Gannett

Content no longer demands to be free. It wants a fee — but how much of one? Consumer pricing is not a core competence of many media companies. For decades, media pricing was on automatic. Newspapers picked a quarter or fifty cents, and then re-programmed the coinboxes. Magazines kept prices low enough to build audiences to reap substantial ad rewards. Book publishers did some minor stratification. Music companies picked a couple of price points, and let the vinyl and CDs fly. In the digital era, though, pricing is confronting — and confounding — media companies. Just what in the digital world of vanishing manufacturing costs is digital media worth? Now with those 20th-century costs — printing, manufacture, distribution, shipping — passing into the night, the question of price, and value, is making itself loudly heard.

For now, let’s boil it down the how to 5 P’s:

People: As in customers. Few newspapers — probably a dozen or fewer in the U.S. — know their combined print and digital audiences as a single audience. It takes a lot of technology moving to get a single, whole view of a customer, matching the subscriber database with the digital registration database to get a holistic view. Without that view, it’s tough to operate a modern, somewhat digital/somewhat print business — and maximize the value of new pay propositions. The New York Times, the Star Tribune, and the Commercial Appeal are among those who do, and papers as small as The Day are getting there.
Product: This is a simple question of content. How much strong local coverage are readers missing after a half decade of staff cuts? The better a news organization covers its community, the more it can dare to charge and still get customer traction. Some papers may simply have already cut too much.
Presentation: Consumers — us — understand the all-access pitch. News (and magazine) publishers have to make it real. That means real ready-for-the-tablet (and smartphone) products, app-based and HTML5. Replica-plus products will satisfy paying readers less and less over time — and won’t compete with Flipboard-esque experiences.
Pricing: Enough said. Newspaper (and magazine) pricing has been fairly dumb over the years, a follow-the-leader, seat-of-the-pants exercise. Playing with the value equation, print and digital, requires both testing and matching of new value to new price.
Promotion: More than just marketing, the new promotion makes better psychological sense of the all-access proposition to older and newer (and younger) customers

What percent of print ad loss is made up by digital ad gain? This is the crossover metric driving much of John Paton’s Digital First Media/Journal Register Company strategy. With print advertising down now more than 50 percent in 10 years in the U.S., and even diving more quickly now in some parts of Europe, replacement ad revenue is at the top of the crossover list. In 2011, Journal Register made up about 95 percent of its print ad revenue loss. It intends to hit the crossover mark — making more in digital revenues than it is losing in print revenues — this year.

Consider how much revenue each of Google, Apple, Facebook, and Amazon earned from outside the U.S in the first three quarters of 2011:

Google: 54 percent
Apple: 54 percent
Facebook: 38 percent
Amazon: 46 percent

Today’s news that the Times Company is finally selling its New York Times Regional Newspaper Group holdings of 14 newspapers absolutely fits with the last week’s news of CEO Janet Robinson’s abrupt departure. Expect the new CEO, most likely from the outside to be focused on three A’s: audience, advertising and analytics. Arrange those three in a virtuous circle, and you have an efficient spinning of the new digital economy. That’s clearly what Time Inc has in mind as it hired Laura Lang from the ad world. The new CEO must also drive a faster kind of decision-making at the Times Company,

We can point to three major phenomena that profoundly changed the news landscape this year. Each offers up its own half-formed metrics for that magic formula in process, and each has dramatically changed the possibilities of news, each largely positive:

1) The transcendant transformative age of the tablet
2) The dawn of digital circulation
3) Social curation joins editorial curation:

There’s an irony to such publisher partnerships, of course. On the one hand, Google is a “partner,” magnifying publisher businesses through its ad and search products. On the other, initiatives such as Google Tomorrow are a potential dagger to newspapers’ jugular. That’s the way of the web world. For Google, or Amazon, or Apple, or Facebook, any new initiative it takes on has its own internal logic. Should another industry — say newspapers — be wounded in the process, it’s just collateral damage. Given the size of these digital behemoths, as they decimate legacy industries, you can almost hear them say, “Sorry, did I sideswipe you? I didn’t feel anything.”

The deep freeze in the U.S. newspaper market thawed a bit over the last couple of weeks. There really hasn’t been much of a market for metro newspapers for almost half a decade. With advertising revenue down now 21 quarters in a row, it’s near-impossible to fix a value on newspaper properties. For valuation, we’d need some high likelihood of stable profitability for the next several years, and that’s not in the cards. So what do we make of the three recently announced sales? In each case, there’s a strong, willful buyer, bucking conventional business sense to bull ahead into 2012.

2012 budgeting, still in full swing at many newspaper companies, is too much like a medical examiner’s exercise. What I hear: Dailies are budgeting down from mid-single digits to as high as low double-digits in print advertising for 2012, compared to 2011. That would compare to how much they’ve already lost this year, compared to last year. Those are brutal numbers.

Is it just imported theater, though? We have to wonder how much the cries of “media monopoly” will cross the Atlantic. Is there much resonance here in the States for the outrage about media power in the U.K.? Will the sins (its newspaper unit now being called to account by a Parliamentary committee for deliberately blocking the hacking investigation) of News International impact its cousin, Fox Television, the one part of its U.S. holdings regulated directly by government — or can it build a firewall between the different parts of News Corp.? (See “New News Corp. Strategy: Become Even More of an American Company.”)

Certainly, the tales of News International’s ability to strike fear in the London political class are chilling. Our issues in the U.S., though, are largely different. Both come down to who owns the media, and what we need in the diversity of news voices.