now read this: a crackerjack analysis of circulation declines

Recovering Journalist offers a depressing, but excellent analysis of circulation trends. Well worth a read (preferably with a lot of scotch at hand):

The declines over the past two years are disproportionately large compared to the seven- and 12-year spans–again, despite growing population and, until recently, a healthy economy. In other words, the circulation slide is worsening. It's hard to see, especially with the economy in the tank, any sort of moderation of the downward trend. And that, in turn, chases off advertisers and leads to even more budget-cutting pain.

The hits keep coming: Newspaper's online revenue down

Just in case 11,000+ news jobs disappearing in the last year didn't perk you up, how about the news that online ad sales are down on news sites, after 17 quarters of growth.

That drop isn't symptomatic of Internet advertising overall, which grew last quarter by 7.6 percent. The problem is, of course, that newspapers aren't competing against only other newspapers (which is already a massively different equation than they're used to, when they could have a near-monopoly over ads in their local market) but against the entire Internet. And while people are certainly looking at news sites, they're looking other places as well. And advertising follows eyeballs (or so the theory goes, anyway).

But in the Times story today, another issue is raised: Newspapers' thirst to sell every possible space on their page, forcing them to rely on small money ad networks to fill a lot of the open space on their sites. These networks, which pay out about $1 per thousand views, may be stealing advertisers from news sites themselves, says Steve Stup from the Washington Post Interactive:

“It’s still a situation where if advertisers even perceive they can reach your audience, they might be inclined to go with a network, and that’s a concern I have with networks."

It's high school economics class: supply and demand. If you're filling your pages with endless numbers of cut-rate ads, how do you expect to sell the good stuff at a premium? Here's another ad-dude:

“That high level of unsold inventory often creates a real challenge in terms of sustaining pricing or growing pricing,” said John Frelinghuysen. “In most media, especially in television, the traditional model has been that you drive sellout, and that gives you the ability to drive pricing over time.”

Here's another case of newspaper moneymen putting the cart before the horse: They see the space, not the value. To them, the Internet is an infinite page with which to fill with advertising. But value doesn't scale like that: the more that's available, the less it's worth.

Why does that sound familiar? Because, perhaps, it's the exact same equation that got newspapers into the predicament they find themselves in in the first place. If you never learn from your mistakes, how can you not repeat them?

Facebook: a business model only a mother could love

Facebook Chief Operating Officer Sheryl Sandberg spoke to the American Magazine Conference yesterday about the business model (or lack thereof) of Facebook. As one would expect, she led with her A game, detailing a joint promotion with MTV that had results that "were really positive," though the article doesn't say if she cited any numbers or talked any level of specifics (nor, if you read the description, does it sound like something that would scale up easily without creating massive amounts of spammy goodness in your Facebook feed).

That out of the way, there wasn't much left for Sandberg to spin:

"We need to find a new model and new metrics," she added.

Which is really about as sad a way of saying "nothing's quite working" as I can imagine.

It's a problem that's plagued social networks from the start: You get a ton of users, but there's no real way of flipping them into dollars. Traditional advertising gets no traction, and attempts at sticking advertising too completely into people's social space--attempts like Facebook's own aborted Beacon--have pushed far too hard on the creep-meter.

It's the age old Silicon Valley conundrum: All dolled up with nowhere to go, and no business plan to guide you. One imagines that the current economy isn't going to help them out much either. Facebook is already on tap to lose $150 million this year (and that's old numbers now). What does next year hold?

I suppose, ultimately, it doesn't matter when your valuation is $15 billion, and Microsoft has your back (they awkwardly integrated Microsoft web search into the site just this week), but still--do you think Facebook execs occasionally wake up at night with cold sweats, worrying that perhaps they've built their house upon rapidly disappearing sand?

Nah, me neither.

brace yourself

The second half of the year looks like it's going to be even worse for newspapers.

magazine ad sales down yet again

Good news: It's not the freefall that newspapers find themselves in.
Bad news: Yet.

Magazine ad pages down, down, down

I've had a few conversations with people over the last few months that focus around the concept that magazines are weathering the digital storm better than newspapers, due to the niche-based business that magazines cultivate with their audience vs. the masses-based model of a daily newspaper. I've always found it odd that people would argue that point with me, seeing as how my very experience contradicts the point, but they do articulate it nonetheless.

Well, a report that some of the most profitable magazines out there took a punch to the gut on ad sales in the first quarter should do a good job of adding some sobering facts to the discussion.

Good thing it's early...

... because a chart like this will make a person lose some serious sleep.

And the award for most depressing lede ever written goes to:

"Get out of media. Get into marketing."

Yep, that's the lede for the saddest newspaper-related story you'll read all month. It's basic premise is laid out in its one-sentence lede and is only fleshed out from there, with such gut-punches as:

• "One in four newspaper jobs have disappeared since newspaper employment peaked in 1990"
  
• Looking at overall media (newspapers, broadcast and cable TV, radio, magazines and internet media companies ) staffing, "since media employment peaked in dot-com-infused 2000, media companies have eliminated one in six job"
  
• Since May 2002, "a majority (11 of 19) media stocks have fallen"
  

Meanwhile...

• "Employment in advertising/marketing-services -- agencies and other firms that provide marketing and communications services to marketers -- broke a record in November"
  
• "Marketing consultancies over the past year added 14,500 jobs (up 10.8%), nearly matching staff cuts at newspapers (down 16,900 or 4.7%)"
  
• Ad/marketing-services sectors have rebounded from the ad industry's January 2004 post-recession employment nadir. Advertising/marketing services has added 106,000 jobs since then
  

But that's a good thing, ultimately, for media, right? If all these marketers are booming, they need somewhere to market, right? Shouldn't we just wait for the national advertising to pour back into our papers like the waterfall it used to be?

Well... uh...

Marketers still invest in marketing, but they have options far beyond paid media: digital initiatives, direct marketing, promotions and events, just to name a few. That creates more opportunities for consultants to help define strategies.

Agencies also have adapted, expanding beyond simply creating and placing ads. Indeed, Ad Age DataCenter research has shown that U.S. marketing-communications agencies collectively in 2005 for the first time generated less than half of their revenue from traditional media and media planning/buying.

Yep, they've gone into business for themselves, realizing that the middleman was exactly that. Waiting for them to come back to a diminishing media landscape is like waiting for Godot.

Once more, with feeling

It's being announced today that Hearst, Gannett, the Tribune Company, and the New York Times Company are joining forces to launch the oddly named "quadrantONE," an online ad agency that will distribute ads out to all of the company's papers (though not the big ones like USA Today or the New York Times, because apparently that would make too much sense or something).

The goal of the company is to "to let national advertisers place ads on local Web sites with a single phone call," which is an admirable idea, but it ignores the fact that most of the money coming out of web advertising isn't from national advertisers, but instead from small classified-style ads matched to page content.

It's not the first attempt to do something like this: "The effort is at least the third in the last decade involving major newspaper companies joining forces to sell online ads."

In fact...

Several of the newspapers involved in quadrantONE are part of Yahoo’s newspaper consortium, which provides advertising technologies and sales, and all of the companies are partial owners of the Newspaper National Network, a network that allows national advertisers to place ads across thousands of papers’ print editions and, more recently, Web sites. The companies were also all part of the New Century Network in the late 1990s, which failed.

That's a lot of attempts, none of which seem to have panned out. So how is this one different?

Executives at the newspaper companies said quadrantONE will fare differently because it will have a central repository of advertising inventory, and thus will not have to call the newspapers individually to fill each order.

Why doesn't that fill me with confidence that they'll pull this off?

Google's old-media envy

“We need to find ways to target people of particular demographics that are comparable to the people you might find in The New York Times or a particular publication that you may be familiar with.”

That's a senior VP from Google interviewed in the Times (dug up by Rough Type's Nick Carr), talking about the search giant's shortcomings in selling ads on social networks. That's the trick about turning your ad sales over to an algorithm--there's no good way to target demographics and, as a result, for every spot-on ad that gets placed, there are plenty of total misses (like the ones in the sidebar on this page, which are currently advertising get-rich-quick schemes because a few posts on the front page deal with the challenges of making money with online publications). In the social networking space, where most pages aren't going to return easily computed subjects (how do you come up with an ad for a page filled with people commenting "thanks for the add"?) the challenges are even more daunting.

One wonders if that's part of the driving force behind Google's new initiative to create a semantic social web: Once you can define relationships between users across sites, you're starting to create a machine-definable demographic.

Until then, though, Google will be looking back fondly at the ease of how a publication could define its readers and then sell them to high-value advertisers. Ironic then, that those very same publications now look to Google to bail them out of web advertising.

Analyzing Analytics

"Under the new rules, the commercial value of specific editorial offerings is estimated with precision, rewards and punishments doled out accordingly, and coverage cut to fit," Edward Wasserman writes in an op-ed in the Miami Herald. He's talking about the brave new world of what he calls "Calibrated Journalism"--the ability to track and analyze readers and page views to judge what's being read and cater accordingly.

we're used to seeing well-loved offerings on commercial media dumped if they don't pull enough people -- or enough of the right people - to keep advertisers satisfied. That's how network TV works.

Still, although network executives re-jigger their Tuesday prime time lineup to please advertisers, editors aren't supposed to redraw their Tuesday front page for the same reason. The journalism business has been different. Although news and commentary offer a setting both for public discourse and sales pitches, traditional ad-supported journalism has worked despite that disharmony, as long as editorial content is passably free of corruption.

There are, of course, great things about being able to track content in the ways that technologies like Google Analytics allow, but certainly it's a sword with two edges and the power that it allows can certainly be used in all the wrong ways.

This argument is echoed in Kira Wisniewski's great essay, "Yellow Journalism 2.0", where she says:

Maybe at this point we’re not quite there just yet, but just like how Hearst and Pulitzer drummed up newspaper circulation in the late nineteenth century by sensationalizing the news, it’s only a matter of time before a new dawn is upon us once traditional news organizations take notice of what’s getting the most hits.

So how can these new ways of understanding readership help journalism instead of hurt it? By looking beyond the simple numbers. The depth and sophistication available in web-page analytics allows for an understanding of who's visiting your site far beyond any previous system for analyzing readers. Those numbers, however, still need interpretation by people that are willing to give them the time.

For instance, a hot story about a celebrity dogfight may bring in a lot of readers, but are those readers valuable? They'll pop in to see the one story, but how many stick around? Dig further into your analytics and you can see the numbers of truly dedicated readers and what they're reading. Dig further still and you can see where they're coming from--universities? other countries? Still further you can discover just how much time they're spending on your site and how many pages they're looking at.

All of these pieces of data mean much more than a simple spike a single story's readers and need to be taken seriously. If you base your decisions on simple hype spikes, you've turned your editorial over to mob rule--and lost your real readers in the process.

(Wasserman piece via Romanesko)

What is Google's core business?

Over the last few months, I've found myself in repeated conversations about Google (I guess living a few miles from their headquarters effects the gravitational pull) and they usually boil down to one core question: What is Google's core business?

"Search!" is the answer commonly spit out, it's the obvious one and the one that the standard narrative wants you to believe: Google is the leader in internet search, so that's gotta be it, right? But that's not it, hence the second question that comes up in conversation: How does Google make money?

The answer to that one is the answer to the first one as well: Google is an advertising company. Yes, it started in search, but search, maps, blogs, and everything else it does (and it does a lot) is secondary to ads, which bring in over $10 billion a year. For most of the Internet, Google is advertising.

So then comes the third question: Then why do they do so many other things? Rough Type's Nicholas Carr posits a very good answer:

Google’s protean appearance is not a reflection of its core business. Rather, it stems from the vast number of complements to its core business. Complements are, to put it simply, any products or services that tend be consumed together. Think hot dogs and mustard, or houses and mortgages. For Google, literally everything that happens on the Internet is a complement to its main business. The more things that people and companies do online, the more ads they see and the more money Google makes.

all the ads shit to print

Publishing 2.0 has a very good analysis today of the New York Times ad numbers and how print ads are down by double-digits year-to-year and while web ads are up, they're not up up.

It's an astounding analysis when you really dig through the numbers, and it paints a pretty clear picture that while things are down in print ad-wise and things are up on the web ad-wise, the two don't come close to balancing out. According to Scott Karp's read on the numbers, print ad sales in May 2006 vs May 2007 declined by $19 million while online ad revenue rose by only $3 million (a 21.4% jump, but still).

Those numbers don't spell an easy future for the Times, or for anyone looking to make a painless transition from print to web. Sure, I'd give my right eye for that $3 million in ad revenues, but they've got to be digging through a lot of couch cushions trying to locate the $16 million they just lost.

NOTE: I'm not used to reading numbers in the millions (oh independent publishing!), and thusly an earlier version of this post erroneously reported the numbers wrong. It also included a funny joke about interns and coffee.

A funny thing happened on the way to monetization

So in light of the comments in the post below, I've decided to put my money where my mouth (er... fingers) is (er... are) and have signed up for an AdSense account to see just how the future of revenue streams on the Internet works. (I recognize and accept that that last sentence made me sound like your great aunt who just signed up for "the hotmail.")

So far, the sign-up server was down for an hour and a half and, after signing up, it takes one to three days to have your site approved, neither of which seem particularly cutting-edge or user-savvy, so I'm going to chalk one up into the skeptical column for now.

I don't expect to make any money off this site, by the way, this is more for the experiment/learning experience of actually serving these ads than it is the ¢72 that I stand to make from it. Because while I, like Whitney, firmly believe that children are our future, the rest of the world seems to point to Google instead.