The Morning Grumpy – 7/9/12

9 Jul

All the news, views, and filtered excellence fit to consume during your morning grumpy.

97% of people who enjoy roomy booths also enjoy print newspapers.

1. The Editor of The Buffalo News, Margaret Sullivan, hosted a live chat with readers and subscribers of the newspaper on July 5th. In it, she addressed several questions, but I’d like to focus on a series of exchanges regarding the new paywall digital subscription service the newspaper plans to implement this coming fall.

Reader: Hi, Margaret. What’s the reaction been to the News’ plans to move to digital subscriptions?

Margaret Sullivan: The reaction has been quite positive. People do seem to understand that news gathering is an expensive business and many of them are willing to pay for it in the digital as well as print form, especially since the cost will be quite low — and free to subscribers.

One might think that the challenges presented by declining revenue and a shrinking print subscriber base might push the venerable paper of record to embrace technology, develop new revenue streams, and incent their readers to slowly move to the online version of the product. After all, the online version comes with much less overhead and embracing this opportunity is in the long-term interests of the company. Instead, I was surprised to read that Ms. Sullivan sees this as an opportunity to leverage demand for online content as a means to boost flagging print revenue. Bizarre, I know.

Reader: What’s Plan B if you find out that nobody wants to pay for the News online?

Margaret Sullivan: Newspapers are experimenting, all over the country, with how to survive in a vastly different world. If something doesn’t work, we’ll try something else. It’s important to keep the printed newspaper healthy, which this plan is designed to do. (emphasis mine – CS) It’s also important to develop new ways of making money, such as expanding into commercial printing and distribution. The News has made some big gains there, too.

What she is saying is that The Buffalo News is in the newspaper business, not the journalism business. They are not the same thing. Meaning the product – the thing they produce – is the printed copy of the daily news, not the news itself. It’s a telling statement. The editors and staff will certainly give all sorts of high-minded statements about the mission of The Buffalo News, its editorial direction, and how they believe providing news and features is a sacred trust with the public. And they would be correct. The editorial mission of The Buffalo News and the quality and scope of their news organization is vital to a healthy and informed community. But, when you get down to brass tacks, the owners and management believe they are managing a printing company.

If they didn’t believe that, why would the pricing plan for their online product be designed to drive print subscriptions?  If a reader wants a single day of unlimited online access to the journalism product, he/she is asked to pay $.99. If that same reader only wants access to the printed version of that same content, he/she would pay $.75.  Yes, it’s $.24 cheaper for a customer to purchase a newspaper that has been printed on multimillion dollar equipment using expensive ink, bundled by union workers, placed on diesel trucks and driven and delivered to stores throughout the area than to read the content online.

If a reader doesn’t have a print subscription, he/she will be able to buy a digital subscription for $2.49 a week. Sounds like a deal, right? Let’s crunch the numbers.

The Sunday paper’s newsstand price will be increased to $2.50 later this month. Of course, if you’re a home subscriber to the Sunday edition of the newspaper, you’ll only pay$1.99 for the newspaper. That special subscription rate also entitles you to unlimited/24-7 access to the online content. So, which option will most people choose? If they are rational, they’ll pay $.50 less per week for the physical newspaper/online combination, which allows The Buffalo News to artificially increase Sunday subscriber rates and charge regional and national advertisers higher rates for advertisements and coupon placement in that Sunday edition. This pricing structure reinforces Ms. Sullivan’s point that the digital subscription service is a means to sustain the print newspaper.

Again, just so I am not misunderstood, traditional and establishment media is important. I value The Buffalo News, but I want to see them embrace technology and innovate, not just stem losses on a balance sheet and sustain a dying business model. The Internet is changing everything, and an attempt to replicate an old business model onto it is not a recipe for success. As Jeff Jarvis wrote, paywalls might boost short term revenue, but they also generate long term costs to journalism.

Alan Rusbridger, the innovative editor of the Guardian in London, just delivered a monumental speech arguing that charging “removes you from the way people the world over now connect with each other. You cannot control distribution or create scarcity without becoming isolated from this new networked world.”

There is a huge business opportunity for someone to build a nimble, multimedia, web-savvy, digital news product in this town that hires hungry young reporters, mixes in a dash of old graybeards for credibility, and takes on The Buffalo News where they are weak and blind, on the web. Maybe it’s time to start working on that business plan again.

2. Everything you need to know about Mitt Romney in one Venn Diagram.

3. The money-empathy gap, new research suggests that more money makes people act less human. Or at least less humane.

This research is not intended to prosecute the one percent, those families with an average net worth of $14 million. Nor does it attempt to apply its conclusions about the selfishness and solipsism of a broad social stratum to every member within it: Gateses and Carnegies have obviously saved lives and edified generations, and one of the biggest predictors of a person’s inclination to donate to charity is how much money he has. But when the top fifth of American families have seen their incomes rise by 45 percent since 1979, whereas the bottom fifth has seen a decline of almost 11 percent, these ­researchers want to explore a timely question: How does living in an environment defined by individual achievement—­measured by money, privilege, and ­status—alter a person’s mental machinery to the point where he begins to see the people around him only as aids or obstacles to his own ambitions?

A long, but very interesting read.

4. The conscience of America, Sen. Bernie Sanders (I, VT), gave a robust and rollicking speech on the floor of the United States Senate on June 27th. He takes on Wall Street in the way I wish more of our Senators would and should.

“The Federal Reserve provided a jaw dropping $16 trillion dollars in virtually zero-interest loans to every major financial institution in this country … why can’t they move to protect homeowners, unemployed workers, and the middle class?”

Wall Street got everything it wanted. What did we get? Incredibly powerful.

5. Thinking about a degree from University of Phoenix or some such similar for-profit “university”, you might want to think again.

A new study from two Boston University economists finds that students at for-profit schools fail to receive any wage boost from obtaining a certificate or associate’s degree. “There is little evidence of a return to any certificate or degree from a for-profit,” the researchers write in a new paper for the National Bureau of Economic Research.

Meanwhile, people with legitimate degrees from public or private not-for-profit universities do receive a significant wage premium after completing their education. In 2010, FRONTLINE did a fantastic hour long expose on the predatory practices of for-profit schools. Absolutely worth watching if you’ve never seen it.

Fact Of The Day: AT&T has a database known as “Hawkeye” that contains 312 terabytes of data detailing nearly every telephone communication on AT&T’s domestic network since 2001

Quote Of The Day: “The weak hate not wickedness but weakness; and one instance of their hatred of weakness is hatred of self.” – Eric Hoffer

Video Of The Day: “This is our planet a.k.a ‘Space Station Porn'”

Song Of The Day: “Potholes In My Lawn” – De La Soul

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5 Responses to “The Morning Grumpy – 7/9/12”

  1. Brian Castner July 9, 2012 at 8:44 am #

    I think I am as fascinated by the paper and the state of journalism and who pays for what as you, and more than that, I’m fascinated so many people, and types of people, care too.

    I think the economically rational tidbit that is missing from your analysis is that the Sunday ads must be a huge share of revenue, far larger than we appreciate. I don’t know what percentage of total revenue it is, but it seems big enough to develop a paywall to protect. Glossy Macy’s ads don’t translate online. If your cash cow is Sunday ads, then your pricing system exists to maximize Sunday ads . . . which is what we have now. In that case, its not that the News thinks its business is the newspaper vice journalism. The newspaper itself is secondary too. They’re just a media company selling ad space, and are tweaking the model to get as many Sunday ads in as many homes as possible.

    • Mike_Chmiel July 9, 2012 at 9:26 am #

      My suspicion as well.  Not to mention the coupons.

      The inevitable result is to continue to cut costs on journalistic content.  Respected writers will eventually move on, or retire without being replaced by the next generation of journalists.  What little writing is there will be completely mundane and extremely hesitant to take on any source of power.

      Oh wait.  We are already there.

    • Christopher Smith July 9, 2012 at 9:53 am #

      The Buffalo News and other outlets like it are critical to a functional society. Without them, we’re left with mildly informed TV reporters, opinionated radio jocks, and bloggers without the resources to adequately do the job. So, we’re all invested in the success of The Buffalo News.

      While the Sunday ads are an obviously large share of revenue, The Buffalo News must to invest in new lines of revenue on new platforms if it is to retain its relevance over the next twenty years. Doubling down on a declining slice of legacy revenue is a certain ticket to obsolescence. It’s been shown over and over and over in hundreds of other industries that innovation (or growth through acquisition) is the only way to adapt to changing business conditions or collapsing revenue models.

  2. Alan Bedenko July 9, 2012 at 9:35 am #

    Here’s one other thing that bears mentioning – presumably, the many independent contractors and businesses who redistribute the paper to consumers buy each copy from the Buffalo News for less than 75 cents; the paperboy and Wegmans probably pay, what – about 25 – 40 cents for each paper, and then sell them for 75 to make a small profit. 

    That means that the paper is charging you a 25% surcharge over the cost of the paper, but it’s actually bringing in a 50 – 75% surcharge over what it actually sells the physical paper for to its distributors. 

  3. Brian Buckley July 9, 2012 at 10:23 am #

    If you pay close attention at the end of the video of the day, you can see Buffalo at night.  I love doing that…

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