Bill Wyman wrote a wordy, erudite and brilliant two-piece article at splicetoday.com entitled Five Key Reasons Why Newspapers Are Failing (and part 2). While I haven’t blamed editors and journalists in my post Business Model for News, I do agree with Bill’s assessment of their culpability.

Bill’s piece has received some play and is well worth a read to see what excess playing to Wall Street’s demands can get you.

The major take-home for me was his suggestions for the future. This part has been pretty much ignored in the discussion so I’m reproducing it here. I’ll remove it if Bill or Splice Today want, but it’s a great manifesto to build any business by.

If I were running a chain of papers, here’s what I’d do:

1)    Go hyper local; devote all resources, from reporting to front-page space, to local news. No one cares what the Pittsburgh Post-Dispatch has to say about Iraq.

2)    Redesign the websites to present users with a single coherent stream of news stories and blog entries. Create simple filters to allow them to tailor the site to their preferences.

3)    Tell the union you won’t be touching salaries, but that all work rules are being suspended, including seniority rights. Tell all reporters that they’re expected to post news if word of it reaches them in what used to be thought of as “after hours.”

4)    Get out of the mindset of “nice” coverage. Tell the reporters to find the “talker” stories in town—development battles, corrupt pols, anything with a consumer bent. Monitor web traffic to find out what people are interested in. If a particular issue jumps, flood the zone. Make each paper the center of every local debate, no matter how trivial, and make finding and creating those debates the operation’s prime job.

5)    Create chain-wide coverage of all areas where it can be done. It’s sad, but it means laying off a lot more film critics and dozens of other duplicated positions. For such positions, do this. Hire two people to cover the beat for the chain. Make them into sparring partners, arguing about each new TV show, movie, CD, traveling Broadway show, concert tour etc. Get out of the business of being promotional. Give your readers sharply argued opinions, something fun to read they can’t get anywhere else.

6)    Create local listings second to none. Create them from the users’ point of view. Don’t use abbreviations. Overwhelm users with insider information that only locals know; where to park, where to sit, when to go, etc. Get rid of all the site navigation levels no one cares about. Put the information people want front and center.

7)    Devote as much manpower as possible to creating must-read local news blogs. Tell the bloggers to work the phones and IMs, finding out about every personnel change, every office move, any tidbit. Support and cite local bloggers in the same areas. Yell at staff members if they are consistently being scooped by (unpaid) competitors.

8)    Create and maintain a wiki designed ultimately to function as an encyclopedia for the town, from neighborhoods and politicians to every retail establishment. Let it become the ultimate guide to the area. Like Wikipedia, it will inevitably contain information that is controversial. Cover the controversies with alacrity.

9)    Serve the community. Don’t publish crap. Tell folks stuff they might not want to hear. Grow a pair.

Bill Wyman is a cultural critic and author of the blog Hitsville. He can be reached at hitsville@gmail.com.

Rupert Murdoch has created a stir with his intent to charge for content. Dave Earley wrote a great piece at Earley Edition explaining how it won’t save news media’s business model.

What is the core business of news media? They are not in the business of “reporting the news”. News media’s business is to aggregate an audience to deliver to advertisers. That is why celebrity tabloids sell – the perceived quality of the “product” only affects the demographics and size of the audience. But in reality the audience is the “product”, journalists and producers are the manufacturing team. The sales team are supposed to be the rain makers. But news media believes their own manufacturing-oriented PR that their business is “the news”.

If news media companies are to thrive under a pay-for-content business model they must now do two new things well for sustainable competitive advantage. Firstly they must deliver compelling content, now mixed with rights management and security that does not interfere with the reader experience. Secondly they must become expert subscription marketers – better than Time Life or Readers Digest. Because the internet is littered with the corpses of companies who believed “if you build it, they will come”. If your business depends on paid subscription you had better become outstanding at the skills to deliver subscriptions. Dave Earley said

It is worrying that users will now be made to pay for news simply because marketing departments are unable to make online advertising work.

Sadly this is typical of sales and marketing reactions in a mature market, it always looks easier to chase the next big thing rather than get great at your core business. If their marketing departments can’t sell online advertising (B2B) how are they going to develop the skill to convince people (B2C) to pay for something they’ve previously got for free? I wouldn’t take that bet.

News media is like the buggy whip manufacturers complaining their markets are shrinking because cars have replaced horse-drawn carriages. Nobody promised newspapers a perpetual license to make money. Evolve or die.  Get good at your real, core business.

Rupert, baby, deliver an audience to your customers.

IF you believe mainstream media, Sol Trujillo is the most unpopular man in Australia and Telstra is the most unpopular company [full disclosure: I am the beneficiary of a Telstra shareholding]. I don’t think I’ve ever forgiven Telstra for its monopolistic behaviour back when it was Telecom and I didn’t have a choice of carriers.

When Telstra was booted out of the National Broadband Network tender process for submitting a non-compliant tender, pundits were eagerly predicting Telstra’s demise or other “dark and awful consequences”. Telstra had submitted a tender that suited their business model, aspirations and view of the future. They signaled the only way they’d consider lining up for the $4.7 Billion AUD the government was offering. I congratulate them for having the balls to stick to their guns.

Today the Federal Government announced none of the remaining tenders were “value for money” and instead would form a new company to build a fibre to the home network to 90% of Australians. Much ink will be spilled in the future on this deviation from the tender outcomes requested, namely 98% fibre to the node.

Here’s my quick take home analysis:

1. Submitting a tender of this size and complexity is a very expensive exercise.
2. No tenderer was awarded a contract despite complying with the guidelines.
3. Telstra spent a little money outlining the conditions they would accept.
4. Who looks smart now?

This seems like a brilliant use of game theory by Telstra. Sol and his team have been called arrogant and out-of-touch, I think they protected their shareholders interests well.

Just because a deal is on the table doesn’t mean it’s always wisest to take it.

As part of my Corporate Finance class, Warren Buffet and Berkshire Hathaway came up. Nobody had checked its stock price recently so I volunteered to do it. In doing so I came across the following op-ed piece Warren Buffet wrote in the New York Times.

For the record BERKSHIRE HATH HLD A (NYSE: BRK-A) closed on 23 October 2008 at $115,100.00 USD per share with a 52 week range of $105,300.00 – $151,650.00 USD. The company does not pay dividends.

Anyway on to the Sage of Omaha’s words

Buy American. I Am.

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month (or a year) from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

Update 10:50am ET 24 October 2008 Of course just after I post this, the Dow takes a bath as Wall Street panics. BERKSHIRE HATH HLD A (NYSE: BRK-A) Real-time: 110,903.00 Down 4,197.00 (3.65%)