Neal R@nts

Okay newspapers... This Could Be Exciting

I love the newspaper.  I would read it cover to cover every day if I had the time (and I consider myself a pioneer of the online newspaper).  It's not that the news is necessarily "new", but I love the commentary and interactive puzzles.  That's right--completing the daily crossword and other puzzles is interactive.  But that's another topic for another day (making the print edition more interactive).

I realize that I am a focus group of one, but I can't help but point out that there are certain days of the week when I can't find a newspaper in a rack or local outlet anywhere.  I stopped having it delivered to my home because it was often wet; besides, my dog Darbey looks forward to the daily jaunts down to the corner store to buy the paper.  Last Friday evening, I came in from a business trip from Houston and wanted to pick up a copy of the local paper to see how the pundits and prognosticators were predicting the pigskin match-ups the next day.  I wanted a paper so badly that I went to eight different locations in search of a local paper and, in the end, went home paperless.  I went online to read.

Not to pick on just my local town, but I found the same to be true in Richmond, Virginia.  Finding a newspaper in a rack in Richmond past lunchtime seemed to always be disappointing, as all the racks and stores were completely depleted of inventory.  I realize that a newspaper has only a limited shelf life and that overstocks can be an expense independent carriers don't care to deal with.  I also realize that independent distributors consider their day done once they've supplied the various racks and stores with that day's product. 

But, given the current financial landscape, local newspapers can ill afford to not have product on the shelves when consumers are hungry for it.

I have an idea...

The afternoon paper has come and gone, but there is a market for news in the afternoons.  I propose a "late edition" newspaper that is a combination of 1) news stories from earlier in the day, but appended to include some of the better online commentary from readers who are commenting online.  As one of the first (if not the first) to add a section for local readers to comment and react to stories in the interactive realm, I quickly learned that a story in print is not the end, but rather, the beginning of many stories.  Once the consuming readers add their opinions, stories grow and take on a life of their own.  Stories are often advanced by the consuming community.  Publishing earlier stories along with some of the "best of" commentary from readers will have value to other readers and the consuming community (isn't it time for the online editions to help feed the offline editions and help make them be more relevant?).  I would also include 2) updated stories from earlier editions.  Often, new information gives us an opportunity to update stories.  New commentary and new quotes, perhaps added information--all could be included in the late edition.  Finally, I would include exclusive new stories that didn't appear in the early edition but have come in during the day.  I would likely have a different set of comics and puzzles to encourage overlap in readership between the early and late editions (crossword people would go plop down another seventy-five cents to get a couple more puzzles; trust me, I are one).

I would not only use the early edition to promote the stew out the new edition, I would also hire an agency to assist in getting the word out.  Too often, newspapers, in their arrogance believe they are great marketers.  Trust me on this: most are poor marketers.  Hire pros... please!

I realize that what I propose is not the usual way that newspapers conduct business, but frankly, business as usual isn't exactly going that well, is it?  What I propose is a way to restore timeliness, relevance, and innovation to the newspaper industry.  An afternoon edition would provide new, exclusive content that isn't available anywhere else.  Some might say that my proposal isn't unlike the old days of the "extra".  That's true.  I theorize that going to a single morning paper may have been a good idea in its day, but in order to restore brand relevance a late afternoon edition that is truly relevant may help the overall brand develop cutting edge news brand awareness with consumers.

I know the naysayers will throw up the distribution issue.  I acknowledge the obstacle, but what I would suggest is a model that does not include a home distribution option--at least not at first.  I would only distribute in racks and retail outlets.  That would eliminate the massive issues that come from having an entirely new set of independent carriers.  I would consider adding a new force of independent hawkers who can strategically position themselves in way to take advantage of bumper-to-bumper traffic in the afternoons.

I would price the late edition just like the morning edition. That really raises another question: isn't it just plain 'ole Econ 101 to consider the supply/demand relationship for dailies?  If Monday papers aren't selling at seventy-five cents, would they sell at twenty-five cents?  Now there's a marketing research project for someone to execute somewhere.  I propose that price elasticity for the daily newspaper varies by the day of the week.  But that's another topic for another day (so many topics, so little time).

I sincerely hope that some newspaper--somewhere has the intestinal fortitude to try what I am suggesting.  I think they will find that there will be at least a 5% overlap in readers from the morning edition and will find that there is a whole new crop of readers out there that prefer to read a paper when they get home, don't have time to read the paper when they get up in the morning, want access to stories that have been advanced by the community through their opinions, or want to read new content.

No guts, no glory.  If a newspaper publisher out there has an itch to try it, I'd gladly help them develop the model.

 

Gratitude and Loyalty Are Easy to Come By in a Bad Economy, But...

News Flash!  The economy stinks.

We live in unprecedented times.  Uncharted waters.  Not since the great depression have we been in such a state within our economy and I would argue that, for employers, it may be worse.  We are no longer a manufacturing, industrial economy.  We are a service/informational based economy that is heavily dependent on skilled professionals who are unbound by normal processes or taught methods.  These are people like those in media, advertising, and other creative pursuits--industries heavily reliant on the talent of individuals.  Put sales in that category too. That makes for dicey dealings in an economic climate such as ours.

In our economy, most businesses, in order to survive, have been doing the unthinkable.  Salaries have been cut, mandatory unpaid furloughs have been imposed, pension plans have been frozen, and stock options have been terminated (and existing options are so far under water that they are, in effect, worthless).    Many businesses have half the people doing twice the work these days. Drastic times call for drastic measures.

And the employee base, looking around and seeing that every tenth person is praying their unemployment doesn't run out before the economy rebounds, is grateful to be working and still drawing a paycheck.  They have no intention of going anywhere.  In a bad economy, loyalty runs deep.

It really begs the question--what happens when the economy turns?

There are really no more golden handcuffs.  Employers may think that those loyal employees will still remain loyal and grateful, or even their carefully crafted employment agreements with terms and conditions--particularly non-compete clauses--will be intact.

I'm not an employment lawyer, but I've been on both ends of employment agreements for many people.  I certainly know that all employment contracts are written differently.  But I also know that any one of the basic terms of any agreement, once breached, effectively renders the entire agreement null in many cases.  So if you're an employer who has imposed furloughs, cut salaries, etc. for contracted employees, those contracts may no longer be binding.  What an employee verbally agreed to will not likely have any bearing on the written terms.  It's more likely that agreements will be void.

I'm big on predictions.  I am going to predict that smart employers, anticipating the economic turnaround will see the signs and become protective, and at the same time, predatory.  They're going to know that there are no strings attaching employees.  Even if some employers don't see it coming, the headhunters are likely strategizing about the potential now.  The gloves will be off even before the economy turns to acquire top-level talent from companies who have left themselves vulnerable in a down economy.  "I'll make it up to you someday" won't be good enough.  And all that gratitude and loyalty will quickly dissipate when dollars from businesses who want to acquire top talent are dangled.

The question (always) is "when?"

I have a few suggestions that smart employers will embrace today, regardless of the "when" if they want to retain their top talent:

1.    Identify your franchise players.  You'd best make a list of the people whom you'll need to be able to rebuild your workforce in the near term.  I'm talking about those people that are highly skilled thinkers and creative people who don't perform skills, but rather, produce work.  Those are the people that must be retained.

2.    Schedule individual meetings with each franchise player.  In that meeting, first--thank them for their loyalty and acknowledge the fact that they have sacrificed in the difficult environment (communicates that they are important-that can go a long way).  At the same time, structure a new agreement to supersede any previous agreements--even if an agreement didn't previously exist.  It can be triggered by certain economic events/conditions for the business.  But there must be a commitment to the franchise employee for some payoff that will keep them working for you (literally and figuratively).  The employee must have something to look forward to.  They must have a reason to stay, outside of these are nice people.

3.    Make a list of potential players from other teams.  If there is going to be switching, best be prepared for the turnover.  Assume that companies will acquire employees from you; you'd best be prepared to get some from others; be opportunistic.  Seize the opportunity to upgrade in key areas.

The real goal should be to retain the franchise players that make things run.

I theorize that many businesses are going to be caught like proverbial deer in the headlights.    For the time being they are just trying to survive day to day.  The smart businesses--perhaps those who read this, will start planning ways to keep the employees who are loyal today but may not be when the headhunters start calling and there is no incentive to stay.  Employees who feel underpaid and undervalued and who have made sacrifices will be vulnerable to predators.  There will be winners and there will be losers in the workforce shuffle that will occur.

Recognize the perils of risk walking into an empty office when things rebound and business starts heating up.

Dr. John Malone

I've been truly blessed to have been able to meet and work with so many truly brilliant and talented people.  Somewhere at the top of the list would be John Malone.  John was probably one of the most respected leaders of the cable television industry when it was young and really just getting started.  He was the CEO of TeleCommunications, Inc.  When I was introduced to Dr. Malone, it was when TCI was the third largest cable company in the world with some 1,000,000 subscribers.  TCI looked up to companies like Warner Cable and ATC.  He led the company to become the largest cable television company through aggressive building and acquisition strategies.

While John was respected, he was also feared as a fierce negotiator.  Not many programming services or peer companies liked negotiating with TCI simply because John Malone was a tough negotiator who never backed down.  I remember once in 1981 when Nickelodeon was just an upstart little network without a lot of decent programming, they wanted to increase rates substantially.  Every cable system within TCI stood by the switch on a Sunday evening ready to pull the plug at exactly midnight.  It's important to know that the good Dr. wasn't bluffing.  We knew it and were prepared for the fallout.  In the end, the plug didn't get pulled and the rates didn't go up.

John spearheaded acquisitions like United Artists theaters and many other programming related ventures.  He has been actively involved in Liberty Media for many years now.

There was a point in time when I presented my annual budget to Dr. Malone.  It was the mid-eighties.  I was part of a company that was made up of a partnership between TCI and another media company.  As I presented, I couldn't help but notice that nearly everyone in the room seemed a bit distracted; they'd been in presentations all day and it was late, so it was understandable.  Everyone was distracted except for one person: Dr. Malone.  His focus and the extreme attention he paid to every word I had to say was something I'll never forget.  Despite being an unbelievable leader, he was an excellent listener.  He was, at his core, someone who cared about people.

Of the lessons I've learned over the years, those Dr. Malone taught me are as valuable as any.

Newspapers Could Learn A Thing Or Two From HBO

No two businesses could be farther from one another.  Premium television and newspapers really have little in common, except they're both in the content business.  It pretty much ends there.  That said, there are parallels.

I doubt there are many who would read this column who have any notion of who Michael J. Fuchs was or is.  But it was under his active leadership as President of HBO that a very fundamental shift took place in the premium television business.  To get a real grasp of what HBO accomplished, one really needs to understand the environment of the mid-eighties. 

When HBO first launched-technically in 1975 as a premium service (and 24/7 in 1981-my first year in what was then a nascent industry) , their business was movies, thus the name Home Box Office.  Nothing but movies, and an occasional boxing match like the Thrilla From Manilla.  And when they launched there wasn't much in the way competition.  Then it seemed that in a matter of a year, there was Showtime and the Movie Channel, and HBO's sibling, Cinemax.  The result was a small market (at that time) with a lot of movie channels in what became a pretty competitive landscape with competing services with essentially the same product.  There were exclusive movie rights deals, but in the minds of consumers, all the services had difficulty differentiating themselves from one another.

At the same time, a new technology no one had seen coming came on the scene.  It would revolutionize the secondary video market.  The VCR made for a new competitor with whom the cable networks had difficulty competing.  The VCR rental market had release windows for movies that beat the cable networks to market by sometimes months.  Needless to say, the value of what the premium cable channels offered was greatly diluted.  The subscriber base of movie services was compromised because there was little point in paying for a subscription for in-demand content you could get now at a video store or wait months and see on the premium networks.

Lastly, during the mid-eighties, there was an unbelievable proliferation of basic cable networks to compete for eyeballs.  Going from 12 channel cable systems to 36 channel systems gave viewers lots of viewing options.  We used to say that every basic cable channel that was launched, to some degree eroded the viewership, and thus, the value of Home Box Office, threatening erosion.  Most systems went from 12 to 36 channels during a period between 1983 and 1985, thanks to nets like MTV, Nashville Network, TNT, and many others.

Not many businesses have had to contend with such competitive forces in such a short period of time.  With all the challenges facing HBO, a new direction was required for survival.

That's where Michael J. Fuchs comes in.  Before he was a president of HBO, he was a producer and had a keen eye for understanding the power of certain entertainment forms.  He made a very bold move that, in the mid eighties seemed risky, but proved to be brilliant.  Even back as far as 1982 Fuchs understood that the very survival of HBO was dependent on being able to move from being a movie service to being an original entertainment company.  Early programs like The Terry Fox Story-the first made for premium television movie, and Fraggle Rock, the first original premium children's series, were received well, but once HBO started launching programs like their first weekly series, 1st and Ten, starring a very young and sexy Delta Burke, it was clear that Fuchs had set a new course for HBO.  Series like Inside the NFL which launched in 1977 in a talk format paled in comparison to the popularity of their original drama and comedy series.  Fast forward to series like The Sopranos, Sex and the City,  and Curb Your Enthusiasm.  HBO could no longer be compared to its competitors; it had established itself as being a very  different sort of service.  They had become a differentiated original content company.

The comparisons to the newspaper industry as a whole provide many lessons.  Newspapers found themselves in a similar situation to HBO some ten years ago.  Just like HBO, the exclusivity of content they used to claim as their local franchise eroded because so much of their content like the syndicated content they carry was so readily available elsewhere.  The proliferation of news channels on cable created competition for the news franchise, and most importantly, a new technology obliterated the speed in which the news cycle moved.  Just the way the VCR created a competitive disadvantage to the premium cable services by invoking earlier movie release windows, the Internet created windows for news that made news new for about only one hour, generously.

Unlike HBO, newspapers made the wrong moves.  Seeing the competitive landscape and understanding the change, the newspapers jumped on the Internet, hoping to extend the franchise to the Web, wrongly believing that sparse local content in print would somehow multiply online.  What they should have been concentrating on was the creation of content and lots of it.  Ten years ago, the newspapers should have revolutionized their newsrooms and challenged them to localize and deliver content not available anywhere else-and lots of it.  Instead, they did just the opposite.  They acquired more and more syndicated fare and expected less and less from local writers.  The real crux of the problem was thinking that all the syndicated fare (comics, syndicated columns, obits, associated press articles-most of the content that comprises a daily newspaper) was a part of the franchise they owned just because they were the only newspaper in town carrying that content.  Nothing could be farther from the truth.  That content is readily available many places online, and beats the printed newspaper delivery window each and every day-and newspapers have no license to distribute much of it online.

Newspapers either didn't see it coming, or, more likely-chose to continue to manage a business on a 12-month financial model, enjoying short term high operating margins even as innovations were coming on scene that shattered the myth that content they license for use from others is theirs exclusively in the age of the World Wide Web.  They are noted for preaching, "content is king", but they only half-heartedly practice it.  HBO they're not.

There is a bitter sweet ending for Michael Fuchs and his career at HBO.  He ascended to actually run a large part of the Time-Warner empire but was ousted in exchange for Gerald Levin, who also originally came out of the HBO side of the Time-Warner house.  Jerry Levin was one of the architects in the ill-fated AOL-Time-Warner deal that still depresses and haunts the stock today, as the merger proved to be a not-so-smart move in a post dot com bubble era.  Fuchs still produces programs, such as A Lesson Before Dying.  But for the bold course that he guided HBO through in the mid-eighties, he deserves accolades he never really received.

I've met and known many interesting people throughout my media career.  Michael Fuchs would be along side the likes of Ted Turner and John Malone.  If you don't know who they are, you should read more.  Next: John Malone and the lessons he taught me.

Search: And the Winner Is...

The latest agreement between Microsoft and Yahoo! brought back a few memories.  The earlier days of the Web had several search engines-not unlike today, but the players were different.  We had search engines like Alta Vista, which happened to be one of the stronger, along with Lycos, which wasn't a slouch either.  Things have changed.

I'm talking about a period that was somewhere around 1996, perhaps '97.  The world of the Web was much smaller then.  I visited Yahoo! back then.  Their offices were essentially on two floors, one those being only a lobby.  The upstairs seemed like a football field of cubes.  Everyone, except for the human resources officer, all had cubes.  Jerry Yang had a cube; it was a nice cube, but it was still a cube, complete with four-foot walls.  I thought it said a lot about Jerry.

That's a major departure from the offices today.  if anyone were to visit Yahoo! today, they'd find at least five pretty large buildings on a fairly impressive campus (because I know I had meetings in the "E" building).  As part of the work of a group of newspaper companies who put a cooperative agreement in place with Yahoo!, I visited several times.

The campus and its stateliness reminded me a bit of the newspaper industry.  Buildings that appeared, at least on their exterior, to communicate size, power, and security, while on the inside, there was clearly a bit of concern about the company's future.  I have to wonder if Yahoo! wouldn't be glad to go back to the good 'ole days of being up US 101 nearer to Santa Clara in more modest surroundings.

Yahoo!, even back in 1996, spoke of their market power.  I had developed a collaborative relationship back then.  In meeting with one of their marketing officers, I was struck by how certain they were of the future and their destiny as the company who would break through to dominate search on the World Wide Web.  I asked, "who do you think comes out on top in the search engine competitive landscape", to which she replied, "all the other minor players will go away and it will come down to us and Alta Vista."  There no "maybe"; there was no "I think..."  There was such conviction in her voice; I remember thinking to myself that I didn't know whether she was right, but she was sure she was right.

Of course, that was all several months before I stumbled onto this little site that seemed to come out of nowhere called Google.  When I think about it, I have come to believe that Yahoo! fell into the trap that many of us do.  We see the competitive landscape in terms of only today and the competitors as a finite set; just the opposite is true.  There is a moral to the story.

We all tend to lose sleep over the wrong things.  We worry about the things that exist today or those things we can see and visualize today.  While Yahoo! was worried about Lycos and Alta Vista, the real threat was being developed by a couple of guys Yahoo! had never heard of.  Be dilligent-not just about those things you can see, but try to figure out where the next innovation will be coming from.  If we do, we'll see the world as a much different competitive space and we may bring that next innovation to the market by seeing the world through an innovative lens.

And never let success go to your head.  Yahoo! declared victory a little early.  I wonder if Google is feeling a little less smug these days in view of the Yahoo!/Microsoft agreement.

Is There A Web 4.0 Yet?

Warning: geek post to follow!

I'm big on predictions about the future.  I like to say that I know what the future looks like, I just don't know when we're going to get there.  That's safe; Nostradamus has gotten away with it for a long time.

I've been in the digital realm so long, I can't remember which Web version we're on.  I remember Web 2.0, 3.0, but I can't remember if we've officially crossed over into 4.0 or not.  I do, however, have a good idea what the next Web will look like, so I'm going to memorialize it right here.

There is a trend just beginning that will guide everything for a good while.  It will come as no revelation that smartphone apps are proliferating at a breakneck pace.  We owe that primarily to Apple and the iPhone.  Frankly, I never liked the idea of the walled garden approach to anything (and I say that as a former cable exec who lived under the walled garden strategy for a long time), but it really works for Apple, since they've opened up the Apple OS for so much creativity.  The single screen size makes programming a whiz too.  That's no criticism of Android; it's open source and that's cool, but I think they're still going to be challenged by the various screen sizes and manufacturing requirements.

That said, I think there will be an avalanche of mobile apps-in fact-it's well underway.  I also think there will be mobile apps that write to an external database that have a Web interface.  Mobile meets Web.  Web 4.0.  We'll be entering data on our iPhone and Android apps that will provide utility while we are out and will store that information on a database that can be accessed via a Web interface.  Maybe calendar events that are entered and interfaced with Outlook are the first of what will be commonplace.  That's the Web 4.0 world, I'm thinking.

Here's another prediction: creators of mobile apps will start to promote the apps themselves through online and offline media.  Today, Apple hocks the apps that others create as a way to sell more iPhones.  The day will come when the creators will advertise to promote the apps they want to sell.  I can also see a day when Apple coops the advertising with the app creators, because the more iPhones are used, the more iPhones they'll sell.

There are just too many smart people inside Apple to not have thought that one through.  So the opportunity may be to reach out to mobile app creators with marketing ideas to move their apps by presenting their utility and advantages to the would be users.

Does Anyone Do Linear Anymore?

Linear media, media who provide a steady stream of programming so audiences have to know when to tune in are on my endangered species list.  Don't get me wrong.  I love consuming shows and spend a fair amount of spare time doing so.  But the notion of looking at a the TV Guide and sitting down at a given time is just not something I do.  And I really believe most lives aren't geared around linear media.  We know how to go straight to the source to get what we want, when we want it.

I'm convinced that television is never going to be the same.  In fact, I have to wonder if, outside of live events, the word telecast has relevance any longer.   The truth is, finding someone who actually makes an appointment with a program has become quite rare in my circle of acquaintances.  We all use PVRs, or we watch on Hulu.  But we generally don't sit down at an appointed hour to consume television in the old fashioned way.

I suppose there's good news and bad news in that fact.  If you're buying programs based on audience, I have news for you: there's no guarantee that we're consuming your commercials.  We know how to fast forward to watch an hour show in forty minutes.  So it becomes really a challenge of marketers to become creative in ways that make commercials an event in and of themselves.  Probably the best example would be Super Bowl Sunday.  Ad time is outrageous and probably for good reason; not only is the audience bigger, the recall for the ads is unbelievable.

A few marketers are smartly giving consumers reasons to record commercials by hiding events within events in the ads, or running text by very quickly that is entertaining or related to contests so consumers have to slow the ads down to be able to read the text or know how to register.

The Good news is that television programs are probably consumed more now than ever before.  Audiences aren't tied to a specific time; they time-shift to more convenient times.  Perhaps the single largest challenge of media in the future is arriving at a strategy for monetizing an audience that is consuming at different points across a variety of devices.  But the audience is probably much bigger than anyone realizes.

Nielsen may have the toughest of jobs going forward.  It's one thing to herd cats.  It's another thing to try to herd cats that aren't even appearing at the same time.  How does one even begin to count viewers of programming that is everywhere at all times?  Good luck with that one; the task seems really daunting...

My guess is that Nielsen is hoping that everyone just stays with the same model and methodology that they've always been sucked into.  I just don't see it working for them in the long run.

Remember CB Radio?

Except for a couple of stats-first, that the middle-agers are the fastest growing segment of Facebook, and second-that Facebook has now overtaken MySpace as the largest social network, the rest of what I have to offer is anecdotal, speculative, and well... just common sense.

A few years ago, anyone born before 1980 was a pretty rare thing on Facebook.  I was there, and the solitude was nice.   It was sort of like AOL IM in the early days when we all LOLed among a group of relatively small users and created many of the acronyms used today.  But like IM, Facebook has become mainstream.  I now have lots and lots of friends.  My social network is already over-scheduled, over-obligated, and over-subscribed.  My network is like the family tree at the local animal shelter.  I need a StealthBook.

I do have a theory that I would like to posit on all the new entrants on Facebook.  First (and I offer this at great risk of being laughed at), Facebook is like the new CB radio.  There! I said it!  Except for the absence of handles and 10-codes (as in "10-4, good buddy") it's pretty much the same.  People go on and see who's there, who's saying what.   Users can belong to multiple communities simultaneously in Facebook Land.   A user can choose to engage in the rhetoric, or just sit back and see what others are saying.  People can follow along, if they just want to be passive.  Just like CB radio.

The truth is, CB radios may have been the first social media.  It was broadcast one-to-many and one-to-one (as long as you didn't mind everyone else listening to your one-to-one). One of the things I do remember about the CB days.  People used it to connect and form relationships.  And I mean the kind with the Big "R".    And interaction and engagement were pretty much givens.

So here's where the real theory comes in: I'm going to predict that Facebook will be the new launchpad for people to reconnect with their pasts--times and people when things were happier and simpler.  I'm witnessing all sorts of interaction taking place as all the middle-aged newbies jump on.  With that (just like with high school reunions) hookups are bound to happen.  I have strong recollection of a Dr. Laura show that was specifically warning of the perils of attending high school reunions alone--as in, without a spouse.  There were countless testimonials of what can happen when old feelings are regenerated and emotions are left unchecked.

Facebook is a Petrie dish for feelings and emotions to come screaming when people are vulnerable or lonely.  Add the Internet uninhibition, and voila!

That's all I have to say about that.  I'm going 10-7 (in CB, that's "I'm going away").

Collateral Automotive Damage

When dealerships close their doors, far more is at stake than the 100 or so people who have had their livelihood taken from them.  Set aside, for a moment, the assets that used to have value for the families who have held them for decades and for generations.  Forget the public companies who are watching the asset value of their companies drop almost overnight.

Local media will suffer another blow in the string of events that has been like Chinese water torture under Niagara Falls.  The lifeblood of both newspapers and broadcast stations has been the automotive industry.  Don't forget local cable advertising too.  One just has to wonder how much more the local media outlets can take.

The newspapers can at least control the flow of the advertising by cutting back on pages and delivery, although I'm sure that's little solace to the print media who are watching 25% of the base of advertisers dry up.  Broadcasters are in a different position.  They are selling a commodity.  In a linear world, once an avail goes, it's got to be sold at some price.  There is limited shelf life.  Without the demand that comes from the automotive dealers to support the advertising floor, I'm afraid media costs on a per spot basis will start dropping precipitously.  I know for a fact that automotive advertising in most markets has historically represented a disproportionate share of all local broadcast advertising.  The net effect will be that the cost per spot has nowhere to go but down.

Be expecting more cutbacks at broadcast stations as the revenue continues to drop--not just because there won't be as much automotive advertising, but also because of the compounding effect of the drop in demand for their commodity--fewer buyers at the auction.  At this rate, pretty soon, interns will be reading from the prompter.

It's Content Exclusivity (at least part of it, anyway)

I've had the fortune of being able to pioneer a couple of media in the span of my career; first cable television and then the commercial Internet (didn't create it).  I've learned a few things about content along the way.  The first and most important--Content Is King.  When given the choice of being in the content creation business or the distribution business, always pick content creation.  Always.

And if you can control both, well you're just in the "A" position.

In cable television, we began with the most envious of positions, controlling high-demand content with a (then) cutting-edge technology to distribute the content.  It didn't begin that way; lots of investments by cable companies into small upstarts like Turner and ESPN gave them capital required to make a go of the business so Turner could start CNN and ESPN could show something beside billiards in prime time.  The investments proved to be wise, as cable networks launched product that was highly competitive.  It's not that off-air television wasn't a substitute; it's just that once consumers got the cable coming in, they couldn't give it up.  Many screamed "monopoly," but let's face it, cable television was hardly a utility and people could go back to antennas any time.  But it was quite rewarding to have a spate of content that was exclusive to cable and so valuable as to be called a monopoly.  That was key to cable's growth curve during the mid-late eighties.  And when satellite television came along, they demanded to be able to carry the content that cable television companies had poured so much money into--and they were granted their wish.  For a long time, however, the satellite providers couldn't get the local channels on and that was a barrier to entry.  Again, for a good while, cable television enjoyed exclusivity of local off-air television on the cable system that created inertia for anyone with a notion to switch to satellite television.  Then, all at once, satellite providers got the local channels and the gloves were off.  Exclusivity for cable was gone.

I saw the day coming when the only exclusive product would be that which emanated from a cable provider's studio and I launched local news programming that was unique, fully local, and exclusive.  Comcast, in their stupidity decided to shut it down after we merged our assets and I was gone, but for a good while, we owned the market.  Few switched to satellite because of the popularity of television news in a market that was completely unserved.  Our programming was exclusive. We provided other programming as well.  Sports talk shows, even our own version of COPs--but with local police.  I'm thinking Comcast would like to have a "do-over" on that decision, but they listened to idiots intent on enhancing short term gains in exchange for future growth.  But I digress....

There is a point to the story. 

Newspaper companies find themselves in the same position.  Overnight, it seems the Internet has changed the game.  It's far too simplistic to say that the Internet is killing newspapers.  One of the biggest daggers in the heart of the newspaper industry is a loss of exclusivity of their content--perhaps it is the biggest.  So much of what used to be a local franchise for newspapers is now available to anyone with an Internet connection.  AP stories that were front page fare are now available online faster.  Obits can be found on many sites; stock quotes are long gone from newspapers.  Even the comics and puzzles can be found online.  The editorial commentary that was syndicated to newspapers is now available online.  And the real poison dart is Craig's list.  An entire franchise that is newspapers' most profitable stream is now gone.  It almost leaves one wondering, "what's left?"  A large percentage of the newspaper's content has been incrementalized and compromised.

Every newsroom in America should be having the content exclusivity discussion quickly.  The only exclusive content is that which comes out of a newsroom.  It's not so much that newspapers put their own content online and that people can read it there.  It's more the fact that someone else puts all the content online that is not the newspaper's anyway.  One of the reasons the newspaper websites struggle is because they don't have rights to all the syndicated content either.  If they did have exclusive rights to everything carried in the print edition, perhaps they'd be able to charge like the Financial Times and the Wall Street Journal.  But they don't.  To survive, they need to provide something unique and exclusive.  Every strategic discussion should be about creation--how to ween the paper off syndicated, regurgitated fare that is available somewhere else.  Otherwise, they're just in the distribution business.

Another industry that needs to learn from the travails of the newspaper industry is the broadcast industry.  There is no example better to use than the broadcasters.  They currently live every day at the edge of the abyss.  What content is actually owned by the broadcaster?  They have local news and... well, they have local news.  They used to create programming.  Local programming.  Entertaining local programming.  Maybe cable killed them.  Local wrestling, kiddie shows with hosts where kids would celebrate birthdays on bleachers while cartoons were shown.  Even the old "dialing for dollars" movies are long gone.  Taking their place are a host of judge shows, talk shows, game shows, and network programming.  Broadcasters are in danger of almost being exclusively non-exclusive.  They are either syndicated or network.  They are relying only on the FCC rules that preclude satellite carriers from offering cross-market network programming.  If I don't like the fact that the Jerry Lewis Telethon is pre-empting the golf tournament at Pebble Beach, tough nuggies.  I can't switch to the New York affiliate and watch.  I'm betting that someday I can.  It's one FCC decision and some public outcry away from changing.

The broadcasters are in a precarious position at best.

If I were a network, I'd call the satellite providers, the few cable operating companies that remain, and cut a distribution deal.  I'd quit paying any network comp (not that there's much left), charge on a per sub basis like cable networks do, and keep the advertising revenue.  The question is, what would stop them? The answer: nothing.  So it really comes down to what is actually content owned by the broadcaster.  Anyone who invests in a broadcast station is investing in a few names of local talent who are under contract (and could leave upon expiration), a network contract that could go away in an instant (and it's happened), some syndicated contracts that are negotiated on a mostly annual or bi-annual basis, and a big stick that is actually a distribution system.  I find it interesting that mobile television distribution deals are between the cell phone services and the networks.  The broadcaster isn't involved-and furthermore, has nothing in the network agreement permitting distribution of network content outside of the transmitter; in other words, no Internet, no mobile.  I can see how this story is going to end.

The moral to the story: be in the content creation business.  It's true for cable, newspapers, and most certainly, broadcasters.  The trouble is that most saw a chance to add margin by switching to syndicated content and relying on whatever came on the network feed or news wires.  It saved a few bucks and made them lazy.  It will likely be their undoing.