The Praized Blog

I was doing more thinking about Rob Barrett’s Latimes.com presentation I heard at the Kelsey conference last week. The decision to re-center their online strategy around hyperlocal is one of the sanest, most courageous and possibly most difficult strategic decisions I’ve heard come out of a traditional media group in a long long time.

Why? I was re-reading this blog post conclusion I wrote 15 months ago, “In a few years, you might find only authoritative international newspaper brands (New York Times, Le Monde, The Guardian, La Stampa, The Globe & Mail, etc.) and strong hyperlocal newspapers. All the ones in the middle will either have evolved or died.”

I suspect that building one of those big international newspaper brands is perceived as the holy grail of the newspaper industry and you can easily imagine that, for many years, the Los Angeles Times management team believed they would be one of those. Moving their online strategy to hyperlocal wasn’t a very sexy and exciting decision but it’s exactly what is needed to make the LA Times brand succeed online.

Very interesting first half-day yesterday at the Kelsey Group’s Drilling Down on Local ‘08. The theme of the conference is “Marketplaces”. It regroups products such as classifieds, auctions and vertical sites. Here are highlights from the first two sessions:

As an introduction, the Kelsey Group’s team provided us with some background information on “Marketplaces”. Neal Polachek first described the local end game as “better search, discovery, and engagement”. He even quoted the Cluetrain Manifesto’s “Markets are conversation”. He also talked about their latest global ad revenue forecast for 2007-2012, stating that the biggest category winner would be Internet and the biggest loser would be newspapers. As I wrote last week, the Kelsey group believes that Verticals will capture a large chunk of online advertising by 2012. Matt Booth then talked about three specific verticals (travel, automotive, home services) that have had a tremendous impact on offline/online business and media spending. For example, Matt showed two juxtaposed graphs showing the decline of newspapers’ automotive revenues vs. Autotrader.com’s revenue increase. Peter Krasilovsky finished the intro by stating that it’s now time to “uncouple” print and online media bundles. As print revenues decline, you need to have online-only ad products to compensate. Peter added that you also want to “verticalize” your offer to expand your revenues.

The second session “Remaking the Los Angeles Times (Online)” starred Rob Barrett, Senior VP of Interactive Media, GM, LATimes.com. He started by mentioning that most of what he’s currently working on is not very visible online now. He spent the first couple of years at the LA Times refocusing the online business. His main focus has been to build the display ad business (as opposed to classifieds). It’s going to generate $25M in revenues this year. Barrett says it’s now “time to finally break the newspaper paradigm online”. The LA Times’ online strategy needs to be local as opposed to national as it will allow them to differentiate their offer versus other “national” newspapers like the New York Times. They’ve realized that local users are key to online revenues as they generate more monthly page views and twice the display revenue per page views. Their product approach is “we want to own Los Angeles”, i.e. be integral to life of Angelinos, be the source of news and information about Los Angeles to the world and be an information retailer by creating, aggregating and curating LA content.

The Latimes.com web site is slowly transforming itself into a hyperlocal social network. All content pieces are going to be tagged and indexed by category and geography. By targeting on demographics and on geo, the LA Times is hoping to raise their average CPMs and improve ad effectiveness. They are creating the best targeting machine for the LA DNA. Barrett then showed us pilots of various new vertical sections that are very promising:

• The Travel section: http://travel.latimes.com
• A hyperlocal arts & entertainment guide: http://theguide.latimes.com
• Hollywood backlot to show pictures of movies shooting: launching next week
• User-generated photo and video content: photos & videos, http://yourscene.latimes.com
• The Homicide map: http://www.latimes.com/news/local/crime/homicidemap/

I was reading this weekend in the Globe & Mail a long article about billionaire Sam Zell and his purchase and subsequent re-engineering of the Tribune Company, one of the large US newspaper groups. The article as a whole is very informative but I was especially intrigued by this excerpt:

Since taking over, Mr. Zell has attempted to raze the culture by replenishing the senior management team with trusted lieutenants and giving his properties more autonomy: Local papers will decide what they do in a particular market and they will also be responsible for creating and meeting their own budgets. Most importantly, though, in some people’s minds, he’s showed up. “I’d say when he came to visit our shop, what a lot of my managers came away with was we didn’t often get visits from executives before. And when they did, they couldn’t pronounce the names of the local cities,” said Digby Solomon, publisher of the Daily Press in Newport News, Va. “It’s not as though the people who have been running newspaper companies are stupid, but I think in any sort of business, you get trapped in a particular way of thinking, and it’s just very difficult to shake loose from that.”

Flickr picture by William Couch.

The Daily Press fits the mould of what Mr. Zell has described as his “petri dish” model – using smaller papers as testing grounds, or incubators, for new ideas that could be rolled out to the chain’s larger papers. The paper has already taken one gamble, replacing its front page with virtually all local news, rather than the conventional format of national news being afforded the prime placement. It may not sound like much, but this is the kind of change that gives newsrooms pause: There were serious concerns about people cancelling their subscriptions. In the end, none did. “Everyone was afraid to test it,” Mr. Solomon conceded. “But this isn’t a heart transplant – if we screw it up, we can change it tomorrow.”

What it means: very interesting to look at the various strategic imperatives Zell is implementing inside Tribune Company. He’s obviously starting with a clean slate (and a now private Tribune Company) which gives him more freedom but the idea of having decentralized decisions centers, the whole local/hyperlocal angle, and the creation of a culture that rewards risk-taking are all steps in the right direction. Using smaller newspapers as a testing ground is also smart if you can iterate and migrate successes quickly to larger newspapers.

As I mentioned in my last blog post, the conversation between Steven Johnson and Henry Jenkins yesterday afternoon at SXSW08 was brilliant and insightful. Here are some interesting snippets (all paraphrased, hope I captured the intent):

On Harry Potter:

• We hear a lot about the fact that Harry Potter helped children take up reading but it’s more than that. They also took up writing (fan fiction), learned how to use social networks, learned how to be political, via online communities.

On Barack Obama:

• The “Yes We Can” slogan uses the language of social networks and collective intelligence. Young people online use “we”, politicians use “I”, very egocentric. Some political pundits say his platform is weak. It’s not weak, it’s like a stub in Wikipedia. We’ll do this together.

On social tissue:

• World of Warcraft (videogames) is the new social glue, like bowling was in the 1950’s.
• The Internet is actually helping repair the social tissue that was broken by increased population mobility. We now carry our relationships on our back, like turtles.
• The main challenge is drilling down to the local level. Traditional media has not been doing a good job at covering the hyperlocal news. It’s a hard problem to solve. It’s the “pothole” issue. If you’ve been obsessing about that pothole in front of your house, and it gets filled by the city, it’s big news for you. But it’s not for residents of the next street.

On harnessing the community:

• Maybe we can use high school kids? They have time, skills, idealism and want to serve their community. How can we free them to talk about local?

More about this conversation here and here. A “graphic” recording of the conversation is here.

Yesterday afternoon at SXSW08, Steven Johnson, Outside.in’s CEO, was interviewing the brilliant Henry Jenkins, Director of the MIT Comparative Media Studies Program. I’ll come back to Jenkins’ insights in a later blog post.

Johnson, while talking about hyperlocal, collective intelligence and communities, unveiled a screenshot of a soon-to-be released feature of Outside.in called “On My Radar”. According to the sneak peek page, “On My Radar lets you zoom down and see all the current buzz on the block you’re standing on, while simultaneously keeping tabs on places around the country that interest you.” It uses Yahoo’s FireEagle location technology.

(see the bigger image here)

What it means: On My Radar is very similar to the Facebook newsfeed, one of most interesting features of the popular social network site. I like the fact that they’ve segmented the geographical elements from the very hyperlocal (within 500 feet of you) to the city-level (Brooklyn). I see two challenges to this idea: depth of content and activity. Without these two, a local newsfeed is less relevant. But if they can mine enough information (and frequent updates) from local bloggers and Outside.in users, this might be a very interesting way to discover hyperlocal news.

Found Silobreaker this morning via Doc Searls blog. It’s a news aggregator with a semantic layer on top. It also has a very interesting user interface, makes me feel like it’s a newspaper from the year 2015.

According to their web site, “Silobreaker is an online search service for news and current events that delivers meaning and relevance beyond traditional search and aggregation engines. Its relational analysis and explanatory graphics provide users with unparalleled contextual insight into the news stories of the day. More than a news aggregator, Silobreaker provides relevance by looking at the data it finds like a person does. It recognises people, companies, topics, places and keywords; understands how they relate to each other in the news flow, and puts them in context for the user.” This page explains the technology behind their engine.

I especially like the semantic tools that help the readers make sense of the showcased news. The “network” helps you explore the relations between entities, the “Hotspots” feature allows exploration at a geo-location level, and “Trends” graphs the evolution of certain keywords in time.

For example, explore news about “facebook” through the various keywords attached. Pretty cool!

What it means: one of the big challenges of the future will be making sense of the deluge of news information found on the Web. I think Silobreaker is a step in the right direction. There’s definitely a need for some improvements to make it really useful to me as a news junkie. Right now, it feels too much like one of those hypernational news sources (CNN, New York Times, etc.). Those sites already do a good job of aggregating top of the news information. I’d love to be able to save a specific country or region as my default page and I would like to be able to quickly drill down from the home page to various topics/sub-regions. Wouldn’t this tool be amazing from a hyperlocal point of view, especially the network search? Being able to see the various relationships in your own neighborhood news! Can someone do a mashup between Topix and Silobreaker?

Yesterday was Kodak’s annual analyst day and the New York Times seized the opportunity to discuss the progress made in the last few years as the company transitions from a film-focused business to a digital one. In light of disappointing newspaper industry and print directory news, it’s heartening to look at the new opportunities Kodak is seeing in the market.

But to hear Mr. Faraci (Kodak’s president) tell it, the factors that are hurting newspaper publishers in the United States — the migration of advertising and readers to the Internet tops the list — are not having the same impact overseas. “Literacy is growing through the world,’’ he said, noting that it is encouraging more newspaper readership in developing countries.

And even in the United States, he said, Kodak is benefiting from the moves that some publishers are making to recoup at least some of those lost advertising dollars. He notes that The Chicago Tribune and some others are trying “microzoning” — printing several versions of the paper in the same city, each with ads aimed at a specific neighborhood. And, he said, newspapers all over are using more color.

All of that, he said, promises to yield increased sales of Kodak’s high-speed production printers — particularly of the 1,600-page-per-minute printer Kodak is about to introduce. And far more important to the company, the trend can yield a steady stream of orders for inks and other highly profitable consumables.

As Mathew Ingram says regarding the newspaper industry, “… just because newspapers aren’t doing well doesn’t mean that journalism or media or the news business itself isn’t doing well. If anything, people are searching for more and more news all the time. They’re just doing it online instead of on paper.”

Now, going back to the Yell Group news that made their stock price fall 18% this week. The Guardian has more details:

John Condron, chief executive, said the problems in the market came to light as Yell’s sales teams put together about 20 directories, out of 102 it produces across the country, to be published in January, February and March. “I think UK plc, as far as our company is concerned, came back after Christmas and took a very cautious, very conservative view of the future. We seem to have replaced the regulatory pressure on us with recessionary pressures,” he said. “But it is important that we all realise that customers are staying with us and renewing with us, they are just not increasing expenditure.” Under its current regulatory regime, Yell cannot increase Yellow Pages prices by more than inflation minus 6%, which in effect means it must cut rates every year. From April, Yell can increase rates in line with inflation. Its average planned price rise is inflation minus 1%.

Based on those explanations, I think that situation might be more cyclical (stock market nervousness, UK regulatory pressures, etc.) than structural, but it certainly serves as an early warning signal to directory publishers worldwide to get on board the digital train fast, and start re-inventing their business.

I leave the last few words to Charles Laughlin from the Kelsey Group as I fully endorse them:

Amid such a sharp sell off, it’s worth reiterating some truths about the directories business. Yes, print revenues are declining, but directories are still a highly valuable source of leads for small, local businesses. The directory industry remains hugely profitable. It seems to us that many investors got into directories based on an oversimplified story (lots of cash, visible revenue, stable customer base). And they seem to be leaving based on similar reasoning (no one uses Yellow Pages anymore, Google has made the medium obsolete, it won’t exist in five years, and so on). While search is a growing factor in local, search cannot yet replace the volume of leads available from printed directories, and it may be some time before it can. Directories will be a major player in local media for quite some time to come.

I love that slide coming from Chris Tolles‘ Web 2.0 Summit presentation. Tolles is the CEO of Topix, a well-known hyperlocal news aggregator. It clearly shows why Topix decided to allow user-generated content in their site back in April.

In it, he tries to extrapolate the number of daily local news stories coming out of traditional media outlets (newspapers, radio and local TV) and comes up with a grand total of 22,293. Given that there are about 43,000 zip codes in the US, this means every zip code gets 0.5 stories per day on average. Not much if you’re trying to build zip-code driven news aggregator. Smart move.

(from USA Today)

“I think we’re tribal creatures, and I think we need close personal connections.”(…) Miller says communal living’s appeal stems from questions many people ask themselves: “Why do we live fragmented, separate lives? … What happened to the old idea of neighbors and interaction? People would like to recapture it.”

What it means: this excerpt from a USA Today article specifically talks about the appeal of “intentional communities” (what used to be called communes in ’70s) but I think the questions seen above are more widely asked than we think. These concepts are definitely in the zeitgeist. Many people wonder why we’re so out of touch with our neighbors and neighborhood. For that reason (amongst others), I am a firm believer in the future birth of a very social hyperlocal Web where everything that’s happening in your neighborhood is available at your fingertips. Hyperlocal is not only about local businesses. It’s everything in your neighborhood including local politics, crime prevention, classifieds, events, interest groups, etc.

As all my readers know, I’m a big proponent of local search. I believe the web will be even more valuable in the future when we have access to deep hyperlocal content and social relationships (local merchants, classifieds, events, politics, etc.). I currently see two major trends in the zeitgeist that favor an explosion in the importance of local in the next few years.

1) Traceability. The various recalls of products made in China are slowly eroding consumers’ trust in imported goods. Even the E. coli scares we had in the last few months are shaking people’s confidence. Buyers are starting to ask questions as to the provenance of products and wondering if they can trust the supply chain. My hypotheses is that the shorter and more local the supply chain, the higher the trust factor will be, and people will figure it out quickly. I think Community Supported Agriculture is a great example of that phenomenon.

2) The carbon footprint movement. People are starting to wonder how much energy it took to produce and bring the products to the store, i.e. what is their carbon footprint? Studies show that local products do not necessarily have lower carbon footprints but I think consumers won’t think twice about buying local products if they have the perception they’re “saving the Earth”. According to FT.com, Tesco, a UK grocery chain, “has embarked on an ambitious labelling initiative that will eventually allow shoppers to compare all its products on their emissions levels in the same way they look at price or nutritional value” In addition, companies like Toronto’s ZeroFootPrint are also leveraging that trend.