The newsonomics of good news about news

Admit it: Good news is bor­ing. All of us in and around the news busi­ness know that. Bad news gets read and gets our juices flow­ing. So when that news DNA is chal­lenged by real­ity, the news can be easy to miss.

As we head into the sec­ond half of 2012, amid much despair given down­ward ad trends in print and stalling ones in dig­i­tal, let’s pause to con­sider some good news about the trade. The good news is too well bal­anced by the bad, but it’s still impor­tant not to lose sight of it. It’s not a mat­ter of being Pollyan­nish, but of being real­is­tic: Within that good news are seeds of what will sus­tain what­ever forms the next stage of the news business.

Let’s call it the new­so­nom­ics of good news.

I’ll make it a top 10 list, as is appro­pri­ate with a good news fea­ture. As we move down the list, we see some of the ele­ments that are among those encour­ag­ing some out­side the indus­try — War­ren Buf­fett, San Diego’s Doug Man­ches­ter, Halifax’s Michael Red­ding, Chicago’s Michael Ferro, Jr. and John Can­ning, Jr. — to buy into the flag­ging news industry.

It’s easy to focus on all the bad news about the news busi­ness. But there are some rea­sons for opti­mism pok­ing through the clouds

1. Dig­i­tal cir­cu­la­tion can work.

Dig­i­tal cir­cu­la­tion (a.k.a. a pay­wall strat­egy) is work­ing and fast becom­ing the default among daily news­pa­pers — from Tokyo, Sin­ga­pore, and Syd­ney to Min­neapo­lis, Boston, and Augusta to Lon­don, Madrid, and Helsinki. At the top end, right now, we can call it a 10 per­cent solu­tion: That’s the kind of cir­cu­la­tion rev­enue bump top pub­lish­ers are see­ing. This is a big piece of new puz­zle. (Caveat: See #11 below.)

2. Dig­i­tal cir­cu­la­tion vastly improves cir­cu­la­tion rev­enue margins.

Last week, faced with a Wall Street Jour­nal renewal notice, I opted for digital-only for the first time, know­ing that WSJ’s tablet for­mat and easy right-hand nav­i­ga­tion makes it far quicker to read than the paper ver­sion. That choice is also greener, both for the envi­ron­ment and for the Jour­nal. The pric­ing of dig­i­tal access — $260 — is only a dol­lar cheaper a week than the print — with far lower costs for the Jour­nal. As read­ers tip into dig­i­tal, these mar­gins will make a big dif­fer­ence in bottom-line performance.

3. Third-party con­tent sales take off.

As the Jour­nal explained about its Pulse deal, it’s just a toe in the water. Expect whole feet and legs to plunge in over the next sev­eral years. Once dig­i­tal cir­cu­la­tion strate­gies are put into place, extend­ing them makes per­fect sense for news com­pa­nies. This move­ment is not only about new rev­enue sources — it’s about cheaply and eas­ily lever­ag­ing the best design and pre­sen­ta­tion on tablets, smart­phones, and other devices, as they come along, with­out news com­pa­nies hav­ing to develop them them­selves. So The New York Times doesn’t need to build its own Flip­board model — it can pig­gy­back on Flipboard’s sub­stan­tial invest­ment and har­vest new rev­enues. Mul­ti­ply this strat­egy by more dis­tri­b­u­tion out­lets, and it goes way beyond experimentation.

Big caveat: How and how fast can this strat­egy be adapted for the regional and local press?

4. Read­ers love tablets.

From Pew’s sev­eral stud­ies to Roger Fidler’s Reynolds Jour­nal­ism Insti­tute sur­veys, the news is almost unre­servedly good. Peo­ple like to read news on the tablet. They read more of it, from known sources, for longer peri­ods. If the news indus­try were just sta­ble, eupho­ria would be in order, but since it’s not, this astound­ing turn­around from splin­tered, bit-sized, aggregator-driven desk­top news read­ing has been under-appreciated.

5. Ad sales are grow­ing beyond sell­ing impressions.

Sell­ing pageviews is so 2005. The most inno­v­a­tive com­pa­nies are mov­ing as fast as they can beyond cost-per-thousand-based adver­tis­ing sales. Two big trends here: First, sell­ing share-of-voice — spon­sor­ships of sorts, bor­row­ing strongly from broad­cast mod­els. These are work­ing to boost effec­tive rates for pub­lish­ers from the FT to the inno­v­a­tive, newer prod­ucts, like the Orange County Register’s The Peel tablet app. Sec­ond, becom­ing a dig­i­tal regional agency, offer­ing local mer­chants of all sizes ways to lever­age the dig­i­tal world, well beyond sim­ply plac­ing an ad. Mar­ket­ing ser­vices (“The new­so­nom­ics of small things”) is a tough, tough busi­ness, with lots of com­peti­tors (note that One on One Ads All-Star game com­mer­cial), but it’s an area of growth for many news companies.

6. The Google­juice thins.

For half a decade at least, news pub­lish­ers have found them­selves hugely depen­dent on Google. The search giant sends a third to half or more of the web refer­rals that news sites get. That’s cre­ated a great reliance on Google. Now, though, refer­rals are diver­si­fy­ing. Sev­eral pub­lish­ers tell me that the per­cent­age of Google refer­rals has dropped a good ten points in the last year. The rea­son: the ris­ing impor­tance of the social web and social refer­rals. Face­book is the fastest grow­ing source of refer­rals, and Pin­ter­est, Twit­ter, and Linkedin are all grow­ing as well. The key to find­ing new value here: min­ing the refer­ring data to see how dif­fer­ent kinds of sam­plers may be turned into reg­u­lar customers.

7. Community-generated blogs mature.

This move­ment is now sev­eral years old, and in its most worth­while forms, is begin­ning to form both new iden­ti­ties and new rev­enue streams for news­pa­pers. Take The Seat­tle Times, which has expanded an exper­i­ment that started with five regional blogs, pro­duced by non-staffers, and built it into a 50-blog News Part­ner Net­work. The Times pays the blog­gers with recog­ni­tion and traf­fic, cur­rently send­ing about 115,000 clicks a month to part­ners, says Times exec­u­tive edi­tor David Board­man. The ben­e­fits to the Times are both tan­gi­ble and intangible.

“Recently, we cre­ated an ‘Around the Sound’ page in our Sun­day news­pa­per that fea­tures neigh­bor­hood con­tent pro­vided by the blog part­ners. That’s low-cost, qual­ity con­tent we would not have oth­er­wise,” says Board­man. “We have made con­sis­tent use of the net­work part­ners for both news tips and for report­ing sto­ries. And it works both ways, with us pro­vid­ing tips and report­ing and pho­tog­ra­phy to them.”

Then there’s the com­mu­nity warmth fac­tor, as J-Lab’s sur­vey has found a sur­pris­ing 80 per­cent of the local pop­u­la­tion show­ing appre­ci­a­tion of the notion.

8. Computer-generated journalism’s tough birth.

A new sur­prise entry. The reac­tion to Journatic’s byline faux pas has been pre­dictable, right at its core — and totally overblown. Jour­natic and Nar­ra­tive Sci­ence are far from the only com­pa­nies ply­ing this ter­ri­tory. The fact is the computer-generated edi­to­r­ial con­tent is here to stay, and it must be mas­tered by edi­tors. One such edi­tor is David Arkin, GateHouse’s vice pres­i­dent for con­tent and audi­ence, quoted in David Folkenflik’s NPR story on the con­tretemps. Says Arkin, “As we look at what our con­tent goals are in our orga­ni­za­tion, we need and want more enter­prise sto­ry­telling.” Exactly. Hold on to as many of those real enterprise-plus report­ing jobs, and then use comp-gen tech­nol­ogy to do the heavy lift­ing, to which reporters add min­i­mal value.

9. Jour­nal­ism gets more mobile.

No, not as in smart­phones and tablets, but as in mobile jour­nal­ists. Dig­i­tal First Media is test­ing the next gen­er­a­tion of its com­mu­nity rea­chout strate­gies, out­fit­ting mobile vans in the Bay Area, Twin Cities, Con­necti­cut and York, Pa., well doc­u­mented at Steve Buttry’s blog. Some of what DFM is try­ing to do will work; some won’t, but there’s no doubt that real engage­ment with news read­ers — online and offline — is a major key to the future, espe­cially as reader rev­enue becomes the dom­i­nant rev­enue source (“The new­so­nom­ics of major­ity reader rev­enue”) feed­ing journalists.

10. Pub­lish­ers are get­ting to know their read­ers far better.

Still another con­se­quence of dig­i­tal cir­cu­la­tion: Some pub­lish­ers are learn­ing much more about their read­ers. From The New York Times to New Lon­don, Conn.’s The Day, pub­lish­ers have seen the neces­sity of cre­at­ing a sin­gle uni­fied cus­tomer view. That means con­nect­ing up print read­ers and their dig­i­tal read­ing, shop­ping, and buy­ing habits. As I wrote last fall, the goal here — some­day — is close to a 100 per­cent con­nec­tion (“The new­so­nom­ics of 100% reach“). The Day is almost halfway, ace audi­ence tracker Daniel Williams told me this week. It has now linked 45 per­cent of its print sub­scribers. That sets up 2013 as a year to bet­ter serve those read­ers — and har­vest more rev­enue accordingly.

Let me add a bonus eleventh, one both sober­ing and elevating:

11. Qual­ity sells.

In this age of dig­i­tal cir­cu­la­tion and read­ers open­ing their wal­lets to all-access mod­els, we’re see­ing that big national/global providers of news are con­vinc­ing read­ers to pay up in sub­stan­tial num­bers. For the regional press, it’s a mixed record so far. We can attribute that mix to a half-dozen ques­tions about the papers’ exe­cu­tion of dig­i­tal cir­cu­la­tion. In addi­tion, though, it’s becom­ing increas­ingly impor­tant to point out that read­ers are more likely to pay up when they believe they are get­ting some­thing suf­fi­ciently fill­ing. Those that have con­cen­trated on sav­ing as much of their news­room capac­ity as pos­si­ble are gen­er­ally far­ing bet­ter. As Press+’s Steve Brill just put it, as his com­pany released a report this week on the rela­tion­ship between con­tent and dig­i­tal circ rev­enue: “If you want to sell jour­nal­ism, you have to do journalism.”

Pub­lish­ers best heed that tru­ism of the new, and old, business.

Orig­i­nally pub­lished on Nie­man Jour­nal­ism Lab by Ken Doctor