From the outside, the answer seems obvious

Mark Andreessen – Netscape and Ning founder, Facebook board member and investor in live-video site Qik – interviewed on Portfolio.com, looks at the current newspaper revenue and circulation crisis and sees… opportunity:

If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business—shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing.

The financial markets have discounted forward to the terminal conclusion for newspapers, which is basically bankruptcy. So at this point, if you’re one of these major newspapers and you shut off the printing press, your stock price would probably go up, despite the fact that you would lose 90 percent of your revenue. Then you play offense. And guess what? You’re an internet company.

The past 12 years had nothing but bad news for print circulation

As industry observers such as Alan Mutter and Mark Potts try to sort out the meaning of the latest newspaper circulation numbers, and what they mean in context of the past 10-15 years, I thought it would be instructive to look at the numbers from ABC for one market, my local market newspaper, The Baltimore Sun.

The Sun is typical of a mid-metro market newspaper in that even with the recent news, it remains the dominant media source for news, information and advertising in its market, but it has seen its position slip greatly over the years. When that slippage is reported in 6-month increments of a certain percentage, year-over-year, it’s hard to understand exactly how bad the story is. But, over time, the numbers are bracing.

The oldest reports currently available from ABC are from 1996, so that will be the base year.

In 1996, the Baltimore DMA had 906,100 occupied households. In the September, 1996 Audit Report, The Sun reports an average of 320,986 daily papers and 483,971 Sunday papers. In pure penetration numbers, that represents 35% for the daily and 58% for the Sunday. For every household in the Baltimore DMA, slightly more than one in three was touched by a daily Sun and a bit more than half of the households took a Sunday Sun.

Fast-forward to this week. Using population figures from the March 2008 Publisher’s Statement (not reported yet for September), there are 1,018,455 occupied households in the Baltimore DMA. In the September, 2008 figures reported by The Sun to ABC, the daily average for the paper was 218,923 and 350,640 on Sunday. By these numbers, daily household penetration had slipped to 21% and Sunday household penetration was at 39%.

Keeping in mind that the overall number of households in the Baltimore DMA grew 12% from 1996-2008, during this same period household penetration of the paper in the market dropped 40% on average on weekdays, and 33% on Sundays. While the Baltimore market added 112,355 households in that period, The Sun ended the period distributing 102,000 fewer papers on a typical weekday and 133,000 fewer papers on a typical Sunday.

Of course, in the same period, The Sun’s online audience went from nothing to more than three million visitors a month, from zero page views (The Sun’s web operation launched in September 1996) to more than 37 million a month in 2008. So it can be argued – credibly – that The Sun’s readership actually increased during the 12 years beginning in 1996.

But as robust as the online revenue stream is at The Sun and at similar metro news operations in other markets, the vast majority of revenue is still pegged to print. And when you look at the numbers across the past 12 years, it’s clear that local newspapers would be in a business-model crisis even without over-leveraged corporate owners or the current shaky economy.

Every indicator available to us says that print is not now and will not be the powerhouse driver of revenue it’s been historically. You can’t have your influence drop by 33-40% in 12 years and continue as if nothing’s changed. Slicing dollars and people off the cost structure isn’t enough. Newspapers need to start over, with a business model that acknowledges that the print cash cow has run dry and the digital future is still exchanging dollars for pennies as the audience and advertising moves.

Efforts like Jeff Jarvis’s recent summit on New Business Models for News and the News Innovation web site are good starts, but it’s time that we start treating this like the crisis it is.

New Business Models for News: The opening salvo

I’ve been remiss in posting this. Here’s Jeff Jarvis last week kicking off the New Business Models for News conference. This is part one of two. You’ll find the second part linked at the end of part one.

This conversation could not have come at a more critical time. Circ. is down. Revenue is down. Staffing is down. If there is going to be journalism in the future, it’s time to change the model now.

Helping local businesses to grow: A follow-up to the New Business Models for News summit

Thanks to the New Business Models for News summit organized by Jeff Jarvis at the CUNY Graduate School of Journalism, I have a spiral notebook full of ideas flagged for followup, which I plan to address on this blog.

This morning, a quick one, courtesy of data from Eric Stein of Google.

As we wrestle with the inevitable and undeniably secular disappearance of classified revenue from newspapers and, by extension, their web sites, the obvious question is “How do I replace those dollars?”

The answer for a lot of us has been local – helping local businesses to grow. And, according to Stein, that potential for growth is just beginning.

By federal estimates, there are 23 million small businesses in the U.S. Of that number, 6-7 million have one or more employees; the rest are sole-proprieterships.

And yet, most of them – in fact the vast majority – have yet to create a web site to promote their businesses. We can’t help them drive traffic. Google can’t help them drive traffic. In the digital world, they don’t exist.

So what are local newspapers doing to help? As the largest single sales and marketing organizations in our markets, what can we do to reach out to the millions of going concerns that need to reach the massive and targetable audience we have?

Who’s doing a good job out there of helping local businesses to reach their audiences? Who’s using the pricing advantage of digital media to show local businesses that they can prosper and even grow in a down market?

What are we doing to help local businesses in our markets?

Newspaper circulation: Now can we call this a crisis?

This is not exactly a surprise, but it’s disappointing nonetheless.

Circulation is down, again, across the board at U.S. newspapers. According to the latest figures released this morning from the Audit Bureau of Circulation, overall daily circulation for the period ending September, 2008 was down 4.6%, and Sunday was down 4.8%

And these numbers were compiled before the financial panic of 2008. That will be taken into account in the numbers reported in March, 2009.

It’s time for creativity. Which major metro will transition to free distribution first? Who will convert to all-electronic? In any other business, this steady drumbeat of decline every six months would surely lead to a change in the gameplan that did more than redesign the packaging. Hint: A crisis gives you the cover to make bold moves, and this certainly qualifies as a crisis.

Finding the next business model for news

The theme of CUNY’s “New Business Models for News” summit didn’t emerge contextually throughout the day. It was staring everyone in the face from the multiple monitors spread throughout the newsroom taken over by about 125 industry thinkers and leaders yesterday. It was this:

“Do what you do best. Link to the rest”

Linking in this case could be the literal A HREF hyperlink, but was often also about thinking about new ways to focus on the core and find ways to either jettison non-core (leaving it to others to pick it up) or find links through outsourcing, freelancing and mobilizing armies of bloggers and citizen journalists.

Jeff Jarvis, the chief provocateur for the day and organizer of the summit, set the tone early. “There won’t be any silver bullets today,” he cautioned. “If there were, we’d have already used them.”

The goal of the day was to provide an opportunity to start an intentional and ongoing conversation about how to rethink the business model for news gathering and reporting, largely at daily newspapers, but also in television and in national niche media. How do you take a business that is built on the scarcity model – there’s only one or two newspapers per town, allowing for the growth of eight- and nine-digit annual revenue streams - and rethink it for an age of information-ubiquity?

I won’t even attempt a blow-by-blow of the day when so much of it is available for watching and reading on the News Innovation web site. Also check out the contemporaneous Twitter stream. But here are some random highlights that jump out from my notes:

Edward Roussel of The Telegraph: If you’re a newspaper company, your technology sucks. Outsource it!

Dave Morgan, formerly of Tacoda: It’s time for newspapers to face reality. It’s a market problem, a business model problem and a cost problem. “Prepare for disassembly.” Newspapers, he said, need to disaggregate and start thinking about reporting, distribution, ad sales and direct marketing, printing and digital as different businesses and treath them accordingly.

Morgan on leveraging the existing structure: Newspapers have the best marketing and sales organizations in their markets. They could become strong local ad agencies if they’re untethered. Printing is either an area of opportunity – if newspaper do a whole lot more of it – or an albatross, that they should outsource.

Morgan on Digital: Making digital a sidecar to the newspapers is killing digital. Only divided (as businesses) can newspapers and digital endure.

Michael Rosenblum, Rosenblum TV: Both in the larger session and in the break-out, Rosenbloom hammered at the notion that it was absolute folly for newspapers to hire any journalists who were not absolutely adept at the full suite of digital reporting skills, including photography and videography.

Adam Davidson, NPR and creator of the excellent Planet Money: Respect people’s intelligence.

Samir Arora, Glam: News organizations need to be curators of content. The network has more value to the consumer than the brand.

Upendra Shardanand, Daylife. Before long, everyone will be a news publisher. How can you offer the best navigation of the world beyond your own content? News organizations need to do a better job of curating the world around their content.

Jay Rosen, NYU: There is a wealth of information available that your connected and interested users would be happy to share with you to make your product better. Publications that get to this point start their days with inboxes full of great ideas. How to make this happen? 1. Be two-way in your approach to reporting. Invite contributions. 2. Be clear that you need people to help you and that you will use their contributions.

More to come on the topic and goals of the day, but it was an excellent first step. Thanks to CUNY Graduate School of Journalism and, of course, Jeff Jarvis.

Budget cuts hurting? Here are some free ideas to improve your news organization

The current topic at the Carnival of Journalism is:

What are small, incremental steps one can make to fuel change in their media organization?

(Yes, we’d all like to swing in our newsroom, lay some boot heels on chests, hoist the black flag and change everything by the end of business on Monday — but the reality is, that ain’t happening unless you have a couple buckets of cash to buy a paper of your choice and a rusty saber.) So what are some realistic, real-world examples of free (or cheap) ways you can help fuel change at your newsroom.

Spend 15 minutes with the links on this page. You’ll get at least one idea you can use today.

And if I can talk my way into this party, here are some additional ideas I’d throw on the table:

  1. Get to know local bloggers. Email them. Introduce yourself. Grab a coffee with. Link to them. You’ll find they have a good pulse on the community. It may be a different pulse than yours, but that’s a good thing. Be generous with your links to them, and you may find your organization with deeper tiest to the community.
  2. Get in front of community groups. You and your reporters should be hanging with the Rotarians and the Community Organizers if you want to make a stronger connection with your local market. They’re just as plugged-in as the bloggers, but may not be blathering on about it on their blog. This is also a great jumping-off point for efforts to create a more-focused Citizen Journalism effort. What if you gave a Flip Mino (customized with your logo and message) to a neighborhood organization or school in exchange for a promise of weekly upates?
  3. Encourage corrections. At the end of your postings/articles, ask a question: Did we get it right? Include a link to a form to add corrections, clarifications, and suggestions for further reporting. Great ideas and deeper connections follow.
  4. Encourage your reporters to think like curators. I’ve beat this particular drum previously, so I’ll keep it short here. But you’ve got a roomful of subject-matter experts; having them just report is wasting more than half their brains.
  5. Link. If you don’t link, you’re a dead-end.