The Business Of the News Business

1. The Business Of the News Business It’s Changing Right Before Your Eyes James K. Gentry, Ph.D. Professor School of Journalism University of Kansas jgentry@ku.edu KU Communicators

2. A Presentation For KU Communicators Original presentation developed for SPJ national convention and regional meetings Developed by: James K. Gentry Lisa Loewen Oct. 24, 2006 KU Communicators

3. Impetus for Change • Internet is redistributing power from news producers to consumers • Old model: Big media companies delivered a “lecture” • New model: New technology lets anyone become a “journalist” or “communicator” at little cost • Fragmenting audiences KU Communicators

4. Impetus for Change • Traditional differences between local and long-distance phone services, cable TV, satellite TV, radio and television are being wiped away. • Present economic models in question • Audiences want “experiences” • Rate of change is escalating KU Communicators

5. Business Reality • In 2005, traditional TV, newspaper, radio, magazine and cable revenue rose 4.2% over 2004 • In 2005, Internet revenue was around $10 billion, up 13% to 23% over 2004 • Advertisers shifting more ad dollars to the web and at a faster rate • Nielsen Monitor-Plus, TNS Media Intelligence KU Communicators

6. Media Trends • More outlets covering fewer stories • Big-city metro papers threatened • Battle of idealists and accountants is over • Technological innovation • Challengers to old media, the aggregators, are also playing with limited time • Old media challenge Internet providers and aggregators to compensate them for content • The State of the News Media Annual Report KU Communicators

7. Newspapers: The Details • Newspaper revenue rose 1%-2% in ’05 • Online revenues rose 30% + in ‘05; exceeded $3 billion in 3rd quarter ‘05 • Circulation declined • Advertising revenue up, linage down • Stock prices fell by an average of 20% • The State of the News Media Annual Report KU Communicators

8. 18-24 years 25-34 years 35-44 years 45-54 years 55-64 years 65+ years 1967 2003 71% 40% 73% 41% 81% 50% 79% 59% 78% 64% 72% 70% Daily Newspaper Reading KU Communicators

9. Circulation and Population • In 1980, daily newspaper circulation was 62.2 million. • In 1980, U.S. population was 237 million • In 2005, daily newspaper circulation was 54.6 • In 2005, U.S. population was 296 million • Newspaper Association of America KU Communicators

10. Newspapers Losing Jobs • Business has lost 3,500 - 3,800 newsroom professionals since high of 2000 (not counting 2006 losses) • Estimated loss of 1,250-1,500 in ’05 • Estimated loss of 500 in ’04 • The State of the News Media Annual Report KU Communicators

11. Broadcast: The Details • Network morning news revenues up 15% in 2004; projected up 6% in ’05 • Network evening news projected a 10% increase for ’05; in ’04, only ABC had revenue growth. • Biggest change in ’05 was the shift from showing a profit to breaking even at many stations. • The State of the News Media Annual Report KU Communicators

12. NBC Universal Reality Check • NBCU to reduce spending on traditional TV by up to $750 million as viewers and advertisers move to new media • Planning layoffs across news departments, including CNBC, MSNBC • Replacing dramas, comedies with low-cost programming in 7 p.m. time slot • Creating regional “hub” in L.A. to serve NBC, MSNBC, CNBC and three area stations KU Communicators

13. Strategies • Clustering • Outsourcing: Sweetheart, get me India • Consolidation • Brand extension • “Convergence” • Develop new revenue streams KU Communicators

14. Clustering • Buy properties in the same region to gain operating efficiencies • MediaNews: Has 33 California papers. Adds Contra Costa and San Jose • McClatchy: Had 1 N. Carolina paper, 3 S. Carolina papers. Adds 1 N. Carolina paper, 2 S. Carolina papers from KR KU Communicators

15. Outsourcing • Reuters: 1,000 journalists in India in ‘05 • Has 15,000 employees in 91 countries • Mid-late 2006, Reuters hoped to have half of its staff located in India • Business 2.0 outsourced entire section of magazine to India in 2004 • “Creeping outsourcing” KU Communicators

16. Consolidation • Rupert Murdoch and News Corp. • Television • Satellite • Newspaper • Technology, multimedia: MySpace ‘05 • Disney, Viacom, GE • McClatchy & Knight Ridder, MediaNews KU Communicators

17. Brand Extension • ESPN • ESPN2 • ESPNews • ESPNClassic • ESPN.com • ESPNRadio • ESPNU • ESPNZone • ESPN the Magazine • ESPYs KU Communicators

18. “Convergence” • Tampa • Lawrence • Tribune Company • Naples, Bonita KU Communicators

19. New Revenue Streams • Build website for other companies • Lawrence Journal-World • Find sponsors for specific sites • MySpace • Package sales with other media • Charge for niche advertising • Google KU Communicators

20. New Revenue Streams • News Corp has developed a national classified database • Consumers can customize ads in • Newspaper • Website • Cell phones • Podcasts • Or any combination of the above KU Communicators

21. What’s Enough Profit? • Knight Ridder and Gannett 16% • McClatchy 14% • Disney 8% • Wal-Mart 4% • Exxon Mobil 10% • Anheuser Busch 12% • Yahoo 38% KU Communicators

22. KR Cost Cutting • Eliminate duplication of key national beats and art criticism • Cut home delivery discounts and NIE • Replace defined benefit plans with defined contribution plans • Consolidate national and retail advertising accounts KU Communicators

23. More Cost Cutting • Regional news center • Consolidate all copy editing, wire editing, page design and layout into three regional centers serving 31 K-R daily papers using common front-end technology • Centrally manage technology, finance • Centralize classified calls KU Communicators

24. Blogs • Instant interactivity, fastest growing segment of the web. A new blog is created almost every second • Perhaps 30 million blogs • Search engines track information found only in blogs • Technorati • Ice Rocket • Google Blog Search KU Communicators

25. Blog Searching • Search engines that track information found only in blogs. • Technorati • Tracks over 31.2 million blogs • Returns more total results • Ice Rocket • Search by keyword and author • Google Blog Search • The fastest search engine KU Communicators

26. Best Blogging Newspapers • Houston Chronicle • Washington Post • USA Today • St. Petersburg Times • Atlanta-Journal Constitution • San Antonio Express-News • New Orleans Times-Picayune • The Oklahoman • NYU School of Journalism KU Communicators

27. What Makes a Good Blog? • Ease-of-use • Clear navigation • Currency • Quality of writing, thinking and linking • Voice • Comments and reader participation • Range and originality • Explain what blogging is on the blogs page • Show commitment • NYU School of Journalism KU Communicators

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29. iPod Explosion • iPod sales increased by 909% from 2nd Q ‘03 to 2nd Q ‘04 • 807,000 iPods sold in 2nd Q ‘04 • 100 iPods sold per minute in 4th Q ‘05 • 31 million iPod units in use in 2005 • 43 million iPods units predicted in 2006 • Now video • What I want, when I want, where I want KU Communicators

30. News Media Podcasting • NPR • More than 6 million downloads monthly • Sponsored by Acura, HBO, Intel and Vanguard • New York Times • Naples • Radio stations purchase newspaper podcasts for their “news” shows KU Communicators

31. News Drives Web Traffic • When a major news event occurs, number of people visiting sites soars • BBC News accounted for 27% of news impressions on day of London bombings • Websites had a 30% increase in activity on the day of the London bombing • More than 60% of users go online to get news and information KU Communicators

32. Change Leaders • New Orleans Times-Picayune • Hurricane Katrina • www.nola.com • Nola changes culture of Times-Picayune • Greensboro News & Record • Virtual town square where every reader is a reporter • New value: collaboration with citizens • Bakersfield • Free classified Website called Bakotopia • Northwest Voice, a free paper • Mas, weekly targeting English-speaking Hispanics KU Communicators

33. Citizen Journalists • Ordinary members of the public turn into photographers and reporters • People getting used to creating pictures and videos on their phones, and increasingly think of sharing them • People want to share their stories KU Communicators

34. Techniques They Use • Camera phones • Personal dispatches • Blogs • Podcasts • Wikis • Instant messaging, chat, etc. • RSS (really simple syndication) KU Communicators

35. Citizen Involvement: Opportunity or Threat? • “Best opportunity in decades to do even better journalism” by enthusiastically embracing connectivity – Dan Gillmor • Traditionalists concerned with accuracy and credibility: hoaxes, fakery and downright errors or deceit. KU Communicators

36. Citizen Journalism • Norfolk • HamptonRoads.tv • Video-only Website • Wisconsin State Journal • Readers pick one story to appear on front page • Inciteful: editor’s blog that explains news decisions • Nashville • Local ABC affiliate WKRN • Entire staff can shoot stories • More naturalistic programming KU Communicators

37. Citizen Journalism: Al Gore • Current TV: Do it yourself TV • Al Gore’s start-up • Goes beyond news and into lifestyle • Uses website to gather feedback on what should air • Pays for videos it chooses to run KU Communicators

38. Forums, Forums, Forums • News • Sports • Survivor stories • Mayoral issues • Pet rescue • “This forum is provided for users to share news and information about animal and pet issues that may help other animal and pet lovers in the Metro New Orleans area.” KU Communicators

39. Readership Institute • www.readership.org/ • Users have “experiences” with your media offering, no matter what you do • Experiences are linked to audience’s behavior using your media • Experiences can be changed, enhanced • Improve the “experience” • Break formula, take risks, be notably innovative KU Communicators

40. What is “Experience”? • How your offering makes consumer feel • How it interacts with consumer needs, interests and desires • Thoughts and feelings consumers have with your publication or broadcast or site and with its relevance to their lives • Breakthrough: • When experiences correlate by target group to motivating or inhibiting media usage KU Communicators

41. Learning from Star-Tribune • Tested Readership Institute findings • Over-arching readership goals and strategy • Everyone measured against them • From RI “experiences” research: • Something to talk about • Looks out for my civic and personal interests • Surprise and humor • Ad usefulness KU Communicators

42. Original • Paper • Feb. 22 • Typical news day • Front and inside page KU Communicators

43. Improved • Paper • Same day, same news choices • Trying for experiences KU Communicators

44. Experience • Paper • Same day, but news chosen from any part of paper or news budget KU Communicators

45. Experience PaperStrongly Preferred Percent who prefer KU Communicators Side by side comparison

46. What is Rob Curley Up To? • Just who is Rob Curley? • Vice President, product development, Washingtonpost.Newsweek Interactive • His team developed the national or international newspaper Web site of the year (named by either the Newspaper Association of America or Editor & Publisher magazine) every year 1998-2004. • In 2001, NAA named him the newspaper Internet Pioneer of the Year, the youngest person to ever win the award. KU Communicators

47. Rob’s Advice: October ‘06 • Own local breaking news • Hyper-local content • Database-driven coverage • Multimedia overkill, video mania • Evergreen content • Embrace platform-independent delivery • Dialog, not monolog KU Communicators

48. Naples & Bonita News • Relentlessly interactive • Lots of community contributions • Reporter and reader photos, videos • Reporter and reader blogs • Lots of audio • Reader forums KU Communicators

49. And More • Newsroom Podcast • Email news, sports, weather to your phone • Access police scanners • Listen to audio traffic from Naples Municipal Airport • Email newsletters • Stories downloaded to PSP • Started videocast from newsroom that runs online and on local cable KU Communicators

50. Hyper-local in Marco Sun • Mega-calendar including: • Rotary meetings and Bible studies • Church guide • Restaurant guide • Beach guide • Schools guide • Marco Island history • Fishing blogs KU Communicators