This is what’s killing the news business: piracy!

Fully-licensed stock photo, arrrrrrrrr!

Fully-licensed stock photo, arrrrrrrrr!

The AP is again trying to blame bloggers for bringing about the downfall of the news business. In an article yesterday, AP reports the findings of a recent study by Attributor Corp. which claims that 1.5 times more people read pirated articles than legitimate articles, housed at their originating organization, or at a fully-licensed AP site.

But it’s not all gloom and doom. Attributor sees a Step Three: Profit! lining in that cloud:

However, the problem, flagged by copyright cop Attributor Corp., could turn into a golden opportunity if media companies figure out a way to mine advertising revenue from the traffic flocking to their pirated stories posted on blogs and other sites.

Attributor, which makes software that trolls the Internet for copyright violations, estimates the average Web publisher could collect more than $150,000 in additional revenue by selling ads alongside its unlicensed material.

It’s an unscientific estimate, based on an assumption that advertisers would pay $1 for every 1,000 pages of unauthorized material viewed on Web sites that aren’t owned by the copyright owners.

If anything, Attributor believes its calculations understate the opportunity for fleeced publishers. The Redwood City-based company already is working with a few media companies that could generate more than $1 million in annual advertising by enforcing their online copyrights, said Rich Pearson, Attributor’s vice president of marketing.

The problem, aside from still not understanding the benefit of having thousands of blogs pointing to your content? The excerpt above counts as piracy for the benefit of the study.

Attributor’s study, conducted from Sept. 12 through Oct. 12, reviewed 30 billion Web pages hosting copies of stories from more than 100 major Web sites. None of the sites belonged to Attributor’s current customers. After excluding all properly licensed content, Attributor then discarded any page that copied less than 50 percent or fewer than 125 words of a copyrighted story.

Oops. Just upped the word count again.

If Attributor – and the AP – wanted to find actual piracy, they should look for whole-article lifting. That happens every day, and should be attacked and stopped.

But focusing only on the actual pirates wouldn’t get them to the big shocking number they want, to make their wrong-headed point, now would it?

Drain, circled?

Alan Mutter, The Newsosaur, returns with another smack-in-the-face post this morning, which analyzes the numbers from 12 newspaper companies and notes, with some horror, how much faster profits are falling than revenues.

The average profitability of newspapers tumbled 18½ times faster than sales fell in the third quarter of this year, according to an analysis of a dozen companies that segment their financial statements in sufficient detail to isolate the performance of their newspaper divisions.

In a three-month period when advertising and circulation sales among the 12 publishers dropped by an average of 10.3% from the prior year’s level, the average operating profits of the group in the third quarter plunged by a staggering 198.3%.

What I appreciate about Mutter’s posts is how he 1) does original reporting and 2) often bases that reporting on numbers.

Numbers may prompt emotion, but they’re not emotional themselves. They tell an ugly story, but there’s little doubt that the story is true.

For at least a year, if not longer, it’s been clear to anyone who would look at the numbers that the old cliche is especially true now: Newspapers can’t simply cut their way to profit. There needs to be a reset of the business, a fresh look at the business model and the cost structure.

There will be more cuts, but if they’re not strategic cuts, executed as part of a rebuilding process, the blood will be wasted and, like Tribune’s payday loans to itself, merely forestall the inevitable.

But if the business (or just one brave paper) doesn’t heed the warnings of such events as the recent CUNY summit on business models or (one would hope) this week’s API summit, then the circling of the drain is only going to accelerate once the advertising money starts drying up in Q1.

Dispatches from behind the locked doors of the API Summit

Mark Potts brings news of a rogue liveblog that made it through the virtual razor-ribbon today at the super-secret API newspaper crisis summit in Reston.

Big ups to Chuck Peters, CEO of The Gazette Company in Cedar Rapids, Iowa, for 1. knowing how to use Twitter and coveritlive.com to get the news out fast attempt to bring more participants into the room, even if only virtually and 2. having the guts to do it, at the risk of the rolled eyes and possibly hostile glares of his CEO co-summiteers.

Chuck Peters:  Just cutting costs is most likely “incorrect action”, without reengineering to meet key consumer needs.

Chuck Peters:  Do you agree with Steve Yelvington that we have “painted ourselves into a corner” by following our success, like GM?   Check out http://www.yelvington.com/node/501

Peters kept the news conversation flowing for several hours, eventually fielding questions and suggestions from participants on the liveblog and on Twitter. It ultimately became impossible for one person to both participate in the conference and field all the questions and suggestions flowing through his liveblog. Too bad the room wasn’t filled with others such as Yelvington, Potts, Jarvis and others to bring some perspective and other voices.

But for now, Chuck Peters, your colleagues and friends salute you. And congratulations for making it out alive!

UPDATE: What kind of coverage can you expect to get when 50 newspaper CEOs gather in one place to discuss the future of desperately struggling industry? Apparently, once you get past one brave soul with laptop and an EVDO card and some media-bloggers outside of the mainstream media, not much. Run a Google search for “American Press Institute” and, as of this writing at least, there’s nothing. Search the Romenesko blog – the industry gossip and tip sheet – and there’s nothing, not even a link to Chuck Peters’s liveblog.

What’s wrong with the U.S. newspaper industry? In this case, a stunning lack of curiosity, it would seem.

UPDATE 2: Made a few edits based on Chuck Peters’s comments below. I still think what he did today was great, but if he chooses to not call it strictly reporting, I’ll abide by that.


Quiet day in Zero Percent Idle land

I spent my day on Twitter today, arguing about Jeff Jarvis (Me: generally pro) and learning about the Higher Ed Web space, where I’ll be focusing my daily efforts, starting tomorrow, in my new position with Johns Hopkins University.

I will still blog here as well, though things might continue to be a bit quiet for a few days as I get my bearings at my new office on the waterfront in Fells Point. Unless you count my time in the World Trade Center (Baltimore!) at The Inner Harbor (and, on balance, I don’t), I’ve never worked in an area that was actually interesting and loaded with good places to eat and with a real, non-chain coffee shop within a few minutes of my desk. So this should be fun.

Until I get back, look for me in 140-character chunks, on Twitter.

The newspaper biz pokes a thumb in the eyes of those trying to help

One of the most tireless supporters of fixing the news business is Jeff Jarvis. But today, you can practically hear the frustration and resignation in his voice as he describes the API’s closed-door conference:

What they should be doing is asking for help, ideas, perspectives, models, worldviews, and suggestions from outside their industry.

Instead, they will be “a facilitated discussion of concrete steps the industry can take to reverse its declines in revenue, profit and shareholder value.”

If they haven’t figured out those steps by now, I’d say getting them into a room together isn’t going to do it.

If you’ve lost Jarvis, you just may have lost the war.

Saving newspapers from the scrap heap: a plan

So the American Press Institute has declared a national emergency, grabbed the newspaper industry by the lapels and summoned its leaders to a hotel ballroom the API campus in Reston Virginia.

The API Summit on Saving an Industry in Crisis happens on November 13th. Here’s what they’re saying about it:

The summit conference will be a discussion on the theory, practice and application of techniques of corporate renewal. Facilitating the discussion will be James B. Shein, Ph.D., a former turnaround CEO for several companies and currently clinical professor of management and strategy at Northwestern University’s Kellogg School of Management. Prof. Shein will lay out for us:

  • The predictable path to decline that our industry is taking
  • How to determine where an organization is on that path
  • Strategies for reversing the decline.

All discussion will be on a non-attribution basis. At the end of the day, participants will have a greater understanding of available tools for engineering the renewal of our industry, and a shared vision of the way forward.

Lauren Rich Fine of paidcontent.org, recently made the intriguing point that, until newspapers start forcing advertisers to take a hard look at interactive, the industry will remain locked in the same 10-20% range for interactive revenue as a slice of the whole pie. She suggests killing the print edition, as painful as it will be, to be the bitter but necessary medicine that will start the healing.

I wonder, though, if there isn’t a bridge to that future that allows for a hybrid print-online model that would be worth discussing at the API summit. So, with all the hubris I can muster, herewith is my straw man for the publishers in Reston later this week.

1. Combine all your staffs. If you have an interactive team, a community newspaper team, an online entertainment product team, a TV interactive team and a print newsroom, put ‘em all together. You’re going to need a multi-disciplined content team for the plan I’m proposing.

2. Pour out a 40 for your beloved daily broadsheet. Here’s your new product mix:

  • Daily free tabloid, limited to 48-60 pages. (Editorial/Ad mix 50/50 or 45/6555) It’s not time to give up on print. The readers you have aren’t ready and lots of your advertisers aren’t ready. By printing a Monday-Friday news tab, you continue to serve their immediate needs, while keeping a significant piece of the print revenue pump flowing. Assuming you do a good job of it, and you actually pick up readers through a combination of smart editorial focus and zero-friction for pickup through the free price-tag, you could very well get into the kind of scarcity-pricing that is common in television and radio. When demand from advertisers increases, you don’t add pages; you raise the prices on the ad spaces you have.
  • Weekly Magazine, paid, 100 pages or more. (Editorial/Ad mix 60/40) This is where you publish your best print work. Think of this as a Newsweek for your local market. It’s the publication that doesn’t get recycled at the end of the day; it sticks around for a week (or longer). For years have been telling daily newspaper publishers that they don’t have time to read a paper every day, that they felt guilty dumping so many unread papers. This solves that, providing the insight and perspective that only a major newsroom can, at a print frequency more attuned to the needs of modern readers. (Big question to be solved: how to carry inserts, a huge part of weekend revenue. Should this be a standard magazine size, poly-bagged, or would a stitched, tabloid-sized publication work? Need to balance the revenue needs with the shelf-life objectives for the publication.)
  • Significantly enhanced digital presence. A 24/7 digital newsroom is a given. Everybody who is in your newsroom – with the possible exception of the page designers – works for digital first. This is where you will meet the promise to your local market of being the preeminent local news organization, reporting news and data in whatever digital form your market needs it, including enhanced phone delivery, consumer-searchable databases, open APIs into your reporting and datastream, and an aggressive program of outreach to the rest of the local web in your market. And, yes, web sites. Not just one uber-site (though that’s welcome), but also a family of niche-focused thin sites that meet the unique needs and desires of your markets. These thin sites, built around events databases and social media tools, can be run by a single reporter-blogger who’s passionate about a topic that ma

Even writing this, I can think of a dozen arguments for why this is not the perfect answer. Good. Because these aren’t times for perfection. These are times for experimentation. The readership trend and the revenue trend are both heading in the same direction. They’ll eventually hit zero if we do nothing. But with the right attitude and a little bit of risky behavior, I believe both of those trends can improve.

Why people had to have a paper today, and what does that tell us about a business model?

Photo by Adam Fagan

Photo by Adam Fagan

I’m hearing and reading a lot today from people, largely inside the newspaper business, who say today’s coast-to-coast sellout of newspapers proves that people really do respect the power of the newspaper and that the public maintains an emotional connection with the paper that lives just below the surface, ready to be reborn with the right stimulus.

I think that overreaches. I do, however, believe we were shown some key facts today that just might serve as guideposts for newspapers looking to pump some life back into the print edition. Here’s what I believe we saw:

If you have created something people want…

And if it better suits their purposes in paper form than in electronic form...

Then they will buy your paper.

Notice there’s nothing in there about emotional connections or even journalism. The people buying papers today had an emotional connection with Barack Obama, not the paper. They used the paper as a permanent, undeniable record of the moment. Look how many people you can find in flickr posing with the paper, in the mirror image of a hostage photo taken to prove the captive was still alive on a particular day. The paper better serves this purpose than a print-out of a web page. It’s more real, it’s cheap, and it is easily portable through time.

Of course, we all joked that this solves the newspaper industry’s business model crisis: simply have Barack Obama win the election every single day from now until the end of time. Funny. But we need to ask how we can fulfill the logical flowchart above in smaller ways on a daily basis.

We spend so much time thinking about how to make digital better than print, but if we’re going to keep print alive or even turn it around, we need to ask ourselves in what ways can print be a better delivery vehicle than digital? Are there ways in which the daily paper can better suit some readers’ need than digital can? And, if so, is that how we are focusing our newspaper efforts?

What do you think?