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Who's Going to Pay for Online Content? A) A Few of You B) Barely Anyone C) You're Already Paying

Peter Kafka — Mon, 16 Nov 2009 15:05:47 +0000

The new conventional wisdom is that sooner or later, consumers will have to start paying for some of the stuff they currently get for free on the Web.

But will they actually pay up? Here, the conventional wisdom is not so helpful. Nor are studies predicting consumer behavior. To wit:

Nearly 50 percent of U.S. Web users are willing to pay for online news, says the Boston Consulting Group.
Not a chance, says Forrester (FORR): Try 20 percent.

For what it’s worth, my money’s on the Forrester number, or one that’s even lower. My gut says people love consuming news, but only in the broadest sense–Obama doesn’t really Twitter! What was Belichick thinking?–and that sort of stuff, which appeals to a very large audience, will always be free, and you’ll get it from Google (GOOG) or something like Yahoo (YHOO). Which leaves you with a small audience willing to pay for everything else.

But! We should note that people are indeed paying for “content” right now. In fact, they’re paying for a lot of it: $115 a month, up seven percent from last year, says NPD Group. The breakdown:

As of August 2009, 81 percent of U.S. households subscribed to a television service (satellite TV, basic/premium cable, or fiber-optic television service). A similar percentage of households (76 percent) paid for Internet subscriptions. Seventeen percent subscribed to an online music service or satellite radio; and 14 percent subscribed to online gaming subscription services.

More traditional forms of entertainment subscriptions, however, did not fare so well. The number of people subscribing to newspapers fell by 2 percentage points to reach 29 percent in August 2009. Forty-one percent of consumers subscribed to magazines this year, compared to 43 percent who did so last year.

According to NPD, an influx of new smartphone owners has led to an increase in mobile data-plan subscriptions: 9 percent of U.S. consumers had mobile data subscriptions this year, versus just 6 percent last year. Fourteen percent of consumers subscribed to a home-video subscription service, like Netflix, this year, which is 2 percentage points higher than last year.

Ah, see? Problem solved: If you want Americans to pony up for stuff on the Web, just link it to something they’re already paying for, like their cable or Internet subscription.

This is what smart guys like John Malone have been talking about for a while, and it’s also the core of the strategy behind the Time Warner (TWX)/Comcast (CMCSA)/everyone else “TV Everywhere” gambit. But it’s also what many people have been trying to do for a very long time–ask the music industry–with limited success.

Bad News From the Washington Post: Ad Sales Slide Again

Peter Kafka — Fri, 30 Oct 2009 14:49:25 +0000

Last week, the New York Times (NYT) offered investors some cheer with an earnings report indicating that its ad sales slump may have slowed. No such luck from the Washington Post Company (WPO), whose flagship newspaper saw ad sales worsen over the last quarter.

The publisher said newspaper revenue dropped 20 percent in the third quarter, and print ads dropped by 28 percent; both of these numbers are worse than Q2, which saw revenue drop by 14 percent and print ads by 20 percent.

No relief from Web ads, either: Internet revenue dropped 18 percent, a decline from the nine percent drop in Q2. And online display ads, which had been more or less flat for the last few quarters, fell off a cliff, dropping 14 percent.

Don’t be duped by headlines reporting a drop in the newspaper division’s losses, by the way. That’s due to one-time accounting charges the previous year. If you look at operating revenue and expenses via a less formal, but more practical, lens, the results are very unpleasant: Losses increased by 55 percent (see summary below; click to enlarge).

Want more bad news? Okay: The company’s magazine group says revenue dropped 33 percent, driven by a staggering 48 percent drop in ad sales at Newsweek.

If you’re at, say, Time Warner’s (TWX) Time Inc. and want to whistle past the graveyard, you can try blaming the drop on the title’s unsuccessful overhaul. But I find it hard to believe that Newsweek’s woes don’t reflect a larger magazine malaise. We’ll see next week.

The good news, as always: The big difference between the Post and many other publishers is that its parent company doesn’t depend on print media. The company’ core education business, which is what has sustained it for many years, continues to do well.

Layoffs Come to the Wall Street Journal, Too: Boston Bureau Closing

Peter Kafka — Thu, 29 Oct 2009 15:40:14 +0000

The layoff ax swings close to home today: The Wall Street Journal is closing its Boston bureau, which will result in up to nine job losses. News Corp. (NWS), which owns the Journal as well as this site, has been pouring resources into the paper, but the Journal certainly isn’t immune to the pressures that all print publishers are under these days.

Here’s the internal memo from Journal Editor-in-Chief Robert Thomson:

From: Thomson, Robert
Sent: Thursday, October 29, 2009 11:25 AM
To: WSJ All News Staff; Newswires_USERS
Subject: Boston

Colleagues,
Today we told our team in Boston that we are closing the bureau in its present form. The economic background to the closure is painfully obvious to us all. An investigative function will remain in Boston, but the core reporting team will be disbanded, though all nine reporters affected will certainly be able to apply for openings elsewhere on the paper. Coverage of the Boston mutual fund industry will switch to the Money and Investing team and we are creating an enhanced New York-based education team.

Any such decision inevitably stirs apprehension and uncertainty, but there are no plans, nascent or otherwise, to close any other U.S. or international bureau. Meanwhile, the Newswires bureau and the MarketWatch team in Boston will remain at their present staffing levels.

That there has been truly great reporting under the generalship of Gary Putka out of Boston over many, many years is not in doubt. But we remain in the midst of a profound downturn in advertising revenue and thus must think the unthinkable.

Robert

The New York Times Explains the Ad Market: Banks Bail, and So Does Hollywood. But Big Pharma Steps Up, and "Modest" Improvement Coming

Peter Kafka — Fri, 23 Oct 2009 13:59:39 +0000

The New York Times (NYT) delivered some modestly good news yesterday: The publisher said ad sales were still way, way down, but it had managed to cut costs enough to deliver a pleasant earnings surprise.

Can the paper cut costs even more? It’s going to try, starting with a 100-person cut in its newsroom, which will bring headcount down by eight percent. But the Times is also counting on the ad market to pick up at some point, and it says it can now see the faint outline of a recovery taking shape.

During the paper’s earnings call yesterday, it offered a bit of insight into who was buying ads and who wasn’t. In the latter category: Banks, mutual funds and insurance companies, which were burning cash a year ago in an effort to convince customers that things were okay; movie studios and telcos also pulled back. But health-care spending was up, via big pharma and hospitals. Were they pitching consumers or legislators?

Bear in mind that ad revenue dropped 26.9 percent for the quarter, so all of this is relative. So when the Times talks about seeing “encouraging signs of improvement,” as CEO Janet Robinson mentioned in a press release yesterday, what exactly does she mean?

Here’s Robinson’s answer to that question, delivered during yesterday’s call. Transcript via Seeking Alpha:

We’re seeing improvement, a modest improvement. We’re seeing certainly more requests for proposals across the board. We’re seeing a modest growth in regard to commitment. We still are seeing just in time commitments, so the visibility continues to be cloudy, but I think we are encouraged that indeed we see advertisers telling us that their business is improving and consequently requesting more information from us in regard to rates and placement and certainly customized programs.

I’ll give you an example. The retailers in September as noted in my remarks, we started to see a little bit of a pickup. We have had in depth conversations with them in regard to their improvement. So we do see traffic improvement in regard to the stores and consequently when that’s the case, they tend to want to do more in regard to building even more traffic.

Same holds true in regard to some of the national advertisers with technology and national automotive, with certainly the bankruptcies behind General Motors and Chrysler and some activity certainly in technology and healthcare, we are seeing more commitments coming our way in regard to national schedules as well.

New York Times Delivers Some Not Terrible News: Earnings, Ad Sales Better Than Expected

Peter Kafka — Thu, 22 Oct 2009 12:05:36 +0000

The New York Times announced plans to cut eight percent of its newsroom payroll this week, citing “economic thunderstorms,” which suggested that this morning’s earnings results were going to be particularly unpleasant.

Surprise! They’re not that awful, at least by the diminished standards of the newspaper industry:

Excluding one-time charges, the publisher earned 16 cents per share on revenue of $570 million. Analysts expected the Times (NYT) to lose a penny per share on revenue of $561 million.

Ad revenue declined 26.9 percent, which is unpleasant but better than the previous quarter, when it dropped 30.2 percent. Internet revenue dropped by 7.2 percent and Internet ad revenue was down 8.2 percent. Both of those results are improvements over the previous quarter as well: Last quarter, Internet revenue was down 14.3 percent and Internet ad revenue was down 15.5 percent.

Some cautious optimism from CEO Janet Robinson:

Looking ahead, visibility remains limited for advertising in the fourth quarter. But as is the case across the media sector, we have seen encouraging signs of improvement in the overall economy and in discussions with our advertisers. Early in the fourth quarter, print advertising trends, in comparison to the third quarter, have improved modestly, while digital advertising trends are improving more significantly.

A little more color on digital: The big improvement this quarter was driven by a turnaround at the Times’s About.com content mill: Revenue was up 7.2 percent, way up from the 5.1 percent decline posted in the previous quarter. This makes sense, given that About is driven by pay-per-click ads and these have come back across the industry, led by Google (GOOG).

But the story is less impressive at the Times’s traditional Web sites. Ad revenue there was down 18.5 percent, which is better than the 21.6 percent drop the previous quarter, but nothing to write home about. As it has done in previous quarters, the publisher blames the decline on a drop in online classifieds, and I assume that much of the drop stems from vaporized employment ads. If this is the case, it’s going to be hard to move those numbers significantly for quite some time.

Rise of the Machines: Why Demand Media Is Worth More Than the New York Times

Peter Kafka — Tue, 20 Oct 2009 10:00:04 +0000

The New York Times’s model for content creation, which revolves around well-paid professionals who rely on their experience and judgment, looks increasingly threatened. What does a new model look like? Perhaps one where a computer spits out assignments to day laborers who work furiously for low pay.

That’s the worrisome conclusion you can draw from Dan Roth’s excellent profile of Demand Media in the new issue of Wired. The piece is well-worth reading, but here’s the very short version: Demand has figured out how to generate a massive stream of low-cost stories designed to extract the maximum dollars from Google’s (GOOG) advertisers.

The company has plenty of competitors that do similar stuff–Associated Content, Mahalo, and About.com, owned by the New York Times (NYT)–but Demand’s secret sauce is an algorithm that helps it figure out the most valuable stories to assign, based on search terms and keyword prices. Which leads to stories like “Where can I donate a car in Dallas?”

Demand currently produces about 4,000 new stories a month, paying the freelancers who create them between $15 and $20 a piece. But CEO Richard Rosenblatt wants to up that to a million per year. At that point, Roth notes, “the payouts could easily hit $200 million a year, less than a third of what The New York Times shells out in wages and benefits to produce its roughly 5,000 articles a month.”

Which is why Demand is constantly floated as a potential acquisition candidate for the likes of Yahoo (YHOO), at price tags of $1.5 billion or more. Investors, who bid up Times stock a bit after the company announced plans to cut its newsroom headcount by eight percent, currently value the publisher at $1.3 billion.

All of that make you queasy? Then you’re going to hate reading paragraphs like this:

Here is the thing that Rosenblatt has since discovered: Online content is not worth very much. This may be a truism, but Rosenblatt has the hard, mathematical proof. It’s right there in black and white, in the Demand Media database–the lifetime value of every story, algorithmically derived, and very, very small. Most media companies are trying hard to increase those numbers, to boost the value of their online content until it matches the amount of money it costs to produce. But Rosenblatt thinks they have it exactly backward. Instead of trying to raise the market value of online content to match the cost of producing it–perhaps an impossible proposition–the secret is to cut costs until they match the market value.

I think there’s an equally worrisome story–worrisome, that is, from the admittedly self-interested perspective of content creators like me–about the pressure from advertisers, armed with their own technology, to push the value of online content down even further. But we’ll save that for later. One downer a day is plenty.

Want to know what the face of new media looks like? Here’s a 2008 interview Kara Swisher conducted with the preternaturally peppy Rosenblatt:

[ See post to watch video ]

Newspapers to Congress: Please Don't Give Us a Bailout

Peter Kafka — Thu, 24 Sep 2009 14:59:01 +0000

The newspaper bailout proposal you may have heard about over the last few months? The newspapers want no part of it, says an industry spokesman.

That said, the industry wouldn’t turn down some help from Congress, says John Sturm, CEO of the Newspaper Association of America.

Testifying at a House hearing this morning, Sturm says his group does like proposals that would let newspapers–and other businesses–change some of their accounting practices related to tax refunds (via net operating-loss provisions) and pension plans. Oh, and he’s in favor of a proposed law that would let papers operate as nonprofits while still generating advertising revenue.

The complete text of Sturm’s opening statement is embedded at the bottom of this post, and if you want to watch the hearing, organized by Congress’s Joint Economic Committee, it was streamed live (albeit choppily) here.

My political handicapping skills are nonexistent, but that said, I think there’s no chance of Congress passing a bill that singles out newspapers for aid. Local papers are still vitally important to local lawmakers, but many of those lawmakers’ constituents hate their papers, for all manner of offenses, real and imagined. I just can’t imagine what they’d do if they were told their tax dollars were going to support their local rag.

Still, I wouldn’t rule out some politically motivated pressure being applied to bogeymen like Craigslist and Google (GOOG), in the form of antitrust scrutiny or other arm-twisting.

JFS-Statement-Joint-Economic-Committee-092409-Hearing –

Newspapers' Bad News Get Less Bad–But Not by Much

Peter Kafka — Mon, 21 Sep 2009 10:00:01 +0000

Is the newspaper advertising slump about to end? Nope. But it’s continuing to get a little bit less awful.

The New York Times polled some of the remaining analysts covering the industry, as well as people who actually work in it, and concluded that Q3 ad revenue will be down 25 percent, or “possibly a bit less.” Awful by any standard except those of this year: Q1 was down 28.3 percent and Q2 was 29 percent.

Worth noting, but not in a newsworthy way: We’ve been headed in this direction for a while. Publishers, including the New York Times (NYT), Gannett (GCI) and McClatchy (MNI), started making hopeful murmurs–or less hopeless murmurs, really–earlier this summer. But all they’re really saying is that:

Things don’t seem to be getting any worse, and
It’s nearly impossible for year-over-year comparisons not to improve for the rest of the year since results will be measured against those posted in the fall of 2008, when the economy was in shocked-and-awed mode. Which we knew. But still worth repeating, and something we’ll probably repeat many more times through the rest of this year.

The Financial Times Strengthens Its Pay Wall With Stern Words

Peter Kafka — Wed, 26 Aug 2009 22:15:41 +0000

As more (and more!) newspapers look to put some of their content behind a pay wall, the Financial Times is running a victory lap, noting that it is already asking customers to pay for Web news, and that this approach has been successful.

Fair enough. But if you’re that confident in your model–which, in short, allows Web surfers to look in on the FT.com site 10 times a month for free but demands payment for anything more than that–what’s with the following message at the bottom of each story?

Copyright The Financial Times Limited 2009. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web.

Anyone else think that strikes a weird tone between pleading and chiding? I’m told the note started showing up on FT stories about three weeks ago and that staffers at the paper are a bit confused about it as well. Here’s how FT spokeswoman Darcy Keller explains the message, via email:

The FT copyright simply protects our ownership of FT content. There is obviously a distinction between third parties referring to FT articles and linking back to FT.com and those that reuse and distribute our content without attributing it to the FT.

Obviously there is! But there’s also an obvious distinction between friends and colleagues who pass along an interesting article and, say, people who run sleazy “scraper” sites that publish other people’s copy in the hope of gaming Google’s (GOOG) search engine. Right? And more important: The people in the second category won’t be deterred by a copyright note–even a sternly worded one. Right?

Obligatory to-be-sure grafs: News Corp.’s (NWS) Dow Jones, which owns this (free) Web site, also charges for access to (some of) its Wall Street Journal. And it also tells people not to distribute WSJ.com stories without its permission. But in order to find that boilerplate language, you’d have to seek out the “Subscriber Agreement & Terms of Use” page, and slug your way through legalese until you got to section 6 (b)–“Limitations on Use.” Or you can just trust me. Does that make you less likely to copy and paste this story?

Sony's Kindle Competition: Touchscreen Plus AT&T, for $399

Peter Kafka — Tue, 25 Aug 2009 14:53:57 +0000

Sony did indeed have a bit of news to announce at the New York Public Library: Its most direct challenge to Amazon’s Kindle to date. Like the Kindle, the “Daily” reader will feature a wireless connection–Sony (SNE) will use AT&T (T), while Amazon (AMZN) uses Sprint (S). And unlike the current versions of the Kindle, the Sony device will feature a touchscreen.

But it will come at a price: The device, shown below (click on image to enlarge), will retail in December for $399. That’s $100 more than the current price of Amazon’s Kindle 2. And that price point is almost certain to drop in coming months.

Sony wouldn’t let reporters handle the Daily, and didn’t put it through its paces, either. So hard to get a sense of much here. But here’s a video I shot of Sony exec Steve Haber holding the machine while talking up its virtues — which include free access to books from your public library.

EXTRA, EXTRA: SONY’S DAILY EDITION ROUNDS OUT NEW LINE OF DIGITAL READERS

Wireless 3G Reader Extends Sony’s Commitment to Bring
Open Digital Reading to Mass Audience

NEW YORK, August 25, 2009 Delivering on its promise to give consumers a variety of choices, Sony today announced the third member of its new Reader family–the Reader Daily Edition™, a highly-anticipated wireless model with 3G connectivity. The Daily Edition caps its new line of Reader products, joining the Reader Pocket Edition™ and the Reader Touch Edition™ which were announced earlier this month.
The Reader Pocket Edition and the Reader Touch Edition are available immediately, and the Reader Daily Edition will be available this December in time for the holidays at SonyStyle stores and SonyStyle.com.
“We firmly believe consumers should have choice in every aspect of their digital reading experience,” said Steve Haber, president of Sony’s Digital Reading Business Division. “Today, we take another large stride to deliver on that promise. We now have the most affordable devices on the market, the greatest access to free and affordable eBooks through The eBook Store from Sony and our affiliated ecosystem, and now round out our Reader offering with a wireless device that lets consumer purchase and download content on the go.”
A Family of Three Readers
The Reader Pocket Edition sports a five-inch electronic paper display packaged in a stylish chassis and is available in a variety of colors, including navy blue, rose and silver. It is available for the ground-breaking price of $199, making it the most affordable dedicated reading device on the market.
The Reader Touch Edition features a responsive, menu-driven six-inch touch screen panel that enables quick, intuitive navigation, page turning, highlighting and note taking with the swipe of a finger or by using the included stylus pen. It comes in red, black or silver and retails for about $299.
The Reader Daily Edition gives consumers wireless access via AT&T’s 3G mobile broadband network to Sony’s eBook store from just about anywhere in the U.S. Book lovers will be able to browse, purchase and download books as well as select newspapers and magazines when and where they want. There are no monthly fees or transaction charges for the basic wireless connectivity and users still have the option to side load personal documents or content from other compatible sites via USB.
The seven-inch wide, touch screen display provides for intuitive navigation and comfortable layout of content, including newspapers and magazines, whether you’re reading in portrait or landscape orientation. In portrait mode, about 30-35 lines of text are visible, making the experience very similar to that of a printed paperback book. A high contrast ratio with 16 levels of grayscale ensures that text and images are crisp and easy to read. The Daily Edition also boasts an attractive aluminum body with an integrated cover for durability. It has enough internal memory to hold more than one thousand standard eBooks and expansion slots for memory cards to hold even more. It will sell for about $399.
All three models feature Sony’s award-winning industrial design and an E Ink® Vizplex™ electronic paper display that emulates the look of ink on paper. Sony’s eBook Library software 3.0, which now includes support for many Apple® Macintosh® computers as well as PCs, makes it easy to transfer and read any Adobe® PDF (with reflow capability), EPUB, Microsoft® Word®, BBeB® files, or other text file formats on the Reader.
Access to Even More Content at the eBook Store by Sony
In addition to announcing a new family of Readers, Sony has also made several changes and improvements to its eBook Store to provide better access to an even greater variety of ebooks. Earlier this summer Sony announced the availability of more than one million free public domain books from Google, and the company made new releases and New York Times bestseller titles available for $9.99.
Today also marks the launch of Sony’s Library Finder application. Sony, working with OverDrive (www.overdrive.com), the leading global digital distributor of eBooks and to libraries, will now offer visitors to the eBook Store by Sony easy access to their local library’s collection of eBooks. Thousands of libraries in the OverDrive network offer eBooks optimized for the Sony Reader, and visitors can now find these libraries by typing their zip code into the Library Finder. Through the selected library’s download website, visitors can check out eBooks with a valid library card, download them to a PC and transfer to their Reader. At the end of the library’s lending period, eBooks simply expire, so there are never any late fees.
The Reader Pocket and Touch Editions, as well as available accessories such as AC adaptors, cases and covers with reading lights, are available now at SonyStyle.com and SonyStyle stores. Book lovers interested in trying out a Reader in person will also be able to find them for sale at Best Buy, BJs, Borders, Sam’s Club, Staples, Target, Toys“R”Us, Wal-Mart and other authorized retailers nationwide.

DIGITAL READING ECOSYSTEM EXPANDS FOR SONY’S READER

NEW YORK, August 25, 2009 Further evidence of the broad support for its open approach to digital reading, Sony today announced relationships with a variety of traditional and digital publishers who provide content in industry standard formats to create a universe of reading material compatible with the Reader.
All of these sites will offer content in the EPUB format, the International Digital Publishing Forum’s (IDPF) XML-based standard format for reflowable digital books and publications. EPUB has gained acceptance among major trade book publishers with dozens of publishers already producing the majority of their eBooks using the standard. Sony recently announced that the company is transitioning its entire content library to the EPUB format, giving consumers the freedom to purchase or download free eBooks from the eBook Store by Sony and read them on any EPUB-compatible device.
“From the beginning, we have said that an open format means more choice for consumers,” said Steve Haber, president of Sony’s Digital Reading Business Division. “Now, working with other industry leaders, we can provide a device that is compatible with the widest selection of content available. Readers can shop around for what interests them rather than be locked into one store.”
Sony’s eBook Store already provides access to more than one million public domain Google Books in EPUB format and, starting today, Sony’s Library Finder application will go live. Library Finder offers visitors to the eBook Store by Sony easy access to their local library’s collection of eBooks. Thousands of libraries offer eBooks optimized for the Sony Reader, and visitors can now find these libraries by typing their zip code into the Library Finder. Through the selected library’s download website, visitors can check out eBooks with a valid library card, download them to a PC and transfer to their Reader.
Other sites offering EPUB content include:
• Independent Bookstores–More than 200 participating members of the American Booksellers Association–including stores such as Tattered Cover (Denver, CO) and Vroman’s Bookstore (Pasadena, CA)–will have the ability to sell e-content to consumers beginning this fall. The stores using ABA’s IndieCommerce platform will offer content in the EPUB format and protected by Adobe’s Content Server 4 (ACS4) digital rights management, which is compatible with Sony e-Reader products. In addition, plans are underway to make Sony’s e-Reader devices available for purchase from independent bookstores in time for this holiday season. ABA is a not-for-profit trade organization devoted to meeting the needs of its core members–independently owned bookstores with storefront locations–through education, information dissemination, business products and services, and advocacy.
· BooksOnBoard–BooksOnBoard, the largest independent eBook bookseller and member of both the ABA and IDPF, has been a staunch supporter of the EPUB standard through its founder Bob Livolsi. BooksOnBoard was the first eBook site to offer the EPUB standard to its burgeoning customer base and has sold more EPUB formatted books than any other online bookstore. BooksOnBoard believes that the EPUB standard significantly benefits the publisher, authors and most importantly the consumer.
· NetGalley–NetGalley is an innovative and easy-to-use online service and connection point for book publishers, reviewers, media, librarians, booksellers, bloggers and educators. NetGalley delivers digital galleys and promotional materials to professional readers and helps promote new and upcoming titles. Starting today, NetGalley will support the Reader with the ability to download a protected PDF file and this fall the company will offer digital galleys in EPUB format.
• Powell’s Books and Powells.com–Powell’s Books is the largest independent bookseller in the world. Innovative since its inception in 1971, it was one of the first booksellers online (beginning in 1994), and one of the first to sell eBooks for reading devices (the Rocket eBook) in 1999. Powell’s offers EPUB content for a wide range of compatible devices, including the Sony line. Powell’s is an important player in the open access world of eBooks, where titles are provided by a wide range of publishers in a competitive retail environment, read on a range of devices, and downloaded and owned by millions of people around the world.

Is the AP Adding DRM to the News? Not Yet.

Peter Kafka — Thu, 23 Jul 2009 20:03:15 +0000

Here’s the next step in the Associated Press’s attempt to adapt to the reality of the Web: It’s going to try to keep tabs on its stories, photos and videos via a “news registry that will tag and track all AP content online to assure compliance with terms of use.”

At first blush, the AP’s description of the program, found in this press release and this FAQ, sounds a lot like an attempt to implement digital rights management–a lock-and-key system–for the news. But at least in this iteration, that’s not the case. The AP is really talking about adding a layer of metadata to its copy, so it can see who’s using it, and where.

“Any time you talk about a tracking system, the thrust of [the commentary] is about enforcing copyright,” Jim Kennedy, the AP’s VP of strategic planning, told me this afternoon. “But what we hope is the outcome out of this is the ability to enable more licensed uses of content. We want to keep the content open, we don’t want to keep it behind firewalls.”

If you want to see a benign description of the technology the AP intends to use, head to this site, developed by its U.K.-based partner Media Standards Trust. If you don’t have time for that, just imagine Wal-Mart (WMT) adding RFID chips to track its pallets as they move around the country.

Jim Kennedy tells me that the AP will have tests for the new system up and running by mid-November, and hopes to have it in place for all the copy it produces by the end of the year. And in 2010, it will make it available to the cooperative’s members, i.e., other news organizations.

You’ll hear griping about this from some corners, but all of it sounds fine to me–I don’t care how the AP tracks its product. But note that this tracking system only works when its used by someone who already has a business relationship with the AP.

Which means it doesn’t solve the two problems the AP started complaining about this spring: The fact that bloggers and other nogoodniks are using AP copy without paying for it and the fact that Google (GOOG) isn’t paying the AP enough for the copy it does use.

On those fronts, the AP’s contract with Google expires at the end of this year, and my understanding is that renewal negotiations are moving slowly, at best. And the AP will continue to use Attributor’s tracking service to find unauthorized uses of its stuff on the Web.

And if the AP ever does try to shove its copy behind a firewall, then a tracking system would come in handy. But we’re not there yet.

A Mixed Bag From the New York Times: Q2 Costs Got Better, Ads Got Worse, and Web Dollars Disappeared

Peter Kafka — Thu, 23 Jul 2009 13:00:07 +0000

We saw a mini-rally in newspaper shares yesterday, based on the hopeful notion that the worst may be over for the industry. Now investors are going nuts for the New York Times (NYT), at least in early trading, based on its Q2 results. But I think the results are a mixed bag.

The publisher was able to take a big chunk out of operating costs, knocking them down 20 percent. But revenue fell faster. The paper did say, though, that things got less bad as the quarter progressed, and that they’ll get slightly less bad next quarter, too.

The numbers: After factoring out one-time charges and benefits, the Times posted earnings of eight cents per share, well above the four-cent loss the Street was expecting. But revenue dropped 21 percent, to $585 million; the consensus was $603 million.

The Times posted an operating profit of $23.3 million; without one-time charges that number would have been $66.1 million. That’s worse than the $100 million the paper made a year ago, but much better than the $74.5 million it lost (net) in Q1.

But! Ad revenue declined 30.2 percent, an acceleration from last quarter’s 28 percent drop. In addition to the regular culprits, the Times noted a “lower volume of online advertising.” More details on that: Internet revenue dropped a shocking 14.3 percent, and Internet ad revenue was down 15.5 percent; last quarter they were down 5.6 percent and 6.1 percent.

The assessment from Times CEO Janet Robinson:

Based on what we have seen so far in July, we expect the advertising environment to continue to be challenging. We believe the rate of decline will moderate slightly in the third quarter from what we experienced in the second quarter.

As we look ahead, an enduring constant is the outstanding journalism of The New York Times Company and the esteem in which it is held by our readers. For the balance of the year, we are focused on developing innovative new products and platforms based on our high-quality journalism, particularly in the digital area, and continuing to aggressively lower our cost base to better align it with our revenues. When the economy and ad markets improve, we believe we will be very well positioned to benefit from the restructuring of our business.

Is the Newspaper Ad Slump Ending? No. But It's Looking Less Lousy.

Peter Kafka — Wed, 22 Jul 2009 17:19:03 +0000

Be very careful about reading too much into this. But for what it’s worth, several newspaper publishers are now announcing that things are looking…“up” is the wrong word. Let’s try “less bad.”

Last week, Gannett (GCI) said national ads had only dropped 12 percent in June, compared to a 24 percent slide the previous year. Yesterday, McClatchy (MNI) said that while ad revenue was down 30 percent in the last quarter, this figure was at least stable compared to the previous quarter, and that things were picking up, just a bit, this summer. And today Media General (MEG) said its declines had also become a bit less severe.

Tomorrow we hear from the New York Times (NYT), and if we use the the very low bar set by its peers, there’s a decent chance the publisher will have a not-terrible story to tell.

That’s because the Times had previously warned that its Q2 would look as unpleasant as its Q1, when its ad sales dropped 27 percent; anything less lousy will constitute a win. Investors seem eager to hear about it: NYT shares are trading up today along with many other newspaper publishers.

And again, be very wary of overvaluing these numbers, particularly as we get farther along into summer and fall. At that point, the comps will be measured against last year’s black hole of an economy, and any company that can’t show an improvement against that performance will likely be DOA.

Still. It’s a very nice day in New York, and newspapers deserve a shot of good news. Enjoy.

How to Save Newspapers, Charity Edition

Peter Kafka — Thu, 09 Jul 2009 19:31:34 +0000

From Slate.com, which happens to be owned by the Washington Post Co. (WPO):

And just to be clear: The video is a joke. But the preroll ads that run before it–the two I’ve seen before are for Amway and some kind of fast food chain called Red Robin–are real. I think. Also not a joke: The New York Times (NYT) is surveying readers to see what they’d think of paying $5 a month for Web access to the paper.

In related news, tomorrow is the first annual “Freelancers put on your pants day,” according to ASSME, which is a sort-of-serious blog/support group formed in the wake of last fall’s mass layoffs.

Want to Work at a Newspaper? Better Brush Up on Your Twitter.

Peter Kafka — Wed, 08 Jul 2009 13:10:31 +0000

Want to work for the Minneapolis Star Tribune? Make sure you can demonstrate mastery of Facebook and Twitter. The daily is looking for a political reporter and insists that the new hire show up with Web 2.0 bona fides.

From the Strib’s posting on Journalism Jobs (via Minnpost): “Enthusiasm for communicating political news on many different platforms–from print to online to mobile to social networking media–is essential.”

First: Good to know that even bankrupt papers are still hiring. That’s my good news tidbit for the day.

Second: The social-networking part may sound like a novelty, but I think in the not-too-distant future, this is simply going to be a core requirement for any reporting job, like having a driver’s license.