A new news beast: Newsweek goes digital

In an interview that could easily have passed for Fox talking to Murdoch, the Newsweek Daily Beast Company sat down with its editor-and-chief and founder Tina Brown to discuss the end of print at the venerable magazine Newsweek.  Newsweek fell into the hands of Brown and Beast two years ago but have been unable to resist sliding circulation and rising costs. The last print edition will be December 31.

Brown was on “Newsbeast” this week seated next to the company’s new CEO Baba Shetty as they said why Newsweek was shedding staff and its print publication.  For Brown, it about protection, both of journalists and content. Senior suited-up columnist John Avlon lollypopped his bosses with the opening question phrased as a statement: “So we are taking the bull by the horns, going all digital…”

“We are,” replied Brown.  “We must embrace the future.”  
Newsweek was 80 years old, she said. and it was time to start looking at the next 80 years.  

Brown, like many editors before her, conceded defeat for print.  

The industry has reached a tipping point and it was no longer a case if but when, she said.

And “when” said Brown, might as well be “now”.

“We decided to take away the when and…embrace it, be ready for it.”

Avlon turned the discussion to Shetty with management speak.

“Being proactive not reactive is always a good idea…”

“Yes,” replied Shetty, who unlike Avlon, was dressed down with a jumper and shirt.

The new CEO, a “brand guru”, said Newsweek was a great brand and a powerful media icon but was encumbered by “the form factor” and its economics. Taking away issues of physical printing distribution and circulation by porting the core product to digital would be “incredibly liberating”, Shetty said.

Consumers were moving to digital and advertisers would want to be there to grab these audiences, he said. Tablet devices, web usage for news, and social news meant it made perfect sense for Newsweek to now go “completely native on digital”. 

Brown gave an economic rationale to back it up. She said it cost Newsweek $42m a year to print, manufacture and distribute "before you’ve even paid one writer or one intern".
“That’s an enormous albatross,” Brown said.

“We thought it was more important to protect the journalists, the contents, the photographers, the ideas.” 

Brown said she wanted a digital Newsweek to focus on the marketplace of ideas.

But how then, would it be different to the Daily Beast, also entirely online, asked Avlon.

Shetty said they were “incredibly complementary".

In four years, the Beast had gone from a start-up to a site with 15 million visitors a month, up 70 percent since 2011, a huge spike in readership and engagement.

Many were “lean forward, participatory, multiple visits a day,” Shetty said. “The Daily Beast is indispensable in many people’s information diet.”

A healthy portion of this traffic was generated each week by Newsweek’s strong original journalism. Newsweek, said Shetty, “a step removed”,  offered more considered, thoughtful, long-form journalism. 

Brown said the the Daily Beast and Newsweek spoke to “the same reader in different moods”.  The Daily Beast offered news that was “hot and happening” while Newsweek appealed to the ipad reader on the train home. But, she said, they offered the same sensibility: reflection, context and “a thorough look at what was happening in the world”. 

Avlon steered the conversation to the new brand: Newsweek Global.  CEO Shetty called it a terrific new perspective and described who the product would appeal to: “The mobile, highly informed, highly engaged, person very aware of what is happening over the globe.”

He said removing legacy print, meant Newsweek could re-interpret what it could be in pure digital form. Brown said the Daily Beast now appealed to a similar global reader who lived in India, London or Brazil.

Brown said one of the focuses was on “really powerful live events” including ones they had organised like Women in the World. which has an associated foundation which last week launched a campaign for education of girls in Pakistan with Angelina Jolie, hot on the heels of the shooting of 14-year-old education campaigner Malala Yousafzai.

All aspects of the company, said Brown were “now playing together” but print was the anomaly. Getting rid of it went with “enormous regret” as some “incredible brilliant talent” would be leaving the company but it was “the right decision for the company.” Avlon concluded that in terms of content that was “good news for journalists” and an exciting new opportunity” before nodding to the camera to end the interview.

The Daily Beast article that went with the video, gave some statistics to back up the “tipping point” :

There are now 70m tablet users in the US, up from 13m in two years. A further explosion of use is likely, especially as two in five Americans get their news online, a number that is also growing.

“Exiting print is an extremely difficult moment for all of us who love the romance of print and the unique weekly camaraderie of those hectic hours before the close on Friday night,” the article concluded. "But as we head for the 80th anniversary of Newsweek next year we must sustain the journalism that gives the magazine its purpose—and embrace the all-digital future.”

Brand Branson

TWENTY-THREE Australians are among the 600 people who have stumped up a cool $US200,000 each to be among the first space tourists with Virgin Galactic. The flights are expected to take place at the end of next year after Virgin test flights prove successful and the passengers undergo basic space training.

Flights on Virgin’s SpaceShipTwo will carry two pilots and six commercial passengers on a two and a half journey that will involve just six minutes of sub-orbital weightlessness 21,000m high. The idea is the latest brainwave of serial inventive British businessman Richard Branson who will be on the first scheduled flight with his family.

The entrepreneurial icon turned 62 in July but shows no sign of slowing down.

Where others see disaster, Branson sees opportunity.  CNN called him part Warren Buffett, part PT Barnum and an “unflappable inventor and promoter”.He has vast interests on six continents, including airlines, express trains, mobile phones and credit cards.

Branson was always an independent sort. Aged 16 he set up a magazine to put out a student point of view. “I didn't like the way I was being taught at school,” he said in 2006. “I didn't like what was going on in the world, and I wanted to put it right.” Plenty of advertisers were willing to stump up to reach the cashed-up youngsters reading Branson’s mag and his career was up and running.

He advertised records in the magazine and started selling them himself at a London store at discounted rates under the brand “Virgin”.In 1972 he launched Virgin Records and was approached by a struggling artist called Mike Oldfield to listen to his demo. Other companies thought Oldfield's instrumental work was unmarketable but Branson took a gamble. Oldfield’s Tubular Bells was the first record released by Virgin. The album took off after it was used as the theme music for the movie The Exorcist and by the end of 1973 it was a massive international success. Branson was always grateful to Oldfield and would later name one of his first Virgin America planes Tubular Belle.

Branson’s willingness to take a gamble paid off and he was at it again in 1976 when he signed the band the Sex Pistols. Johnny Rotten and his punk crew were controversial but they knew how to shift records. Though the band broke up before Branson made serious money out of them, they successful changed Virgin's image as a hippie label. In their wake, he signed up XTC, The Skids,The Culture Club, The Human League, and Sting. Virgin’s income went from a loss of £900,000 in 1980 to a profit of £11 million in 1983. In 1992 Branson was able to sell the music label to EMI for £0.5 billion. 

By then, Branson had broadened his scope with expensive airlines in his firing line. In his autobiography Losing My Virginity he explained why. “My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them,” he said. “From the perspective of wanting to live life to the full, I felt that I had to attempt it.” Just as his assault on the expensive record industry worked, the over-regulated airline market was also ripe for picking.

His Virgin Atlantic Airways was followed by Virgin Blue in Australia in 2000. Virgin Blue took full advantage of Ansett’s collapse a year later to become the country’s second largest airline. Internationally there was Virgin Trains and Virgin Mobile and even Virgin Comics as Branson spread his net far and wide. Meanwhile there was a succession of world record attempts, film appearances and humanitarian initiatives as Branson the man competed with Branson the brand. 

He was knighted in 2000 for “services to entrepreneurship” and he now gets rock star treatment wherever he goes. Last year, stadiums in Sydney and Melbourne were filled with people who forked out $300 a ticket to attend a “financial education summit” where Sir Richard was the star speaker.

Now at an age when many are reaching for the pipe and slippers, Branson is still reaching for the skies and beyond.

Clive Palmer: last sentry

Clive Palmer continues to hold a fascination for Australian politicians and the media alike. Prime Minister Julia Gillard invoked his name in her revenge attack on Campbell Newman's Queensland LNP Government. Gillard made a long speech to the Queensland ALP conference yesterday but it was the reference to Clive Palmer (curiously left out of the official transcript) that gave the Brisbane Times its lead. "Even Clive Palmer is having doubts," Gillard said. "You know the ship is going down pretty fast when the bloke who wants to resurrectthe Titanic is seen leaving it."

Gillard is referring to LNP life member Palmer dishing out on LNP leader Newman. Palmer has been on the attack since last week’s Queensland budget where the new government raised coal royalties. The near billionaire Palmer is directly affected through his China First coal project in the Galilee Basin which was cancelled in May though he cloaked his criticism in wider concerns. According to News Ltd, Palmer said “strikes, protest marches and royalty hikes were not good for the image of the state and would drive away investment.”

It is amusing to see Labor use Palmer as a tool of their propaganda after painting him so often as the bogey man. Wayne Swan was in his sights for much of that past 12 months, but the businessman has added the State Government to his grumbles. He is up in arms against both levels of government over his proposal to pump wastewater from his Yabulu nickel plant into the Great Barrier Reef protection zone.

Meanwhile the Queensland Government decision to award Gina Rinehart and an Indian consortium a rail corridor to the Galilee still rankles. Palmer and his Chinese partners have put their joint venture on hold due to the dropping price of coal. Luckily for Palmer, his enormous wealth is in iron ore not coal. His company Minerology painstakingly secured 160 billion tonnes of iron ore deposits south of Dampier in the Pilbara Ranges in Western Australia over 15 years.

Forbes estimates Palmer as being worth $795m making him the 29th richest person in Australia. Palmer said his father George, a successful silent movie star of the 1920s and radio pioneer, had the greatest influence on him. "Dad worked with the then Prime Minister Billy Lyons when he was in power, advising him on media stuff. He was probably the first of the spin doctors,” Palmer told the Gold Coast News. "He also set up train and buslines for transportation. He broke that monopoly that the state railways had. He was quite an amazing guy."

On leaving uni, George's son got a job in real estate in the Gold Coast. He quickly became their top marketing consultant, before setting up his own company, GSS Property Sales. With the Coast in the middle of a construction boom, Palmer thrived and was worth $40m before the age of 30. In 1986 he set up companies to buy iron ore deposits and trade oil. He became a close confidant of Joh Bjelke Petersen and an admirer of the way the Premier turned Queensland into a coal exporter. Palmer was considered the architect of Joh’s final election victory in 1986.

Palmer also met Soviet leader Mikhail Gorbachev and set up joint ventures with Russian companies that persist to this day. Palmer also greased the wheel with Chinese interests and had to be very patient to make the deals work over many years. The lesson was to treat everyone with respect. Palmer said their collective decision-making process often allowed middle management more power than the managing director. But Palmer’s key skill was his sense of timing. As Griffith Uni’s Jason West said, thermal coal prices spiked to unprecedented levels allowing the likes of Palmer, Hancock and Forrest to experience profit margins beyond their wildest expectations. “Instead of earning margins of $2 to $10 a tonne as they had for decades, coal miners were now earning margins of $50 to $100 a tonne which in turn increased asset values to levels rivalling well-established and brand name top 50 firms,” West said.

West said Palmer had one income-earning asset and a whole bunch of tenements offering nothing but promises of future wealth. But some of those promises are extremely lucrative. They include the massive $8 billion Sino Iron Project at Cape Preston, 100 km south west of Karratha, WA expected to deliver before the end of the year. Owned by Hong Kong-based CITIC Pacific, it is on Palmer’s tenements and will be the largest magnetite iron ore mining and processing operation in Australia. The Sydney Morning Herald estimates Palmer will rake in half a billion a year in royalties on Sino Iron.

These are impressive numbers for someone who is still mostly regarded as a joke. Much of this poor public profile is his own fault due to his buffoonish tendency to act as a walking headline. Palmer is not shy about self-promotion and prefers to call himself Professor Palmer, courtesy of an honorarium from Bond University. Somewhat bizarrely, he has also been officially listed as a "national living treasure" though the National Trust of Australia offers no reason for this accolade other than the incorrect statement “Palmer is a self–made billionaire”.

Whatever his status, there remains the unfinished business of political ambition. In a Lateline interview last week, he attacked Campbell Newman for his lack of experience in business. “I'm the most successful Queenslander in the commercial world that's ever lived, yet I'm not supposed to have any say and any knowledge about that,” Palmer said. But while he has flirted with Katter, he still wants change from inside his party. “I love the LNP and I've been a supporter of it for 43 years,” he said. “I remain the last sentry at the gate to protect democracy in this country.” The question remains whether the sentry is there to guard the gate or attack the castle.

Surat Basin Rail gets another approval

The Queensland Government has approved the development scheme for the Surat Basin Rail Joint Venture. The approval is another tick for the proposed rail line linking the western line with the Moura Railway System. The Surat Basin Rail is the so called “southern missing link” a 214km railway linking Wandoan and Banana. According to the Surat Bain Rail project, the railway will “enhance the existing coal rail network and unlock 6.3 billion tonnes of coal reserves in the Surat Basin.” The approval follows last year’s environmental approval and the railway will connect to the future coal industry-owned Wiggins Island Coal Export Terminal.

Surat Basin Rail is a Joint Venture between rail infrastructure company Australian Transport and Energy Corridor Limited, Xtrata Coal and QR National. JV chair Everald Compton said the project had significant implications for the Surat Basin and Queensland. “Surat Basin Rail will boost economic development of regional Queensland and connect the multi-billion dollar industry-funded Wiggins Island Coal Export Terminal, to unlock the vast coal reserves of the Surat Basin and support the continued growth of Australia’s largest export industry,” he said. “The Joint Venture’s proactive engagement approach and environmental impact statement which comprised 14 technical studies, will ensure minimal social, environmental and economic impacts.”

The Queensland Government’s Surat Basin Rail Bill 2011 proposes to grant a long-term lease over the Surat Basin rail corridor land. The bill has been referred to the Industry, Education, Training and Industrial Relations Committee for detailed consideration reporting back on 19 March 2012 (which may or may not before after the next state election). If passed the bill will regulate a lease the Government intends to grant to the SBR JV, to construct and operate the railway. The Bill would provide some exemptions from provisions of the Property Law Act 1974 and the Land Title Act 1994.

Meanwhile the Co-ordinator General’s report said the project was needed but its value would increase once integrated with other rail and port infrastructure projects. The Co-ordinator General has imposed a number of environmental conditions relating to land and soil, water management, air quality, traffic, greenhouse gas emissions and other factors. He accepted some impact on good quality land was unavoidable and further investigations were required for future habitat approvals.

The Surat Basin Rail Joint Venture has an exclusive mandate granted by the Queensland Government to develop the project as an open access coal and freight railway. Government approval now allows the joint venture to begin land acquisition and construction in late 2012 with first coal on rail due in 2015. The railway will have the capacity to transport up to 42 million tonnes of coal per year on trains up to 2.5 kilometres in length.

Stanmore Coal made the development approval announcement in an ASX release last week. Stanmore Coal has a strong vested interest having applied for five million tonnes of capacity on the SBR to deliver 5Mtpa of high quality export thermal coal from The Range project from 2015. The Range project is in the north of the Surat Basin 27 km south east of the line. Stanmore Coal has obtained 7Mtpa of priority capacity rights at the proposed Wiggins Island Coal Export Coal Terminal Stage 2 at Gladstone.

Wiggins Island is expected to open in 2014. The 27Mta coal terminal is located at Golding Point, Gladstone. It is owned by eight coal producers and will be operated by the Gladstone Ports Corporation. The terminal will be built in stages and when fully commissioned will provide more than 80Mtpa in export coal capacity. Stage 1 construction of the $2.5b project started in October. Construction will include a stockyard for 1.9Mt of coal, a 5.5km-long overland conveyor, a 7600tph rail receipt facility, a single berth with travelling ship loader and channels and wharf to accept 40,000-220,000dwt ships. A feasibility study for the terminal’s expansion is expected by the end of the year. In case anyone was in any doubt, coal remains central to Queensland’s economy.

Home ground advantage: commerce and e-commerce

I was at a local chamber of commerce meeting tonight where the guest speakers from one of the major banks gave us a macro-economic view of exchange and interest rates. The conversation about the health of the economy suddenly got round to the internet and its effect on the shopping experience. One of the speakers wondered at what point “home ground advantage” was lost and people did their shopping online because it was cheaper. (photo: transcyberiano)

The tale was told of shops who charged their customers $50 just to try on the footwear. Many people were getting fitted out while getting expert advice then buying exactly the same gear for a fraction of the price online. The owners had a right to be miffed by a time investment not matched at the till, but their defensive measures in response was also short-sighted, the speaker argued. The internet is coming whether the skishop owner likes it or not.

A few minutes later, there was a worried question from the floor asking what this meant for commercial operations in Roma. The speaker reiterated the earlier point: it becomes a question of when home ground advantage is conceded. As another voice from the floor put it, “I like shopping”. The Internet will never fully replace the visceral appeal of commerce in real life.

Nevertheless it is pointless to ignore the truth. Cheaper online overheads and the convenience of clicking will eat seriously into the profits of the shops. People are spending a lot more time online too. A Nielsen Australian Online Computer Report released yesterday showed average internet usage has increased in 12 months from 17 hours 36 minutes in 2009 to 21 hours and 42 minutes in 2010. Usage has tripled in the last decade and with the prospect of high-speed broadband ahead, it is likely this trend has not yet reached saturation point. Australians will sooner or later spend a full day a week online.

Much of this usage is spent watching TV programs or surfing, but shopping online is also on the increase, though not as sharply. In 2008-09, 64 per cent of Internet users (pdf) aged 15 and over made online purchases, up 3 percent on 2006-07. This behaviour is concentrated in the young, which suggests it will increase. Three-quarters of people aged 25-34 bought over the Internet while less than half aged 65 and over made online purchases.

Businesses are going to lose business to the Net whether they like it or not. Rather than resisting change by charging $50 for the right to try things on, the bricks and mortar operations need to engage with the competition. That doesn’t just mean having a website to sell their wares. They also need to maximise other home ground advantages. While issues of security and shopping in person were important factors the most commonly reported reason for not making online purchases in 2008-09 was “a lack of need”. People shop in the real world when they don’t need to do it online. Understanding how to tap into this lack of need should be a holy grail for 21st century business.

Traders cannot rely on the GST loophole argument to equalise prices. There is a threshold below which it is too costly to collect taxes on goods privately imported. Keeping retail price below the cost of imports plus delivery is unlikely so shops should look to value added services to keep the tills ringing. Intangibles like goodwill, trust, a social media presence, an identification with their geography, and an honesty when dealing with customers may end up being decisive factors. If customers think there is a need to for online services - and they will – then they will find them. It’s up to business to find an ecological niche to avoid extinction. (photo seen outside a closing Borders store in the US)