Tag Archives: Web_2.0

Tech PR War Stories 14: Are CMP layoffs the death knell for IT print media?

Posted on by
Reply

This week in the Tech PR War Stories podcast, David and I reflect on upheaval at CMP, which laid off 20% of its workforce last week and shuttered some print publications. I suggest that this is the beginning of the end of print publishing in the IT media market and note that the economics of online publishing in that area are now weighted toward using freelance and blogger contributors instead of full-time staff.

David points out that technology companies are becoming more aggressive about launching their own online and even print publications, and that some of the senior editors who have lost their jobs in IT media will move over to work for vendors. We agree that these custom publishing operations are legitimate targets for PR people to place their clients. Now that everyone can publish easily to the Web, the definition of a “media company” is becoming fuzzier.

In Cheers & Jeers, I praise Oovoo, a new videoconferencing service that sent customized video messages to journalists and bloggers as part of its launch campaign. My jeer goes to Dell Computer, which sent a cease-and-desist notice to Consumerist.com, an action that ultimately backfired on Dell. But at least Dell was contrite in blogging about the mistake and even linking to underground photos of unannounced Dell products. My, how times have changed!

Listen to the podcast here (right click to download): 15:05

Dell attack-dog tactics backfire in the blogosphere

Posted on by
Reply

A story has been playing out at Dell Computer this week that illustrates vividly the clash of cultures that must be going on in many companies over blogging.

Last Thursday, Consumerist.com posted a list of tips submitted by a former Dell sales manager that told, among other things, how to get the best deals and even get a free laptop replacement at the end of a warranty cycle. This kind of stuff is Consumerist’s bread and butter – and Dell one of its favorite targets – so the site gleefully ran the secrets, along with commentary from a current Dell rep.

Dell must have been ripped, but it then threw gasoline on the fire. On Friday, Dell sent a corporate lawyer after Consumerist with a cease-and-desist notice. What a boneheaded maneuver that was. Naturally, Consumerist posted the lawyer’s threat along with a response. The exchange made the Dell lawyer looked clueless, particularly since she never disputed the accuracy of the Consumerist information.

Meanwhile, readers were having a field day. Along with more than 300,000 page views, the Consumerist story on was dugg more than 3,600 times, making it one of the most popular technology news items of the last week. In trying to bury the offending item, Dell actually created a magnet of publicity

On Saturday, Dell’s Lionel Menchaca posted a thoughtful and somewhat extraordinary account of the whole incident on the Direct2Dell blog. He admitted that Dell had dropped the ball and should never have asked for the information on Consumerist to be taken down in the first place. He also addressed many of the flaws in Dell’s pricing, promotion and support system highlighted by the original post. What was extraordinary was the links to photos on Engadget of unannounced Dell products. People used to get fired for leaking news like that. Now they link to it on the company blog!

Needless to say, commenters have been all over this story. Consumerist comes out smelling like a rose, and it should because it published accurate, useful stuff. You have to wonder what kind of troglodyte at Dell thought it was a good idea to sic the corporate lawyer on Consumerist. In the professional media world, these kinds of disputes take place in the background and outside of the view of the reader. There is no such discretion in the blogosphere; in fact, many bloggers actually rejoice in tweaking the noses of those whom they offend.

The contrast between the corporate lawyer’s truculence and the corporate blogger’s openness are really a microcosm of what many organizations must be dealing with right now. There’s a command-and-control side of Dell’s business that attempted to apply decade-old containment strategies to a medium that simply laughed in its face. At the same time, you can see in the Direct2Dell experiment that a culture is emerging at the company that values a new form of interaction. You just wonder why the lawyer never asked the blogger for advice before going on the offensive.

The New Journalism

Posted on by
5

It would be pointless to continue to post headlines about the looming financial disaster in the newspaper industry, so I’d like to focus instead on what will emerge from the rubble of that industry’s inevitable collapse. Over the next few blog posts, I’d like to sketch out a model of a new kind of journalism that is being formed in Web 2.0. I believe it will come to replace much of journalism as we now know it, and may form the basis for a rebirth of newspapers.

First, some background and assumptions. The business model of metropolitan daily newspapers is badly broken and can’t be fixed. The model was developed over 150 years ago to support a delivery method that is becoming irrelevant. Huge staffs of people were needed to create content, turn it into type, print it on paper and distribute it on a timely basis. It was very expensive, but it was necessary because there was no alternative way to deliver information on a daily basis.

Large editorial staffs were needed to create proprietary content. A few alternative sources of content were available, such as news wires, but there was almost nothing at the local level. In any case, running wire copy didn’t differentiate a newspaper from its competition, so staffs of salaried reporters were needed to turn up original news. At some newspapers, these staffs can run to several hundred people.

Newspapers had to maintain large circulation operations and massive subscriber lists in order to justify their ad rates. Circulation is expensive. While renewal rates for daily papers have always been high, it’s costly to acquire new subscribers through advertising and direct mail. In my experience working for a paid newsweekly, the cost of circulation didn’t come close to matching the small revenue it generated. Circulation revenue at newspapers has also been falling in recent years due to price cuts and competition, further squeezing margins.

Capital costs inherent in buildings, presses, paper, ink and people to run all those machines were astronomical. Labor unions added to those costs. In some cases, the unions have succeeded in preserving jobs that were automated out of existence years ago. People go to work and literally have nothing to do.

Add it all up and a metropolitan daily newspaper must employ several hundred people to produce the product. Newspaper advertising is very expensive because of the large fixed costs. The Chicago Tribune, for example, charges $755 per column inch in the daily paper ($1,135 on Sunday). That business works as long as advertisers are willing to pay for it and for many years they have. That’s because newspapers were one of the most effective means for businesses to reach consumers in certain geographies.

Because newspapers are so capital- and labor-intensive, their revenue-per-employee is relatively low. The New York Times Co., for example, generates about $280,000 per employee. The Journal-Register Co. generates a much more modest $105,000 per employee.

The upside, though, is that newspaper model has traditionally been profitable and predictable. Once a newspaper achieved dominance in its market, it was practically unassailable. As consolidation reduced the total number of daily newspapers (there are about 1,750 in the U.S. today), competitive pressure eased and the winning papers were able to drive their ad rates higher. Until the mid-1990s, this was a pretty nice state of affairs. Even the Internet didn’t put much pressure on newspapers, at least during its first decade.

That is all about to come to an end. As I’ll argue in future posts, the business model of metropolitan daily newspapers is poised for a collapse that will be stunning in its speed and scope. The cause is Web 2.0. In the next installment, we’ll look at some of the economics of that emerging business.