Government Cancels Subscriptions

You know your business model is in trouble when entire cabinet-level agencies in a Democratic administration are canceling their newspaper subscriptions. Homeland Security has instructed its employees to access articles online instead. After all, "most publications can be found online on an in-house Web site," the agency said (via the Associated Press). Newspapers that are relying on print for the vast majority of revenue, yet are giving content away online without getting much in return, are absolutely in trouble. Perhaps there should be a reprise of the morning/evening paper model, except with a paid print entity and a free internet entity in each city. At the very least it would be interesting to see if readers would pay for higher quality.

Free Fall on Eighth Avenue

The New York Times Company's advertising revenue fell 27 percent in the first quarter. The company lost $74.5 million dollars. NYT Co. is blaming most of the troubles on the perpetually underperforming Boston Globe. The company's overall ad revenue dropped by $124 million year over year. Internet advertising was not immune, declining 8 percent to just over $40 million.

Once again, we see evidence that newspapers' pain is nowhere near letting up. We also see more evidence that internet advertising is not going to come to the rescue of ailing media companies. On the contrary, it's becoming clear that a gross oversupply of ad inventory on the web has the potential to drag down revenues for all advertising-dependent traditional media companies for years to come.

Local papers will have the best chance of surviving going forward. The key will be to build a large network of local web sites and sell ads across the network (a la Google); in essence, to be the dominant player in each local advertising market. It's anybody's guess how a national paper like the Times will be able to survive in its current form if print continues to bleed.

Hyperlocal Dreams, Fiscal Realities

As established news companies and entrepreneurs dip their toes in the hyperlocal waters, there are increasing doubts that such ventures will be self-sustaining. Traditional local ad spending is in the dumps, and local ad dollars aren't making the leap to the web. Billions of dollars are potentially at stake, but it's a steep climb to hyperlocal Valhalla.

The first challenge is attracting an actively-participating audience. Hyperlocal promises to deliver relevant local information to consumers (see Patch for a well-executed example) who, in theory, would welcome such a resource. In practice, though, we have only seen a relatively small group utilizing such sites. Building an audience is a slow and uneven process and it's not clear how much time consumers will devote to contributing such sites on a regular basis.

The bigger challenge here is monetizing hyperlocal. As mentioned above, local advertisers often just don't have the know-how or cash to invest in online ads. Self-serve ad solutions show promise but, again, it's hard to convince a small business owner to throw money at such an unproven, unestablished ad medium. A look through Patch will reveal very few ads from local businesses.

Hyperlocal sites provide a valuable service to local communities, but it looks like they will remain unprofitable works-in-progress for the foreseeable future. Also, such sites will probably never produce the kind of big-picture journalism found in city dailies, so forget the argument that such sites can be a newspaper replacement.

Local governments may consider funding their own hyperlocal sites as a value-added service to residents. I'm reminded of my suburban hometown's monthly magazine. It was officially a government entity, but it was well-produced, editorially independent, and mostly self-sustaining through advertising revenue. Government-supported hyperlocal sites that follow a similar model may not be totally self-sustaining, but they could be quite successful in other ways.

Debut of South Florida Live

As of this writing, it's roughly three hours until "South Florida Live" debuts on the web and on the Miami-area airwaves. It's essentially a joint production of Tribune-owned WSFL-TV and the South Florida Sun-Sentinel. Give Sam Zell credit for conducting the boldest TV/print "synergy" experiment so far, after witnessing a long line of synergistic non-starters and outright failures.

The idea here is to create an unconventional newscast using the newsgathering resources of the Sun-Sentinel paper, as opposed to an independent assignment desk. It's also to look as flashy as possible for as cheaply as possible.

A "SFL" rehearsal was released on the web. Of course, it's a work in progress, and it's easy to criticize any venture like this when it's in such a nascent stage. Inauspicious debuts are quite normal for TV, although Tribune set a high bar for on-air disasters during the hurried launch of Fox5 San Diego's "unconventional" newscast (huge map of San Diego in the parking lot, anybody?).

There are several things to like about SFL. The graphics actually manage to be (somewhat) innovative, informative, and (yes) flashy at the same time. The hosts have personality and appear perfectly comfortable on camera. The set in the center of the Sun-Sentinel newsroom seems to work. There's a feature reporter who was actually live somewhere. The Zellian dream of doing the weather using the newspaper's weather map was apparently scrapped in favor of modern, conventional weather graphics.

For all the flash and relative polish, there was one thing conspicuously missing: news. Sure there was a bunch of yapping. And some actual weather forecasting (no traffic, but that's not a mortal sin). But where was the news? Where was the point where they actually presented topical information of interest to their specific local viewing audience? Perhaps that detail is being left out of the rehearsals, but if not I forecast stormy seas for SFL.

Okay, there was a lengthy feature about US-Cuba relations. Presented with the ultra-compelling visual accompaniment of a small image of a web story. The story was introduced in a lackadaisical, time-consuming manner that reverses the conventional wisdom that viewers want more information, faster. Other than the shaky camera work during the sound bite, this is the antithesis of MTV (so much for Lee Abrams' rock n' roll thinking).

Contrary to brain-dead media management belief, people don't want to watch a bunch of people sitting around talking about nothing. The key to maintaining (and even building) a broadcast news audience in the internet age is to present relevant content in a timely manner. This isn't rocket science.

The bottom line is that this could work. Relying on a newspaper for broadcast newsgathering is certainly unconventional, in that it potentially de-emphasizes crashes, shootings and other shallow "breaking" news. This could result in smarter, more enterprise-driven stories making it to air (think: NPR on TV). But in this format, an ounce of smart news will likely be lost in a gallon of meaningless drivel.

Bad News Bears

The Great Newspaper Meltdown shows no sign of slowing down.

Chicago's Sun-Times Media Group has filed for Chapter 11 bankruptcy, a probable prelude to a liquidation when credit market conditions improve.

Meanwhile, Belo continues to ride the roller coaster straight down towards bankruptcy with $10 million in salary reductions. Hey, it makes more sense than paying people to stop writing.