I was sorting through some of my father’s belonging recently and came across the 1941 souvenir edition of the Honolulu Star-Bulletin (Jan 8, 1941), “The March of Hawaii.” Its lead story was the reorganization and strengthening of the Pacific Fleet and the appointment of Admiral H.E. Kimmel to head it.
My father acquired the paper while stationed in Hawaii with the Army Air Corps. Eleven months later the U.S. was at war, with Kimmel taking heat for having the bulk of his capital ships anchored in Pearl Harbor during the Japanese attack.
I was reminded of the find this week while reading the news that Gannett has agreed to sell the Honolulu Advertiser to the Star-Bulletin. The two have a 130-year history of competition, somewhat muffled until they escaped their relatively difficult marriage in a joint operating agreement between 1960s and the millennium. Now the smaller paper is buying the bigger paper, if it can comply with or skirt antitrust provisions.
We are now in the last throes of consolidation of the newspaper industry, brought on by audiences shifting to television, cable channels, and the Internet for news and information, and advertisers following audiences. The consequence is the newspapering has become a monopoly business in more than 1360 cities and towns and big city papers—even when they are monopolies—are having difficulties competing for advertising dollars. Only two percent of cities have competing dailies.
This change calls into the question the traditional view that a competing press is the foundation of democracy. If competition among perspectives on news and information is necessary for democratic functions, we have to think of it beyond the printed press and begin recognizing the important functions provided by other providers of news, information, and commentary.
Rather than constantly challenging their abilities to carry out functions in the same way as the press once did, we need to find ways to support and improve their activities—whether they be broadcast or Internet based. And we need to find ways to ensure that the papers remaining in place reevaluate their democratic functions and find ways to provide service to the spectrum of observations and ideas that has been diminished by the newspapers monopolies that now dominate our land.
Showing posts with label competition. Show all posts
Showing posts with label competition. Show all posts
Saturday, February 27, 2010
Tuesday, February 2, 2010
THE BATTLE TO CONTROL ONLINE PRICES
The struggle to control prices of digital content sold online continues, with producers and distributors battling over prices for downloads of books and music.
In the latest skirmish, Amazon removed Macmillan books from its website after the company protested that online retail was using monopoly power to force publishers to accept prices no higher than $9.99. Macmillan and other publishers have now signed distribution deals with Apple that allows them to price downloads at $12.99 and $14.99.
Producers, of course, want higher prices because they produce higher revenue and better profits.
The struggle to control prices is not unique to the online environment. In the offline world, producers of books, magazines, CDs, and DVDs have long struggled to gain limited shelf space because there is a large oversupply of products and retailers’ have selection preferences for popular, rapidly selling products.
Large national and retailers have also used their bargaining power to push wholesale and manufacturer suggested retail prices downwards. Wal-Mart, now the number one music retailer in the World, uses its purchasing and sales power to sell large quantities of music at the lowest price possible—the basic price/quantity model for all the products it carries.
What is new in the offline world is that the conflict does not merely involve struggles over the price and quantity strategies of retailers, but that the retailers are using the media content as a joint product with their proprietary digital hardware.
Amazon wants content prices low not merely to sell more books, but because it helps it sell Kindle, its e-book reader. To date, it has been able to do so because it was the leading seller of both products—something it learned from Apple’s strategy with i-Tunes and i-Pod.
Competition in distributing content, even just a little competition, helps shift some of the power away from the retailer and back to the producer. Apple was forced to back away from its enforced price of 89 cents for a download when recording companies made deals with other download providers and threatened to end the rights for Apple to see their popular music. Apple is now playing spoiler to Amazon in the book downloads and Amazon has agreed to carry Macmillan books again.
Newspaper publishers are now seriously testing and considering a variety of e-readers as ways to reduce production and distribution costs. As part of their strategies, however, they would do well to learn from the experience of the music and book business. They need to remember that a basic rule of business is that if you don’t control price, you don’t control your business.
In the latest skirmish, Amazon removed Macmillan books from its website after the company protested that online retail was using monopoly power to force publishers to accept prices no higher than $9.99. Macmillan and other publishers have now signed distribution deals with Apple that allows them to price downloads at $12.99 and $14.99.
Producers, of course, want higher prices because they produce higher revenue and better profits.
The struggle to control prices is not unique to the online environment. In the offline world, producers of books, magazines, CDs, and DVDs have long struggled to gain limited shelf space because there is a large oversupply of products and retailers’ have selection preferences for popular, rapidly selling products.
Large national and retailers have also used their bargaining power to push wholesale and manufacturer suggested retail prices downwards. Wal-Mart, now the number one music retailer in the World, uses its purchasing and sales power to sell large quantities of music at the lowest price possible—the basic price/quantity model for all the products it carries.
What is new in the offline world is that the conflict does not merely involve struggles over the price and quantity strategies of retailers, but that the retailers are using the media content as a joint product with their proprietary digital hardware.
Amazon wants content prices low not merely to sell more books, but because it helps it sell Kindle, its e-book reader. To date, it has been able to do so because it was the leading seller of both products—something it learned from Apple’s strategy with i-Tunes and i-Pod.
Competition in distributing content, even just a little competition, helps shift some of the power away from the retailer and back to the producer. Apple was forced to back away from its enforced price of 89 cents for a download when recording companies made deals with other download providers and threatened to end the rights for Apple to see their popular music. Apple is now playing spoiler to Amazon in the book downloads and Amazon has agreed to carry Macmillan books again.
Newspaper publishers are now seriously testing and considering a variety of e-readers as ways to reduce production and distribution costs. As part of their strategies, however, they would do well to learn from the experience of the music and book business. They need to remember that a basic rule of business is that if you don’t control price, you don’t control your business.
Sunday, October 25, 2009
JOURNALISM AS CHARITY AND ENTREPRENEURSHIP
Many journalists pursuing new online initiatives are learning that good intentions are not enough for providing news.
The latest group to do so is former Rocky Mountain News reporters who started rockymountainindependent.com this past summer using a membership payment and advertising model. The effort collapsed Oct. 4 with them telling readers, “We put everything into producing content and supporting our independent partners, but we can no longer afford to produce enough content to justify the membership.”
There problem is hardly unique. The conundrum facing many journalists is whether to pursue the noble work of journalism as unpaid charitable work or to become engaged as journalistic entrepreneurs with a serious attitude toward its business issues—something many despised in their former employers.
If journalists want pay for their work, if they want to provide for their families, and if they want to pay mortgages, they need to spend more time figuring out how to provide value that will extract payments from readers and advertisers. To do that they have to construct organizational structures and activities that support the journalism; they will have to ensure that startups have sufficient capital; and they will have to engage staffs in marketing and advertising activities, not merely news provision.
One of the most difficult issue for these new journalism providers—as well as existing print and broadcast providers—is that journalists tend to overestimate the value of news for the public. What the public actually wants is less, not more, news.
It is not that the public doesn’t want to be informed, however. It is just that journalists spend so much time, space, and effort conveying commodity news that provides little new and helpful information for readers and cannot generate sufficient financial support. By commodity news I mean the simplistic who, what, and where stories about what happened yesterday. Those kinds of stories are readily available from many sources and provides readers little for which they will pay.
Instead, in a world of ubiquitous commodity journalism, successful journalists need to be spending time exploring the how and why of events and issues and helping readers understand and cope with what is expected next. Effective journalism in the new environment needs to focus more on today and tomorrow than on yesterday.
Success in the contemporary journalism environment it is not merely about providing news, but about providing helpful and advisory news explanation based on solid values and identity to which readers can relate. It must be part of entrepreneurial journalism or new ventures will fail.
To get there, however, journalists starting up new enterprises will need to develop resources and entrepreneurial motivation to sustain their efforts more than a few months. Most new commercial and noncommercial enterprises require 18 to 36 months of operation before they develop a loyal audience and achieve a stable financial situation. Unless journalists are willing to work for free during that time, they will have to raise capital to survive; and if they want their new organizations to thrive and develop they will have to provide a different kind of news than most are used to creating. It will need to be unique and better than what is already available.
The latest group to do so is former Rocky Mountain News reporters who started rockymountainindependent.com this past summer using a membership payment and advertising model. The effort collapsed Oct. 4 with them telling readers, “We put everything into producing content and supporting our independent partners, but we can no longer afford to produce enough content to justify the membership.”
There problem is hardly unique. The conundrum facing many journalists is whether to pursue the noble work of journalism as unpaid charitable work or to become engaged as journalistic entrepreneurs with a serious attitude toward its business issues—something many despised in their former employers.
If journalists want pay for their work, if they want to provide for their families, and if they want to pay mortgages, they need to spend more time figuring out how to provide value that will extract payments from readers and advertisers. To do that they have to construct organizational structures and activities that support the journalism; they will have to ensure that startups have sufficient capital; and they will have to engage staffs in marketing and advertising activities, not merely news provision.
One of the most difficult issue for these new journalism providers—as well as existing print and broadcast providers—is that journalists tend to overestimate the value of news for the public. What the public actually wants is less, not more, news.
It is not that the public doesn’t want to be informed, however. It is just that journalists spend so much time, space, and effort conveying commodity news that provides little new and helpful information for readers and cannot generate sufficient financial support. By commodity news I mean the simplistic who, what, and where stories about what happened yesterday. Those kinds of stories are readily available from many sources and provides readers little for which they will pay.
Instead, in a world of ubiquitous commodity journalism, successful journalists need to be spending time exploring the how and why of events and issues and helping readers understand and cope with what is expected next. Effective journalism in the new environment needs to focus more on today and tomorrow than on yesterday.
Success in the contemporary journalism environment it is not merely about providing news, but about providing helpful and advisory news explanation based on solid values and identity to which readers can relate. It must be part of entrepreneurial journalism or new ventures will fail.
To get there, however, journalists starting up new enterprises will need to develop resources and entrepreneurial motivation to sustain their efforts more than a few months. Most new commercial and noncommercial enterprises require 18 to 36 months of operation before they develop a loyal audience and achieve a stable financial situation. Unless journalists are willing to work for free during that time, they will have to raise capital to survive; and if they want their new organizations to thrive and develop they will have to provide a different kind of news than most are used to creating. It will need to be unique and better than what is already available.
Tuesday, October 13, 2009
CAN PUBLIC BROADCASTERS HARM COMPETITION AND DIVERSITY?
This is not trick question and it is being increasingly asked as public broadcasters grow larger, offer multiple channels, move into cross-media operations, and increasingly commercialize their operations.
The Federal Communications Commission will have to consider that question shortly when it considers the effort of WGBH Education Foundation—operator of WGBH-TV, the highly successful Boston-based public service broadcaster—to purchase the commercial radio station WCRB-FM.
WGBH is the top ranked member of the Public Broadcasting Service in the New England and produces about one third of PBS’ programming. It operates a second Boston television station, WGBX-TV, and WGBY in Springfield, Massachusetts. In addition it operates FM radio stations WGBH (Boston), WCAI (Woods Hole), WZAI (Brewster), and WNAN (Nantucket) and is a member of National Public Radio and Public Radio International. It operates two commercial subsidiaries involved in music rights and motion picture production.
This month it announced it was planning to purchase WCRB-FM, a classical music station that serves the Boston area. The purchase would allow it to alter its WGBH-FM format to compete more directly with WBUR-FM, the leading public radio station in Boston that is operated by Boston University.
WGBH Educational Foundation is an enterprise with $580 million in assets and revenues of $280 million annually. It has more than 600 employees who are paid more than $50,000 annually and has 5 paid more than $225,000. Its president and CEO is paid about $340,000 and 2 vice presidents about $250,000 annually. This is not a small, poor charitable enterprise.
Were WGBH a commercial broadcaster, those who hate big media would be howling in protest, arguing that it puts far too much control of the airwave in the hands of one organization and that the concentration will create market power that harms competition. But they are strangely silent.
However, in deciding whether to permit the purchase, the FCC will have to consider whether the expansion of the public broadcaster harms competitors and plurality and diversity.
Similar questions are being asked elsewhere as well. Across the pond, the British Broadcasting Corp. has recently been the target of a good deal of criticism because of its increasingly commercialized operations and because its expansion of public service operations in TV, Radio, and Internet at the local, national, and international level are seen as affecting commercial firms and competition.
The BBC is one of the largest broadcasting companies in the world, operating on revenues of £4.7 billon ($7.4 billion) and it has assets of £1.5 billion ($2.4 billion).
Many commercial broadcasters and publishers in the U.K. have criticized the growth of the BBC operations and the debate became especially heated recently when James Murdoch, the News Corp. head in Europe and Asia, made a public speech charging the BBC was engaging in a “land grab” and that its ambitions were “chilling.”
“The expansion of state-sponsored journalism is a threat to the plurality and independence of news provision, which are so important for our democracy," Murdoch told the Edinburgh International Television Festival. Whether you agree with him or not, you have to give him credit for co-opting the language of critics of big commercial media.
News Corp. and the other commercial firms competing with the BBC obviously have self interests at heart, and some commercial firms have certainly behaved in ways that harmed public interests in the past, but their arguments should not be casually dismissed.
If competition among commercial firms, between commercial and non-commercial firms, and among non-commercial firms is good for pluralism and diversity, cannot concentration and reductions in sources of news and entertainment due to acts of large not-for-profit firms also harm competition, pluralism and diversity?
The Federal Communications Commission will have to consider that question shortly when it considers the effort of WGBH Education Foundation—operator of WGBH-TV, the highly successful Boston-based public service broadcaster—to purchase the commercial radio station WCRB-FM.
WGBH is the top ranked member of the Public Broadcasting Service in the New England and produces about one third of PBS’ programming. It operates a second Boston television station, WGBX-TV, and WGBY in Springfield, Massachusetts. In addition it operates FM radio stations WGBH (Boston), WCAI (Woods Hole), WZAI (Brewster), and WNAN (Nantucket) and is a member of National Public Radio and Public Radio International. It operates two commercial subsidiaries involved in music rights and motion picture production.
This month it announced it was planning to purchase WCRB-FM, a classical music station that serves the Boston area. The purchase would allow it to alter its WGBH-FM format to compete more directly with WBUR-FM, the leading public radio station in Boston that is operated by Boston University.
WGBH Educational Foundation is an enterprise with $580 million in assets and revenues of $280 million annually. It has more than 600 employees who are paid more than $50,000 annually and has 5 paid more than $225,000. Its president and CEO is paid about $340,000 and 2 vice presidents about $250,000 annually. This is not a small, poor charitable enterprise.
Were WGBH a commercial broadcaster, those who hate big media would be howling in protest, arguing that it puts far too much control of the airwave in the hands of one organization and that the concentration will create market power that harms competition. But they are strangely silent.
However, in deciding whether to permit the purchase, the FCC will have to consider whether the expansion of the public broadcaster harms competitors and plurality and diversity.
Similar questions are being asked elsewhere as well. Across the pond, the British Broadcasting Corp. has recently been the target of a good deal of criticism because of its increasingly commercialized operations and because its expansion of public service operations in TV, Radio, and Internet at the local, national, and international level are seen as affecting commercial firms and competition.
The BBC is one of the largest broadcasting companies in the world, operating on revenues of £4.7 billon ($7.4 billion) and it has assets of £1.5 billion ($2.4 billion).
Many commercial broadcasters and publishers in the U.K. have criticized the growth of the BBC operations and the debate became especially heated recently when James Murdoch, the News Corp. head in Europe and Asia, made a public speech charging the BBC was engaging in a “land grab” and that its ambitions were “chilling.”
“The expansion of state-sponsored journalism is a threat to the plurality and independence of news provision, which are so important for our democracy," Murdoch told the Edinburgh International Television Festival. Whether you agree with him or not, you have to give him credit for co-opting the language of critics of big commercial media.
News Corp. and the other commercial firms competing with the BBC obviously have self interests at heart, and some commercial firms have certainly behaved in ways that harmed public interests in the past, but their arguments should not be casually dismissed.
If competition among commercial firms, between commercial and non-commercial firms, and among non-commercial firms is good for pluralism and diversity, cannot concentration and reductions in sources of news and entertainment due to acts of large not-for-profit firms also harm competition, pluralism and diversity?
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