BOB GARFIELD:
It seems a shame to end the year fixating on what went wrong for the press in 2011, so let's now take a peek ahead at what will go wrong in 2012. Joining me is Alan Mutter, the inveterate editor who writes the industry blog Reflections of a Newsosaur. Mutter believes that if you're a local legacy media company – newspaper, broadcast station, Yellow Pages – 2012 will be the year when the digital giants show up in town to eat your lunch. Alan, welcome back to the show.
ALAN MUTTER:
Great to be back.
BOB GARFIELD:
Tell me about lunch.
ALAN MUTTER:
There are a number of people coming to the trough. Google is taking a greater interest in putting feet on the street in a number of markets to teach people how to build websites, help them get the domain names and show them how to do online advertising so they don't have to spend money in the Yellow Pages or the local paper. Fewer than 10 percent of most local businesses are now using Google ad services, so there's quite a big upside for Google in making that sort of investment.
And I should point out that Google's ad revenues this year in 2011 will be about 36 billion or one and half times bigger than all of the newspapers in all the land put together.
BOB GARFIELD:
Now salesmen will call at the door of the hardware store, the barber shop or the pizzeria and say, let me tell you how to work this Internet thing.
ALAN MUTTER:
It's already happening. The next thing that is happening is that Amazon is getting very aggressive about trying to go after both the customers of main street merchants and even big mall merchants, the big box stores like Best Buy. They released this great new shopping app that came out over Christmas that allows you to be standing at Best Buy and take a picture of the barcode for the TV and find it cheaper online and push to Buy before you can even get out of the store.
If their business begins to contract, they're going to have less money to spend on advertising. That affects the media companies because these are the guys who buy the ads in local newspapers and on local radio and TV.
BOB GARFIELD:
Okay, let's talk about television.
ALAN MUTTER:
Next year is gonna be a great year for TV because of all the political advertising. It's gonna be a very expensive election, probably the most ever. But what's happening underneath is that lots of people are trying to connect the Internet seamlessly to the big screen in the den. That will really start to further fragment the audiences now assembled by local broadcasters.
As more and more things happen to give consumers choice about where to get programming and how to buy programming, this is going to have a huge impact on not only local broadcasters but even local cable companies who now have very high priced bundles of channels.
Somewhere down the road they're going to be forced to unbundle, and when that happens all those expensive local cable systems, which now generate profits of around 50 percent, are going to become not money machines but actually albatrosses.
This year we've seen people begin to cut the cord and discontinue expensive bundles of cable TV services because people have more and more choices. This has almost never happened before in the history of the cable business.
BOB GARFIELD:
And I want to leave this with newspapers. As you look at what we have experienced the last ten years and as you look ahead at 2012, any thoughts for present or future business model for monetizing the newspaper industry?
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ALAN MUTTER:
The people who run newspapers are going to have to learn a lot about creating little islands of content and connecting exactly the right audience with the right advertiser in the moment. That's what Google has done so brilliantly. That is the success of the company.
But I believe that there's a future for newspaper publishing companies if they become the owners of the definitive base of information about consumers and the markets that they serve. But it requires a big investment that quite a number of publishers have yet to make.
BOB GARFIELD:
Yeah, one more thing, Alan. In the summer, I'd like to spray my patio furniture and I'd like to put down newspaper first, you know.
ALAN MUTTER:
Right.
BOB GARFIELD:
Will I have any to put down?
ALAN MUTTER:
You may, in the immediate future. But we are starting to see publishers cut back on the number of days a week that they publish. And also, we're seeing some publishers cut back on the days of the week that they do home delivery. Both of the big dailies in Detroit print a paper every day, but they only deliver to your home three days a week, the three days of the week that advertisers really want. So that's kind of a strange and interesting transition.
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BOB GARFIELD:
All right, Alan – happy new year.
ALAN MUTTER:
Same to you.
BOB GARFIELD:
Alan Mutter writes the Reflections of a Newsosaur blog. He spoke to us from San Francisco.
