Tuesday, December 09, 2008

Forecast for 2009: It Could Have Been Worse

Forecast for 2009: It Could Have Been Worse
by Michael Bush
NEW YORK (AdAge.com) -- Considering the economic uncertainty that has gripped nearly every global market and the fact that a major U.S. industry may end up driving off a cliff, taking millions of jobs and billions of advertising dollars with it, it could have been a lot worse. At today's UBS Media Conference, ZenithOptimedia and Group M both forecast global ad spending on measured media will experience no growth in 2009, the first time in years, and will instead decline 0.2% compared to 2008.

ZenithOptimedia projects global ad spending will hit $490 billion next year, down from $491 billion. Group M's estimate is $458 billion for 2009.

Forecaster Robert Coen Sees a 0.3% Decline in Global Ad Spending U.S. looks worst
When broken down by region, the numbers are a little more worrisome. In ZenithOptimedia's report, North America is expected to decline 5.7%, with a 6.2% drop in the U.S., while Western Europe drops 1%. Asia Pacific (up 3.2%) and Central and Eastern Europe (up 1.5%) are still expected to grow, albeit at a slower rate than was previously estimated.

Latin America (14.9%), bolstered by very strong growth in Brazil (30%), as well as Africa, the Middle East and the rest of the world (11.2%) will not only show growth in 2009 but exceed the impressive numbers they posted in 2008, according to ZenithOptimedia. Like Brazil, the remaining BRIC countries of Russia (5%), China (9%) and India (13%) are also expected to post impressive growth numbers in 2009.

ZenithOptimedia projects a "very tough" global ad market for the first half of 2009 but is anticipating a "mild" turn for the better starting in the third quarter with year-on-year comparatives starting "to get a lot easier" in the fourth quarter.

Developing nations expand share
Throughout 2010, ZenithOptimedia predicts global ad spend will increase 5.5%, to be followed by 5.8% growth in 2011 with developing markets behind most of that increase. "We expect the sharp disparity of growth rates between the developed world (which we define as North America, Western Europe and Japan) and the developing world (which we define as everywhere else) to continue," it said in a statement. "We estimate developing markets will contribute 89% of all ad expenditure growth between 2008 and 2011, and increase their share of the global ad market from 30% to 36% over this period."

Despite all the talk about newspapers (23.8%) and TV (38.3%) losing their appeal as ad media, ZenithOptimedia expects both to still garner the lion's share of ad dollars in 2009. Not surprisingly, as marketers look for cheaper and more measurable ways to market, the overall ad spend against web advertising is expected to increase to 12.1% in 2009, up from 10.3% in 2008.

ZenithOptimedia believes the global ad spend on web advertising will jump to 15.6% by 2011. It's also forecasting "substantial growth" for cinema and outdoor advertising in 2009.

In its study "This Year, Next Year," Group M said the global decline in spending is the first since 2001. Its numbers for U.S. activity are less ominous at -3.2% growth, but its projections for Western Europe (-1.7%) are slightly worse than ZenithOptimedia's. Group M is also predicting a strong 2009 for Latin America (8.1%), though down from 9.9% in 2008. The Middle East and Africa are estimated to show 8.7% growth, but that is also down considerably from 2008 (15%), according to Group M.

Tight spending
"Advertisers are scrutinizing every penny," said Adam Smith, Group M futures director, who oversees all of Group M's "This Year, Next Year" reports. "The automotive and financial services categories have obviously seen weakness across 2008, and retail will be under pressure as we move beyond its busiest fourth-quarter into 2009. Among our own client base we are not seeing wholesale cancellations, but we are seeing migration from expensive and less-tried-and-true media to value and certainty."

While Mr. Smith called out internet ad spending as the only "significant growth area," at 5% for 2009, he added that spending is still down compared to the expected 16% growth in 2008. Group M expects global web ad growth to slow from 22% in 2008 to 10% in 2009, which represents $5 billion growth reaching $59 billion or 13% of measured media investment.

Ad-Spending Forecasts Are Glum
Estimates Vary, but Economic Crisis Is Expected to Spur Cuts in U.S., AbroadArticle

For the advertising and media industries, the worst is yet to come, according to some of Madison Avenue's most closely watched forecasts.
Fallout from the global financial crisis will bring cuts in total ad spending next year both in the U.S. and abroad, though predictions vary widely. Publicis Groupe media agency ZenithOptimedia expects U.S. ad spending to drop 6.2% in 2009 to $161.8 billion. WPP's agency GroupM sees a decline of 3% to $157 billion.

Continued growth in emerging markets will help offset declines in North America and Western Europe, according to both firms, which predict that global ad spending will decline by 0.2% in 2009.

Both companies plan to present their forecasts Monday morning at the UBS Global Media and Communications Conference in New York. Their predictions have been keenly anticipated as industry observers seek signs of how severe an impact the economic downturn will have on the ad business.

Another high-profile forecaster, Robert J. Coen, senior vice president and director of forecasting at Interpublic Group's Magna, also plans to present his predictions at the conference Monday. IPG declined to release its forecasts ahead of time.

Forecasts from Zenith and GroupM represent differing views on ad spending in 2008. Zenith says the current ad spending downturn started in the third quarter and has accelerated through the end of the year, with U.S. ad spending down 3.8% in 2008 to $172.5 billion. Group M is predicting that U.S. ad spending increased 0.3% this year to $162 billion.
In addition to weakness in spending from automotive and financial advertisers, GroupM predicts that retailers will be under pressure following the critical holiday sales season. It says that while it has yet to see wholesale cancellations among its clients, advertisers are now watching every penny.

Spending cuts probably will be most severe for newspapers, magazines and radio as advertisers shift dollars to digital media. One bright spot continues to be Internet, which will keep on growing, albeit not as quickly as in recent years. Online ad spending is expected to increase 5% in 2009, down from 16% growth in 2008, according to GroupM. TV spending also should fare relatively well in the downturn. Advertisers are familiar with using that model to build brands, and TV viewing tends to rise in recessions because TV is a low-cost entertainment option, according to Zenith.

Still, these forecasts paint rosier pictures than recent predictions from Wall Street analysts, which also are split.

Just last week, Fitch Ratings cautioned that U.S. ad spending next year would drop between 6% and 9%, in line with the steep downturn experienced in 2001 following the bursting of the dot-com bubble and the Sept. 11 terrorist attacks. That year was the worst ad recession since 1970.
Fitch predicts that the current downturn will extend well into 2010, probably causing broad pullbacks in both the national and the local markets, pressure across a wide spectrum of advertising categories including retail, auto and financial services, and a glut of ad space thanks to the Web and other emerging media.

UBS is forecasting that U.S. ad spending will fall 6% in 2009 but doesn't anticipate the ad spending decline will be as steep as in 2001.

Monday, December 01, 2008

Magazine Shutdowns, Magazine Layoffs, And The Looming Pullback In Automobile Advertising

Magazine Shutdowns, Magazine Layoffs, And The Looming Pullback In Automobile Advertising
Posted by Jon fine

In recent days, there have been layoffs at Forbes, Time Inc., Conde Nast Publications, Bauer Publishing, The Economist, and Hearst Magazines. In the past 24 hours, Time Inc's Cottage Living ceased publishing, and Ziff Davis Media's PC Magazine killed its print edition to become an all-digital publication.

This brings me to auto advertising. Auto advertising? Yes, auto advertising. Specifically: advertising from Detroit's Big Three. These tattered titans of America's industrial past still spend massive sums on magazine advertising, even after trimming their buys in recent years.

In 2007, GM, Ford and Chrysler spent $807.3 million on magazine advertising, according to the data-miners at TNS Media Intelligence, who provided all such figures in this post. In the first half of 2008-a year characterized by cutbacks in auto spending-Detroit still spent $306.4 million in mags.

Yesterday I appeared on CNBC to talk about the collateral damage that would ensue from Detroit cutting advertising further. Before I did, I called a senior-level magazine executive well-versed in the auto advertising world.

He told me he's expecting the Big Three's ad buys to drop by around 30% in 2009, across all media.

Assuming that the half-year figure for '08 represents half of the car guys' magazine ad spending this year-it may even underestimate it, given that the car companies spend more at certain times of the year-that means that about $183.8 million in ad dollars will disappear for magazines.

Potential complications loom, like, say, the prospect of an imminent GM bankruptcy, and there's a bit of a drama concerning the Big Three playing out in Congress more or less as I type.

(We can only imagine that this is why American Media Chairman and CEO David Pecker today gently nudged his employees to support a government bailout of the American auto industry. This is sort of funny. One of Pecker's great hopes for his major tabloid titles, The Star and nationa Enquirer, would be that they'd eventually attract auto advertising. But it never quite worked out that way.)

Thus, in the past few weeks we have seen severe contraction among magazines. And, while December's already reckoned to be a terrible month for magazines, much of the really bad stuff hasn't even started happening yet.

Sorta silver lining for magazines: TV gets much more advertising from American carmakers: $2.9 billion in '07 and $1.2 billion in the first half of '08.

This excellent Ad Age article--which, unfortunately, might be firewalled--goes into great detail regarding which media properties run the most auto advertising. Short answer: anything having to do with sports, but read the piece to get the full picture.

Friday, October 31, 2008

Time Inc. Ad Slump 'Like 1931' Just as Magazine Recalls Great Depression

Time Inc. Ad Slump 'Like 1931' Just as Magazine Recalls Great Depression
CEO Ann Moore's downbeat forecast comes out as FDR cover on stands.
By Julia A. Seymour
Business & Media Institute
Time Inc. is facing an advertising ‘depression,’ which might explain its magazine’s recent obsession with the Great Depression and the 1930s.

Time’s Oct. 27 issue – the one with FDR, Abraham Lincoln and the two presidential candidates – was on newsstands the same week CEO Ann Moore told attendees of an Oct. 30 ABC Circulation Conference that, “By this October it was looking like 1931,” Foliomag.com reported. “[Time Inc.] has never had so many advertising clients in trouble at the same time. The declines are stunning.”

Moore’s speech came just two days after she announced “dramatic restructuring” and “significant layoffs” for the company, which owns magazines including Time, Fortune/Money, Sports Illustrated, Entertainment Weekly and People among a host of others.
Like the rest of the mainstream media, Time magazine has drawn many comparisons to the Great Depression this year. A “history” column by David M. Kennedy in the same Oct. 27 issue said, “Today’s crisis isn’t a repeat of the Depression. But we can still borrow lessons from the past.”

“What is now manifestly needed is a round of creative institutional invention like what the New Deal gave us,” Kennedy, a Stanford University history professor and Pulitzer-winning author, wrote. Like others in the news media, Kennedy’s call for a new, New Deal ignored economists who say that FDR’s policies actually prolonged the Depression – extending Americans’ intense suffering for roughly seven years.

Economist Roberts Higgs told the Business & Media Institute a new, New Deal would be disastrous. “I cannot imagine a worse course of action, short of outright socialization of the entire economy. The measures comprised in a new, New Deal will not hasten general economist recovery, but will only bulk up the power of government and transfer income to privileged interest groups at the expense of taxpayers and consumers,” Higgs said.

Yet, the mainstream media have promoted that by comparing the Great Depression to the 2008 economic downturn hundreds of times. On the networks (ABC, NBC and CBS) alone, there were 70 comparisons in the first six months of 2008. Since July 1 that number more than doubled to 157.

Monday, October 20, 2008

Readers feel the Pinch, but Glossies keep their Sheen

Readers feel the Pinch, but Glossies keep their Sheen
By Stephen Brook
The Observer

As the economic downturn slides towards a recession and magazine publishers peer into the abyss, fervently hoping that the credit crunch does not beget a circulation crunch, they pray that women will value their glossy magazines as much as they value their lipstick.

Advertisers are slashing their budgets more savagely in the third quarter of 2008 than at any time in a decade, with main-media advertising, including that of magazines, the hardest-hit. But it seems that glossy magazines are riding out the storm. Just as sales of lipstick are predicted to.

'There's a theory that in times of recession sales of lipstick go up,' says Alan Brydon, head of press communications at the Media Planning Group, which plans and buys advertising for companies. The theory is that women still want luxury and sales of beauty products are a convenient and satisfying way of getting that. He thinks that the top-end glossies such as Vogue, GQ and Elle will not be severely hit by a circulation slump nor a plunge in advertising revenue. Even though they will be premium products in a recession, their readers and advertisers will still want them.

'Monthlies are in a good place because they are hugely good value,' Brydon says. Women are not going to sever the special emotional connection that they have with glossy magazines, even if they are feeling the pinch, 'for the sake of £3'.

Across the industry there are positive signs. As a weekly glossy, Bauer Consumer Magazines' Grazia should act as a bellwether for the market. Circulation has been solid in October, despite the stock market shocks, and this month it has achieved a record amount of advertising - 80 pages in one issue. 'Money may be tight, but people can afford £1.90,' says managing director David Davies.

Over at the Wall Street Journal, WSJ., the glossy that launched in September, will bring out its second issue in December. There are plans to convert WSJ. from quarterly to monthly next September, recession or no recession.

But in harsh times such magazines are at risk of a backlash, particularly if they indulge in frothy consumer exuberance, such as this week's Grazia: 'Meet the fashiorexics - "I spend £3 a day on food - and £1,000 on dresses".'

Can you still be ostentatious in the middle of an economic downturn? Guardian columnist Polly Toynbee thinks not, and last week witheringly contrasted carnage on the stock exchange with the arrival of the Financial Times' very glossy and very profitable monthly magazine How to Spend It, which can rake in about £1m in advertising revenue per issue. 'The day there was cardiac arrest on the stock exchange, with carnage in every market, was also the day How to Spend It slipped out between the crisp pink sheets of the Financial Times. This was the magazine's well-timed Bonus Issue. Oh joy! Here is the zeitgeist publication of the last reckless decade,' Toynbee wrote.

Gillian de Bono, editor of How to Spend It for eight years, was not afraid to return fire. 'There are still an awful lot of people with an awful lot of money,' she said. 'People spending money is what is going to turn this economy around.' She pointed out that FT readers were high-end and not sub-prime and defended the 'perfect hi-fi' feature (price tag £200,000) that Toynbee took aim at. Anyone buying hi-fi at that price would be handing the government £35,000 in taxes, countered De Bono, which could only be a good thing.

But other magazines are altering their tone as the downturn bites. Elle, the fashion title published by Hachette Filipacchi, introduced a column called The Credit Crunch Shopper, for readers who want to wear the trends but save cash. This month it features a silk-chiffon blouse from K by Karl Lagerfeld at £190 a pop. 'The Elle reader will spend that money,' editor-in-chief Lorraine Candy says confidently. But she admits: '"Must have" or "it bag" we have to avoid now,' she says. Next year the magazine will feature more real-life stories about their readers, as a way of responding to circumstances.

A survey of 4,000 Elle readers found that they were determined to keep shopping. It showed that 33 per cent of respondents' shopping habits remained unaffected by the crunch. 'But they are being a lot more elegant in the way they buy. The huge flurry of instant gratification shopping in the lunch hour - I don't think they are going to be doing that anymore,' Candy says.

The advertising downturn has not hit Elle. Candy says that its volume of fashion advertising rose this year, although beauty advertising struggled. December's issue will be a robust 372 pages.

But the credit squeeze has already claimed its first glossy victim. Women's monthly Eve folded in September, just five months after a relaunch. Publisher Haymarket bought it three years ago from the BBC. The magazine employed 56 staff and most lost their jobs.

At the very top of the market the good times continue, with others set for bumper December issues and steady circulations. But next year is an unknown quantity, even though big luxury conglomerates including Gucci and LVMH plan to boost advertising spend.

At Condé Nast, the December issue of men's magazine GQ - a 20th anniversary special - will be a whopper at 584 pages. 'It will be the fattest GQ in any country ever,' says managing director Nicholas Coleridge. December Vogue will also be bigger than one year ago, at about 450 pages with 243 of advertising. But Glamour, the glossy aimed at the Cosmo generation, has been hit. Its ad volume fell after Condé Nast refused to cut its advertising rates.

'For us it has been a very confident 2008 that hasn't seen any erosion in the last quarter. Having said that, I expect next year to be more challenging,' Coleridge says.

Condé Nast is forging ahead with plans to launch not one but two high-end magazines next year, when Britain could be mired in recession.

The company poached Katie Grand from Bauer, which published her magazine Pop, to launch a twice-yearly fashion and style magazine. It will be called Love, and appear in February with a £5 cover price. The launch of a UK version of glossy US technology magazine Wired will follow months later. Coleridge says Condé Nast is planning for the long-term and the launches will be smart niche publications. 'It is not like launching a super-tanker.'

Coleridge is enough of a veteran to remember the last severe media recession of 1990 to 1992. Then advertising pages fell, but a big difference this time will be the strength of the luxury companies, which have grown into vast international concerns and should be able to weather the downturn better.

Brydon says the luxury houses are being careful, but they are not giving up their cherished positions in the front of book of high-end magazines. To do so could mean that they lose their slots for months, if not years. 'It is almost like a nuclear deterrent. You can't be the first to blink,' says Brydon.

There is still the risk that glossy magazines will leave a bad taste in the mouth of readers who lose their bonuses or, even worse, their jobs.

But Coleridge denies his stable of magazines is ostentatious and says they merely fulfil their journalistic duty to report what is out there. 'Readers always want to see the best of what's available.'

'A lot of it is about dreaming,' says Jeremy Langmead, editor of upmarket men's title Esquire, who predicts magazines will provide more of that next year.

'I am not going to rent Richard Branson's house on Necker Island, but for 10 minutes I am going to imagine I am lying on that beach.'

Slump spenders
A survey of 300 men by trend forecasters Future Laboratory for Esquire identified a high spending group the magazine dubbed Intelli-gents. 'These guys were prepared to spend more money at the higher end because they wanted to be connoisseurs,' said editor Jeremy Langmead. 'They want to own a wine library, not just a wine cellar.'

Elle magazine carried out an online survey of 4,000 readers aged between 18 and 55. It found 33 per cent were defying the credit crunch, saying their clothes-shopping habits had been unaffected. Forty-two per cent said they were prepared to sacrifice a night out in favour of shopping.

Grazia has reported on a new type of consumer: the fashiorexic. Tabitha Somerset-Webb, a handbag designer, confessed to spending £3 a day on food to fund her £1,000 dresses.

Lisa Burprich, who works in TV production, eats supermarket own brands and tinned food to afford £200 7 For All Mankind jeans every two months.

Tuesday, October 07, 2008

How's Media Doing?

How's Media Doing?
By James Brady

Wall Street isn't the only hurting industry in town. Madison Avenue's annual "Ad Week" just ended, with media, clients and ad agencies confronting their own woes without a Washington bailout in sight.

Being a media lifer, I focus less on the markets than on the business I've been working in since 1948, getting myself through college by working until midnight as a copyboy at the New York Daily News, by far the biggest circulation paper in the country at the time. And since I've worked on TV and been an editor and publisher--and I'm still a magazine columnist and author and write for this Web site--I've still got a fair amount to worry about.

A couple of things got me thinking about all this. CBS selling Mel Karmazin's old radio stations, the 75th-anniversary celebrations of Esquire magazine, the layoffs of old daily newspaper friends, and an informative lunch at Le Bernardin with a former magazine colleague, during which we talked about his business and about other media, new and old, good times and bad.

First the layoffs, regrettably typical of recent consolidation and cost-cutting at American newspapers. At Mort Zuckerman's, and my old, Daily News, some 25 editorial staffers were said to have accepted buyout offers. They included my pal Faigi (pronounced "Fahey") Rosenthal--tall, attractive, the most competent librarian I worked with at the New York Post before she moved to the News.

In those days before Google, there were only keepers of the morgue, or the "library." You relied on magicians like Faigi to find just the obscure item you needed to nail down a story properly, from hard, upfront news to a tasty item for Page Six.

The other Daily News casualty was the drama critic: lanky, wise Howard Kissel. He covered theater at Women's Wear Daily in my time as publisher and was later hired away by the News, thereby providing an opportunity for a promising young man named Ben Brantley, who took the critic's job at WWD and eventually became the most powerful theater reviewer in town, at The New York Times.

Next, my chat at Le Bernardin with veteran magazine publishing executive Jack Kliger of Hachette Filipacchi. After nine years, Kliger recently handed over the reins of the Magazine Publishers Association (MPA) to John Griffin of National Geographic. I asked him for his thoughts on the magazine business today, a world of sluggish advertising and falling newsstand sales, with a number of magazines failing to meet the rate bases they promise to deliver to the ad agencies.

"This has been one of the worst down periods we've experienced in the magazine business," said Kliger. "I don't want to beat up on newspapers, but if magazines have been bad, newspapers have been worse. I remember 1997 and '98 being pretty bad as well, and we got through that. TV isn't having an easier time either. Cable is doing OK.

"For magazines, I think 'the recession' is short term," he continued. "But structurally things are now even worse than '97 and '98. The auto industry story, for example, is brutal. Magazines are down millions in auto advertising. Television must be down billions."

I asked if there were any bright spots Kliger could point to.

"I don't know if the magazine business will ever again be as robust," he said. "But ads will still be very important, the dominant revenue. Magazine advertising really works. And consumers like magazines. There's value to original and trusted third-party content. Young people may not like newspapers anymore, but they like magazines. And we really do have good print journalists and editors who can learn the new digital platforms.

"I love blogs, much as I love Speakers' Corner in Hyde Park," Kliger said. "But editors are still needed to separate the wheat from the chaff, as they do in magazines but don't on blogs."

Kliger's passionate on ad space pricing. "Magazines should charge more for audience reach, as all other media do," he said. "Circulation being down is not necessarily as difficult a problem in the long term. Circulation is still promising, but the consumer is getting used to the fact you can get things free on television and the Internet. The question is, Who's going to pay for what?"

The ironic thing about Kliger's handing over the MPA reins right now? Despite reports of belt tightening at Hachette, the company's American flagship publication, Elle, is booming. Elle was up nearly 5% in ad pages in August (Vogue, In Style, Allure and Cosmopolitan were all down that month) and even further ahead in ads in the traditionally thick September issue, while category leader Vogue was down.

This buoyant trend seemed to be continuing for October. According to Advertising Age, a tie-in with hit TV show Project Runway has Elle moving from No. 6 in the fashion category to No. 2, behind Vogue.

And Esquire's star-studded anniversary? The issue ran over a healthy 300 pages, while its gala party featured a speech by Bill Clinton, whom you'd think might have been out hustling votes for Barack Obama. That's got to be a sign of something.

Wednesday, September 24, 2008

'Life' Magazine Resurrected As Web Site

'Life' Magazine Resurrected As Web Site
by Erik Sass, Tuesday, Sep 23, 2008 12:27 PM ET
Like a non-threatening zombie, Time Inc.'s Life brand is back from the dead again, this time as a Web site offering thousands of old photos from Life as well as new photos from Getty Images.

Set to debut some time in early 2009, the site will make the images available for free online for non-public use, including sharing the photos with friends. Visitors will also be able to buy photo albums created by other users.

Overall, Life.com hopes to publish 3,000 new images provided by Getty every day, executives revealed at the Interactive Advertising Bureau's MIXX Conference in New York. The new venture's CEO will be Andy Blau, the president of Life and a senior vice president with Time Inc. Interactive.

Catherine Gluckstein, vice president of iStockPhoto and Consumer Markets for Getty Images, will serve as CFO.

The Web portal has been a long time in the planning.

Time Inc. first disclosed plans for an online archive of Life's extensive collection of 20th-century photography in March 2007, when the company announced the closure of the Life Sunday supplement, a newspaper-distributed magazine.

Thursday, August 21, 2008

Today, I Only Have Questions

Today, I Only Have Questions
Posted by BoSacks
Today, I only have questions. What is the difference between Europe and the United States when it comes to publishing and newsstand sales? Why are the newspapers in Europe not only doing well, but on the whole thriving and growing, while ours are gasping for air, with plummeting revenue and circulations? What does the "old" world know about publishing that we here don't?
Why? How? What is the difference?

A "cub reporter" of this newsletter, who is actually a worldly and knowledgeable publisher, recently argued with me on-line on a similar subject that seems relevant to my vent today:
"Professional circulators analyze reader acquisition costs in excruciating detail, with mountains of real-world data. No one can tell why a publisher picked a price, set a rate base, or chose a sales channel by looking at magazines on a newsstand . . . especially in today's incredibly complex and competitive marketplace . . . Publications with good strategies will prosper and magazines with bad strategies won't."

I generously offered to send him to Europe to find out the answers to these questions, but doubling his T&E budget from last year didn't seem to be enough to send him on the important investigative journey. (Last year his BoSacks T&E budget nearly topped $000,000.00)

So I'm forced to ask more questions:

Why are the last U.S. ABC figures reporting such dire domestic results while European magazines are on the whole doing better than we are? Why do European magazines charge almost the same for a subscription magazine as a newsstand title and we practically give away our subscriptions? Is this a holdover from better bygone days or a real, bona fide science that can actually work in the 21st century?

Let's remember that we are talking about the very same product, manufactured in the very same way, but clearly with a different business model. Why are the European sales numbers for magazines hovering around a 60-percent sell-through while we struggle with a low-to-mid-30-percent sell-through?

Let me move on. Why are the reading scores of our domestic youth plummeting? Is there any connection with the fact that text messaging is on the rise while writing skills are plummeting to unconscionable lows? Why is the biggest expense for so many businesses remedial writing for new employees?

None of these questions address the on-going digital dilemma the publishing world is facing. Clearly, we are going to have to remake our industry and redesign our business models including the circulation paradigm. These questions seem to me to be a great start and a part of that process.

There you have it: a dozen questions and not an answer in sight. These are the things that make me, well, wonder just what the heck is going on with our business-and reading in general?

Sunday, August 10, 2008

Desktop Publishing's Legacy: 230,000 Fewer Commercial Printing Workers, and An Explosion in Content Creation Workers

Desktop Publishing's Legacy: 230,000 Fewer Commercial Printing Workers, and An Explosion in Content Creation Workers
Dr. Joe Webb

FREE Marketing, Management and Economic Notes from Dr. Joe Webb

08/07/2008 -- Everyone thinks that the Internet has been the cause of a decline in print; the real cause has been the lasting legacy of desktop publishing in the grander computer revolution.

Last month, U.S. commercial printing employment was below 600,000, which caught my attention. I went straight to my library of industry statistics. As best as I can determine using various government data, we're at levels not seen since 1986 or 1987. Commercial printing employment peaked in mid-1998, almost reaching 830,000. It's been quite a change from 1987 to now.

At that time, there were 70,000 employees in prepress trade shops (separators, platemakers, and trade typographers). Today, there are 25,000 with most of them are in some high-level publishing workflow, with nary a sense of what platemaking, separating, or typography was or might have been.

In 1987, there were 176,000 employees in book, magazine, and miscellaneous publishing; there are 300,000 today, augmented by another 50,000 or so micropublishing entrepreneurs.

Desktop publishing reduced the costs of production and stimulated the content creation process, and was a critical component of the march of new media. In 1987, graphic design did not even have its own industry classification code, as it was buried in something called "commercial art and design." Many of these workers referred to themselves as "illustrators." About 52,000 employees worked in graphic design firms then, with another 4000 or so as freelancers. Today, there are 73,000 employees in graphic design firms, plus another 90,000 freelancers, more than three times 1987's level.

Even advertising employment is higher. There are 40,000 more workers in advertising than in 1987.

Commercial printing employment is now at 1987 levels, while publishing, design, and agencies have added more than 250,000 workers in the last 20 years. Not all of them are creative workers, of course. Without the ability to create content efficiently, however, even those workers who are not in content creation or content production positions owe their jobs to the creation process that is the reason for their employer's existence.

The loss of prepress has hurt the printing industry's financial performance, especially its profitability. In turn, the technological changes that undermined our industry created new opportunities. "Creative destruction" is a phrase used by economists to explain how technology and other factors destroy old ways of doing things and replace them with more productive methods, new products, and sometimes entirely new industries. Your perception of the effect depends on whether your skills are the ones being replaced. There is no doubt that the technologies and entrepreneurs that coalesced around desktop publishing two decades ago are still having ripple effects in our industry.

It is curious that the 230,000 loss in print workers in the last ten years is almost the same as the 250,000 new workers in content creation industries, isn't it?

There is another important point. The new workers are more inclined to be freelance professionals, working as sole practitioners, than ever before. A $10,000 Mac workstation today is a powerful production tool, capable of producing sophisticated, high quality media in almost any format. They're not always working alone, however. These workers are more likely to be working on a project basis rather than with a single employer, linked with other independent professionals, each with a unique expertise. Modern telecommunications and the Internet are only a hint of what is to come. Printing organizations need to recognize this empowered freelance revolution.

I am often asked what would draw more young people to the printing industry. I have always heard the same tired recommendations in my 30 years in the business, and we know they don't matter. There is only one thing that does it: successful, dynamic, and growing companies that do interesting and exciting things. One of the attractions to content creation businesses is the newness that is the essence of their projects: there is always some aspect of the content that has never been done before. Creating content, even in its necessary repetitive production tasks, is more attractive to young workers. Working as freelance plays into millennial generation themes of independence, time flexibility, and geographic freedom.

Manufacturing by its nature may not be able to compete with that. Quality control programs, for example, are designed to create a repetitive and predictable sameness of results without regard to content. Small print businesses may not be able to compete with the attraction to the content creation businesses unless its owner or management is somewhat charismatic, emanating a sense that the risk of tagging along will be worth it in the long run.

In the end, falling under 600,000 employees is just a number. It's a reminder of where we've been, and what may come. It's a reminder of how much the communications business has changed, and will change. The question is whether our industry's entrepreneurial spirits will create, individually and collectively, that successful, growing, dynamic, and intriguing culture that attracts workers and capital for these decades ahead.


For a look at what life was like at the beginning of the desktop publishing movement, this 1987 article from Money is illustrative.

Magazine Circulation Falls in First Half

Magazine Circulation Falls in First Half
By Irin Carmon with contributions from Stephanie D. Smith Amy Wicks
From WWD Issue 08/08/2008
The phrase "flat is the new up" became a mantra in recent years when it came to assessing newsstand sales. Well, as core fashion titles, women's service books and men's magazines have almost universally posted declines in their single-copy sales in the first half of 2008, how does "less down is the new up" sound?

To wit, Hachette Filipacchi Media's Tom Masterson, senior vice president for consumer marketing and manufacturing, pointed out that, while Elle's newsstand was down 6.3 percent in the first six months, "many of Elle's competitors decreased more."

That's true - Vogue was down nearly 15 percent, though it still outsells Elle on the newsstand by an average of about 50,000 copies monthly; Harper's Bazaar fell 8.3 percent, and W, which gets the vast majority of sales through subscription, was down 10 percent.

Or take Shape, which was down about 10 percent overall on the newsstand in the first half, but still averaged higher total sales than the troubled fitness category in general. (Self had the dubious honor of being less down, but is still smaller; Shape has beefed up its distribution at checkout and added 17,000 pockets nationwide.)

Growing market share might be the last remaining competitive advantage in an environment where nearly every editor in chief is seeing the kind of declines that once would have gotten them fired. The long-standing expectation that a healthy magazine is one that sees successive growth on the newsstand is in question - you can't exactly fire everyone.

Whether the change is cyclical (uncertain economic times that include high gas prices, fewer supermarket trips and less disposable income) or secular (consumer behavior is undergoing a fundamental change away from newsstand, or from print magazines themselves) depends on whom you ask. Editors and publishers would have it be the former.

"I don't think newsstand softness is systemic to magazines, but rather systemic to the economy," said O, The Oprah Magazine publisher Jill Seelig.

But some advertisers and observers are beginning to wonder whether the second diagnosis is upon us. As consumers' attention fractures, spoiled by choice and easy digital access, the culture and entertainment industries already have adjusted their expectations, counting smaller sales numbers than ever as blockbusters. The magazine industry might be falling prey to the same tectonic shift.

Several magazines, such as Glamour and Marie Claire, have seen disappointing sales for several periods in a row, even when the economy was flush, suggesting more of an overall move away from big women's titles. (Perhaps in reaction, Glamour unveiled a redesign this month.) Even newsstand stalwart Cosmopolitan dropped 6 percent in this period, a difference of more than 100,000 copies, after essentially flat newsstand sales since 2004.

The only source of growth across the board has been in total circulation, which, given the newsstand declines, usually means that publishers are spending more than ever to build and maintain their subscriber bases. And advertisers are traditionally more skeptical of that kind of audience-building, given publishers' past practices of steeply discounting subscriptions.

That Men's Vogue's newsstand is down 39.1 percent, for example, even as it's raising its rate base to 400,000, can be explained several ways: first, that it suffers from an apples-and-oranges comparison between five issues published in the first half of 2008 and three in the first half of 2007; second, and more significantly, that it's growing its audience the expensive way, through subscriptions, and not wowing on the newsstand.

The title also has seen its verified circulation (bulk copies in public places) drop by 14 percent since last year. A spokeswoman said, "Men's Vogue continues to take risks on covers to recognize accomplishment over celebrity." Case in point: the model-free Bugatti cover in May, which sold 45,000 copies, according to Rapid Report. (That was still better than the worst cover to date, April with Alex Rodriguez, at 41,000.)

As such, given the flood of negative newsstand figures in the first half, the few examples of uptick in sales should be particularly celebratory - among them, In Style, which, whether you consider it a core fashion title or a peer of Glamour and Marie Claire, was the only one in either group to see any rise in newsstand, by 4 percent to 783,254. That's before the recently unveiled redesign was even tested on the newsstand.

And Rodale's David Zinczenko showed once again that he can put his money where his mouth is, maintaining Men's Health's position as the number-one newsstand seller in the men's category with a 2 percent growth, and having a hand in two newer magazines, which also have seen good news: Women's Health, with its 12 percent rise, and Best Life, up almost 20 percent. Maybe that's why Men's Health Living has been given a go-ahead in a tough environment for shelter magazines.

So, do the steep declines serve as a harbinger of equally sharp falls in advertising revenue as firms seek other media? Well, for now, media buyers seem to be seeing the big picture. "I don't think we would have seen these types of declines if the economy had been in a different place," said Robin Steinberg, senior vice president and director of print investment and activation at MediaVest. "We would have seen some declines, but not deep declines." That said, she added: "The future of magazines is not going to have the same distribution exposure as in years past," as the business model shifts from emphasizing the number of eyeballs to assessing quality of audience.

And media companies are experimenting with new distribution tools such as Maghound, the so-called "Netflix for magazines" launching in September. A subsidiary of Time Inc., Maghound will allow consumers to switch in and out titles for a flat monthly fee, and around 300 titles have signed up so far.

Magazine publishers also are trying to figure out how to leverage their Web sites to build a subscription base - a potentially more efficient, or at least cheaper, way to add subscribers than direct mail or verified circulation. Hearst magazines in particular - many of which tend to be big, single-copy-heavy titles in an age of grim newsstand - have suggested this as a winning strategy. In the face of a newsstand decline of 17.3 percent, for example, Oprah's Seelig pointed to the fact that the magazine hasn't had to resort to verified circulation and that subscriptions were up 7 percent, in part because "we played around with the subscription offers on Oprah.com."

She added, "The simple truth is consumers are not going to the places where our magazines are sold as frequently as they were," i.e., airports, supermarkets, drugstores and other retailers.
That said, the magazine recently saw the exit of editor in chief Amy Gross, billed as voluntary, and new editor of former Golf for Women editor Susan Reed will have to figure out how and if the newsstand can be turned around. George Janson, managing partner/director of print at Mediaedge:cia, said, "Some magazines have reached a natural level of circulation," pointing to Oprah in particular.

"Magazines are also coming off a period where [advertising] spending and circulation have, for the most part, been flat to up," added Janson - meaning that what goes up sometimes has to come down.

But if the latest newsstand numbers prove to be long-term indicators, publishers could be faced with hard choices, such as cutting rate bases or rethinking their distribution models. "As content becomes free on the Internet, I question whether or not the future of magazines will be opt-in and nonpaid," said Steinberg.

Wednesday, August 06, 2008

As the vision unfolds, software still can't surf.

As the vision unfolds, software still can't surf.
By Andrew Brenneman

Tim Berners-Lee, director of the World Wide Web Consortium (W3C), outlined a strategy for the future of the Web in a series of papers and articles published between 1998 and 2001. He observed that while there was a wealth of information available for people to explore on the Web, computers had difficulty extracting information from it. The Web consists largely of free-form text, and computers have great difficulty understanding human language. While search engines can index the Web, a human being is required to interpret the search results. You may be able to surf the Web, but your computer can't. The value of the World Wide Web is significantly compromised, Berners-Lee argued, without the ability for systems to interpret its content.

He proposed a solution: the Semantic Web, which would provide a bridge between the language of humans and the language of computers. It consists of a set of standards for creating XML-based tags that describe information contained on the Web in a way that computers can understand. The Semantic Web would act as a global database that software applications could meaningfully explore. Your computer could surf.

The implications for content providers are significant, and fall into two categories:

1. Value Chain Integration: A common way of labeling subject matter and meaning within content-the contents of the content-would help integrate parties along the publishing value chain: authors, publishers, distributors, retailers, consumers.

2. Research Value: The value of content for research would be enormously increased. Content that is semantically structured could be queried, as one would query a relational database. Software research agents could continually comb through the Web, looking for significant information, aiding in research. For example, a research agent could be programmed to continually monitor the Web for new findings involving the correlation between thyroid cancer and any polychlorinated biphenyls congener in Northern Europe. This would have a profound impact on legal, scientific and scholarly research.

It has been a decade since Berners-Lee presented this vision, and the Semantic Web is yet to be. The content on the Web is still, for the most part, in human language, undecipherable by software. While there has been much research on semantic technologies, they have not been widely deployed over the last 10 years. HTML took only a couple of years to become a global standard.

What Currently Exists
Was Berners-Lee wrong about the Semantic Web? To begin to answer that, we can first examine what methods have evolved to manage and extract value from the content on the Web.

· Search Engines: Search engines, principally Google, Yahoo and Microsoft Live Search, are the primary means for exploring content on the Web. A search engine's results are semantically "fuzzy" or imprecise, because a search engine indexes words and not their meanings: "apple" will return search results with both fruit and computers. Inexact or not, search engines provide tremendous value and, for many, structure the Web experience.

· Folksonomies: In the current Web 2.0 era, communities of users dynamically submit content to share with others on the Web. The user creates and assigns labels to the content. These labels, or "tags," describe the subject matter and help connect it with other content. This is similar in principal to the application of tags within the Semantic Web model, with an important distinction: The Semantic Web only uses tags from a standard taxonomy of terms, a "controlled vocabulary." Web 2.0 tags are typically user-defined, uncontrolled and are referred to as being within a "folksonomy." A folksonomy is inexact because one user's tags will likely not correspond with another's. Folksonomies, therefore, cannot be used efficiently by software. A person is still required to interpret them. Like search results, folksonomies are "fuzzy," but sometimes "fuzzy" is good enough.

Examples of the Semantic Approach's Value
In looking at the dominance of search engines and Web 2.0 folksonomies, we may well conclude that the model of the Semantic Web has been usurped by other less cumbersome and more organic methods.

But I don't think that is the case. There are some compelling examples emerging of how the semantic approach is adding value to published content.

· Book Industry Standards and Communications (BISAC). Publishing professionals know all about taxonomies. They use them every day. BISAC and Library of Congress subject headings are, in fact, standardized taxonomies, used to connect partners along the publishing value chain. Publishers do not typically embed BISAC tags according to the Semantic Web technical specification, nor do BISAC subject categories contain the detail necessary to perform research. Ted Hill, a publishing consultant who specializes in digital supply chain issues, points out that BISAC was created to let booksellers know on which shelf in a bookstore to place a book. "BISAC subject codes were part of a strategy to reduce double-stocking and cut the cost of inventory," notes Hill, "not promote discovery by search engines." However, BISAC is conceptually consistent with the semantic vision described by Berners-Lee.

· Alexander Street Press. Founded in 2000, Alexander Street Press might be the most forward-thinking electronic content aggregator in the humanities. Alexander Street Press acquires, prepares and electronically distributes collections of books, documents and rich-media content for humanities research. Their preparation includes a very detailed application of semantic tags from controlled vocabularies that dramatically increase the value of the content for research. This process requires domain expertise, curatorial care and technical know-how. According to Alexander Street Press President Stephen Rhind-Tutt, "There is a general underestimation of the value of librarianship and cataloging."

The value of the results is clear, however. Semantic preparation enables researchers to extract facts from collections of content-not just find search terms. Rhind-Tutt observes, "Researchers can ask questions that are much harder to ask [than] if the content was not semantically structured." Alexander Street's longevity is a testament to the value it is creating in the humanities research marketplace.

· Knovel. Knovel provides semantically structured collections of engineering and technical content, including text, charts and tables. This allows the information contained in articles to be queried, as one would query a database. Technical researchers can find answers contained in large bodies of content with great efficiency. For example, a technical researcher could submit a query to find studies that address polymers with a specific tensile strength at a given temperature range. This is tremendously more efficient than simply putting a search engine on top of a collection of thousands of journal articles. In the context of the cost of an engineer's time (and the time he saves on research), the economic value is enormous.

Was Berners-Lee's vision of the Semantic Web on target? BISAC, Alexander Street Press and Knovel are evidence that the semantic approach can increase the value of content through discoverability and research efficiencies. While considerable effort is required to structure content in this way, it yields, in many cases, a significant return.

What has not taken place is the wholesale transformation of the Web. The Web has not become a global, semantically structured database. Instead, there are islands of semantically structured content, inside commercial, walled gardens (subscription services), or within defined communities, as in the case of BISAC. The reason is economic: There often is insufficient justification for the investment required in semantically structuring content.

In addition, adoption of semantic technologies has been slow, since it is built upon other standards-particularly XML and Web Services (a standard way that software can connect with one another on the Internet). It has taken time for XML and Web Services to become widespread. With those standards in place, the semantic approach can and will be increasingly used. However, this will only occur in specific areas of content when there is a particular, usually financial, rationale for doing so.

Your computer still won't be able to surf, but it may be able to swim some laps in the pool. And that may be enough.

Andrew Brenneman is managing director of Finitiv, a digital media consultancy. He has 20 years of experience leading pioneering digital media initiatives in publishing and advertising, including NETg's Skill Builder, Thomson Learning's WebTutor, FreeMark Mail and MsDewey.com. Brenneman also founded the Digital Media Group of The University of Chicago Press Books Division, where he led digital distribution for the Books Division and the development of The Chicago Manual of Style Online.

Sunday, August 03, 2008

BoSacks Speaks Out: Free Textbooks Coming Near You

BoSacks Speaks Out: This is an amazing little article. The portents are huge for text book publishers, but might just have some traction for other publishing styles as well. What if educators banded together and formed their own network (publishing house)? It is not so far fetched. I am skeptical about a full open source text book implementation, because someone, somewhere has to get paid. But there are ways of incorporating both open source and capitalism. It is a new business model and one worth thinking about. It's not for everybody, but in the "long tail" style of doing business it doesn't have to be.

They always say time changes things, but you actually have to change them yourself.
Andy Warhol (1928 - 1987), The Philosophy of Andy Warhol

Free textbooks coming near you
Brittani Lusk - Daily Herald

Textbook options: fork out the cash and buy the shiny new book, forget the book altogether and rely on class notes, or read it online for free.

Fall semester begins at Brigham Young University and at Utah Valley University in a little more than a month. Students will be looking for the cheapest way to get their hands on class materials, and they may have a new option.

Textbooks with open licenses are complete, scholarly college texts written by the same type of people writing traditional books, but these books have a twist. They've been placed online with the author's permission under an open license that allows students and instructors to read, print and even customize the text for free or a small fee. Students, professors and other advocates nationwide, including students and professors in Utah County, are pleading with authors to participate in the open textbook movement. One UVU professor is even writing an open textbook simply on principle.

Fighting the system
"I'm so upset about the whole textbook issue that it's actually motivating for me on the basis of just my values," said UVU professor Ron Hammond. He said his book "will be an act of community service to the whole country."

The UVU sociology professor, who last year stopped using traditional textbooks, has written six chapters of a sociology textbook that will be available online when he and his students finish it at the end of the year.

"I just finally got fed up," Hammond said.

He periodically publishes scholarly work in academic journals and isn't worried about losing royalties on the new book.

Some book publishers have contended that the work he is doing isn't real scholarship and his online manuscript won't be a real book. Hammond disagrees with the textbook company representative that criticized his work.

"This book is going to be better than the book that's on the market in terms of currency, because it's got links," Hammond said.

In his book, Hammond plans to link to current data from the Census Bureau and other government agencies. That gives him a real-time edge because most traditional books, he said, are usually one to two years behind when it comes to numbers. Having the book online allows Hammond to update the research whenever it changes.

Behind the cause
Hammond is one of more than 1,200 college professors across the nation, including at least three from Utah County, who have signed a statement of intent pledging to use open textbooks when available. The Campaign to Make Textbooks Available posted the Faculty Statement of Intent on its Web site, maketextbooksaffordable.org, earlier this year.

"It really shows that textbooks don't have to be expensive," said Nicole Allen, director of the campaign.

She said the key to decreasing costs that have been rising at double the rate of inflation for at least the last two decades is changing the market by adding more competition. That's where open textbooks come in.

"Students have to buy whatever textbook they're assigned," Allen said. "So publishers can choose whatever price they want."

She said finding a textbook online and printing it themselves gives students the choices they need to fight back.

"You can get it on pink paper," Allen said. "The idea is that students have more options."

Students in Utah have been lobbying their professors to use more open-source, free material. Kelly Stowell, executive director of the Utah Student Association, called the effort a grass-roots movement aimed at recognizing professors willing to use free materials.

"We'd like to recognize and reward professors," Stowell said.

At UVU, student leaders have been meeting with their professors and school administrators pitching the idea. Student Body President Joseph Watkins said the reception has been good.

"Everybody that we've spoken to is more than happy to help out," Watkins said.

Watkins said the students might gather the information and put professors using open-source materials into some sort of database so students can pick and choose which professors to take knowing who uses books and who doesn't.

In addition to Hammond, UVU information systems and technology professor Jeff Cold signed the statement of intent, as did BYU professor David Wiley.

"If I have an opportunity to get them a textbook for free, I will do so," Cold said.

Wiley has been using open source material in his classes for years.

"I made a commitment to myself a number of years ago that I wold only use free or openly licensed materials in my courses, and have stuck to that commitment since," Wiley wrote in an e-mail.

He's even written an open book and makes all his course materials public.

A new way of thinking
Cold said he'll use open textbooks when they're available, but he doesn't have a vendetta against book publishers.

"I think that at times, textbooks can be expensive. I don't think the publishers are gouging students," Cold said.

His interest in open textbooks is their timeliness. In information systems, technology changes before the books can be updated. Cold doesn't like teaching students to use operating systems from a book that is sometimes two versions old.

Hammond said the Internet model will help solve the lag that paper books face as well as serve his Google-generation students better.

"They want to know what they have to know and then they go find it," Hammond said.

He said the textbook learning model that worked in the past is fading.

"The point is that we can't say to them, 'Do it the way we did.' "

Hammond said he was once worried that material found on the Internet wasn't the same caliber as written material and that perhaps students wouldn't gain the skills they needed if they only surfed the net.

"I used to [think that], but I don't anymore because our society is computers-based and Internet-enriched," Hammond said.

He said students need the computer skills and should develop them.

"We don't know, but it looks like the paper version of knowledge is on its way out," Hammond said. "The Internet version of knowledge seems to be much more powerful, much more efficient."

Wiley said an open license doesn't automatically make a book better, but open texts have more potential because they can be added to and customized.

"You have made it possible, now, for others to make the changes they need to make in order for the text to really speak to their students. So open textbooks aren't automatically of higher quality than traditional texts, but they have the opportunity to become better over time," Wiley wrote.

Making it work
One pair of former publishing company employees is attempting to make open textbooks into a business model that serves the students and the book authors better than the publishing companies.

Eric Frank and Jeff Shelstad both left publishing companies to start Flat World Knowledge, an open textbook publishing company.

"Basically we're, as far as I know, the first commercial open textbook publisher," Frank said. Frank is the chief marketing officer for the company he founded and plans to offer open textbooks in the spring of 2009. Right now the company is testing and researching its products.

Wiley has been working with Flat World Knowledge as its chief openness officer, helping them with licensing issues and developing strategy.

Frank said when the system is up and running, students will be able to view books online, print them for about $30 or download an audio book for about $25. Students could also purchase PDF versions to print themselves.

"Our model here is, you decide," Frank said.

Flat World also plans to offer a smattering of study aids in an a-la-carte format similar to iTunes. Students can purchase one study aid such as a podcast or set of flash cards for 99 cents each. Instructors will also be able to customize a textbook by rearranging chapters or only giving students certain pieces of the text.

Frank said book authors will be as compensated or more compensated than they are by publishing companies because authors will continue to receive royalties on their book several semesters after it is released.

Frank said the traditional model, where students buy a new version of the book and then re-sell it, causing used books and pirated works to circulate, only allows authors to receive royalties on new books sold. That results in a steep drop-off in royalties after the first semester. Frank said that drop shouldn't happen in the Flat World model.

Tuesday, July 29, 2008

The Internet Is No Substitute for the Dying Newspaper Industry

The Internet Is No Substitute for the Dying Newspaper Industry
By Chris Hedges, Truthdig

The decline of newspapers is not about the replacement of the antiquated technology of news print with the lightning speed of the Internet. It does not signal an inevitable and salutary change. It is not a form of progress. The decline of newspapers is about the rise of the corporate state, the loss of civic and public responsibility on the part of much of our entrepreneurial class and the intellectual poverty of our post-literate world, a world where information is conveyed primarily through rapidly moving images rather than print.

All these forces have combined to strangle newspapers. And the blood on the floor, this year alone, is disheartening. Some 6,000 journalists nationwide have lost their jobs, news pages are being radically cut back and newspaper stocks have tumbled. Advertising revenues are dramatically falling off with many papers seeing double-digit drops. McClatchy Co., publisher of the Miami Herald, has seen its shares fall by 77 percent this year. Lee Enterprises Inc., which owns the St. Louis Post-Dispatch, is down 84 percent. Gannett Co., which publishes USA Today, is trading at nearly a 17-year low. The San Francisco Chronicle is now losing $1 million a week.

The Internet will not save newspapers. Although all major newspapers, and most smaller ones, have Web sites, and have had for a while, newspaper Web sites make up less than 10 percent of newspaper ad revenue. Analysts say that although Net advertising amounts to $21 billion a year, that amount is actually relatively small. So far, the really big advertisers have stayed away, either unsure of how to use the Internet or suspicious that it can't match the viewer attention of older media.

Newspapers, when well run, are a public trust. They provide, at their best, the means for citizens to examine themselves, to ferret out lies and the abuse of power by elected officials and corrupt businesses, to give a voice to those who would, without the press, have no voice, and to follow, in ways a private citizen cannot, the daily workings of local, state and federal government. Newspapers hire people to write about city hall, the state capital, political campaigns, sports, music, art and theater. They keep citizens engaged with their cultural, civic and political life. When I began as a foreign correspondent 25 years ago, most major city papers had bureaus in Latin America, the Middle East, Europe, Asia and Moscow. Reporters and photographers showed Americans how the world beyond our borders looked, thought and believed. Most of this is vanishing or has vanished.

We live under the happy illusion that we can transfer news-gathering to the Internet. News-gathering will continue to exist, as it does on this Web site and sites such as ProPublica and Slate, but these traditions now have to contend with a new, widespread and ideologically driven partisanship that dominates the dissemination of views and information, from Fox News to blogger screeds. The majority of bloggers and Internet addicts, like the endless rows of talking heads on television, do not report. They are largely parasites who cling to traditional news outlets. They can produce stinging and insightful commentary, which has happily seen the monopoly on opinion pieces by large papers shattered, but they rarely pick up the phone, much less go out and find a story. Nearly all reporting -- I would guess at least 80 percent -- is done by newspapers and the wire services. Take that away and we have a huge black hole.

Those who rely on the Internet gravitate to sites that reinforce their beliefs. The filtering of information through an ideological lens, which is destroying television journalism, defies the purpose of reporting. Journalism is about transmitting information that doesn't care what you think. Reporting challenges, countermands or destabilizes established beliefs. Reporting, which is time-consuming and often expensive, begins from the premise that there are things we need to know and understand, even if these things make us uncomfortable. If we lose this ethic we are left with pandering, packaging and partisanship. We are left awash in a sea of competing propaganda. Bloggers, unlike most established reporters, rarely admit errors. They cannot get fired. Facts, for many bloggers, are interchangeable with opinions. Take a look at The Drudge Report. This may be the new face of what we call news.

When the traditional news organizations go belly up we will lose a vast well of expertise and information. Our democracy will suffer a body blow. Not that many will notice. The average time a reader of The New York Times spends with the printed paper is about 45 minutes. The average time a viewer spends on The New York Times Web site is about seven minutes. There is a difference between browsing and reading. And the Web is built for browsing rather than for reading. When there is a long piece on the Internet, most of us have to print it out to get through it.

The rise of our corporate state has done the most, however, to decimate traditional news-gathering. Time Warner, Disney, Rupert Murdoch's News Corp., General Electric and Viacom control nearly everything we read, watch, hear and ultimately think. And news that does not make a profit, as well as divert viewers from civic participation and challenging the status quo, is not worth pursuing. This is why the networks have shut down their foreign bureaus. This is why cable newscasts, with their chatty anchors, all look and sound like the "Today" show. This is why the FCC, in an example of how far our standards have fallen, defines shows like Fox's celebrity gossip program "TMZ" and the Christian Broadcast Network's "700 Club" as "bona fide newscasts." This is why television news personalities, people like Katie Couric, have become celebrities earning, in her case, $15 million a year. This is why newspapers like the Los Angeles Times and Chicago Tribune are being ruthlessly cannibalized by corporate trolls like Sam Zell, turned into empty husks that focus increasingly on boutique journalism. Corporations are not in the business of news. They hate news, real news. Real news is not convenient to their rape of the nation. Real news makes people ask questions. They prefer to close the prying eyes of reporters. They prefer to transform news into another form of mindless amusement and entertainment.

A democracy survives when its citizens have access to trustworthy and impartial sources of information, when it can discern lies from truth. Take this away and a democracy dies. The fusion of news and entertainment, the rise of a class of celebrity journalists on television who define reporting by their access to the famous and the powerful, the retreat by many readers into the ideological ghettos of the Internet and the ruthless drive by corporations to destroy the traditional news business are leaving us deaf, dumb and blind.

We are cleverly entertained during our descent. We have our own version of ancient Rome's bread and circuses with our ubiquitous and elaborate spectacles, sporting events, celebrity gossip and television reality shows. Societies in decline, as the Roman philosopher Cicero wrote, see their civic and political discourse contaminated by the excitement and emotional life of the arena. And the citizens in these degraded societies, he warned, always end up ruled by a despot, a Nero or a George W. Bush.

Chris Hedges, who graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times, is the author of "American Fascists: The Christian Right and the War on America."

Saturday, July 26, 2008


There's lots of empty space as Michael Bonney transitions his Monmouth Street shop from a newsstand to a convenience store.
When Michael Bonney bought Red Bank News in May, it seemed the decades-old monument to print journalism, deemed "a Red Bank treasure" by one regular, would continue much the same as before.
Patrons could still lose themselves browsing the racks of newspapers and magazines that took up most of the shop’s floor space.
But today, what was once a crowded warren of newsprint and glossies is open space that mainly draws the eye to the checkered black and white floor (soon to be replaced by hardwood or linoleum, Bonney said).
The magazine racks are gone, as Bonney has drastically pruned his 500-title magazine inventory, which he's planning to replace with more household items, including dairy products and toiletries.
"It'll be more like Prown's," he explained, referring to the much lamented Broad Street five-and-dime that closed in 2003 and for many residents remains the symbol of a slower, more stable, less gentrified downtown.
Now it seems that the Red Bank News known to generations of customers is also about to begin slowly fading into the collective memory, as newspaper and magazine sales become more of a sideline to its business than its mainstay.
"I do feel bad about it," Bonney told redbankgreen last week. "People are a little bit disappointed, and there's been a few complaints."
Like many other changes wrought by technology, the decline of print media attracts its mourners. But Bonney has found that standing against the tide enacts its toll — in this case, financial.
Bonney, an Asbury Park resident and avid newspaper reader, said he was returning more than 1,000 unsold copies of periodicals monthly. He's also learned in his short time in the business that more people were browsers than buyers.
So as much as he liked carrying the variety of titles, he decided after a painfully slow August that he couldn't continue to stock a product that was unprofitable. Lack of flexibility in working with his large distributor also contributed to his decision, he added.
"People just aren't buying most magazines every month," he said. "They use the Internet, or subscribe, so they don't buy single copies much."
Now, copies of garish gossip magazines and the obligatory Playboys sit at the front counter amid a few lonely looking copies of Discover and the Economist. "I'm just keeping the ones that always sell," Bonney said.
He's still selling newspapers, but not in as great a variety as before. Cigarettes, lottery tickets an snacks remain on sale.
What's next? The store will slowly transition to more of a convenience store, Bonney said, while he tries out new items — household staples such as light bulbs and foods such as eggs and milk.
And how are the old-timers taking it? During all his stops and starts, "people have been very patient and understanding, I want you to say that," Bonney stressed. "I'm learning as I go. These are growing pains."

Monday, July 21, 2008

Delighting in a Magazine's Death?

Delighting in a Magazine's Death? a Q&A with the blogger behind MagazineDeathPool.com
By Peter Beisser

The Grim Reaper, the popular, anonymous blogger behind the Magazine Death Pool at http://www.magazinedeathpool.com, believes the end of days is near for print magazines.

It may not mean coming into physical contact with the blade of a scythe, but appearing on the Grim Reaper's blog may prove just as deadly to a major magazine title. For nearly three years now, the unidentified industry insider regularly has taken pleasure in predicting what popular title will close its doors next. Whether it's a dip in ad revenue or pages, another redesign or a shake-up in management, the Reaper sniffs out the early warning signs and chronicles the shuttering of popular magazines throughout the industry.

While maintaining his (her?) anonymity, the Grim Reaper excused himself for a few minutes from taking pleasure in predicting who's next on the chopping block, and answered Publishing Executive Inbox's questions about his bleak outlook for the future of the industry.

Publishing Executive Inbox: In your opinion, what are the top reasons that all of these magazine titles have been shuttering in such great numbers in the last few years?
Grim Reaper: There are several reasons why titles are closing down, some with greater impact than others. A) Magazines that outlived their usefulness or relevancy, especially being in the line of fire of what's popular on the Web. B) Magazines that were right in the crosshairs of the faltering economy. C) No. 3 titles in some categories were just not going to survive. D) Magazines that were created for advertisers, not for an audience. E) Magazines that did not have a smart and profitable digital strategy. F) Too much reliance on advertisers in trouble or under the gun (i.e. automobiles, liquor).

In the first three cases, there was really not much fault to be given. The times changed. The way people consumed their media changed. The Web began to own certain areas, like gossip, personal finance and sports, so magazines were becoming more vulnerable.

As for D, the biggest mistake is to create a magazine first for advertisers, and hope the audience follows afterwards. Cargo will forever be the poster boy for this line of thinking-that men would want a shopping magazine if women had made Lucky so successful. I have a feeling we will see Portfolio fall into the same trap in the next year or so, and it will create a much more deafening crash in the forest.

As for E, it still amazes me that magazine publishers didn't learn from the first dot-com bubble about slapping their own articles online, thereby cannibalizing themselves. Fast Company and Radar put many of their current issue articles online when they hit newsstands, for example. On the other hand, SmartMoney was intelligent enough to create a site that not only stands on its own, but they created unique Web applications that they can license out.

Inbox: When did it all begin to snowball out of control? What did publishers and the industry do wrong?
Reaper: I sensed it all began to spiral out of control when I started my blog, when Time Inc. began its first round of layoffs in December 2005. The paradigm shift to digital media really kicked in the fear at that point. I do not think publishers did anything wrong for the most part except be in the wrong place at the wrong time, much like the dinosaurs.

Inbox: What are the warning signs that tell you a title is in trouble? When is the plug usually pulled?
Reaper: The warning signs I look for a magazine getting in trouble include: losing lots of ads and/or circulation in a category dominated by the Web or becoming irrelevant, publishers firing in-house sales staff and then outsourcing them, desperate attempts to pretty up the covers into something the editorial isn't, changing the editorial mission, especially to be fad-ish, and consumers basically ignoring them.

Inbox: What do you think magazine publishers can do to stop the hemorrhaging?
Reaper: With some titles, there's nothing that can be done to stop hemorrhaging. For example, I just don't see how newsweeklies are going to survive, so they may as well close up shop and move fully to the Web. I know this sounds terrible, but if you can't beat 'em, join 'em in some cases. Magazine brands and their domains can be very strong and profitable on the Web, as opposed to ink on paper. Others just need to suck it up, cut rate bases, and devote resources to Web sites that can stand alone with well-done SEO to generate revenue.

Inbox: What were your main goals for the Web site? What has the response been from the industry?
Reaper: I set up Magazine Death Pool in February 2006 as a way of marking the slow end of an era in my own special way. It functions to point out some of the foolishness and arrogance of the industry, while certainly mourning the notable titles that have passed on. I've received a lot of e-mails from professors, as well as people who get sentimental about magazines that went under a long time ago. Of course, there are a few bile-spewing e-mails, including ones from the magazines I write about. I don't mind if they post comments in response to what I write. They should have a platform to vent. Knight Kiplinger, Jr. posted quite a long defensive comment on the blog recently. Anybody whose first name is Knight deserves a spot on my blog.

Inbox: Who is going to survive, and why are these titles different?
Reaper: The titles which have the best odds of surviving are the ones that are read for the big splashy ads, like Vogue, Elle, the bridal books. People buy those magazines for their lush spreads and ads. They can not be reproduced on the Web or read comfortably on a mobile phone . . . yet.

Thursday, July 17, 2008

In these hard times, some titles are up in pages

When the going's tough, the tough sell
In these hard times, some titles are up in pages
By Diego Vasquez
This last quarter was the worst in recent memory for consumer magazines, and it doesn't look very promising going forward, contrary to some forecasts that see magazines rebounding in the second half of 2008.

How bad was the second quarter?

Ad pages were down 7.4 percent, according to Publishers Information Bureau figures, and of the 23 magazine categories tracked by Media Life, all but one saw pages fall.

Just a handful of magazines saw improved ad page counts, among them OK!, up 31.7 percent; The Economist, 3.7 percent; Harper's Bazaar, 9.4 percent; Conde Nast Traveler, 3.8 percent; National Geographic, 11 percent; Popular Mechanics, 8 percent; and Everyday with Rachael Ray, 15.4 percent.

To get a better sense of the state of the magazine industry, and why some magazines are up in pages, Media Life talked to their publishers, as well as longtime magazine consultant Martin Walker of Walker Communications.

These are anxious times, they agree.

"I've seen a lot of ups and downs, but this is scary," Anne Balaban, publisher of Everyday with Rachael Ray, tells Media Life. "We're hearing day after day about how many marketers just aren't advertising. It's across the board. It's every industry, not just ours. These are trying times."

Says Lisa Hughes, vice president and publisher of Conde Nast Traveler: "It's harder to find that customer out there who's still consuming. The economy is the economy, and there are a lot of unknowns right now. The election, will oil prices ever come down? It's a tough business climate for everybody."

William Congdon, publisher of Popular Mechanics, agrees. "We're in for a challenging second half. Right now we're up through the October issue at least, but I know it will be challenging. Through first quarter it will still be very challenging. A lot of it depends on when we get a new president and people figure out what direction we're heading."

Says Jason Webby, vice president of advertising sales at the Economist: "I would hope magazines rebound in the second half of this year. That's everybody's hope. But with what's happening in the financial markets, especially this week, you never know."

Walker doesn't see consumer magazines springing back anytime soon.

"The industry probably won't turn around until at least 2010," he says. "Most of the decisions about next year are being made in the next two or three months, so all of those will be based on what's happening now. If the economy all of a sudden gets good in 2009, that's not enough time to impact the second half of next year, given the print cycle."

A major hurt has been the drop in pharmaceutical ads, which had buoyed consumer titles for several years. For this first half of this year, ad pages for drugs and remedies fell 13.2 percent.

Always controversial, drug advertising has come under closer scrutiny by regulators following a rash of lawsuits over harmful side effects that were not detected or revealed before going to market. Marketers, anxious to avoid tougher regulation, are cutting ad spending, and they've entirely cut advertising for new drugs in their first six months.

Certainly, the falloff in drug advertising has hurt a lot of titles, and it's something publishers have no control over. That's true of all ad categories.

But a huge factor in how well a title is doing is in the hands of publishers, and that's in how hard and how well they sell. That especially matters during tough times, these publishers say.

Conde Nast Traveler's Hughes says it's about coming up with better ideas.

"You have to be really out there, you have to be aggressive as a sales team. Advertisers are demanding great programs, and they scrutinize every dollar they spend. The titles that are hungry for the business and coming up with good ideas are going to win the business."

Says Rachael Ray's Balaban: "This is when it really counts to have good product and smart programs--building a base of smart programs that are unique to our brand and compelling enough to advertisers that makes them feel they're getting so much value with their dollars. "

Says Tom Morrissy, OK!'s publisher: "Those who have strong programs in place and are strong brands will do fine. It just won't be one of those years where everyone is breaking open champagne bottles."

Popular Mechanics' Congdon observes that good programs have a way of rooting out ad dollars. "It's not so much that ad budgets are totally cut. Advertisers are just being cautious. But if you keep going in and keep bringing fresh ideas, they'll still have that money."

Valerie Salembier, publisher of Harper's Bazaar, says it's also about being where your competitors are not.

"Things are tough, but they've been tough before and all of these magazines continue to publish and last and endure," she says.

"In terms of selling advertising, it is back to basics 101. Get out there and make the calls. You don't get ads by sitting behind your desk on the phone, you get them sitting at your client's desk.

Claudia Malley, vice president and U.S. publisher of National Geographic, says it's also about being able to stand apart from your competitors, and a big part of that is reader engagement, which she says resonates with marketers.

"Integration will be a key. Those brands who can differentiate by being a brand leader and then have communication with consumers across all media will be the ones that succeed."

Monday, July 14, 2008

Is Digital Marketing Killing Magazine Ads?

Is Digital Marketing Killing Magazine Ads?
BY Jason Baer

A report last week by the Publishers Information Bureau found that advertising pages in the nation’s magazines declined by 7.4% compared to the first half of 2007.

With the stock market down by about 20%, and house prices down at least that much in some parts of the country, a 7% dip in magazine ads may seem less frightening than the prospect that Angelina Jolie will somehow end up being mother to all of the world’s children.

However, there are two inexorable trends in marketing right now and neither bode well for magazines mid or long-term. The economy will rebound at some point, but even when that happens, will magazines recoup their share of the advertising pie? In general, I think not.

First, marketing is increasingly about measurability, and on that front magazines score no better than any other “traditional advertising” tactic like TV, radio, or newspaper. I would put magazines ahead of outdoor on that scale, because at least they have audited circulation. But how does the savvy marketing director (or agency media buyer) determine the financial impact and ROI of magazine? Short of tracking URLs and phone numbers (which basically pass the measurement buck off to another medium), it’s pretty difficult to isolate the effect of a magazine buy - which is why digital marketing is growing and everything else is stagnating in this down economy.

The second issue for magazines is speed. The lead times required by monthly magazines for advertising and editorial are positively anachronistic. Consumer magazines are working on their October issues right now. Seriously? By October, Brett Favre could be playing quarterback for the Bears, and all of California could be on fire. In these uncertain times, committing to expensive magazine ads 90 days in advance seems like a leap of faith that fewer advertisers are willing to make.

And speaking of speed, magazines without an especially sharp editorial focus and solid reporting are going to have a tough time in a culture where information is conveyed in 160-character bites RIGHT NOW. Interestingly, some of the magazines showing the biggest decline in ad pages this year are those who cover topics that are perhaps covered better online by sites and blogs.

Blender (-23.5%). See www.pitchforkmedia.com, last.fm

Business Week (-14.8%) See www.thestreet.com, www.cnbc.com, www.businessweek.com

PC Magazine (-35.8%) See www.gizmodo.com, www.cnet.com

Newsweek (-22.4%) Time (-21.1%) and U.S. News (-30.3%) See www.huffingtonpost.com, www.nytimes.com, and Twitter, where thousands of people are discussing current events as they happen, not a week later.

Interestingly, one area of magazine-ville that showed consistent gains was food publications. With gas and food prices soaring, Americans are eating out less and trying to craft delicious meals at home. I’m not sure this trend is going to do anything about the obesity problem, however, as Cooking with Paul Deen ad pages were up 31%. That lady is physically incapable of executing recipes without at least one pound of sour cream.

Thursday, July 10, 2008

Media Survival: Avoid Obsolescence

Media Survival: Avoid Obsolescence
by Diane Mermigas

Obsolescence is a word that sends chills down the spines of most corporate executives. It also is something we are going to see more of as sweeping changes in digital technology, fuel prices and financial fundamentals disrupt and displace the norms.

This trend is starkly evident at U.S. automakers struggling with car sales at a 10-year lows, and most particularly General Motors, whose stock is trading at 50-year lows. At the core of these troubling trends is a dramatic, swift shift in consumer demand caused by the oil crisis. Detroit automakers are still selling the SUVs and minivans that consumers wanted when gasoline was selling at $2.50 a gallon, but have quickly shunned at $4-plus per gallon.

The knee-jerk response of production plant closings, massive layoffs and other cost reductions do not get to the heart of the problem. GM and other U.S. automakers must unload their existing inventories of gas-guzzling vehicles and completely revamp their operations and infrastructure to accommodate demand for new products. Liquidity is a big issue, as is the ability to revise existing cost structures and union contracts without resorting to bankruptcy. Since none of this can be accomplished overnight, there is going to be transitional pain. They simply cannot shift gears fast enough. For proof, look no further than the financial and logistic nightmare haunting domestic airlines.

Media companies - in particular, broadcasters, cable operators and content creators - must take heed, too. They could be confronted by a similar obsolescence that renders their assets and operations with shrinking value and flexibility. The marketplace's pervasive digital conversion is well ahead of where most traditional media players need to be. There are many instances where their products, services and business models are no longer what technology-empowered consumers want. These companies' public values, balance sheet stability and cash reserves are in decline.

They can't generate new digital revenues fast enough to offset the decline in traditional revenues due to an inability to reform their inefficient legacy structures. They also are limited in their ability to raise capital. Media companies of all stripes have seen their valuations tumble, not just because of the overall stock market malaise. Their revenue and earnings forecasts are being thrown off by massive shifts in content distribution, services and the general flow of money. It is challenging to value new interactive connections between target consumers with the most relevant advertisers and content, much less redefine the value of entire companies.

The parallels to the auto industry are disturbing. GM's market cap has fallen to $6 billion, compared with foreign-based Toyota at $147 billion. CBS is treading a $13 billion market cap compared with Google's low-end $169 billion valuation. New business models, methods and markets are both creating and destroying value.

The media sector where this is most painfully evident is newspapers, which are sustaining record double-digit declines in annual advertising revenues and even some operating margins. The entertainment and broadcasting sectors collectively are down 25% from the first half of 2007, based on soft advertising trends in a worsening economic environment and local markets "more exposed to recessionary trends and lower digital penetration," according to Lehman Brothers analyst Vijay Jayant. All media and telecom (67 stocks in 14 subsectors) were collectively down -15.5% from a year earlier, underperforming the S&P 500 (down 12.8%) the first half of 2008.

However, there will be even more dramatic structural and fiscal fallout evident for some broadcasters when there is no election or Olympic year ad spending in 2009. Local TV broadcasters will be confronted by what veteran analyst and consultant Tom Wolzien has described as the $16 billion challenge, or the growing gap between their primary channel and total revenue goals based on mining digital opportunities.

Wolzien made the point during a TVB presentation that local broadcasters - like their affiliated broadcast networks - will need to do more than shift some of their TV programming and ads online. He made the point using 2006 newspaper statistics. Although newspapers collectively sold $2.7 billion in Web advertising, up 31%, overall newspaper industry growth based on all revenues sources was flat.

In other words, for the beleaguered newspaper industry to post even just 5% returns, it needed for its online sales to rise an estimated 161%. Not all revenues are made equal, especially when priced differently and held up against legacy operating expenses that can only be permanently reduced through a complete embrace of e-publishing models - akin to GM shifting from SUV to hybrid car manufacturing.

On the broadcast front, Borrell Associates estimates that local TV station Web revenues will grow 48% this year to top $1 billion, and grow to an estimated $1.4 billion in 2009. However, analysts point out that online revenues still represent 5% or less of TV stations' overall revenues and generally will not completely offset lost or declining revenues especially in non-election years. The only way to secure more significant, permanent growing new revenues and profits is to structurally alter the local TV broadcast business. It is a tactical overhaul that TV broadcasters - like car manufacturers - must squarely confront and execute to achieve lasting change and a path to survival.