all manner and size use ABCi to audit traffic.

In a nutshell, ABCi verifies a Web site based on the results of its internal logs, reviewing its server-content files and removing spiders, bots, and other types of software applications that run automated tasks that could skew the numbers.

To help bolster this division, ABCi released a study -- conducted by NSON Opinion Research -- with the heading, "Online Accountability: Gauging the Growing Demand for Audited Web Metrics." The research found that 68% of advertisers and agencies would prefer to advertise on Web sites that are audited, versus those that aren't. When asked to project their preference over the next three years, that number increases to 76%.

The disparity in data-gathering methods and results among Web-measuring outfits is astounding. The September 2006 audience data for the San Francisco Chronicle's Web site,, fluctuates wildly depending on which firm is doing the counting. An ABCi audit shows the site had 7.6 million monthly unique users, while comScore said it was 2.4 million. Meanwhile, Nieslen// NetRatings tallied 3.7 million uniques.

That's not an isolated example. At the Houston Chronicle, ABCi reported the paper's monthly unique user count in September 2006 as 6.5 million. ComScore said 2 million; Nielsen//Net Ratings reported 3.5 million.

For now there is little urgency among newspaper publishers because, in a classic chicken-and-egg scenario, many local advertisers haven't raised much concern. Of audited Web metrics, Howard Owens, director of digital publishing at GateHouse Media, succinctly puts it this way: "It's a solution in search of a problem."

Owens explains that variations in tracking audience haven't hamstrung the pitch during sales calls, since advertisers and publishers can triangulate how many people are coming to a site. Advertisers pay for a certain number of "impressions," and get them, no matter the site's overall traffic.

"I have talked to advertisers, especially local advertisers, and they are not demanding [Web audits]," Owens adds.

Caroline Little, CEO and Publisher of Washingtonpost.Newsweek Interactive, says while she doesn't hear of any pushback from advertisers about audits, there is some confusion in the industry. "We have a lot of .gov users that don't get counted" in the Washington Post's traffic numbers, she says about third-party measurement firms. In general, she says, it's a problem when compares itself with another site that might be using a different method to track audience.

But as long as publishers are up front about how audience metrics are obtained, they shouldn't run into trouble. "I think that is the value in going with a leader in Web measuring," says Michelle Strong, audience development and national sales director at Belo Interactive.

She says that there are benefits to audited metrics: "I applaud the efforts of IAB and other organizations really pushing for standards. It allows us to speak from the same script."

If national advertisers and agencies start making noise about such matters, more newspapers will revisit an auditing procedure, says Randy Bennett, vice president of audience and new business development at the Newspaper Association of America.

"In this environment there are so many different media conversing on this platform that it's not a newspaper decision, but [organizations] like the IAB and some others who are driving the standards forward," Bennett says. "The newspaper industry will comply with those standards as they emerge. If it will give us a leg up, the newspaper industry would take the lead on it."

Even ad agencies concede that audited Web sites are not top-of-mind. "It should be a big deal, but it's not right now," says Shawn Riegsecker, CEO and founder of interactive agency Centro.

Though taking action to audit numbers is barely at a simmer now, it could reach the boiling point in the near future -- something that publishers, advertisers, and ABC acknowledge.

David Verklin, CEO of advertising agency Carat Americas, explains it's currently not a pressing issue, but it will be when more money floods to the Web. U.S. online advertising is projected to grow to $32 billion in four years from $17 billion in 2006, according to Merrill Lynch. And it's something that national advertisers -- an area of weakness for many newspapers -- want.

"There is so much data available, and [for] the clients, there is an assumption it's accurate and unbiased," says Verklin. "That may not be an issue with spending at 4%, but it is when it reaches 20%."

So as advertisers shift more and more dollars to the Internet, the importance of standardizing data will become decidedly more apparent.

Verklin concedes that advertisers and publishers are still in the early stages of pushing for Web audits, but that he doesn't know of a single client that is not planning on increasing its online budget: "With that as a frame, one begins to see why audited metrics become a little more important. We are talking about real money."

Targeting audience

Newspaper executives, meanwhile, are crossing their fingers that they will be able to seriously increase their online revenue share during the next few years. Most companies report that Internet revenue represents anywhere from 5% to 10% of the top line -- which isn't bad, considering it was a pittance not so long ago.

Or as Gary Pruitt, CEO of the McClatchy Co., responded in late March when asked about online revenue by the New Yorker's Ken Auletta during a panel sponsored by Syracuse University's Newhouse School in New York on the future of newspapers, "It used to be online audiences were worthless to newspapers; now we are making money."

Now, the rush is to make more of it, and fast. One way in which some newspapers have added to their online revenue is by using the Internet for arguably its strongest application: targeting. Web sites can aim ads at highly specific audiences, and in the process charge more.

For example: A car dealership wants to place an online ad in the auto section of the site, but the section is sold out. It can then choose to place the ad so that readers of the auto section who also visit the business section will see the ad -- but only those who first visited the auto section, not every business-section reader.

This is referred to as "behavioral targeting." As Verklin of Carat Americas describes it, "It's one of the greatest opportunities newspapers have. It's the future of where marketing is going." And he's willing to pay a higher cost-per-thousand (CPM) to get it, and effectively weed out waste.

Michael Mathieu, president of the Internet division at Freedom Communications, is employing online behavioral targeting. He came to the Irvine, Calif.-based company last summer from the consumer site United Online (parent company of and NetZero). "When I got here, most of these papers still had the mentality that online was like print," he says.

Mathieu cites one example of the effectiveness of behavioral targeting, describing a mortgage company that wanted to advertise in the financial section of one Web site. The site positioned the ad in general news, but targeted only those readers who also visit the financial section.

It's not dissimilar to's approach, in which the book purveyor tracks purchases and then "recommends" future books based on the titles that were bought.

"For key verticals, it works well," says Mathieu. "We would hope to have the goal to be in the position to [target] every piece of our inventory." He recalls that one advertiser claimed a 22% increase in his return-on-investment by using behavioral targeting.

When using BT, the cost of pinpointing ads increases as well. For each level of targeting, Freedom Interactive can up the CPM by $5. For example, it might cost $12 to place an ad on the site. The paper could bump that up to $17 to include behavioral targeting, or $22 if the advertiser requests a profile with more details of who is visiting.

"I don't think it's a silver bullet. It's another tool that we use," says the Washington Post's Little. Her paper does target ads by behavior, and she says that it helps with inventory management and in reaching its target demographics.

Belo Interactive's Strong says the company has seen some success with behavioral targeting, but not all the company's sites could take advantage of it. (Belo uses the popular third-party behavioral advertising network Tacoda.)

Because Belo penetrates so many markets of varying sizes, sometimes BT worked and sometimes it didn't. Strong says that for behavioral targeting to be successful, the audience needs to be large. "The larger your site, the more audience you have to carve into segments," she explains. "Our larger markets are having success, but our smaller markets don't share the same success. That why you see the trend of audience networks."

Strong explains that for Belo's bigger metros, it's worth it, especially in certain categories. Auto and travel advertisers in particular take a shine to it. And, better for Belo, the company can command 20% to 50% higher rates for the effort.


It's been more than a year since the New York Times launched its online daredevil experiment Times-Select, introducing new content but in the process walling off the paper's marquee opinion writers.

In March, the company reported that 442,060 home-delivery subscribers signed up for free for the service, while 213,900 are online-only subscribers (or 30% of the Times' total subscribers). For 2006, the company reported that it snagged $9.9 million from TimesSelect purely from subscriptions.

Vivian Schiller, senior vice president and general manager at, calls the switchover a "big success. We are pleased with the results."

The New York Times has no intention of charging more for ads -- or even selling ads around the content, according to Schiller. While there is advertising on TimesSelect (a banner for Netflix, for example), that is not the company's primary focus. For now, TimesSelect makes money from its subscriber base.

She says the company has "no regrets" making some of its content paid. Others, including industry players and observers, aren't so sure it should feel that way.

"I think at this point, it's a middling success," says Ken Doctor, an affiliate analyst with Outsell Research. But he hails the Gray Lady for proving it can stand in the marketplace with its hybrid model of partly paid online content.

For the most part, the New York Times is testing the waters while other newspaper publishers are unwilling to get their feet wet. "It's another instance where the Times is showing a kind of leadership in the industry and is willing to do something in a full-fledged way without fear or indecision," says Bruce Murray, co-founder and CEO of research firm Corzen. "But I think the jury is still out on whether it will work or not."

The other newspaper making the paid-content model work is the Wall Street Journal. But over time, the paper has been pushing more of its content from behind the pay wall. The paper is generating free blogs and videos while being more "courageous" with search engines like Google, says Brian Quinn, VP of advertising sales and marketing for Dow Jones Online. But he adds that the site remains bullish on paid.

It's not surprising that is unshackling some of its content, since the site is trying to grow advertising. At the moment, gets more revenue from subscriptions (about 48%) than from advertising (about 42%).

The Washington Post considered a hybrid model as well, but put the idea on ice. Says Washingtonpost.Newsweek Interactive publisher Little, "I think the New York Times and we around the same time recognized that opinion really defines our publication. We found that users are really interested in that on the Web."

The Post took the opposite approach, however, keeping that opinion free -- producing more blogs and video content, as well as interactive chats that have proven very popular with readers.

She says that since 90% of's readers come from outside the D.C. market, it would cut out an enormous chunk of online readership to suddenly start charging: "We want to grow the audience, and the advertisers will follow."

And advertisers are not necessarily willing to pay more for an ad behind a pay wall. It's easy to believe the print standard would apply to the Internet -- that advertisers value paid print products over free ones -- but that is not the case. Says Carat Americas' Verklin, "Publishers will have a hard time convincing us that we should be prepared to pay double the CPM in that space" -- meaning ads running in the paid-content areas. "Will the user in the walled garden pay more attention to the advertising? Probably not."

Even when publishers "own" a specific coverage area, that valuable content might not turn out to be quite as valuable once a price tag is attached. That's what The Dallas Morning News found when executives decided three years ago to put the paper's coverage of the Cowboys -- the patron saints of the Big D -- behind a paid wall. The paper made some stories about the football team free, but charged for columnists and multimedia coverage. Readers could access that material by paying $40 a year or $10 per month.

The results, says John Granatino, assistant general manager at Belo Interactive, "were not extraordinary," and in December 2006 the paper punted on the idea. The audience was too small to justify a subscription fee, and there was very little advertising revenue gained on paid content. Although the Morning News is benching the concept for now, Granatino admits paid content could make a comeback.

"We will always look for opportunities," he adds, upon further reflection. "Publishers are in challenging times. We're always looking for ways to get money."

Disney CEO Discusses Future of Media

"There is more treasure in books than in all the pirate's loot on Treasure Island."
- Walt Disney

Disney CEO Discusses Future of Media
Iger explains lack of response to Hamas TV's Mickey Mouse look-alike

ANAHEIM, Calif. -- The traditional trip to the movies won't be entirely replaced by the Internet, or by new methods of consuming digital media, but the amount of time between theatrical and home release will continue to shrink.

So says Robert Iger, Walt Disney Co. chief executive. Of course, one would expect nothing less than movie-theater bullishness from an executive whose company has large sums riding on the fate of the third "Pirates of the Caribbean" installment, due out later this week.

That was among the subjects addressed by Iger at the Society of American Business Editors and Writers annual conference at the Disneyland Hotel in Anaheim on Monday. Iger fielded a wide range of questions from the audience -- unlike Bill Gates, who created a minor controversy at the same convention in Seattle two years ago when he was interviewed by a selected reporter on stage but declined to take questions from the audience of journalists.

Todd Bishop / P-I

Walt Disney Co. chief executive Robert Iger addresses the Society of American Business Editors and Writers annual conference at the Disneyland Hotel in Anaheim.

Like the Microsoft chairman, however, Iger had plenty to say about the future of media and technology. He also addressed the use of a Mickey Mouse look-alike on Hamas-run television -- saying that Disney was "appalled by the use of our character to disseminate that kind of message," but didn't feel it would have been constructive to respond to it publicly.

Edited excerpts from his comments:

On the growing role of the Internet in entertainment: "This is the first medium, or mass media, that we have seen that enables us to actually get to know who our customers are and, in some form or another, be in direct communication or touch with that customer.

"When people go to a movie theater, we don't know who they are. When they watch TV, it's rare that we know who they are. When they go into a Disney theme park, we get a sense for who they are if they've stayed in one of our hotels, but by and large, we haven't captured their names.
"So we finally have a medium, the Internet, that gives us the ability to deliver entertainment experiences and other experiences in a way that is two-way in nature. We really can have a dialogue with consumers on a global basis who are accessing product that the Disney Co. creates. And we believe that will be a powerful growth engine for this company going forward."

On the future of the movie theater: "I got myself in the headlines a couple years ago by making comments about making DVDs available at the same time that movies were available in movie theaters. What I really meant was I thought that we had to listen to the consumer and make content available more aggressively, which meant that I thought at the time that the window, meaning the time that movies are in theaters, would probably collapse and should collapse.

"I actually believe that the movie-going experience, when you go into a theater with a number of other people and see it on a big screen, is a good experience and an important experience for the business, and I don't think that should go away. And I believe it actually should be protected in a few ways. One, we should all be working as an industry to make the product more compelling, which means everything from digital theaters, digital cinema to just a better movie-going experience.

"But I also believe that the window to when it's available in the next form ought to be maybe a little shorter than it has been in the past, and we've seen some of that compression. It ought to be designed to continue to maintain value for both windows -- for what I'll call the home-video window and for the theatrical window. I don't think we're going to get to a point where everything is available at all times, but you will see, thanks to technology, a lot more available than ever before."

On the use of a Mickey Mouse look-alike on Hamas-run TV: "The (Disney) corporate machinery did not kick in, I think, in a way that you might expect, in a sense that we didn't mobilize our forces and seek to either have the clip taken down or make any broad public statements about it. Instead, a few of us spoke about it and thought about the situation carefully. One thing that was clear was that we weren't going to rail against the theft of our intellectual property. That seemed to be a bit absurd in light of the messaging that was being distributed using that character.

"Secondly, I didn't believe that us making a statement would do anything to either change the direction I guess Hamas was taking or to cause them to do anything differently. We're the Walt Disney Co., we're not a major government. So we simply made a decision that we would not either create or prolong a public discourse on the subject by making a loud public statement. We did speak with a few government officials but did not engage in the campaign to have the clip taken down. ...

"That said, we were appalled by the use of our character to disseminate that kind of message. I think any time any group seeks to exploit children in that manner, it's despicable. But it didn't seem as though it made sense for this company to make any loud public statement on that subject at that time. I just didn't think it would have any effect. I think it should have been obvious how the company felt on the subject."

On the future of digital media copy protections: "I believe that the best way to manage intellectual-property value, or protect it, is to make your product available as broadly as possible. I talk often about well-timed, well-priced to market.

"I think the biggest problem that owners of intellectual property have in today's world, in terms of piracy, is access -- meaning, when access to product on a well-timed, well-priced basis is not available, the technology that is available today enables people to gain access either without paying for it or under illegal circumstances. While I believe in using technology as aggressively as possible to protect -- filtering would be one great example of that -- we're never going to prevent piracy completely. ... Unless we put the product out there well-priced, well-timed, we're not going to ultimately attack piracy in an effective way."

On News Corp.'s bid for Dow Jones, and its potential impact on The Wall Street Journal, the Dow Jones flagship: "I have a lot of respect for News Corp. They are a significant competitor of ours in a number of markets, and I think they are a well-run company, and what I mean by that is not just operationally but, I think, strategically, and I applaud a lot of their efforts. They're not necessarily things that we would do, not because we feel that they're bad business decisions but because they just don't fit into either our own set of assets or our own company strategy."

"I find what Rupert (Murdoch) is doing, or attempting to do, with The Wall Street Journal to be very interesting, both from a business perspective and a consumer perspective. I certainly believe that the notion of creating a global financial news brand that not only occupies more space territorially but more space technologically is a sound one and an interesting one.

"But we're not looking to grow in the global financial news space, so it wasn't something that we would necessarily look at anyway.

"I'm not worried about who owns The Wall Street Journal. I read The Wall Street Journal, both as a consumer and as an executive, and I'm just going to hope that whoever runs The Wall Street Journal, owns it or runs it, is going to do so in a fair and balanced way. And until such time as I see otherwise, I'm not going to lose sleep over it. I'm sticking to our knitting, and if I have worries, which you'd expect anyone in this job would have at some point or another, it's not about that. ...

"But I watch with interest."

Time Inc to Launch Food Portal

Southern Progress Bakes
Southern Progress joins the culinary feeding frenzy, serving up a new portal in May called

BY Lucia Moses

For all the obsession with cooking shows, culinary schools and winery tours, the question still looms for most home cooks at the end of the day: What should I make for dinner? Many are finding the answer online. Of the 10 biggest food and cooking Web sites that were around a year ago,

eight have since shown double-digit audience growth.

Now, Time Inc. is looking to get a slice of the online pie with, a new food portal from its Southern Progress Corp. unit. The site, whose launch is set to be announced this week, serves up 25,000 recipes, pulling mainly from Southern Progress' Cooking Light, as well other Time Inc. titles, including Southern Living, Sunset, Coastal Living, Health and Real Simple. The site also offers daily menus and how-to videos and lets users create and share recipe and menu files with fellow cooks.

"It will let people find quick and easy solutions for everyday meals, entertaining, healthy how-to," said Michael Gutkowski, senior vp and general manager of SPC Digital, a new division.

The site grew out of Time Inc.'s strategy to grow its magazine brands in part by developing data-rich vertical sites, home/food being one of them. Gutkowski said Southern Progress plans to launch a home portal later this year.

Gutkowski said he expects MyRecipes to attract food ads as well as automotive, pharmaceutical, auto, consumer electronics and financial services, as part of print and stand-alone online buys. Launch clients include Hewlett-Packard, Weber Grill and GlaxoSmithKline.

To make MyRecipes one of the top-visited food sites, Gutkowski has a tall order; there are already nine sites with more than 2 million unique monthly visitors, per Nielsen//NetRatings (which, like Mediaweek, is owned by The Nielsen Co.). At the top is the Food Network, with more than 8 million uniques. Yahoo's food site, launched in November, now ranks No. 7, per NetRatings. Among magazine-related sites, only Reader's Digest Association's cracks the top 10, with 5.1 million unique visitors.

"It's a cluttered category," said Jeff Ratner, managing partner, digital director, MindShare North America, which has client Unilever advertising on MyRecipes. He said MyRecipes' ability to maximize search engines and be useful to users will be key to its success. "Utility is going to be critical." Ratner added that MyRecipes has a couple of advantages, though: It could leverage the Cooking Light brand and traffic to Time Inc.'s large network of Web sites, which Gutkowski plans to tap into.

Gutkowski said MyRecipes also would differentiate itself in a few ways. Southern Progress will create daily original video content starting this summer, initially animating Cooking Light's Dinner Tonight feature. Some food sites recycle TV video, with mixed success, but MyRecipes' video will be created solely for the site, he said. He also pointed out that recipes are kitchen-tested by experts, in contrast to many other sites, whose recipes are vetted by home cooks. The recipe search tool lets users search by 150 categories and will be upgraded in the fall to let people more effectively narrow their searches. The site also will offer robust social networking and user-generated content.

"Clearly the competition is stiff, and there are some really fabulous sites out there," he said. "[With] and CNN and Real Simple, I think there's some great integration points that will enable us to create great awareness and drive people back to MyRecipes."

Growth Demands From Publishers, Rise of Online Rivals May Cause Shakeout

Growth Demands From Publishers, Rise of Online Rivals May Cause Shakeout

By Nat Ives
NEW YORK ( -- Most of the attention to Condé Nast's Portfolio so far has wondered about its effect on the old-guard business magazines: Forbes, Fortune and BusinessWeek. In reality, Portfolio or no Portfolio, the market trends we can already observe suggest pressure for a biz-mag shakeout is building -- pressure that the scrappier players will feel far more acutely than the old behemoths.

Little guys like Smart Money, Money and Fast Company would likely be first the to go in a category shakeout.

Consider, for example, the challenges for Business 2.0, a smart magazine with a great editor in Josh Quittner. Its ad pages sank 7.7% in 2005 and slid 5.1% in 2006, according to the Publishers Information Bureau. This year ad sales are off to a terrible start, with pages off 31.6% through the May issue, per the Media Industry Newsletter. It may be profitable -- although people close to the title have expressed skepticism on that point -- but at its parent, Time Inc., even profitability isn't worth what it once was. Now the company wants all its resources invested in the highest-growth areas.

And it's not just the new Portfolio that established business titles must contend with, by the way, but also legions of young digital outlets drilling into all kinds of business subjects. One of them, DealBreaker, recently savaged Portfolio in a review and proved its own worth by breaking news on aspects of Rupert Murdoch's bid for Dow Jones. Business books are actually facing increased editorial competition from all sides (don't forget the ad dollars Fox News plans to vacuum up with its planned business channel), while advertisers are gunning hard for complex multimedia deals that encourage concentration of dollars with fewer outlets. Does that mean we're due for a category shakeout?

"It's happened before," said Brad Adgate, senior VP-director of research, Horizon Media, citing last year's annihilation of teen magazines. "But Fortune, Forbes and BusinessWeek have been around since the '20s and '30s, so I'd be surprised if one of them went anywhere."

The numbers show a bumpy ride for everyone -- just bumpier for some than others.

Three of the titles clock in with annual pages above 2,000: Forbes, Fortune and BusinessWeek. Their most recent ad-page totals for 2007 show declines of 2.1%, 13.3% and 11.8%, respectively, according to Media Industry Newsletter.

In the smaller tier, only Mansueto Ventures' Inc. and Fast Company showed gains, of 10.5% and 9.4%, respectively. In addition to the declines at Fortune and Business 2.0, Time Inc. has seen ad pages at Money fall 25.6% so far and Fortune Small Business lose 7.2%. The Hearst and Dow Jones joint venture SmartMoney slid 7.92%.

Consolidation toll
Andrew Swinand, president-chief client officer, Starcom Worldwide, said consolidation among technology and financial-services firms is reducing the number of advertisers in the business category. Those that remain can't do business with everybody.

"Unless you are a 360 player, you aren't competitive," Mr. Swinand said. "Unless you have the package of events and digital to complement the print publication, we're not really interested. Smaller publications who don't have as mature and developed 360 properties are going to continue to lose in the marketplace."

Forbes is one of the winners, relatively speaking, in that game. "There are more one- and two-book buys going on than I've ever seen," said Jim Berrien, president-publisher, Forbes. "Now everybody wants these bespoke complex, measurable, real, live marketing programs. And you know what? Thank God. Otherwise it's dull. The pressure comes on the companies that either don't have the resources in terms of channels or assets that are germane, or that can't execute for one reason or another."

Robert Safian, editor in chief and managing director at Fast Company, figures his kind of title is better positioned for changing times.
Photo Credit: Spencer Heyfron

To be fair, there are plenty of challenges facing the establishment business books as well, not least the rapid changes among consumers and the business world at large. Many people would disagree with Mr. Berrien's opinion that the unwavering Forbes "flagpole point of view" is an asset amid all the upheaval.

Robert Safian, who left Fortune in January to become editor in chief and managing director at Fast Company, figures his kind of title is better positioned for changing times. "The patterns are set up by big magazines because of where they've been," he said. "The questions about where business is heading, and where the motivations and emphasis will be in the future, creates challenges for magazines that are aligned with the way things are now. That's the opportunity that Fast Company has -- to define itself a little differently than the other business magazines."

Exhibit A
"That's not to say that the way that traditional business magazines have defined themselves is not still credible and important," he added. "It is, it's real; I'm still going to read them looking for those things. But there is a new sensibility that's emerging that they try to address but is harder for them to own."

We have an Exhibit A to suggest: the cover story about 20-somethings in the new issue of Fortune, where Andy Serwer was named managing editor last October with a bit of a change-agent mission.

Cover line: "'Manage' Us? Puh-leeze ... " Twenty-somethings have already noted, to start, that "puh-leeze" isn't quite their vernacular. Media blog Gawker also tore up the article's list of identifiers for the 20-somethings in question, such as iPods, digital cameras and designer coffee. "Look around you," Gawker's take-down said. "Is someone wearing big headphones? They may be a Gen Yer! Proceed with caution: They're likely to take your picture and put it on their blog!"

The one sure thing is that demand for business information, from stock prices to lengthy exposés, will always mean a robust category -- however it is composed. "A lot of people go online for financial information," said Mr. Adgate. "There are thousands of initiatives that the magazines are doing now online. There's a sense that perhaps they've created a brand by having a magazine, but the future may be online."

Staff cuts won't cure Publisher's Woes

"Putting out a newspaper without promotion is like winking at a girl in the dark -- well-intentioned, but ineffective."
William Randolph Hearst

Staff cuts won't cure S.F. Chron woes
BY Alan Mutter

As deep and traumatic as the pending cuts may be in the newsroom of the San Francisco Chronicle, the savings will make only a dent in the growing losses at the increasingly troubled newspaper.

When the Chronicle completes the planned termination of 100 members of its 400-person editorial staff by the end of the summer, the resulting headcount will be nearly 35% lower than the 460 journalists working for the paper two years ago.

Although the staff reductions will save an estimated $8 million a year in payroll, the amount will cover barely a third of the approximately $25 million that industry experts believe the Chronicle lost in just the first four months of 2007.

The operating deficit is significantly higher than the roughly $18 million the paper is believed to have lost in the same period a year ago.

The estimated payroll savings are based on the wage scales in the collective-bargaining agreement between the newspaper and the Northern California Media Workers Guild.

The escalating deficit at the Chronicle comes on top of the more than $330 million the paper has lost since Hearst Corp. bought it for $600 million in 2000. The purchase price doesn't count the additional $66 million that Hearst paid a local family to continue publishing its former Bay Area flagship, the San Francisco Examiner, to settle a suit trying to block the Chronicle purchase.

Thus, Hearst has invested more than $1 billion in an asset that would be on track to lose $75 million this year, if its current burn rate weren't arrested.

The Chronicle's losses result from the usual combination of weakening circulation, declining revenues, rising expenses and increased competition for the available advertising in the market from rival traditional and digital media.

While most other metro papers are struggling to sustain their typical robust operating margins, the Chronicle is one of the few big-city dailies that actually loses money every day it continues to publish.

The Chronicle's year-to-date deficit of $165,563 per day is roughly equivalent to the annual pay and benefits of two journeyman reporters. If the paper continued losing money at the same rate every day for the rest of the year, it could fire every journalist in the joint and still not break even.

With continuing uncontrolled losses of this magnitude, the Chronicle, if it were a standalone company, would be going out of business.

The only reason the Chronicle is still around is the continuing forbearance of the Hearst Corp., a family- owned, $7 billion-a-year media conglomerate whose other newspaper, magazine and broadcasting interests are sufficiently profitable to effectively subsidize the struggling newspaper.

Controlled by the descendants of buccaneering publisher William Randolph Hearst, the company's board includes individuals who have deep personal connections to the Bay Area and a pride of ownership in the Chronicle that transcends pure dollars-and- cents analysis. As such, Hearst may continue to support the newspaper indefinitely. Or not.

But the deteriorating economics of the business already have encouraged Hearst to take a number of radical steps to restructure it.

For one thing, the newspaper has conceded its former circulation dominance in Northern California. Although the Chronicle once boasted the largest circulation in the market, it has slashed its distribution footprint to eliminate unprofitable vanity circulation in distant counties.

The paper's average daily circulation of 387,533 in the six months ended March 30 is a far cry from the pre- Internet era. During my time at the paper between 1984 and 1988, for example, circulation peaked at an average of 618,621 copies per day during the week the pope visited San Francisco in 1987.

The Chronicle's circulation today is less than half that of MediaNews Group, whose nearly 800,000 papers per day encircle it on all sides.

In another unprecedented move for an industry infatuated by its thundering presses, the Chronicle has signed an agreement to outsource its production to a third-party printer. The deal will cost 230 unionized press operators their jobs when the new plant opens in 2009.

What's left? Perhaps the sale of the Chronicle's office building in a once-seedy neighborhood now gentrified by the likes of Nordstrom's, Bloomingdale's, a Marriott Hotel and a Sony entertainment complex. If the Chronicle sold this valuable real estate, which no longer contains any production facilities, the down- sized, white-collar work force could be relocated rapidly to a less-elegant part of town.

The plans for the Chronicle staff cut were revealed less than a month after a suit brought by a local civic activist scuttled plans by Hearst and MediaNews to collaborate on certain advertising and distribution initiatives. The two publishers hoped to raise revenues and cut expenses through the planned collaboration.

With that prospect seemingly off the table, the two publishers may go their separate ways in the Bay Area, notwithstanding their joint publishing investments in other parts of the country.

Or, they may consider trying to combine the Chronicle and the MediaNews properties in the type of joint- operating agreement that linked the Chronicle and Examiner until the papers were separated in 2000.

A joint operating agreement is a federally sanctioned exception to the antitrust laws that permits competing newspaper companies to combine their ad sales, production and circulation operations while maintaining independent editorial staffs.

JOAs, as they are called, are permitted under the Newspaper Preservation Act of 1970, when the petitioning publishers can demonstrate (i) that circulation sales and ad revenues are falling, (ii) that one newspaper has disproportionately less circulation than another and (iii) that at least one of the publishers is losing money.

Hearst and MediaNews each participate in JOAs in places like Denver, Detroit and Seattle, so the idea is not alien to them. On the other hand, they just settled a legal challenge to a less-ambitious co-operative venture in Northern California, so they may not want to go down that path again.

Because both companies have the financial capacity to stay their present parallel courses, nothing has to happen imminently. If the Chronicle can't fix its business, however, it seems only fair to conclude that something's got to give.

Monday, May 21, 2007

Time Warner to consider stock buyback, other options

Somewhere along the way, maybe at Jamestown, America decided the sales figures were going to matter more than the product."
Steve Johnson

Time Warner to consider stock buyback, other options
By Gina Keating SP/idUSN1821442820070518? pageNumber=2

LOS ANGELES (Reuters) - Time Warner Inc.'s chief executive said on Friday the board is considering another stock buyback and other options, but quashed talk of spinning off its flagship Time Inc. publishing business.

Shareholders of the world's largest media company also approved two proposals that give them more say over company matters, according to preliminary results at the annual shareholders' meeting in Los Angeles on Friday.

"We're considering (a buyback) along with some other options but we haven't made final judgment yet," CEO Richard Parsons told Reuters ahead of the shareholders meeting.

Time Warner had just finished a $20 billion repurchase program after it completed the transfer of the Atlanta Braves baseball team to Liberty Media this week in exchange for about 68.5 million shares of Time Warner.

The company had boosted the size of its buyback program last year after billionaire investor Carl Icahn agitated for change at the company. The company later agreed to raise its buyback to $20 billion.

Parsons said he was "not an advocate" of spinning off Time Inc., addressing Wall Street speculation.

"I like our publishing business, I like the magazine business and I like the fact that it's portable and can be moved into digital," he said. "I am not an advocate of selling Time Inc."

In recent weeks, Wall Street analysts have speculated on the possibilities of divesting in part or whole the magazine division, seeing it as a rational move following Time Warner's spin off of a partial stake in Time Warner Cable.

"This is something our board considers periodically," Parsons said of a company review of its portfolio, which also includes Turner Broadcasting and HBO.

Asked whether AOL would be competitive in the currently frenzied deal-making landscape without its own separately traded stock, Parsons pointed to two small acquisitions this week to help AOL augment its advertising business. "We have the capacity to fund whatever we need to fund," he said.


Two proposals that give shareholders more power were approved by a majority of holders.

Some 79 percent of votes cast were in favor of approving a measure to adopt a simple majority vote on company matters.

About 64 percent of votes cast were in favor of a proposal to give shareholders owning 10 percent to 25 percent of the outstanding common stock the ability to call a special shareholder meeting.

"Shareholder control over timing is especially important in the context of a major acquisition or restructuring, when events unfold quickly and issues may become moot by the next annual meeting," according to Time Warner's proxy detailing the proposal.

All 13 board of directors were re-elected to the board by more than 94 percent of the votes cast, Time Warner said.

Tab Wars: Breaking News or Faking News?

America is the only country that went from barbarism to decadence without civilization in between."
Oscar Wilde

Tab Wars: Breaking News or Faking News?
Us Weekly Has Launched a New Feature Aimed at Outing Competitor Tabloids' Alleged Inaccuracies
By BLAIR SODEN id=3188294&page=1

This year Brad Pitt and Angelina Jolie have been married three different times on three different continents, divorced twice and split for good after Oprah Winfrey organized a reunion show between Pitt and ex-wife Jennifer Aniston -- or so read the splashy headlines of American celebrity magazines.

In the top-grossing genre of celebrity media coverage, rumor and gossip are often mistaken for the truth. Now one title is on a crusade to expose errors inside its competitor's covers.

But in a country addicted to the Hollywood story, is fiction more valuable than fact?

From Breaking News to Faking News In early May, celebrity magazine Us Weekly began publishing a section called Faux Biz, in which it calls out false reporting from rival rags such as Life & Style, In Touch, OK! and Star. The two-page spread detailed errors in reporting since 2005 in the Pitt-Jolie story by Life & Style and In Touch.

"Brangelina did what? Nope, turns out they didn't. A look at two mags' twisted records," read the section's subtitle.

Us Weekly editor in chief Janice Min said the section was born out of necessity rather than spite.

"When the business of reporting on celebrities is attached to these copycat publications that fabricate stories, yes, it was a conscious decision to clarify Us's position," said Min.

A lot is at stake. In 2006, Min's magazine brought in over $250 million in combined circulation sales, while In Touch grossed just over half that amount, according to the Audit Bureau of Circulations.

Min said her title is being threatened by younger publications that value entertainment over reality.

"It seems that the imitation has gone to a place that's actually strange now," said Min. "Where Us Weekly had made its name breaking news, these publications have crossed the line into faking news."

Bauer Publishing, the parent company of both In Touch and Life & Style, declined to comment on the situation. Calls to OK! and Star were not returned.

Looking for Truth in All the Wrong Places Magazine analyst Samir Husni said all of this infighting is bad for the industry. He has studied celebrity magazines for the past 25 years and now chairs the journalism department at the University of Mississippi.

"It's unfair for Us Weekly to do this," said Husni. "It's going to hurt all of us in the end because this nitpicking and fights among these magazines won't do any favors for the audience -- they're losing sight of who's really important."

While Min maintains her magazine has a duty to its readers to reveal the truth -- Husni said that's not really what the audience is looking for.

"We are a nation addicted to that type of gossip -- people are not picking up those magazines looking for the need to know the truth," said Husni. "Magazines are more like Prozac for the readers, these are disposable items."

The Celebrity Beat
Min is trying to separate her title from this generalization. She said erroneous reporting wouldn't be tolerated in other industries.

"This world of following celebrities is to women what sports is to men, and nobody would ever tolerate this kind of conduct in those industries," said Min.

Us even calls itself a "celebrity magazine" in an effort to avoid the "tabloid" logo.

"Us Weekly is fun, it's addictive, it's light, but it's definitely a news magazine, and it absolutely covers the celebrity industry," said Min. "This is a beat that should be covered with the same journalism that you cover sports, education and finance."

Husni disagreed.

"We are the only country in the world who refers to those magazines as celebrity magazines, the rest of the world refers to these as gossip," he said.

"If you focus on truth and journalism in a medium that's not really geared towards truth and journalism, you will give the readers a lot of opportunity to explore other options," added Husni.

Disclaimer: This Story Is Only Based on True Events According to Husni, tabloids are like soap operas in print. Pitt and Jolie, or "Brangelina" as they are known in the tabloids, graced the cover of over 60 percent of celebrity magazine covers last year, and Husni said that whether the stories were fact or fiction doesn't necessarily interest the readers.

"The whole thing is like a movie, it's Hollywood in print, and do you believe every movie you go to watch?" he asked. "They add a little salt and pepper here and there, it's not a true representation and that audience actually understands that, they know they're reading something just for fun."

Min said this mindset and the alleged sloppy reporting of competitor magazines threaten the credibility of her publication.

"These magazines could turn the whole industry of celebrity coverage into a joke," she said.

But Husni said it's already a joke -- Min just has never heard the punch line.

"Sometimes those people take themselves way too seriously in an industry that's completely unserious," said Husni. "There's nothing serious about this business."

Reality Shatters Fantasy

Some analysts speculate Us Weekly's move to out competitors was less noble in its intentions and more about boosting slumping sales.

Min said that's not the case. Citing that overall revenue is up nearly 40 percent in 2007, grossing some $75.3 million with a circulation over 1,750,000 -- she said Us Weekly sales are hardly slumping.

And she concedes that Us makes mistakes too.

"None of this was undertaken to say we're never wrong," said Min. "Us Weekly is like every news organization -- makes errors and corrects them, that's part of news gathering."

Husni said Us Weekly's attempt to win readers with its decency may actually be insulting them.

"Give some credit to the readers, they're not dumb," said Husni. "This game will probably backfire on Us because the more readers hear about other magazines, the more they will want to go and pick them up."

Husni said staying out of it may be the best strategy to maintain readers. Credibility, he said, isn't synonymous with truth.

"Credibility is in the eyes of the beholder," said Husni. "The needs, wants and desires of the readers - - that's what credibility is."

Min said Us Weekly and parent company Wenner Media are not planning to stop the assault anytime soon.

On Friday the magazine launches another new section exposing the secrets of faking news. For example, how do magazines make stars look pregnant?

But will readers really care? Only time, and celebrity news, will tell if truth is more profitable than fiction.

Copyright © 2007 ABC News Internet Ventures

Hearst newspaper to publish on e-paper

HearstSeattle newspaper to publish on e-paper

US newspaper publisher Hearst has announced that it will trial versions of the Seattle Post Intelligencer on electronic paper within the next two years.

The 120 year-old company, which dates back to William Randolph Hearst's proprietorship of the San Francisco Examiner in 1887, will pioneer flexible colour LCD displays from LG Philips to deliver real-time daily news.

Articles carried on the electronic newspaper will be today's, rather than yesterday's, claim Hearst officials.

They hope to run the trials in other cities where Hearst publishes daily newspapers. The company owns 18 newspapers, 29 TV stations, 18 magazines and numerous websites in the US.

The electronic display will be a colour tabloid size (A3) screen the thickness of card, so that readers will be able to roll up the screen and carry it.

Turning the page, i.e. refreshing the screen with a new page image, will involve touching a pressure-sensitive control at the page edge.

While the screens will be made by LG Philips, they use technology developed by E Ink, a company in which Hearst invested when it was spun out of MIT a decade ago.