Business Blog: Hoover’s Business Insight Zone

Two of my favorites in conversation: Hugh interviews Seth about Seth’s new book. A favorite bit:

9. With the advent of certain Web 2.0 media coming along in 2007- Facebook, etc, suddenly the “Blogging is Dead” meme keeps popping up all over the place. I think they’re kind of missing the point. You?

Who the hell knows what ‘blogging’ means? People say, “that’s not a blog because” it doesn’t have comments or because it has three authors or because it’s got video or who knows what… What’s a book? a blog? a speech? Who knows?

I think it’s entirely possible that the ego-driven, comment-driven water-cooler blog is being replaced by Facebook and Twitter. I don’t think, not for one second, that the inherently closed communities of social networks are a replacement for the idea-driven blog designed to be read by surfers, strangers and the masses.

I agree entirely with Seth. People want to be prescriptive or proscriptive about what blogs are “supposed” to be, as though blogs were primarily a social contract. No — blogs are primarily a technology, like the printing press. They are a means of distribution. And just like it would be silly to think that books are all going to operate the same way (novels, almanacs, cookbooks, coloring books, etc.), it’s silly to think that blogs must have comments or must operate this or that way.

The whole interview is worth reading if you care about what’s happening in the online-business world.

My colleague Russ Somers pointed me to an item from Michael Arrington, who discusses the extreme ease with which Amazon’s new Kindle e-book reader can be used to read e-books in formats other than the proprietary one sold by Amazon.

Stealing Books For The Kindle Is Trivially Easy

So since the Kindle makes for such an easy open-format e-book receptacle, surely it’s helping move the book world toward a day when e-books will flow over the ‘Net as readily as song files do today. For context on what I’m talking about, see this post from 19 November:

A BitTorrent for e-books?

As Arrington points out in his post, e-books are already on BitTorrent. The only missing link for wide-scale e-book piracy, working from the model I proposed a couple of weeks ago, is this:

A workable system for translating large numbers of printed books into digital files. This could include all sorts of approaches:

• optical scans, with or without character-recognition, image smoothing, and so on;
• system hacks of publisher/compositor computer networks that would enable direct piracy of typesetting files;
• Project Gutenberg-style keyboarding ventures. It seems clear that a technologically-driven solution based on scanning would be infinitely preferable to relying upon individuals (haphazard volunteers, paid employees, whoever) to keyboard very much material.

Mind you, it seems clear that the Kindle still needs some Apple-style design TLC. (Watch this Robert Scoble video on same if you’re in the mood to hear a rant.) But, at a minimum, it’s compatible with the scenario I laid out earlier.

If it needs saying, I don’t endorse violation of anyone’s copyright. I’m a writer myself, after all, and I’d rather make a living from what I write than not make a living from it. But if, say, you wanted to download a free novel from Project Gutenberg or Cory Doctorow or Charles Stross or Baen Books or . . . you get the idea.

In the wake of my post the other day about reflexive bashing of Twitter, I was planning to write something about the cycles of hype and anti-hype in the blogosphere, the pendulum swings of which you could probably plot mathematically. But then I came across this piece of wisdom from Josh Bernoff of Forrester Research:

The cult of immediacy versus the unstoppable groundswell

I think bubble thinking is driven by the swirl of events in this frenzied cult of immediacy. It’s hard to think straight when your head is buzzing with the cocaine high of whatever happened ten minutes ago. Steve Rubel, quoting Brian Reich, called it out as “Shiny Object Syndrome.” Behind this bubble is a reality driving forward, an unstoppable groundswell. Stuff that builds with that trend will matter. The rest will be swept away. . . .

You may think corporations don’t get it, but they do, eventually — they just move more slowly and carefully. I’ve now spoken with dozens — they’re spending real money, moving forward with projects, making mistakes, learning, and mobilizing. They have lots of money and big brands. As the mass of regular people absorbs these social phenomenon, many of those companies will be there to meet them, and laugh if you want, but they are not all clueless — not any more.

In the end, the blogosphere has its fun with the news of the moment. Often they (er, we) have smart things to say. But in the long run . . . only the long run matters.

A couple of weeks ago The New Yorker ran one of its patented character profiles* on Sam Zell, the real estate tycoon who is in the process of buying Tribune Company.

Rough Rider
Where will Sam Zell take the struggling Tribune Company?
by Connie Bruck

Having read the piece, I’m having second thoughts about my own reflexive dismissal of the deal. Yes, the newspaper business is heading further into the toilet by the week. But dang, Zell sure knows how to make money.

He also makes many a meal out of his flamboyant personality, to the point that you could think of him as a Richard Branson of real estate. But this penchant for iconoclasm has also helped Zell to excel in the business world.

Annotated excerpts follow. Read more

Generally I like Kevin Kelleher’s work, and that includes the first four-fifths of this piece on the proposed combination of Sirius and XM Satellite Radio:

XM/Sirius: The Wedding March Goes On

It was starting to look like the merger that time forgot. . . .

Kelleher gives a nice overview of how the two satellite radio companies have proposed a tiered subscription system to calm the worries of Kevin Martin and other FCC commissioners.

But then Kelleher takes an unusual — and apparently wrongheaded — turn:

Of course, if XM and Sirius were really interested in giving consumers the best offering, they wouldn’t combine at all. They’d also end all their exclusive relationships with MLB, the NFL and personalities like Oprah Winfrey and Bob Dylan, provide the kind of flexible pricing they are offering now only under duress — and let consumers choose.

That would be a true market-driven approach. This slowly brokered merger is the best we’re going to see. But if it helps push the cable companies to be more flexible, it would be worth the wait.

I say “apparently” wrongheaded because I’m still not sure I understand exactly what Kelleher is getting at. Sirius and XM have lined up exclusive programming just like all other broadcasters, whether we’re talking about ESPN (e.g. exclusive rights to Monday Night Football), NPR (exclusive rights to Car Talk etc.), or ABC (Grey’s Anatomy and so on). It’s not clear to me why the satellite radio providers should do anything different, and Kelleher doesn’t supply the links in the chain of his reasoning.

My own take is that this deal is somewhat like what I said about the Whole Foods acquisition of Wild Oats, which the FTC ridiculously opposed: two niche purveyors combine forces not to monopolize a niche, but to beef up so they can take on broad-range competitors in the larger market.

Whole Foods isn’t just competing with high-end or organic-only stores, but with Wal-Mart, Safeway, and every other grocery retailer that offers high-end and organic foods. XM and Sirius aren’t going to weild a pricing crowbar against satellite radio consumers, but try to use their combined strength to compete with the massively larger purveyors of terrestrial radio, plus Apple, Microsoft, and every other seller of networkable audio devices.

Maybe Kelleher will clarify what he meant in his post, but so far I have a hard time buying his position.

Once you adjust for inflation, that is — as Alan Mutter explains:

Newspaper Ads Tank Again, Industry Shrinking Fast

If you subtract this year’s likely $42.7 billion in print-ad revenues from the constant-dollar value of the sales a decade ago, the difference of approximately $10 billion means that today’s revenues are nearly 20% lower than they were in 1997. On a constant-dollar basis, therefore, industry sales this year will be about one-fifth lower than they were in 1997.

. . . With inflation eliminated from the sales numbers, you can see that the industry’s sales have fallen far more steeply in the last decade than the actual numbers suggest. Further, sales have been diving at an increasingly accelerated rate since 2004. . . .

Seemingly dumbfounded by the arrival of serious competition for their audiences and advertising revenues, newspapers have been struggling for more than a decade, with meager success, to regain their relevance and economic vitality.

Be sure to check out Mutter’s chart.  Ouch.

Jack Welch once said that the grand challenge of management — the very thing that makes it hard — is playing long-term and short-term considerations off of one another. That’s what we’ve seen in many markets as old-line companies try to figure out how to make the most money from the Internet.

For the longest time, newspaper companies, and especially the biggest ones, have tried to make money by walling off their content and charging subscription fees to see it. They’ve never made much money doing it, but the thought behind the subscription model has been that it would pay off in the long run. You give up short-term gain — in this case, from ad sales — in favor of the long-term gain of adding online subscribers.

If you spend much time reading news online, you’ll know that the New York Times has recently undone this decision, opening much of its archives to free searching and freeing its most popular columnists from the late TimesSelect prison. Now it appears that Rupert Murdoch will be leading the Wall Street Journal to do the same thing:

Wall St. Journal to End Fee for Web

ADELAIDE, Australia, Nov. 13 (AP) — Rupert Murdoch, the chairman of the News Corporation, said today that he intended to make access to The Wall Street Journal’s Web site free, trading subscription fees for anticipated ad revenue.

“We are studying it and we expect to make that free, and instead of having one million, having at least 10 million-15 million in every corner of the earth,” Mr. Murdoch said, referring to The Journal’s online readership.

The News Corporation has signed an agreement to acquire Dow Jones & Company, and the deal is expected to close in the fourth quarter. A special shareholders meeting is scheduled for Dec. 13 in New York.

Mr. Murdoch said he believed that a free model, with increased readership for wsj.com, will attract “large numbers” of big-spending advertisers.

Murdoch’s canny enough to build businesses for the long-term rather than the right-now, but it didn’t take him long to come to the conclusion that both the right-now and the long-term payback from the Journal’s excellent online offerings will come in the form of a flood of page hits and ad sales rather than a trickle of subscription fees.

I try not to get too “meta” with my analysis of what’s going on in the business world — no simplistic stories about stories about stories if I can help it. But it occurs to me that the recent binge of financial news (it’s been going on for many months, now) stems from at least two sources — and that it’s important to keep the two distinct as we read the business news:

1. The actual importance of news emanating from the financial markets. There’s no question that the “mortgage meltdown,” the “credit crunch,” and attendant phenomena are not just important but highly important for the entire world of business. They affect how companies finance their operations; rates of foreclosure and bankruptcy; mergers, acquisitions, and layoffs; big-time executive shifts; and on and on. These effects are real and they’re meaningful, and to that extent the floodtide of financial reporting is useful.
2. The sometimes envious, often adulatory, celebrity-style coverage of financial firms and moguls. This “finance pr0n” is not very different from what US Magazine or People does with stars from Hollywood or famous bands. In this world, what Steve Schwarzman does matters not because (or not primarily because) Blackstone is a big-time player in the world of commerce, but because he’s Steve Schwarzman, and we want to know what Steve Schwarzman is doing. This is not different, at bottom, from wanting to know what’s happening with Brangelina and their growing polyracial family.

Mind you that there’s nothing necessarily wrong with #2. Heck, I find myself reading character profiles on top athletes just because they fascinate me, not because I believe it has anything to do with following a particular sport. Personality journalism is a time-honored tradition; we just need to keep it separate in our minds from actual, substantive coverage of the financial markets if we want to avoid being so overwhelmed by the personalities of the finance world that we fail to see the structural, strategic, and tactical realities at play there.

It’s not much news that Jeff Bewkes is succeeding Dick Parsons atop the Time Warner masthead. But I liked these paragraphs from the International Herald Tribune’s story:

Parsons, one of the most prominent black executives in corporate America, has spent much of his five-year tenure as chief executive repairing the damage from Time Warner’s agreement in 2000 to be acquired by the pioneering Internet company AOL.

The grand synergies promised by the deal never materialized, and the company later faced, and settled, shareholder lawsuits and U.S. investigations stemming from questionable accounting practices at AOL.

There it is, plain as day: “repairing the damage,” “never materialized.” The deal failed. That’s the verdict.

There are a few folks who would still dispute that, which is fine — people still argue rightly about Andrew Jackson’s role in U.S. history. But this is a reminder to the journalist in me that, in the longer run, the historian in me will have the last say. We keep up with what’s happening from day to day, and we try to peer as far as we can into the future (read: not very far). But in the end, the confusions of today will be less confusing, even though they will be replaced by other confusions in turn.

In other news, water remains wet, soccer is the world’s most popular spectator sport, and Americans overwhelmingly support the sentiments embodied in the Declaration of Independence.

Circulation falls at many major newspapers

NEW YORK (Reuters) - Circulation fell at many U.S. newspapers in the six months to September, according to statistics released on Monday that for the first time include Internet readership in a bid by publishers to boost their attractiveness to advertisers.

Average daily paid circulation for newspapers printed Monday through Friday fell 2.6 percent and Sunday circulation fell 3.5 percent for the six-month period that ended September 30, 2007, compared with the year before, according to publishers’ statistics released by the Audit Bureau of Circulations.

You have to feel for the Reuters headline writer. I mean, what else are you going to write there? And yet, the headline can only elicit a great big “No duh” from anybody who’s been following the long decline of the American newspaper business. (Examples here and here.)

Meantime, Jeff Jarvis continues to chronicle episodes of boat-missing or failure-to-comprehend by decision makers in the newspaper business.

Off with their headlines

The Cleveland Plain Dealer didn’t know what it got when it hired four local political bloggers to collaborate on a group blog at Cleveland.com (which I oversaw when I was at the parent company). They got citizens with opinions. You’d think that would be obvious. In fact, you’d think that was the goal.

But apparently not, for when one liberal bloggers was found to have backed and contributed to a candidate, he was fired. Then the other liberal quit. Then the paper shut the blog….

I made a comment on that post; it reads, in part:

Episodes like these reveal the gulf between normalcy in the blogosphere and normalcy in the heads of traditional media executives. Many of the execs just can’t seem to get their heads around the fact that the blogosphere doesn’t operate like a traditional 20th-century U.S. newsroom, while most of the blogosphere can’t even understand what’s so hard for the execs to understand.

Monetizable or not, the blogosphere continues to grow while the dead-tree versions of papers continue to shrink, both in ad pages and in circulation. Put your long-term bets on where the long-term growth is — and expect many, many more “No duh” headlines on this subject from Reuters.