Last week Andrew Mason, the 31-year-old CEO of newly public Groupon conducted an interview with Leslie Stahl of 60 Minutes.  I was excited to get to see for myself just how crazy this newly minted multimillionaire could show himself.  Groupon is know for its wild culture, and Andy did not disappoint.  The words, the look and the attitude were just what I was expecting.  Lesley, to her credit, seemed taken back, not that she hasn’t interviewed a number of crazies over the years, but this was a masterpiece of craziness.

Crazy how?  Crazy in that Groupon continues to struggle to achieve real relevance since going public.  As the biggest tech IPO in some time it was to be a real bellwether of things to come for others seeking to go public.  The price was set relatively high at $20 per share, and it hit the mid-thirties in the first day, but then retreated.  The bloom quickly faded from the rose and it continued to slog along in the low 20’s, sometimes dipping below.

One thing for sure Mason was still high on the ‘juice’ of their success, though smarting from the comedown of having to restate their earnings.  They had forgotten to include things like ‘sales expenses’ that included the returns back to the advertisers after sales had been booked.  Ouch!

Started in 2008, Groupon was one of the few businesses that actually took advantage of the economic downturn.  Blessed with a large pool of available talent, many recently displaced from their current jobs, they were able to build a solid team to blanket the market with a novel concept.  Pay nothing up front, get a lot of customers in your doors, and get around 50% back when the customers pay Groupon.  Groupon gets all of the money upfront, and the clients have to collect from Groupon.

In the existing advertising world a number of clients have tried to negotiate these deals with newspapers and others, but this was generally for remnants that the newspaper knew would go unsold anyway.  This did not happen often, though more today, and Groupon created a new model for the financial transaction.  Would it work?  Yes, but there are catches.  This is built on the model of getting new customers, and the goal of building loyal customers.  This has been the real sore point from my research with a number of Groupon advertisers.

Most of the Groupon advertisers have found that redeemers of Groupon offers are not returners later.  Having found one deal they get hooked, and then search for the next deal.  Others have found the process somewhat confusing and hard to understand and are not flocking back for more of the same medicine.  The last factor is the holdouts that have not jumped on the bandwagon for ‘daily deals’.  This is the sector that, in the tight economy, has shut down their discretionary spending.  They are not enticed to buy something they didn’t really need just because it was 50% off.  Tight times mean tight wallets for many, and enticing offers just won’t work well with this group.

What does this mean for Groupon?  Groupon will continue, and will continue to produce some great results for some types of businesses.  For many though they will burn and churn through a number of clients who will never do a Groupon deal again.  Competition will continue to grow, why because the barrier to entry is low.  Existing forms of advertising will also offer daily deals, most already have just on that bandwagon.  The churn and the increased competition will make it hard for Groupon to be the 800 lb gorilla many had thought.

What does this all mean?  Groupon will continue, but it will not become the growth stock many had hoped.  Those who bought the initial offering will come out ok, but those who bought in the 30’s will never recoup their full investment.  This could change if Groupon evolves beyond its existing concept, demonstrates solid growth, and solid customer retention through great sales results at the advertiser level.

I wouldn’t bet on it.  I also don’t believe that monkeys can fly, even if Andrew Mason thinks they can.  Time for Andrew to grow up, put on a tie and be responsible.  I’ll be reading the results weekly to see how it goes.  And regarding the interview?  It was classified as a PR nightmare the next day.  The stock price went up for a couple of days and then declined back to around 20 again.  I guess that proves the old adage – ‘buy on the bad news, and sell on the good news.’  It’s Monday, and the price remains about the same.  Put on the tie Mr. Mason!

Is this in our future?

I was amused to read the article in the recent Los Angeles Times–” Coastal cities will sponsors: make our beach your sandwich board”.  Boy did that bring back memories for me.  For several years, beginning in 1999, I led a start-up in Southern California that offered advertising on local government vehicles. This was a fun venture for several years, but then the fun for me left of the business. It appears from the comments in the articles that little have changed since that time. Local governments are still looking for new revenue sources, but are not willing to give enough value to attract advertisers who have more attractive ways to reach their audiences.

Beginning in the late 90s, and continuing through the early years, municipal corporate advertising was in its heyday. By the mid-“ought” years the bloom had come off the rose. The hard fought battle to gain acceptance have led to some significant revenue streams. However, it was then that the impact began to be felt from the growing Internet advertising. We could see that the trend would gobble up much of the hard fought growth that had been expensive to win.

The real trend in municipal advertising has come from larger sponsorships mostly to stadium advertising. This is where the big bucks are.  A few dollars have been left over from corporate budgets that have leaked into municipal advertising programs. My experience in the early years of municipal advertising showed me that the concept was viable, and rewarding, but in the long term most programs would not be sustainable. Why? The reality that I found, and others in the same field found, was that the returns for advertisers was not at the level of their expectations. High client churn, meant high sales costs. Within a short period of time, usually within 2 years, the programs started to decline.

Advertising and government places can work, however the price generally doesn’t match the value received and the grief rendered. My experience, and those of other compatriots working in the field at that time, showed that working with the government agencies was costly, time-consuming, and unfulfilling. The dollars earned simply did not match the effort and as such made the venture non-sustainable.  This can work for both sides, if and when, the value ratio can meet expectations of both sides

My first iPhone photo - July 2007

It was fun today to wake up to the news that this was the anniversary of the day that Steve jobs announced the coming production of the iPhone. Everyone viewed the latest production by Steve, and thought this is interesting, but I don’t see it going anywhere.

Boy, were we wrong. In just a few months the 1st iPhones were launched in the relatively new Apple stores. Like many others I waited in line, on day 2, of the launch to be one of the 1st to own this great new tool.

Many of the people that I was working with at a company in Oakland thought that I was totally crazy. I had only been there for a short time as the new President, helping to turn around a direct mail brokerage. My staff was still trying to figure out what kind of leader I was going to be. In this new assignment I was trying to figure out what the future of direct marketing was going to be.

It seems that the future of direct marketing, direct mail, was starting on a decline. It was going to take a while to see that the introduction of the iPhone was going to be a prime mover in launching the mobile marketplace. I love my tools and gadgets.  I’ve always been a bit of a propeller head, but I certainly did not see what was going to come of the new mobile market.

It is fascinating to sit here today and see just how far we have come in 5 short years. The communications field has been dramatically transformed, and yet so many, are still learning that our old methods of marketing and communication will never be the same.

I look forward to the future that all of these wondrous tools and devices will make our lives more fulfilling. For now, we will all muddle through while we learn to adapt to this new digital age. I’ve certainly adapted, and Apple has profited, by the fact that I have totally converted all of my personal computers devices, and soon, within Apple TV.

The biggest challenge is now to find how we can live with these tools without losing our human contact. By that I mean, I how do we ensure that our lives are fuller, but not diminished. All of the changes while bringing numerous benefits have also caused great disruption from those fields like direct marketing, print publishing, and other businesses that have been transformed through digital technology.

The challenge for the future is to learn how to have this technology empower all humans without causing major disruption. I’m not certain that we can have our cake and eat it too, but that is the real challenge. Happy 5^th anniversary Steve! We are all thinking of you today, and miss those marvelous product launches.

I love endings!  That usually means a completion of a task or a goal, and the opportunity to move on to new things.  Year endings are the best.  Close out the old and start with a clean slate.  I think this year will not end so well.  Instead of starting fresh we will be dragging an incredible amount of baggage along with us into 2012.  As we have moved into our new digital age in the first decade of the 21^st century, our legacy tools and traditions, and so much of what makes up our business way of life are struggling to advance with incredible pressure being on them to adapt, or die.

One of our oldest tools in the U.S. has been the Postal Service initiated in large part by Benjamin Franklin.  It was instrumental to our overall success for over 200 hundred years.  Today, it is seen by many as a ‘relic’ of the past as new digital tools have eaten into its core ability to facilitate communication.  Hand written letters are becoming things of the past.  Our current generation would not understand the context of the old saw – “keep those cards and letters coming!”  Now we have to warn people about communicating (i.e. – texting) while driving.

I could go on for days about this transition, but I won’t.  I have written extensively about the battle for the future of our USPS and what it means to commerce and personal communication.  The leaders of the USPS have offered solutions – i.e cutbacks, and I have applauded their honesty and candor about their situation and things that must be done to keep the USPS on a sound financial footing given our change in mailing patterns.

The latest salvo against their plan has come from their masters, the Postal Commission – “Postal Service’s Closure Review Process Was Flawed, Panel Says”  They believe that the original plan was ‘flawed’ and did not take into consideration a number of sensitive issues other than just cost.  That is an honest statement, but the overall consideration by the Commission is politics.  The only answer for the USPS is a full and open consideration of what we expect from the service in light of today’s evolving digital world, and what are we will to pay for as citizens to preserve the service as a whole, and how will the prime users contribute to save their unique positions.  This includes the full commercial mailers, and rural users who are the prime drivers of cost.

I await 2012 to see how this evolves.  I expect no real answers until after the election of 2012 which will go a long way to determining how we as a large community will choose to deploy and pay for the resources that we use.

Postponing the inevitable…good news, and bad advertising, will still be delivered to your mail boxes, on time  and without delay.  A temporary agreement driven by a coalition of Democrat Senators has gotten the USPS to postpone the planned closing of a number of postal service centers, post offices, and the reduction in service standards the USPS proposed.  Whew, just another great challenge for our elected leaders in Washington to boot down the road until ‘later.’

While that was going on this week I spent my time interviewing local businesses and those I know who are professionals in the mail business on how they were taking the situation that will have big impact on them, and their customers.  The delay is good news, since we need more time to process and plan.  Almost to a person everyone that I have spoken with understands the situation – volumes have dropped, costs have continued to rise, and the direct mail support industry has continued to shrink.  Like my old compatriots in the newspaper business they understand the direction things are headed.  No heads buried in the sand here!

What they don’t understand is why it has taken so long to recognized what they see everyday.  The world has changed, and legacy forms of communication, mail, just as printed daily newspapers, aren’t the dominant forms of communications they used to be.  We all must plan for the next phase of evolution in how we send and received all of our information, including payments for bills, as well as Christmas cards.  This hurts because it forces us to once again, realize how much our entires lives have been transformed, and will continue to change.

I hope that in this ‘truce period’ we can lower the volume and come up with some plans on what we want our postal services to be.  I didn’t use USPS, because we might find other ways to communicate or ship messages with something other than a total government monopoly.  But we have to define what we want, what we are willing to pay for, and then gain agreement before moving forward.  If not, the plan will fail.  Here’s to coming up with some great plans…and to a Happy Holiday for all.

Another one bites the dust!  Lee Enterprises, publisher of 48 daily newspapers, filed for Chapter 11  bankruptcy protection to refinance almost $1 billion in debt.  This will not be the last bankruptcy filing for the newspaper field, perhaps the last for 2011, and that’s a good thing.

The plan is for the company to repay its creditors in full, but will require the extension of key payments of maturing debt due in April into 2015-2017, though at higher interest rates.

The newspaper business is not the high margin field it used to be.  Coupled with the debt incurred after a major raft of acquisitions and consolidations over the past several years, the field is awash in red ink.  In the case of Lee it was their acquisition of the Pulitzer chain back in 2005.

Recently, Warren Buffett bought The Omaha World Herald, it’s other newspapers in what is likely a ‘sugar daddy’ deal.  By that I mean it was for personal reasons, not just as an investment.  Nice to have a lot of disposable billions like Warren has, and that is what the newspaper business needs.  Deep pockets, and the desire to make a difference with a big voice in the local community.  This was really how the newspaper business got started, and going back to our roots could be what we really need at this time in our history.

A funny thing happened on my way to researching the options for the USPS.  I got way laid! I must admit that this happens to me a lot, especially when I have ‘chores’ to do.  This time, no chores, but I found that when I started doing research with all of my friends in the direct marketing field – they wouldn’t stop talking.  I quick discussion turned into a 2-hour meeting.  That was repeated multiple times, but it was well worth my time, and therapeutic for them.  I left them all with the feeling that they had gotten something off of their collective chests.

What did I learn…a lot!  First thing, all are passionate about what they do!  They feel that they are contributing to the big marketing effort to sell goods and services, and that direct marketing is still relevant and vibrant.  The second thing that I learned is that, they are nearly all wondering, what the hell happened, and this can’t be happening to me.

Where do they go from here, and where the heck do I go from here?  More field work I guess, looking for real options that reflect the public mood, and the mood of the users of direct mail and direct marketing.  Meanwhile, the battle continues to be waged in the halls of Congress, where hearings will go on,and talk will flow.  If we could harness the energy from all of the Congressman’s lips, even on this little subject, the energy crisis would be over…tomorrow.

Seriously, this issue on the future of the USPS is real, and everyone is concerned.  The answers aren’t simple, and few agree, today, on what we should do, and what kinds of USPS we should have in the 21st Century.  I will continue my journey throughout December to try to bring some sense to the issues, and to try to shed some light on possible solutions, and probable outcomes.  Now back to the battlefield to interview more wounded warriors.  Roger and Out!

It seems that the battle for the direction and future of the USPS has now been fully engaged.  We’ve had words, and now we have action – or at least the threat of action. We’ve gone from hand wringing, to bluster, and now we have the scheduling of some real action to address the persistent financial problems facing the USPS.  Today we have a real General, albeit the Postmaster General, promising positive steps to reducing costs by changing service levels to reduce costs.

As a direct marketing veteran, 30 years in service, General sir!  I am pleased that Patrick Donahoe has taken some bold steps indicating that he is ready to make the cuts and adjustments that will help bring his USPS back into a balanced financial position.

Over the coming days, and probably weeks, I will write extensively about all of the issues, hopefully from the perspective of all sides, and try to posit some solutions that I think all can live with, if not love.  Our times have changed how we consume our information, more digitally now, and less via print and mail.  This trend is likely to continue and that means adopting solutions that work best for all of us.

Tomorrow – the USPS plans and requests, their solution for the short-term fix to their budget woes.

Honoring our First Postmaster General, Ben Franklin

The battle goes on, for the life and soul of the United States Postal Service.  Life and soul?  Yeah, that’s what I think.  We are at a cross roads to decide whether we will keep the USPS as we know it, or will cut it down to a botique service used for direct mailers and holiday cards.

I hate to sound so harsh, but I really think that we are at a point of no return.   In all of our budget discussions, and the search for expenses that could be reduced, the long knives have come out against the USPS.  I would not describe the USPS as the most efficient agency of the government, if there are any of those kinds of animals anyway, but they are important to us as a people and we shouldn’t be in such a hurry to solve the issue…right now.

Last Friday George Will waded into the fray will his piece on privatizing the USPS.  A few of his thoughts from the right side of the argument:

“Today, the U.S. Postal Service, whose financial condition resembles that of the federal government, of which the USPS is another ailing appendage, is urging cancellation of Saturday deliveries, perhaps en route to three-days-a-week delivery. The USPS lost $5.1 billion in the latest fiscal year — after serious cost-cutting. Total 2012 losses may exceed $14 billion, a figure larger than the budgets of 35 states.

“The fact that delivering the mail is one of the very few things the federal government does that the Constitution specifically authorizes (Article I, Section 8: “The Congress shall have power to . . . establish post offices and post roads”) does not mean it must do it. Surely the government could cede this function to the private sector, which probably could have a satisfactory substitute system functioning quicker than you can say “FedEx,” “UPS” and “Wal-Mart.”

“The first two are good at delivering things; the third, supplemented by other ubiquitous retailers, could house post offices. All three are for-profit enterprises, so they have an incentive to practice bourgeois civility — to be helpful, even polite. These attributes are not always found at post offices.”

On the philosophical lefter side of the argument on the USPS, David Lazarus, my favorite gadfly columnist from the Los Angeles Times has also weighed in on the USPS situation.  I’m going to quote him liberally here so we have a little fairness in the argument:

“Richard Maher can’t remember the last time he wrote a personal letter to anyone — and he works for the U.S. Postal Service. That’s how bad things have gotten for the government agency that, in the age of email, Facebook and Twitter, not to mention FedEx and United Parcel Service, announced last week that it lost $5.1 billion in the last year.  And the losses would have been more than double that amount — a record $10.6 billion — if Congress hadn’t allowed the postal service to engage in a little creative bookkeeping and shift an outstanding $5.5-billion payment for retiree healthcare into the current fiscal year.”

Lazarus goes on to say…“As a newspaperman, I know a little something about antiquated business models. Simply put, the postal service can no longer raise the money it needs to do the job it’s required to do. Period. It just isn’t economically feasible.”

“A couple of years ago, after the postal service reported losing a mere $3.8 billion, I asked whether it was time to think about privatizing mail delivery. The problem with that idea quickly became apparent when both FedEx and UPS told me they weren’t interested in the job.

“While both companies might be interested in cherry-picking profitable urban routes, neither wanted the obligation of schlepping mail up and down backwater rural roads. We believe that the government plays a role in terms of ensuring that every mailbox is reached every day,” a UPS spokesman said. “That is not a responsibility that UPS would want.”

“Higher rates are obviously in the cards. A first-class stamp will cost 45 cents as of Jan. 22. Don’t be surprised if that charge quickly grows to 50 cents, or more. But higher fees alone won’t do the trick. That’s why the postal service has also proposed dropping Saturday delivery, closing processing centers nationwide and having the leeway to lay off tens of thousands of workers.”

“But I’d go a step further. Perhaps it’s time to do away with the postal service’s constitutional requirement for universal service. Perhaps it’s time to stop delivering to the sticks. I know, I know: heresy. But think about it. The real problem here is costly rural delivery. So instead of having the mail man (or woman) visit every home everywhere, how about we set a geographic boundary for home delivery at some point on the outskirts of every urban area?”

“Beyond that point, people’s mail would be delivered to the nearest post office, where you could pick it up at your convenience. Or you could authorize someone else to pick up your mail — the neighbor’s kid, say, riding his bike home from school.  For more urgent deliveries, such as medicine or medical supplies, an opportunity would exist for local companies to establish services that would bring mail to people’s homes in a timely fashion. Such services could also address the needs of seniors who may not be able to get to the post office.”

For the last word on the issue let’s turn to the man at the top of the USPS.  U.S. Postmaster General Patrick Donahoe said the two separate bills that have advanced in House and Senate committees “delay tough decisions” and “don’t come close” to giving the Postal Service the flexibility it needs to stem steep financial losses.

The Postal Service has offered a number of solutions, however not everyone agrees with them – mainly Congress, the Postal Unions, and major mailers.  At a National Press Club luncheon, Mr. Donahoe said that neither of the two bills passed recently by House and Senate committees went far enough to help the post office achieve its goal of cutting $20 billion from its annual costs, which are now about $75 billion, by 2015.

Here’s the part that I love to hear, if I had it on tape I would play it over and over – Mr. Donahoe said “We’re in a deep financial crisis today because we have a business model that’s tied to the past,” he said. “We are expected to operate like a business, but don’t have the flexibility to do so. Our business model is fundamentally inflexible. It prevents the Postal Service from solving its problems.”

I think that opening up the discussion to admit that what we are doing today is not sacrosanct, carved in stone, patriotic, or whatever…it is really that the old business model doesn’t work today.  Wow, so many buckets of ink have been spilled to get down to that point.  If we accept that as fact, and I posit that we should then we need to come up with some answers for our future – for the USPS, its’ employees, its’ customers, both senders and receivers – and move forward.

I will be back soon to talk about all of the possible solutions from as many sources as I can find, top them off with me own – and then let this rest.  Like David Lazarus, I’ve spent too many years in the industry not to care, but it is also obvious that the current model doesn’t work and must be changed.

I guess you could say that the bloom is off the rose for the Groupon IPO and the initial investors as the stock cratered this week.  Tech stocks also hit the skids, the European market is still a major drag on the market, as if it needs one.

After jumping up during the first few days of selling to over 31 from the initial 20 offering price it settled in to the mid-20’s and stayed there.

It stayed there for a few days and then started a slow downward creep.  Today it passed below the 20 floor at about 17.

There was always a certain amount of skepticism regarding the IPO, but reality seems to have settled in, for Groupon as well as a number of the other tech stocks who have gone public over the past year.  Today the name WebVan came up again and that is not the kind of company wants to be seen in, or mentioned with.

This could also be a big signal that the market is not ready for another round of new tech companies to go public right now.  Great way to raise some cash for the initial investors, but a horrible for the next round of stock investors who are now getting burned by Groupon.  This should chill the interest for a while.

This will also have more than a few to go back to take a look at the Groupon model to see if it really has staying power.  A number of newspapers have also announced another round of daily offerings for them to share with joint audiences in addition to their own unique daily discount offerings.  The field seems to be a little crowded right now.  Great for people seeking deals, but a horrible place to invest for the future as a stock.

It was fun to work in the newspapers world…a long time ago.  Times have changed, and things aren’t just the same.  Circulation is down, ad revenues are down, and most of my friends who are still in the business aren’t having much fun.  It is with this in mind that I came across a recent article that gives me a little hope that someone might have an answer that could work.

David Carter wrote a timely article in the New York Times on John Paton, the new leader of MediaNews Group, the second-largest newspaper chain by circulation in the country.  Formerly lead by Dean Singleton who fashioned MediaNews into the giant that it is today.  Long known as a very costly effective (cheap) operator who bought distressed papers Dean was dethroned by the board, and the the note holders (banks) who had backed his grand plan.  I never competed with Media News, my newspaper days ended before they hit the stage, but many of my former associates have gone onto careers their.  Some are still breathing, others not so much.

Mr Carr does a terrific job in profiling John Paton, and the challenges MediaNews, and every other newspaper faces in today’s digital world.  The biggest challenge is that the new owners of many of these papers are now banks and hedge funds, and they are not patient people.  Talk about your perfect storm – declining circulation, decreased advertising revenues, and the banks want more now!

Newspapers in the U.S. hit their peak in the 90’s and carried the good feelings and profits into the 00’s.  The results and profits, and the chance for market dominance lead to a major buying spree by a number of chains who managed to hit the jackpot.  They won on “Black”, but soon the real number came up and it was “Red.”  Mid way through the 00’s they could see that everything was melting down.  The Knight-Ridder chain had been gobbled up, and the remains were hitting the skids in terms of circulation and advertising dollars.

MediaNews was one of the big buyers, along with a number of hedge funds, like those who purchased Freedom Communications (The OC Register).  The family sold out after a small group wanted to cash out.  The early sellers from the family still have a lot of cash to count, those who stayed and took stock with the new buyers, are looking very sad, and their purses are bare.

What happened?  Demographics and Digital.  The world for newspapers will never be the same.

Demographics changed and the those in the post Boomer groups never became the consistent readers and consumers of daily newspapers.  They never picked up the newspaper reading habit of their parents.  Those of us in the newspaper world at the time thought that this would change as they got older and took their real place in the world…but it didn’t happen.

Digital also happened, and this meant that there was a whole new alternate universe of communication going on.  News could be had, without having to get ink on your hands.  It was on your computer screen, and it cost you nothing.  Hey, you could also text your buddies at the same time if you found something worth sharing, something you couldn’t do with newsprint.

There are other trends that have played into this transition, but this is a post, not a term paper.

The Digital Challenge that the newspapers were faced with was that digital revenues could never replace those of the print world.  Why?  This happened because the newspaper charged extraordinarily high rates – because they could.  They were the dominant media, and generally had a monopoly like position in their markets.  Rates went up every year, and advertisers really had few options.

When digital came along there were real options, and most were free.  In order to compete the newspapers had to offer similar services for free.  Newspapers are only now attempting to offer real paid services, and showing the discipline to effect a transition.  Even I now pay for a number of services I used to get for free.  I also used to get 2 daily newspapers, but now only one, and that only for the 4-day weekend special rate.

So the real challenge for newspapers is that they used to make money hand over fist and were the only game in town.  Now they have to compete for a slice of the pie, and that hurts.  Many are trying to lead the transition, and perhaps John Paton can make it work for MediaNews….and for his role in Digital First.

In my next post we’ll talk about how Digital First, under John Paton’s leadership is trying to change all of the previous concepts about how newspapers can continue in the digital world…and actually make money.

Let me make one more point...!

In my search for updates on the current postal service issues I came across a new source of information – PostalReporter.com.  This is a site maintained by the APWU, and I suppose other affiliated postal service unions and workers.  A concise site for all things related to postal issues,especially postal worker issues it was informative and very direct in covering USPS issues today.

In the site I noticed that the USPS has been given until November 18^th to come up with a decision on how they will handle the payment to the Postal Pension account that they had earlier defaulted on.  This was the default that set into play the whole mess of what to do with the USPS earlier this year.

After a lot of discussion, angry words on all sides we are now back to looking at the clock.  Tic Toc, but the cupboard is still bare and no real decisions have been made.  The USPS has requested making changes, but the approval to make them rest with the politicians.  Now what?

One of the key leaders in the Congress actively working to help reshape the USPS is Senator Bernie Sanders of Vermont.  He is quoted as saying…“It is time for the Postal Service to move into the future, to offer Internet service, printing service, and all the other services appropriate for the modern age which are financially viable.”  He has offered his own version of a bill to help save the postal service.  Others have done the same thing, but the big question is can they all come together in this politically charged environment to do something that is forward thinking?  I hope so, but I have real doubts on anything substantive happening in the short term.

One of the things that had been recommended was to sell some of the surplus USPS real estate.  Some is currently vacant, some was purchased in anticipation of future growth.  Some facilities will be available if the USPS is allowed to close a large number of postal facilities – both processing centers and post offices.  Again, this is all subject to political approval in Congress.

To help set this all in motion the USPS awarded CB Richard Ellis a contract in July 2011 to serve as its exclusive provider of strategic corporate real estate solutions nationally. “CB Richard Ellis will provide transaction management services for USPS, including leasing and disposition.”  The website listing USPS properties for sale is operated by CB Richard Ellis Group.

After having watched the series of commercials sponsored by the postal workers unions I thought I had seen them all until yesterday when they came out with a new wrinkle.  Cutting postal workers will cut veterans!  I wasn’t aware that the USPS is one of the largest employers of veterans, and that there was a preference for hiring and retaining veterans since an act of Congress in 1944.

With all of our worries about getting people back to work and our desire to do well for veterans returning from duty in Iraq and Afghanistan it gave me pause, but then reality set it.  We need to come up with the right focus for our postal system, staff it appropriately to meet our needs and move forward.  This includes looking at the mandate that it should be self-supporting.  I would be the first to say that the USPS should be cost-effective, but to be fully self-supporting I think is short sighted – and we need to apply long term vision for our future now.

Ringing the Bell for the Launch of the Groupon initial trading day

Today is Groupon Day!  Perhaps this will become a national day of recognition, just like Groundhog Day when we all come out to see if “Phil” sees his shadow or not.  Today we’ll see if Groupon, has the “legs” to go the distance as an investment stock.  I’ve held my tongue until now, though my files are huge with material on Groupon, and the other digital deal sites like Living Social.

Groupon has been taken to task for its creative accounting.  I guess John Corzine used that as his model for his latest venture, and we see how that has gone for him and his investors.   I have many doubts about the long term viability of this sector as an investment opportunity.  They can move product, but do they produce profits for their customers who offer the deals?  The jury is still out, but the results are very mixed based on the results from many who have lost heavily after doing a ‘Groupon.”

I’ll be following the results over the next several weeks with posts on Groupon, both as an investment, and as a marketing tool.  Back at you later when we see how the stock ends up next week.  Talk to you next Friday!

This is a very tough environment for newspapers, and one that does not look to be brightening any time soon.  A lingering recession level of spending and generational and lifestyle changing trends point to a dismal future for any newspapers looking for a resurgence to past days of glory.

Not only is the economy one of the toughest environments that any of us has lived through, it has also drained advertising dollars from established print media and shifted it into digital media.  Talk about taking a barrage of blows to the head and body, this is today’s environment

With that as a backdrop for today’s comments we also have self inflicted news that tells us that ‘they can’t really be serious can they?’ It was reported that Gannett’s CEO of the last six years, Craig A. Dubow, received a parting gift of  – $37M in bonus and retirement benefits.  During his period of leadership the company’s stock declined from a high of $75 a share to just$10. Unfortunately, there are a number of other CEOs who have gotten similar treatment after miserable leadership terms.  Theirs has been the one bright story of the last decade for newspapers.

Aside from the economy the trend to digital news has also accelerated the down trend for newspapers.Now they are banking on some new trends to help rescue them, before the companies run out of money to help cover their severance as they head off to happier pastures.

The iPad has helped drive this new shift, and now the Newstand app recently added to iOS5 on Apple mobile applications appears to be working as well.  The new native app works especially well for magazines, and The Daily, the first iPad only news product from Murdoch Inc.  Conde Nast is reporting a 268% increase in digital subscriptions since Newstand was announced. Still a bit of a stretch a newspapers work through their own versions of apps for both phones as well as tablets.  In some cases they are developing their own tablets in conjunction with manufacturers.

A recent Pew study as noted in a recent Newsosaur article on tablet owners shows that only 14% had subscribed to a paid news app.  Also that only 21% say they would be willing to subscribe if the price was below $5 per month.  83% also said that being free or low cost was a major factor in their decision about what to download.  One good factor for digital users and providers of digital content, including our major ’newspapers’  shows that 43% of respondents said they now spend more time consuming news than before they bought their tablets.

I’ll take that as good news, and it certainly mirrors my own habits.  I’ve been excited to see just how much content I can get for free, but have also found that there is some content I am now willing to pay for, I’ve moved across the aisle and am a willing participant of paid digital content.

The other good piece of news about the ’43 percenters’ is that they too will make the change since their really won’t be as much available on the free channels in the future…unless you go ‘full social’ and get all of your news from your ‘friends.’  I’m not ready to do that yet…and doubt I ever will.  You would know what I mean if you could see some of them.

Pew study as noted in a recent Newsosaur article on a recent Pew study that only 14% had subscribed to a paid news app,  Only 21% say they would be willing to subscribe if the price was below $5 per month.  83% said that being free or low cost was a major factor in their decision about what to download.  43% of respondents said they now spend more time consuming news than before they bought their tablets.

Helping to drive the trend to digital deliver of news is  the development and testing going on for a wide array of tablets being developed directly for major newspapers, including the Tribune group and the Philadelphia newspapers.  No final details have emerged, but it appears that they will be available for subscribers.

It was reported, perhaps by union insiders, that in the recent negotiations for a new contract for the paper’s print unions that they were offered a shorter 3 year contract, and that they were lead to believe that the paper had plans to stop printing by that time.

Now we can see what the future really looks like.  As a former newspaper ‘insider’ I know what it costs to print and deliver the papers daily, and a digital only world would be a less costly one for sure.  Too bad digital ad rates are lower that print ones, but that too could change when print fades away.

Another accelerator in our switch to digital comes from Amazon.  With it’s very small price tag the Amazon Fire which is to be shipped on November 15th could have a great impact on the digital distribution of print and magazines along with a host of other digital media including video and audio.  I know that my son has one ordered for his wife and/or his one-year old daughter, and I will order one for my wife as well if they check out as OK.  If not, then they both will have to settle for an iPad.  Life is tough that way.

Like the Los Angeles Newsgroup here in So Cal, Cox Media has adopted a similar shared editorial program.  This means that the editorial and news staffs are shared, reducing costs for the newspapers. In Los Angeles this appeared to be a big deal with a broad range of papers with distinct markets sharing news staffs.  In the case of Cox it will mean the sharing of staffs from Florida, Atlanta and Texas.  We’ve come to accept the downgrading of the news content on a local basis, since most of the papers involved were 2^nd tier any way, but I don’t know that Atlanta and Austin will accept it without a lot of belly aching.  I don’t know about Atlanta, but I bet some larger than life Texas oilman would consider starting his own newspaper in Austin if they felt slighted.  Texas takes this stuff seriously…just like their BBQ.

Back to Southern California!  The So Cal newspaper marketplace continues to stumble forward with few positive signs of positive growth.  The biggest question mark concerns the Orange County Register which is still up for sale.  Some past bidding pitted the Los Angles Times vs the Los Angeles Newsgroup in a potential bidding war…but no winners emerged with both large newspaper groups mired in their own financial problems.

I don’t see any big hitters with deep pockets willing to step forward and take over The Register here.  Texas still has oil, but our key drivers in OC have been homebuilders…and they can’t even afford to take over each other for now.  Who knows what the future will bring, but nothing big on the horizon now for our local media.  We shall slog on with the media who ‘brung us here for now!’

I gave a presentation recently to a group of executives and thought I’d share it here: