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Former sell-side media analyst Lauren Fine's view on the newspaper industry
Lauren Rich Fine has a fairly unique perspective on two industries which are in the midst of transformational change: news and financial services. For nearly 20 years, she followed the newspaper industry as a sell-side analyst at Merrill Lynch. When she stepped down from that role two years ago, the subprime crisis was still considered an isolated problem and private equity firms were paying a premium for newspaper companies. What a difference 24 months makes.
More recently, Lauren has moved to the alternative media space, serving as Research Director for Content Next Media, publisher of PaidContent and related news blogs. Her latest report for Content Next is Playing a New Tune: The Music Industry's D-I-Y Era. Fine also serves as Practitioner in Residence at Kent State University's College of Communication and Information.
Content Matters: The world of investment research has changed dramatically since the Spitzer settlement. This has contributed to the emergence of the independent analyst and the professional blogger. What do you see ahead for investment research?
Lauren Rich Fine: I think you will see more well known analysts hanging up their own shingle, lilke Ivy Zelman and Meredith Whitney. I have chosen to do the part of the job I really loved, which was forward looking industry research; I was less interested in picking stocks so the position as Research Director for ContentNext was perfect.
CM: In an interview shortly after you left Merrill, you were asked what you might want to do next. You suggested that you’d love to help Sam Zell with his then just-acquired Tribune business. A lot has changed since then, particularly the end of cheap credit. But, credit aside, what might you have done to make Tribune a sustainable business?
LRF: I would have made changes a lot faster. I would have communicated more directly with my readers and explained the changing landscape for newspapers. Online, I would have had the editors use quality Internet content for nonlocal content, and even use it in print, and focus my dwindling resources on local news, particularly investigative reporting. I would have really tried to energize my sales force, both for print and online. There are many other things, but overall, experimenting and moving more rapidly could have helped.
CM: Gordon Crovitz recently suggested users should pay for news with micropayments. Newsday has announced plans to make their news available only to paying subscribers, while US News is publishing a paid PDF magazine. But the genie has been out of the bottle for ten years. Can publishers (other than perhaps the FT and WSJ) really get consumers to pay for news?
I don't think so. The WSJ is providing information that is required to do a job, vs the average metropolitan papers which is read to be an informed citizen. One produces a return on investment, and by the way, is frequently paid for by an employer. The comparison to iTunes is flawed as a purchase of a song can be heard over and over again vs news which becomes stale very quickly.
CM: We’ve seen a handful of blog acquisitions by traditional media in the past year (including ContentNext, Ars Technical, etc), but not as many as some of us anticipated. Why do you think that is and do you see that changing as the ad market comes back?
LRF: It is hard to maintain a site that is proprietary and dominant market share. The barriers to entry are so low that when one does the build vs buy, frequently, build wins out. It is getting harder to break through the clutter and have a site with enough traffic to really attract advertisers.
CM: While there’s a lot of gloom and doom about, there are always bright spots. Weak economies bring transformation and change. What are you optimistic about in 2009 (professionally or personally)?
LRF: Well, I for one am happy to say goodbye to the era of excess and lack of accountability. While I am deeply concerned about the rising unemployment rate, I don't mind that my five teenagers will really learn to work hard to get what they want. Personally, I have an amazing family that I enjoy watching mature and a few jobs (I am also a practitioner in residence at Kent State University) that keep me fulfilled and bring me into contact with smart, innovative people.
(Image source: farm3.static)
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