The Texas Observer's near-demise, one year later

Apparently the Texas Observer's attempted recovery from its near death experience one year ago, mainly due to financial mismanagement, but with bits of other mismanagement and other general problems, as I wrote about at the time, isn't going so well.

At the start of this month? Editor-in-chief Gabriel Arana is now "the former," allegedly to help the Observer as it still loses money, and being replaced by fundraising staff apparently paid off what was his salary. Well, his salary and two other editorial staff also canned. They were explicitly canned to free up money for fundraising staff. The first piece hints at unspecified additional reasons for Arana getting the boot. The two other staffers have spoken in support of the Observer. At the time, at least, Arana had radio silence. 

The Observer and its parent, the Texas Democracy Foundation, continue to cause their own problems on the financial side, as I noted a year ago, for the holier-than-thou attitude of refusing to accept ads mixed with the stupider-than-thou refusal to paywall. I have no sympathy. And, if the recent changes are just the surface of an iceberg, re Arana, will other editorial staff be jumping ship? And, will the fundraising staff broach some Trib-like "pay to play"?

Maybe, re just Arana, wrangling over the Bellingcat partnership led him to be canned? The timing is right, for sure. (He's now at The American Prospect in some way, shape or form, per his Twitter bio.)

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Update, Aug. 10, 2024: I don't even get their Javascript "please become a member" screen now. That's after clicking to read more than half a dozen stories. Instead, there's a "plea box" down at the bottom of each story.

Details of how the new Craphouse — Gatehouse — guts papers, with maybe a touch of naivete?

An Atlantic staff writer, Elaine Godfrey, checks in from the scene of the crime, Burlington, Iowa, where she grew up.

The Burlington paper is still a daily since the new Gannett, aka the old Craphouse, started running it. But, in things I saw when Craphouse started paginating a paper as big as the Dallas Morning Snooze, it doesn't look so good. Bigger fonts? Check. Not even flowing the jump to fill all the space on the jump page? Don't know if that's the case in Burlington, but likely.

Being owned, not just paginated, by Craphouse?

If your paper's late (it's printed in Peoria, Illinois) you're given the number for a call center. In the Philippines.

Op-ed stuff is state and national. None regional to eastern Iowa. Local columnists mainly gone. Godfrey doesn't guess at the likely cause ... regional paginating means combo editorial pages. (Burlington is paginated down in Austin, and other pre-merger Craphouse papers from Iowa also certainly are, and possibly many post-merger "old" Gannett ones, too.

And, filling the void? As at an exurban Pittsburgh paper, Facebook groups. Largely inaccurate and rumor-driven.

OTOH, per the demographics of Burlington and Des Moines County, I had originally written that if that paper is still six-day daily, it should be cut to five-day and maybe to tri-weekly, with a well-paywalled website. Did the previous owners do that? No, Craphouse did a year-plus after buying it. County's under 40K; city under 25K; both shedding population for decades. Problem is from Craphouse's POV, any national ads or inserts it runs are harder to get for a non-daily paper. But, it should still cut to a tri-weekly. Some of this makes me wonder how proactive on web issues the Harris chain, the previous owners, were. Or were not. And, Harris owned enough decent sized dailies (started in Hutchison, Kansas) it had the money to do more earlier.

Related? Godfrey talks about being trolled by friends for a "puritanical tween" revelation in the article. What if that, re things like Burlington's demographic decline and her not discussing it, is actually part of nostalgic naivete of some soft?

Plus, the current version's website is light to nonexistent on paywalling. (I clicked around the website on different stories under four different verticals, all of them local stories, at least 10 times, and hit no paywall warnings.) If the pre-Craphouse version was that way, that also explains part of the problem. I've seen this failure for years. It STILL is, at some places, despite the ongoing decline in print ads, the ongoing price decline in digital, and computer digital dimes now being gutted by mobile digital nickels.

Also, in the past half dozen years or so, smaller family-owned chains have also been consolidating printing operations.

So, it's easy to blame all of this on Craphouse. And, a large part of it is. But, not all of it. Sorry, Elaine. And, while not justifying smaller family owned chains cutting back as well, it's part of the reality.

So, if you write another story about newspapers, Elaine, either don't focus on your own (while learning more about today's industry in general) or else take off the rose-colored glasses.

Light at end of tunnel for papers, and more new ideas for smart paywalls

Earlier this week, I blogged about how Matthew Ingram at GigaOm appears to have a Jeff Jarvis/Clay Shirky/Jay Rosen paywall-hating burr up his ass.

Well, per Ken Doctor at Nieman Labs, that’s a good description, because Ingram, a blind follower of the Three Musketeers of Gnu Journalism (deliberately ripped off, with same snarky intent, from Gnu Atheism) details several specific ways in which he and they are wrong.

First, especially at non-daily papers, the light is not only apparently at the end of the tunnel, but profits may actually pick up next year. As a result of that, newspaper stock prices (albeit from in-the-toilet lows) are soaring.

And, yes, even some non-dailies have paywalls. The light for dailies, definitely for smaller ones, and possibly for mid-sized ones, is at least probably getting near to a flattening out point.

Second, and directly related, Doctor details the economics of paywalls. There’s a variety of ways to skin the paywall cat. Most new adopters are going with fewer freebie reads than, say, the New York Times, and also a lot less leakiness. That includes not just small companies but as big a boy as Gannett. Doctor says opt-out provisions, in which hardcopy subscribers are automatically charged at least a nominal fee for digital access, are also growing. (I hate opt-out provisions in general, including this one, but … the idea is, nonetheless, growing.)

Third, the truth is what the Three Musketeers and hangers-on won’t tell you: paywalls are growing internationally, too.

But, even there, Doctor starts with the US side of the equation:

By the end of this year, figure that about 20 percent of the U.S.’s 1,400-plus dailies will be charging for digital access. Gannett’s February announcement that it’s going paywall at all its 80 newspapers galvanized attention; when the third largest U.S. newspaper site, the Los Angeles Times, went paid (in March), more nodding was seen in publishers’ suites.

But, that’s his takeoff point to note that (as of March) more than a dozen European dailies also had paywalls.

That, then, leads to the more significant issue. Doctor notes most paywalls are neither flaming successes nor flaming failures. So, why?

So if charging for digital access — a too long phrase, but one that’s most accurate than paywall — is neither a panacea nor a tombstone on the way to the inevitable, what is it? It’s a building block, and it’s a way to re-envision the business.

And, that’s a good point. 

Isn’t that type of creative thinking and re-envisioning what the Three Musketeers laud?

Short answer? Yes, as long as it’s done for free online.

That’s because they deliberately practice a selective quoting of only one of two sentences from Stewart Brand’s famous “Information wants to be free” comment:

On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

Note carefully that first sentence.

Then, also per Wiki, and partially reflected on its original link, there’s the question about whether Brand meant free in terms of cost, or free in terms of access.

That, then, gets back to many critics of the Three Musketeers noting that two (Jarvis and Rosen) are paid academics, and at public, taxpayer-funded universities, no less, and therefore can easily afford to tell newspapers to let people be online leeches. Until 2010, Shirky was at the public Hunter University, so ditto on him. Let’s also not forget Shirky’s consulting for Libya’s former strongman Moammar Gadhafi, and his naivete about how autocrats could use social media to their own ends when queried about that consulting.

Update, May 3, 2013: I probably spoke too soon. 1Q 2013 numbers for most major papers show that hardcopy advertising continues to slump, and that digital advertising isn't (yet? ever?) offsetting it. Paywalls are adding some money, but they may be not much more than digital dimes, until (ever?) AP (and Reuters, and AFP) up their rates to Google et al, enough to force wire service news to be paywalled, too. And, Saint Warren of Omaha expects newspaper revenues to continue to decline, even though he became a buyer last year.

Public will pay for media content

A new survey says the public will pay for media content — if the need/reason is adequately explained.

"When participants were provided with a compelling justification for the paywall -- that The New York Times was likely to go bankrupt without it -- their support and willingness to pay increased," Cook and Attari concluded.

Again, take that Jay Rosen Jeff Jarvis Clay Shirky and other new media fluffers who tout "no paywalls" for selfish reasons:.

That said, the survey authors note that many people will believe the “information wants to be  free” quote out of context and misinterpreted means they should get newspaper stories for free:

Those publishers should also consider this cautionary note: a majority of The New York Times readers surveyed by Cook and Attari said they wouldn't pay for content and made good on their threat, often by switching to free providers. "The decline reported in our study is echoed in the decrease of over 3.3 million unique website visitors reported in The New York Times marketing materials between the spring of 2011 and 2012," Cook and Attari wrote.

Of course, with more and more papers adopting paywalls, that option is shrinking. The key will be AP (and Reuters and AFP) continuing to up their rates they charge news aggregators.

I work in the fifth-worst career, part 3 - advertising revenue

Last week, I blogged about the fact that a certain careers website said that journalism was the first worst job/career field right now, noting that, from the inside, that was no surprise.

Well, I'm probably going to do a few follow-up posts, looking at more specific issues.


Today, I throw out more specific ideas about advertising and circulation/paywall issues.

First, although paywalls aren't the answer, they're part of the answer. Period.

Newspapers are reporting more of their ad dollars are coming from the web, but that's because hardcopy ad dollars continue to sink, even as the country partway comes out of the recession. Newspapers need to get honest with themselves and permanently write off half of their hardcopy losses since 2007. And, that may be conservative.


Until newspapers do this, and accept this, they're not going to be able to better address the future, not just at individual newspaper levels, but at corporate levels.


As for the current disparity between traditional web ad rates and mobile-specific ad rates, reportedly as high as 5-1? Within in a decade, that difference will be no greater than 2-1, driven primarily by greater use of mobile devices, greater competition for eyeballs, etc.

Remember how much higher traditional web ad rates were a decade ago? The same things drove them down as will drive down mobile rates. More mobile-specific content, portals, and sites increases openings for ads and competition for eyeballs gets more scattered. Ergo, rates go down.


So, looking ahead to the future, newspapers need to be honest about that, too.


The Net, in its various delivery forms, has just the opposite problem as old newspaper media. You got plenty of room for editorial content, of course, but, because of ephemeral attention in many cases, there's limited "space" for ads. Plus, add in ad-block software, etc., and web rates plummeted.

I have no doubt that for both Android and iOS for Apple, somebody will invent the equivalent of ad-block programs, too. It's going to happen. Somehow. Jailbreaking of specific apps as well as mobile operationg systems will be involved, in all likelihood. But, it will happen.


The even bigger thing is that corporate chains have probably not even fully digested that 25 percent profit margins, along with hardcopy ad riches, are gone for good. I think many of them think that the much lower overhead for the Net will alleviate that. But, if Net dollars are dropping, or flat, still, and mobile dollars, while rising, are still smaller potatoes yet, that's not a "replacement." Plus, per part two of this series, as readers often demand fancier content, the overhead differential probably isn't quite so great as these owners imagine or hope.


So, back to those profit margins. Owners, and investors, need to digest that the day of 20 percent margins, even, for even the biggest dailies, are gone. Even with two more years of economic recovery, they need to get comfortable with 15 percent as "good." And, therefore, to stop laying off ever more editorial staff, cutting content, etc., while rewarding the CEOs who do that.


Think of this as the dot-com boom in reverse. The worst of the dot-com financial bust for papers is over. BUT ... not all of it is over. AND ... not all the lessons have been learned.


On circulation? A dollar is as high as even big metros outside the two coasts (and I really mean coastal California, on one hand, and the Boston-DC axis on the other) can go for several years. Ditto for the $3 mark on Sundays. That's your ceiling.


I'm glad to see a major metro like the Dallas Morning News has therefore finally gotten into the paywall spirit. I don't currently live in Dallas, so I wouldn't pay, and I don't know how much it costs. But, it was needed. That's even as, here in central Texas, the Austin American-Statesman, still free online, bleeds even more.


Of course, the AP, and now, Reuters with a largely expanded American presence, and somewhat AFP, have to be in the mix. Not all three can jointly deal with rates for news aggregators without explicit Congressional antitrust waivers, of course. But, individual papers can only do so much.


Of course, AP's long-term chairman of the board, Dean Singleton, was as stupid about this issue with AP as he ultimately was with the finances of MediaNews, running it into bankruptcy.


And, why didn't a court impose a five-year hiatus on him buying newspapers after getting out of Chapter 11? That could be a blog post by itself.

What went wrong at the Mercury News?

An early online innovator. Great reporting by the likes of Gary Webb (before the Merc threw him under the bus). A booming market. Mediocre papers in San Francisco.

So, what went wrong? That's the theme of this in-depth piece by Columbia Journalism Review. (H/t to my friend Leo Lincourt.)

My reaction? It nails the main points of what went wrong not just at the Merc, but to some degree, the industry in general:

First. I didn't realize that the Merc had, at the start, "paywalled" its website, only to abandon it later. Related to that, as Leo notes, is its failure to find "niche" reporting worthy of being paywalled, or to realize what it had in Silicon Valley. Especially after Steve Jobs' return to Apple, the Merc, even with national media "discovering" Silicon Valley, could have had the angle on premium, paywalled content. The WSJ is partially paywalled even with the New York Times in its backyard, after all.


Second, specific to the Merc, Dean Singleton is an idiot, and certainly had a hand in the Merc's demise, as he has in the AP focusing first on news aggregators and many other things that have hurt the industry. The story doesn't at all look at him, but it's too bad it didn't. (That said, Deano's injuriousness to the industry, while being Example No. 1 of not "getting" the online newspaper world, could make a separate story of equal length all by itself.


Third per many other observers, we see the problems with newspapers trading on the NYSE and focusing on short-term profits. The stock-zooming 1990s has had its payback, with newspapers doubling down on new purchases while ignoring the destructiveness of the Net:

(General manager Dan) Finnigan explained that either they were going to cannibalize their own businesses or someone else would. 

This was at a meeting of Knight-Ridder publishers, where he tried to get them on board with investing in ...

CareerBuilder! (K-R/The Merc also took a whiff at buying into eBay.)

This was even as people were warning that newspapers should accept lower profit margins and maybe even initial losses for investments in some new technology, websites, etc.

In that way, newspapers (those publicly traded and especially those, like Knight-Ridder but unlike the NYT, with one-level stock structure) are emblematic of what's wrong with hypercapitalist America today.


The "cannibalization" is also another argument for paywalls. Especially at smaller, more regional papers, paywalls not only are a way to make more money off of online operations, but keep people from leaving hardcopy and its ads, which are still the largest revenue producer.

Related to that, how many industries bemoan making "only" a 9 percent profit? As noted, the Merc's margin had fallen to 9 percent by 2006. Even today, if you throw out debt service (mainly from the buying-up binges of 1995-2005) papers are still profitable; just not at 20-plus percent.

In the story, Tony Ridder comes off as a bean-counter, but one who honestly was doing so within "old newspaper" mentality.

Anyway, give the whole thing a read.

One complaint, though. The story throws Gary Webb and his well-known reporting on the Nicaraguan Contras-cocaine-CIA connection kind of, or more than kind of, under the bus, at least by implication. On the purely editorial side, I'd have to agree with one commenter that slicing and dicing Webb was far more egregious than any of the business/editorial/Internet inter-departmental screw-ups.

Paywalls and leaks — are they desirable?

The Nieman Labs note that the new New York Times paywall, already live in Canada, can, in current incarnation, be cracked with just four lines of Javascript. And, it says, beyond that, that some "leakiness" in a paywall, if the media company knows how to manage it, can actually be a good thing.

The story approaches the issue in part from a cost-benefit analysis. It notes that there are a couple of classes of people who are simply determined not to pay for content in such situations. Those who have the skill, or who get the information from someone else who has the skill, will work around the paywall easily enough. As long as they're looking at ads, the story says, and maybe clocking an occasional one, then the NYT is still ahead, rather than spending more money to tighten the paywall.

OOPS.

Just one problem with that analysis.

Those same people, in general, are already blocking ads on their computers. I can't believe Nieman was either that dumb or that naive.

And, beyond THAT, the reason WHY for paywalls is to generate revenue not only from falling Internet ad rates, but, because savvy online news readers are already blocking ads, and savvy online newspaper IT staff know that.

That said, from there, we can honestly discuss whether a "straight" paywall, a "freemium" system, or a metered system like that of the NYT is the best thing for a daily newspaper vs. a "weekly" (in hardcopy) magazine, etc.

But, this idea that a fair amount of "leakage" will actually help on the ad side? Stupid.