My shoeshine guy is 84. He says we’ll get through this. I believe him.

Robert Ivan, tweeting, Haiku style, from the Newspaper Association of America’s mediaXchange conference

LAS VEGAS — It’s so quiet on the casino floors here that you can hear a — well, all right, it’s not that quiet. But with visitors and gaming revenue down sharply, this party town has a really bad hangover. The dealers at the blackjack table stand forlornly, no players to employ them.  Hotel room rates are marked down. (But the food court still charges $11 for a cheeseburger and potato chips, so it’s good to know some things haven’t changed.)

Were it not for the recession, the lush setting of the Mandalay Bay hotel and casino might seem an incongruous setting for a meeting of newspaper executives.  But the stillness of the casino floor mirrors the mood at the Newspaper Association of America’s inaugural mediaXchange conference.

The mediaXchange replaces NAA’s annual marketing conference and its NEXPO technology conference and trade show — a recognition of the industry’s increased focus on digital publishing, and according to NAA, the increasing collaboration of the “audience and revenue side of the business and technology professionals.” Indeed, the seminars here offered promising reports on new products that are generating revenue: mobile content, web video, contextual advertising.

Where is everybody?

Still, there was a Night of the Living Dead feeling to the proceedings. At the ceremonial ribbon cutting to open the exhibit floor the applause was hollow and half-hearted. At the opening session, keynote speaker Tony Hsieh, CEO of online retailer Zappos.com, addressed a huge ballroom that was less than one-quarter full.

John Sturm, NAA president and CEO, opened the conference with a little gallows humor, referring to the “good old days” before the global financial crisis, when newspapers only had to worry about their secular challenges of declining circulation and advertising revenue. Sturm insisted bravely that is not circulation but local “reach”  — which incorporates visits to newspaper websites via computers and mobile devices — that matters to the industry.

And by that measure, there is some good news: Nielsen Online reports that newspaper websites’ audiences hit an all-time high in January: nearly 75 million unique visitors, representing 44 percent of all active web users. “City by city,” said Sturm, “we power the local markets because the path to consumers goes through our newspapers and websites.”

No, 44% still isn’t the kind of penetration newspapers had in the days before the web, cable TV and satellite radio. But it’s enough to suggest a future for newspapers — if they seize it. “We’ll never get back to being a dominant media in the way we were 40 years ago,” said Roger Fidler, director of the Donald W. Reynolds Journalism Institute program for digital publishing at the University of Missouri. “But digital allows us to continue to be a viable information medium that people will continue to use.”

But looking at the generally sparse attendance and the mostly white male, mostly middle age demographic of the attendees, one has to wonder whether this industry is capable of saving itself.  Where were the young people who are most comfortable and knowledgeable about these emerging technologies, the digital natives who have never had an emotional attachment with print newspapers?

Where were the news-side people? At one session attended by more than 300 attendees not a single hand was raised when a speaker asked if there were any representatives from editorial. Two executives from the Fargo, N.D., Forum told another audience it took them 18 months to get editorial to begin tagging articles with keywords so that they could be matched with similarly-tagged advertising - and this was one of the success stories!

I’m not suggesting editorial should abandon its independence or surrender to publishing advertising-friendly copy. But if we don’t start working better with the business side, there will be no business left.

As James Jackson, vice president/new media and product development for the Cincinnati Enquirer, noted, moving to digital requires a profound cultural shift. Journalists have to think in terms of a wire service-like 24-hour publishing cycle. Marketing and ad sales have to develop a platform-agnostic approach to “sell audience, not products.”

Jim Jackson, Cincinnati Enquirer

Fittingly, company culture was also the theme of the opening keynote speech by Zappos’ Tony Hsieh.

Zappos’ offbeat, anti-hierarchal culture has made the company legendary for customer service: honored as one of the best companies to work for (Fortune magazine) the most innovative (Fast Company magazine) and, with $1.1 billion in revenue in 2008, fastest growing private companies (Inc. magazine).
Hsieh joined Zappos nine years ago after selling his previous start-up, the ad broker Link Exchange, because he had so failed to pay attention to the culture of the company as it grew that he dreaded going to work. It had lost the fun, family atmosphere it had in the beginning.

Now, Zappos subjects each prospective hire to two interviews, one to screen for skills and experience, the second to determine whether the individual has the right personality.  No matter what their ultimate job, each new hire undergoes four weeks of training and work in the company’s call center and a week at their warehouse. At the end, they are offered a $2,000 bonus to quit. The idea: those who are just there for a paycheck will take the money and run. Those who remain buy into the culture.

And while most retailers seek to minimize costs and contact with their customers - hiding their phone numbers and outsourcing call centers to India - Zappos makes its Las Vegas call center the centerpiece of its marketing strategy and offers free shipping and 365 days to return unwanted items.

Such creative and counterintuitive thinking is sadly rare in the newspaper industry. Newspapers face what Clayton Christenson identified as “The Innovator’s Dilemma:” the companies that rose to success with one technology and business model are often kicked to the curb by new companies when the industry is hit with a “disruptive” technology. Because they have so much invested in the old technology and generate large revenues from them, incumbents often fail to seize on new technologies and business models until it is too late.

A few speakers here spoke with urgency the situation requires. Roger Fidler predicted: “I believe that ink on paper will not be a viable alternative for much longer.”

Dave Hunke, CEO of the Detroit Media Partnership and publisher of the Detroit Free Press, declared: “If we don’t talk about things that are controversial we are wasting our time here.” Beginning March 30, the Detroit papers will abandon home delivery except for Thursday, Friday and Sunday, delivering their content over the web and through 32-page “express” single-copy-sale print editions the rest of the week.  The papers also hope to distribute via the Plastic Logic eBook by year’s end.

Dave Hunke, Detroit Free Press

“The Detroit News and Detroit Free Press are fighting for their absolute survival right now,” Hunke said. “We are absolutely not going to stop (the changes). We are not going to sit here and die.”

Chuck Peters, CEO of the (Cedar Rapids, IA) Gazette, said the industry shifts left his company “stunned and immobile.”

“A year ago I walked in and said we have 600 people who are doing the wrong things to the wrong end with the wrong attitude, he said. “We were a franchise. Now we’re a start-up.” His new strategy is “Complete Community Connection,” which he writes about here.  Peters says the company’s success will depend on its ability to become more transparent and less authoritarian and focus on a network of products and services rather than trying to be all things to all people. Peters doesn’t claim to have found all the answers. But “now we’re able to stumble somewhat in the right direction.”

Some other takeaways from the three-day conference:

NAA Study

Jim Chisholm, principal of iMedia Advisory Services, offered a mix of good news and criticism in summarizing the results of a study he did for NAA on future business models:

• Newspapers are making inroads in display and classified advertising, increasing their share of ad spending from 29% to 40% in the last four years. But papers are still not doing well on search advertising and referrals.

• Some papers are diversifying their revenue sources; the London Telegraph, for example now generates 11% of revenues from retail products including books, wine, travel, event tickets and financial services using their database of  “high-value customers.”

• Chisholm chided U.S. newspapers for failing to raise circulation prices in pace with inflation, saying papers are sacrificing revenue they could be capturing without risking incremental circulation losses.

Mobile

Many speakers talked of the potential of mobile content delivery and advertising. Cost per thousand advertising rates (CPMs) for mobile applications can run in the high double digits, even triple digits for special events.

• The Tampa Tribune generated “five-digit profits” over two weeks leading up to the Super Bowl with its “mobile concierge,” telling visitors where to play, eat, drink and shop.

• Traffic on newspaper mobile sites is heaviest after 4 p.m. and on weekends - exactly the opposite of the traffic patterns for papers’ main websites, which are get most of their traffic during the day from work computers. Mobile sites also attract an audience “who never touched our products before,” said Tim Repsher, marketing director for the Tampa Tribune’s tbo.com.

• The Cincinnati Enquirer’s Jim Jackson compared the maturity of the mobile web today to the web in 1997.  “We’re not so much pushing information onto phones, we’re positioning ourselves for the long-awaited emergence of e-Readers and digital ink.”  Jackson said.

• Mobile page views for the New York Times have increased from 500,000 in February 2007 to 14 million in February 2008 and a reported (but unconfirmed) 50 million for December 2008, according to Chisholm.

• The Palm Beach Post sold a supermarket exclusive sponsorship of its mobile hurricane alert service for $40,000 per year.

Video

Video was another hot topic. Several speakers recommended publishers use syndication services or turn-key solutions to overcome their limited resources.

• Shannon Dunnigan, director of online revenue for Gatehouse Media, said her firm is earning 60-70% profit margins on video recruiting ads, which helped boost total online ad revenue at one small paper by 25%. “Video doesn’t have to be broadcast quality as long as it’s timely and relevant,” she said.

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