What Ails Newspaper Business Model?

To fix a problem, one first must define the problem correctly. Some might argue the problem for newspapers is "declining readership." Others might argue it is the existence of Internet alternatives which are the problem.

But a new book published by Oxford University essentially argues "too much reliance on advertising" is the problem newspapers in some countries face. The study, commissioned by the Oxford-based Reuters Institute for the Study of Journalism, examined newspaper industries in several countries, including the US, UK, Germany and Brazil.

In many countries where online activity is high, including Scandinavia and Germany, newspapers are still faring well, with titles typically generating 50 percent of revenues from advertising.

The U.S. newspaper industry, which has generated more than 80 percent of its income from advertisements, is today in a much more serious crisis than its counterparts in Germany and Finland, where advertising typically constitutes about 50 percent of total revenues, Reuters suggests.

To be sure, there probably are numerous reasons why newspapers are in trouble. See http://www.splicetoday.com/politics-and-media/five-key-reasons-why-newspapers-are-failing for one view on what the problems are.

But it might seem somewhat silly to suggest that excessive reliance on advertising is the problem. Advertising only works when users already have ratified their appetite for consuming content in a particular venue. To argue "too much advertising" is the problem, or more accurately, that declining advertising now is the problem, sort of mistakes a symptom for a cause.

In the United Kindgom and the United States, where advertising accounts for a larger proportion of revenues, the picture is worse, but could be explained by a cyclical advertising recession which has seen spend fall dramatically in recent years, the study suggests.

That ignores the fact that readership has been falling for decades. Falling readership leads to lower ad spending and lower ad rates, which leads to lower revenue. But those problems are directly related to the availability of other channels that have more user engagement. People have shifted attention to other media formats.

The book challenges the conventional wisdom that the Internet has undermined business models by claiming there is no correlation between Internet usage and newspaper profitability. Up to a point, that is undoubtedly true. But likely only up to a point. To be sure, newspaper readership has been declining for decades, including the period before the advent of easily-consumable Internet news.

But advertising is shifting throughout the media world, and it might be wishful thinking to assert that the growing use of online channels is not directly responsible for a shift of growing amounts of advertising.

To be fair, one might argue that the researchers mostly are saying there should be a better balance between end user payments and ad support. That's fair enough, but anybody who has spent time in print publishing would agree that it is tough to get large numbers of readers to pay very much for the ability to read publications. The reason advertising historically has been important in the publishing business is precisely that readers do not necessarily "value" print content all that highly.

http://reutersinstitute.politics.ox.ac.uk/fileadmin/documents/Publications/Changing_Business_of_Journalism_Exec_Summary.pdf

http://www.guardian.co.uk/media/2010/nov/21/british-newspapers-advertising-revenue

Viacom Nixes Google TV Access, Web Streaming Options Dwindling | Android Phone Fans

Add Viacom to the growing list of networks blocking access to online streaming content from Google TV. News Corp, NBC Universal, Disney and CBS are among networks that block Google TV access to content. You might argue the networks have multiple reasons for crippling Google TV.

The networks are not enthusiastic about forms of online TV that cut them out of the controlling role. Networks are uncomfortable handing a third party more control over online video, as music companies have found Apple iTunes now is able to do.

Viacom Nixes Google TV Access, Web Streaming Options Dwindling | Android Phone Fans

The Future of Work

The Future Of Work

View more presentations from Jeff Brenman.

Distributed, virtual work offers many advantages for avoided energy consumption and employee happiness. It also makes outsourcing of work easier.

Channel Stuffing is a Bad Sign

Most analysts and investors likely were quite shocked when Cisco Systems reported a surprise revenue miss in its third quarter financial report. That is relatively unusual, and has some observers wondering whether technology sales are suffering more than people think. Some are worried about "channel stuffing," a practice that can temporarily hide market weakness.

Groupon Said to Weigh Sale to Google

Groupon, the application that sends daily messages to users in 300 markets in 29 countries, offering steep discounts on products and services ranging from cupcakes to yoga classes, dinner cruises to dental exams, is said to be weighing selling itself to Google.

Groupon keeps a 50 percent cut of every deal sold, while the business benefits from a rise in new customers. Deals, known as groupons, activate when a certain number is sold, encouraging users to recommend offers to friends.

The deal is noteworthy for several reasons. For starters, it is part of Google's announced acquisition spree, which Google says will occur basically on a "a company a month" sort of pace. The other angle is that a Google purchase would show Google's deepening moves into mobile-facilitated commerce and shopping, all with social networking angles and local advertising angles.

Groupon might be seen as a "social coupon" or "digital coupon" business. That makes it a mobile marketing and advertising vehicle as well. Local advertising through media including newspapers, direct mail, radio and the Internet will reach $133 billion in the U.S. this year, according to BIA/Kelsey, a consulting firm.

Groupon also illustrates the growing synergies between mobility, location, local advertising and commerce.

Groupon Said to Weigh Sale to Google vs. Raising More Funds - Bloomberg

FCC Still Looking at Title II Regulation?

The FCC might still be looking at putting common carrier regulation of broadband up for a rule-making in December, some suggest.

Reclassifying the Internet under Title II regulations would be bad for business, bad for consumers and would hurt broadband’s innovative drive, many will argue. Congressional leaders also reportedly are gathering signatures for yet another letter to the FCC insisting that the FCC does not have authority to do so.

FCC's Broadband Regulation Would Hurt Economy | Broadband for America

GSMA Launches Embedded SIM Initiative

The GSMA, the global association of GSM mobile providers, today announced the formation of a task force of mobile operators to explore the development of an embedded SIM that can be remotely activated.

The move is expected to enable the design of new form factors for mobile communications, especially machine-to-machine devices, cameras, MP3 players, navigation devices and e-readers and smart meters.

The idea is to make the devices easy to sell in traditional retail venues, but also easy to activate for service later, on any GSM network. You can probably expect the carriers not to be quite so enthusiastic to embrace the same concept for mobile phones, though.

Extended to smartphones, users could buy any device they wanted, so long as it was GSM standards compliant, and activate with any GSM service provider. I doubt the carriers would enjoy the loss of control that would mean.

GSMA Launches Embedded SIM Initiative to Support the Connected Future ~ GSM World

Consumers Prefer Unlimited Plans

Mobile subscribers in the United States prefer unlimited data plans, according to a newly released survey conducted by analyst firm Sanford C. Bernstein and Co.

According to the survey, 58 percent of light data users said they would change carriers to get an unlimited data plan. Among the highest data users, that figure rose to 67 percent. 'Customers generally have strongly negative perceptions about UBP, and these are often not correlated with self-interest,' Bernstein analyst Craig Moffet said in a research note, referring to usage-based pricing.

Survey: Consumers eschew tiered data pricing - FierceWireless

Small Businesses Want 100 Mbps, 1 Gbps, But Won't Pay Too Much For It

There are lots of interesting tidbits in a new study of small-business broadband Columbia Telecommunications Corporation, which conducted a nationwide survey on behalf of the Small Business Administration, but the really significant finding is that respondents won't pay all that much for 100 Mbps or 1 Gbps connections.

And price resistance is stubborn. Even when the price for such a service is just 10 percent to 20 percent higher, businesses are significantly less likely to switch to a 100-Mbps service from what they currently buy.

As you might guess, if small businesses are hesitant to spend 10 percent to 20 percent more to get 100 Mbps, they are even more hesitant to spend more for an extremely fast Internet connection of 1 Gbps. This is especially true for prices that are 40 percent or more higher than their current prices.

If you asssume the average prices now range between $70 a month to $124 a month, then survey respondents show significant resistance to paying much more than $84 to $149 a month for 100 Mbps service, or $98 to $174 for 1-Gbps service.

This graphic might confuse you. The taller the bars, the less likely the respondent is to take the action indicated. The tallest bar, a score of "5" would mean "highly unlikely" to take the action.

A score of "1," shown by a shorter bar, would indicate strong willingness to take the action.

The point is that small business users aren't willing to spend much more to upgrade from their current level of service to 100-Mbps service.

The most surprising finding is that even the same prices, or prices 10 percent 5to 20 percent lower do not cause small business respondents to become certain of switching. Scores around "3" indicate a "maybe, maybe not" attitude.

No matter what these respondents say about wanting higher speeds, they don't appear to be willing to pay much of anything for it.

read the full report here

House Prepares to Remind FCC It Has No Authority to Impose Net Neutrality

House Commerce Committee Republicans reported are signatures for a  letter to Federal Communications Commission Chairman Julius Genachowski reminding him there now is bipartisan agreement that net neutrality must be resolved by Congress.

"FCC Chairman Julius Genachowski will imminently flout the  will of the American public, the Congress, the unions, numerous civil liberties and minority groups, former FCC officials, and even members of his own political party, and unilaterally impose Net Neutrality regulations on the Internet," said Mike Wendy, director of Media Freedom.org.
"In light of other recent statements, it represents a 180-degree shift away from his call to ‘catalyze private investment, foster job creation, compete globally, and create broad opportunity in the United States.’"

Widgets are Not a Business, As it Turns Out

There are hits and misses in the Web 2.0 business. Some once thought "widgets" would provide the foundation for full-blown business models. Apparently, not.

Should San Diego Just Declare Bankruptcy? Will Others Follow?

Aside from everything else citizens of United States have to deal with, growing structural imbalances in municipal and state government revenue and spending provide additional unpleasant challenges. Consider the city of San Diego, Calif., which were it a private business would face outright bankruptcy.

"When all costs for retirement benefits are totaled up in city government, they exceed $370 million this year, or roughly two thirds of the city’s entire payroll expense," says San Diego Councilman Carl DeMaio. In other words, of taxes paid by city residents that are spent on personnel, only a third actually support current employees supplying services to residents.

That same problem is going to overwhelm most school districts as well, leading to inability to educate today's school children because nearly all funds to support schools will have to be diverted to pension obligations.

This cost structure cannot be sustained, DeMaio says, and any organization with these excessive costs for retirement benefits would face bankruptcy in short order.

Unless San Diego takes significant actions to mitigate future payments on the unfunded pension liability, the growth rate of these payments is almost certain to outpace the growth rate of tax revenues, he says. All of that will be unpleasant and painful, but there now is no escaping the decisions.

San Diego's current forecast for 2012 through 2016 already shows scores of millions of deficits in every year.

The city’s defined benefit pension payment has climbed from $154 million last year to approximately $230 million this year. And it only gets worse. According to the pension system actuary, it will climb to $343 million in FY 2016 and spike to $511.6 million in FY 2025.

In addition, pension-related health care obligations add another $120 million a year, at current levels.

"To put the magnitude of the pension problem in a more simple perspective, if General Fund revenues grow at a rate of two percent per year, fiscal year 2014 projects the city’s defined benefit pension payment alone to consume more than 20 percent of general fund revenue: one out of every 5 dollars," says DeMaio.


http://www.cleanupcityhall.com/uploaded/FinancialReport.pdf

Telco 2.0: FT World Telecoms: Broadband & Fibre

BT CEO Ian Livingston makes an interesting point that successful high-bandwidth, fixed-line broadband network deployment.

Deployments seem to involve either massive investment by government (as in Sweden or now Australia), toleration of an incumbent monopoly (as in Japan), or unusually favourable circumstances such as extremely high urban density, or to put it another way, extremely low trench mileage per subscriber passed (as in Hong Kong or Singapore).

One suspects that list of strategies will be longer in the future. It is possible that a sort of "hybrid"model could develop in the United Kingdom and some other markets, where there is a single facilities-based wholesaler, but also relatively easy ways to create new facilities-based access drops that use the single distribution network.

In principle, that might have advantages if one thinks about a neighborhood optical access terminal representing the aggregation point to the backbone network, and then multiple providers compete to supply the "access" or "drop" connection.

In the United States, competition is more likely to continue to take the form of a landline duopoly and a few wireless broadband providers, all operating using their own discrete facilities, for the most part.

FT World Telecoms: Broadband & Fibre:

News Corp. to Produce "Tablet Only" Daily

Many print publishers plan to produce apps for tablets. News Corp. appears to be preparing a "table only" digital product that will not be available anywhere else.

News Corp. reportedly has spent the last three months assembling a newsroom that will soon be about 100 staffers strong. The Daily will launch in beta mode sometime around Christmas, and will be introduced to the public on the iPad and other tablet devices in early 2011.

It is expected to cost 99 cents a week, or about $4.25 a month. It will come out seven days a week.

Rupert Murdoch, News Corp. CEO, believes that within a few years, tablet devices will be priced and sold through mass market retailers at reasonably affordable prices, and that, at some point, every member of the family will have one. That obviously makes a tablet the ideal "reader" platform.

Rupert Murdoch Does Another Daily

Is Cloud Computing a Bubble About to Burst?

The current hype about cloud computing, now going on three years, is "just another bubble," says Gartner analyst Jack Santos. In Gartner-speak, it is reaching the peak of inflated expectations. But the higher the peak, the greater the crash to the trough of disillusionment), and this peak has reached amazing heights, Santos argues.

That might be so, but all consequential new technologies have a "hype cycle" and therefore always feature an investment bubble. The issue is not the over-investment, but the degree to which the sector has profound and destabilizing implications for the broader economy.

But there is another side to bubbles. "Even in a bubble, there is a germ of truth and reality," Santos notes. Google was a dot com, but was different. It proved to be the provider of a consequential new technology, unlike most of the other inconsequential endeavors.

The real trick in any bubble is not trying to talk yourself out of the hype, but picking the winners that come out of that bubble, Santos says. In other words, cloud computing is going to produce a couple of big winners. The unknown today is who those winners will be, and why they prove to be winners.

Cloud Bubble