This weeks commentary centers around the news, no longer shocking, that another major daily newspaper is on the ropes and is threatened with being shut down by it's owners. The NY Times, parent of the New England regional powerhouse, has told the unions to accept $20 million in concessions in the next 30 days or face immediate shut down. The pressure is intense as the paper lost $1 million per week in 2008 and is currently bleeding at a rate of $1.5 million per week now according to most estimates.
As the Wall Street Journal reports, recent valuations on the once billion dollar franchise hover between $12 million and $20 million and that assumes you could even find a buyer willing to take on the suicidal cash flow picture facing the Globe today.
The Boston Globe was the first paper I ever subscribed to, when at 15, I signed up so I could get the legendary sports page delivered to my home. Back then, in what I refer to as the golden age of sports writing, you could read daily a who's who of journalistic talent assembled by Vince Doria, one of the great sports editors of all time. Peter Gammons covered baseball, Bob Ryan covered basketball, Bud Collins covered tennis, Will McDonaugh covered the NFL, Lesley Visser got her start covering the NFL and you had columnists such as Ray Fitzgerald, Leigh Montville, Mike Madden and others to supplement the coverage. It was superb reporting and I'm sure I'm forgetting other great writers of that era of the Globe as well.
However, it was able to hire, nurture and retain that level of talent only as a result of it's amazing monopoly on regional news and the fact that it was the one major advertising buy for firms looking to reach the New England market. As someone who once looked into the cost of advertising in the Globe, I can tell you with certainty it's pricing was beyond the reach of mere mortals, but as long as it had the monopoly it kept it's power and cash flowing from major, well heeled advertisers.
The internet has systematically destroyed monopoly pricing in many once powerful entities; music, newspapers, radio, magazines and now television. As the monopolies collapsed, we witnessed each industry clumsily attempt the transition from monopoly status to grafting it's old, familiar business model on to the internet. For newspapers and trade publications it was and is the frantic sprint to develop " internet properties " that created similar revenue and reach as their once powerful print franchises once had. However, as most of us in the internet media and broadcast business will tell you, the margins and advertising models being used so far, fall far short of the massive monopoly pricing values of these old line media conglomerates.
You see, the internet does not allow for the forced interruption of the viewer, reader, listener as it has a mouse that permits the user to simply skip, delete or find alternate information that doesn't force unwanted advertising upon them. In the old days of monopoly media you had to endure the flood of advertising interruptions in order to "consume" the monopoly media product. The internet has utterly destroyed this interruption model but the ad companies and media firms have been slow to share this fact with their advertisers but the metrics are now starting to prove this out as evidenced in the almost 9% decline in ONLINE revenue at major newpapers at the end of 2008.
This theory, first mentioned by Phil Wainewright in his ZDNet column, and who is one of the true thought leaders in SaaS and other topics related to how the internet is massively reshaping major business models, is explained in greater detail in this weeks edition of Chairman Mark, my weekly column and interview series over on The Legal Broadcast Network blog page.
In this video podcast with Phil Wainewright we talk about how the conventional wisdom of how advertising models on the internet simply don't work in the same fashion as the media companies wish them to work. This disconnect of grafting old media advertising tactics and rates on to what is in reality a profoundly different medium, i.e. The internet accessed through a PC, is causing near hysteria in response to the collapsing revenue of many major online ventures. A modest article written by Wharton Professor Eric Clemons has been met with a cascade of abuse by media experts who refuse to believe what the numbers are telling them, and that is the techniques and methods of advertising that served monopolists so well simply can not and will not work on a medium where the power now resides with the end user to choose their content and the advertising that is relevant and important to them.
If you are in the media or advertising business I urge you to read this important blog post and analysis on ZDNet.
Also, I suggest you learn more about Phil Wainewright and his forward thinking views and analysis by checking out his blogs at ZDNet and at his site at Phil Wainewright.com I hope to have him back on again in the future.
Finally, read in it's entirety the article posted as a guest commentator on TechCrunch by Professor Eric Clemons to get a better handle on where things are headed. As Jonathan Swift once wrote, " When a true genius appears in the world, you may know him by this sign, that the dunces are all in a confederacy against him." The intense and almost hysterical reaction among readers and those in the media and advertising world was swift and stunning, but ultimately validating in my opinion, of the theory he is putting out there. It's not comfortable to read if you are in the media business, but the truth rarely is at times.
This same truth is one confronting the Structured Settlement profession and that is the tactics, sales models and monopoly of control over our product is being rapidly eroded by the spread of information about structured settlement services via the internet. I believe the trade associations are about to lose, if in fact they haven't lost already, their ability to "speak as the one voice" about structured settlements as consumers and trial lawyers instead search the internet for information about their structured settlement options and information. NSSTA will be largely relegated to being a (hopefully) effective lobbying force for the profession in Washington, DC, but it's ability to agree on coherent marketing messages and models just means individual experts will instead fill that void on the internet instead.
Much of the annoyance over factoring companies is that they were ahead of the structured settlement industry in adopting and blanketing the internet with "news and information" about structures that ran counter to NSSTA's desires and wishes. The fact is the genie is out of that bottle and unless and until NSSTA and other entities realize their ability to control who speaks for the industry on a topic has ended, they will be playing an expensive and ultimately losing game of catch up as entrepreneurs and members strike out on their own initiatives.