Music and newspaper industries are scarily similar

I think Anderson is at his best when he writes about the physical constraints of old media and the unfettered nature of new media. I especially like his reference in the book (not this article, unfortunately) to the democratization of the tools of production , in which the price of news must fall because anyone, anywhere, can now “report.” In fact, I’ve been joking about teaching a class called “Reporting by iPhone” which would prove that.

The perspective on the record companies, on page 4, and their onerous infrastructure costs to maintain and stock music retail stores is frighteningly analogous to newspapers. Papers have high infrastructure costs; their traditional model is being shaken by digital media; and digital distribution is threatening to undermine the business model. The biggest difference that I see, ironically, is that newspaper content doesn’t have to be pirated to be free – the news outlets did that themselves. No wonder RIAA is better positioned.

So are top brands like the NY Times and WSJ “hits?” Or are only the top brands within the top brands hits, like columnist Maureen Dowd at the Times? And what’s the value in news of user recommendations – are those good or bad for national news outlets? Local news outlets? I think Chris Anderson’s ruminations are really interesting because, without offering a roadmap, they at least lay out how things are, and why.

This book, the Long Tail, is the straw that convinced me to join Netflix. My selections are way down at the end of the long tail… I prefer TV series from the 60s, 70s and 80s, like MacGuyver and the original Mission Impossible. But for $5 a month I can get that, thanks to the infinite shelf space of digital information. I rarely make selections based on the recommendations, but it happens. I liked the Mel Gibson movie “Payback” and Netflix recommended “Point Blank” – the 1967 original of the same story. Ditto with “Ocean’s 11.” Now the original movies, starring Lee Marvin and the Rat Pack, are among my favorite movies. I don’t think the tattooed, pierced guy at the video store could have recommended those flicks, and I know the store wouldn’t have had them in stock.

Circulation drops again on newspapr price hikes

The NY Times and USA Today both saw circulation drop. News Corp, ironically, saw print circulation increase after raising the price of online content.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a3zVFwU3wo7A

Newspaper model reversing?

The NY Times now makes more money from circulation than from advertising - a dramatic reversal of the traditional business model. Of course, the Times can profit from circulation as a "superior good" but what's the fate of, say, the Statesman?

http://business.timesonline.co.uk/tol/business/industry_sectors/media/article6886390.ece

GE & Comcast, lack of confidence?

GE and Comcast are discussing a $30 billion deal to sell just more than half of NBC Universal. GE has been trying to get out of the media company because it is less lucrative than jet engines, housing and military contracts. But it seems like Comcast is less than thrilled, offering barely half and wanting an easy out in three years.
http://www.reuters.com/article/newsOne/idUSN1214454620091012

Strong language from print against aggregators

Wow, check out all the strong language from the AP chief and News Corp's Rupert Murdoch:

"it is time for search engines and others who use news content for free to pay up"

"We content creators have been too slow to react to the free exploitation of news by third parties"

"We content creators must quickly and decisively act to take back control of our content"

"We will no longer tolerate the disconnect between people who devote themselves — at great human and economic cost — to gathering news of public interest and those who profit from it without supporting it"

"The aggregators and plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid content, it will be the content creators — the people in this hall — who will pay the ultimate price and the content kleptomaniacs who triumph"

Ironic that my link is on Google, hosting AP:
http://www.google.com/hostednews/ap/article/ALeqM5j-QHPkd1wPcAZL8SOqSTACDn33TgD9B7G7TG0

Inferior audiences

David Carr, NY Times, http://www.nytimes.com/2009/04/13/business/media/13carr.html?fta=y
You know, you can argue, as the “digital evangelists” do, that monopoly newspapers should have saved for a rainy day while they were pocketing 15% profits, but when ad revenue drops 48% in a single quarter http://www.huffingtonpost.com/2009/01/28/new-york-times-ad-revenue_n_161607.html it’s like kicking a guy when he’s down.
You can tell when content generators and content aggregators are using language like “parasite” and “shut up” that things are getting interesting.

Especially interesting in the video Yonghwan posted are the comments of Denver Mayor John Hickenlooper talking about the importance of competition. So which is it – were newspapers arrogant monopolies which refused to save a bit of their obscene profits or were they aggressive competitors in two-paper towns fighting for the best journalism because that’s what sold? You have to admit, the quality of the journalism is getting a lot worse now, after cutbacks and buyouts... after the economics of media tanked, not before. I’ve said this before – I don’t think daily newspapers or the AP were broken a few years ago (I think they are now). I think what’s broken is the audience. If people strove to stay informed about their communities there would be more value for local newspapers, which still provide unique content – as Google has learned. Inferior goods? How about inferior consumers, who are the driving force behind this: “consumers...are used to paying for entertainment.”

Scarcity versus surplus & "inferior goods"

The Taloussanomat case study is interesting because December 2007 is the earliest I know of any newspapers ceasing print publication altogether. The Christian Science Monitor didn’t stop until April 2009; http://www.csmonitor.com/2008/1029/p25s01-usgn.html.

Taloussanomat’s 10% spike in online readers with the cessation of print is amazing – I think that’s a pretty impressive jump given that most U.S. print readers also read online. Of course, it loses its luster when compared to the increase in online consumption of the Guardian and London Times. Now, the fact that the spike lasted 5 months is a mixed bag – is it good that it didn’t drop off after just a few weeks or is it bad that it dropped off at all? It’s a bit scary from an advertising perspective that online readership continues to fall. That means the payoff from the online-only gamble is entirely staked in cost savings, not an increase in online revenue. Scary. On page 6, Thurman and Myllylahti finally get to the crux of the decision – the paper was in dire straits and abandoned print out of desperation (losses of 31%). In that environment it, literally, pays to experiment.

I love the discussion of the key difference in economic principles of print versus online – the economics of scarcity versus surplus (p. 7). That’s fascinating and betrays that it will be hard for “inferior goods” like newspapers with dwindling audiences to be able to compete strongly online. Rather than a clash of the titans it’s a clash of the cheaps – low production cost versus low renumeration. How do you make the cost numbers small enough to run in the black from minimal and capricious online income? You use the Web to do what newspapers have long done – you target a subset of reliable, lucrative readers like the Taloussanomat is doing with the e-mail, and you “re-purpose” content so you can sell it twice, on other sites and in other publications. Interesting.

Most interesting is how the change to online only has affected the paper’s journalism: fewer original enterprise stories; more narrative rather than scholarly economic reporting; more stories from other sources, including PR people. Is this the future of American journalism? Can online-only outlets like the Voice of San Diego or Spot.us pick up the slack and tell the important stories? Or will corruption become easier to get away with without traditional newspaper journalism? It seems sadly ironic that newspapers will follow the ways of TV production (p. 13) – first, fast, piecemeal updates – when TV news in the U.S. has been riding newspapers’ coattails for decades.


Paul Farhi, Online Salvation
http://www.ajr.org/Article.asp?id=4427
Wow, the NY Times draws more than 10% of ALL online newspaper traffic and still is losing $18 million a quarter? And they stay for a minute a day – 20 seconds a day at the next nine newspapers? Ouch. The Farhi article mentions “hard core” visitors online and I suppose people like me and Kang fit that profile. We both still read print newspapers but Kang raises a compelling point. With print circulation you can reasonably predict to advertisers how many people will read your product next week or next month. Even with dwindling readership you can promise some number. But online who knows? I know that, unlike with print, online advertising is paid for after it runs, not before, which means this is more vital for news outlets than for advertisers. Also, I read papers in print and online, but I also go first to news aggregators, like Kang mentioned. Is Alice beginning to influence my behavior? 

The Patterson study is already dated – it’s from 2007: http://www.hks.harvard.edu/presspol/research/carnegie-knight/creative_destruction_2007.pdf
But it’s interesting, finding that brand names matter, probably more than anything else. In Miami and elsewhere, local newspapers teamed up with local TV stations in coverage partnerships, sharing some resources (video, reporting) and cross-promoting each other. Given that both are sinking ships, that model hasn’t been very stable either, with rotating TV stations and newspapers signing and breaking deals. And Miami is a big-paper town, with Tribune’s Sun-Sentinel and McClatchy’s flagship Miami Herald. TV stations are familiar with CMP – it’s how they set ad rates based on ratings. But if it takes 10 (or more) online readers to replace 1 print reader, that won’t compensate for the savings – even 70% savings – of printing and distribution. Look at it this way – the San Jose Mercury News “touted plans to increase its share of Internet revenue to 20 percent – by 2012.” So 80+ percent of revenue comes from print (90% for the Times). Saving 70% on publishing costs you 80% in revenue – and that’s bad math. My new BFF Craig Newmark seems to agree.

Christian Science Monitor on Web only

This is a 10-minute video from back in April - it's a conversation between the editor and publisher of the Christian Science Monitor over their decision to abandon print.
http://www.csmonitor.com/mediaplayer/index.html?file=http://csps.edgeboss.net/download/csps/csm/flash/webmedia2/csm-vision-public-081027_flash_high.flv&height=403&width=600

This is a link to the article in the CS Monitor about this last April. The paper had endured a 40-year decline in print readership and, even with a $12 million annual subsidy from the Christian Science Church the "paper" is losing money.
http://www.csmonitor.com/2008/1029/p25s01-usgn.html#

Journal article critique; media skepticism & trust

Tsfati, Yariv & Cappella, Joseph N. (2003). Do People Watch What They Do Not Trust? Exploring the Association Between News Media Skepticism and Exposure. Communication Research, 30(5), 504-529.
http://crx.sagepub.com.ezproxy.lib.utexas.edu/cgi/reprint/30/5/504

This paper explored the relationship between media consumption and media trust – specifically to investigate whether media trust affected consumption patterns. The hypothesis suggested that people who trust mainstream media consume it; those who don’t seek alternatives.

Assumptions:
The author uses an elegant, parsimonious definition of media skepticism; “a subjective feeling of mistrust toward the mainstream news media.” Specifically, this involves questioning credibility and reliability, whether the MSM is right and fair. But this is a two-part study, with the other key aspect being a hostile media effect. This paper assumes rational audiences, a la the rational self interests of consumers as described in the Media Economics book. This is the first of four assumptions made by the author, each of which lacks a bedrock foundation. There is also the assumption that consumers desire “accurate knowledge about the nonimmediate world;” that they “have an incentive to ignore many stimuli; and that, for convenience of analysis, there are two types of media, mainstream and non-mainstream. With deference to the elegance of analysis of these assumptions, I believe each of these lacks fail to capture the complexity and diversity of contemporary media and those who consume it. For example, the study equates PBS and MSNBC as mainstream; while I would agree, I dare say dissenters could be found. Likewise, online news and political talk radio are equated as non-mainstream sources.

Two of the hypotheses seem fairly obvious:
H1: Mainstream media skepticism will be associated with lower mainstream news exposure.
H2: Mainstream media skepticism will be associated with higher non-mainstream news exposure.

The final hypothesis seems less explored and more interesting.
H3: Skepticism will be associated with news media diets: the higher the skepticism, the higher the non-mainstream component in audiences’ media diets.

I also take issue with the data set. The Electronic Dialogue project offered free WebTV units to those who volunteered to participated in surveys and online political discussions. As an early attempt to gather public opinion data online, the ED study is laudable. But the panel inherently lacked early adopters of online technology and likely excluded both those who were pioneers in consuming information online as well as online laggards. Cudos to the author for attempting to validate the data with cross comparisons to two well-respected and established data sets; the National Election Studies and the Annenberg Public Policy Center.

Analysis:
The analysis was well done. Nine factors were scaled to create a media trust index and factor analysis clearly delineated between mainstream media and non-mainstream, which included talk radio and the Internet. While skepticism has already been voiced about lumping Internet with alternative, the factor analysis found only 15% correlation between the two, validating the data over my objections. The author found that a majority of audience members still preferred mainstream media and that most subjects were skeptical of mainstream media – especially national television news and newspapers. This seems to contradict both hypotheses 1 and 2, which suggested those who watch mainstream news more will be more trusting of it; and those who don’t trust it will avoid it. In fact, given the author’s definition of mainstream versus non-mainstream, political ideology was as much stronger predictor of media skepticism than was news consumption habits – although skepticism also was associated with listeners to talk radio. Therefore H3 was supported and, in fact, political interest was the greatest predictor of any and all media consumption and the skeptics seemed to cast a wider news net than non-skeptics.

Of course this study was conducted in 2003 and, hence, suffers from the inability to consider the wealth of academic research conducted in the ensuing years – but, pretending this was a contemporary study, I would have suggested the new fall, 2009 Pew study examining media credibility and trust which found, as I described, that political ideology was a large predictor of trust in the mainstream media. Also, studies last year and this year by Gil de Zuniga, Valenzuela, Kaufhold, Bachmann, Shah, Eveland and many others have constructed new ways to define traditional, online and alternative media, including recoding online MSM sources with traditional; blogs as alternative; and treating conservative talk radio as an outlier variable – highly predictive but incomparable to other media types.
I would certainly recommend that this article be revised and resubmitted, with more careful thought given to how the literature leads to the hypotheses and to more contemporary literature and data sets. This study was well thought out. It could benefit from a more thoughtful embrace of the definitions of mainstream and non, traditional and alternative.

When supply exceeds demand

In an attention economy like we have, it seems like the solution is selectivity – information now is, for the first time on such a scale, better, more numerous, and personalizable (p. 4). Since filtering is also personalizable that should solve the problem of information overload. It also contributes to the tremendous specialization available in contemporary society, like, for example, cardiothoracic surgery or piloting a modern jet fighter. A hundred years ago, people were able to read most of what was available, on all topics, if they so desired. If they did, they overwhelmingly read important, meaningful words – stirring literature, economics, history, civics. Does selectivity make it much, much easier to distract people away from serious information and rather choose to, say, watch slam dunks on YouTube (p. 5-6)? Am I being elitist or is this a problem? The authors admit that attention to entertainment was on the rise already in 2001 and I love Herbert Simon’s quote: “…a wealth of information creates a poverty of attention.”

This is just an aside, but the attention economy discussion reminded me of the three levels of media “effect” – cognitive, affective and behavioral. It seems like one big advantage of the Web, from a communicators perspective (think about the 40,000 grocery store items) is the wider reach for cognitive awareness. Ever heard of Goya foods? Now you have. And the Grateful Dead example (p. 8) illustrates that attention can lead to a desire for more attention, and a profit.

I’m a little surprised at Davenport & Beck’s lack of skepticism at the devaluing of some information in the attention economy (p. 9) although they wrote this in 2001. It seems like mainstream media, under a tsunami of distractions and competing sources for information, has clearly deflated in value. You mention in your chapter (p. 91) that supply outstrips demand even at a cost of zero. Davenport & Beck do acknowledge a mismatch of supply and demand, worsening the attention deficit. Given that we’re in journalism, is there a deficit of attention paid to important news – not just mainstream media, mind you, just the information that will guide how I spend my money and live my life. I’m not at all adverse to exploring new models of journalism, but here’s a thought for you. As for me, I’d rather have surgery now than at the end of the 19^th Century. Does the same apply to news?

As for your chapter, I’ve long had an interest in young adults and news, every since I started to realize a decade ago that my young newsroom colleagues weren’t following the news. I think it’s ironic that new technologies diffuse most quickly among the young but that online news consumption is lowest among the young. But there are a lot of ironies, online and in life. For example, Facebook began as a closed network only for college students but now most users, by far, are over 30. And here’s an analog – when Vespa introduced its retro scooter in 2004 it expected big “cool factor” sales to the young. Instead, sales overwhelmingly went to buyers over 40 who remember the original Vespa.

Information surplus contributes mightily to Putnam’s time displacement hypothesis. It’s easier than ever, especially with wireless devices, to find something digital to do. In that environment, is differentiation enough? Do we need to push price below zero – to pay people to consume news? It sound crazy, but think about this – the majority of revenue, by far, has come from advertisers for 170 years. We’ve been “selling” eyeballs for decades – why not take the next step? 

Quality, bias, and the future of news

So, two really interesting things in the “Among the Audience” article: 1) that more than half of teens (56%) post content online (even assuming this includes social networking, it’s remarkable); 2) Barry Diller’s quote that “talent is the new limited resource.” Jerry Michalski has an interesting retort – “What an ignoramus!” But boring is boring and as Mark Tremayne found in his network analysis study, good, original journalism matters, to both quality and audience size. Michalski’s partly right – online is (can be?) just as good as print or TV, but not everybody is.

Oh My News (from the “Compose Yourself” article) is intriguing because it lives, like Wikipedia, on a “tip-jar” system of funding. This is a bit like a Nielsen rating or even the collection coming after the sermon Sunday morning – it’s a direct reflection of perceived value of the site, and presumably the content on the site. It’s exciting that OhMy has led to increased conversation online in traditional news outlets. I dare say the discourse is probably a lot more informed and polite in Seoul than it is here, but I don’t know. It’s extremely important that OhMy serves as a counter to the lopsided media bias. Talk radio and now partisan news, like MSNBC and Fox, play that role here. Ironically, their success is growing in today’s U.S. media environment while the traditional objective outlets are all losing audience. Hmm… so is ideology the future of profitable news? Or is it tip-jar non-profit journalism? Oh, and the beauty of the folks at Current TV receiving upwards of half their content is that they don’t have to pay for half their content.

Philip Rosedale kind of misses the point. The RIGHT way to think about Second Life, or any other vehicle, is “let’s build a really cool swing and see if we can get somebody to PAY to sit on it.” I there’s ego (Twitter), conceit (Facebook’s “what I’m doing now”) and full-on narcissism, which is embodied… well, I guess disembodied by Second Life. Really? People have time to swing, build houses and publish a couple of newspapers in a virtual world? I’m concerned about the lack of an informed citizenry in the real world.

The libertarian capitalism of Craigslist

I agree with Kate about Craig Newmark and the video link about Gov 2.0 was fascinating. It builds on the impression I got from the Wired article, which is that Newmark believes strongly in the ability of Americans to govern their affairs, whether they be buying and selling, campaigning, or... well, affairs. As Thomas Jefferson wrote it: "governments are instituted among them, deriving their just owers from the consent of the governed... it is their right, it is their duty, to throw off such a government." Newmark mentions the Founding Fathers in talking about Gov 2.0. I just think Craigslist started the idea - and did it well.

Newmark may be liberal but he’s created the ultimate tool for unfettered capitalism. The irony to both ideological leftists and law-and-order rightists (like state attorneys general) is that Craigslist has, apparently, proven the value of libertarian capitalism better than anybody could have imagined. Facilitate and get out of the way – it’s the ultimate tribute to economist Milton Friedman and to “grassroots democracy” (because not every posting on Craigslist is to buy and sell). And Wolf kind of misses the point on page 3, suggesting Newmark is a hypocrite for being the dictator of the ultimate experiment in digital democracy. However Newmark runs the inner workings of Craigslist he has protected the unfettered nature of the site with almost religious fanaticism. Okay, so he subjectively removes some postings, but my guess is it’s only because their language or content is offensive. This article is exceedingly cynical at the end, which is unfortunate because it seems like Wolf is trying to blame Craigslist for its content, when in fact the content is an artifact of democracy. I’ve used Craigslist to buy and sell and never had a problem. Paint me in the 99.9% - why whine about the remaining one-tenth?
And an aside from the Craigslist article - newspapers have lost $10 billion in declining advertising over the last decade? I know it’s not all due to Craigslist, but it’s amazing that papers have lost half their ad base.

How to measure Web traffic and Google

The Web Numbers article talks about reach, which is a lot like “share” in TV news. Ratings report how many people were watching a show; share reports what percentage of the audience you got of TVs that were on in your town. So you might get an 8 rating but a 16 share if only half the town’s TVs were on. Reach reports a site’s visits as a proportion of all Web users online at a time – but is it local or national or worldwide? Is that a proportion of users in Austin or everywhere? Does it matter? I guess it depends on your business and site. A local bar like Antoine’s has a different audience than Dell, so it makes sense that different types of sites (like Meebo) would need different ways to measure traffic. By the way, a reader, “DNJC,” noted in the comments after the Web measure article; “Page views have always been a crude measure of Web site usage.”

Wow, that third paragraph in Jeff Jarvis’s article on Google is an amazing description of how Earth-shaking Google’s online advertising is. It never occurred to me how revolutionary online advertising was in so many ways, especially eliminating media scarcity (adding elasticity to the demand curve) and tying advertising to performance. I also think it’s fascinating that new media companies like Google and Apple make money “through the side door,” like downloadable music and ads. The idea that “every product is great” works online in the Long Tail, especially in digital environments where storing and “shipping” 1 million costs the same as one. In that arena, advertising as information – “the economics of information” – makes perfect sense. It’s focusing on cognitive media effects, making people aware of your product or service. After that the few customers you need to reach can go online and find you. You don’t have to convince them yours is the “it” product – you just need to get your distribution center and the existing customers in the same digital showroom. At this point, can you start to ignore affective effects, especially if you’re the first to offer something? Is there less need for complementary advertising because the market for your product already exists in the Long Tail – you just need to have it find you? (Although Apple still lives by complementarity, being the ultimate “it” company.)

Primer on advertising

HMF chapter 11 on advertising was really insightful, especially in two areas; the details about demographics and the fact that 9 out of ten editors had been lobbied by an advertiser to alter content (p. 257) and that one-third had assented. First, coming from TV news, I was very aware of demographics – for example, TV advertisers often pay 2 ½ times more for viewers under age 35 than for older viewers. A top-ranked show like CSI will get top advertising dollars, but a show like the OC might get one-fifth the viewers but charge almost as much as CSI because of the proportion of young adults watching. What I did not know was that online advertising gets so content specific in determining price (p. 255) – people interested in health are more valuable than those interested in video games, for example. That’s fascinating. I also liked the explanation of why there’s so much homogeneity to TV programming (so many crime and medical shows – illustrated in table 11.4 on p. 258). But with 300 satellite and cable channels and the limitless frontier of the Internet does this still happen? I guess it does on the “channels of scale,” the broadcast networks. But isn’t there a growing and more reachable market for diverse content? And does it promise a mix of marginal revenues (MRe – “news and entertainment” value and MRa – ad revenue)?

Picard readings, the business of media

Picard, Chapter 8
I know that account executives (sales people) are a vital part of local television, where I spent most of my career, but I had no idea that collection was such a vital part of the media economy. I mean, it makes sense – if your clients don’t pay you have a huge problem, but is it commonplace to have difficulty collecting from advertisers?
And this is a bit sacrilegious, but having working in both television news and television production, I know the people in production were much more conscious of budgets – what they could spend on which equipment each year, how many light bulbs and videotapes they could get, etc. But news people were either clueless about budgets or kind of arrogant about them. If they wanted satellite time or more equipment they just expected it. I’ve always had the utmost respect for the division between business and journalism, but these days I think a lesson in the stages of development of a media company, and the complexities of budget management, should be mandatory reading for journalists. Kate and Peter, am I wrong?

Picard, Chapter 9
Along those same lines, there are certain institutions in society that serve a higher calling than just that of shareholders, like defense contractors, transportation and media companies. Is it ethical for Boeing to have the same shareholder obligations as, say, Mead paper?
On the other hand, I’m stunned at how much venture capital got tied up in tech companies in the late 1990s (40%; p. 175). I remember a commercial for a financial services company in which the antagonist was trying to talk his buddy into investing in a startup. When his friend asked about the company’s fundamentals, the antagonist says “Uh… it’s got a Web site!” Scary but true.
Public ownership gets scary when a firm like the New York Times Company borrows $250 million to make a loan payment on its new $600 million headquarters… which was built in the midst of a 20-year decline in readership. From an investor’s perspective, it makes owning a piece of Facebook (about 1,000 employees, 200 million members) more attractive than owning a piece of the Times (9,300 employees, 18 million readers, 830,000 print).
Finally, I think it’s disingenuous for media managers to cite the recession as the reason for their historic declines (p. 178). While everybody lost more capital since last September, the media failings preceded the Lehman Brothers failure; media companies fell harder; and they’re less likely to climb back out of the hole. It’s all about changes in demand (Chapter 12, p. 231).

Picard, Chapter 12
Picard dismisses the primacy of price in demand in media companies – that makes sense. It’s a scary world when there’s a declining demand for your product even when it’s free. As I mentioned before, debt is a huge factor for media companies (p. 234). My friend worked for XM Satellite Radio when it started up. They had insanely large infrastructure costs – two satellites built and launched; tens of thousands of pre-built and distributed satellite radios; enough staff to man 100 radio stations 24 hours a day. They were in over $1 billion before they were on the air and, so, were destined to fail. That’s a lot of fixed assets to depreciate. Their timing was also bad – XM launched in 2001, just two weeks after September 11 – and right when MP3 players (iPods) were launching. Sirius has the same problem, now, because there’s no possible change in reinvestment and productivity (p. 236-7).
The personnel issue reappeared on p. 242. How does a saturation of available journalism talent dilute the value of journalists? I’m sure we’re seeing an increase in journalism graduate school and former newspaper reporters keep popping up in other roles, like crowd-funded news outlets (spot.us, for example). How do we maintain “eat your peas journalism” in an era when its value is declining? Maybe that’s a good area to invest in R&D (p. 243).

Dude, you got Chrome on my Bing

In reading Cringely’s article, Chrome vs. Bing vs. You and Me, I started to think Google and Microsoft were operating in an oligopoly relationship, but then there’s nothing in this op-ed to suggest that they’re working strategically or worried about undoing each other. In fact, I hadn’t thought, before, of the remarkably symbiotic relationship between Windows users and Google. I wonder what the value is to the bottom line of giving engineers more than 20% of their time for R&D when it will hardly impact profits at all – it’s insignificant. I just hope their standoff doesn’t adversely impact the value of our sidebar ads!

Brand loyalty in the wwwild west

As soon as I started reading chapter 7 I thought of an oligopoly with a big price diffferential and wondered how that worked… then I saw it mention on p. 148. Top pharmaceutical companies like Pfizer still command a higher price for their drugs even after competitors like Ivax introduce much cheaper generics. That’s a great illustration of brand loyalty, and compensation for the original drug developer for their learning curve, or research and development (pp. 149-50). Can’t that same concept be applied to online aggregation of traditional media? Newspaper staffs do the research, reporting, writing and publishing, at significant cost, then find their work re-published (for free) on Yahoo, Google or 100 other news portholes. It’s also interesting to compare media monopolies in the digital age; the New York Times commands dominant market share in New York and across the country in print, especially on Sundays. But online it draws half as many visitors as MSNBC – and less than Yahoo, CNN.com and AOL – all of which “borrow” NY Times content http://www.stateofthemedia.org/2009/chartland.php?id=899&ct=col&dir=&sort=&c1=1&c2=1&c3=1&c4=1. Maybe that’s why conglomerates like General Electric, Post-Newsweek, Paramount and Disney are chucking TV holdings and investing much more in cross-platform brands (like Disney) and new media.

Kelly - Stepp, Time to Panic

"Daily newspaper circulation has declined every year since 1987... Thirty years ago, 71 percent of adults read a daily newspaper. Ten years ago, it was 59 percent. Last year's figure: 48 percent."

Those are ominous indicators of changing economics and, seemingly by definition, diminishing marginal utility. I think there are two distinct factors at play in diminishing "utility" or demand for traditional media, especially newspapers - although both stem from the technological revolution.

The equimarginal principle assumes that soverign consumers will seek to "maximize utility from consumption." If information is the currency, how do we define maximimum utility? Is it the most beneficial or valuable information (i.e., Wall Street Journal) or the most enjoyable (i.e., TMZ.com)? Ready access to a world of selectable information online literally changes the equation because now consumers can choose to meet their varying utilities minute by minute, spreading allocation of time far and thin. This diminishes investment in traditional media like daily newspapers or local and network newscasts.

But, the decline in news consumption began even before 1987 among younger Americans, so onsumer utility was venturing elsewhere even before the Internet - probably due largely to VCRs and cable TV. We talked last week about the fixed costs of newspaper production and distribution (in the 60 to 75% range) - the variable costs can come only from staff cuts which dilute quality, which Stepp rightly slams as counterproductive. I love his vision for a highly interactive hyper-local news page (ranking sermons?!) but think he's too optimistic. He mentions four staples of journalism (entertainment, discussion, connection and reliable information) but only the latter may be better in print than online. I couldn't agree more with Yonghwan about selective exposure. If the attribute of interest to consumers is self-selected, free information - both consuming and creating it - traditional news is in big trouble.