"Skip" Prichard on Publishing

Skip Prichard, CEO of Ingram's Content Group and a long-time executive in the publishing industry gave the keynote at eContent's Buying and Selling conference in Scottsdale, Arizona. Being an alum of Lexis-Nexis, Elsevier, Ingram Books and Proquest, his career has been an homage to digital convergence.

He recalled being asked by a reporter to speak to the future of publishing, Prichard offered these tidbits:

• Standard Operating Procedures -- need to be revised. Disrupt the status quo because you can become a slave to tradition, versus looking at the situation with fresh eyes. Chances are your competition does not have the same constraints as your SOP. 
• Unprecedented Opportunity in terms of building audiences (look no further than GroupOn). Of course that opportunity means constant stress and pressure... because
• Competition is everywhere. It is global -- and it is relentless. There are no resting on laurels.

While little of what Prichard said was new or a surprise to me, he refreshingly gave real-world examples of how publishers need to embrace change by deftly calling on his own experience. Too often, pundits and executives speak in platitudes and such generalities that the subject could as easily be about March Madness as it is about Digital Publishing. By drawing from his own experience it changes blah-blah to rah-rah -- and I believe, actually works to inspire people to take action.

That would be an interesting exercise. Poll conference attendees to find out how the information they learned will be applied. 

New York Times' Pay Wall

To pay wall or not to pay wall, that has been the question.

Well the NYT did it -- they instituted the pay wall. (Paywall?? -- AP finally dropped the hyphen in email and the spaces in cellphone, smartphone and handheld -- although the hyphen remains in e-book and e-reader. Pay wall still has a space - perhaps because it is still a chasm for most newspapers).

But I digress. Only 3 months behind schedule, the Times has finally announced its new pay scheme. The critics are rolling their eyes, the schemers are figuring out ways around the fence, but I think Ken Doctor at the Nieman Labs has analyzed it best. The Times has, like every other newspaper in the universe, lost print subscribers, print revenue and while increasing digital subscribers, has not created a business model to sustain the legacy and additional digital workflows and deliveries. In other words, the Times had to do something.

Unlike the Wall Street Journal and Financial Times, which hawk (chest beat) important business news, which in turn mandate that all businesses subsidize subscriptions for its employees (or at least the top echelon), the NYT and other newspapers, is a nice to have. Supported by aficianados, news junkies and advertising, the NYT et al are trying to figure out how to get non-print subscribers to pay for content. It is a very slippery slope since the Times' brass does not want to (further) erode print subscribers -- but they do want a mechanism to be able to charge said aficianados.

I think they have done a fairly good job. The new price points will capture some digital-only readers at a weekend-delivery pricepoint -- which is far higher than the Journal's annual subscription fee. While the paper may see some churn in the 7-day a week home delivery (a $600 a-year-habit) vs $195 for all digital, it protects the all-important-Sunday home delivery price of $197 a year. Sure some of the $680m subscription franchise might be at risk, home delivery bears a much higher cost of good. If news print fades to black and the Time can convert a growing percentage of news readers to digital only at the rate of $200 a year -- management will be only too happy to jettison print readers -- and greatly improve margins.

Who knows, in a few years, it may be that the diehard print readers will be anteing up big premiums to continue that home delivery.

Younger than a toddler & worth $6Billion???

Man, newspapers really should be kicking themselves.

Just hours after I wrote about the Deal of the Day mavens, Google announces an astronomical bid of $5.3 billion for the upstart Groupon and another $700k in incentives. According to analysts cited in a New York Times article,  the Chicago-based neophyte, is pulling in $500 million in revenue -- and achieving profitability. That is a staggering amount of revenue for a relatively simple business model. The company has about 3100 employees in 300 markets -- so do the math -- that's about 5-10 feet on the street selling online ads to all the little local spots that most likely can't afford to have its own Web presence.

That Google is interested in Groupon's connection to these micro-retailers is a no-brainer. For years Google has been trying to figure out how to get into the local market -- even trying to woo newspapers to virtually rent out their sales force to sell local ads. It was a bust. And of course it was!!!

Those of us in the industry assume every company is as digitally aware as we are. And that's hogwash.

When a small business is born -- it starts with an idea that is usually financed with a severance check.  Whether its a service or a retail shop -- unless those entrepreneurs have relatives that can provide HTML, graphics and editorial -- the Web offering is often anemic at best. In my opinion that is why Groupon is successful. They serve the low end of the market that the Clipper magazines and Weekly Shoppers do -- but via the Web. I don't know if it is part of its business model now -- but if I were Groupon, I would create a directory and let each of its customers keep the Web page created for them up on the Web for an annual fee. My bet is, this is likely the only (or at least the best) Web presence these small companies have.

Almost two years ago, I wrote about how newspapers are not serving this "down market." Dailies should have been all over this model -- and created it on their own! The Groupon/LivingSocial/TownHog template is staggeringly easy to build. Which is why some analysts are gagging on Google's gutty move. “A multibillion-dollar valuation for a company that is in a business with virtually no barriers to entry and is younger than my toddler is absurd,” said Sucharita Mulpuru, Forrester Research retail analyst, wrote in a note to clients on Tuesday morning.

Low barrier to entry, younger than a toddler -- and raking in $500 million. And so why aren't newspapers doing this?? I know creating a directory of deals may not earn you a Pulitzer Prize -- but last I checked the old cash cow of Classifieds weren't so sexy either. And with the money coming in -- at least you could continue to afford the journalists.

The Role of Journalism Within the Press

The decade-long introspection of “the future of publishing” has twisted pubishing executives into Gordian knots. “Information wants to be free,” “Content can not be free.” “The Wall Street Journal charges,” “The WSJ has unique urgent business news – paid for with corporate expense accounts, not consumer ones,” so sayeth the pundits.

Pay-wall or no paywall, from mono-channel to multi, publishing has been forced by the disruption of the Internet, to evolve or perish. But should the burden of change be solely on the medium? Or should the creators of content be looked at as change agents – actively looking to revise the product? The challenge is the content creators have, in large part, been journalists. And as a group, they abhor change.

Publishing and journalism have been inextricably linked since the advent of the printing press, and journalism, throughout the world, is often understood to be a bulwark of democracy.

Indeed, when New York Weekly Journal editorial writer James Alexander lampooned New York's Royal Governor William Cosby for terminating New York's Chief Justice after the judge had ruled against the sovereign appointee. Governor Cosby had been appointed by King George II, to head the young colonial province in 1731. A vindictive and aristocratic ruler, Cosby had tried to justify the sacking in the Journal -- but the editorial page fought back. Finally, Cosby sued the paper's publisher, Peter Zenger for seditious libel. At the time, English law protected government against critics. In what has stood as a landmark ruling, Zenger's attorney, Alexander Hamilton, passionately defended the publisher and established that truth is an absolute defense against libel.

That victory for truth was a victory for democracy, and thereby elevated journalism, journalists and the press to be referred to as the fourth estate as well as the fourth branch of government. Keeping a watchful eye on democracy required being unfettered from the influences of commerce; hence the firewall between the newsroom and advertising had been inviolable. And with this sacrosantness -- came absolute power. Nary anything could be added or subtracted from the paper -- without the blessing of the newsroom.

However, in a world where publishing has been stood on its head by the disrupter of all disrupters, the Internet, forcing a rapid evolution of the medium, the sovereignty of the newsroom is at stake. If digital newspapers cannot survive – is it because the business model is bad – or because the product has not adapted to the needs of the people?

Early-stage investor Charlie O’Donnell asserts that people will pay for content if the product (and the payment model) are right, and cites products that are perfectly relevant to people’s lives. Outsell Analyst David Worlock concurs that an evolution is needed. He observes that “our customers have turned from a content-sharing and information-sharing environment to one that wants us to solve a problem.” Which may explain the rapid adoption of apps that help us find restaurants in cities, sales in malls, and sitters in NY.

But will people pay for that which journalists create? I am not debating the value of journalism to society. Journalism is often described as the (factual) reporting of trends, news and events, while the definition of the fourth branch of government was any group that supplied checks and balances on the government. For years the press held the edge of being sole watchdog of democracy. But in the new media, bloggers have assumed that role as well. That doesn’t mean that watchdog journalism needs to go away, but the press can’t stand on its laurels of thinking it is the only arbiter of the truth. As such, the value of watchdog journalism, like good parenting or nutritious food, is often lost on its benefactors -- until it is absent.

Will tomorrow's journalist morph into an oracle of answers to problems poised? It is possible. As journalists have more access to and comfort with technology, they will begin to mine the rich resources of their audiences to create news stories, including voices found in tweets and comments, and maybe some will be set up as experts in given areas. Some will also begin to lose some of their objectivity and proffer analysis along with their news, a trend seen recently in The New York Times, and commented on by its new Public Editor Arthur Brisbane.

But the real change will be in the hierarchy of the press. While we should continue to expect a veracity of our journalists, no longer should they have veto power over new technologies, new services, new sources of revenue for the entire organization. Keeping journalism at its best means freeing it from the shackles of holding the monopoly on content creation.

PayPal for a Free & Open Media

The future of newspapers -- is not really something I lose sleep over. The better concern should be: The future of a free and open media. The media that is supposed to be the checks and balances to the government (instead of shills). With media jettisoning news creators -- read that: bonafide journalists, the question is: who will do the work? Better still: who will pay them to do the work?

The New York Times had a front cover story of a Pennsylvania VA Hospital that didn't have safeguards in place so that a rogue doctor was able to botch about 90 routine prostate procedures -- errantly putting radioactive seeds in bladders and rectums to consign his patients to a life of misery. The article ran easily 5000 words -- and probably took hundreds of hours to pull together. That's one mere example of good reporting -- and doesn't take into account the hundreds of thousands put in by good journalists all over the country safeguarding our democracy. Who will pay for this? Syndicated columnis Aaron Harber presents some very timely and well-thought out suggestions on the future of news gathering.

Let's face it, the commercialization of the media has not been a panacea. Not much is open nor free when media owners squash or skew stories because it may offend an advertiser. (You are naive if you think this doesn't happen.) Still, most of think of news coverage as a de facto right -- and expect to have people committing hours of their life tracking down the truth for us. But are we willing to pay for high quality reporting?

What is the value in the news gathering efforts -- listening for leads, reaching out to victims, researching backgrounds, interviewing countless sources -- many of whom can't keep facts straight, delving into databases -- to then sit down and right a 5000-word piece? (And that is 5000 words that follow rules of grammar -- no smilies and no abbrev.) How do we subsidize what might have been months of work for our behalf?

In watching this Iranians struggle to find the truth we can see first hand the value of news. But of course there is an intense distrust of our own media -- which may have been made worse by Vanity Fair's Matt Pressman's navel-gazing attempt to get at the "truth." The deal is there is a very good chance that our gravy train will end; that there might cease to be major corporations willing to pay staffs of people on average upwards of $50,000 a year to report on abuses and scandals. And when that happens, we may find ourselves helping to support passionate activists like Kelly Golnoush Niknejad, an Iranian emigree, who is fully dedicated to getting out news about her native country -- and who lives on the PayPal donations of others -- in the home of her parents.

Tale of a Small Town Retailer

My 80-year old father started up a contemporary furniture boutique in 1959, and has weathered the cyclical and catastrophic ups and downs of his local Buffalo, NY, economy -- particularly the 1970s when Buffalo dropped from a top 20 metro market to a top 50. That slide represented population -- and dollars lost. Never large enough to expend huge dollars in advertising, he reached out to neighboring Toronto and Rochester by placing ads in the local YellowPages.

His turning point was the web. In 1995, his son-in-law John Kenyon and I put his store on the web, and for the next 13 years, the online drove the success of the store. The last 12 months have been a tough one for a luxury retailer -- although ironically enough, the local economy is doing pretty well. So online sales are down, and not wanting to stand still, the family business is looking to put a satellite store into a local shopping mall which attracts nearly 20,000 a day, 20 percent Canadian. The purpose of the store is to be a representative outpost of the larger, more secluded location.

The objective of this post is to show how real-world retailers, small business owners who represent employment for more than 50 percent of the population, are grappling with high costs of advertising and declining margins. When we in the media industry get together to pontificate -- we forget about this half of the equation: the small business owner.

In the past it made better sense to go for the long-ball, as these folks could be a pain in the ass to service, since they money they spend is usually their own -- and they are more emotionally tied to results. However, with the winds of change, the ball ain't sailing out of the park like it used to and media is forced to figure out how to serve that other half. But here's the thing, that other half doesn't feel they have a lot of viable, affordable and effective options when it comes to getting their messages out there. My dad's business is lucky; he had a son-in-law who understood the vision of the 'Net and a daughter in the digital business and the combination yielded a top-notch site long before others thought to get an email address. Many others his size didn't have the vision or know-how.

For newspapers and magazines to thrive on the web, they need to figure out how to serve this end of the market: the folks who would rather spend $500 a day to open a second location to reach 20,000 people daily -- because they aren't sure that $150,000 in advertising will yield the same results.

Schmidt's Advice to Publishers

I was stuck at home with the flu so couldn't get out to the Newspaper Association of America's conference in San Diego. Bad one to miss. Most of recent years' events would have tested an insomniac's affliction, but this year, Eric Schmidt was brought in as a headliner to kick some -- er, motivate publishers to seek new ways to reach out to readers and focus on, wait for it, advertising.

Now, really, that is priceless: The 10-year old Internet prodigy telling the century old media scions a thing or two about audience development and making money from eyeballs. According to my friend and Nstein colleague, Christopher Hill, who bore witness to Schmidt's carefully chosen words in his closing keynote, Schmidt attempted to move the dial from foe to friend, appealing to publishers' egos by calling papers trustworthy and curators of the public record. He almost sycophantically exalted the printed form versus the web presentation. Simultaneously he wove in bits on cloud computing, networking and data mining. All of these strings were tied up with the meme of innovation. With these technological tools and newspapers' strengths for story-telling, he gave advice on how newspapers be more relevant -- and make money. But the fun began when the Q&A started. Someone asked Schmidt to speak frankly about what newspapers have done right -- and what would he do if his 'fantasy' came true and he woke up to find himself a publisher! He praised them for getting onto the web back in the 90s. Then he took a circuitous path to a direct hit: "What have you done for a second act?"

He said that first and foremost he would try and figure out what his reader wanted. Ha!! Those words transported me back to 1995 -- when we were launching two new "ezines" for IN Jersey's portal: The Surf Report and Neo. The duo were unapologetic in its embrace of Gen Xers who shunned pro-sport coverage (a staple of newspapers) in favor of X-treme action like surfing and (snow & skate) boarding. Our coverage was superb (yes we used real writers) and our national and even international following for both were robust and enthusiastic. At the time we asked our sister dailies if they wanted to repurpose our efforts in print. I might have just as well asked them if they would like to pepper their food with cockroach feces.

Newspapers thought they could shovel their product from their editorial systems to their web content management systems, and all would be right with the world. Any attempt to create content outside the bastion of the newsroom was met with contempt. There was no room for innovation for a newsroom back then. Neither in how they presented the news online - nor in their understanding of what was news.

While everyone blames the Internet for eroding print sales, could it be that the real problem was that newspapers didn't adopt coverage to their changing audiences? As if playing hot potato with NFL and MBA coverage "no, really, you take it" the major tv networks realized they just couldn't get the fan following particularly in the 18-35 audience -- and cut back accordingly. And that was a decade ago. And yet, papers devote proportionally massive real estate and man-power to covering pro sports, yet are derisive when they cover surfers who "flaunt the laws, and surf during rough weather." Just whom are they appealing to?

Last month at NAA's MediaExchange, Chris Dorsey, Digital Media Sales Director for Forum Communications paper in Fargo, ND was on a panel on contextual advertising. Dorsey was explaining how contextually speaking, Fargo is a cold place, and what is of interest to his constituents is what to do when it is cold -- or when the river rises. Beer blasts and drying up wet basements. So Dorsey created a home-page product called "Marketplace Offers." For $149 a month, businesses can advertise Ladies' Nite Specials or offers to remove mold. Every listing has a print or mobile response -- all facilitated by the paper -- a vendor doesn't need to have an IT staff at the ready to do this. Readers can subscribe for daily emails of specials. This morning's count: 125 business offers, or nearly $20,000 in monthly revenue for something with that should be exceedingly high margin (self-serve sales origination page).

This is what Schmidt was talking about. Know your audience and create a service that reaches it. Don't try and lock your content behind a paywall -- unless you cover a niche market and have created value for that information. What information do people find valuable? Is it alerts to buy a new car or to be notified of job opportunities?

The lesson is not just for newspapers, but magazines, bloggers, ecommerce folks, anyone. People pay for that which they perceive to be valuable – whether it is a lead, a job tip, where the ladies' night specials are -- or how to dry a wet cellar.

Rocky Mountain Low

The decision by the E.W. Scripps company to close the Rocky Mountain News on February 26 -- a month shy of its 150th birthday was more evidence of a vastly troubled industry. The mourning in Denver for the favorite voices that were silenced, was the exact way I felt in 1982 when Cowles Media stopped the presses on the Buffalo Courier-Express. (That paper resulted from the union of the Buffalo Courier and Buffalo Express, whose vast archives extended back to 1828, and whose ownership included a guy by the name of Samuel Clemons, aka Mark Twain.)

1982, you might recall, is the year that economists harken back to, usually in the context of "the worst economy since 1982." Some numbers:

• Median houses: $83,000
  
• a gallon of milk: $2.24
• a gallon of gas: $1.30

Whether 2009 will win the dubious distinction of surpassing 1982 as worst year, there is no doubt that the perfect storm of a bad economy and changing technologies kills businesses and hastens transformations. What changing technology impacted newspapers in 1982? Hot metal typesetting (truly the very first movable type!) to phototypesetting -- also known as "hot-type" versus "cold-type." The cold type process eliminated the need for a skilled set of laborers who deftly created lines of copy for press. Adapting to the technology required negotiating with unions, investing in technology and dealing with the criticisms that phototype was a generation less than hot-type. (There would often be a blurriness that drove readers nuts.)

The other technological change that impacted the C-E was, believe it or not, television. The evening news on TV had seriously eroded evening newspapers, causing many of them to move into the morning slot -- such as the C-E's competitor, the Berkshire Hathaway-owned Buffalo (Evening) News. A decade of plant closings and subsequent exodus from the Buffalo area saw the population plummet and advertising shrink. Sound familiar to today's woes? The C-E had actually invested in cold-type but hadn't been able to implement it because of union constraints. And suddenly the voices of syndicated Chicago columnist Mike Royko and New Jersey's Jim Bishop were eliminated from the Buffalo news diet. Over the next decade many two newspaper towns shrank to one. Denver dodged that bullet for yet another decade before succumbing last month.

This traipse down memory lane is not to belittle the sorrows of newspapers today. Rather it is to show natural evolutions that occur following every technical advancement. Savvy papers moved from evening editions to morning, and savvier ones realized that they could use those presses they reserved for news to print commercially for others. Still the savviest will be those who follow the upgrade path available to them, and while it won't be easy, it is still a more graceful morph than, say, the horse and buggy to a car.

Yes, the models have to change, and yes the infrastructures have to change, and yes union contracts will have to be rewritten. But there is an upgrade path. The Seattle Post-Intelligencer, all but out of the pulp business, is seriously talking about going all digital. It wouldn't surprise me if Hearst migrates its San Francisco Chronicle into web only as well. ImpreMedia's Hoy New York went all digital in January. The Detroit papers are both ceasing home delivery save for Thursdays, Fridays and Sundays. They are evolving: losing their tales that are heavy to transport.

The next step is modifiying the notion of church and state. Notice I didn't suggest eliminating church and state, but modifying it. There is room for a little integration, a little cooperation. And how about democratizing news -- so that not just reporters determine what is news worthy. Perhaps the model will be to open up the gates for users to assist as field researchers, while a writer/editor follows up and fact checks. We all trust readers during catastrophes -- why not create a process for readers to assist in the newsgathering process? HuffingtonPost is popular for its voices -- and the voices it aggregates.

The Rocky Mountain low being felt right now will not be just an isolated event in the news industry. And we will look back at this time as a transformative one, as going all digital will not be a last-ditch gasp at life -- but a viable alternative. The voices that ceased in the '80s when the presses were stopped, were not silenced with the shuttering of the RMN, but have morphed into Inside the Rockies and I Want My Rocky, two new sites by former writers. No doubt the ownership and business model may change. So while yes, in 2009, just like in 1982, some organizations will be hastened to die, some will hang on, others will adapt -- and some pure-plays will be borne. "Without failure, the culture of risk fades. Without risk, creativity withers," says NYT Columnist Roger Cohen who points out that churn is the American way.

Or to paraphrase Mark Twain, the rumors of the death of newspapers is greatly exaggerated.

The Future of News ... Ownership

The hand-wringing in the publishing industry continues as Chicago Tribune files for bankruptcy, The NY Times mortgages its building, and the rest of the dailies mortgage their souls by dumping hoards of journalists out on the street.

What seems like a lifetime ago during my tenure as head of interactive for New Jersey Press, my then boss, Bob McAllan (no relationship to the Scotch -- although he loved it) and I would spend hours talking about the role of the web and information. In 1994, we likened it to the evolution of the transportation industry; how newsrooms needed to evolve to embrace the newest dissemination system. Apparently, all that thought was bogged down in the ether and was just picked up by the New Yorker this week.

And I was non-plussed by its observation that while the byproduct of a paper continues to be consumed, people have ceased wanting to pay for it -- either directly or indirectly. Online advertising doesn't equate to print advertising rates. (This too was a problem manufactured by newspapers when they decided to "bundle in" online, basically devaluing the online ad. Betcha they wished they had a do-over for that dopey decision.)

No, what I found most interesting in the New Yorker piece, cleverly hidden at the bottom, was the suggestion that newspapers may have more success if they retool as non-profits. Frankly, I believe this idea has incredible merit. There is precedent for this -- a handful of small papers are non-profits, thereby becoming self-sustaining news ecosystems. Back in the day, privately held companies, which Wall Street would no doubt dismiss as might-as-well-be non-profits, thought it appropriate to have 10-15 percent margins. All worked well until former USA Today founder & publisher Al Neuharth, whose skills as a marketing genius far outweigh his news sense (despite columns he filled to prove otherwise) convinced the public to buy shares in his product. Suddenly all newspapers wanted to be public. And so they did. And now a decade later, each month, more resources* are spent creating powerpoints in preparation for board and analyst meetings -- than on long-term storygathering and retooling their digital strategies.

(I digress, but Sam Zell, the Trib's owner, publicly ridiculed the focus on long-term investigative projects, telling a New York investors’ conference, “I haven’t figured out how to cash in a Pulitzer Prize.”)

So here is the problem in a nutshell: the business model of news manufacturing has been badly hit by a disruptive technology, making near obsolete the old method of dissemination. However the new method of delivery doesn't generate the same amount of income that the old method does, and further, the people who own the newspaper, the investors and shareholders are a demanding and cranky bunch who want to distill news development into a commodity product that comes off an assembly line -- versus a community-based responsibility that is the Fourth Estate.

And, so why yes, Jeff Jarvis is partially right in that journalists did bring some of this on themselves by not embracing digital at the onset, so too are the owners to blame: Those who cashed out to become public, and those public owners who think being in the news business is about manufacturing dividends -- instead of news.

So maybe it is not the business model that needs to change, maybe it is the ownership model. Because a true news loving gent would comfort himself in knowing that Chicago's mayor was deathly afraid of the incessant questions asked by his reporters, and thus offered money to have those reporters rooted out. For a guy who really loves news, that would be payment enough.

* this is an anecdotal claim based on first hand sightings of burgeoning financial teams clamoring around photo copying machines just prior to investor meetings.