Lou Heldman on media, technology and society

Posted by Rick Edmonds,Oct. 12, 2009, Poynter.org

Nearly everyone agrees now on the basic narrative of the news business in transition. Old media -- newspapers especially -- are contracting drastically. They don't field the news effort they did in better times and probably never will again. On the other hand, alternative digital startups are exploding, and may in time plug much of the gap.

It occurs to me, though, that there has been very little effort to quantify what has been lost, then compare that figure to the scale of the best of new media.

This is a first shot at those numbers.

By my back-of-the-envelope calculations (see below), newspapers have, just in the last several years, reduced their spending on journalism by about $1.6 billion annually. 

The new media sector defies that kind of collective measurement. By its nature, digital launches are extraordinarily diffuse. There is room for debate over what qualifies as a news/information site. And by any definition, new media ventures are a fast moving target with the pace accelerating even in the last few months.

What is known is the dimension of some of the most prominent ventures, the majority of them non-profits. Pro Publica has an annual budget of nearly $9 million and is growing. The Knight Foundation is investing up to $5 million a year in start-ups through the Knight News Challenge. The Kaiser Family Foundation is spending millions on a health policy news service launched in April.

San Francisco financier Warren Hellman is commiting $5 million through his family foundation over several years to a non-profit digital service that will also seek to harness volunteered effort by UC Berkeley journalism students. Venture capitalist John Thornton, several foundations and individual donors have committed $4 million to launch the non-profit digital Texas Tribune, which expects to operate on a $1.6 million budget in it first year.

Probably best known of the start-ups are MinnPost and Voice of San Diego. Both operate on a total budget of a little more than $1 million a year, probably about $1 million of that a direct spend on journalism. Geoff Dougherty recently suspended operation of Chi-Town Daily News, saying he had been unable to raise $300,000 to keep going. He commented that a metro digital report needed at least $1 to $2 million a year to make a difference.

So here is an indicator of relative scale. It would take roughly 1,600 MinnPosts or Voice of San Diegos to replace the spending on journalism newspapers have cut.

How do I figure the deficit at $1.6 billion? In 2004, 2005 and 2006, newspapers were a $60 billion industry with advertising revenues just over $49 billion and circulation revenues of about $11 billion. 

Deep advertising losses will take the advertising total for 2009 down to around $28.5 billion. The Newspaper Association of America no longer offers estimates of circulation revenue. I'm estimating that despite some rate increases, the total has fallen to around $8.5 billion. That will leave roughly a $37 billion industry as 2010 begins.

The Inland Press Assocation's cost and revenue study is the best source I know for figures on newsroom spending as a percentage of revenues. The latest report, as of the end of 2008, finds that figure at 13.7 percent for papers of roughly 100,000 circulation.

But in earlier work with these numbers, I found the newsroom spend was a lower percentage at the biggest papers of 250,000-plus circulation. Given their outsized weight as a share of the industry, I estimate the current industry average at 12 percent. When profits were higher in the middle of the decade, I estimate newsroom share was closer to 10 percent of revenue.

So at $60 billion total revenues in 2005 and 2006, the newsroom spend would have been roughly $6.2 billion. Now as a $37 billion industry, newspapers are likely spending $4.4 billion on news. That's $1.6 billion less. 

Newsroom spending, by the way is 80 to 90 percent salaries. It also includes fees for wire service and freelance contributions, as well as a travel and training budget. In the Inland survey, benefits are counted separately as part of "general and administration."

These raw numbers, you may already be thinking, don't tell the full story. Even stalwart newspaper enthusiasts would admit that some of the trimmed spending and positions were expendable with little impact on quality for readers. The industry is still hacking at inefficiencies like having six editors read a single story or sending hundreds of reporters, editors and photographers to the Super Bowl.

MinnPost, Voice of San Diego and the rest have made canny decisions about what to leave out of their report -- sports results, breaking crime news and more -- the better to deliver serious reporting. A number of the new non-profit units -- like Pro Publica -- focus exclusively on investigative reports.

The start-ups typically dispense with the expensive print, delivery and ad sales costs of newspaper organizations and thus can spend the great majority of their revenues -- not just 12 percent -- on content.  My comparisons, however, back out most of that legacy expense structure to look apples-to-apples at levels of news spending.

All that said, new media at best appears to be covering a small fraction of the traditional news capacity lost. (Broadcast and magazines have cut coverage too, though I do not have a handy way to measure how much).

We will save further discussion on how far a dollar goes in the old and new media for later in the week. Your thoughts are welcome in the meantime, however, and feel free to check my math, too.

Lou says: The Monday newspaper, my beloved Wichita Eagle, now comes to me in a plastic wrapping small enough to do double-duty wrapping foot-long hot dogs. While Rick Edmonds' methodology can be challenged, his point is unassailable -- newspaper readers have lost a lot in the way of local news (and enterprise) that won't soon be made up for by other sources .

According to a survey conducted for the American Press Institute, reported in Media Buyer/Planner, more than half of newspaper publishers believe readers will pay to access online newspaper content. 51% of publishers say they believe they can successfully charge for content, while 49% either aren't sure or believe paying for content will not work.

But Alan Mutter, in his Reflections of a Newsosaur blog, said "While 68% of the publishers responding to the survey said they thought readers who objected to paying for content would have a difficult time replacing the information they get from newspaper websites, 52% of polled readers said it would be either "very easy" or "somewhat easy" to do so... "

The survey, which was conducted for the latest in the series of industry conferences this year studying how to monetize the valuable content most newspapers give away for free, shows that publishers who are worried about charging for content have good reason to be concerned.

68% of publishers said they thought that, even if readers object to paying for content, they would have a difficult time finding that information in other places, while 52% said they thought it would be either very easy or somewhat easy for readers to find replacement content.

More data from the study includes:

• 58% of publishers said they are considering charging for content
• 49% said they have no timetable in mind for how that will play out
• 12% said they plan to charge for content by the end of the year
• 18% said they will do so in the first quarter of 2010
• 10% said they would begin charging by the beginning of next summer
• 10% currently charge for some portion of the web content

According to the study:

• 38% of the respondents say they will limit full access to stories to monthly subscribers
• 28% say they will likely offer monthly subscriptions as well as micropayments for individual articles
• 15% expect to offer monthly subscriptions, micropayments, and "day passes"
• 19% expect news articles to remain free but that they will produce content specifically for the website which would be behind a pay wall
• 9% say they may adopt a system which would make visitors pay separately for each story they want to read

At many airport food courts, Asian restaurants offer free samples on toothpicks to entice you to buy a full meal. Newspapers have been offering multi-course free meals on the Web for years. It will be hard, but not impossible, to get customers used to paying.
Despite how established the Internet is in our lives, business models are still evolving. It's too early to write off the possibility that a smart pay strategy may yet emerge for local newspapers.

Excerpted from nytimes.com, September 9, 2009

Over the course of 10 months in eastern Afghanistan, an Army specialist nicknamed Mud Puppy maintained a blog irreverently chronicling life at the front, from the terror of roadside bombs to the tyrannies of master sergeants.

Often funny and always profane, the blog, Embrace the Suck (military slang for making the best of a bad situation), flies under the Army’s radar. Not officially approved, it is hidden behind a password-protected wall because the reservist does not want his superiors censoring it.

“Some officer would be reviewing all my writing,” the 31-year-old soldier, who insisted that his name not be used, said in an e-mail message. “And sooner or later he would find something to nail me with.”

There are two sides to the military’s foray into the freewheeling world of the interactive Web. At the highest echelons of the Pentagon, civilian officials and four-star generals are newly hailing the power of social networking to make members of the American military more empathetic, entice recruits and shape public opinion on the war.

Gen. Ray Odierno, commander of American forces in Iraq, is on Facebook. The chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, has a YouTube channel and posts Twitter updates almost daily.

The Army is encouraging personnel of all ranks to go online and collaboratively rewrite seven of its field manuals. And on Aug. 17, the Department of Defense unveiled a Web site promoting links to its blogs and its Flickr, Facebook, Twitter and YouTube sites.

The Web, however, is a big place. And the many thousands of troops who use blogs, Facebook, Twitter and other social media sites to communicate with the outside world are not always in tune with the Pentagon’s official voice. Policing their daily flood of posts, videos and photographs is virtually impossible — but that has not stopped some in the military from trying.

The Department of Defense, citing growing concerns about cybersecurity, plans to issue a new policy in the coming weeks that is widely expected to set departmentwide restrictions on access to social networking sites from military computers. People involved with the department’s review say the new policy may limit access to social media sites to those who can demonstrate a clear work need, like public information officers or family counselors.

If that is the case, many officials say, it will significantly set back efforts to expand and modernize the military’s use of the Web just as those efforts are gaining momentum. And while the new policy would not apply to troops who use private Internet providers, a large number of military personnel on bases and ships across the world depend on their work computers to gain access to the Internet.

To many analysts and officers, the debate reflects a broader clash of cultures: between the anarchic, unfiltered, bottom-up nature of the Web and the hierarchical, tightly controlled, top-down tradition of the military.

“We as an institution still haven’t come to grips with how we want to use blogging” and other social media, said Lt. Gen. William B. Caldwell IV, the commander of the Army Combined Arms Center at Fort Leavenworth, Kan.

One of the Army’s leading advocates for more open access to the Web, General Caldwell argues that social networking allows interaction among enlisted soldiers, junior officers and generals in a way that was unthinkable a decade ago.

He requires students at the Command and General Staff College at Fort Leavenworth to blog, and the college now sponsors 40 publicly available blogs, including his own, where policies are freely debated.

But getting approval for those blogs, as well as for YouTube and Facebook access at the college, was a struggle. “At every corner, someone cited a regulation,” General Caldwell said. In recent months, however, “the Army has made quantum leaps” in embracing the Web, he added.

Noah Shachtman, editor of Wired.com’s national security blog, Danger Room, which has reported extensively on the new policy review, said he recently asked students at West Point whether they would allow soldiers to blog. Almost every cadet said no.

“Then I asked, ‘How many of you think you can stop the flow of information from your soldiers?’ ” Mr. Shachtman recalled. “Everybody agreed there is no way to stop this information from going out anyway. So there is this sort of dual-headedness.”

Skeptics of the Pentagon review say it is motivated partly by a desire among certain officials to exert control over the voices of troops on the Web.

Since the advent of military blogging during the Iraq war, some commanders have remained uncomfortable with the art form, citing concerns about both security and decorum.

Lou says: This is where the freedom afforded by social technologies runs smack into life-and-death issues. It's one thing to see corporations or sports franchises struggling desperately (and futilely) to control the messages coming from their employees and players; it's quite another to contemplate a situation where a soldier's blog postings or tweets can compromise a military operation.
World War II soldiers were warned about 10 prohibited topics in letters home. According to eyewitnesshistory.com, these included:
1. Don't write military information of Army units -- their location, strength,, materiel, or equipment.

2. Don't write of military installations.

3. Don't write of transportation facilities.

4. Don't write of convoys, their routes, ports (including ports of embarkation and disembarkation), time en route, naval protection, or war incidents occurring en route.

5. Don't disclose movements of ships, naval or merchant, troops, or aircraft.

6. Don't mention plans and forecasts or orders for future operations, whether known or just your guess.

7. Don't write about the effect of enemy operations.

8. Don't tell of any casualty until released by proper authority (The Adjutant General) and then only by using the full name of the casualty.

9. Don't attempt to formulate or use a code system, cipher, or shorthand, or any other means to conceal the true meaning of your letter. Violations of this regulation will result in severe punishment.

10. Don't give your location in any way except as authorized by proper authority. Be sure nothing you write about discloses a more specific location than the one authorized.

An updated version of that list, combined with training for those in sensitive situations, is probably the best way to go. The idea isn't to spare criticism of the military, but to preserve the safety of our troops and country.

Excerpted from The Center for Media research, MediaPost.com, September 2, 2009

According to the USPS Household Diary Study, In 2008, only 4% of household mail, and about 3% of total mail, was sent between households; the rest was sent between households and non-households, meaning junk mail, bills and periodicals. 

Advertising mail represented 63% of all mail received by households in 2008.

According to McCann-Erickson, says the report, American businesses spent about $271 billion in 2008 advertising their products and services, a decrease of 3.2% from 2007. Of this total advertising spending, 22% was spent on direct mail. In 2008, more than one-fifth of total advertising dollars was spent on direct mail advertising.

Direct mail was the second leading media choice of advertisers in 2008, after television. However, due to a steep economic downturn, direct mail advertising spending fell 1.0% compared to 2007. Except for the Internet and Other, all other spending media categories declined as well. 

U.S. Advertising Spending by Medium, 2006-2008 ( Billions of Dollars)
Medium	2006	2007	2008	Percent Change 2007-2008
Direct Mail	$58.6	$60.2	$59.6	-1.0%
Newspapers	$46.6	$42.1	$35.8	-15.1%
Television	$71.9	$70.8	$65.2	-7.9%
Radio	$19.6	$19.2	$17.5	-8.4%
Magazines	$13.2	$13.8	$12.9	-6.0%
Internet	$16.9	$21.2	$23.7	12.0%
All Other	$54.9	$52.3	$55.9	7.0%
Total	$281.7	$279.6	$270.8	-3.2%
Source: McCann-Erickson - estimates (Consumer magazines advertising only, business is in All Other)

Direct mail's share of total advertising spending has been on a strong upward trend for most of the past 17 years. Since 1999, the direct mail share has risen steadily reaching 22% in 2008. Direct mail has maintained its large ad share even with the introduction of new, fast-growing ad markets such as the Internet

Households received 100 billion pieces of advertising mail in 2008, and represented about 63% of all mail received by households in 2008. About 83% of all advertising mail received by households in 2008 were sent by Standard Mail, which equates to a total of 83.0 billion pieces. 

First-Class advertising mail accounts for 16.4 billion pieces (16.5%) of all advertising mail received by households. Of this, 8.3 billion pieces are advertising only, while the other 8.2 billion pieces are secondary advertising, such as an advertisement enclosed with a bill.

Financial institutions, the largest users of First-Class advertising, were particularly impacted by the collapse of the housing market and the sustained credit crunch that accompanied the recession. As a result, credit card and other financial types of advertising sent via Standard Mail decreased dramatically compared to other industries.

Advertising Mail by Year
	Volume (Billions of Pieces)	Growth
Mail Classification	2006	2007	2008	2006-2008
First-Class Advertising	18.0	16.9	16.4	-8.6%
Advertising Only	10.3	9.0	8.3	-20.2%
Secondary Advertising	7.7	7.9	8.2	7.0%
Standard Mail	86.9	83.4	83.0	-4.5%
Regular and ECR*	73.1	69.9	69.4	-5.1%
Nonprofit	13.8	13.5	13.6	-1.1%
Unsolicited Packages	0.2	0.2	0.1	-42.0%
Total Advertising	105.1	100.5	99.6	-5.3%
Unaddressed Mail	17.8	12.6	3.9	-78.3%
Source: HDS Diary Sample, FY 2006, 2007 and 2008.

  

Advertising Mail Per Week (Pieces per HH per Week)
	Pieces per HH per Week
Mail Classification	2006	2007	2008	Share of Total
First-Class Advertising	3.0	2.8	2.7	16.5%
Advertising Only	1.7	1.5	1.4	8.3%
Secondary Advertising	1.3	1.3	1.3	8.2%
Standard Mail	14.6	13.8	13.7	83.3%
Regular and ECR*	12.3	11.6	11.4	69.7%
Nonprofit	2.3	2.2	2.2	13.7%
Total Advertising	17.7	16.7	16.4	100.0%
Unaddressed Mail	3.0	2.1	0.6	N/A
Source: HDS Diary Sample, FY 2006, 2007, and 2008

The amount of ad mail received by a household is closely tied to income and education. The relationship between advertising mail and household income is quite strong, as seen in Table 5.4. Households with less than $35,000 income receive less than half as much advertising mail as households with $100,000 or more income. And, education plays a key role in the amount of advertising mail households receive, even after accounting for the impact education has on income.

The role that education plays in advertising mail is two-fold, says the report. First, direct mail is a written type of communication, and education may play some role in its relative effectiveness compared to television or radio advertising. Second, education is not only tied to current household income, but also future household income. A college graduate who currently has a relatively low income may, in a few years, earn a much higher income. 

Advertising Mail Received (Pieces per HH per Week)
	Education of Head of Household
Household Income (x000)	<High School	High School graduate	Some College or Tech School	College graduate	Average
Under $35	9.5	10.2	11.1	12.0	10.4
$35 to $65	13.4	13.3	14.7	16.5	14.6
$65 to $100	14.6	17.3	17.7	19.9	18.4
Over $100	21.0	22.7	22.6	26.3	24.9
Average	11.1	14.5	15.9	20.6	16.4
Source: HDS Diary Sample, FY 2008

For every income group, advertising mail received increases as the age of the head of the household increases. In part, this is because age is correlated with other characteristics such as marriage, home ownership, and the presence of children in the household.

Households with incomes over $100,000 and with a head of household age 55 and older received the greatest number of advertising mail pieces at 27.8 pieces per week. The amount of advertising mail received increases as income, education, and household size increases. 

To access the full report from USPS in PDF format, please go here.

 

 

AdAge.com, Posted by Chris Perry on 09.01.09

When presented with a new technology, people tend to use that innovation to do existing jobs more effectively.

Brand-building is no different. As social media gains momentum, brand communicators are experimenting in masse with these new technologies and connections to get their jobs done, typically coming at it from an advertising, interactive or PR perspective.

But what if social media and its inherent benefits are so revolutionary, so potentially game-changing that it takes time for people to figure out how to best use them? More fundamentally, what if organizational silos and constraints limit its potential to address a new brand-building equation?

A historical analogy brings this issue to life. When airplanes began flying 100 years ago, they came under the purview of the U.S. Army's Signal Corp. As guns and artillery went airborne in World War I, the Army controlled the aircraft. The military brass saw this innovation as means to help move soldiers forward by attacking enemy lines. Thus, aircraft grew in stature as a tactical tool for Army purposes.

It wasn't until the mid-1930s, when the vision to take the battle beyond enemy lines became clear, that the seed of a new idea was planted: create an independent organization to accelerate the benefits of this innovation in both strategic and tactical ways. By doing so the Air Force became a game-changing innovation for campaign purposes and a major contributor to World War II victory.

This is an apt metaphor for the current state of innovation with marketing and PR team thinking. The pace of functional change isn't keeping pace with the unprecedented social shifts disrupting media and consumer behaviors and the possibilities that come with it.

I regularly see brand teams struggling to incorporate social strategies into their specific function and world-view. They're confused over whom to turn to for help with a glut of new media experts, or how to value the merits of ideas. They aren't necessarily structured to take advantage of programs in play and can't, for example, route customer comments through social sites to customer service or R&D. And they're struggling with how to design and execute campaigns inline with the media habits and behaviors of people they're trying to reach.

The value of social media acumen and Inline thinking will skyrocket in stature as rapidly developing capabilities grow. But to realize the value, new practices shouldn't necessarily follow the exclusive lead of advertising, interactive or PR in its mission. Teams should be organized to exploit possibilities for making new contributions in a way that lets people in and where possible, lets people do the marketing for them. This goes beyond one-off UGC campaigns and Twitter accounts. It's about committing to a new design for social business and communications.

According to USA Today companies are starting to re-engineer marketing operations, but there's lots to be done to accelerate this trend. Given how quickly the media equation is changing it's conceivable that brand-building enabled by social technologies will need to eclipse traditional methods in the future, just as aircraft gained ascendancy during the middle of the 20th Century. While I'm not suggesting that all companies give the social media team its own organizational function, it's clear that brand leaders haven't fully examined structural changes that need to be made. When they do social by design, I believe substantive, positive and accelerated changes will occur.

Then we'll see social live up to and even surpass the hype.

ABOUT THE AUTHOR

As exec VP of digital strategy and operations at Weber Shandwick, Chris Perry leads the firm's digital practice and works closely with agency team-members and clients to understand the changing media landscape and apply new methods that take advantage of these changes in measurable ways for clients including HP, Verizon, American Airlines, Standup2Cancer and CKE Restaurants. You can follow him on Twitter.

Lou says: This typifies the "innovator's dilemma" identified by Harvard biz prof Clayton Christensen. He found that great firms can fail when confronted by disruptive technology. At first, there's no strong demand from existing customers, and no significant profit incentive, so the new technology is marginalized.
In the meantime, others who see its potential, often frustrated former employees of the successful company, use the new technology to establish a market, then gain unassailable share in that market. The old companies, even if they recognized the value of the new technology early on, are often left behind because of their failure to commit to the next wave.
The media landscape is becoming littered with sick and dying old media companies who made small bets on digital.

Multitasking works? Not really, Stanford study shows

You might think a lot gets done when you multitask, but a study conducted by Stanford researchers Eyal Ophir, Clifford Nass and Anthony Wagner says it isn't so.

Attention, multitaskers (if you can pay attention, that is): Your brain may be in trouble.

People who are regularly bombarded with several streams of electronic information do not pay attention, control their memory or switch from one job to another as well as those who prefer to complete one task at a time, a group of Stanford researchers has found.

High-tech jugglers are everywhere – keeping up several e-mail and instant message conversations at once, text messaging while watching television and jumping from one website to another while plowing through homework assignments.

But after putting about 100 students through a series of three tests, the researchers realized those heavy media multitaskers are paying a big mental price.

"They're suckers for irrelevancy," said communication Professor Clifford Nass, one of the researchers whose findings are published in the Aug. 24 edition of the Proceedings of the National Academy of Sciences. "Everything distracts them."

Social scientists have long assumed that it's impossible to process more than one string of information at a time. The brain just can't do it. But many researchers have guessed that people who appear to multitask must have superb control over what they think about and what they pay attention to.

Is there a gift?

So Nass and his colleagues, Eyal Ophir and Anthony Wagner, set out to learn what gives multitaskers their edge. What is their gift?

"We kept looking for what they're better at, and we didn't find it," said Ophir, the study's lead author and a researcher in Stanford's Communication Between Humans and Interactive Media Lab.

In each of their tests, the researchers split their subjects into two groups: those who regularly do a lot of media multitasking and those who don't.

In one experiment, the groups were shown sets of two red rectangles alone or surrounded by two, four or six blue rectangles. Each configuration was flashed twice, and the participants had to determine whether the two red rectangles in the second frame were in a different position than in the first frame.

They were told to ignore the blue rectangles, and the low multitaskers had no problem doing that. But the high multitaskers were constantly distracted by the irrelevant blue images. Their performance was horrible.

Because the high multitaskers showed they couldn't ignore things, the researchers figured they were better at storing and organizing information. Maybe they had better memories.

The second test proved that theory wrong. After being shown sequences of alphabetical letters, the high multitaskers did a lousy job at remembering when a letter was making a repeat appearance.

"The low multitaskers did great," Ophir said. "The high multitaskers were doing worse and worse the further they went along because they kept seeing more letters and had difficulty keeping them sorted in their brains."

Still puzzled

Puzzled but not yet stumped on why the heavy multitaskers weren't performing well, the researchers conducted a third test. If the heavy multitaskers couldn't filter out irrelevant information or organize their memories, perhaps they excelled at switching from one thing to another faster and better than anyone else.

Wrong again, the study found.

The test subjects were shown images of letters and numbers at the same time and instructed what to focus on. When they were told to pay attention to numbers, they had to determine if the digits were even or odd. When told to concentrate on letters, they had to say whether they were vowels or consonants.

Again, the heavy multitaskers underperformed the light multitaskers.

"They couldn't help thinking about the task they weren't doing," Ophir said. "The high multitaskers are always drawing from all the information in front of them. They can't keep things separate in their minds."

The researchers are still studying whether chronic media multitaskers are born with an inability to concentrate or are damaging their cognitive control by willingly taking in so much at once. But they're convinced the minds of multitaskers are not working as well as they could.

"When they're in situations where there are multiple sources of information coming from the external world or emerging out of memory, they're not able to filter out what's not relevant to their current goal," said Wagner, an associate professor of psychology. "That failure to filter means they're slowed down by that irrelevant information."

So maybe it's time to stop e-mailing if you're following the game on TV, and rethink singing along with the radio if you're reading the latest news online. By doing less, you might accomplish more.