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Oct 25 2006
Merrill: 20 Years Till Online Is 50% of Newspaper Revs
In the past, financial analysts covering the newspaper industry haven�t paid much attention to online results. They�re more focused on quarterly results, which don�t have much to do with online. Indeed, despite several years of strong growth from online services, newspapers are still, typically, just getting 5 percent or so from online.

A new report from Merrill Lynch�s Lauren Rich Fine � covered by E&P�s Jennifer Saba � reinforces the lack of enthusiasm. Fine figures she�ll be long retired from crunching numbers before newspapers get even half their money from online.

�Even if the rapid [online] growth continues for the next few years, we don�t see online representing over 50 percent of newspaper ad revenues for at least a couple of decades,� says Fine (per Saba). Fine�s back-of-the-envelope projection assumes double-digit growth for online ad revenues through 2012, eventually slowing to 5 percent. Meanwhile, print advertising is estimated to decline 1.5 percent annually.

The only problem with Fine�s calculation, of course, is that she can�t responsibly incorporate a �tipping point� scenario, where online reaches such a level that print drastically falls off. It is a real problem that is looming over newspapers � especially considering that a single print user continues to be worth 10 to 20 online users. Such a tipping point is bound to happen within 10 years, don�t you think?
Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  18:41 | permalink | comments [1] | trackbacks [0]



Oct 24 2006
Yahoo! HotJobs, Newspapers Close to a Deal
This isn�t officially confirmed, but Yahoo! is apparently close to finalizing a major deal that would pair its lagging HotJobs recruitment site with a consortium of �non-CareerBuilder� newspapers. The deal has been in the works since at least July. Apparently, it has become a high priority for new Yahoo! listings head Hilary Schneider, who was recruited from the embers of Knight Ridder, where among other things, she oversaw the company�s share of CareerBuilder.

A deal would help ease the doldrums that have seized Yahoo!. Since this summer, the portal has been hit with a mountain of bad news. Its contextual search service has suffered delays, it has entered a sales slump, it suffered a bad earnings announcement, it lost market share to Google, and it "lost" YouTube to Google.

Leading the newspaper side has been Dean Singleton and his lieutenant Eric Grilly at MediaNews Group. MNG has been emboldened by its takeover of The San Jose Mercury News and some of the other former Knight Ridder properties � and its apparent inability to buy into the CareerBuilder consortia.

My source told me that as many as 12 newspaper companies have been involved with the negotiations, but as few as six may end up participating. At this point, contracts haven't been signed.

One can assume that none of the CareerBuilder owners (Tribune, Gannett, McClatchy) will �quit� the alliance to join HotJobs. Then again, some of CareerBuilder�s affiliates might. One source told me that �Dean Singleton is the ultimate pragmatist.� This source could envision that Singleton would always seek as broad a distribution for his want ads as he could: even putting ads on Monster.

HotJobs has been led by Dan Finnigan, a predecessor of Schneider�s at Knight Ridder. It isn�t clear if he will remain in charge. Whether it is Finnigan or someone else reporting to Schneider, the effort will hinge on the ability to leverage the promotional might of newspapers and their online/offline synergies.

Here�s the playbook to level the playing field with CareerBuilder and Monster (if the deal is completed). The first thing they are likely to do is to re-brand newspaper recruitment sections as �HotJobs.� CareerBuilder has done the equivalent. The second thing they�ll do is build up a national presence, probably taking out expensive national ads and other marketing. HotJobs hasn�t been a contender in this area.

Over time, they might go �a step beyond� by integrating newspaper and Yahoo! content � a step that could lead to an even broader alliance. Separately, they may also step up the site's technology. For now, however, it is apparently �all about jobs.�
Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  23:22 | permalink | comments [0] | trackbacks [0]



Oct 23 2006
Grayboxx: 50 Million Mentions Can't Be Wrong (Can They?)
Are most of the businesses in your address books ones that you would endorse? How about the mentions in your calendar of restaurants where you are meeting colleagues? How about the businesses in your photo software that you have bothered to tag? Or the ones you mention in e-mails, various Web sites and other sources?

Generally, the answer is: �Yes. I like them. That�s why I use them.� And that�s the premise behind Grayboxx, a new San Francisco Bay Area-based company that is �four to eight weeks� from being funded, and hopes to mine user data from a variety of sources to come up with �most popular� ratings (although in this case, �most popular� is translated as �most mentioned�).

Company founder Bob Chandra thinks the system is going to prove vastly superior to the ratings and review sites, like CitySearch, Judy�s Book, Insider Pages, Yelp and Kudzu. Unlike the others, he claims, it achieves a critical mass of reviews, without changing the essence of user meaning. Aside from popular categories like restaurants, most businesses on other ratings and review sites have just one or two reviews and many don�t have any, he says.

True, Google Base and MSN Live Expo have gotten closer to criticial mass by aggregating reviews from several of the sites. That helps. But they don�t always have enough, either.

So Grayboxx sounds like a good starting point. But by no means is it a perfect solution. Speaking personally, my Palm tends to only contain service providers, such as painters, electricians and termite killers. The only restaurants that I tend to list are a few upscale ones that require reservations � usually in cities where I travel on business, rather than where I live.

Although I have reviewed them on the ratings sites, I certainly have no need to list the Mexican restaurant that I go to every Friday night in my address book � Fidel�s. I also don�t list Linda�s Homemade Yogurt down the street, where I finish my pigout. If you want to follow in my footsteps, gastronomy-wise, you won�t get satisfaction from reading my Palm.

For that matter, I don�t actually tag the names of businesses in my PhotoShop, either. The best you will get out of me is a photo outside �The Plaza Hotel� in New York, where Redford and Streisand once stood. It would be kind of an aberration for me to tag, say, a Marriott Courthouse in Overland (even though I am a proud member of Marriott Rewards).

But you got to start somewhere, right? And the Grayboxx solution is certainly inventive � assuming it doesn�t alienate people by taking their address book and e-mail info � even in aggregate. The company also gets brownie points with me by hiring a marketing exec who has had some exposure to local sales � former SBC Senior Director of National Advertising Doug Threet. That�s kind of unusual for a Bay Area start-up these days; hats off to them. (Innocent question: Why would a VC invest millions of dollars in a local concept company that hasn't hired an executive or consultant without any kind of local experience, or even exposure to a local media company?)

With this in mind, I had a phone conversation with founder Bob Chandra. Chandra says I am probably atypical in my limited mentions of local businesses. In Grayboxx�s early testing, most address books alone yield three-to-five businesses apiece, providing aggregated review counts of 25 to 100 for businesses in the Bay Area, where the company has been doing some prototypes. On Yelp, he says, you might see just one or two.

Chandra says his ultimate ambition is to collect a base of 50 million reviews. He also plans to go vertical, with such products as a �home contractors� page and a �business to business� page � both areas of particular strength. His goal is do an "effective job" of providing ranked results in 3,000 categories; 600 of which he hopes "to provide at least 200 recommendations.�

To reach his numbers, Chandra is currently leaning heavily on a national data collector (whose identity he won�t publicly reveal, but if what he told me checks out, it is an interesting one). Looking forward, he envisions a number of additional sources for data, including the aforementioned photos, but also such sources as free directory assistance queries. One imagines there is real potential with that as well.

So what do I think? The company�s solution is kind of left field. And it isn�t going to be nuanced enough to plan a date. Based on sheer number of mentions, you�d probably end up at Applebee�s.

But Chandra disagrees. To paraphrase an old record cover, to him, basically, 50 million Elvis fans can�t be wrong � especially when they are weighted with some unique Grayboxx algorithms for negative comments, etc. �Please see our correlations with quality (user rankings and critics picks)," he says. "I invite you to conduct searches against Yelp or Yahoo!."

What else do I think? Assuming Grayboxx gets the right partners, and its concept goes over, I think it may well get over the serious hump of �critical mass.� And then it could be perfectly positioned to build its own review database, since it will be operating from something. I also think its chances are somewhat stronger in vertical categories, where it can go up against approaches like LinkedIn�s new Yellow Pages.

I just hope it doesn�t take its algorithms too seriously. This isn't about computers. Ultimately, review sites/social networks really are about individual taste. There�s nothing in Grayboxx that helps me with that. Yet.

Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  22:46 | permalink | comments [0] | trackbacks [0]



Oct 23 2006
Hearst Invests in Jingle's Free DA
Hearst Corp. is listed as a lead investor in Jingle Networks� new US$30 million financing round, along with Goldman Sachs. Jingle is the two-year-old provider of 1-800-FREE411, an ad-supported, �free� directory assistance service. Other investors are repeaters from earlier rounds. They include Comcast Interactive Capital, Liberty Associated Partners, IDG Ventures Boston and First Round Capital. The new round of financing comes on top of earlier rounds, including US$26 million from Liberty Associated.

Free DA is currently something of a black hole. Most of Jingle's new money will probably need to go to subsidize money-losing calls, while the company perfects its automation and builds up the market, market share and its targeted inventory. Many calls to 1-800-FREE411 today, for instance, do not have any advertising. In addition, many calls revert to live operators, which is good service but highly costly. Earlier this month, the challenge of building the marketplace claimed InFreeDA, the provider of 1-800-411-METRO, one of Jingle�s highest-profile competitors.

Hearst�s investment suggests that it might seek synergies for free DA beyond the national advertisers that currently dominate the category (and which it reaches via its magazines). Hearst�s local properties include Hearst Newspapers and White Directory, an independent Yellow Pages publisher.

Hearst doesn't have much of a track record in pulling off cross-media �synergies.� The acquisition of White in 2003, for instance, might have led to a directory presence in various Hearst newspaper markets, which include Houston, San Francisco, San Antonio and Albany. But the development of such ties has been a non-starter. To this day, there is no apparent relationship between the divisions. Still, the appeal of free DA might provide another way in.

Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  14:47 | permalink | comments [1] | trackbacks [0]



Oct 20 2006
Tribune: 80% of Online Revs From Classifieds
Online classifieds revenue is OK. But since it typically represents just a fraction of a fraction of existing print dollars � you�d rather base your growth on display ads. Especially, targeted, premium-priced ads that represent �new dollars� for the company.

That�s the problem with yesterday�s earnings reports from several newspaper companies. To be sure, online remains a bright spot in otherwise dour earnings. 3Q growth rates for online were 21.4 percent (New York Times Co.), 28 percent (Tribune) and 50 percent (Belo). And the growth is beginning to add up. Online revenues account for 7 percent of Belo�s total earnings from newspapers, for instance.

But online classifieds are cheap. They don�t really approximate the value of print ads. If they are inching up in share, it means that the high-value ads aren�t selling very well.

Tribune, for instance, reported during its earnings call that �roughly 80 percent� of its online revenues now come from classifieds. If that number was closer to 50 percent, it would be much healthier. In print, classifieds account for roughly 34 percent of earnings, industrywide (albeit 50 percent of profits).

Largely, the growth of classifieds� share is due to the hearty rebound of real estate advertising and fairly neutral results from recruitment and auto. (yes, the real estate market is bad. That�s why Realtors are advertising again).

Perhaps the number is not as significant as it seems. It isn�t exactly clear what Tribune�s �80 percent� covers. Does it, for instance, include X percent from CareerBuilder, Cars.com and other verticals? I couldn�t tell. Moreover, display categories such as real estate feature ads are sometimes lumped in with listings. Still, it is a concern, and suggests that the replacement of print dollars with online dollars continues to be a tough road to hoe.

Right now, major newspapers are laying off or buying out hundreds of workers, citing, as Belo did, an "Internet-centric" marketplace. Meanwhile, some of the online divisions are hiring. One newspaper that I know, for instance, is trying to jumpstart its tiny online division by hiring 80 to 100 workers. We�ll see whether the revenues it produces ultimately justify the faith in online growth. Whatever the amount, it can't be made up of "80 percent classifieds."
Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  18:39 | permalink | comments [0] | trackbacks [0]



Oct 18 2006
Citysearch, San Diego Union-Tribune End Ties
The San Diego Union-Tribune has used Citysearch as the default city guide for its SignOnSanDiego Web site since 1999. The arrangement, one of several Citysearch struck with newspapers in that time period, gave The UT exclusive rights to sell Citysearch advertising in San Diego and also gave it default traffic whenever someone types in �San Diego� on the Citysearch home page. In return, Citysearch received licensing fees, the use of restaurant reviews and other UT/SignOn content, and some revenue share.

Such deals saw Citysearch through some lean times when it couldn�t count on advertising revenues. But now Citysearch has gone in a different direction, choosing to own localized sites in every major market across the U.S. (with the exception of Washington, D.C., where The Washington Post bought exclusivity from Citysearch in perpetuity).

Come Oct. 31, The UT will launch its own homegrown city guide. Already, the two longtime partners have started selling against each other. Citysearch publicly announced its presence to the San Diego ad community a couple of weeks ago at a rooftop party for media and advertisers in the historic Gaslamp district. It also announced a new local media partner: San Diego, an upscale city magazine.

We talked to Chris Jennewein, The UT�s VP for new media, about the change�s impact on his company. Jennewein noted that both sides have felt increasingly constricted in their relationship. The UT hadn�t been in any hurry to end the deal, however, because the switching costs were high.

Now that the break has finally occurred, Jennewein said The UT is eager to develop a truly local service that will stand out against Citysearch�s �national� approach. �They have a completely different model,� he said.

The new UT entertainment guide will be Open Source and will use zope.com as its primary vendor. It will also have �plenty of bells and whistles� that weren�t possible using the Citysearch platform, including the integration of SignOn�s new Internet radio station, and Flash audio-visual.

The end of the Citysearch deal means users won�t default to SignOn from Citysearch�s home page anymore. But Jennewein said that will have a negligible impact on SignOn�s traffic. It accounts for �less than 1 percent� of his entertainment guide�s traffic, he noted. Most of SignOn�s traffic from outside the area is generated from search engines.

As to whether he is worried about Citysearch�s competing sales force, Jennewein said only that he �is worried about every competitor, large and small.� But SignOn is on pace for record growth in usage and advertisers.
Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  21:30 | permalink | comments [0] | trackbacks [0]



Oct 17 2006
CBS Stations Providing Video to Yahoo! News
Starting today, CBS is providing Yahoo! with local news clips from its 16 owned and operated stations in exchange for a big chunk of the Yahoo! local news page, links back to the local station sites and a revenue share from advertising sold by Yahoo!.

Under the deal, the CBS stations are receiving prominent placement of three video thumbnails on the right-hand side of Yahoo!�s local news page, above the ad. The left-hand side continues to consist of print sources � including text versions of various stories from local TV stations. Selected clips, such as the closing of New York�s CBGB nightclub or the Corey Lidle plane crash, might receive additional play if they are selected for Yahoo!�s national news page coverage.

We talked to Yahoo! News head Neil Budde about the deal. �It is about expanding the marketplace,� said Budde, who noted that Yahoo! has already had ties with CBS vis-a-vis 60 Minutes and the Nightly News. �We�ve been building local news for six to nine months� and also been developing the video channel. �Video and Local News are two things we�ve been focusing on. So the relationship with CBS makes sense.�

Budde emphasized that the deal has been specifically set up to avoid channel conflict. CBS and Yahoo! will split revenues from pre-roll advertising, but Yahoo! won�t pitch local businesses. While no specifics were released about Yahoo!/CBS advertising, pre-roll ads typically run $25 to $50. According to Budde, other station group owners are likely to be pursued by Yahoo! to expand beyond CBS� 16 markets.

From CBS� point of view, Yahoo! is going to provide a lot of additional promotion and distribution for its stations, which are really beginning to ramp up with �best of" contests, etc. Yahoo! News currently is getting just under 36 million users, compared with 8 million received by CBS, according to comScore. While it has been generally overlooked in the hubbub over Google�s deal with YouTube, Yahoo! is also a leading force in video. In September, Yahoo! had 50 million video streams � more than YouTube and MySpace.

CBS, of course, is not the only TV station owner putting clips on the Web. As reporter Mark Walsh writes in Media Post, NBC is also syndicating video clips from its 10 stations, as well as YouTube-like user-generated content in partnership with Motionbox.
Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  19:45 | permalink | comments [0] | trackbacks [0]



Oct 16 2006
Centro's Spin: Online Newspapers Outreach Portals
It is depressing for online newspapers that Yahoo! and other portals generally outpace them in their own communities. But not so fast, says Shawn Riegsecker, a founder of Centro, an ad network dedicated to localizing ad buys for national marketers, such as GM.

�Any of the four portals have over twice the reach of a newspaper Web site in any community,� Riegsecker says. But according to comScore, "roughly half the portals traffic is made up of utilities such as Technologies/Applications/Mail." When this is stripped out to allow for an apple-to-apple comparison of content traffic, "guess what? The local industry, mostly made up of online newspapers, actually beats the portals from a reach perspective.�

Riegsecker acknowledges �the incredible advantage the utilities� traffic gives the portals over the online newspaper industry with regards to reach and available inventory for sale.� But he adds, �it's a compelling reason for newspapers to do whatever they can in their communities to begin beefing up on as much utilities, applications and other services to increase 'usership' and inventory available for sale.�
Blog: Local Media Blog
 
posted by  Peter Krasilovsky at  18:50 | permalink | comments [0] | trackbacks [0]





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