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Wednesday, August 25, 2010

Finally, a legit 21st Century Local TV Strategy

Under the headline, “Why the Apple iTV will change everything,” Digg’s Kevin Rose posted a glowing forecast of the next-generation Apple TV device, which is due out as early as next month. Rose said it will likely have an app store that’s similar to the iPhone/iPad, which means you could punch up your ABC app on your TV and watch “Lost” in 720p. Same goes for local TV stations that offer their own video apps.

Rose also writes that the iPad will turn into “one big badass remote control” that lets you control the iTV and extend the viewing experience, like watching other camera angles.

“This will eventually destroy the television side of the cable and satellite industry, as your only requirement to access these on-demand stations will be an internet connection,” writes Rose. “Say goodbye to your monthly cable bill.”

Rose might be a bit ahead of himself, as network content providers aren’t going to kick cable to the curb anytime soon. Or the affiliates. And set-top boxes, as standalone devices, take a very long time to reach market penetration (TiVo, anyone?) But it’s Apple, and if it does gain some traction, it will certainly throw a wrinkle into the matrix.

Local broadcasters, for example, may feel more compelled to produce web-original video — something that never really took off because the consumption never paid for the costs to create it. But distribute that same clip on the web, iPhone app, iPad app and iTV app, all in a consistent sponsored experience, and that may — may — be enough to jump-start new digital programming efforts in local TV.

Your thoughts on iTV in local markets?

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So often most of what I read about local TV's future revolve around clinging to the status quo of scarcity. It's usually some person with their net worth or career tied to keeping the local media landscape tied to a rear-view mirror. But this article is refreshing. Unfortunately, I think they buried the lead.

I don't think Apple iTV will change everything. First and foremost the TV industry has not shot itself in the foot as badly as the music industry had when Apple rolled out iTunes and iPods. But the real news in this article is the local app strategy for local tv. This seems to me to have real potential. And I don't think the local apps all have to content-driven. Imagine, for example, a local app that I could use to ask and find the best deal on anything I'm looking for. Find me the best deal on a new pair of running shoes...there needs to be an app for that!

Posted via email from Randy's Stuff

Friday, August 13, 2010

That Ain't Goin' Away

Screen shot 2010-08-11 at 8.48.02 AM.png

Yesterday I posted some thoughts on the Google-Verizon framework, offering what turns out to be a pretty widespread sensibility, at least in the punditocracy, that this whole thing feels off, not like Google, counter to the brand.

There had to be another reason Google would do this, something super important that forced its hand, something so crucial to its own perceived future that it would be willing to upset its core brand advocates.

But what? I wrote: "it gives me the sense that the two parties are colluding in some way, creating and/or obscuring potential loopholes which will allow side deals in other parts of their business."

I then suggested this had to do with Android. And perhaps it does.

But a very well placed source just sent me a thoughtful note, and it immediately stuck a nerve. Perhaps this has not to do with Android as much as it does the future of television.

Google TV, according to those that see it, is very very powerful stuff, and a major weapon on Google's war with Apple (not to mention Microsoft and others). It's streaming, interactive HD with the web folded into it (and it's based on Android). And to work, it will need a fast lane on the ol' info superhighway. Screen shot 2010-08-11 at 8.52.45 AM.pngA really fast lane. And perhaps, preferential treatment to boot.

Might Google petition that Google TV is an "Additional Online Service" outside the protected net neutrality framework it's developing with Verizon? Such a service sure would drive subscriptions for Verizon and customers and advertisers for Google.

Hmmm. I think I'll ask.

Earlier this year, during a digital strategy meeting I was having with a TV general manager, I was sharing some my perspective on the changing local advertising landscape. I always tread lightly during those meetings but this GM said something that stuck with me. He pointed to a TV monitor in his office and said, "yeah, some things are changing, but that ain't goin' away." I shook my head in agreement and kept my thoughts to myself. Perhaps I was being a coward, but I choose to pick my battles, particularly with senior managers. Here's what I was thinking: Yeah, that ain't goin' away, it's YOUR version of THAT facing challenges.

Today I come across two articles that added to my need for Pepto Bismal. Earlier today I posted about estimates by eMarketer that Facebook is reeling in $500m annually in self-served local ads. Now this article about Google TV come across my path. I have no idea if Google TV will be more hyperbole than reality (remember AppleTV?) But here's what is clear: There are many powerful, well-funded companies taking aim at TV as we understand it today. These companies have no tie or connection to the terrestrial-based, ad-supported legacy delivery system we understand today. The attacks are on two critical fronts: Local ad revenue and delivery. I'm hoping that GM allows me to help him battle.

Posted via email from Randy's Stuff

Local Ad Dollars Flowing To Facebook

EW YORK (AdAge.com) -- With its more than half billion users and privately-held status, Facebook's revenue has long been a favorite guessing game for observers from Silicon Valley to Wall Street. But a new estimate from eMarketer says the company will book $1.285 billion in global advertising alone this year, almost double the estimated $665 million the company took in last year. That figure doesn't include Facebook's so-called virtual currency trade, which would nonetheless account for a fraction of the company's overall business.

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Interestingly, Facebook's fastest growing area comes from its self-serve ad platform, which launched in August 2007. "We believe it accounted for about half of all ad spending on Facebook," eMarketer senior analyst Debra Aho Williamson said. "It's really become a tremendous business for the company. We didn't account for the size of that business last year in our estimate, but we found that it's become a great tool for direct-marketing advertisers."

The eMarketer analysis stands as a significant third-party verification against some of the provisional numbers floating around in the media. A July Bloomberg article, for example, cited two anonymous sources indicating Facebook would book $1.4 billion this year. A March report from the Wall Street Journal pegged the company's 2010 revenue at a wide range of $1.2 billion to $2 billion, also citing anonymous sources. In both articles, it was unclear whether the information came from inside or outside the company itself.

Like Google, Facebook's self-serve advertisers are largely local, coming from marketing dollars once spent on yellow pages listings. If those advertisers perform anything like Google's, they won't be as cyclical as national brand advertising, giving Facebook a buffer against future ad slumps.

Two things strike me here: First, is there really $500 million local ad dollars going to Facebook? If those estimates are true, it's a little staggering. Let's do a little math here. Divide $500m by 200 TV DMA's across the country. That's over $2m in local ad dollars flowing to a new competitor. Obviously Facebook's local ad dollars are not evenly divided across all DMA's, but whatever the size of market you compete in, consider what just happened in the last year.

The second thing that strikes me about the Ad Age story is that Facebook's local ad dollars are SELF-SERVED. I don't underestimate local advertiser's ability to wrap their arms around new technology. I just find most don't have the time. This number suggests they're making the time.

Posted via email from Randy's Stuff

Friday, August 6, 2010

Disruption At Every Level

Today they are standing on every corner in one town outside New York City. They are blonde, female and clearly under 25. They wear bright green T-shirts and visors that say “Patch,” and they hand out pens and stickers and leaflets by the gross. They do not live here.

“Have you read Patch?” they croon to the commuters and shoppers and mommies with strollers, many of whom stare straight ahead without stopping.

These are the new Journalists. At least they say they are.

Patch, or “Poach,” as someone here at Lost Remote once called it, is the network of identical hyperlocal sites that AOL is rolling out at a reported cost of well over $50 million this year.

In fact, the sites are parachuting down so fast they can’t even keep up with the list of “coming” sites on the Patch homepage; the town where we spotted the lovelies today isn’t even on the list yet, but they are advertising for writers on Craigslist.

In Southern Westchester New York, as well as in other affluent suburban areas in eight other states, Patch has let loose (what they say are) 75 young reporters, bloggers, marketers and sales people to cover an area that we do with two to four, depending on the day.

Editors of hyperlocal sites like mine, like Baristanet in New Jersey, OaklandLocal, WestSeattleBlog and dozens of others that were built on the passions of their founders, consider Poach, I mean Patch, to be anything from a pesky annoyance to a real threat.

My standard response when people ask me how we differ, is that Patch is like a drive-thru McDonald’s, all corporate and chain-like, and we are a comfy diner. That serves cocktails.

I think we must all be mindful that conglomo-sites like Patch, while legitimate local news gathering enterprises, could push bootstrap start-ups off the map, simply because they’re able to spend millions. It feels too much like what Gannett was able to do with dozens upon dozens of  local newspapers almost a generation ago.

Patch is hardly the only one out there. I was approached by the Publisher of  MainStreetConnect,  who told me he has bought up 3000 urls, including www.thedailynorwalk.com in Connecticut. He offered me a job editing all the sites in Westchester County (which has about 72 towns and villages) for $40,000 a year.

“We are going to put you out of business anyway,” he said.

I declined. “We’ll be watching you carefully,” he added.

It’s capitalism. We are okay with that. Media is reinventing. We are okay with that too. These are great training grounds for young journalists. Even better. I’m jus’ sayin’ let’s all keep an eye out for each other and not lose sight of why we do this to begin with: to tell stories, inform, protect, advocate and provide a platform for all voices. The voices with the best economy of scale shouldn’t automatically win.

One of the most important things I learned at the Knight Digital Media Center earlier this year is the importance of the role of the publisher as community builder. Because online journalism is often a conversation between media and readers, rather than the Voice of God of yore,  one of the most important things we can do is to help build partnerships and alliances when both sides are committed to the same community.

Last year, we at theLoop had the idea to sponsor a Bastille Day block party in our area with a local restaurant to give residents a reason to visit the village at night. We offered publicity and coverage. We paid the police overtime and the band with modest sponsorship money, and the sponsors put up their banners.  Over 500 people came. There was music, food and drinks. It was great for the partner restaurant, for the sponsoring businesses and it was great for theLoop.

This year, Patch approached our partner and offered $900 and ten staffers (in T-shirts and visors and pens, flyers…)  to sponsor our event.  The restaurant agreed.  Most of the staffers were dispatched from Patch HQ in Soho, New York City, and don’t live here. There was little we could do. We set up a table and tried to look cheerful.

But I am going to order some T-shirts.

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I was struck by this post. I work in traditional media and everyone knows what kinds of disruption this industry faces. But disruption knows no protected class. Today disruption happens at such a fast pace and on some many levels that even the disruptor is being disrupted. Amazing, really. Unsettling, as usual.

Posted via email from Randy's Stuff

Tuesday, August 3, 2010

Wow - Newsweek sells for $1!

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BS Top - Lauria Newsweek Sidney Harman. Credit: Newscom Ninety-one-year-old audio tycoon Sidney Harman's purchase of Newsweek yesterday was greeted with internal cheers. But a look inside the magazine's financial records, leaked to The Daily Beast, reveals its new crisis.

Yesterday's purchase of a 77-year-old magazine, Newsweek, by a 91-year-old audio magnate, Sidney Harman, had all the makings of a feel-good story, even as editor Jon Meacham announced his departure. A legendary media franchise rescued from an uncertain future by someone who regards Newsweek as a “national treasure,” and commits himself to the highest quality, Harman the idealist also has credibility as a brilliant innovator and businessman of stature. Though he has made his fortune in audio, he loves print. He is the author of two books and said writing “enables the process of self-discovery.” He will take over with a staff overjoyed by his commitment and his manners.

"Harman was someone who was taken less seriously by the staff who worked on the deal because he had no plan."

But make no mistake, Harman's pocket change purchase of Newsweek—he paid $1, plus the assumption of liabilities for the magazine—has to be a passion play, because it certainly isn't a financial one. The Daily Beast has obtained a copy of the 66-page sales memorandum that the Newsweek seller, the Washington Post Co., gave to prospective buyers, and it paints a picture of a media property given to someone unequipped to fundamentally change the current trajectory.

Much will depend on finding a near-genius editor and an inspired publisher and their freedom and shared approach, as much as their bankroll. As with many weeklies, Newsweek’s financial freefall is jarring. Revenue dropped 38 percent between 2007 and 2009, to $165 million. Newsweek's negligible operating loss (not including certain pension and early retirement changes) of $3 million in 2007 turned into a bloodbath: the business lost $32 million in 2008 and $39.5 million in 2009. Even after reducing headcount by 33 percent, and slashing the number of issues printed and distributed to readers each week, from 2.6 million to 1.5 million, the 2010 operating loss is still forecast at $20 million.

Dig deeper into the document and the numbers get worse. Newsweek lost money in all three of its core areas in 2008 and 2009: U.S. publishing, foreign publishing and digital. Even with the smaller guaranteed circulation, it still retains $40 million in subscription liabilities owed to readers. And then there's Newsweek's lease foibles: last year, it paid $13 million in rent, a startling figure for a company of its size.

Click Image to See 10 Memorable Newsweek Covers

Article - Newsweek Gallery

Into this picture steps Sidney Harman, who is venerable enough to have read the very first issue of Newsweek back in 1933. By Harman's own admission at a gathering of the magazine's staffers yesterday, his goal isn't to make a profit any time soon, but rather to reach break-even by 2013. Clearly, while the billionaire founder of Harman/Kardon and Harman International Industries is new to the media world, he's already got the "flat is the new up" mantra down pat.

Newsweek Staffers Nervous After Sale

Who Killed Newsweek?But by the Washington Post Co.'s own account, as told via the sales memorandum, Harman's Newsweek lacks what is necessary for a turnaround: the synergies of another media company. "The right strategic partner can potentially provide scale and synergies on the digital platform," the memo states. Additionally, if another media company bought Newsweek—such as when Bloomberg rescued BusinessWeek in a fire sale last year—then the murderously inefficient $55 million in general and administrative costs that Newsweek carried in 2009 (covering everything from finance and accounting and rent to legal, HR and IT. Standalone magazines no longer work.) could be greatly reduced by sharing resources.

Yet Harman has none of that—neither the scale to juice sales or reduce costs. When the microphone had to be lowered yesterday to accommodate Harman's diminutive stature during his address to the troops, he joked, "This microphone will be the last thing I will cut down to size," in an attempt to reassure staffers that he wasn't about to order wholesale layoffs.

In fact, Washington Post CEO Donald Graham apparently considered the fact that Harman would need to retain Newsweek's back office inefficiencies as a selling point, even as his company's sales memo advised otherwise. Graham will not have all that blood on his hands. (When one of the great brands in American journalism sells for a buck, legacy is about the only tangible currency left to haggle over.)

"Harman was someone who was taken less seriously by the staff who worked on the deal because he had no plan," says a person close to the deal. "He won the bid because he had the lowest number of layoffs."

Thus, further cuts have been kicked down the road, to occur on Harman's watch—or that of his heirs, who may include his wife, California Democratic Congresswoman Jane Harman.

"[Harman] has enough money for this to be a hobby that he can have fun with while trying to fix," says prominent media banker Reed Phillips.

Adds longtime friend and Newsweek political correspondent Howard Fineman, who wooed Harman to purchase the magazine over a mid-May lunch at the Hay Adams Hotel in Washington, D.C., "I told him that it's a great nameplate, and it's worth saving for several reasons, one of which is its global reach. It really does circulate around the world."

You can buy a bottle of water or Newsweek magazine. Amazing. I guess that's what happens to valuation when you post $20+million annual loses. Good luck to Mr. Harman. I'm glad he has a commitment to philanthropy.

Posted via email from Randy's Stuff