The New Local

What has the experience of leading Google’s latest push into local advertising taught Mayer? Google Maps, Google+, Google Ad Words Express, Google Zagat, Google Places are all meshing into Google Places for Business, meaning a better place for local merchants to invest their marketing dollars — with Google. Is the Men in Black memory eraser part of Mayer’s Google contract? Or will Yahoo, and its news partners, benefit from her recent experience?

We’d have to believe that the odds against Mayer are long. She inherits a mess, and she’s an inexperienced CEO. She knows product, but she’s not a deal-maker. She’s got the experience of one great company, but no other. The game is newly afoot though, and therein lies the serial pleasures of Yahooing

2. Digital circulation vastly improves circulation revenue margins.

Last week, faced with a Wall Street Journal renewal notice, I opted for digital-only for the first time, knowing that WSJ’s tablet format and easy right-hand navigation makes it far quicker to read than the paper version. That choice is also greener, both for the environment and for the Journal. The pricing of digital access — $260 — is only a dollar cheaper a week than the print — with far lower costs for the Journal. As readers tip into digital, these margins will make a big difference in bottom-line performance.

Paid. Magazine. Re-purposed. These are words that didn’t seem to have a lot of commercial value a scant three years, and certainly didn’t appear much together.

AOL is hardly alone in rethinking these big questions. We’re seeing a cascading experimenting around packaging and repackaging content from coast to coast, much of it so far unannounced, but in planning. The movement has been building (“The Newsonomics of 100 Products a Year”) and we can see it including newspapers, magazines, online-only companies, book publishers, and public media. Each are taking new twists, looking for formulas that fit their emerging business models.

At The Boston Globe, a made-for-tablet and smartphone design magazine has joined its food ebooks. The Chicago Tribune, I’m told, is looking at about 20 ebooks to be tested over the next year. Frommer’s is starting to parcel out its guidebook content, in smaller bite-sized slices, with a partner. Wired is trotting out its first ever issue — a retro rocket blast from our collective past — in the Apple app store. ProPublica is repurposing its free web content in paid ebook form, at a faster rate, one a month for the last three months. In Portland, Oregon Public Broadcasting is reimagining its publishing future.

We’re about to move into a period in which reader revenue surpasses advertising revenue as the main support of many news(paper) companies. It’s yet another kind of profound crossover (“The Newsonomics of Crossover”), demonstrating again how quickly news business models are changing. With readers paying most of the freight comes a new series of profound questions, ones that we should start asking as we try to understand this change.
Unexpectedly, newspapers — of all things — are becoming the leaders in reader-supported media.

One reason News Corp. may move forward with the trust idea rather than a sale of the properties is that it may meet a market without buyers. With the Times’ losses, it’s tough to come up with logical buyers for the papers. Why mess with the market, though, if you can both perform an act of public service — save the venerable Times, only nine years younger than the United States — and move on? Rupert already has denied that his company is studying such a move, though the Financial Times has joined the Telegraph in describing trust discussions within News Corp.

If the trust spinoff moves forward, it could have profound implications for the U.K. press. That press has seen as much or more disruption than the U.S. press; broadband penetration is greater, and digital ad spending passed print two years before it did in the U.S. Now the U.K. recession further depresses the ad market.

Consequently, at least two questions tumble out of the potential News Corp. spinoff. First, who exactly would run the new organization? Second, why have we heard so little of potential trusts in U.S., given the freefall in valuation of the press here, and now a cascade of newspaper property sales, the last Warren Buffett’s surprising pick-up of Media General newspapers (“Berkshire Hathaway Media Group: Financial Engineering Makes the Deal”)

The New Orleans move is not a shocking one. By 2020, we’ll be used to a few days a week of print, or maybe just “the Sunday paper,” and wonder why we chopped down whole forests; didn’t we always have these tablets? Newsprint is going the way of the steam engine, to be visited in theme parks. US newspaper companies are using only a little more than half of what they consumed, in newsprint, a decade ago.

Will the print habit be abandoned by publishers well before then? In 2013? or 2015%. The when is important, because the creation of community journalism — in tradition or transition or transformation — demands readiness. Readiness to serve community news needs, with a business model underneath that service that can be sustained. Newhouse isn’t yet there, nor is anyone else, but now we’ll see how new shock therapy works.

At first glance, the question of whether professors and journalists are in the same business seems almost absurd, doesn’t it? We know what a college is, and we know what a newspaper is. One’s got ivy-covered walls, demands on-site instruction, costs tens of thousands of dollars a year, and grants certificates of completion, or degrees. The other is a physical, throwaway product that until lately cost a quarter a day and now can go at the top end — in print — for $650 a year. No prizes are awarded for reading daily — or for 50 years.

Online, though, these historic differences seem to fade rather quickly. We read to learn, whether it’s a course on European history or the latest twists and turns of current European economic drama. Greek tragedies of two different era. We read to understand and make sense of things.

It’s the early movements of the ball that make this deal more a feat of financial engineering than a newspaper deal:

Lend Media General $400 million, and extend a $45 line of credit, at 10.5% interest. That allows Media General to escape shorter-term financial pressures, and gives BH a good profit along the way.
Gain warrants that are convertible to about 19.9 percent of Media General’s outstanding shares. The new Media General is mainly a broadcast company, a sector with its share of issues, but with lots more projectable upside than the newspaper industry. So it’s gotten — as Buffett earlier got in General Motors and other “bail out” deals — a better deal than your average investor, as Media General re-charts its future.
Takes title to all the real estate these newspaper companies sit on.

Why do it? Why trade in the sleepiness of California’s capital city (Sacramento is McClatchy’s headquarters) for the bright lights of Broadway, a long walk from AP’s NYC offices?

Number one on list may be McClatchy fatigue. Pruitt and his CFO, now-successor Pat Talamantes, have rowed the third-largest U.S. newspaper company oh-so-gingerly around the bankruptcy shoals that have grabbed more than dozen of their peers. They’ve had to make devastating cuts in staff and other expenses along with other companies, but get some points for greater efforts to keep newsroom size and spirit going in the face of that bleak reality. It’s important to note that McClatchy has found no special sauce in transforming itself for the digital age, performing on par, sometimes better, sometimes worse, than its peers. Pruitt is getting this job not on the basis on being a proven transformative player, but on being a known, highly respected news exec who understands the challenges of the times.

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