rasmuskleisnielsen.net

So, in hi-fi billionaire Sidney Harman, the Washington Post Company found a buyer for the ailing Newsweek. Peter Lauria and Lloyd Grove at The Daily Beast have a good report on the sale, based on the sales memorandum circulated.

A few key numbers suggests the challenge the 92-year old Harman (it is his birthday today, as a matter of fact) has taken on:

Newsweek’s financial freefall is jarring. Revenue dropped 38 percent between 2007 and 2009, to $165 million. Newsweek’s negligible operating loss (not including certain pension and early retirement changes) of $3 million in 2007 turned into a bloodbath: the business lost $32 million in 2008 and $39.5 million in 2009. Even after reducing headcount by 33 percent and slashing the number of issues printed and distributed to readers each week from 2.6 million to 1.5 million, the 2010 operating loss is still forecast at $20 million.

Dig deeper into the document and the numbers get worse. Newsweek lost money in all three of its core areas in 2008 and 2009: U.S. publishing, foreign publishing, and digital. Even with the smaller guaranteed circulation, it still retains $40 million in subscription liabilities owed to readers. And then there’s Newsweek’s lease foibles: last year, it paid $13 million in rent, a startling figure for a company its size.

Moving to a cheaper address than 251 W 57th St might be a start. No wonder the article calls the sale a “passion play” and implicitly identifies Harman as something of a print sentimentalist.

Lauria and Grove go on to make this prediction: “Standalone magazines no longer work.”

Part of their argument is reasonably enough, that Newsweek would have been better off had it been sold to a media conglomerate that could have reduced its massive overhead–what Lauria and Grove describes as “the murderously inefficient $55 million in general and administrative costs that Newsweek carried in 2009 (covering everything from finance, accounting, and rent to legal, HR, and IT)”–by sharing back-end operations amongst several magazines.

But let me offer just one counter-point to the broader version of their assertion about magazines–look across the pond to Europe, and you will see several countries with internet use at levels comparable to those in the US where newsmagazines are actually doing rather well–in print, but also online.

In Germany, for example, Der Spiegel, a bastion of news reporting and current affairs coverage with a circulation around 1 million in a country with little more than 25% of the US population, is a leading source of news both in print and online. While revenue dropped from 2007 to 2009 there too (about 15% during the worst recession in the post-war period), they still stand at an estimated €300 million in 2009–almost twice Newsweek‘s, for a company build around a magazine with a smaller circulation in a smaller market.

(The media market in France is rather peculiar for historical reasons, and thus not easy to compare with, but it is still worth noting that news magazines like L’Express and Le Nouvel Observateur have comparatively speaking high circulations (~500,000) in a much smaller country.)

News magazines are under pressures everywhere, yes, and Harman has certainly chosen to take on a major challenge at a rather advanced age, but the business he has entered with this acquisition is not going away–it is changing.

UPDATE (after lunch conversation): The Economist is another interesting but tricky comparison, British-based, but with a much more international audience, the Economist Group based around a magazine with a circulation of about 1.5 million had, according to its annual report, a revenue of £313 million and an operating profit of £56 million (!) in 2009.

1. Wikileaks all the time, everywhere

There is just too much that’s interesting about the Wikileaks story and the intersections between new technologies and forms of activism and old organizations to even begin to compile and comment on, but notice:

1) how personalized the coverage by legacy news media have been (Julian Assange said this, said that) of something that is a collaborative and largely anonymous endeavor,

2) how focused the conversation in journalistic circles has been on whether the disclosure of 92,000 documents was “news” or not (and usually whether it was news to journalists and area experts, or at most a newspaper reading public), and

3) keep in mind, no matter how much you hear about how this is not a revelation on par with the Pentagon Papers, just how amazing it is that someone can share more than 91,000 documents in a searchable form not only with a few thousand professionals, but also with those of more than a billion and a half internet users who care to have a look. That Daniel Ellsberg could not do in 1971.

UPDATE: How nice to be reminded that the conversation isn’t over just because a few days passed. I felt almost embarrassed writing the above years after the story broke (and felt embarrassed feeling embarrassed, but that’s rather meta)… but look, the conversation continues. A couple of old links worth revisting here, here, and here.

2. Top Secret America

I continue to be impressed by the Washington Post’s Top Secret America series and accompanying website. Attention seem to have been fleeting in some circles, but I think this is a very valuable demonstration of how a legacy news organization can use new tools to underpin its traditional values and unfold them in new and interesting ways. As Keach Hagey of Politico put it: “The “lightning strike” came when they realized that although they couldn’t get inside these secret sites, they could physically represent them through databases and mapping.”

3. Journalisto

Oh, and then there was the whole kerfuffle over journolist, an email list of journalists, academics, and pundits, many with liberal sympathies, where some rather critical discussions played out in the run-up to the 2004 Presidential Election. The Daily Caller used some quotes from these to kick off quite a controversy. Mark Schmitt offers his take on what the list was for him, a multi-generational conversation amongst knowledgable people who disagreed, and James Fallows notes:

I have one question for people who are upset about an email list involving 400+ mainly-liberal journalists and academics: Have you ever been on a listserv? If you have, everything about the dreaded Journolist would be familiar to you. It had all of the virtues, and many of the faults, of the standard internet email list.

Barack Obama raised unprecedented amounts of money from small dollar donors (under $200) in 2008. That one you’ve heard before. He also, mind you, raised unprecedented amounts of money from large dollar donors ($1000 and up). That’s sometimes left out of the story.

The omission of this proven track-record with large dollar donors has led some to claim, usually on the basis of anecdotal evidence, that Obama and the DNC, high on the grassroots funding successes of Dean and later Obama, have abandoned their traditional big-time funders in New York (and California).

They haven’t. And why would they?

First of all, they haven’t stopped cultivating large donors. Obama hasn’t, the DNC haven’t, and candidates at all levels certainly haven’t either. It seems safe to predict that large donors will donate the plurality of individual contributions in the 2010 mid-terms, just as the Campaign Finance Institute found that they did to Obama in 2008 (for the general election, 34% of individual donations came from donors who gave $200 or less, 23% from donors who gave between $200 and $1000, and 42% from donors who have $1000 or more). Looking at House candidates in 2008, the Campaign Finance Institute found, quite predictably, that they relied much more on large dollar donors than Obama did. Without breaking it down by party or incumbency, just look at the raw numbers: donors who gave $200 or less contributed 8% of individual contributions to House candidates, between $200 and $1000 11%, over $1000 35%. (The rest comes from political action committees (36%) and from other sources, including self-funding (10%)). Internet or no internet, the total percentage of donations that come from small dollar donors have consistently declined from 15% in 2000, 12% in 2002, 10% in 2004, 9% in 2006, and to 8% in 2008. Small dollar donors gave $10 million less in absolute numbers to House candidates in 2008 than in 2000! (Interestingly, the numbers for the Senate are a little different, still a decline, but slight and less consistent.) Democratic Party operatives at all levels are at least aware of these numbers, and they would have to be rather high on new technology hype to fail to realize that it would be rather short-sighted not to keep on cultivating the usual fundraising circuits.

Secondly, why would they stop? Small dollar donors and large dollar donors aren’t, after all, mutually exclusive alternatives. They surely have different implications for who political operatives and candidates feel they need to represent, but from an operational point of view, cultivating both is simply a matter of capacity and organizational priorities (as the Republican success with courting small dollar donors via direct mail while pulling in large dollar donors by the barrel full at the same time have demonstrated for a long time). (OK, the candidate’s time is limited, and you can’t schmooze at a $1000-a-plate fundraiser while giving your stump speech to a couple of hundred activists who have donated $50 dollars for the cause (not that many congressional candidates even have the second option, given how disconnected from politics many people feel).) Back to Obama 2008 and the starting point for this post—not only did his campaign raise unprecedented sums from small dollar donors, they also raised unprecedented sums from large dollar donors (for partial numbers, see this).

New technologies and organizational priorities offer political campaigns new opportunities for courting small dollar donors in larger numbers across the country, and at lower overhead when well done, than have been the case in the past. For those candidates who chose to embrace this, and who appeal to the kinds of people who donate money to politicians, this can be a game-changer (see Nancy Scola’s post on TechPresident on a number of spectacular examples). But this important development and disgruntled complaints from a few former big-time funders who don’t feel they get the attention from national Democrats that they should get (as the Washington Post article linked to above suggests, often because they are politically toxic for one reason or other), shouldn’t lead us to conclude that we are witnessing the end of the large dollar donor in American politics. We are not.

(cross-posted on TechPresident)

1. The Economist on the BBC

The Beep find friends at the normally free-market Economist (no less relevant after Culture Secretary Jeremy Hunt has started talking about reducing the license fee), highlighting how the technological challenges public service media organizations face today haven’t made the old political ones go away.

Yes, it is a clique-ish institution, and snobbish towards outsiders. I have bumped into BBC teams on four continents, at airports or election rallies or hotel lobbies late at night after some long story, and have routinely marvelled at their incestuous, clannish manner. In terms of insiderishness, I think only a travelling hockey team from a very grand girls’ boarding school comes close.

But the outrage is out of proportion to the sins of the BBC. Take a step back, and the BBC is not broken. I would argue it is the best broadcaster in the world: and thus on the rather short list of British things that are the best in the world.

2. California’s Gubernatorial race, money (and technology) versus people?

In American field campaigns, it is usually money, technology, and people lined up against each other when serious candidates from the major parties face off. But in California, the Republican (and largely self-funding) candidate Meg Whitman may have so much more money than the Democratic candidate Jerry Brown, who in turn probably has more support from member-based interest groups and activist networks, that it actually may be money and tech versus people for once. Whitman has spent $2.7 million on her website alone, according to the Mercury News. It will be interesting to follow.

3. Editors’ weblog on charging for comments and forcing commenters to publicize their identity

Editors’ weblog have a useful piece on The Massachusetts Sun Chronicle’s decision to start charging for comments, and publicizing identities–this has created quite a stir. A couple of weeks ago, Blizzard Entertainment burned their fingers on the personal identity side of this when they tried to force users of the World of Warcraft forums to use their real names, sparking a back-lash from the community, causing the company to back down.

I was at the launch of Nic Newman’s #UKelection2010, mainstream media and the role of the internet yesterday, and want to (a) applaud Newman for what is a timely, highly interesting, and useful overview of the role of various internet tools by parties and media during the 2010 UK election and (b) highlight a point made by Steven Barnett during the Q&A session.

In the summary section of his report (p.4), Newman writes

Online news sites were the most important source of election news for 18–24 year olds, ahead of television and printed newspapers.

There are two important qualifications here, first, Newman has not actually shown this, and secondly, even if this was so, it says nothing about who produced the news people found online (legacy organizations, pure players, etc).

On the empirical point, as Steve Barnett pointed out and Newman acknowledged at the launch, while online news sites may be the most important source of election news for young people, we do not actually know that they are.

This becomes clear when one follows the footnote attached to the statement, “Survey of media habits of 18–24 year olds for this paper: full details and results in section 7.” Newman’s survey–and he makes this very clear at the very end of the report (p.45)–is not a statistically representative sample, and was recruited via email and Facebook, with people already online self-selecting as respondents.

Newman has shown that a wide range of internet tools were used by both parties, media organizations, and ordinary people for a wide variety of purposes during the 2010 UK elections, but he has not shown that Online news sites were the most important source of election news for anyone.

UPDATE: Just one example of people not reading the fine print, from the International Federation of Journalists note on the report:

Online news sites became the most important source of election news for the “facebook generation”, ahead of television and printed newspapers.

Maybe, but we don’t know.

1. Experian Hitwise on the The London Times going behind a paywall

With the venerable London Times being one of the first major News Corp papers to go behind a paywall, we are all waiting to see what happens. Experian Hitwise has an interesting analysis of what the consequences of the first step–requiring registration–were.

the title’s market share has dropped from 4.37% during the week ending May 22nd to 2.67% last week (w/e June 19th).

…

the conclusion so far seems to be this: since it forced users to register in order to view its content, the Times has lost market share. However, this decline has clearly not been catastrophic and none of the paper’s rivals has particularly benefitted. Yet.

And this is before they actually start charging for content in a very competitive market for national newspapers in the UK.

2. More paywalls

Gannett, the largest US newspaper company, is embarking on its own paywall experiment, though admittedly with less well-known titles. The Tallahassee Democrat in Florida, the Spectrum in Utah, and Greenville News in South Carolina have introduced a range of subscription packages beginning July 1st, as editorsweblog notes. All three are local newspapers with circulations under 100,000, presumably not facing stiff competition on local news, and thus may in way be better positioned than the London Times to charge for at least some of their original content.

3. International blogging research

My friend John Kelly’s ever interesting research with Morningside Analytics was featured in the Economist a little while back

ONLINE archaeology can yield surprising results. When John Kelly of Morningside Analytics, a market-research firm, recently pored over data from websites in Indonesia he discovered a “vast field of dead blogs”. Numbering several thousand, they had not been updated since May 2009. Like hastily abandoned cities, they mark the arrival of the Indonesian version of Facebook, the online social network.

A rather poor summary of a presentation called “Beyond Determinism” that I gave at Westminster earlier this month on behalf of myself and David Levy have led to some misunderstandings.

Here is a better summary, from the Reuters Institute website:

Is the internet killing newspapers? On June 8, RISJ Postdoctoral Research Fellow Rasmus Kleis Nielsen presented preliminary research conducted with David Levy that suggests otherwise at a conference at the University of Westminster in London.

Comparing developments in the newspaper industry in the US, France, and Finland from 1998 to 2007, the two authors suggest that while the newspaper industry is clearly in decline in many developed countries today, the decline often started well before the advent of the internet, plays out very differently in different national contexts, and is—with the partial exception problems directly related to the recession—slow and gradual enough to offer most legacy news media organizations time and resources for a managed transition to a smaller but still central role in a new communications environment.

Clearly the newspaper industry face a structural adjustment today. Equally clearly, it still retains a large and loyal core readership and generates enormous revenue (though relatively speaking smaller than in the 1970s-1990s in many countries), and it is hard to imagine that commercial media organizations will simply leave the money on the table and walk away from news provision partially based on a print platform.

1. Jay Rosen (and more) on what the Rolling Stone McChrystal story says about journalists and sources

Rosen (taking a lead from Andrew Sullivan at the Atlantic) rightly pounced on this passage from a Politico story: “as a freelance reporter, Hastings [who did the interview and article that lead to the General’s ousting] would be considered a bigger risk to be given unfettered access, compared with a beat reporter, who would not risk burning bridges by publishing many of McChrystal’s remarks.”

Politico in turn removed the paragraph from the online story, resulting in further debate and this summary on their own site.

The combination of the malleability of digital publishing and the ease of copying and commentating is one interest dimension of this whole episode, the other is how it confirms every textbook media research finding about the relations between (regular) reporters and officials.

2. Frédéric Filloux on the pending sale of Le Monde

Nice overview here for those of us who haven’t followed it closely, dealing both with the business situation itself and the larger question of what Le Monde’s project is/should be today.

3. Alan Mutter on newspaper economics

Mutter is sobering and interesting as always, pointing out that newspapers in the U.S. have had a hard time capitalizing on the economic recovery so far, with further declines in print advertisement and newspapers’ online advertisements growing more slowly than the sector as a whole.

1. BBC on broadband regulation in the US

BBC News had a short piece on the policy battles surrounding broadband regulation in the US, with many of the key players in place, the Federal Communications Commission and the courts, of course, but also telecom providers like ATT&T and Verizon versus internet companies like Goolge and Amazon, all arguing their side of the net neutality issue. Precious few citizen groups quoted in this debate, I have to say.

“It’s a tough road ahead and the telcos are going to fight this to the death,” [Public Knowledge] communications director Art Brodsky told BBC News. “AT&T in the first quarter of this year spent $6m on lobbying. That is one company. One quarter. Compare that to Google which spent $4m in the whole of last year.””

In this article, the carriers/teleco’s got more for their lobbying/PR money–at least, the last third of the  story is spent on a report that argues “that a 10% reduction in investment by broadband providers would cost more than 500,000 jobs before 2015” (funny they should scare lawmakers with jobs of all things, during a recession)–without wondering if perhaps a move away from net neutrality and common carrier provisions might also cost jobs by undermining what Jonathan Zittrain calls the “generative internet”.

2. Financial Times notes that Google could undermine Demand Media’s model

Lots of people are writing about the potential conflicts between the business model of legacy content creators (news organizations) and search companies like Google, now it looks the internet giant is also in potential tension with new content creators (Demand Media, Associated Content-type players).

The FT has this, for example: “a recently granted patent to Google that appears to replicate one part of what has made Demand’s approach to content so successful could spoil the party. Google’s patent on “identifying inadequate content”, co-authored by some of the search group’s leading thinkers, including Hal Varian its chief economist, details a similar system that analyses search engine queries to spot topics of high interest which are not readily available from publishers.”

Little more than a week ago, I emailed two Danish journalists I know about this report from the OECD, on “The Evolution of News and the Internet.” I had seen it in draft form, knew it was about to be declassified, and thought it represented an interesting empirical challenge to the doom-and-gloom rhetoric that dominates many discussions of the news industry today.

Read the report, it is interesting, I promise.

One of the journalists did, and on Wednesday morning, with the OECD report published, this article appeared in the Danish morning broadsheet Politiken.

The people who produce this newscast on DR2 (public service television) clearly still read newspapers, and contacted me for a segment on the report for their show the same evening, so I stayed till late in the office and appeared via Skype.

The morning after, this digest was published on the business portal of another newspaper, Jyllandsposten (provided by a news service called MediaWatch). It is a fine little summary of two previous summaries that manages to transform the male author of the OECD report, Sacha Wunsch-Vincent, into a woman and conjure a “quote” from me–without ever actually speaking to me–by combining parts of what Lea Korsgaard, the journalist at Politiken, had written the day before, with parts of what she had quoted from our conversation.