What's wrong with media? Don't get me wrong, we [in the new-media side of the business] have done some great things during the past dozen years. However, it's my role on this panel to talk about the Emperor's New Clothes or the Elephants in the Room. Such as:
- After 12 years of our efforts at publishing on the Web, fewer people use our websites — and less thoroughly and less often — than currently read or view our companies' declining, legacy products (printed newspapers, magazines, or TV or radio programs). Sure, there are exceptions such as NYTimes.com or Guardian.co.uk. But when you analyze server logs and discard questionable traffic such as from web spiders, you find that the average newspaper, magazine, or broadcast site is used by no more than one quarter as many people as still read the printed editions or as view or listen to the analog broadcasts.
- After 12 years of our efforts at publishing on the Web, our sites earn one-twentieth to one-hundredth the revenue per user as do our companies' legacy products. The average newspaper website earns between USD 5 and USD 14 annually per user, comparied to USD 250 to USD 900 annually per printed edition subscriber or daily single-copy purchaser. The comparisons for broadcast sites are even worse.
- After 12 years of our efforts at publishing on the Web, most of our media companies earn less than 5 percent of their revenues from new-media. Sure, there are exceptions; McClatchy and Knight Ridder were each earning about 7 percent from new-media. But at most media companies, the percentages are much lower. Even if online advertising continues to grow at a 35 percent compound annual rate, which isn't realistic, our companies will implode from their legacy products' constantly declining circulations, readerships, and revenues before our new-media efforts can sustain them.
- Which points to another problem. Our efforts are still totally dependent upon our companies' legacy products for content and, to a huge degree, financial subsidies. We often talk about how our new-media efforts have been like the rise of radio in the 1920 or TV in the 1950s, but radio and TV were totally independent and self-sustaining within about five years of launch. After 12 years of our efforts at publishing on the Web, we're still totally dependent. Moreover, 75 percent of American newspaper websites' gross revenues are generated from the three traditional printed newspaper classified advertising categories of automotive, properties, and jobs. And half of that revenue comes from 'upsells' to us by the print folks.
- After 12 years of our efforts at publishing on the Web, we consider ourselves to be the online kings of our local markets because we have about a 43 percent market share of online advertising there. However, Google and Yahoo! within the past five years now have a 28 percent share of local online advertising, a percentage that growing ten times as fast as our own.
- After 12 years of our efforts at publishing on the Web, Wall Street, which owns most of our companies, is not impressed. Ask the folks here from Knight Ridder.
Later during the panel, I gave a few solutions for these problems. However, our 45 minute panel didn't have time to give many more or to get into details:
- Most of our sites, particularly the newspaper sites, need to gain advertising from more than the three traditional printed newspaper classified advertising categories of automotive, properties, and jobs. Though those categories are generating 75 percent of our current revenues, the three amount to only 10 percent of local online ad spending. Immediately go after that other 90 percent!
- After 12 years of our efforts at publishing on the Web, it should be clear to everybody that attempts to maintain 'walled gardens' are a disastrous, or at best pyrrhic, business strategy. You shouldn't be trying to provide only your own content to your users, but all content to your users. You're not in the business of providing a product (such as a newspaper or magazine or even a brand name) but in the business of providing a service. For examples, I applaud how USAToday is providing non-Gannett newspapers' content in its RSS feeds, or how the daily e-mails from The Wall Street Journal also report what its competitors are reporting. Make your site the one your users use for all purposes.
- Likewise, find out what each and every of your individual users wants. The era of providing the same content to all of them is over. They claim that your companies' legacy products, which provide the same content at the same time to all of them, are no longer relevant to their lives. That's not because relevant stories don't exists but is because your individual users aren't getting the specific stories that are relevant to each of their lives. You can call it personalization, even though it's really individualization. You can mistakenly claim that few abysmally concocted and implemented experiments with individualization somehow prove that it's the wrong strategy — much the way that livery stable owners 100 years ago claimed that the sputtering and frequently failing early automobiles proved that automobiles had no future — but the future trend is nonetheless clear.
- Know that the solution to reversing decades of declines in your companies' legacy products — declines that began and were long underway before the Internet was opened to the public — have nothing to do with your legacy products' content not having been online and also can't be reversed simply by putting those legacy products' content online. Shovelware isn't the solution. Putting the newspaper, magazines, or broadcast online isn't the solution. Converging those online isn't the solution. Changing the type and distribution of content is the solution. Look at that. (同感同感)
- If fewer and fewer users are willing to pay for your legacy products' content, why would you think they'd pay for that same content online? In order to give your sites subscription revenue — the type of revenue you need if your sites are ever to sustain or overtake your companies' legacy products — you'll need to change the type and distribution of content you provide in all the ways I've mentioned. People might be willing to pay a monthly fee for a service that provides content that is individually relevant to them, possibly from all sources. Again, have your brand provide a service, not a product.
- Most of all, what you folks need to do is begin providing metadata and metadata coding within your content. Most of you rarely put hyperlinks within your stories, nonetheless metadata. For instance, who among you are coding their stories with XML or NewsML? How are individuals to receive relevant stories if machines have no way of telling what those stories are about? Did you notice that users themselves are tagging stories for relevance because you folks aren't. You need to provide semantic tagging or else you'll be left behind early this century, which at this trend will happen.