April 04, 2014

Warren Buffet's gamble on community papers a loser — and other stupidities (updated)

Warren Buffett doubled down on community newspapers a couple years back, and it's a loser, so far. Hell, I could have told Bloomberg that. First, despite Buffett allegedly supporting paywalls, here in Central Texas, his two small 7-day dailies only paywall the PDF e-edition, which means bupkis, especially as nobody reads PDFs on mobile devices. And, the HTML news stories on site are all free. Given that most non-daily community papers still think this is what a paywall means, it's no wonder that community newspapers are basically, with some differences in detail, about at the same spot in the financial stupidity curve as larger newspapers were a decade ago.

Linked to this is that smaller metropolitan areas, at least here in Tejas, aren't fully sharing in the economic recovery of the big cities.

Take Waco, where the Tribune-Herald is one of the two papers I'm talking about. On Saturdays, which should be a big day, the paper struggles to hit the 30 percent mark on ads, and that's counting the inches of paid obits as straight ad space. I don't know about Bryan-College Station, but I venture to guess the Eagle's in somewhat similar boat, though maybe not as bad.

Beyond that, whether his investments in the biz are small or not, Buffett knows nothing special about newspapers, other than fairly typical slash-and-burn. At the Buffalo News, early on, he was strong on union-busting as part of reducing costs.

Back to the main point, though. PDFing an e-edition while posting in HTML all your main news stories for free is NOT a paywall.

What it is, is stupidity and a waste of time even as newspapers try to do more with less on staff time as well as money.

And this isn't likely to get better in the near future.

Meanwhile, per Editor & Publisher, "winning stratetegies" of small and middle sized dailies include:
1. Publishers using the C-word. Any time a publisher mentions "content," I reach for my revolver.
2. Newspapers "rediscovering" special sections. Problem? If you're hosting the event for which the special section is about, and "hosting" as in paying costs to put it on, having staff on the ground, etc., aren't you losing at least part of your profit? If so, how much? Are you trying to minimize this by having only salaried and not hourly people do this? If so, how much, if any , comp time are you giving them?
3. Newspapers "partnering" with folks like chambers of commerce for tourism guides, etc. Sounds good — until your chamber of commerce does ill-advised spending of hotel-motel tax money, or the equivalent in your state, and, you have to write a story about it. What if the chamber, the economic development board, etc., then "un-partner" with you?
4. A newspaper saying that its expanded database of email addresses for discount blasts have helped ward off Groupon. If you're that worried about Groupon, a company more and more despised by merchants, and you're that worried in part because you've not read NEWS STORIES and not CONTENT that has reported exactly this about Groupon, then [sigh].

What can you expect from such stupidity, though? Per Poynter, back with the big boys, the Boston Globe is now going to a metered paywall, with 10 freebies per month, vs none before. But, it refuses to call it a paywall, just using the term "meter." It's unclear if the totally free Boston.com is staying around. If it is, then the Globe is as stupid as the Chron in San Francisco and the Snooze in Dallas.

That said, the stupidity isn't limited to the U.S.

The Guardian is getting a pretty penny for selling its majority stake in Auto Trader, but, without a paywall, Alan Rusbridger and gang will continue to burn through Scott Trust money, and this "infusion," like money's going out of style.
The company, which has divested of non-core newspaper assets such as GMG Radio – the third largest radio group in the UK which owned brands including Real and Smooth – for £70m has revealed that the sale of its majority stake in AutoTrader has secured the financial future of the newspaper portfolio for a minimum of 30 years.
Yeah, we'll see if this last for 30 years. Meanwhile, how much profit were these other assets making? Maybe you should have kept them and done more to fix the Guardian's bottom line at the same time.

I mean, you can chase the allegedly "lucrative U.S. market" all you want, but since that market, for newspapers, is expected to have another 8 percent ad revenue decline this year, it gets less lucrative all the time. And, new numbers on digital circulation aren't doing a lot more than offsetting print subscription declines, in many cases.
There is essentially now an infinity of digital inventory, very different than scarcity in print, so you can buy digital advertising anywhere and everywhere,” (Ken Doctor) said.
This is something I've been hammering myself, as the flip side of the Gnu Media gurus talking about how the digital world offers an infinity of room for news stories, length of news stories, etc. Throw in programmatic advertising, which is further driving down rates, primarily in print, but surely in digital, too.

Add in that digital dimes are likely to be replaced by mobile nickels, especially per my note above about PDFs and mobile devices, and, Rusbridger can chase diminishing returns all he wants.

Unfortunately, the only real hope Doctor sees is from points 2 and 3 under the "best practices" above:
Growth may come, he suggested, as companies expand into “third, fourth, and fifth” businesses, in addition to the first two, advertising and circulation. Newer revenue sources include digital marketing services, sponsoring events and conferences, and in-house publishing activities to help other papers looking for publishing services.
Uhh, given that Doctor was one of the first media analysts to talk about Digital First Media shutting down Thunderdome for its own papers under "in-house publishing activities," as I noted in my blog about DFM's pending implosion, that's a big negatory, Ken, on that being likely to do anything.

Doctor should also read this piece by Jack Shafer. Shafer gives a good smackdown to the NYT's "Premier" premium website in specific, and to the concept of "premium" newspaper websites in general. Folks in Dallas, Boston, and likely San Fran, who think they can "sell" a premium website while keeping a totally free, totally unpaywalled basic one, should take note. But almost surely won't.

Doctor doesn't specifically mention "swag" under his ideas, but it's kind of hinted at.

So, let's look once again at this.

Digital marketing services? In small towns, papers may have a partial edge on this. But, big cities? Nahhh. That's what public relations companies do, Ken. Thousands of them, both newer and older, flood Monster, Indeed, and other job sites with "SEO specialist wanted" ads all the time, even as that job market loses steam.

So, scratch No. 3.

No. 4? I've already poo-poohed this on conflict of interest grounds. Or worse, on sponsored conferences? We've already seen this backfire with the NYT and WaPost. And Politico. That said, as we see with the likes of Advance Media paying writers bonuses for, essentially, promoting clickbait, journalistic ethics, on the management side, continues to sink by the day. John Paton at DFM should be kicking himself that he didn't think about hosting digital-only cyberconferences, like ginormous Google Hangouts.

No. 5? Given that more media companies are already consolidating printing services, and the long-term future points digital only, how can you even offer this one? And, as I just updated, with that link a few grafs above, that ain't going anywhere, either. Joint copy desk hubs in major newspapers will likely become bigger clusterfucks the more newspapers they're asked to build in the future. (And it's probably time for a separate blog post just on that.)

Shows that outside stereotypical Jarvis, Rosen, Shirky, and other Gnu Media gurus, other analysts aren't so brilliant all the time, either.

I have the feeling that many newspaper companies, their top management, their family owners, or whatever, suffer from the Dunning-Krueger effect.

Folks, analytics say that ads are going to fall 8 percent on average this year. Odds are there's nothing special about your newspaper to beat those odds.

The big issue is that, as Michael Wolff notes, we still haven't figured out how (with select exceptions) to make the online model pay. I've blogged before that the Net is exactly the opposite of print in this way. Because space for stories was limited, it made the "information" of ads pricey, to quote the second paragraph of Stewart Brand's famous saying — one that Gnu Media gurus routinely ignore. Wolff adds elsewhere that advertisers have figured out that Net traffic numbers aren't real, either, which is why click-per-impression rates continue to drop. (Yet more from Wolff here.)

On the Net? Because story/photo/video/space is limited only by server size, and every daily paper with a website, plus top blogs and news aggregators, post wire service stories, ad "information" is almost free, even if it doesn't "want" to be so.

In Buffett's case, other than staff-slashing at Buffalo, then Omaha, he knows no more about new media revenue models than any other old media owner. And, since Omaha's a relatively recent buy, and both it and Buffalo, pre-Media General, were tiny drops in his empire, he's never bothered to give much thought to it, unlike buying BNSF stock a few years back because he expected both intermodal and energy shipping to pick up as the Great Recession lessened.

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