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The Business Of the News Business It’s Changing Right Before Your Eyes James K. 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 1

A Presentation For KU Communicators Original presentation developed for SPJ national convention and regional 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 2

Impetus for Change n n Internet is redistributing power from news producers to consumers Impetus for Change n n 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 3

Impetus for Change n n Traditional differences between local and long-distance phone services, cable Impetus for Change n n 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 4

Business Reality n n n In 2005, traditional TV, newspaper, radio, magazine and cable Business Reality n n n 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 n Nielsen Monitor-Plus, TNS Media Intelligence KU Communicators 5

Media Trends n n n More outlets covering fewer stories Big-city metro papers threatened Media Trends n n n 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 n The State of the News Media Annual Report KU Communicators 6

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

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

Circulation and Population n In 1980, daily newspaper circulation was 62. 2 million. n Circulation and Population n In 1980, daily newspaper circulation was 62. 2 million. n n In 1980, U. S. population was 237 million In 2005, daily newspaper circulation was 54. 6 n In 2005, U. S. population was 296 million n Newspaper Association of America KU Communicators 9

Newspapers Losing Jobs n n n Business has lost 3, 500 - 3, 800 Newspapers Losing Jobs n n n 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 n The State of the News Media Annual Report KU Communicators 10

Broadcast: The Details n n n Network morning news revenues up 15% in 2004; Broadcast: The Details n n n 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. n The State of the News Media Annual Report KU Communicators 11

NBC Universal Reality Check n n NBCU to reduce spending on traditional TV by NBC Universal Reality Check n n 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 12

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

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

Outsourcing n n n Reuters: 1, 000 journalists in India in ‘ 05 Has Outsourcing n n n 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 15

Consolidation n Rupert Murdoch and News Corp. n n n Television Satellite Newspaper Technology, Consolidation n Rupert Murdoch and News Corp. n n n Television Satellite Newspaper Technology, multimedia: My. Space ‘ 05 Disney, Viacom, GE Mc. Clatchy & Knight Ridder, Media. News KU Communicators 16

Brand Extension n n ESPN 2 ESPNews ESPNClassic ESPN. com ESPNRadio ESPNU ESPNZone ESPN Brand Extension n n ESPN 2 ESPNews ESPNClassic ESPN. com ESPNRadio ESPNU ESPNZone ESPN the Magazine ESPYs KU Communicators 17

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

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

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

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

KR Cost Cutting n n Eliminate duplication of key national beats and art criticism KR Cost Cutting n n 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 22

More Cost Cutting n Regional news center n n n Consolidate all copy editing, More Cost Cutting n Regional news center n n n 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 23

Blogs n n n Instant interactivity, fastest growing segment of the web. A new Blogs n n n 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 n n n Technorati Ice Rocket Google Blog Search KU Communicators 24

Blog Searching n Search engines that track information found only in blogs. n Technorati Blog Searching n Search engines that track information found only in blogs. n Technorati n n n Ice Rocket n n Tracks over 31. 2 million blogs Returns more total results Search by keyword and author Google Blog Search n The fastest search engine KU Communicators 25

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

What Makes a Good Blog? n n n n n Ease-of-use Clear navigation Currency What Makes a Good Blog? n n n n n 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 n NYU School of Journalism KU Communicators 27

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

News Media Podcasting n NPR n n n More than 6 million downloads monthly News Media Podcasting n NPR n n n 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 30

News Drives Web Traffic n n When a major news event occurs, number of News Drives Web Traffic n n 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 31

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

Citizen Journalists n n n Ordinary members of the public turn into photographers and Citizen Journalists n n n 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 33

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

Citizen Involvement: Opportunity or Threat? n n “Best opportunity in decades to do even Citizen Involvement: Opportunity or Threat? n n “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 35

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

Citizen Journalism: Al Gore n Current TV: Do it yourself TV n n Al Citizen Journalism: Al Gore n Current TV: Do it yourself TV n n 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 37

Forums, Forums n n n News Sports Survivor stories Mayoral issues Pet rescue n Forums, Forums n n n News Sports Survivor stories Mayoral issues Pet rescue n “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 38

Readership Institute n n n www. readership. org/ Users have “experiences” with your media Readership Institute n n n 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” n Break formula, take risks, be notably innovative KU Communicators 39

What is “Experience”? n n How your offering makes consumer feel How it interacts What is “Experience”? n n 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: n When experiences correlate by target group to motivating or inhibiting media usage KU Communicators 40

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

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

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

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

Percent who prefer Experience Paper Strongly Preferred Side by side comparison KU Communicators 45 Percent who prefer Experience Paper Strongly Preferred Side by side comparison KU Communicators 45

What is Rob Curley Up To? n Just who is Rob Curley? n n What is Rob Curley Up To? n Just who is Rob Curley? n n n 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 46

Rob’s Advice: October ‘ 06 n n n n Own local breaking news Hyper-local Rob’s Advice: October ‘ 06 n n n n 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 47

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

And More n n n n Newsroom Podcast Email news, sports, weather to your And More n n n n 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 49

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

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Challengers n n n Craigslist Ohmy. News Skype and e. Bay KU Communicators 52 Challengers n n n Craigslist Ohmy. News Skype and e. Bay KU Communicators 52

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Others n n n Backfence. com, in suburban Virginia. Citizens are the only contributors Others n n n Backfence. com, in suburban Virginia. Citizens are the only contributors and the “newspaper” is an unedited Web site. Blufftontoday. com, Bluffton, S. C. Made up largely of reader contributions. Also free tabloid. Loudon Forward, Loudon County, VA KU Communicators 56

And More n n n Generation @ Vlogging Videocasts Video on handhelds On-demand media And More n n n Generation @ Vlogging Videocasts Video on handhelds On-demand media KU Communicators 57

Social Networks n n n Participants act as producers, distributors and marketers of content Social Networks n n n Participants act as producers, distributors and marketers of content through reviews, voting and blogs Today’s audience wants more interaction Today’s audience wants the ability to create and distribute its own content Today’s audience wants a personalized media experience Yes, experience KU Communicators 58

Social Networks n n n My. Space. com (Murdoch) Facebook. com (Yahoo? ) You. Social Networks n n n My. Space. com (Murdoch) Facebook. com (Yahoo? ) You. Tube. com (Google) Buzz-Oven. com Vidilife. com KU Communicators 59

My. Space n n n 79. 6 million unique visitors in August More than My. Space n n n 79. 6 million unique visitors in August More than 40 million registered users Received 21% of visits to U. S. online video sites in September Users may post messages, update blogs, send photos via mobile phones Google paid $900 million to provide search services and advertising on it News Corp. purchased it for $580 million KU Communicators 60

Facebook n n n 15. 5 million unique visitors in August Connects college students Facebook n n n 15. 5 million unique visitors in August Connects college students with similar interests and activities Includes 1500 college campuses Launched a high-school version Ads may be targeted to students at a specific college Talking with Yahoo about $1 billion purchase KU Communicators 61

You. Tube n n Purchased by Google for $1. 65 billion Received 46% of You. Tube n n Purchased by Google for $1. 65 billion Received 46% of visits to U. S. online video sites in September Users watch short videos more than 70 million times a day Users post 60 million videos daily, for free n n Mainstream shows from current season, clips from TV’s earliest days, and homemade movies from around the world Can submit video from mobile phones KU Communicators 62

Buzz-Oven n n n Social Network for teens in Dallas Started as a way Buzz-Oven n n n Social Network for teens in Dallas Started as a way to market local concerts Evolved into a full social network Sponsored by Coca Cola Operates independently and as a subsite on My. Space. com Links to the Dallas Observer KU Communicators 63

Vidilife n n n A Social Network that uses online videos to attract net Vidilife n n n A Social Network that uses online videos to attract net surfers New technology allows anyone with a computer to put video online Launched in September, attracted 220, 000 unique users in October KU Communicators 64

Google: 800 -Pound Gorilla n n Google will be first search company to gain Google: 800 -Pound Gorilla n n Google will be first search company to gain one-quarter of the total money spent on online advertising ($4 billion) in 2006 You. Tube purchase means more ad dollars Google. Mail growing in popularity Leaving Yahoo in its dust KU Communicators 65

Gaming Industry n n n More than 300 million people play worldwide Handheld gaming Gaming Industry n n n More than 300 million people play worldwide Handheld gaming hardware sales grew 96% from 2003 -04 $34 billion in revenues in ‘ 05 n Compared with $21. 4 billion movie box office receipts KU Communicators 66

Gaming and News? n PSPcasting n RSS and PSP Video 9 software n n Gaming and News? n PSPcasting n RSS and PSP Video 9 software n n Convert regular PC video files into PSP files ABC News signed as PSP’s first news provider News Corp. paid $650 million for game-site operator IGN Entertainment Viacom to acquire Xfire Inc. for $102 million n Adding 300, 000 gamers per month KU Communicators 67

Professional Electronic Gaming Global Gaming League World Cyber Games Cyberathlete Professional League n n Professional Electronic Gaming Global Gaming League World Cyber Games Cyberathlete Professional League n n n First tournament held in 1997 TSN will webcast 25 tournaments in 2006 CPL finalists will compete for $500, 000 KU Communicators 68

Gaming and Advertising n Microsoft to acquire Massive Inc. , a start -up company Gaming and Advertising n Microsoft to acquire Massive Inc. , a start -up company that places ads in videogames n n n Clients include Coca-Cola Co. , and Honda Video games could become new medium for advertising Companies pay to insert brands on billboards, posters, soda cans and other on -screen elements within video games. KU Communicators 69

Key Factors: New World n n n What I want; when I want; where Key Factors: New World n n n What I want; when I want; where I want Today’s economic models in question Big media will remain but portfolios will be different Citizen produced/open-source content Video conferencing ubiquitous Help people make the most of their time: TIVO, PDAs, cell phones KU Communicators 70

By 2010 n n n n e-ink Consumer control: Podcasting, RSS, e. Bay, consumer By 2010 n n n n e-ink Consumer control: Podcasting, RSS, e. Bay, consumer created media Digital across platforms, almost ubiquitous Talk free with paid services Video conferencing changes communications Media moving to other news & information channels: Super search, hyper-local, B 2 B Other? KU Communicators 71

Challenges for Media n n n Offer decent pay Opportunity to be creative Appreciate Challenges for Media n n n Offer decent pay Opportunity to be creative Appreciate staff ideas Ramp up the pace of change Engage young audience: as workers and media consumers!!! KU Communicators 72

And in the Workplace n What young workers want n n n Ability to And in the Workplace n What young workers want n n n Ability to make a difference Meaningful work Opportunity to learn new skills Mentoring Flexibility Decent paycheck KU Communicators 73

What’s It Mean? n n To “win, ” traditional media can’t nibble at innovation What’s It Mean? n n To “win, ” traditional media can’t nibble at innovation Recent changes and those to come are potentially lethal for legacy media n n Some will embrace new ideas and use media to their advantage Many will talk change but stay unchanged Can the business change? To be a strategic winner, you can’t stand still n Readership Institute KU Communicators 74

Sources n n n n www. stateofthemedia. org www. readership. org www. people-press. org Sources n n n n www. stateofthemedia. org www. readership. org www. people-press. org www. pewcenter. org www. mediacenter. org www. poynter. org www. morningstar. com Newspaper Association of America Radio Advertising Bureau Magazine Publishers of America Television Bureau of Advertising Cable Television Advertising Bureau Business Week The Wall Street Journal The New York Times Fortune KU Communicators 75