wilkinson

>> Earl J. WilkinsonExecutive Director and CEO | INMA

The Newsmedia OutlookLast Moments of Danger, Last Moments of

Opportunity

All newsmedia companies face economic downturn

Confusing the worst downturn in 8 decades

A lot of hysteria with journalists writing about journalists

Recession-ridden newspapers

Debt-ridden newspapers Most debt-ridden

newspapers concentrated in U.S., U.K.

What I learned from my talks with INMA publishers

Advertising industry discussions from New York, London impact others

The megaphones

How discussions in New York and London affect advertising thinking

The megaphones

Is what’s happening in U.S./U.K. tip of iceberg?

Short-term (2009-2011): “no” Beyond recession conditions,

horrific nature of certain newspapers in these countries is about debt

Acceleration of trends by consumers and advertisers pre-recession: internet, mobile

Factors: a) trend-lines of demography and literacy; b) broadband internet penetration; c) business models; d) national culture

What is unique to U.S./U.K.?

Debt: Debt loads astronomical: McClatchy, Tribune, Lee, Star Tribune, Philadelphia, Johnston Press, Trinity Mirror, others

Broadband: How high is broadband internet penetration?

Advertising: How mature are advertising markets?

Profitability: Expectation of high profit margins (20%-25%)?

Public perceptions: Poor public perception of news on paper and your brand

What is not unique to U.S./U.K.?

Capital budgets: Huge capital budgets tied up in printing presses, not databases and CRM

Strange internal cultures: Editorial, production cultures dominate over “market culture”

Vertical organisations: 19th century silo’d organisational structures that discourage communication, innovation

Collapse of classifieds: Global tsunami impacting real estate, housing, automotive advertising

Vast majority of national newspaper industries will return to normal

Post-recession (2011)

Business as usual

Symptoms of change

Internet disruption

Scale of disruptio

n

Some are seeing symptoms of structural changePost-recession (2011)

Business as usual

Symptoms of change

Internet disruption

Scale of disruptio

n

Others seeing internet destroy their countries’ business models


Business as usual

Symptoms of change

Internet disruption

Scale of disruptio

n



Business as usual

Symptoms of change

Internet disruption

Scale of disruptio

n

Certain business models

Certain business circumstances

Certain market environments

Recession exposes vulnerabilities

Today’s newspaper isn’t universally dying

Today’s presentation1. Are we facing the

death of newspapers?2. Prisms of strategic

planning3. How can we create

new value by linking “audience + content + platform”?

4. How can we determine the value of content?

Prism for planning: deep hole, shifting

sand

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

'50 '52 '54 '56 '58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08

Print newspaper advertising

in U.S.: 1985 levels (adjusted for inflation: 1968)

U.S. advertising and marketing share 2002-2012

0%10%20%30%40%50%60%70%80%90%

100%

2002 2007 2012 (e)

Traditionaladvertising

Traditionalmarketing

Alternativeinteractivechannels

Source: Veronis Suhler 2009

47% 32%41%

7% 27%13%

48% 42%46%

Advertising growth will return in second/third quarters of 2010

100% broadband penetration Doubling, tripling of broadband

speeds Market saturation of

smartphones Where does what newspapers

do best fit in this world? Where does advertising fit in

this Digital World?

Prism for planning

Less advertising, smaller companies

Less journalists, more editors

Replacing print complexity with digital complexity

More sales, more marketing, more research

Speed: product development, social media

More partnerships, less go-it-alone

Assumptions

Reformation and Renaissance of media

Age of Mass Media Newspapers Television Magazines Radio Outdoor

… we talked to the forest

Age of Niche Media Zoned newspapers Cable TV Niche magazines Niche radio Outdoor

… we talked to the tree in the forest

Age of Micro Media Blogs Social networks SMS Magazines-on-demand Podcasts E-mail

… we talked to the leaves in the tree in the forest (and the leaves talked with each other)

Power of news on paper

Deep engagement

Deep loyalty and passion

A canvass of emotion

Opt-in medium to bypass avoiders of media

Excellent mass medium and niche medium

Tangible influencer of society

Marketing: a contest for the consumer’s attention

In 2009, average consumer will see 1 million marketing messages (3,000 per day)

60% of Americans have home telephone on a “no call” list

Spam filters prevent commercial e-mail to reach consumers

Finland: 400,000 consumers register for list … do not call, e-mail or mail me (10% of population)

Technology now blocks or skips over significant amounts of TV viewing

”Marketing is a contest for people's attention. Thirty years ago, people gave you their attention if you simply asked for it. That's not true anymore.”

-- Seth Godin

How do we evolve from audiences of geography to audiences of passion niches?

What is the best medium to reach these audiences?

How do we balance our mass-market societal role with how technology is re-shaping audiences?

How do we acquire tools to engage with micro-audiences?

Our choice: multi-media providers of content and audience solutions

“Newspapers” adapt to the “Age of

Micro Media”

Print for mass-market journalism and passionate niche audiences

Web and mobile for timely news

Mobile for location-based news and advertising

Social networks for granular New forms of content for

engagement: mashups, video

Our USPs are deep content, deep audiences

Multi-media provider of audience solutions

Disaggregating print’s value propositions

Print bundle protects allContent Verticals

NewsSportsBusinessFeatures

Advertising Verticals

ClassifiedsLocal retail

National

The Newspaper Bundle

The crumbling bundle When newspaper moves

online, the bundle falls apart

Each story, each section stands “naked in the marketplace”

Invisible system of subsidisation disappears

Subtle effects on journalism and story selection

Expense of printing created environment where Sears subsidised your Washington bureau

No deep link between advertising and reporting

Advertisers had no choice Today, a deep cultural

practice nobody thinks about

Effects of printing cost are being destroyed by internet

Link between news and advertising being severed

Content verticals

Breaking newsInvestigative

journalismWire service newsPack journalismLocal sportsNational sportsStock listingsWeatherPuzzlesPhotography

Advertising verticals

PropertyJobsCars

Private-partyLocal retail

NationalMatrimonials

BrandPrice-point

All categories

The Newspaper Bundle

Every unit of content must have value

Why determining your content’s value is a

top priority today

Why “value of content” is important to you

1. A proxy for engagement in Digital Age, focuses you on what/how you market to consumer segments

2. Even if you never charge for content, segmenting “content, platform, audiences” forces market approach to growth

3. Places you in context of today’s “abundance of information”

4. Not about “content,” but what content means for growth

5. Goes straight to your differentiating value proposition

Tipping point on traditional business model1. 50%-75% of print

advertising will return

2. Too much abundance and inventory to drive up online CPMs

3. Advertising a smaller part revenue pie, but won’t disappear

4. Consumers will pay, but can’t absorb full cost of journalism

5. We will produce more for audiences that pay and less for audiences that don’t pay

Google CEO Eric Schmidt to newspapers this week: You don’t have a new problem. You have a business model problem.

Content’s pure value Content’s pure value is

declining: denominator keeps changing

Not all content is of equal value

Not all platform experiences are the same

Today: dumb conversation about how to get readers to pay for digital content

Tomorrow: understanding how reader perceives content in different platforms (context)

What publishers tell INMAReacting to advertising declines, consumers pay more

India: radical re-thinking of low print circulation price model

Switzerland: grow online audience, drive e-commerce

United States: doubling of print subscription prices

Indonesia: charging expatriates for online access

Australia: pay walls to deliver online revenue, protect print

United Kingdom: value-added membership formulas

What is the reader perception of the print bundle?

What is the reader perception of disaggregated digital content?

What is the atomic unit of our content?

What are the variable values of our audiences to advertisers?

What content drives passion?

Important: It doesn’t matter how we perceive ourselves

Monetize = back to basics

People don’t pay for content Consumers perceive that

they are paying for content Instead, they pay for

access to content This is nothing new: in past,

consumers paid for paper, delivery, theaters, books, CDs/albums … rarely content

“Share of wallet” for media/content access has risen, yet revenues go to access providers

Media share of wallet1975

$40 per month ($161 inflation-adjusted)

Consumed Media ($23/$93)58% of content package

4 print magazine subscriptions: $10 0 print magazine single copies: $0 1 print newspaper subscription: $5 1 movie in-theater: $3 1 music album: $5

Access ($17/$68)42% of content package

Cable television access: $7 Land-line telephone: $10 AM/FM radio: $0

2010$392 per month

Consumed Media ($140)36% of content package

0 print magazine subscriptions: $0 4 print magazine single copies: $20 1 print newspaper subscription: $15 1 movie in-theater: $10 30 iTunes songs: $30 1 video-on-demand: $5 4 iTunes movies: $40 1 Blu-Ray DVD movie: $20

Access ($252)64% of content package

Cable television access: $69 Land-line telephone: $45 AM/FM radio: $0 XM Radio: $15 Broadband access: $25 Mobile phone access: $40 Mobile data plan: $30 Netflix subscription: $15 1 online newspaper subscription: $8 Xbox 360 Live gold membership: $7 1 iPhone app: $2







2010$392 per month





+51%

+271%

+143%







2010$392 per month





Newspaper battle

Industry battle







2010$392 per month





iPad 3G access content subs

e-butler services

Kindle

4G Net access

3G television

iPad apps

Skiff

iPad single-copies

paid aggregators

personal assistant

data mash-ups

Media share of wallet Who controls access owns

highest share of wallet Thanks to rising access,

time with content growing exponentially

Subsidies shifting from media (classifieds, advertising, retailer efforts to drive store traffic) to device/access (Amazon covers access fees, subsidizes cost of books)

Audience

+ Content + Platform = Value

How to re-create value for news content

Carve perceived scarcity from an abundance of information

Value = audience + content + platform

No price tag on content without perceived value in consumer’s mind

“Value” to publishers must have tangible, financial return on investment (ROI)

Upscale?Downscale?Geography?

Interest?Mass?Niche?Micro?

Value equation in Age of Multi-Media

Uniqueness?Quality?

Differentiation?Timeliness?Contextual?

Print?PC/Web?

Mobile Web?Mobile SMS?

E-reader?

Audience PlatformContent

Principles of monetization (really, principles of running a multi-media

company)1. Content has different values: surprise,

delight, inform, utility, context, speed, stickiness

2. Respect the platform for all its unique values

3. Prioritize engaged audiences (requires research)

Conclusions

Old gets broken faster than new can be put in place

Importance of experiments aren’t apparent at the moment they appear

Even revolutionaries can’t predict the future

Nature of revolutions

Written in 1979 by Elizabeth Eisenstein

How the world looked different before and after printing press (1500s)

Bible translated into local languages

Erotic novels appeared Greek classics flourished, but for

first time people realised they clashed!

Shrinkage of books allowed for portability and cheaper access

As publishing flourished, value of literacy grew

Printing press as an agent of change

Living through 1500 all over again

Easier to see what’s broken than what will replace it

Internet is 40 years old

Access by general public less than half that

Access as part of everyday life a fraction of that

Revolutionary times

Summary

1. No pending “death of newspapers,” but clear digital disruption throughout decade ahead

2. Prism of planning: 100% broadband, 100% smartphones, double broadband speed

3. “Newspapers” are evolving into multi-media “newsmedia companies”

4. Value = audience + content + platform

>> Earl J. WilkinsonExecutive Director and CEO | INMA

The Newsmedia OutlookLast Moments of Danger, Last Moments of

Opportunity

wilkinson

News & Politics