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- Summer 1999
 - Werner's World


By Werner Elhauge,
Chief Technology Officer  SAXoTECH

SAXoTECH - Newsroom - Newsletters -  Int. Newsletter - Summer 1999 -
Werner's World

Once upon a time media companies (newspapers, TV, and maga-zines) competed on a level play-ing field. Large corporations did not own most media companies. Broadcast and print media were not allowed to form local monopolies, and media companies competed for advertising revenue with clear-cut rules of engagement. Cost per thousand, market reach and the logic-emotion con-tinuum dominated the collective thinking of Publishers. Publishers of traditional print products suffered decreasing readerships and a decrease in the overall percentage of the advertising revenue pie.

The newsroom created one product, one deadline operation.
Content came in through various sources (wire services and local and international reporting), was processed (in a serial method) and produced for the media of choice. The processing of advertising and circulation sales also occurred in a linear manner.

The reader/viewer tuned into their choice of media (print or broadcast) and sat passively absorbing the information. In general, the individual could tune into local broadcast news or the newspaper to receive their local, national and international news. But the readers, viewers and advertisers were less than thrilled with this paradigm. The readers and viewers wanted more choice and mo-re depth while the advertisers wanted better targeting.

Time Warp I - Complexity Arrives
Over time, traditional media companies attempted to react to the needs of their readers and advertisers by targeting the news and advertising content through zoning and special products.
However, this only partially ameliorated the problem. And it did have an undesirable effect by making life more difficult for the newsroom and advertising personnel. The number of publications increased (doubled, tripled or worse) while newsroom and advertising employees decreased. The newsroom had become a cost center and advertisers were demanding more targeted advertising for less money. Publishers countered by pushing their suppliers to provide technology to ease these production pains. The new tools did allow publishers to do a better job of producing and distributing the content. Editorial pagination systems and advertising zoning and rating systems came of age which allowed pub-lishers to distribute their production facilities and cut costs and begin to target readers.

At the same time new competitors emerged. First the addition of more magazines. That allowed a reader to get in-depth information about his or her interests. The magazines included hobby (PC, Bike, etc.) trade (Education, Agri-culture, etc.), and advertising (Ho-mes, Cars, etc.). This had two ma-jor effects, it reduced the time available to read and view the traditional media and allowed ad-vertisers to better target their ad-vertising purchases.

Corporate Ownership
In addition, corporate ownership has moved from reality to dominance. Independent publishers are going the way of the dinosaur. Large media companies are consolidating their holdings. They are purchasing independent publishers and small media companies.

Some are doing this on a geographic basis. Thompson is a good example with their Strategic Marketing Group (SMG) concept. They pick a region that they believe is growing and purchase all of the publishers in the surrounding area. They then drive costs down through efficiencies in production & distribution, newsgathering and advertising. They achieve most of these efficiencies through technology.

Time Warp II - Immediacy and Interactivity 
Then a whole new set of competitors came on the market, E-MAIL and the INTERNET. This has provided two new threats for traditional publishers. First, it allows the niche publisher to further target their readership with news and advertising. Second, it allows anyone to become a publisher with a very low cost of entry.

Readers and viewers did not need to sit passively while the news rolled out. Don’t like the way an issue is represented, e-mail the author, the publisher and a hundred of your friends in the bat of an eye. If you feel that your local group is not getting the coverage you deserve from the local paper, start your own Web page.

So, how did publishers react to this new threat? They invested in new companies, repurposed their current news content and created New Media newsrooms.

First, publishers have not been surprised by these new competitors. In fact, they have been active investors. The Tribune Com-pany held a large chunk of AOL. They have seen these competitors coming for a long time and have, for the most part, established an Internet presence.

Along those lines and wanting to be first to market, publishers quickly repurposed their content as best they could given their current technology. However, here is the rub. The Internet requires different technology to meet the needs of the Internet. The Internet is a media with no deadlines and where content only doesn’t meet the needs of the reader/viewer or the advertiser. Publishers traditionally are very slow to invest in technology (after all, how often do you want to replace a press?). 
When this new paradigm came into full swing, publishers and their suppliers were ill prepared to meet the challenge.

Future Monopolies
The FCC has historically hated a monopoly. They have keept pub-lishers from purchasing the local newspaper and the local radio station and the local television station. Then came cable television and the Internet, which is moving the FCC to give up trying to control the consolidation of media power.

We should look for the same trends to occur in the future that have occurred in the past. I would think that taking the preceding Thomson example and extrapolating the example to the future gives us a pretty good idea of what the future will be like.

Media companies will try to do-minate local geographic areas, not just purchasing one media type but many. As with Thomp-son, they will consolidate operations, they will gain efficiencies in newsgathering, advertising and distribution through technology. And they will purchase other competitors like portals and ag-gregators whenever possible.

The Questions
l What will readers want (and pay for) in this new paradigm?
l What will advertisers want (and pay for) in this new paradigm?
l What will be the new newsrooms production processes?
l What will be the new advertising production processes?
l What will corporate owner-ship pay for?
l What will corporate owner-ship build themselves?

We will go into these issues in our next issue of Werner’s World.

Share your views with me on Werner_Elhauge@saxotechonline.com


 

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