Chris Anderson Whipped by Long Tail

Chris Anderson Whipped by Long Tail
Says Ad Industry Actually Gets It
Posted by Andrew Hampp
http://adage.com/adages/post?article_id=125021
Chris Anderson is his own worst enemy. The editor in chief of "Wired" and the author of "The Long Tail," the most-cited marketing book of the last two years not written by Malcolm Gladwell, was asked at the end of his keynote speech at the Radio Advertising Bureau conference in Atlanta which sector of the media industry was succeeding in making a business out of the long-tail, that niche-heavy part of the business where there are no major breadwinners and loaves for everyone.

"The curse of my own book is that my biggest competition is the long tail," he replied. "[I compete] with 1 million blogs and social networks and micro engagements." His own industry, the publishing world, has "not really figured how to do it yet," he said. "We can launch web properties that are successful but very expensive, we have not figured out how to scale it down to very narrow competition."

The TV networks aren't doing very well, either, and for similar reasons. "They don't scale down to narrow audiences," he said.

But guess who Mr. Anderson thinks has made a boon out of the long tail? The advertising industry, of course. "In a strange way, the advertising business is the best example of an industry going down the long tail and finding a lot of growth and stability down there, to the surprise of everybody."

But it's no surprise as to who Mr. Anderson thinks is leading the pack. "That Google model, recognizing there was a latent demand for small advertisers with a small narrowly targeted audience, and the ability for that to be monetizable" is what the ad community has been able to execute the best, he said. "Google recognizes that in part with pay-per-click, in part with very low-cost advertising and content sites with an acquisition method that's basically software-driven, it's allowed the little guys whose sales force are now approaching them."

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Dennis to launch new digital mag
Stephen Brook, press correspondent guardian.co.uk
http://www.guardian.co.uk/media/2008/feb/12/pressandpublishing.digitalmedia
Dennis Publishing is following up its digital lads' magazine Monkey with the launch of consumer technology title Gizmo.

Gizmo, a free fortnightly digital magazine, launches on March 11 and, like Monkey, will be delivered to readers' inboxes.

The new digital offering will mix elements of magazines, websites and video to review and demonstrate products. Gizmo will target ABC1 men aged 25 to 45.

Gizmo: 'will create desire for the products featured' Dennis Publishing will target Gizmo at its database of 1.5 million male magazine readers of its titles such as PC Pro and Mac User, Computer Buyer and Custom PC.

"Delivered directly into consumers' inboxes, Gizmo will create desire for the products featured and will bring a genuinely new format to the category," said Bruce Sandell, the head of new product development at Dennis Publishing.

"The brand will be focused on immediacy, interactivity and innovation. We are bringing together the achievements in publishing Monkey, our digital expertise and Dennis's heritage in the technology sector to successfully launch Gizmo."

Ross Burridge, reviews editor at Dennis's PC Pro, and author of the Ultimate Guide to HDTV and Home Entertainment, has been appointed Gizmo's editor.

"We're bringing an exciting mix of broadcast, online and print to readers desperately in need of clarity," said Burridge.

"By bringing products to life directly on the page, you no longer need to trawl the maze of websites and magazines to find out what's really going on in the world of consumer technology."

Someday There Will Be People Who Don't Know There's a Print Version

BoSacks Speaks Out: As most of you know, I have been debating Samir Husni for years about the future of printed magazines and the ascendancy of the age of digital reading. It will be a generation, perhaps more, before print evaporates to an unaffordable collectors-only medium. But until then it is not an either/or situation. Printed niche publications will rise and prosper before they, too, fall pray to the inexpensive lure of commoditized epaper electronic distribution, also known as el-cid. So it is no surprise that we find the following quote in the article below:
. . . . Someday there will be people who don't know there's a print product."

"The time to repair the roof is when the sun is shining."
John Fitzgerald Kennedy (American 35th US President (1961-63), 1917-1963)


Time Editor: Someday There Will Be People Who Don't Know There's a Print Version
Stengel: 'We want people to be addicted to the magazine.'
By Bill Mickey
http://www.foliomag.com/2008/time-editor-someday-there-will-be-people-who-don-t-know-there-s-print-version

Time magazine's managing editor Richard Stengel opened the Direct Marketing Association's 22nd annual Circulation Day event today in New York with a keynote that largely addressed the magazine's relationship with the Web site. Recounting the last year and a half, Stengle noted the magazine's redesign, ratebase reduction, the new publication date and the Web site's expansion into a product that stands out as a separate, 24/7 news site.

Broadly, Stengel said the magazine needed to regain its status as a vital read, in a way that vaguely echoed the luxe leanings of other high-end publications. "We have to become a more premium product with beautiful paper and photography," he said. "Each medium needs to do what it does best. A magazine should be something you're addicted to."

The Web site, too, had, to Stengel, become static. "We were a traditional magazine Web site. We decided we should be a 24/7 news Web site."

While the two products should be complementary halves, Stengel added that they nevertheless offer two very different perspectives on world news-and lately have been downplaying the opportunities of driving the audience from one platform to the other. Focus groups revealed that readers didn't necessarily appreciate the callouts in the magazine to go to the Web site to see more information on a particular story, he said. "Why are we doing that? It doesn't make sense," said Stengel. "They should be two separate audiences. Someday there will be people who don't know there's a print product."

In 2007, the rate base reduction, a cover price increase and a redesign of the magazine contributed to the second most profitable year in the magazine's history, said Stengel. "It was during a time that we thought was going to be a transition year."
Raising the cover price by $1.00, Stengel said, increased newsstand profitability but also caused sales to contract "a little." Indeed, according to the recently released Fas-Fax report, single copy sales for the second half of 2007 fell to 107,277 from 133,084 in the same period 2006-a 19.4 percent decrease.

Stengel said that print has largely ceded breaking news to online and, as a result, has become the more analytical of the two platforms. "There's no news that breaks in print anymore," he said. "Print takes the facts and adds insight. Online is for the 'what' and print is for the 'why'. The magazine puts it in context and that's why we see them as complementary brands."

BoSacks Readers Speak Out: Why Do Good Magazines Die?

BoSacks Readers Speak Out: Why Do Good Magazines Die?

Re: BoSacks: Why Do Good Magazines Die?
I agree with your premise, below. My first job was with House & Garden and it was a heady time, with editors who had tremendous style and clout with the reader and the retailer and a publisher and ad sales staff who were nearly mythic in their ability to convince the advertising community that the House & Garden brand was essential to their media schedule.

The key here was the fact that the "brand" was presented as unique, and advertisers understood clearly what the brand meant, in terms of the emotional connection and importance it had to readers.

I wonder if that was the way the magazine was still being presented to the ad community - and if the reader also understood why they needed to have the magazine as well?

Many magazines believe that just because they have a product that comes out every week, or every month, etc., and appears on the newsstand, or in their customer's mailbox, that they have a "brand". That couldn't be further from the truth!

I think that unless and until the magazine moguls understand that each magazine needs to do what their own best advertising customers wouldn't step foot out the door without doing - and that is to make it clear what is unique, compelling and competitive about the magazine - and what the emotional connection the magazine uniquely has with the reader - we're going to see a lot more titles, old and new, go under. A magazine should be a brand, not a commodity.
(Submitted by a President and CMO)

Re: BoSacks: Why Do Good Magazines Die?
Yes, this is truly astounding. You have to wonder, "What were they thinking?!" They couldn't even sell the old lady onward to someone who saw an opportunity? Must be nice to be that fat, dumb and happy, but if I were a Condé Nast shareholder I'd be screaming bloody murder.
(Submitted by a Publisher and COO)

Re: BoSacks: Why Do Good Magazines Die?
Wow Bobby, taking on the Conde behemoth - you go boy!!
(Submitted by a Senior Publishing Consultant)

Re: BoSacks: Why Do Good Magazines Die?
Bo, the main reason of H&G closing is how Conde Nast manage circulation and advertising. All the income is based on advertising pages and just a little amount on circulation. If H&G had a "good paid circulation", like People or US Weekly, probably it would not had been closed.
(Submitted by a Senior Magazine Rep)

Re: BoSacks: Why Do Good Magazines Die?
Your comments about the unfortunate impact of the influence of youth are spot on. In support of that statement I offer an article in the latest issue of Scientific American discussing something called myelin. Myelin is the white matter underpinning the gray matter of the brain. To the best of my rather basic understanding, the gray matter is a network of firing neurons performing data processing tasks and is, more or less, present at birth. White matter is the infrastructure that, among other things, determines the quality of one's decision making. Myelin, and the advanced decision making abilities it imparts, is not even all there until one reaches his mid-20's. 'Nuff said.
(Submitted by a Printer)

Re: BoSacks: Why Do Good Magazines Die?
Bo, I agree with you and your analysis, and I loved the title of your piece. I think the industry is just damn confused. The big guys, which I am not, don't have any more of an idea where this industry is headed then I do as twenty nine year veteran publisher of four smallish titles. Actually I think I am in a better position to survive the content wars than the so called giants of the industry. I know my readership and they know me. Can any Conde publisher say that? I doubt it. My readers pay me a very fair price for my work and my titles on the newsstand or as a subscription. Can they say that? I doubt it.
(Submitted by a Publisher)

Publishing Evolution From Linear Thought

BoSacks Speaks Out: The following was forwarded to me by one of our illustrious readers. I think it is a very provocative article for publishers to ponder. Has the digital age and evolving digital methodology changed the way we think, read and solve problems? Has this re-wiring of thought from historic linear logic to endlessly streaming tangential bits and bites changed us for the better or the worse? Is this a missing link in moving magazines from the printed page to the digital platform? At this point I have more questions than answers, but I think if we can frame the correct questions to probe, we can find the appropriate solutions and profitable business models as well. What do you think on this subject?

"Answers are not obtained by putting the wrong question and thereby begging the real one"
Felix Frankfurter (American Jurist, 1882-1965)

The Evolution From Linear Thought To Networked Thought
by Scott Karp
http://publishing2.com/2008/02/09/the-evolution-from-linear-thought-to-networked-thought/
I was thinking last night about books and why I don't read them anyone - I was a lit major in college, and used to be voracious book reader. What happened?

I was also thinking about the panel I organized for the O'Reilly TOC conference on Blogs as Books, Books as Blogs - do I do all my reading online because I like blogs better than books now? That doesn't seem meaningful on the face of it.

Then I read this really interesting post by Evan Schnittman at the OUP Blog about why he uses ebooks only for convenience but actually prefers to read in print.

So do I do all my reading online because it's more convenient? Well, it is, but it's not as if I don't have opportunities to read books. (And I do read a lot of Disney Princess books to my daughter.)

But the convenience argument seems to float on the surface of a deeper issue - there's something about the print vs. online dialectic that always seemed superficial to me. Books, newspapers, and other print media are carefully laid out. Online content like blogs are shoot from the hip. Books are linear and foster concentration and focus, while the web, with all its hyperlinks, is kinetic, scattered, all over the place.

I've heard many times online reading cast in the pejorative. Does my preference for online reading mean I've become more scattered and disorganized in my reading?

I've also spend a lot of time thinking and talking recently about how understanding the future media on the web is so counterintuitive from the perspective of traditional media - about the challenge of making the leap from thinking about linear distribution to network effects.

After reading Evan's post and struggling with the convenience argument, I read this Silicon Alley post speculating on a possible lack of demand for ebooks, despite the Kindle reportedly selling well. If I'm such a digital guy, then why do I have no interest in ebooks?

I was eating some peanut butter last night . . . and then suddenly something clicked. (Don't know if the peanut butter caused it.)

What if I do all my reading on the web not so much because the way I read has changed, i.e. I'm just seeking convenience, but because the way I THINK has changed?

What if the networked nature of content on the web has changed not just how I consume information but how I process it?

What if I no longer have the patience to read a book because it's too . . . .linear.

We still retain an 18th Century bias towards linear thought. Non-linear thought - like online media consumption - is still typically characterized in the pejorative: scattered, unfocused, undisciplined.

Dumb.

But just look at Google, which arguably kept our engagement with the sea of content on the web from descending into chaos. Google's PageRank algorithm is the antithesis of linearity thinking - it's pured networked thought.

Google can find relevant content on the web because it doesn't "think" in a linear fashion - it takes all of our thoughts, as expressed in links, and looks at them as a network. If you could follow Google's algorithm in real time, it would seem utterly chaotic, but the result is extremely coherent.

When I read online, I constantly follow links from one item to the next, often forgetting where I started. Sometimes I backtrack to one content "node" and jump off in different directions. There are nodes that I come back to repeatedly, like TechMeme and Google, only to start down new branches of the network.

So doesn't this make for an incoherent reading experience? Yes, if you're thinking in a linear fashion. But I find reading on the web is most rewarding when I'm not following a set path but rather trying to "connect the dots," thinking about ideas and trends and what it all might mean.

But am I just an outlier, or just imagining with too much peanut butter on the brain some new networked thinking macro trend?

Then I remembered - or rather arrived at in nonlinear fashion - a contrarian piece in the Guardian about an NEA study that bemoaned declines in reading and reading skills. The piece points out the study's fatal flaw - that it completely neglected to study online reading.

All Giola has to say about the dark matter of electronic reading is this: "Whatever the benefits of newer electronic media, they provide no measurable substitute for the intellectual and personal development initiated and sustained by frequent reading."

Technological literacy

The only reason the intellectual benefits are not measurable is that they haven't been measured yet. There have been almost no studies that have looked at the potential positive impact of electronic media. Certainly there is every reason to believe that technological literacy correlates strongly with professional success in the information age.

I challenge the NEA to track the economic status of obsessive novel readers and obsessive computer programmers over the next 10 years. Which group will have more professional success in this climate? Which group is more likely to found the next Google or Facebook? Which group is more likely to go from college into a job paying $80,000 (£40,600)?

But the unmeasured skills of the "digital natives" are not just about technological proficiency. One of the few groups that has looked at these issues is the Pew Research Centre, which found in a 2004 study of politics and media use: "Relying on the internet as a source of campaign information is strongly correlated with knowledge about the candidates and the campaign. This is more the case than for other types of media, even accounting for the fact that internet users generally are better educated and more interested politically. And among young people under 30, use of the internet to learn about the campaign has a greater impact on knowledge than does level of education."

What I'd be most curious to know is whether online reading actually has a positive impact on cognition - through ways that we perhaps cannot measure or even understand yet, particularly if we look at it with a bias towards linear thought.

Is there such a thing as networked human thought? Certain there is among a group of people enabled by a network - but what about for an individual, processing information via the web's network?

Perhaps this post hasn't been an entirely linear thought process - is that necessarily a bad thing?

BoSacks: Why Do Good Magazines Die?

BoSacks: Why Do Good Magazines Die?
By Bob Sacks
Publishing Executive Magazine
Chuck Townsend, president and CEO of Condé Nast Publications, said in a statement, "Our investment in House & Garden throughout the years has been substantial, and we no longer believe it is a viable business investment for the company." Well, that is surely his call to make, but the public death by hanging of an old and cherished lady of publishing with a fan base of almost a million paid copies a month sets the stage for a review of what constitutes "success" in the magazine world, and, I think, makes a case for the impending doom of megalithic publishing empires.

House & Garden also had about 800 advertising pages per year-better numbers than many of its competitors can boast, and dream numbers for almost any publisher in this day and age. If I had those stats, I guarantee I wouldn't pull the plug, but rather find the leakage in the revenue stream.

I will assume that the operating costs were, from Condé Nast's perspective, too high to handle for long-term sustainability. But what the heck does that mean? To me, it is proof positive that they haven't the slightest idea what it means to be entrepreneurial. The time is now, if ever, for all publishers to focus on the entrepreneurial side of our business.

Sure, there is tough competition out there, and some of that competition is in the house of Condé Nast itself. So, what? What better way to command the market than to establish a beachhead with your own titles? And that's the thing-large corporations can't/don't/won't be fast, smart and agile. The fire of quick action is not in the belly of the corporate beast. And in today's world, corporate speed means life.

Condé Nast has everything a publisher could dream of: 100 years of positive branding, and a sweet printing contract based on high-volume, multi-title efficiencies and paper being purchased as cheaply as by anyone in the business. It also must have had a flexible publishing perspective, one that could adjust with the economy and economics of the times. If the economy is slipping, then so glides your editorial message to your constituency. House & Garden had almost a million paying readers, just waiting for its insights and instructional visions.

I also think youth contributed to this murder. It's an old publishing tale of buyers and planners who are too young and in the earliest parts of their careers, who don't yet have the tutoring to look beyond the numbers. These youngling buyers need the experience of years and the mentoring advice of seasoned professionals to look at the magazine business in a different light than other media. We are not an iPod. We don't claim to be one. We are not a download. We are print, and we have tremendous worth. We can reach market segments that are as yet untouched by the Internet. This will not last forever, but it is true for today for many titles.

The lesson here is one of choice. Chuck Townsend and Condé Nast chose to capitulate. Without all the facts, I think it was unnecessary. They could have taken this title in any one of a dozen other directions. Even though it was a competitor to some of Condé Nast's own titles, I believe the death was a revenue blunder. They angered a million paying subscribers and left millions of dollars on the table with no place to go but elsewhere.

I'm not saying that there are no titles that deserve a quick death. Many do. But this wasn't one of them.

Bob Sacks (aka BoSacks) is a consultant to the printing/publishing industry and president of The Precision Media Group (www.BoSacks.com). He is publisher and editor of a daily international e-newsletter, Heard on the Web. Sacks has held posts as director of manufacturing and distribution, senior sales manager (paper), chief of operations, pressman, cameraman and corporate janitor.

BoSacks Speaks Out: "Fork in the Road: Which Direction for the Publishing Industry?"

BoSacks Speaks Out: "Fork in the Road: Which Direction for the Publishing Industry?"
By BoSacks
As I have published here before, I am a principal partner in mediaIDEAS which investigates and provides original research reports with actionable advice and analysis for the publishing/media industry. I have asked for and received permission from mediaIDEAS to send to my readers a small portion of a recent research paper whose conclusion after a detailed analysis was that full color flexible e-paper display will be available to the market by 2011.

The report goes on to say that publishing magazines and books incorporating high quality color artwork such as those involved in the fashion/design/art sectors, and looking to develop digital editions, need to carefully monitor developments in electrowetting display technology . . . Planning for this event is critical to the future profitability, and even the existence, of such publishing companies.

The reason I asked for permission from my business partners to release this portion of our Call to Action is that I believe it is critical for our industry to fully comprehend the technologic reality on our door step. We are on the threshold of a new digital age. As publishers we can adapt and prosper or wither on the vine of antiquated protectionism and dysfunction.

On February 7, 2005 I debated Samir Husni at Primex hosted by IDEAlliance in an event titled "Fork in the Road: Which Direction for the Publishing Industry?" After the debate I was asked an excellent question from the audience. I was asked how long till publishers have to start really paying attention and worrying about e-paper. My answer was that five years from that time epaper will be real, functional and a necessary item on any publishers business plan and watch list.

As a futurist with an impressive track record of prescient predictions under my belt for the last 35 years, I am sad to report to you that I was wrong. Yes, wrong. It didn't take five years but rather three years for e-paper to be available to the general public. And the technology is growing at an exponential rate. Look around you and read the writing on your Kindle, which is currently sold out and backlogged. E-paper is here and it is not going to go away. The report from mediaIdeas and my own research is correct. Publishers must be . . . . planning for this event as it is critical to the future profitability, and even the existence, of such publishing companies.

This is not and should not be a fearful transition. Everything stays the same except the actual reading platform. The paginated (metered), well designed, and edited magazine experience is the same. The same writers, editors, artists, and mostly the same publishing staff will be required to "manufacture" magazines of the future. I would also add that it is not an either/or scenario. There will no doubt be both a printed version of magazines and an e-paper version available to the general public. The question will come down to one of cost and reader preference.

Just this morning I've completed a review of the Amazon Kindle. As an experienced e-paper reader the future is clear and the current arguments about the future of e-paper are as relevant as the old discussion of whether or not film-based printing will ever be replaced by CTP (Computer-to-Plate). I'm sure we all agree that was indeed a very juvenile argument. As much as this sounds like bravado, I was right then and I'm right now. I will go further to say that someday, perhaps less than ten years from now, the e-reading experience will be more preferred by the majority of the reading public than the inefficient, costly, environmentally unfriendly, and extremely dated current magazine methodology. Are we there yet? NO! But you can bet your bottom dollar that we will get there. And if you don't believe and prepare for it, it will be your bottom dollar.

Coupon Mailer Urges Postal Rate Hike for Magazines

Coupon Mailer Urges Postal Rate Hike for Magazines
ValPak targets 'low-volume, high-cost magazines.'
By Joanna Pettas
In an era of rising postal rates, it appears it's every mailing class for itself.
Direct marketing coupon mailer ValPak filed comments with the Postal Regulatory Commission last week encouraging the commission to raise Periodicals rates by a double-digit percentage-an increase that would be well above the CPI rate cap, according to American Business Media. If the commission finds it can't get around the CPI cap, ValPak recommends that the entire CPI-based increase be targeted on "low-volume, high-cost magazines that are circulated nationally."

ValPak's comments are in response to the finding that Periodicals failed by a wide margin to cover its class's postal costs in fiscal year 2007, according to the USPS's filing of its cost and revenue data by class of mail.

ABM is planning to file responding comments by the February 13 deadline, arguing that an excessive increase for Periodicals which make up less than 4 percent of mail volume would have a "nearly immeasurable effect on other mailers." The comments will also highlight the fact that the present Periodicals rates-on average, 11.8 percent higher than the previous ones-were in effect for only two and a half months of fiscal year 2007, that the new rate design will have cost-reduction effects and that the new Flat Sequencing System, set to be deployed this year, will lessen the cost of Periodicals for the USPS.
ABM and ValPak did not immediately return requests seeking comment. A spokesperson for the Magazine Publishers of America said it's too premature to comment.

What's Really Wrong With a Little Media Company Called EBay

What's Really Wrong With a Little Media Company Called EBay
Media Company? Yep. Incoming CEO Donahoe Must Figure Out How to Better Market Site's Content
By Simon Dumenco
http://adage.com/mediaworks/article.php?article_id=124777
Everybody, of course, has heard of eBay, the massive e-commerce company. But have you heard of eBay, the massive media company?

Yeah, OK, they're one and the same. Actually, I've been arguing for years that eBay is more of a media company than an e-tailer. Now that the company's at a crossroads -- longtime CEO Meg Whitman announced late last month that she'll retire in March, and her successor, John Donahoe, has let it be known that he intends to shake things up. Given eBay's recently declining fortunes -- it might be helpful to stop and reflect on what eBay really does.

For starters, eBay doesn't sell stuff. Its sellers -- an army of independents -- do. Unlike, say, Amazon, eBay doesn't warehouse inventory or spend millions on shipping and handling. That's because it's mostly in the business of handling ones and zeros: the trillions of bits of data that course through its servers. It doesn't even, really, market individual products (though eBay, of course, has engaged in massive branding campaigns and does invest in advertising placements in Google search results for some of its major product categories). Rather, it delegates even the copywriting of individual product pitches to its sellers.

There's actually another company that does something very much like what eBay does -- and, curiously, nobody hesitates to think of it as a media company. Like eBay, Craigslist is all about maintaining a giant, searchable database of listings. It brings buyers and sellers together (it also, famously, brings other parties, like the oversexed and the lonely-hearted, together, but I digress). Of course, it does so, mostly, without extracting fees, because of the admirable sociopolitical sensibilities of its founder, Craig Newmark. Oddly, Newmark regularly gets slammed for single-handedly killing the newspaper classified-ad business, even though eBay, founded in 1995, is four years older (and vastly more profitable) than Craigslist.

Why does it matter, you might be wondering, how eBay thinks of itself? Because when you don't know what business you're in, you lose focus fast. Over the years, eBay forgot that it was in the information business and let its user interface languish. It fell behind, too, on its product-search functionality (new CEO Donahoe has promised to roll out a better system soon). It abused its sellers by repeatedly jacking up fees to pump up its balance sheet. (Donahoe just announced a listing-fee cut but pissed off sellers anew with a new, steeper back-end fee structure.) And it began to think of itself as a glamorous retail destination -- thus its recent "Shop victoriously!" campaign -- when, in fact, shopping on eBay is often a hugely frustrating experience.

My advice to Mr. Donahoe? Stop masquerading as a real merchant. Real merchants have control over their inventory, individual product pitches and fulfillment in ways that eBay, by definition, never will.

Stop pretending there's something inherently glamorous or "victorious" about poking around in your virtual yard sale; that's just a recipe for frustration and disappointment, which is why eBay recently has seen declines in unique visitors.

Remember your real value proposition. Back in 2000, eBay ran TV commercials with a tagline that nailed it: "If you broke it, lost it, need it cheap or just can't find it anywhere else: eBay." (In a recessionary economy, emphasizing that "need-it-cheap" angle in particular is surely the way to go.)

And remember that you live and die by your content -- all the data points you have in your giant eBay spreadsheet at any given time -- and how you present that content and how sellers and buyers interact with that content.

Mostly, though, just remember that you are -- no kidding! -- in the media business.

Newspapers and Buggywhips

Newspapers and Buggywhips
By Lawrence Henry
I grew up in a newspaper family. My grandfather ran a small town journal. My father headed up the advertising department of a chain of suburban weeklies and later published his own weekly paper in Florida. I have lived through the switchover from letterpress to offset printing, through the death of the evening daily (done in by TV news), through declining circulation, through price hikes in newsprint, and through the Internet.

I've set type, run printing presses, sold advertising, written stories, done page layouts, and edited sections. I cannot remember a time when newspapers weren't -- in some way -- going in the tank, failing, losing circulation, or losing money.

Yet we still have newspapers, and newspapers continue to be a force -- in the shaping of information and public opinion, and in the political life of the nation. They do so in spite of comically bad management, the near-total disregard of the usual high-profit demographic (the one that goes to the malls and the multiplexes), their sheer wrongheadedness in matters of public policy, and the alienation of their writers from the lives of everyday people.


IN ONE OF HIS books, humorist Dave Barry made fun of the usual way that newspapers try to turn around declining circulation. They look at their readership, they find out that younger people don't read the paper, and they decide to appeal to the readers they don't have -- or at least try. The paper's panjandrums determine to make their graphics kickier, to run more youth-oriented features, to cover entertainment, to make the product livelier and more fun.

Of course, the effort fails. The paper can't compete in the entertainment and fun market with TV, radio, and (for those of the younger set who read) specialty teen magazines. Instead, the newspaper prints less of what its dedicated readers want, and therefore loses more of its core audience. Five years later, says Barry, they do the same thing all over again.

Ironically, everybody used to read Dave Barry. If you could field a newspaper full of Dave Barrys, there would be no problem with the medium at all.


THE DECLINE AND FALL of newspapers mirrors a publishing failure in the past, that of general interest national magazines. Used to be everybody read Look, Life, Collier's, and the Saturday Evening Post. Those giants of publishing collapsed in the 1960s and 1970s, and we have not seen anything like them again.

But magazines did not disappear. In the language of marketing, the large, vertically oriented national journals gave way to dozens of horizontally marketed specialty magazines. The 1970s saw the flowering of the city magazine: New York, Texas Monthly, San Francisco, Washingtonian, and so forth.

At the same time, new magazines sprang up to address specific niche audiences. At the time, I worked for a publisher's representative (an ad sales agency) that took pride in having sold the first credit card ad to Ms.

To the surprise of most of us in the magazine biz, Ms. is still around, witness a recent flap over the magazine's refusal to carry an ad from Israel. Eleanor Smeal, Reagan-era head of NOW (and, I presume, still unable to pronounce the "d" in "administration" or "admit"), edits the book.

The fragmenting of the magazine world presaged the development of "narrowcasting" in cable television. Now, everyone can find his or her special interest reflected in at least part of a cable channel. Pool and poker could never have succeeded in national media without a proliferation of channels. And to pursue the parallel further, viewership of the big networks has fallen much the same way that newspaper readership has.


JUST LIKE NETWORK TV, newspapers will survive. So savvy an entrepreneur as Rupert Murdoch would not have bought the Wall Street Journal unless he was sure he could make it into a "big, big-titted hit" (to quote the Robert Duvall character in Network).

Murdoch, opines Ed Lasky in the American Thinker, will make his product a profitable market leader by synergizing with other elements of his media empire, and by infusing capital and talent into the newspaper.

Murdoch is a special case, aiming, as he does, to make the Journal the pre-eminent newspaper in the U.S. For publishers of more modest means and aims, the motto going forward will be synergy and specialization. Some combination of the Internet and print, some certain target audience, some canny design and organization, all will point the way forward for the newspapers of the future.

Some may look like professional journals, some may resemble the rabble-rousing shout-sheets of the Colonial era, some may take off from hobbyist enthusiasms. The big dailies like the New York Times and the Washington Post will survive. At least a few of the biggies have to, if for no other reason than to provide content and direction for broadcast newsies -- who can't do their own reading and research.

It's Time, Ad Industry: Stand Up and Hold Marketers to Account

BoSacks Speaks Out: It's Time, Ad Industry: Stand Up
I've been reading and enjoying Rance Crain's written work for years, but today I think he had better step back from the Kool-aid dispenser at the Ad Age cafeteria.
He suggests that ". . . a more militant ad industry might have been a big help in preventing the financial debacle that's threatening to drag worldwide economies into severe recession." In a dream world I might agree with Rance, but in the nuts and bolts world of today's advertising, it is just a fantasy.

I have ranted for years that advertising is a system of over-communication excess that is out of control and on a collusion course with the public at large. There is no peace on this earth from the advertising onslaught. You can't even relieve nature's call without being bombarded by crass, in-your-face advertising. Now Rance is asking this very same adolescent advertising system to show some restraint and "just say no" when it comes to deceiving the public. Who is kidding who? Where will this strength of character come from? Within? Wouldn't that be nice?

Here's the deal - first take the damn ads out of the bathroom, then try and save the world.

"You can't talk your way out of what you've behaved yourself into."
Stephen R. Covey

It's Time, Ad Industry: Stand Up and Hold Marketers to Account
Remember This Adage: What's Best for Consumers Is Best for Advertisers
By Rance Crain
http://adage.com/columns/article?article_id=123323

If tough economic times are ahead, advertising has to change. Claims had better reflect reality because consumers will become especially cautious and critical.

I keep in mind the adage of my old boss Stan Cohen -- what's best for consumers is best for advertisers -- and I wonder if those wise words are being ignored in three major areas: financial services, prescription drugs and sustainability.

It's very apparent that advertisers didn't hold up their end of the bargain in the subprime mess. I've said that the subprime meltdown is, in large measure, a failure of communications, and communicating effectively and clearly and completely is the job of advertising -- at least it should be.

But the sad truth is that many financial marketers didn't want prospective home buyers and mortgage holders to understand the downsides of their transactions: that interest rates can go up without notice, that buyers are taking on too much debt, that housing prices don't always go up.

A more militant ad industry might have been a big help in preventing the financial debacle that's threatening to drag worldwide economies into severe recession.

Ad leaders should have called for financial marketers to do a better job of disclosing the fine print of mortgage lending -- and, yes, Advertising Age should have been there urging them to do so.

Last August I talked with Wally Snyder, president of the American Advertising Federation, about the situation, and I quoted him as saying, "It's becoming pretty darn clear that we've got to accept this problem and bring ethical considerations -- not just legal -- to bear."

Yet, as far as I can see, nothing was done, and so everybody involved, including regulators, the Federal Reserve and ad people, dragged their heels. Now the Fed is requiring certain disclosures in lenders' advertising, but the ad industry could have taken a leadership position there.

One area where ad groups were very forceful was in their unified lobbying against an advertising moratorium during the first two years a prescription drug is on the market. But nobody knows what unexpected adverse reactions a new drug might have, and such reactions would be compounded if the drugs were widely advertised.

The groups argue that limiting drug advertising is an abridgement of commercial free speech, so how about the drug companies agree not to advertise a new drug to consumers for one year? (Of course, they would be free to advertise to physicians.) As Wally pointed out, food companies agreed among themselves to bar ads aimed at kids that might contribute to child obesity, and "even consumer groups have said what the food companies have done is impressive."

Another problem for big pharma is that the industry is running out of breakthrough blockbusters to bring to market, and more and more drugs will be forced to rely on highly imaginative advertising to differentiate almost identical products. We're going to see ads for diseases we never knew were a problem (restless-leg syndrome, anyone?), and critics are bound to step up their cries that the drug firms are getting people to ask for prescriptions they don't need.

Lots of scrutiny also will be paid in the coming year to the sustainability issue. Companies will be clamoring to show they are making important efforts to conserve our natural resources, and the big story will be when they overstate their contributions.

Marketers can't be too careful here. Seemingly innocuous (if stupid) promotions like Toyotathon can backfire. In the ads, people wreck their cars so they can justify buying new Toyotas. But as the Cape Cod Times said in an editorial, "In today's world, how funny is junking a quality machine in good working order and using up more energy and natural resources to replace it?"

So in 2008, advertising will be viewed through a new, harsher prism. It's our job to prod advertisers to stand up to the glare.

The Written Word? It's So Totally Over, According to Mr. IPod

The Written Word? It's So Totally Over, According to Mr. IPod
Nobody Reads Anymore, Steve Jobs Says. YouTube Addicts Might Agree -- but What Is 'Reading,' Anyway?
By Simon Dumenco
By all rights I shouldn't be writing this -- and for God's sake, you certainly shouldn't be reading it! Because reading is, officially, dead.

I have that on good authority -- from no less a trendmonger and trendsetter than Apple chief Steve Jobs, whom reporter John Markoff of The New York Times quoted last week as saying that the Amazon Kindle -- that much-hyped e-reader for wordy products such as books, newspapers and magazines -- is doomed. "It doesn't matter how good or bad the product is," Jobs told Markoff. "The fact is that people don't read anymore. Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don't read anymore."

At this point you should go check to see what's new on YouTube.

But if you -- you freak, you anachronism, you dying breed -- are still with me, then let's try to parse the math, and Jobs' grim logic, together.

While it's generally taken for granted that the newspaper industry is doomed and the magazine industry is under siege, it's worth noting that the book-publishing industry has been holding its own. According to the Association of American Publishers, in 2006 (2007 figures aren't out yet), "trade sales of adult and juvenile books grew 2.9% to $8.3 billion, a compound growth rate of 3.7% per year since 2002. The strongest growth in this category came from adult paperback books, whose sales last year rose 8.5% to ... $2.3 billion. Adult hardbound books [grew] 4.1% to $2.6 billion."

As for Jobs' stat, it seems he extrapolated it from an old National Endowment for the Arts study, which found that in 2002, just 57% of American adults reported reading a book. Then again, according to an Associated Press-Ipson poll released last August, 27% of American adults read no books last year -- ergo, nearly three-quarters did. In fact, the poll revealed that the "typical American adult" read four books last year.

"Who are these 'people' to whom Steve Jobs is referring?" Publishers Weekly Editor in Chief Sara Nelson asked me last week. "Not the million-ish who are devouring Elizabeth Gilbert's 'Eat, Pray, Love' or the ones who line up for Harry Potter and/or James Patterson novels." She added: "All I can say is that when I sat in restaurants and airports or on buses or trains and pulled out my Kindle, I got more attention than if I'd shown up naked -- with an adorable puppy."

At this point you should type "Sara Nelson naked with an adorable puppy" into Google Image Search.

And then check to see if the Kindle is in stock on Amazon -- which it probably isn't, because almost from the moment it was introduced, the product page has displayed this notice: "Due to heavy customer demand, Kindle is temporarily sold out. We are working hard to manufacture Kindles as quickly as possible and are prioritizing orders."

In other words, Amazon is politely asking customers to be patient -- which is hilarious, because Kindle is all about instant gratification. As New York technology consultant Michael E. Gruen wrote in a comment he posted on the Silicon Alley Insider blog (about Jobs' Kindle dis), "I'll bet people are reading fewer books because they're not yet as 'on demand' as other forms of media like music and film (which Apple has solved) as well as e-magazines and blogs." Kindle is far from perfect -- I, like other observers, have disparaged its clunky look -- but with its built-in EVDO broadband modem, it's all about getting text on demand, anywhere.

Which brings up a larger point: What is reading? After all, you can use a Kindle to read Brontë, but you can also use it to skim BoingBoing (Kindle has deals with some 250 blogs). If you're not devouring "serious" literature or old-school A-list publications, are you not technically reading? Are you effectively nonliterate? Clearly, Jobs thinks so.

How else to explain his judgment that "nobody reads" in a culture in which more and more people seem to be more obsessively engaged in producing and consuming words than, possibly, ever in the whole of human history? I'm talking about not only blogs (Technorati tracks more than 100 million of them) but social-networking communication and Twitter "tweets" and even, yes, e-mail. Think of the countless people who live vibrant, effusive, all-consuming epistolary lives who, pre-internet, might never have made the effort to write a proper ink-on-paper letter. With apologies to Gertrude Stein, a word is a word is a word -- and storytelling is storytelling is storytelling.

Yeah, even if it comes in the form of "cellphone fiction." You probably heard about (or actually read!) the New York Times' recent front-page story about the rise of that genre: terse Japanese "chick lit" written on cellphones and meant to be read on them, though an increasing number have been able to cross over to print best-sellerdom.

The Times, actually, was really slow to notice -- The Wall Street Journal covered the phenomenon last September. And when Ben Vershbow, the editorial director of the Institute for the Future of the Book (which is affiliated with the University of Southern California and funded by the MacArthur Foundation), blogged about that Journal article, his colleague Bob Stein, founder of the Institute, wrote, "This suggests that art is irrepressible, as it emerges and pokes its way through the smallest of cracks in the media firmament."

God bless you for saying that, Bob Stein -- and for having the generosity of spirit to even think it.

But, as always, it all comes down to the question of who gets to define "art."

BoSacks Speaks Out; How Quebecor can Thrive

BoSacks Speaks Out; How Quebecor can Thrive
Here is an interesting story. To me it is so clearly an issue of disconnected perspective that I am almost stunned by the reporter's "take" on the issues.
Well, not really stunned because it is a Wall Street perspective. You know what I mean , bottom line profit, outstanding shares, that sort of thing. This was clearly not written by a reporter who knows anything about the printing world nor the presses that this story might have been printed on. Nope. To this reporter presses don't matter and Quebecor World and it's staff is just a small cog in a shareholder's diversified portfolio.

"Emotions get in the way but they don't pay me to start crying at the loss of 269 lives. They pay me to put some perspective on the situation."
Ted Koppel


Quebecor's media interests can thrive with sale of Quebecor World: analysts
The Canadian Press, 2008 - Canadian Press
http://www.piworld.com/story/sstory.bsp?SMContentIndex=5&SMContentSet=0

MONTREAL - A complete sale of Quebecor World would allow its parent company Quebecor Inc. to thrive as it focuses on expanding its presence as a Canadian media conglomerate, industry observers said Thursday.

Quebecor Inc.'s prospects are led by its strong cable operations at Montreal-based Videotron and a portfolio of newspapers, including the Sun Media group and recently acquired Osprey newspapers.

The media business, which also includes television and Internet, hopes to enter the cellphone business in Quebec through a spectrum auction.

"The media side has a very positive outlook, it's doing quite well and Quebecor World wasn't that big of a deal to Quebecor Inc. anymore," said one analyst who didn't want to be identified.

The parent company's share value has dropped 25 per cent since November, in large part because investors feared it will sink money into the struggling printer.

Late Wednesday, Quebecor World received an American court order providing protection under Chapter 11 of the U.S. bankruptcy code. That enables the company to borrow up to $750 million immediately from Credit Suisse and Morgan Stanley to help fund operations while Quebecor World restructures.

"Once I know they are not going to put money in, my comfort level grows," said a second analyst, who added that cutting ties would allow Quebecor Inc. to focus on its core business without distraction.

"The best outcome could be strong indication from (Quebecor Inc. CEO) Pierre Karl Peladeau that Quebecor Inc. is no longer going to be involved in supporting Quebecor World."

The printing business was founded by Peladeau's father.
Quebecor Inc. had attempted a last-ditched rescue for Quebecor World by teaming with Tricap Partners to provide a US$400 million lifeline to the printer.
Its banking syndicate refused to sign off and the parent company was unwilling to increase its financial position. It also said this week it wants the printing business to be renamed so as not to confuse investors about the state of Quebecor as a whole.
Analyst Jeffrey Fan of UBS called Quebecor Inc.'s decision to walk away from the proposed rescue plan the right one.

"We believe these actions reflect Quebecor Inc.'s decision to surrender control of Quebecor World," Fan wrote in a report earlier this week.

He said Quebecor Inc.'s share price should increase post Quebecor World and upgraded his rating on the stock to "buy" from "hold."
"We believe there is attractive potential upside for Quebecor Inc. shares and in a volatile market, we expect the shares to outperform."
Investors who own Quebecor Inc. stock like its media assets and aren't looking to own a vehicle that indirectly invests in another questionable business, said one analyst.

Quebecor officials couldn't be reached for comment Thursday. But earlier this week, company spokesman Luc Lavoie insisted Quebecor World is a good company, that has faced financial pressures.

"The perception should not be that the company is in bad shape, it's actually in a good shape now that the situation in terms of credit will be frozen," he said in an interview.
Quebecor World's financial numbers are expected to remain meshed in its parent company until it is completely sold.

Removing these contributions would dramatically reduce the company's size and geographic reach.

In 2006, Quebecor Inc. lost $93.9 million on $9.8 billion of revenues. It employs 43,000 employees, including some 28,000 by the printer.

Since 2002, Quebecor Media's operating income has increased annually while Quebecor World's contribution has steadily declined.
Quebecor Inc.'s share price had climbed in the days following the bankruptcy protection filing. However, it lost 88 cents or 2.8 per cent to $30.34 Thursday on the TSX.

Quebecor World's shares, which have been hovering near all-time lows in recent weeks, more than doubled in value on Thursday.

It gained 25 cents to 36.5 cents with 48.2 million shares traded - making it the most actively traded issue on the Toronto Stock Exchange.

Is Trade Publishing a Canary in a Coal Mine?

Is Trade Publishing a Canary in a Coal Mine?
Posted by Jeremy Greenfield
I had lunch on Monday with the Steve Cohn (EIC of min), and the editor, publisher, and president of a very big, very well-known, and very old gentleman's magazine at a restaurant in the McGraw-Hill building. Of course, we talked about their magazine, the Giants game, and consumer-side gossip. But one topic of conversation that kept on coming up was the state of trade publishing in 2008. We talked first about BusinessWeek and the plight of the weekly in general. Then we talked about M&A in the B2B space, and then, finally, the topic of whether trade advertising would be strong in 2008.

Alan Greenspan famously said while chairman of the Federal Reserve that he need only look at the price of scrap metal to determine where the economy was headed. The scrap metal business is a commodity based on several commodities: essentially, the profit that scrap outfits make is dependent on the price of various metals around the world as well as the price of oil, electricity, and various other commodities. Therefore, price of scrap can be a good indicator for the economy as a whole-scrap goes up, economy doing well, scrap goes down, who knows. (I got this from The New Yorker . . . see John Seabrook's article "American Scrap" (abstract) in the 1/14 issue for more. You should also read Ken Auletta's "The Search Party" (complete article) in the same issue-it's about Google's lobbying efforts in Washington.)

Like scrap, trade publishing can be a good indicator of how the economy as a whole is doing. When I look at our exclusive min's b2b Boxscores and see that the building and construction category is down as a whole about 10%, well, that indicates something to me. Just for fun, I'll give you a quick run down of how all of our categories are doing (change is in ad pages year-to-date through November 2007, Source: IMS/The Auditor, except Business/Horizontal, which is provided by min):

Advertising & Marketing: +1.66% (A strong year in advertising has bolstered some of the big books in this category)

Automotive: -2.32% (More on this category in this week's min's b2b)

Banking & Finance: -.60% (Something tells me that some books in this category will be hit hard in 2008)

For the roundup of the rest of our categories, click below . . .

Broadcast Video: -19.5% (This category has been hit hard by cable network carrier saturation. More in this week's min's b2b)

Building & Construction: -9.46% (This one's obvious . . . and is being bolstered by commercial construction)

Business/Horizontal (Jan-Dec, Source: min): -9.13% (More on this category in this week's min's b2b)

Computing: -22.96% (But, in related news, most of the books here are just killing online . . . so I hear)

Developers Technical: -3.77% (Some books in this category are seeing a resurgence in print)

Electronic: -8.54% (Internet)

Engineering & Manufacturing:-6.88% (This year's decline is part of a long-term trend in this industry-not as much in the way it markets: the big boys are still holding their own)

Fashion & Design: -7.22%(While the graphics/design books are doing well, the fashion trades aren't as much)

Food: Retail:-2.22%(While life has been tough on the supermarket industry this year, the convenience store/petroleum industry has benefited from high gas prices and innovations in basic business practices and store services)

Food: Service/Restaurants: +.82 (A few books that have had several bad years in a row are coming back)

Food: Processing: +3.66 (More on this category in this week's min's b2b)

Government: -10.54% (Gov IT books are computing books this year)

Healthcare: -3.32 (Pharm)

Pharmaceutical: -5.16% (Pharm)

Telecommunications: -12.40% (Wireless books are hard hit in 2007)

Transportation: -9.76% (Oil prices and Pacific port overcrowding have squeezed Pacific and air marketing budgets-Gulf is up)

Travel/Lodging/Hospitality: -3.29% (Travel agent books are bringing an otherwise healthy category down)

OVERALL: The min's b2b index of 300+ trades is down 8.17% in ad pages through November 2007. I smell gas.

In men's magazines, a question of size

BoSacks Speaks Out;

I'm not the first nor the last to say it, but as we all know, it's not the size, but the magic it performs that counts. This is as true for magazines as anything else. The discussion below of alternate, smaller-sized magazines is neither new nor all that adventurous. The magazines will work very well for some readers and not so well for others. At best they are a stop-gap performance. The sizes that are now being discussed for these travel-sized magazines are pretty much the same size as the Sony e-reader and the Amazon Kindle. So, is the magazine industry laying the ground work for size acceptance with this new introduction or is it just my imagination? OK, I guess it's just my imagination.

An optimist will tell you the glass is half-full; the pessimist, half-empty; and the engineer will tell you the glass is twice the size it needs to be"
- Unknown

In men's magazines, a question of size
Britain's FHM will introduce a travel-size edition
By Heidi Dawley
http://www.medialifemagazine.com/

In men's magazines, the eternal question is whether size does in fact matter, and in Britain, where competition among men's titles has been especially fierce, it's a question that's being asked more and more.

FHM thinks it may have the answer.

This spring, the monthly title is set to launch a smaller version that it hopes will help attract readers on the go.

This idea of what's called a travel-size edition is not new. It's been a popular tactic in the women's market for some years now. FHM will be one of the few major men's titles to give it a go.

Media buyers think it might well attract new readers. "The travel format has certainly seemed to work in the women's sector. A number of magazines have brought it out," says Steve Goodman, managing director, print trading at GroupM. "So for FHM to try it is a very sensible move."

For FHM, as well as its brethren, the last few years have not been stellar. The magazine sold an average of 311,590 copies a month in the first six months of 2007, according to ABC figures. That was down 25.9 percent on the same six months in 2006 and way down from the 750,000 copies it sold monthly not so many years ago.
Among the problems facing FHM and the other monthlies was the flush of men's weeklies launched in recent years, mostly downmarket publications. That led the monthlies to chase downmarket in an effort to hold onto their readers, and not with success. "They were tarnished with that," says Mark Gallagher, press director at Manning Gottlieb OMD.

But the monthlies have also been hurt by the internet, which comes as no surprise.
So in 2007, FHM brought in a new editor Anthony Noguera, who had been head of Emap's men's magazine portfolio, to help bolster FHM's fortunes. Noguera oversaw a redesign that came out in August.

"FHM is very different from how it was a few months ago. It is less in that downmarket sphere that it was pulled into to compete with the others," says Gallagher.

The decision to bring out a travel edition, which will be published in select markets alongside the larger edition, is likely to be another part of that effort to help create distance from the others in the market, believes Gallagher.

FHM has not yet said how big the travel edition will be. The regular edition is 12 inches by about 8 ¾ inches.

The travel edition is likely to be similar in size to other travel editions in the glossy monthly market. For instance, Glamour, the magazine credited with bringing this size to the market, is 8 ¾" tall and just over 6 ½" wide.

FHM has said that the travel edition will be a scaled-down version of the regular edition, having the same content and page layouts. It will retail for the same price as the full-size edition -- $7.60 an issue.

The travel size first really took off in Britain in 2000 when Glamour launched into the market. The magazine chose what it called the "handbag size" when it launched.

Glamour flew off the newsstands, overtaking Cosmopolitan to become the No. 1 women's glossy just about 18 months after launch.
Not surprisingly, others followed suit, launching travel editions alongside their regular-sized editions in commuter markets.

A number of publications continue to publish at least part of their circulation in this format, including Marie Claire and Elle, which implies that the publishers believe it to be successful, although it hasn't resulted in huge upward spikes in circulation.

How it does for men's titles is an open question. One title that tried it was James Brown's Jack magazine. It launched in that size, but later abandoned it and has since folded.

http://www.medialifemagazine.com/artman2/publish/Magazines_22/In_men_s_magazines_a_question_of_size.asp

Nowhere To Run: Trickle-Down Theory Impacts Advertising

Nowhere To Run: Trickle-Down Theory Impacts Advertising
by Diane Mermigas
Amid the chaos and panic created by Wall Street and the Federal Reserve, ad-dependent companies are scrambling to determine just how impaired their financial lifeline will be in a troubled economy. Three words: trickle-down effect.
The broad-scale tumult is filtering down into the crevices of all media and advertising companies. They are making adjustments in spending as their costs, revenues and credit tighten. They are watching their stocks get hammered, and their ability to leverage assets or do deals is drying up-for now.

The normal retrenchment that comes during an economic downturn is being complicated by several unusual factors that could extend into 2009. Major advertiser categories, such as autos, financial and housing, are undergoing an unprecedented squeeze and will not provide the spending levels that ad-supported media needs. Retailers and packaged-goods marketers are also under pressure. Media itself is undergoing transformative change, moving from passive to interactive; the learning curve will last for years. Unlike recessions past, advertisers continue to shift some of their cautious strategic spending to new interactive platforms, where they can permanently realize more immediate returns.

These economic pressures will spill over into 2009, when there will be no $3 billion artificial boost of cyclical election-year dollars. Advertiser spending on traditional and new interactive marketing will continue to fragment, as will consumer attention. "It is going to be pretty ugly for a while-well into next year," says Lauren Rich Fine, formerly advertising guru at Merrill Lynch and now researcher in residence at Kent State University.

The stop gaps media companies in particular are hoping to fall back on-ramping digital revenues and international sales-will not increase rapidly enough to offset declines in diffused traditional advertiser spending. Most media companies remain vulnerable. Newspapers, outdoor, Internet display and radio have above-average exposure to the most risky advertising categories-including financial, real estate, retail and construction, which collectively account for nearly 10% of total U.S. advertising, according to Bernstein. Media companies are among the largest advertising categories, previously believed to be recession-proof.

Advertising contributes as much as 97% to the revenues of a media company such as Clear Channel Communications, 71% of CBS Corp. revenues, and as little as 22% to Walt Disney Co. Advertising also is a growing revenue component for Internet giants Google and Yahoo. Consumer spending, which may not be bolstered much by the government's proposed $150 billion stimulus package, contributes 55% to Disney's overall revenues and 72% to Time Warner. On the flip side, digital revenues contribute less than 10% of most media company revenues, and only News Corp. and GE (owner of NBC) rely on international markets for half of their income. The level of international growth that media companies seek will not come while foreign markets are being dragged down into U.S. economic jitters.

So, as advertisers go (in every conceivable industry), so go media companies. The economic uncertainty is creating mixed views for 2008, according to speakers at Bear Stearns' recent annual advertising summit. The outlook depends on who and where you are in the medium spectrum, according to Bear Stearns and industry trade groups. The most volatile-newspapers-could decline as little as 1.2%, or more than 7% in the case of a recession. Broadcast TV should top 9%, fed by the Olympics and elections. Cable could be up more than 5.5%, benefiting from audience and ad-dollar shifts from the writers' strike damage at the broadcast networks. Outdoor will be up 6%, and the Internet 22%.

However, all bets are off in 2009, when the economy and advertiser spending could still be under pressure. That prospect is impetus for all media and entertainment concerns to move more of their ad-supported branded content and services online. That is where double-digit growth will continue for years-as marketers move past search and text advertising into new forms of connecting and transacting with key consumers. The science of pitching, selling and buying is in the throes of a sea change that will alter ad spending among media platforms and devices.

There also is incentive for traditional media to alter the way it conducts its revenue-generating business. For instance, backing away from the costly upfront selling ritual and leaning toward a 52-week continuous selling cycle, based on the development and availability of new content, is a move that NBC Universal chief executive Jeff Zucker is initiating. With advertisers looking to solidly justify every dollar they commit, there is incentive for media and measurement companies to further sharpen and qualify their audience metrics.

In a bullish report titled "The Cowboys Dance On and On. . . ," Yankee Group analyst Daniel Taylor recommends that advertisers use these uncertain times to incorporate interactive into mainstream media spending schedules, invest in building and maintaining data interchange, grow online expenditures more than 100% annually, and explore sponsored content and "advertainment."

Media companies should create new marketing segments, take the lead in online privacy, invest in online content, focus on cross-media opportunities and develop social networks. The reason: even as the number of Internet users levels off, Internet advertising will continue to grow at a 24% compounded annual rate to more than $50 billion in 2011, surpassing all forms of broadcast television, cable and radio spending. That's why the Internet cowboys are the only ones dancing.