Yahoo Newspaper Consortium

Bartz hardly seemed like the proud captain of a news enterprise. You know, the news, it’s just so negative, so ungainly, just too darn hard to understand…The CEO of this $6.5 billion company, who is “on Yahoo all day”, is just another one of those Americans who just can’t through the Tea Party haze, and read all the intelligent prose written out there that tells us all very clearly what’s in the health care legislation, whatever we may think about it.

Charging for non-desktop/laptop access should be a new revenue stream for news publishers. The math, though, isn’t huge. Who is most likely to pay for Journal mobile? Presumably it’s online subscribers, of whom there are about a million. So $12 a year, if all of them signed up, would be $12 million. Not bad, but only about an 8% increase in reader revenue. I can’t see lots of non-subscribers shelling out $24 a year, but I may be wrong.
Better than charging just for mobile, I still think All-Access is the way to go: Get the Journal (or the Times or Guardian or ?) anyway we produce it, print, desktop, laptop, phone, e-reader, e-edition. And add a $5.95 per month charge for that. All-you-can-eat model that Americans seem to love, if if they don’t often sample the whole buffet.

Fast Flip, Google’s hardly secret visual news search product, just made its debut today. It’s a premiere that tells us lots about the swirling tradewinds in which the company now finds itself. It also marks two important milestones, one about the slow replacement of news search 1.0 and one about Google’s willingness to share its ad revenues with news publishers.

The main difference: Advance Internet is maintaining its own ad platform, currently powered by 24/7 RealMedia, and integrating with Microsoft. Yahoo Newspaper Consortium members have fully adopted the Yahoo APT platform for their ad serving businesses, creating a closer, more exclusive relationship. “We wanted flexibility,” says Weinberger, who won’t comment on what parts of the deal involve exclusivity or on the duration of the contract.

Search advertising does have an impact on newspaper companies. Most consortium members take Yahoo search and paid search, both services that would be replaced by Microsoft’s new Bing and related products. The newspapers’ paid search deal with Yahoo has provided a steady, if small, revenue stream — guaranteed — over the first couple of years of their agreement. Last I have heard, not too many had exceeded that guarantee. So when Microsoft replaces Yahoo search, which will give it a roughly 30% share of search combined, perhaps it can drive higher search pricing. Google, though, is clearly still the big dog here, so don’t expect a lot of new revenue in this developing paid search duopoly world.
What the deal doesn’t include is Microsoft’s usage of Yahoo APT; the companies have said they’ll go their own way in selling display advertising. That’s a missed opportunity, potentially, for newspapers. As they perfect the art of selling Other People’s Local, it would have been good to be able to sell Microsoft local as well.
What the deal doesn’t include is HotJobs, still being shopped by Yahoo, and still a major revenue driver for many newspaper companies. Lucrative recruitment packages, though clearly hurt by the recession, have contributed as much as half or more of Yahoo-related revenue for some of the companies.
What the deal doesn’t include is more traffic generation, a good Yahoo benefit, as it gives preference to newspaper content. No Microsoft preference in this deal.
Of course, all of this could have been worked out quite differently if newspapers had ever really been a search player. They missed that boat, though, several times.
They mistook the web for a browse medium early on. Then, the old troika of TKG (Tribune/Knight-Ridder/Gannett) almost got into the search business, coming close to closing a deal for Kanoodle a search player that wanted to make their own and industry-wide solution. They walked away from the deal, though, fearful they were overpaying for a slice of what has turned out to be a $10 billion plus ad segment (paid search alone). So instead, today, they find themselves bystanders, watching from the sidelines as two of behemoths mate.

By my calculation, readers (print and/or online) of news from U.S. newspaper companies will see about three quarters of a million stories fewer in 2009 than they did in say, 2006, before this big round of cuts began. I get to the number starting with ASNE’s census number of 8300 newsroom jobs lost in 2007-2008. Now let’s say two-thirds — 5520 — of those positions wrote stories, reporters, columnists, writers of various kinds. That’s probably a low estimation — there’s not that many editors left, right? — but let’s be conservative. Let’s say each of those 5520 writes 150 stories a year, probably conservative overall. So that gets you 828,000 stories a year. Each year. Neither written nor read.

What the predictions failed to get right was how deeply newspaper companies have cut expenses. Consider these cuts, 2Q, 2009 compared to 2Q, 2008:
* McClatchy: 29%
* Gannett: 20%
* Media General: 23%
* New York Times: 20%
It is these cuts — coming on a base that has been shrunken quarter by quarter for a couple of years now — that brought the surprising results, the “return to profitability.” Take the Times, for instance, cutting 20%, when in past quarterly sessions, CEO Janet Robinson has pointed to reductions in the 10% range. Similarly, look at Gannett’s 2Q, 2008 expenses cuts: 6.3%. McClatchy 1Q, 2008 expense cuts: 10.5%. Media General, 3Q, 2008 expense cuts: 10%.

If ad sellers think they have a puzzle to figure out, think about the ad buyers. Now there are many more people knocking on their doors, offering them “consultation” on marketing their goods and services. In the end, they’ll want to rely on only one or two “consultants,” and the battle is on to be one of them.

Once ATT sales reps got up to speed (and that’s certainly an intriguing question, given the newspaper company implementation experience), they’ll be competing head-on with newspaper reps. Open up the Yellow Pages, and browse through furniture dealers, appliance sellers, home services of all kinds now coveted by “newspaper” companies. Sometime in 2010, that local furniture dealer will be seeing a newspaper rep one day, selling newspaper space, local online news site space and Yahoo-inflected products. The next day, the same dealer will get a visit from a YP rep, selling YP space, online site space and Yahoo-inflected products. Maybe, in 2010 or 2011, local broadcast sales people will join them, if Yahoo believes they would add to the mix.

So, the three, somewhat ungainly pieces — combined, represented a trifecta of web reckoning –I see going forward now are:
Renegotiation of news producers’ relationships with Google, Yahoo, MSN and AOL. I’ve written about my notion of Fair Share (no relation and coincidental timing with Attributor’s “Fair Syndication Consortium”) and numerous others, including Maureen Dowd, have been exploring the issue.
Paid content models. Janet Robinson today pointed out that the Times had recently studied 30 top publishing models and came away with the continuing belief that the ad-friendly model was the most lucrative. She also noted the Times will continue to look for other ways to monetize its content. Journalism Online’s entry into the discussion here provides new firepower. Ultimately, I think we’ll see greater concentration on niche pay models, rather than lots of new pay walls.
Anti-Piracy: Then, there’s anti-piracy. Attributor will try to make its new solution an industry standard. Publishers will like the technology and the idea, and will have to sort through what role they want Attributor to play. Attributor points to a potential gold mine, saying that as much as $250 million annually in new ad revenue could be gained if the system were fully deployed.