4. Newspaper Industry Crisis
Market Cap Erased: U.S. publicly traded newspaper companies have lost 78%
of market value since 2004
Classified Verticals Collapsed: Ubiquitous broadband access prompting
collapse of classified verticals
Retail Declines: Retail advertising marketplace shifted to low-marketing big-
box retailers
Circulation Declines Accelerating: Urban dailies have seen 1% annual
circulation declines in 1990s accelerate to 3%-5% annual declines
Newspapers Losing Money: At least 19 of the Top 50 newspapers will lose
money in 2008
Debt Loads Unbearable: Average debt-to-EBITDA ratios increased from 1.3 in
2004 to 3.1 in 2008; anything above 3 is considered dangerous
It’s Going To Get Worse Before It Gets Better: INMA network feedback:
latest banking crisis could prolong downturn
6. Mental Bandwidth:
Managing Complexity
Rising complexity in deriving economic
value from media assets
How to generate enough
transformational bandwidth to re-
engineer media companies while
simultaneously maintaining operations
How to get the right people and
structure highly talented people
toward company goals
How to expand (and manage) the
ideas cultivation process
More market knowledge needed for
product development and advertisers
7. Today’s Presentation
Get our arms around mental
bandwidth issues and try to
make sense of them
The 2009-2012 environment
From content to audiences
The rising value of the
“context of content”
The role of innovation in your
growth strategy
10. Environment
Economy: Soft economy
through 2009, with growth
returning in 2010
Marketing Communications:
Long-term share shifts from
advertising to direct marketing,
public relations, events,
promotions
Advertising: Structural shift
from one-way communications
to two-way communications, will
negatively impact newspapers
11. Managing Risk
Potential Upside Potential Downside
Acceleration of online Acceleration of eyeballs to
revenue growth the internet
Higher prices from online Under-performing job growth
advertising and retail sales
Faster rebound in job Further deceleration of
growth circulation volume
Stable newsprint prices Faster-than-expected
newsprint price increases
Lower access to capital
through dropping profit
margins
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22. Mid-Term Outlook
Through 2012, traditional media will pay the bills, non-traditional media
will drive growth
Classified advertising from print to online will accelerate with
broadband growth: more with jobs and property, less with cars
Digital/mobile distribution accounts for 5% of media/industry spending,
projected to be 11% in 2012 (will represent 24% of industry growth):
PricewaterhouseCoopers
We don’t need digital to replace print; we need digital to fill the hole
left by print declines
This will begin to happen in 2011 and could be an industry average in
the U.S. by 2013 (Deutsche Bank)
Cost structure must be adapted to Digital Age; focus changing from
content to distribution
27. Why Do They Grow?
All are “aspirational societies,” newspaper is linked to aspiration
All have rising middle classes
All have low advertising as a percentage of GDP
Brazil: The fast-emerging “quality popular” newspaper
India: Low-cost newspapers for fast-emerging classes, low-cost
subscription canvassing, focus on an infusion of youth
South Africa: Finding the right formula of newspaper for young adults
who never read a newspaper
China: Government-encouraged “market newspapers” exposing local
corruption
Indonesia: Major players found niche in diverse society
35. The Big Picture:
Chasing Fragments
Consumers Fragmenting:
Technology and abundance
disrupting information
consumption
Advertisers Chasing
Fragments: Advertisers
shifting to multi-media
Newspapers Regrouping:
Newspaper business model
changing as a result
Fast Change Rewarded:
Companies changing faster
rewarded, those changing
slower punished
41. Audience Management
Strategic Suggestions from Forrester Research (June 2008)
Aggregate
content to bring your audience to the
newspaper first
Bring in all non-newspaper sources
Syndicate to engage audiences wherever they are
Newspapers using YouTube video channels
Use social technologies to reach audiences
Connect newspaper readers with each other
Allow readers to create their own blogs
42. Pricing Value Tiers
Light Medium Heavy
Allow 30 free Annual online Subscriber to print
FT.com articles per subscription newspaper
month to be £100/year Maintain average
consumed free daily rate of £1.00
Single-copy buyer – lower than
single-copy price
of print newspaper
Increased from
£0.30 to £1.30
43. “What our business will be about going forward is the skillful
management of the slow decline of the printed product and the
accelerated growth of the internet.”
-- John C. Mellott, Publisher, Atlanta Journal-Constitution
Target Market Segmentation
Print = Older Readers Online = Younger Readers
45. Future of Print
Philadelphia Model (Quality)
Audience migrates from print
to online
Raise print circulation prices
and sell “quality audience” to
“quality advertisers”
US$3 cover prices OK daily
46. Future of Print
Norway Model (Quantity)
Audience migrates from print
to online
Lower print circulation prices
to maintain mass audience
until inflection point …
Convert paid dailies to free
dailies to maintain quantity
audience
47. Future of Print
Philadelphia Model (Quality) Norway Model (Quantity)
Audience migrates from print Audience migrates from print
to online to online
Raise print circulation prices Lower print circulation prices
and sell “quality audience” to to maintain mass audience
“quality advertisers” until inflection point …
US$3 cover prices OK daily Convert paid dailies to free
dailies to maintain quantity
audience
49. INMA Newsprint Survey
Key findings worldwide and regionally: ROI of print
65% worldwide said will use less newsprint in 3 years
89% of North Americans considering gradual format
change vs. 33% of all others
42% of North Americans considering cutting back on
publishing frequency vs. 20% of all others
51. The Crumbling Bundle
When newspaper moves
online, the bundle falls apart
Each story, each section, each
content section stands “naked
in the marketplace”
Invisible system of
subsidisation disappears
Subtle effects on journalism
and story selection
Hard journalism adds to the
print bundle, becomes hard to
justify economically online
53. Fortress Newspapers
Content Verticals Advertising Verticals
Breaking news Property
Investigative journalism Jobs
Wire service news Cars
Pack journalism Private-party
Local sports Local retail
National sports National
Stock listings Matrimonials
Weather Brand
Puzzles Price-point
Photography All categories
The Newspaper Bundle
54. Content’s Declining Pure Value
Percentage of media-produced
content shrinking in growing
world of communications
Amount of free content available
skyrocketing online and offline
(editorial/classifieds)
Advertisers unwilling to fund
certain disaggregated content
Obtaining content “frictionless”
Ease of access to content
damaging perceived financial
value to consumers
Consumers willing to pay far less
for same product outside of
print
55. Print Magazine’s Value
in Digital Spaces
Print Magazine: 100% =
print magazine
E-Paper: 47% of print
copy’s value if an e-paper
Mobile Web: 35% of print
copy’s value if a mobile-
based web site
Computer Web: 19% of
print copy’s value if a
computer-based web site
Source: PricewaterhouseCoopers
56. Value = Context of Content
Content becoming the “commodity backbone” around which
contextual services can be delivered
CityAM’s bluecasts in London an example
Postal code mobile alerts
Metrics needed to determine value: Who saw it? How was it
consumed? How many people viewed it?
Advertising-supported content would rise in value more people saw it
Certain content (stock tips) would drop in value more people saw it
Next-generation editors will be “content strategists” who
decide which stories get told and what the best storytelling
platform is
Book industry: print for long-form, e-readers for in/out reference
Print pays the bills and encourages long-form journalism
Re-take breaking news via online and mobile
57. Commercial Value of Platforms:
Philadelphia Inquirer
Shifted high-value unique
journalism to “print-first”
Breaking news nationally, widely
covered local news, and
commodity news would continue
to be “internet-first”
Inquirer makes lion’s share of
revenues from print advertising
Segmenting their content
verticals and flowing them to
commercially relevant platforms
Part of “quality journalism” for
“quality audiences” drawing
“quality advertisers” strategy of
CEO
58. Movie Industry
Value Chain Platform Experiences
Theatres for new releases Digital theatres
Home video 3-6 months later Multiplexes
Digital downloads and pay- High-definition DVDs
per-view Mobile/internet platforms
Internet television Home pay-per-view
Pay cable television Events
Commercial television
59. “Some claim that content is
King in the world of media.
Our research indicates that
content may only be Queen.
It is the creation of an
experience for the consumer that
promotes true engagement.”
– Anne Moser-Wellman, Author, “Running While the Earth Shakes,” Media Management Center
60. Experiences
Desire for participatory, interactive media experiences
Demand for content disconnected from devices and
time slots
Everything an “experience”
Advertising OK if it’s relevant to the experience and
to the individual
61. Music Experiences
CD
Buy a download
Wallpaper for mobile device
Mastertone
E-ticket
Music video
Become friend on social
network
Sign up for subscription service
Justin Timberlake’s Futuresex/
Lovesounds: 115 products, 19
million units sold, 20% sales
from CDs
62. “When somebody raises their hand and says, ‘I’ve got five minutes,’ you want to
make sure you give them five of the best minutes they’ve ever had.”
-- Scott Bowman, chief executive officer of MLB Advanced Media
MLB.com Experiences
1. Attending game in person
2. Broadcast television
3. Radio
4. Streaming video online
5. Text messages
6. Mobile device
7. Satellite radio
8. Cable/satellite television
9. Internet/satellite radio
10. Fan chat rooms
11. Online graphical play-by-play
63. Reader’s Digest
Print magazine
Books
Music
Videos
Home accessories
Gifts
Insurance company
Financial services company
71. Context of Content
Studyof platforms is yielding new thinking on value
propositions
Howto create a browsable experience in print that
maximises value to advertisers
Breaking news via mobile and online
Enterprise reporting/journalism in print
Consideration
of reducing print frequency and
channel energies into best browsing days
73. Converting Bandwidth
to Innovation
Do we have the
transformational bandwidth to
manage our way out of today’s
industry crisis? No, not yet
Management must create
innovation “bubbles”
Being done at world’s leading
companies
Innovation programmes
beginning to take hold at
traditional newspaper
companies
Must create frameworks for
innovation and ideas
74. Rewarding Innovation:
Incubator of Experimentation
At least 3 major companies use a centrally controlled
innovation fund that customers can tap into to
experiment with unproven media
Procter & Gamble
Johnson & Johnson
Unilever
75. Rewarding Innovation
Google: Engineers encouraged to spend 20% of
time on their own projects
CNN: “Free-Thinking Fridays” where best ideas are
shared
MSNBC: “Innovation Days” where people share
ideas they are working on
Yahoo: “Hack Days” where developers share tech
ideas with the rest of the company
76. Rewarding Innovation
Boston Globe (USA): innovation awards, cash El Nuevo Dia (Puerto Rico): director-level
bonuses “innovation office,” lunch-box meetings, innovation
part of competence to reward
Mid-Day (India): quarterly Zagyom awards in
each major area of operation Zero Hora (Brazil): regular internal seminars with
West Australian (Australia): talent identification guest speakers and innovation process
programme, project teams populated by up-and- Jawa Pos (Indonesia): appoints younger 20-
coming middle managers addressing specific something staffers to chair strategic and
strategy issues programme committees, bonuses and promotions
Joong-ang Ilbo (South Korea): “Bottom-Up tied to performance
Idea” programme via intranet
Die Burger (South Africa): pays employees a
The Globe and Mail (Canada): “Reimagination” 10% commission on profit generated from new
project dividing hundreds of employees into initiatives
horizontal teams focusing on industry issues
Bakersfield Californian (USA): 1% of revenues
E.W. Scripps Company (USA): Scripps put into “innovation fund” for incubator-like
Entrepreneur Fund, brainstorming sessions, best projects; new initiatives treated as separate “start-
ideas submitted to board of directors up” companies
The Telegraph (India): “Out of the Box” Atlanta Journal Constitution (USA): hired a
programme, submit innovative ideas to save money “director of culture and change” to encourage
or grow revenue, cash prizes horizontal thinking
The Free Press (Canada): innovation committee
across departments and processes to evaluate
ideas, submissions rewarded
77. Open Innovation
Late 1990s, sales
decline at Procter &
Gamble due to lack
of new products
Consultants advise
that P&G culture of
“not invented here”
pervasive
Need to broaden
sources of ideas and
innovation
New CEO: By 2010,
50% of P&G new
product ideas will
come from outside
of P&G
Translation: Need
“master networkers”
78. Business Case for Networking
Schibsted Corporate Conference: 22 September 2008, Stockholm
1. Companies providing access to strong external networks attract better
young talent
2. Networks should be “strategic,” not just “nice to have”
3. Managers with broad networks promoted faster, make 30% more money
4. People with better external networks have better ideas
5. Higher % of ideas accepted by people with diverse networks
6. Most innovations come from networks, not individuals
7. Build network diversity, not just size
8. Build broad “weak ties” for new knowledge, narrow “strong ties” for
emergencies and tough projects (goal: 100 “weak ties” outside of
company, country)
79.
80. Lead India
Launched campaign on
Indian Independence Day in
2007 by The Times of India
Country advancing in spite of
(not because of) its
politicians
Encourages everyday people
to become leaders
Multi-media campaign
showing India as “half full,”
not “half empty”
Wrapping The Times of India
in this future
81. Islam File: Koran Giveaway
Promote 15-part pullout
supplements in De
Standaard on Islam
Gave away free Korans to
coincide with special
report
Involve readers in
community discussions,
important in Belgium
because of Danish
cartoons unrest
Single-copy sales up
138% on day of Koran
giveaway
82. Free Prince CD
The Mail on Sunday aimed
to create buzz among
young readers and retail
outlets
Free Prince CD
Sold out 2.8 million
copies, including 600,000
new readers
Largest promotional uplift
for a U.K. Sunday national
daily
83. Stunt: All Eyes on (ST701)
Miss Singapore lives in a
glass house for a week
Lives on materials that
can be accessed through
Straits Times’ ST701
micro-site
Keeps regular blog
Ancillary contests
ST701 web site traffic up
50% over 7-day period
Generated lots of buzz
89. Contest: Photo/Video Uploads
Dallas Morning News
launches microsite for
high school sports
Encourages students,
parents, fans to upload
photos and videos
Daily cash prizes for best
photos
School with most uploads
win US$10,000 cash prize
for high school prom
129,004 photos, 5,497
videos uploaded
90. MediaLab for Advertisers
Philadelphia
Inquirer created
MediaLab to show
advertisers the
power of newspaper
advertsing
Shopping channel
QVC was shown
power of print in
national image
campaign
Benefited Inquirer
and other
newspapers
91. Search Engine Marketing
Campaign Drives Traffic
Houston Chronicle search
engine marketing service
that optimises traffic
volume to an advertiser’s
web site or physical site,
as well as quality of sales
leads
Campaign enhances
Chronicle’s position as
local online advertising
resource
260% growth in
customers
317% growth in
Chron.com SEM revenue
92. Online Template For Students
To Produce Newspaper
Ekstra Bladet creates “The
Newsroom,” internet-based
editorial platforms where schools
produce their own newspaper
Only known application of its
kind in the world
Develop writing skills, participate
in editorial meetings, lay out
newspaper
Ekstra Bladet colour prints
copies and delivers to schools
(100 newspapers so far)
94. Hidden Assets
Highest success rates from
legacy companies that have
discovered “hidden assets”
previously not central to
past strategy
Diamond industry
Swiss watch industry
Scotch whiskey industry
Comic book industry
96. Shifted from comic books to licensing Marvel characters for film distribution
97. Hidden Assets for Newspapers
Audience: Brand-loyal readers
who have never considered
themselves a community
Journalists: Valued journalists
trained only for broadcast
communications
Money: Immense cash flows
and capital budgets
Distribution: Infrastructure
second only to the postal
service
Advertising Sales Force:
“Feet on the street” that even
scares Google
Service: Making “smart” the
“help desk” concept
98. Fundamental Challenges
Technology driving
consumers to consume
news on many platforms
Advertisers chasing
consumers across platforms
“Newspapers” reinventing
themselves as “multi-media
companies”
Newspapers re-imagining
their value proposition for
Digital Age
Audience development
Value for advertisers
(Im)patiently waiting for
business models to emerge
99. INMA: Harvester of Ideas
Constantly In Search of Global Best Practices
Europe
Newspapers: 2,398
North America
Newspapers: 1,577
Middle East
Newspapers: 272 Asia
Newspapers: 5,071
Africa
Newspapers: 400
Latin America South Pacific
Newspapers: 1,400
Newspapers: 89
100. INMA: Harvester of Ideas
What INMA sees for the years ahead
2009 economic slowdown, 2010 beginning of recovery
Where there is disruption, there is opportunity
Change culture from “content” to “audiences” for growth
Context of content: Flow content to platform with most €€€
Inject innovation processes, become master networkers
More and more about managing complexity (bandwidth)
Prediction: will publish tomorrow; need ideas, networks
101. >> Earl J. Wilkinson
Executive Director | INMA
Newsmedia Outlook 2009
Converting Bandwidth to Innovation
