PeppercomBlog

Balloon Boy: Not the First, Not the Last

Posted by Matt Purdue 

 A strange craft is seen floating over the skies of the United States. Immediately, the authorities and the news media mobilize. An entire nation is riveted by live reports of the ship soaring through the lower atmosphere. Millions of people are caught up in the excitement. 

The craft lands in a quiet field, and the police and media descend, falling over each other to uncover if what’s inside is a nightmare. 

But, in the end, we’re all fooled. This real-life drama has very little to do with reality. It’s all a fraud. 

Don't Rub It In.

Posted by Matt Purdue

In today’s L.A. Times, James Rainey’s column is a must-read for PR professionals. Rainey pithily summarizes the latest chapter of the Alessandra Staney saga at the New York Times (sorry, I refuse to capitalize the self-aggrandizing “the” in the paper’s title). A bit of background: Stanley, the NYT’s leading TV critic, has been chastised almost without mercy for the shoddy job she did on Walter Cronkite’s obituary in the July 17 edition. It’s become widely known that the obit included at least eight factual errors.

Everyone from Gawker to Katie Couric have ripped Stanley (and, to a lesser extent, her editors) for, once again, playing fast and loose with veracity. In one of the most scathing rebukes I’ve ever seen a journalist fire at a colleague, the NYT’s public editor placed blame with a reporter “with a history of errors [who] wrote hastily and failed to double-check her work, and editors who should have been vigilant were not.”

Citizen “Journalists”?

Posted by Matt Purdue

Real journalists are headed to the blogosphere in droves, and this trend bears watching--and celebrating--by all of us. 

Just the other day, I heard that Kerry Peckner, formerly of Retirement Income Reporter, has begun blogging professionally. He’s the third print journo I’ve noticed in the past two month who has gone out into the digital world on his/her own. As a former ink-stained wretch from the land of print newspapers, I have to give these folks a tremendous amount of credit. They’re a little late, but they’ve finally realized that print media is going the way of the dodo bird. (Of course, as I write this, Kerry’s site won’t load. The digital realm is not without its set of challenges.)

God knows we need more “professional” bloggers. With apologies to all the legit bloggers out there, the blogosphere remains more like a flea market of information than a healthy exchange of real ideas. In fact, we may be about to reach the absolute bottom of the blog bargain bin with the release of the new film, Julie & Julia. From the syrup-addled mind of Nora Ephron (Sleepless in Seattle, Bewitched), this bit of treacle tells the true story of a “lowly cubicle worker,” Julie Powell, who spent a year making all 524 recipes in Child's cookbook and blogging about it. It “changed her life,” the trailer intones. Holy crossover, Batman: an excruciating blog has been turned into a saccharine Hollywood onslaught.

Going, Going, Gone?

Posted by Milos Sugovic

The following empirical question was posted as a comment on Free Exchange, an Economist.com blog, regarding the economics of newspapers and their evolving business model:

“I think there is a correlation between falling broadband prices and falling newspaper demand. How much? I would like to know.”

I too wanted to know, especially since we’ve discussed it here and here on Reason Enough, so I went ahead and mined data, graphed it, and did some back-of-the-envelope forecasting calculations. 

Based on a few Datamonitor reports on changes in internet access volumes (instead of broadband prices) and newspaper quantities from 2003 to 2007, I generated the below scatterplot:

To Cooperate or Not?

Posted by Milos Sugovic

The TechCrunch policy of breaking every embargo (unless you’re on their “friends” list) came as a bit of a shock to the PR community. As an economist, I’m not surprised at all. Adhering to an embargo is a dominated strategy, which means outlets have an incentive to break it. So what’s a PR firm to do if outlets stop cooperating? Use carrots and sticks. 

First, let’s get the facts down. A portion of stories are embargoed, meaning that PR firms pre-brief the outlet and ask for the story to be released no earlier than a specific time. But with added stress, desperate PR firms are blasting embargoed news to too many media outlets, which increases the probability of a leak. That’s because the first outlet at the finish line with the story in hand gets all the cream, while suckers that played by the rules get what’s left over.  

So TechCrunch has decided to break EVERY embargo here on out, and rationally so - they’re playing the dominant strategy. To show this, I’ll use a simple game-theoretic framework: a two player, two option scenario, with outcomes that depend on the strategy of each player.

Newspaper Econometrics

Posted by Milos Sugovic

After posting on the economics of newspapers and discussing the sustainability of the newspaper business model, I can’t help but discuss a piece of empirical work that ties it all together. 

I came across quantitative analysis from 2007 that examines correlation between daily newspaper circulation and monthly unique Web site visitors. The correlation gives a rule of thumb for measuring a newspaper’s success in attracting online readers, and here’s the regression equation:

The picture is straightforward: Newspapers with higher daily circulation also exhibit more unique Web site visitors. No surprise there - as is the case with most empirical research - the popularity of the NYT spills over to NYT.com.

Newspaper Economics

Posted by Milos Sugovic

Note the blog post from The Economist titled “Newspaper Economics” which echoed our discussion on the bankruptcy of the Tribune.  Our analysis of supply and demand forces and the sustainability of the business model - the Achilles heal of the newspaper industry - was spot on. Look at the following:

“Technology hasn't just changed the demand for newspapers, it's also changed the supply of information. News used to be an oligopolistic business, now it's just about perfectly competitive. Barriers to entry are minimal, and plenty of suppliers are happy to provide content at next to nothing. That's a recipe for a big drop in price, and any organisation built on market power and rents is sure to fail in such an environment.

Does this mean that news, as a business, is dead? Not necessarily. Some papers will survive by selling things other than news—reputation, say, or exclusivity. Others will hang on until the print market shrinks enough that profitability is possible for a handful (or fewer) of national papers. Survivors in both groups are also likely to capitalise on the demand for news products that remain scarce—especially investigative reporting.” - Economist, December 15, 2008

e-Tribunes

The Tribune -- owner of the Los Angeles Times, Chicago Tribune, Baltimore Sun and other dailies  -- filed for bankruptcy this Monday, giving the struggling newspaper and television station owner time to put finances in order. It also stirred a discussion between Peppercom analysts, Matt Purdue and Milos Sugovic, on the implications for the media business and the public relations profession.

Milos: I’m wondering if we’re seeing creative destruction brought about by the Internet. With newspapers filing for Chapter 11 left and right, the PR business will undergo some massive reshaping. Do you think PepperDigital will become the core business of this firm if media evolution leaves newspapers extinct?

Matt: Well, there’s going to have to be a digital component to everything we do. The folks in our industry who really get digital will rise to the top. Print newspapers just can’t sustain the business model.  

Let’s Play “Guess That Trend”

Posted by Milos Sugovic

“The market makes the news – not the other way around” according to a blog post on The Big Picture. The argument: journalists report what happened, not what will happen. To investors, news is history, especially when it comes to stock prices, and what matters is tomorrow, not yesterday. 

I disagree: Tomorrow’s expectations are a function of today’s news. What else are expectations based on? Fortune-telling? The horoscope?

As “evidence,” the blog post refers to the last 30 years of Time Magazine covers and stock market performance, namely the Dow Jones Industrial Index, on the day of the issue release and ten years later. Here it is:

Taking Down the Dow

Posted by Milos Sugovic

The Dow Jones industrial average is a misnomer -- it’s an unreliable representation of the broader market. The media can’t get over its 777.68 point (6.98 percent) drop yesterday, which is understandable as it’s the most popular index. But it’s misleading. And to those affected (that’d be all of us), it might make sense to use a more accurate yard-stick.

Take a look at the umbrella indices: The S&P 500 dropped 106.59 points, or 8.79 percent. The Nasdaq Composite lost 199.61 points, or 9.14 percent. Does this mean the stock market plummeted more than just 6.98 percent? You bet.

The Dow has many big problems. Let’s revisit the basics: It’s based on 30 companies only. There’s no way this fully reflects economic trends on Wall Street and Main Street. It’s price-weighted, meaning a dollar change in stock price translates into points. But not all stock price changes are created equal. Since when does relative size not matter?

There’s clearly a disconnect between reality and the 107-year-old index, and yesterday’s stock market (or bailout) failure makes it evident.  So when using any index, make sure you understand the math behind it. And if you don’t or can’t, make sure it reflects what you’re trying to measure. More often than not, you’ll find the most popular metric to be the most misleading.