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