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Canadian newspapers still generate big profits

Those death-defying newspapers

By David Olive | Sun Feb 13 2011

Source: moneyville.ca

Newspapers are proving so resilient that the term “dying newspaper industry” will be retired in the next year or two.

Newspapers are still profitable, even in the midst of the most punishing ad drought in memory. Readership is at record levels, despite price hikes imposed by publishers. And web interlopers haven’t laid a glove on the industry’s status as society’s dominant news-gatherer.

In the latest sign of the industry’s strength, Statscan reported this week that the pretax profit margin for Canadian newspapers averaged 9.9 per cent last year. That’s down markedly from the halcyon pre-Internet, pre-ad-slump of 12.3 per cent in 2008. But it’s a long way from the extinction forecast for the industry by the most exuberant heralds of a purely digital world, a brave new world devoid of household names like the New York Times, Le Monde and metro dailies like The Toronto Star.

As recently as last year, the industry was shuddering from 2009’s stomach-churning plunge in advertising revenues, which cratered after the onset of the global financial crisis. Sam Zell, the real estate mogul who had just bought newspaper conglomerate Tribune Co., moaned that the industry was “looking at some of the worst advertising numbers in the history of the world.”

In the darkest hours, the venerable Seattle Post-Intelligencer and Denver’s Rocky Mountain News closed. Tribune and CanWest Global Communications Corp., the largest newspaper owners in the U.S. and Canada, respectively, filed for bankruptcy protection.

Yet newspapers appear poised for a bright future. To be sure, ad-revenue growth remains anaemic. And the industry has likely lost forever its lucrative franchise in classified ads, to Craigslist and other online upstarts.

But the widely anticipated “hollowing out” of newspaper readership hasn’t happened. Quite the opposite. The newspaper habit is stronger than ever, with more than three-quarters of Canadian adults, or 77 per cent, reading the print or online edition of a paper at least once a week.

Over the past five years, readership of Canada’s 95 dailies has actually increased, albeit by a modest 3.7 per cent. More than 14.7 million Canadians read a paper each week. That’s a “reach,” or portion of potential audience, that no non-traditional medium comes close to matching.

As important, Canadians are spending more time with newspapers. According to the latest, 2009-10, readership survey by NADbank, the industry group, in Canada’s top 10 markets readers are spending more than 3.8 hours a week with newspaper print editions. That’s up 2.1 per cent over the past three years.

And that at a time when publishers were raising the price of their product, enabling the industry to post a 12.9 per cent increase in circulation revenue between 2007 and 2009 to cushion a 4.9 per cent drop in ad revenues.

Meanwhile, readers are not spending close to two hours a week with the online editions of newspapers. Traditional papers are winning out in cyberspace. Retaining their status as the most trusted of news sources, with brand names dating back to 1778 in the case of the Montreal Gazette, newspapers have been able to build huge online audiences from scratch. The New York Times now claims a staggering 55 million online readers, against a weekday print circulation of less than 900,000. Online now accounts for 26 per cent of the New York Times’ total ad revenue.

Newspapers have benefited enormously from the rapid fragmentation of cyberspace.

The online world now is populated by social-networking sites, including Facebook with its 555 million members. There are some 200 million “blogs,” or personal web logs of writers on every topic from orchids to T-bill investing. There are tens of thousands of specialized newsletters, some published by the usual financial-services industry suspects, others independent, but none differing in content from their non-pixel predecessors. Not to overlook the so-called “aggregators” that merely repackage the online content of traditional media sources.

In that hyper-crowded arena, the advantage has gone to the most familiar tribunes. That would include the 164-year-old Chicago Tribune, which like almost every daily in North America has continued to earn profits through the industry’s worst hours. Indeed, industry warhorses the New York Times, Rupert Murdoch’s Wall Street Journal and even Tribune have reported profit gains in the past year.

Having not endured a crisis of this order since Gutenberg, the industry took on the appearance of a man with his hair on fire and trying to put it out with a hammer. Yet the demise of the Seattle P-I and the “Rocky” were simply a long-delayed capitulation to the one-newspaper monopoly that has characterized U.S. cities since the 1970s. And Tribune and CanWest succumbed to unsustainable, acquisition-related debt.

The “barriers to entry,” in econospeak, for launching an online publication are exceedingly minimal. Anyone with a Facebook, Blogger or Flickr account can become a publisher. Volatility is the norm, as underfunded websites are routinely abandoned.

By contrast, Star owner Torstar Corp., with close to $1.5 billion in 2009 revenues, has the resources to launch a portfolio of websites, host dozens of bloggers, and maintain a costly IT crew to run a complex digital enterprise.

Which explains why top-flight U.S. bloggers Andrew Sullivan, Felix Salmon and Eric Alterman have given up their garrets to bunk in with the venerable Atlantic, Reuters and The Nation, respectively. And why aggregators Huffington Post and The Daily Beast have sought shelter in larger and more familiar enterprises, AOL Inc. and the 77-year-old Newsweek, respectively.

In the past 12 months, shares in North America’s top10 publicly traded newspaper firms have gained an average of 20.8 per cent. And that’s before any meaningful recovery in ad revenues, or significant migration of print advertisers to online. And ahead of the New York Times’ second experiment, later this year, with trying to charge for selected online content. That’s a feat the Wall Street Journal and Financial Times have pulled off, and that Murdoch’s general-interest papers are now attempting.

Not long into the Internet’s brief history, users were complaining that “trying to get a drink from the Web is like sipping from a fire hydrant.” That growing flood of information is a boon to traditional newspapers. They alone have the expertise to quickly collect and verify staggering amounts of data and present it in reader-friendly formats.

We’ll hear soon enough about the phoenix-like rebirth of newspapers. It will be a crock, since there were no ashes to rise from. But editors will enjoy handling those reports far more than the industry obits they’ve edited these past few years.

Lennerton, Cameron Clyde

July 3, 1950 – December 14, 2010

Cam Lennerton

LENNERTON, Cameron Clyde July 3, 1950 December 14, 2010 It is with heavy hearts we announce the passing of Cam Lennerton at Royal Jubilee Hospital in the early morning hours of December 14, 2010. Cam was predeceased by his mother, Tillie; and father, Clyde. Cam leaves to mourn his loving wife, Maureen; his beloved daughters, Joanne, Dianne, and Christine; and their mother, Terry; stepsons, Nick, and Mike (Chelsea); and two grandsons, David, and Cooper. Cam spent his childhood in Winnipeg. He started working as a paperboy for the Winnipeg Free Press, eventually moving on to an apprentice stereotyper. As a young man, he started adventuring on his motorcycle, travelling across the country and as far south as the Yucatan Peninsula, where he spent many months enjoying the warm sun and surf. In later years he entertained friends and family with great stories of his many adventures travelling on his motorcycle, and in his bus. He eventually moved to Victoria and worked in the Mail Room at the Times Colonist until his early retirement due to ill health. He enjoyed sailing the Gulf Islands for the last few years in his dream sailboat, and particularly enjoyed the voyages to Princess Louisa Inlet and Desolation Sound, a lifelong dream of his. Many, many thanks to the paramedics for their heroic efforts. A Celebration of Life will be held Monday, December 20, 2:00 p.m. at First Memorial Funeral Chapel, 4725 Falaise Drive, Victoria. 612840 

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The Future of Media Gradually Coming Into Focus

Source: seekingalpha.com

by: Larry Kramer

Suddenly there are a lot of moving parts on the media landscape. And what’s really interesting is that they all seem to be moving in the same direction. 

We have old media coming toward new media: Rupert Murdoch and Steve Jobs building an IPad-only newspaper.

We have new media moving toward old media: Gawker’s Nick Denton, Newser’s Michael Wolff, Talking Points Memo and Digg all changing their look to add curation and perspective to their pages, and make them behave more like traditional media, editors and all.

We have a huge example of old and new media merging to create, well, newer media: Tina Brown riding her Daily Beast up a steep slope to take over and merge with Newsweek………………  click to read entre story

For Newspapers, the Future Is Now: Digital Must Be First

Source: gigaom.com
By Mathew Ingram Dec. 2, 2010, 8:21am PDT

As newspapers everywhere struggle to stay afloat and remake themselves for a web-based world, many continue to debate how much emphasis they should put on digital vs. their traditional print operations. John Paton, CEO of the Journal Register group of newspapers, says the time for debate is over. Newspapers need to be digital first in everything they do, he says, and more than that, they need to take the same approach to their businesses that many web-based startups have, and that means being transparent, crowdsourced, collaborative and flat. There’s no question; it’s an inspiring message, but will anyone listen?

In a speech he delivered Thursday at the Transformation of News Summit in Cambridge, Mass. (put on by the International Newsmedia Marketing Association or INMA), Paton said that the Journal Register — which he took over in February — has been living and breathing these principles for the past year, and they’ve paid off in terms of both revenue growth and profits for the company, which was effectively bankrupt last year. Paton says the Journal Register’s profit margins will be about 15 percent this year.

In effect, Paton says, the Journal Register — which publishes about 170 daily and weekly papers in Pennsylvania, Michigan, Connecticut, New York and New Jersey — is already a digital-first company whether it wants to be or not, because its total online audience is bigger than its print audience. “We are already a Digital company,” he said in his presentation, “with small sales in the area of growth and a burdensome cost structure on the declining business – Print.” The newspaper CEO said the company has dealt with that cost structure problem by outsourcing everything it can to others who can do it cheaper or better.

We are getting out of anything that does not fall into our core competencies of content creation and the selling of our audience to advertisers. Get rid of the bricks and iron [and] focus on core competencies — meaning, get rid of those things that don’t add value to the business. Reduce it or stop it. Outsource it or sell it.

What’s most interesting about the Journal Register’s approach is it doesn’t rely on putting up paywalls, the way that media mogul Rupert Murdoch has done at his newspapers in Britain — which led to a decline in online readership of more than 90 percent — and the way some other media outlets such as the New York Times are planning. Instead, Paton is focused on expanding the relationship his newspapers have with both readers and advertisers in their local communities, and taking that online. He says it’s working even better than expected.

Digital ad growth is 2 times better than the industry. More importantly the company’s digital revenue has grown from negligible to 11 % of ad revenue in November – in less than a year. The company will write about 1,000 digital ad orders this month and has expanded its revenue streams from about 13 basic revenue streams to about 60. And all of that with less costs.

In addition to the advertising growth, Paton says his papers are reaching out to the communities they serve, to make them part of what he calls the “new news ecosystem.” For one paper, the Register Citizen in Connecticut, that means creating a new community newsroom, which the newspaper is moving into later this month — the new offices have no walls, Paton says, and feature “a newsroom café with free public Wi-Fi, a community media lab and a community journalism school.”

The Journal Register CEO has also been taking the same approach to his own company: Earlier this year, Paton launched a project called ideaLab, in which employees from across the company were chosen from an open application process that generated almost 200 comments on Paton’s blog (his post about the lab is here). Armed with their choice of mobile phone, a netbook and iPad, members of the ideaLab get 10 hours of paid time per week to experiment and innovate — and only one rule, Paton said: There are no rules, and no sacred cows. Paton also had strong words in his presentation about why most newspapers aren’t changing:

The reasons… are simple: Fear, lack of knowledge and an aging managerial cadre that is cynically calculating how much they DON’T have to change before they get across the early retirement goal line. Look at the grey heads in any newspaper and you will see what I am talking about.

The solution, according to Paton?

Stop listening to newspaper people. We have had nearly 15 years to figure out the Web and as an industry we newspaper people are no good at it. No good at it at all. Want to get good at it? Then stop listening to the newspaper people and start listening to the rest of the world. And, I would point out, as we have done at JRC – put the Digital people in charge – of everything.

Whether anyone decides to take the Journal Register Co. CEO’s advice, it seems clear that the approach is working for Paton’s chain; he says in the year to date, the company outperformed the newspaper industry, with ad revenue growth three times better than the industry average, and classified ad performance that was six times better. Since costs have shrunk, profit margins have actually increased. On top of that kind of financial performance, it’s refreshing to see a newspaper publisher not just talk about going “digital first” but actually put his money where his mouth is. If you care about the future of newspapers and media, it’s well worth reading the entire presentation.