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Sep 30, 2008

AP: The News B2B Marketplace, But Not Mission Critical to Saving Newspapers

Interview: MediaNews' Singleton On What's Ailing Newspapers: It's The Economy, Not The Internet

imageIt's been a rough few years for the newspaper business. With the migration of readers and advertisers from print to online, and then the past year's economic downturn and market meltdown this month, it's hard to figure out where the fixes are going to come from. William Dean Singleton, CEO of Denver-based publisher MediaNews Group and chairman of the AP board, believes he can address the challenge presented by online media to newspapers by tying print and interactive ad sales more closely together and by relying on cooperative services from Yahoo (NSDQ: YHOO), the AP and real estate ad net Zillow. But the economy, that's a whole other problem. I spoke with Singleton following Yahoo's heralding of its APT display ad sales delivery and targeting system last week. During the Yahoo press conference, Singleton said he expects up to 22 percent of the privately-held company's revenue this year will come from online newspapers, with that number reaching 50 percent in five years. Rather than looking too far ahead though, our conversation focused on the here and now.

-- It's the economy: Singleton: "The biggest thing we need right now is an improved economy, because at least 60 percent of the revenue problem we're facing today is good-old fashioned economic recession." In particular, MediaNews, which publishes the San Jose Mercury Newsand Denver Post along with 42 other papers across 11 states, is feeling some pain from a pullback in auto and real estate ads. "It was less than two years ago that some of our California newspapers were seeing 80 percent annual growth in print real estate ads. Today, it's down 60 percent. That wasn't structural change, that was 'We ain't sellin' houses anymore because people can't get a mortgage.' More than half our problems today are economic and that will come back when the economy does. But a lot of it is structural. But it's not an even comparison. If we lose $1 dollar in print, we don't need $1 dollar to come back online. We need 30 cents. Maybe even 20 cents, because of the marginal profit that online produces." More from Singleton on convergent ad sales and the AP after the jump.

-- Unifying print and online sales: Newspapers seem to go back and forth on the value of tying print and online ad sales closely together. These days, the consensus appears to be that convergent ad sales that combine the print and web sides together tends to dilute online spending. The reasoning is that a typical advertiser will simply cut from the print budget and shift it online, rather than spend more. And even when ad sales are separate, the print and online teams end up in competition with each other for the finite universe of local marketers. But Singleton is not buying it. "MediaNews is 100 percent on board with selling print and online together. If you go see a GM dealer in San Jose, you might say, 'I'm going to sell you a full-page ad. Oh, you want to buy an online ad? I'll get my associate to see you the day after tomorrow. Oh, you want mobile too? I'll have to get another associate for that.' We need to have well-trained sales people that goes to that dealer and says, 'I have a comprehensive program to reach 80 percent of your demo and can target it down to a GM buyer.' Selling it separately, which most of us did, didn't work because you have the sales team trying to outflank each other. The print seller would say, 'You don't want online.' The same would happen from the web salesman. Plus, if you go to the decision maker and say, 'I'm going to give you a comprehensive program to market your business,' you got a much better chance of getting face time if you have one person trying to make an appointment rather than three. Consolidated print and digital sales is the future and that's what we're doing at all our papers."

-- AP is the best buy I know: In addition to his CEO role at MediaNews, Singleton is also chairman of the AP's board. So it's not surprising that he shakes his head at member newspapers' threats to walk away from the wire service over the forthcoming changes in the pricing structure as part of its Member Choice plan. "I'm at a loss as to what some of the members are complaining about. The AP gave $21 million in fees back to the members and they weren't complaining before they gave it back. Now they're complaining, I guess because it wasn't more.Newspapers are under a lot of pressure, especially newsrooms, which have to cut their budgets. An editor asks, 'do I cut some reporters or do I cut some AP?' And that's an easy answer lately. AP has become the whipping boy for an angry bunch of editors who want to blame somebody for their woes. I don't believe a newspaper operation can function without AP. There are some who have given their notices and others who say they're going to try to go it alone. Let somebody try to do without AP and let's see how the readership does. The AP is the best buy that I know. It's 5 percent of my newsroom budget, 35 percent of my newsroom content. And they just cut my rates more than 10 percent. Sounds like a deal to me."

AP: The Modern Newsroom Looks Like a Little RSS Reader

APExchangelogo.jpgThe 20th century news and stock ticker used to be one of the most archetypal images of newsrooms all around the world. It was timely and exciting, if a bit impersonal, for editors to watch the wires for breaking news from the big news syndicates and select stories to run in the local paper. That ticker doesn't print everything out any more, though, and a constant stream of news is something that millions of consumers now see for themselves inside their RSS feed readers.

How are newspapers adapting to digital syndication? Today the Associated Press announced that more than 500 newspapers are using their service called the AP Member Marketplace. To web savvy consumers, the Marketplace might look like an RSS reader that publishes selected stories to a webpage built out of Del.icio.us badges. It's a pretty interesting program.

The Interface

The AP Marketplace interface looks like a sophisticated, multi-media RSS reader but with limited sources. Publishers set up a workflow that lets editors send selected media items directly from the reader out onto the paper's website.

Below, the AP newsreader, click to view full screen image.


It's very reminiscent of of the CMS built by the Crowd Fusion team, which we profiled last week. There's one huge difference though between the AP's project and things like the Crowd Fusion project, the red-hot world of cool-hunting aggregation and even the new publishing strategy of web giants like Yahoo and AOL. The AP service finds and publishes AP stories, not content from around the whole web.

Could this kind of aggregation technology save the local newspaper? 
( surveys) There was a time when it must have been hard to imagine getting more news to choose from than what the wires brought publishers each day. That time has passed and while the small Midwestern US newspapers that the AP highlights as happy users of the Marketplace may be on board - it's hard to say how for how long readers will remain excited about AP fueled news websites. Especially once they discover a little more about how the internet works. (We don't mean to be critical of Mid Westerners, they were just the demographic of several AP demo sites.)...

Ed: The relevancy of AP is trusted sources, categorized by humans, and fed to newspaper insiders - a B2B marketplace of news. It is a better product than Google Search, however, it is not mission critical to the future of the news industry. 

The critical problem is changing the monetization model

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