Reciprocity is the new karma.

Whether you’re talking about how many followers you have on twitter, or how influential you are in the digital world in general, it’s all about reciprocity. And in fact, within the next few years, reciprocity will become a much more important indicator of media influence than traditional measurements like circulation or subscription numbers.

This is what reciprocity looks like. Thank you Bing images.

So what is reciprocity? It is almost a rewording of the Golden Rule. It is the idea of helping out other people or organizations and, in turn, being helped out by them. In terms of the blogosphere it is linking to other blogs, with the social normative assumption (or hope) they will link back to you (depending on their size), or at least take note of you. When it comes to twitter, reciprocity is posting links to other people’s blog posts and articles. It’s taking interest in their interests, rather than just using the network as a promotional tool for personal gain. And in either case, blogging or tweeting, it is one of the most important aspects of gaining more influence and followers for us non-celebrity types.

Reaping benefits of reciprocity can be elusive. Wayne Baker, Author, describes the paradox of seeking for the rewards of reciprocity:

We cannot pursue the power of reciprocity. When we try to invoke reciprocity directly, we lose sight of the reason for it: helping others. Paradoxically, it is in helping others without expecting reciprocity in return that we invoke the power of reciprocity. The path to reciprocity is indirect: reciprocity ensues from the social capital built by making contributions to others.

So really, if he’s right, we gain reciprocity by not pursuing it, but rather by seeking to make meaningful contributions.

This all ties back to the journalism landscape of Web 2.0.

In the future of media, reciprocity will be a direct measure of how many people are linking to an article and discussing its contents. It will be a much greater measure of influence and of what readers want than anything we have now. Letters to the editor are great, and can spark discussion. Subscription figures tell how many people like the paper enough on a consistent basis to pay for it regularly. But nothing provides the finger on the pulse of what is being discussed and what is important to people like the principle of reciprocity on the Web. The importance of your blog is relative to how many people link to it. The relevance of your story is how many people comment, and pass it on to their friends.

In light of this, Sparxoo recently posted their list of the top 25 most influential digital news and politics outlets. On the list were a handful of examples of those who have risen within the last five years due, in part, to their effective use of the principle of reciprocity, and the trickle-down effects of other people linking to themTop 25

Top 25 influential digital media outlets

When you look at digital influence, The Huffington Post, Google News, Yahoo News, Daily Kos, Politico, and DrudgeReport, none of which existed a decade ago, have become some of the most influential digital news outlets. And, with the switch the market is making from “traditional media” to online media, this essentially means they’ve become some of the most influential people in information dissemination, from scratch, in under a decade. It’s the American dream, in online media form, and it’s reciprocity at work.

As cynical as it may sound, the internet is now becoming one giant popularity contest. With the advent of twitter and blogs, it’s not always about what you know, but who you know, and how many of them you know. Just as social capital exists in real life, it exists online. It may not be easy to cultivate, but bloggers, tweeters, online newspapers, podcasters, etc., will come to spend more and more time investing in social capital to be competitive in a Web-based environment.

So here’s to you in your quest to build online social capital. And feel free, while you’re doing so, to share the love and toss some social capital my way.

The newspaper industry does not need, or want, a bailout or any other government handouts.

Not to worry, friends. Er ... not from newspapers anyway.

This was the message of the Newspaper Association of America President and CEO, John Sturm, today at a Joint Economic Committee hearing to discuss the future of the newspaper industry. The hearing also sought to investigate possible legislation the government could implement to assist the Fourth Estate.

While the industry leader made sure he got across the “no bailout” message, he did bring a number of suggestions the NAA is in favor of:

• Legislation, already introduced, that would extend operating loss provisions from two years to five, to all industries, not just newspaper companies.
• Changing funding regulations that require businesses to use cash reserves to fund pension plans. The idea is to have access to those cash reserves for use in the short term to keep businesses afloat, rather than having legislation that dictates they be used for pensions.
• Allow newspapers to operate as nonprofit organizations, while continuing to generate ad revenue. The logic here is the newspaper industry has a special role to fill and consequently deserves special legislation protecting their existence. Sturm said this “has merit and could work in certain situations.”
• Last, the NAA recognizes newspapers, on their own, have to adjust to change their business models to find a way to receive compensation for their online content.

This last bullet is the most promising. The NAA Web site explains:

The original reporting done by newspapers each and every day cannot be sustained over the long run if newspapers are not able to obtain fair and reasonable compensation for the content they produce.

They expect many of these models to be in place within the next year.

Mr. Sturm handled the hearing well, considering the tough spot he’s in. On one hand, he’s representing an industry with struggling branches everywhere. He could easily be attacked by those he represents if he didn’t do something to express the plight of the industry and ask for some sort of breathing room.

On the other hand, the last thing Americans want is talk of another bailout. Newspapers are struggling enough already. If the image of a newspaper became synonymous with bailout money and government meddling, it could serve to sink their ship even faster.

The sad part about the situation is it didn’t really establish answers one way or the other. Sturm did get across his “no bailout” message, loud and clear. But then in the next breath, he said the NAA supports the idea of some of the legislation on the table, leaving the question of government involvement just as open-ended as it was before the hearing.

The NAA is a nonprofit that represents more than 2,000 newspapers in North America.

Almost one quarter of the newspapers you use for free online today will be charging for their content before the end of the year, according to the Washington Post.

The exact number, 22 percent of respondents, is only a fraction of the 58 percent that said they are considering implementing online fees. In addition to those with plans to add fees this year, 28 percent have plans to have a paid subscription model of some sort in place within the first six months of 2010.

The data, collected by the American Press Institute, reported that the business model currently being most widely considered is one in which the front page, with headlines and story summaries would remain free, but that access to full stories would be limited to those who pay a monthly subscription.

News organizations: the unknown welcomes you

Although the study wasn’t exactly scientific, it does have a significant enough number of respondents (118) to point to a tidal wave of innovation and business model reworking that is coming sooner than many people expected it. With the change coming so soon, the lineup of companies trying to get a share of the pie has already begun.

Among the companies jumping to develop a universal pay system are Google, Microsoft, IBM and Oracle. The prevalent idea behind the proposed system for each company is that it will be capable of allowing one payment source for all news outlets, making it more convenient for consumers than the alternative of signing up individually with each news organization they want stories from.

According to the article, the transition will not come all at once, but will happen gradually:

The free-to-fee transition likely will occur in tentative steps rather than bold leaps that would lock all online content behind a pay gate. Publishers are taking this cautious approach because they are still trying to devise online payment plans that will generate more revenue without alienating too many of their readers.

There is trepidation, however, expressed by those in the industry:

“There’s still a lot of ‘wait-and-see’ attitudes out there,” said Randy Bennett, senior vice president of business development for the Newspaper Association of America. “I think a lot of publishers would like to see some empirical evidence of what happens to other publishers who dip their toes into the water.”

Nobody really wants to be the first to jump, because they’re afraid those who stick to the old model will get a rush of new traffic of people disillusioned by the thought of paying for news content online. But, as the ledge of profit each organization is standing on gets smaller and smaller, many are reaching the point where taking the plunge is just about the only choice.

There is a glimmer of hope in all of this: Now that there are an increasing number of circulations setting timetables for people to pay for content, it has started to attract some of the larger tech companies. And with them comes capital, which is a necessary element to catalyze this business model pioneering experiment.

(All of the study’s findings were reported at an invite-only Newsmedia Economic Action Plan Conference last week.)

Luckily, Obama saying he is “happy to look at” legislation dealing with restructuring newspapers into nonprofit organizations is not the same as saying “we’re going to give them $30 billion in bailout money.”

Obama’s conversation with the Toledo Blade has started to light up the blogosphere, garnering over 1,600 comments within 16 hours of being posted on The Hill’s blog, most of them being angry at the notion of another bailout. In fact, anger seems to be the primary reaction to this non-committal comment made about looking at potential legislation … which almost helps to prove the point the president was making when he said:

“I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding.”

I’m no proponent of a newspaper bailout, but I do find it amusing that the blog world can so quickly confirm its accused fault.

On the brighter side, the president did acknowledge the importance of journalism to a democratic society, and also pointed out that the acquisition of news online is not free. He also gave a good heads up, saying there’s “got to be a business model that supports [online news distribution].”

To reiterate, the correct solution for the newspaper industry is not bailout money or legislation which would help to bind the “fourth branch of government” more closely to the other three. But it would make things much easier for proponents of the evolution of journalism if the current state of the blogosphere weren’t so quick to rear its ugly head and reveal its fatal flaws.

Confused a little? I was too – yet this is the theme of a somewhat recent post on Clay Shirky’s blog. The entirety of the post is worth the read, but if you don’t have time, I’ve gone and done some digging for you.

If only finding our way to journalism's future looked this fun...

I will soon afford a longer post on this article, but in the mean time I will share some of the gems and other things I discovered: (Consider this the Cliffs Notes version.)

Brilliant:

• The nod in the direction of the problem. Shirky does well at decrying the problems with the current newspaper business model. He neatly does so by pointing to the fact that the business of newspapers is not journalism, but that their business, instead, is based completely on the delivery method.
• “Society doesn’t need newspapers. What we need is journalism.” The two are not synonymous.
• It’s likely that many newspaper business models will fail before we find the succeeding formula. This is not an easy pill to swallow for any print journalist, but makes it that much more necessary to hear.

Not So Much:

• Shirky is quick to discount basically every proposed method newspaper companies have devised to keep their newsrooms afloat while hard copy paper circulation declines. The fact he so easily decries them as failures seems to counteract the point of his article. On the one hand he says “we don’t know what the future will look like, and we won’t until it’s here,” and on the other hand he’s telling us he knows that things like paid online subscriptions and “pay-per-article” will not be the bridge to get there.

The post overall is great. The future of journalism is just around the corner, and while there are failures to be had, the prophets of the industry stand to make a name and fortune for themselves. And, according to Shirky, we have a lot of people who are going to have to lose limbs walking through the minefield of innovation before somebody makes it through.

Rupert Murdoch, after a lifetime of innovation, announced this summer he would take another astronomical risk in business. He said within the year all of News Corporation’s newspapers would start charging for their online content.

Murdoch: the savior of professional journalists?

This comes as a bold move, but one that must be taken. The newspaper industry is slipping, and journalists are quickly becoming some of the most educated people in the unemployment line (next to investment bankers…).

So everybody in the industry starts holding their breath, collectively, and watches — because this will definitely be worth keeping an eye on.

What’s impressive about this is that Murdoch is gambling on the willingness of his audience to pay for quality content. While there has been little official discussion of exactly how this will be implemented, there are a number of ideas which have been floating around for years now.

First is the idea of unlimited access to content based on a regular subscription fee. This has been mulled over, analyzed and encouraged dozens of times by hundreds of paper executives, and is looking more likely as a major business model shift for the newspaper industry’s online future.

Some, however, debate the usefulness of this approach, and decry potential problems with its implementation. Some of the most common (there are literally hundreds) are that people won’t be willing to pay because they can get their news elsewhere for free. And even for the exclusive content of certain papers (like Murdoch’s Wall Street Journal), there are certain loopholes involving google news and other services which would have to be closed up.

Another less-discussed approach is an iTunes inspired pay-per-article system, which will be piloted for the first time in 2010 by London’s Financial Times. This has a number of advantages over the regular “subscription fee” method (discussed in a later post).

Suffice to say, the industry needs a change, and Murdoch could be the pioneer to save it, or could end up showing the rest of the industry what not to do when trying to save their revenue in the age of free online content.

Howard Owens has weighed in with his view on what the newspaper industry’s “Original Sin” was in the early days of the Internet:

Alan Mutter says we screwed up by failing to charge for content. I say not only was that not a mistake, but many newspapers did try to charge for content. I have written that the Original Sin was that we “did next to nothing to explore how we might use this new technology to help businesses connect with customers.”

Howard, publisher of the digital startup The Batavian, contends that a greater error was keeping our online units “tethered to the mother ship.” Howard, one of the most insightful people working in digital journalism, makes an excellent case in his blog that we would have done a better job in moving into the digital age by spinning our web sites off into standalone companies.

Howard makes a lot of good points, and I won’t summarize them here. I encourage you to read them yourself. I do, however, take issue with two points Howard made:

• First, lots of organizations did separate their online operations from their print operations. The Washington Post is perhaps the best-known example. My former newspaper, the Omaha World-Herald, separated its Omaha.com operation from the newspaper for a while, and its digital performance has been consistently disappointing. I understand the Gazette had a separate online operation at some point before my arrival. I have visited several newspapers that had significant organizational separation between print and online. Howard has some excellent advice on starting an independent online operation and most, if not all, of the online spinoffs from newspaper organizations did not do things the way Howard is saying they should have. My point is that organization is not as important as mindset. And spinning digital operations off did not change the mindset.
• Howard misunderstood and thus mischaracterizezd my Original Sin post. He says I identified “bundling of online ads with print ads” as the Original Sin. Actually, I said the Original Sin “was failing to  see beyond our original business model.” The bundling approach was a symptom of the bigger sin. Because we were forcing our old business model on the new technology through bundling and other blunders, we didn’t explore and discover the possibilities of the new medium, such as search and direct transactions. I apologize for any lack of clarity in my original post.

As I noted in my post earlier today, responding to a comment from Chris O’Brien on my original Original Sin post, I will blog soon about another huge mistake (I won’t call it an Original Sin; I think we’re kind of wearing out the Garden of Eden metaphor). Not sure I will get that posted today. Three posts might be enough for a Saturday.

Newspapers in the US and Europe are suffering hard from the global downturn as a result of a drop in ad spending (down 18 percent third quarter last year in the US). So today’s report from Zenith optimedia, quoted on Brandrepublic is good news. At least partially.

RIP:s have already been written for the paper version of Detroit free press and Detroit news, Chicago Tribune went bankrupt last year and the legendary New York Times has been borrowing money with their office building as security. Many has predicted the end of the newspaper era as we know it. Some has compared the newspapers to General Motors, that where to late jumping on the bio fuel car development, and now is bankrupt. No or very few newspapers started off their online version with a clear business model. For the vast majority the material on the web was best off for free, and has remained so.

For those few who where early on the web, and who have been persistent in the development of online advertising the future seems brighter in the years to come. According to the report, online advertising will account for 15.1 % of all ad expenditure worldwide  in 2011. In the US 2009 will see a rise in search advertising of 20 %. This is wonderful news for search engine sites like google, yahoo and microsoft, but it is also a potentially huge source of money for online newspapers. It has been stressed that the revenues from online ads are but a few % of the ad revenues from paper. This is true in terms of direct cash inflow. It is not true in terms of ROI. Fewer people tends to read newspapers on paperback. In young generations the computer is the platform and online news the source of information. Interaction is the trend, social web applications the tool and wiki texts where users tend to modify it as new things happens the thing.

Since early 19th century newspapers has had a monopoly on the ad-market. They where partially challenged by the radio and television but survived. They have been challenged by the web for 15 years with a strong media concentration as a result, but they have survived. In Scandinavia Aftonbladet and Verldens Gang has been two leading and successful papers on the web. Others in Scandinavia like Expressen and Helsingborgs Dagblad are struggling with their business models. So is the world newspaper flagship The New York Times, on which a worthwhile article was written in their magazine in the beginning of this year. New information platforms has been constructed that are taking off and expanding during the crises. The most cited is Huffington posts investment in investigative journalism. Lets hope the rise in online ad-spending will kick start the qualitative journalism and not the commercial journalism.

What if the cyclical part of the advertising collapse does not come back after the end of the cycle?

Lad Paul, an old friend and colleague from the Des Moines Register who recently retired as executive editor of the New York Times News Service and is now consulting, asked that question recently on my Facebook page.  I asked Lad if I could share his question and my answer on the blog (with some minor editing, mostly to remove personal remarks we exchanged, and with some elaboration because I’ve thought more about it as I’m writing this) and he agreed. He had been making his way through my Blueprint for the Complete Community Connection and these questions kept nagging him:

What if advertisers have discovered that they don’t need middle men like our newspapers to find their customers? What is to stop them from taking the money that in the old world would have been their advertising budgets and spending it instead on developing fancy Web storefronts, and then letting the customers find them and their products via search?

If that were to happen, it seems to me, the only time advertisers would need us would be (1) to introduce new products that customers don’t yet know about, and (2) brand building (or what we Old Media types used to know as “image adverising”).

Those two won’t make up what we’ll have lost in day-in day-out retail product advertising.

So my question is, how would your idea of being the sales agent, as it were, for local retailers, short-circuit this? What’s the “value proposition,” as our MBA friends like to say, of having the newspaper act as the retailer’s agent, selling the goods and taking a cut of the revenue?

And what other revenue components are you envisioning? I get that you’re an ardent foe of content fees, but what are the other ideas out there for supporting our very costly addiction to gathering and disseminating information? Or haven’t I read far enough in yet?

Here’s how I answered:

Nothing is stopping businesses from taking the money they used to spend advertising with us and reaching consumers directly. Many businesses are doing that already. In fact, I presume that traditional advertising won’t bounce back with the economy.

As Alan Mutter reported in his Newsosaur blog, employment, real estate and automotive advertising, the three traditional pillars of newspaper classified advertising, each fell nationally by more than 40 percent in the first quarter of 2009, when compared to 2008 figures that we though were dismal then. Retail advertising fell by more than 20 percent. Some of that is a cutback in spending, but some of it reflects efforts to reach the public directly or through other sources.

Our only way to ensure that we will recover with the economy will be to offer new value to business customers and develop a new relationship with them.

I see two primary reasons why some businesses will come to us (if we develop the expertise and the community connections that will help us succeed):

• They aren’t in the communication business, so they want to spend their time on their core business (remember Jeff Jarvis‘ advice: Do what you do best and link to the rest).
• If we succeed at the content aspects of the C3 approach, we should have a larger audience than businesses in our communities will be able to gather by themselves. And unlike the old days when all we offered was a mass audience (much of which each business customer had little interest in), we will be able to help businesses connect with exactly the customers who are most interested in their products and services. And we will have valuable data about the interests of the community and an ability to help businesses connect with the most likely customers.

As I explained in the C3 blueprint, I see us shifting from a model that sells eyeballs to businesses to a model that enables (and often conducts) the transaction for businesses. If our relationship with businesses is simply to sell advertising, we are just an expense line in their budgets. And we all know what every business does in hard times: We look for expenses to cut. If we are enabling or conducting transactions for businesses, we become part of their revenue stream and they will be seeking ways to do more business with us in good times and bad.

For more on how I see this relationship changing, and possibilities for new revenue streams in a recovering economy, check out these sections of the C3 blueprint:

• Revenue approach
• Driving
• Graduation
• Weddings
• Business connection services

Here’s how little hope executives of newspapers see for our industry: The idea that reportedly excited them most at last week’s secret meeting could make up about 3 percent of last year’s decline in advertising revenue.

Zachary Seward of Nieman Journalism Lab, who is doing an outstanding job of reporting on the meeting, tells in his latest report about the Fair Syndicate Consortium’s plan to track down splogs (spam blogs) that reprint news web site content in its entirety and get advertising revenue from third-party vendors such as Google and Yahoo!

The report is interesting and I don’t fault newspaper executives for protecting their copyrights and their rights to advertising revenue from content they produce. But here’s what I found discouraging in Seward’s report:

• Jim Pitkow of Attributor, who made the “Fair Syndication Consortium” pitch, estimates that pirated content is costing newspapers $250 million a year.
• Seward reports: “Nearly everyone I’ve spoken to with knowledge of the Chicago meeting, where newspaper companies were pitched on a variety of online business plans, says that Pitkow’s presentation of the Fair Syndication Consortium was by far the most popular.”

OK, let’s do some math on that. As Alan Mutter reportedin his Newsosaur blog, advertising revenues plummeted by $7.5 billion last year (and that pace accelerated in the first quarter of 2009). So the $250 million that newspaper executives got excited about was a mere 3 percent of last year’s decline in revenue, less of what we appear headed for this year.

Sure, save that $250 million if you can. But that’s a tourniquet, not a plan for a healthy future. 

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• James Warren: Shhhh. Newspaper Publishers Are Quietly Holding a Very, Very Important Conclave Today. Will You Soon Be Paying for Online Content? (huffingtonpost.com)
• Opening Up Closed Doors: What News Execs Asked Brill (paidcontent.org)

I don’t want to belabor my opposition to paid content or to the secrecy of last week’s meeting of newspaper executives.

But the secrecy and the resulting attention to the heavy paid-content focus of the meeting kept us from learning until a week later about Alan Mutter’s interesting presentation about ViewPass, a plan for a system that would allow easy payment by consumers across multiple platforms and extensive collection of data that would allow publishers to target advertising based on that visitor’s interests.

Mutter proposes ViewPass as a way to “access valuable content on the websites and mobile platforms of all participating publishers.” While I have concerns about all paid-content approaches (I made the Freudian typo “pain-content” in a tweet last night), and about the industry’s unhealthy focus on such a misguided approach, I concede that charging for high-value content might work in some niches.

I heartily endorse Mutter’s call for better collection and smarter use of data about customers. And ViewPass might be a great vehicle for the shift to more transactions and lead-generation that is the revenue approach of my Blueprint for the Complete Community Connection.

And I hope that Mutter was as blunt with the publishers about general pay walls as he was in his blog:

If you suddenly put a pay wall on a website that used to be free, you are bound to lose a substantial amount of traffic representing a considerable amount of potential advertising inventory. Once customers are turned off, it will be awfully hard to get most of them back, especially as plenty of free websites will be glad to welcome them.

You could argue, as Steve (Brill of Journalism Online) does, that some newspapers are doing a poor job of selling their existing online inventory. But the solution is to sell the ad inventory better, not to write it off.

This is another illustration of how the secrecy of the executives’ meeting was harmful. If they had invited reporters and bloggers to cover the meeting, some of the immediate coverage might have focused on Mutter’s innovative approach, instead of all of it focusing on the paid-content discussions that leaked out first.

I have been encouraged to comment on the distance between the American Press Institute’s visionary Newspaper Next project, of which I was a proud participant, teacher and contributor, and API’s Newspaper Economic Action Plan, which focuses heavily enough on paid content that those words appear on the title page.

My time at API was one of the most rewarding times of my career and I value my friendships and business relationships there. Those relationships are strong enough that I can state my disagreement with them, as I did in a tweet when the report became public. I don’t care to go further than that.

I do, however, want to share some links from others who are writing about the issues in the news industry this week:

• Dan Conover, who visited Cedar Rapids last Saturday and plans to write about our innovation efforts and who was interviewed for the API report, calls the industry’s rush to paid content a “ritual suicide pact” in his Xark! blog.
• This post by Tim Windsor is a few months old but more timely than ever. He linked to it in a comment on Dan’s blog and I gladly remind you of it: Will paid content work? Two cautionary tales from 2004.
• John McQuaid’s blog post, On newspapers and pay walls, shows the frustration many journalists feel at the lack of true innovation in our industry.
• TechCrunch took a mocking tone in its assessment of the API report.
• Steve Outing proposed some alternatives to paid content.
• Scott Nelson was disappointed with the heavy early paid-content emphasis of the API, but later found some encouraging ideas, as he recounts in Invest in the content, not the channel.
• Paul Bradshaw reminds us that the news business has bigger issues than free content or Google in How the web changed the economics of news — in all media.
• Daniel Bachhuber, a Publish2 intern with more wisdom about media than many executives twice his age and more, offers a plan of action in his Open memo on how to right a sinking ship: Value experimentation with new business models, redesign newsroom for digital age, change audiences into communities and products into processes, hire developers and go open source.
• At my prodding, Nick Bergus invited journalists to start a collection of metaphors for the news industry: lemmings, the Titanic, Humpty Dumpty. It’s quite a list, to which I contributed substantially, wincing at the accuracy of many of the metaphors.

Once upon a time there was a tiny hamlet in the Swiss Alps. This hamlet was in serious trouble. The well that supplied water to the village went dry. The people began to panic.

There was, however, another well flowing with water across a deep gorge on an adjacent mountainside. An imaginative young thinker came up with a solution. He built a bridge across the gorge.

The villagers were elated.

A bucket brigade was formed immediately, and the water supply was replenished. Needless to say, the bridge became very important to this group. It was their source of life.

They honored the bridge. A committee was formed to take care of the bridge. Only certain people were allowed upon it, and then only on certain days, and then only wearing certain clothes. No one could see or cross the bridge without permission.

Unfortunately, there were disputes within the committee. The disagreement centered around whether a canopy should be built over the bridge. So the bridge was closed until a decision could be made. Many villagers died of thirst while the leaders debated.

A similar tale is unfolding in the newspaper industry. Just as the village in the Alps found another source of water, newspapers have found another source of revenue on the internet. Like the Swiss villagers, they need to work a bit to bring that revenue over. Unfortunately, some newspaper companies have begun to mismanage access to this new source of revenue.

The landscape is different, the product is different and the business model is different, yet too many newspapers are trying to fit interactive models into a print framework. If they’re not careful, newspapers run the risk of putting themselves out of business by not recognizing the differences between print and on-line in their efforts to increase on-line revenue.

Here are some thoughts on the differences between print and on-line models that newspapers should keep in mind in their search for new revenue over the next 5 years:

I. On-line Sales Strategies Are Not The Same As Print Strategies:

Many newspapers are treating on-line as just another product. Training programs are in place to teach print reps how to sell on-line ads. Internet Sales Managers are put in place to coordinate sales efforts and ride-along on appointments. While it’s true that these practices have been helpful and necessary, on-line only sales efforts also need to be put into play. Here’s a few reasons that Newspapers should consider on-line only sales strategies:

1. Print reps are ill-equipped:

Besides the lack of technical skills required, interactive products require much more support after the sale. Without laptops or even access to computers in some offices, its challenging to make presentations and support on-line products after the sale.

2. Core Compensation Plans Discourage On-line Sales:

When faced with allocating a clients campaign budget, print execs take care of the core first in an effort to hit their monthly budget or goal. On-line compensation plans are often based upon a flat percentage with no contribution to core revenue targets. Certainly special bonuses and spiffs can be put into place, but these “Pep Talks” wear off and sales execs go back to their bread and butter core sales activities.

3. Territories Are Gone:

While print sales execs are often comfortable selling and taking ownership of a territory, on-line campaigns are network wide by nature. Execs need to be able to sell into a network of sites. Some newspapers have actually begun trying to territorialize their on-line sales teams, encouraging execs to sell on-line in their territory only. The result is less revenue and poor performance for clients. On-line only sales execs can focus on selling products across territories, reaching businesses who have never advertised with the newspaper before.

“The” Objection:

The major objection to on-line only sales teams seems to be the fact that these new execs will be taking revenue away from print reps who are already struggling. I would suggest that these new execs would actually bring more revenue in for print reps by pulling in advertisers who have never advertised in print. This is “reverse-publishing” at its best.

Perhaps shared revenue programs can be put into place to encourage print and on-line reps to work together. On-line campaigns can be turned over to on-line only execs who are more skilled and better equipped to support on-line products. On-line only execs can do the same with print and bundling opportunities that they run across in the field.

II. Online Ad Production Is Not The Same As Print Ad Production:

Too many newspapers are treating on-line ad production like print production. They need to remember that there are no hard deadlines with on-line. Ad production systems need to be streamlined by leveraging the technology and standards the WWW offers. Any on-line ad producer who has built print ads will tell you that on-line display ads with set IAB sizes are much easier to produce than print ads. There are even some companies like ImpactEngine and AdReady who have built a self-serve business behind standard ad sizes and themes.

Creative services teams need to build similar systems in-house to streamline ad production. On-line specs are a much larger part of the sales process than print specs. On-line specs need to be shown on a website spec, not on a white background as they are in print. It’s like taking a newspaper into an advertiser and showing them their spec ad in the newspaper in the exact spot that it will run. Something newspaper companies have never been able to do, can be done easily on-line.

III. On-line Fulfillment Is Not The Same As Print Fulfillment:

Web traffic changes hourly, unlike print circulation which is more static in nature. Too many newspapers are over-managing their ad-delivery systems. With an often lengthy and layered submission and approval process, newspapers have made it difficult to fulfill on-line advertising orders. There are also too many automated restrictions in the process. At some newspapers, campaigns are actually being rejected by ad serving systems because their impression goals exceed “projected” impression availability by 100 impressions or less. Newspapers need to remember that “available” impressions is a “dynamic” quantity. On-line campaigns need to be started and billed, impressions can be made up later if necessary. Who knows what local news event will occur tomorrow that results in increased traffic and impression inventory.

IV. Performance Metrics For On-line Are Not The Same As Print Metrics:

Newspapers are right at home with CPM models for measuring performance. They’re actually starting to treat CPM’s like CPI’s, a metric they’ve been using for years. Elaborate metrics reports are being developed and refined to help compare different newspaper groups and increase average CPM’s.

It’s time for newspapers to realize that there’s not enough revenue in on-line display ads. Banner revenue is limited by traffic and we can’t just add more pages like we can in print. The formula is simple (Total Banner Inventory Available/1000) X (Target CPM). Perform this calculation for any newspaper site and you’ll see that banner revenue is not going to sustain the industry. While behavioral targeting and niche site development are going to help CPM’s, the CPM metric is the last thing newspapers need to focus on right now. The focus needs to be on (in this order):

1. Interactive Revenue (non display):

Newspapers need money now. Local search (directories), Search Engine Marketing, On-line Video, Web Site Development and hosting, Email Marketing are all recurring revenue opportunities, independent of banners that newspapers can take advantage of now.

2. # Of New Advertisers:

Newspapers need to use their brand to build networks of new customers in local markets. Self-service products need to be developed and sales forces need to penetrate ALL businesses in the local market. Ted Leonsis, former vice chairman of AOL, states it well in his recent blog post where he lays out his “Ten Point Plan For Newspapers“.

Ted writes:

“Create mini local third party networks. Embrace and extend your reach locally by building a great digital sales force and then network and ingest local unique visitors, page views and engagement from third parties. Do locally what Advertising.com has done nationally, superset the region by creating a network of affiliates and build up massive scale of local sites. Promote them in your print-based property..”

3. Traffic Building Content:

Desperate times call for desperate measures, so content comes last. While they still have some quality journalist left, newspapers need to look for innovative ways to deliver quality content on-line. Again, they can leverage technology and partner with companies wanting to reach local markets.

The veil between sales and editorial needs to come down completely and newspapers need to build content initiatives with sales objectives. There are too many instances where sales is not aware of a new on-line section that suddenly appears on the web site. Editors need to let they’re guard down a bit and invite sales people into meetings about on-line special sections. Widgets can be built to syndicate content across other local sites, encouraging viral traffic growth.

Crossing The Gorge:

It should be clear by now that the solution for newspapers and the tiny hamlet in the Alps is to cross the gorge. They need to get out of the newspaper business and into the internet business. Sure there’s competition, but they still have a foothold on local markets. Newspapers also have a brand that’s been around for hundreds of years versus even the largest and most successful internet companies that have only been in existence for 10 to 15 years.

The answer is not in applying old methodologies, they need to create a new framework and business model to redefine the industry.

“The Word Is Alive”