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Jan. 7, 2016, 11:19 a.m.
Business Models

Newsonomics: Setting the news table for 2016

The news business hopes it won’t end up one sandwich short of a picnic as the new year’s big trends unfold.

How can we set the table for 2016?

Advertising woes continue — deepen, actually. Whole new forms of storytelling open up and go mainstream more quickly. Virtual reality joins the harsher realities. Hundreds of millions in new investment develops alongside an equally strong belief that legacy media decline can be managed profitably.

The business of news remains a business like no other. On the other end of all the business machinations, fascinating as they can be, are the readers. They are veteran and young, mobile and stay-at-home, all trying to make sense of a wider world in paroxysms of change. It is their news diet — one that has consequences, especially in election years like 2016 in the U.S. — that matters most.

Let’s use that metaphor to start the year and preview what’s on the menu for the business of news in 2016.

Amuse-bouche

Alibaba Surprise: Just a wee taste of the fruits of Chinese consumer expansion, even as that becomes a rarer treat. First served as a starter to the Yahoo main course, until it replaced it as the entrée and turned Yahoo into an underappreciated leftover. The reverse spin may leave stomachs unsettled and puts off the eternal question of what Yahoo may be in its next incarnation, though many have just gotten tired of asking and moved on. In fact, on Wednesday, the company cemented its quest to become a legacy newspaper-like company: It cut comics, including reader faves Dilbert, Garfield, and Cathy!

Adblocker Prevacid: After testing in various news tech kitchens, publishers are looking to blunt the impact of highly acidic adblockers. This is the odd sort of heartburn that decreases with age, as millennials — now fully disrupting all that’s ever been true about news — become the only generation many publishers care about. They love to block ads, as data shows, everywhere from the U.S. to Germany and France, where the pain is greatest. So far, it’s desktop blocking that’s been the main threat to ads, but mobile blocking, aided by iOS 9, is slowly growing more problematic.

Bargain Taste of the Day: Pundits, revered (Fred Wilson: “What is Going to Happen in 2016”) and less so, have touted declining digital media company valuations as “markdown mania.” Many see bubbles in every digital news drink. Yes, Business Insider sold at a good price, but the doubts about the valuations and values of other startups persist. (Is Mashable as valuable as ever, as the company presents itself for sale? How much would you pay for a chunk of Quartz?) 2015 saw an unprecedented year of investment in new combinations, with NBC Universal buying a significant stake in the future (and/or hedging on its old-line operations), with BuzzFeed and Vox Media assured of near-term futures, along with Vice. The degree to which these once-smaller players will grow into maturing, stable news companies is a major question for 2016, while we wonder whether it’s too late for smaller news companies to make the grade. And the question once again hanging in the air, via China’s stock market: What happens to our new digital news diet should a recession come sooner than later?

Starters

The Less-is-More Paleo Salad: It’s meat, but not much of it. Lost in the blur of media change is the unending loss of daily newsroom jobs from coast to coast, month to month, with bigger cuts at year-end as management prepares for still another lean year ahead. We’ll soon find ourselves with half as many local daily journalists as we had in 1990. Given the turmoil at the L.A. Times, the cuts of 50-plus there drove much of the job-loss news, but throughout Tribune, Gannett, Advance, and most others, cuts from the dozens to twos and threes diminish community knowledge, drip by drip. Worse, the local news consumers’ appetite also shrinks, as the memory of what robust local news looked like wanes.

Axel Springer Sweet-and-Sour German Meatballs: From the kitchen of the German media powerhouse comes a motley assortment of delights, some that will please over the long term, and others that may only offer recipes to be later adapted. Springer finally won a big auction in October, with its $400 million-plus purchase of Business Insider. That “anchor” acquisition, as big as it is, only publicly certifies the company’s busy kitchen. The company now counts 15 U.S. investments, ranging from Ken Lerer’s NowThis (where it led a funding round last month ) to Mic to Thrillist to Ozy in the direct media space to VR high-flier Jaunt and shopping digitizer Retale. A few may blossom into meaningful businesses, which Springer could buy, while others are intended to help the company drive its culture change to digital. CEO Mathias Dopfner (“What Are They Thinking? Eight Principles for Mathias Dopfner’s Transformation of Axel Springer”) has moved well beyond Germany, embracing the global digital business and English as a means of serving a big, big clientele.

The ARPU Appetizer: Priced at a still-affordable dollar a serving, this dish will whet your appetite for the news of the day. Borrowed from an ongoing test in Boston (“Newsonomics: Can you get readers to pay a dollar a day for news?”) at The Boston Globe, we present this dish with the eater in mind. Why be dependent for your news diet on fickle advertisers, when you can pay for the meal directly? The Globe now sells about 65,000 digital-only subscriptions. If it can triple or quadruple that number — a tall order, but one that will be aided by print subscribers going digital over time — it will begin to prove out a new reader-dependent business model for regional media. The ARPU (average revenue per user) Appetizer recognizes that getting more money per discriminating customer is the route to success.

Entrees

Millennial Mash: Have you had your recommended daily allowance of millennials? An arrangement of video tidbits and easy-to-digest conversational threads delivered on a mobile platform of your choosing, the Mash is our most au courant dish. The oldest millennials are about 34 this year, with the youngest around 16 — making them the largest group of buyers in the country. Fast-growers like Mic (positioning itself as a video-centric millennial-oriented company) aim to define themselves as the center of this new world, while many other publishers (newer and legacy) can claim elements of millennial-satisfying content in their offerings (“The newsonomics of the millennials moment”).

The Adelson Gut-Bomb: Arriving just in time for overeating season, the Sheldon Adelson-prepared secret dish comes replete with undisclosed condiments from Macau. Warning: This dish requires extraordinary post-meal care. Long-time MediaNews editor Dave Butler — experienced at dealing with cantankerous owners like Dean Singleton — looks he calmed the immediate aches in Las Vegas this week. Glenn Cook, who wrote a gutsy Page One editorial in response to the Adelson buy, becomes interim editor. Further, straightforward guidelines now protect the newsroom from Adelson meddling — on paper — with the publisher still reviewing stories involving the paper itself, as has been routine at many well-managed operations for a long time. And, most surprisingly, it looks like the recently up-in-arms newsroom is getting more resources! The big question hanging: What was Gatehouse management’s involvement in ordering up what looks like a hit story on judges critical of Adelson?

Tribune Tagine: Sam Zell spit in the Tribune pot, and CEO Jack Griffin has been scrubbing it out for a year and a half now. Just this week, Tribune hired former DFMer Tom Wiley, described by associates as a guy with vision, as the new Hartford Courant publisher, moving Rick Daniels from there to The Baltimore Sun. That should complete the team Griffin and Times veteran Denise Warren have been assembling. The question that still hangs in the air, given TPUB’s still worse-than-average revenue numbers: Do they have the right ingredients? Does the Griffin five-point strategy have a hope of working?

Next up, will TPUB add the Orange County Register to its Southern California near-monopoly as the Register’s current bankruptcy winds to a close? In the meantime, Jack Griffin’s 2015 hangover dish remains warm: Will Apollo, Eli Broad, or others bust up the dinner party? They now wait in the wings for possible early-bird prices. If TPUB’s share price descends again to the $7 range, we may see new bids for the company.

A Carousel of Tasty Stories: With little fanfare, Google created the low-cal alternative to Facebook Instant Articles and Apple News, late in 2015. Its AMP (Accelerated Mobile Pages) offered a beta portion in the fall, as news publishers tested. The allure: speedy-loading mobile news pages that readers can find on the publishers’ own websites. That’s the carrot here. In March, the stick arrives from the Google kitchen, as a news carousel tops Google mobile news pages. Google will launch a new carousel — that visual image-by-image return we see in other Google products and elsewhere on the web. On the carousel, though, it’s highly likely that only AMP’ed stories will be eligible for carousel inclusion; others will follow in the text-laden (increasingly second-class) results below. The big question for publishers: Will they commit tech resources to adding the AMP protocol to their content — of, if not, will they later suffer traffic indigestion for failing to do so?

Meanwhile, it’s unclear how high or low on the menu the 2015 distribution delights of Apple, Facebook, Snapchat, and others will find themselves. Publishers so far report some traffic results, but no business game-changers. Twitter’s 10,000-word offering may both be too late to a party that’s already pooping out.

National News Two Ways: Now enjoy the delight of two big national dishes, each prepared in distinctly different ways. Our New York dish has been the very standard of excellence, pithy and flavorful, even as its preparation has seen many changes in recent years. Now we can add the revitalized Washington take, a flowing, attractive, on-the-move friendly dish that’s savory and at a lower price. It was The Washington Post that proclaimed its national re-emergence, calling itself “the newspaper of record” by year’s end, given its fast-growing U.S. digital audience. With a bolstered budget, editor Marty Baron (“Newsonomics: Marty Baron shines a new spotlight on journalism”) has been able to offer up a more diverse menu than most of his fellow chefs, who have only seen their pantries shrunken. The idea of a national news war may seem a bit quaint, given the multitudinous competition from all quarters, old and new. But it still bears sampling into the new year.

Desserts

Dutch Crunch: Blendle, with its pay-per-article model, launched to some modest success in the Netherlands and Germany. This spring, backed by investors at The New York Times and Axel Springer, Blendle will serve its first dishes in U.S. Can it succeed in selling select articles for a few dimes each?

Tablet Tart: The tablet had a big year in Canada in 2015. Recently thought to be peaking as a news driver, it received new life, first in Montreal and then in Toronto. The Toronto Star’s dropping of its paywall and embrace of daily tablet-focused digital publishing offered exposure in the anglophone market for what French Canadians had been experiencing for some time. In fact, as of this month, the only way Montreal’s La Presse can be read on weekdays is in digital, mostly on tablets, with the closing of its daily print product. Can digital advertising — no matter how high-toned or gorgeously presented — really be a route forward for those in more southern climes, or across the Atlantic?

Service charge

It’s simple, people. You want good food and good service — pay up. As advertising as we know it melts before our eyes — consider the advent of big-time branded marketing, Amazon disintermediating seller-buyer relationships, the onrushing Google-Facebook duopoly, the death of old-timey digital display, and more — the necessity of reader revenue has never been more important. The New York Times, The Wall Street Journal, the Financial Times, and others have proven it at a national/global level, and publications as diverse as The Boston Globe and Amsterdam-based De Correspondent are making real progress across two continents. As the amalgamated Piano and some of the biggest news publishers aim to make data science-infused and nuanced reader payment a reality, Paywalls 2.0 may finally join our menu.

Photo by djromanj used under a Creative Commons license.

POSTED     Jan. 7, 2016, 11:19 a.m.
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