Social media is the latest buzz phrase to describe the trend in normal people creating content. Something previously the realm of professional journalists.

In a recent article, Nina Simon investigates how much time is involved per week for different types of participation:

I’m considered fairly involved as I participate in a number of services, including this blog, Flickr, Twitter, Facebook and monitor a forum here or there. Some of my friends are participating with Twitter alone, as Twitter dropped the barrier of entry to virtually nil.

This raised a question of how journalists are allocated time for social media. The trend in traditional media is to attempt to integrate social media into the news process. This includes using user generated content in the print product and on the web. But it also involves journalists becoming members of the community.

The obvious implication is that more time is required. However, with newsrooms shrinking and with print and online operations attempting to converge, available time is reduced.

Until time is allocated to social media, the voice of the traditional media will continue to broadcast rather than participate in the conversation.

Business and technology news is awash with the latest rounds of M&A.

Amidst the noise, Fred Wilson adds some perspective:

The Internet is decomposing into a vast array of micro-services that we, the end user, stitches together to make our own unique web experience.

And yet, these large behemoths are trying to do their normal consolidation play on the Internet. First of all, it’s not going to work. They are destroying value with all of their M&A efforts and the bigger they get, the more value they will destroy, for them and their shareholders.

And:

Here’s the problem. The company/web service creation process needs some kind of end game. The entrepreneurs who spend years and risking a ton need a way to get paid for that effort.

… if you can’t take a company public, how do you get out? M&A has been the primary answer in the web/tech sector for the past eight years. And it’s been a great period to sell companies.

But if you look deeper, I wonder. Delicious grew nicely for a while under Yahoo!’s ownership but recently the user base has fallen off pretty dramatically. I double checked this chart in compete and alexa and they all show the dropoff.

But who am I to complain? We got paid right? So sit down and shut up.

Except I am also a user of these services. I see what happens when a company gets purchased. The service languishes. The team leaves. It stops getting better. And often gets worse.

Fred sees this from both sides, as a VC looking for liquidity and as a consumer of web services looking for quality.

The problem with consolidation is in how large companies typically innovate. To get a new idea through requires either skunkworks, acquisition or sixteen layers of approval to risk people’s time. It becomes a problem of permission.

On the flip side, for a start-up you have two options: innovate or die.

Large companies are trying. Google’s 1 day a week program gives explicit permission for people to tinker. Microsoft invests big dollars in R&D and the start-up community. Unfortunately, it isn’t enough.

Fred is quite right. There needs to be a better path to liquidity. Or stated differently, start-ups need a way to become companies, not food for dinosaurs.

From sfnblog:

The Newspaper Association of America (NAA) spent almost US$1.6 million last year lobbying the U.S. government on issues ranging from advertising to freedom of information requests, the Associated Press reported Tuesday.

I’m not sure which is more broken: the US government’s lobbying process, or the NAA’s need to spend so much protecting their position.

From The Secrets of Consulting:

The Second Law of Consulting: No matter how it looks at first, it’s always a people problem.

This was a book I read a few years ago, and this quote has stuck with me as it continues to resonate. Even technology decisions are really people problems.

Alley Insider claims newspapers are screwed, and provides a financial model to explain why. Using the New York Times as a case study, their conclusion is that newspapers are making a loss on content generation.

They make the extreme assumptions that print will disappear and that online profits will grow modestly. The other areas of the business are adjusted to compensate for the removal of print production.

The result? Losses. Massive losses. Revenue plummets from $789 to $285 million and profit is in the red by $64 million. This makes a fairly good case for their argument that the cost of content generation is too high.

However, the model omits some of the possible savings from removing newsprint.

Newspapers typically include the following business units:

• Editorial — reporters, photographers, editors, layout, design, and imaging.
• Advertising — classified, ROP/display, sales staff, layout, design, and imaging.
• Circulation — how to get the paper distributed to subscribers, newsagents, and other places.
• Production — printing the content onto the actual paper and bundling it.
• Other — support staff such as HR, payroll, management, etc.

To cut out the print side of the business means much more substantial savings in costs and staff than outlined by the article. In a web only newspaper, the Circulation and Production departments can go. The supporting staff can also be reduced, as the overall staffing will be lower.

The Editorial team can shrink, both in size and cost per employee. For examples, photographers don’t need high resolution cameras as print resolution isn’t required. The imaging department can be simplified or replaced by automated tools, as colour matching and image quality are simpler for the web. Layout of stories is not required, so layout staff can go. Web pages are uniquely designed, so the design staff can go.

The Advertising team can be significantly reduced. For a web only publication, online ad booking would be the norm, so the call centre can be mostly eliminated. The paginators (layout staff) aren’t required for web publishing, and the imaging and design departments can also be shrunk or removed.

This leads to a much bigger cost cutting than proposed by the article. I’d argue the the wages and salary cost, after staff reduction, is slashed by 50-75%. The Selling, General and Admin costs could be slashed by a similar amount.

Rather than the estimated losses of $64 million, the bigger staff reductions by the move to web-only provides a profit somewhere between $33 and $158 million. In other terms a profit of margin between 11% and 55%.

The amount of work involved in putting out a newspaper to print each day is underestimated when compared to online publication. I do not see newsprint dying off in the near future, and I will be surprised to see it go in my lifetime. However, if newsprint were to disappear, newspaper publishers could still be profitable content generators.