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Sport could be the secret weapon as newspapers campaign to get readers to pay for online content.

Like business, sport is a media niche where people already expect to pay for coverage.

It has already worked for television. Here in New Zealand there is almost no live sport on free to air television other than international netball. Rugby, cricket, rugby league, soccer, golf and tennis are only shown live on pay TV.

In other words, if Kiwis wants to watch TV sport, they have to pay – and it isn’t cheap.

People seem willing to pay a premium to watch sport on TV more than other forms of entertainment. That’s partly because of the nature of the beast – a game with an unknown result is exciting. Watching it the next day, or a few hours later, when the score is known just isn’t the same.

Newspapers can’t compete directly with TV when it comes to capturing that drama, but I suspect people would pay to have access to first class analysis, high quality games stats and live blog or Twitter style coverage of key matches.

An example of how this can work is the way the BBC runs live, online ball-by-ball coverage of cricket test matches. Until ESPN acquired Cricnfo, the site ran similar coverage and managed to sell a number of value-added extras to subscribers.

It wouldn’t be hard to stick sports journalism behind a paywall.

Sports writing operates along slightly different lines to other types of journalism. Sports codes and the big clubs jealously guard access to personalities for interviews, photos and other matters. Publications who don’t, er, play ball, can find themselves on the outer. Some types of coverage are not welcomed and many sports have control over coverage.

A sports governing body could easily license exclusive coverage to one or more newspaper group – clubs could do the same. News Corporation already has interests in sporting codes and clubs.

This idea has one major drawback. Moving sport from free-to-air to pay-TV damages some games at a grass-roots level – sticking online media coverage behind a paywall may only make matters worse. But that’s another issue..

Jumbled signals coming from Fairfax, but the message is clear. Australia and New Zealand’s largest publisher plans to follow Murdoch and charge for online news.

The signals are confused because on Friday, Stephen Hutcheon at the Sydney Morning Herald wrote a story about readers’ reluctance to pay for online news.

On one level Hutcheon’s Not happy, Rupert: readers say they won’t pay for online news was a dig at rival News Corporation – complete with an unflattering photograph of Rupert Murdoch. He says News’ announcement was followed by 140 reader comments – mainly from angry readers threatening to go elsewhere when charges apply.

Clearly Fairfax’s left hand doesn’t know what the right hand is doing because Sunday saw Tom Hyland write Fairfax, News to charge for online at The Age website. He also wrote the longer Stop the presses. Hyland had the unenviable job of quoting Fairfax chief executive Brian McCarthy who told him; “charging for online access was essential if publishers were to maintain their newsroom staff.”

You always know things are going to get tricky when a newspaper executive uses a word like ‘monetising’ and Hyland quotes McCarthy getting his teeth around that in the next paragraph. He went on to talk about a two-level model at the The Age and the The Sydney Morning Herald websites.

Of course Fairfax is no stranger to charging for online content. The company’s The Australian Financial Review has long been one of the region’s few major titles to charge readers. By all accounts the AFR’s paywall hasn’t been successful, but it will have taught the company useful lessons about turning reader clicks into money.

The Bulletin's last front cover
The Bulletin’s last front cover

When Lachlan Murdoch says the Internet is having an effect on classified advertising, it is time to believe some of the hype from an industry that’s never short of a boast. The chair and CEO of News Ltd was reported expressing this view following his company’s annual general meeting last month.

He followed these comments by saying that his organisation is focused on the matter. This is probably an understatement. Murdoch’s News Interactive division is one of Australia’s leading Internet content providers and already has a substantial on-line advertising operation.

News Interactive may not be making money at this stage, but for now staking out turf in cyberspace is more important. Even so online success for News is hard to define. There are reports that the organisation’s on-line Information Technology recruitment advertising is stealing copy sales from Tuesday’s Australian. That may be desirable in the long term, right now it is a problem.

While Murdoch argues that television stations have more to fear, there is evidence newspapers will find the going tough. In mid-October, Mark Webber, vice-president of classified marketing groups at the Minneapolis Star Tribune described his paper’s performance to delegates at the Pacific Area Newspaper Publishers Association. He said his paper’s classified revenue grew 20% in 1997. In 1998, this growth was just 1%. When asked why the growth stopped, Mr Webber gestured at Harold Levy, CEO of TMP Australia and said the cause was TMP’s online recruitment service, The Monster Board.

More chilling is the fate of the San Jose Mercury. Based in Silicon Valley, the Mercury is America’s top newspaper for computer industry recruitment. Last year, the paper suffered a 40% fall in classified recruitment advertising revenue. Given that Australia is about a year behind US in Internet advertising trends, from New Ltd’s point of view, the worst may be yet to come. Or is it?

Australian publisher profits online

At least one Australian publisher has profited through the transition from print to electronic publishing. Roderick Mcallery is a director of Commercial Dynamics, which publishes the Trading Post group of papers. Mcallery said, “the Trading Post site succeeds because it offers better utility than other classified web sites. Our base content is better. Suppose you want to find a Mazda 323. Search other sites and you might find ads that feature 20 cars from a single dealer, where only one is a Mazda 323. With our car ads, the rule is one advertisement, one car. Which means the same search on Trading Post will only deliver Mazda 323s.”

He said another advantage is that Trading Post ads are costed by the word, while big papers charge by the line. This means his advertisers tend to use fewer confusing abbreviations, making the entries easier to understand. At the same time, the Trading Post insists that advertisers indicate location and price information. The result Mcallery said is a content delivery system designed for speed and to ease the search process.

In other words, Trading Post works because it has approached classified advertising from the customer’s perspective. In this case customers are advertisers and potential buyers.

Industry gossip says Commercial Dynamics is the only company currently earning substantial revenues from Internet classifieds. The truth of this statement depends on how you define Internet classifieds.

Australia’s Most Successful Websites

According to Marc Phillips, author of ‘Australia’s Most Successful Websites’, the key to profitable Internet publishing is to discard conventional publishing business models. Phillips is a director of APT Strategies an Internet monitoring organisation that publishes Australia’s online readership survey.

He said, “Traditional newspapers make their money from a single revenue stream. The cover price barely pays for printing and distribution; the real money is in advertising. On the Internet, where distribution costs are lower, companies make their money from multiple revenue sources.”

Phillips offers the traffic deal between travel.com.au and Yahoo!, the popular site directory, as an example. Like all such deals, the specifics are confidential, but generally traffic deals involve paying a percentage of the final transaction or a fee per visitor delivered to the site. He said, “These guys are all leveraging their eyeballs off to get e-commerce revenue”.

And there’s the rub. While the Trading Post’s content lies in information rich advertising, other media organisations like News Ltd, Fairfax and Kerry Packer’s PBL have to find leverage from other content assets. And it appears that, in some cases at least, they are already getting the message. In PBL’s case, leverage works across traditional and online media. A television viewer watching say, Channel Nine’s Getaway program, can be delivered to the Getaway pages on the NineMSN website. Once there, they don’t just view travel advertisements, they can actually book and pay for their trip. There’s imply no equivalent of this process in traditional media.

So, this Internet sales model works thus: publishers offer worthwhile content to attract visitors. Once they reach the site, they are offered a variety of ways of generating revenue. This variety is important. Phillips says his online readership survey found that 28% of people browse online, but purchase offline. They might use the Web to compare prices or product specifications. Only 21% had actually purchased online.

Marcello Silva, national interactive manager for TMP Worldwide agrees that content is the key. Silva, who has responsible for The Monster Board in Australia, describes his product as a globally branded career management operation. He says to compare the Monster Board with online classifieds misses the point. The Monster Board is a one-stop shop where recruitment advertising is just a single element in a complex mix that includes a lot of advice.

Silva said, “TMP trades on NASDAQ, its value rises and falls with the technology sector. Our vision is to become the online global hub for career management. We’ve tailored our service to give people a helping hand as they progress from their first job all the way to the boardroom.” Clearly, TMP is a long way from newsprint linage ads, yet it is still seen as part of the online classified scene.

Melbourne-based Matthew Rockman is a director of Seek Communications, which operates a web site featuring job advertisements from some 200 recruitment companies. Seek competes with TMP, but approaches the market from a very different perspective.

Rivers of gold pour through classified advertising

Like many other Internet entrepreneurs, Rockman’s sights are set on the fabled rivers of gold that pour through the classified advertising departments of Australia’s major newspapers. He says that traditional publishers like News Ltd and Fairfax are in the Internet market because they have to be. “They don’t want to be here, they only want to protect their profits”.

While TMP is vertically integrated, Seek Communications is aiming to own a horizontal slice of online recruitment by opening a marketplace where job seekers can interact with recruiters. Rockman said with some 4800 current vacancies, his site offers the greatest range of Australian jobs. He said job seekers will be attracted to the site simply because its where the most jobs are.

Right now it seems that some Australian publishers are still grappling with basic business models. Meanwhile, a new threat to the traditional classified has appeared in the US. New sites like eBay have been described as classifieds on steroids. They let users provide their own content in a seemingly anarchic online swap meet. If they take off here, Lachlan Murdoch won’t be the only media executive noticing an ‘Internet effect’.

This story first appeared in The Bulletin in 1999.

If you have a marketable skill and a decent reputation there’s a good chance a head-hunter will call. You may get a personal phone call from a senior executive in the recruiting company, but it is more likely the approach is from a professional head-hunter.

Being head-hunted is flattering – though not always. I was still young the first time I was head-hunted. Instead of feeling flattered I felt insulted. At the time I worked for the leading magazine in its niche and my employer was launching new titles.

The number three publisher rang with an unsolicited job offer. Sure promotion and more money were on offer but there was still something vaguely offensive about being considered a suitable candidate to work at an also-ran company.

While being head-hunted sounds exciting, it is not always be welcome. You may be happy in your job and unwilling to move.

You may have recently moved jobs and feel that it is too soon to move on. The head-hunting company might be in another city a long way from family and friends.

It might be a company that does business in a way you don’t like.

Listen to the head-hunter

Even if you are certain you do not want to move jobs, you should at least listen to exactly what is on offer. It is unlikely you’ll get this information from the first phone call – generally it involves a short out-of-hours meeting in a bar, coffee shop or hotel lounge.

As a rule the head-hunter won’t want to wait, you’ll be pressed to arrange a meeting within days of the first contact.

If nothing else, it is worth sacrificing an hour and shuffling appointments to get a clearer picture of your worth on the job market.

There are two exceptions:

First, I’d flatly turn down a meeting if I suspected its real purpose was a fishing expedition for a business rival. Some people think you’d be so flattered by a job offer that you’ll spill the beans on your current employer.

To avoid the risk of this you should first check that the person approaching you is a genuine head-hunter. This is rarely easy, if possible ask someone he or she has previously placed for a reference.

If the person is an executive of the hiring company or another go-between, try to check they have a good reputation. You should check a head-hunter or recruiter before divulging any information.

If you are still suspicious, then before agreeing to meet ask them how long the job has been vacant and why it became vacant. Also ask why they selected you. You’ll probably hear some flattering words, but try to see through the smarm and decide whether you are a serious candidate for a real job.

Tread carefully

When you do meet, if they quiz you about your current employer on no account offer any information – even if the company does choose to hire you later on, your disloyalty will be on the record. More to the point, there may have been no intention of employing you.

You need to play things by ear. The recruiter may ask you legitimate questions designed to show whether you could be persuaded to leave your current job.

I’d also be unwilling to meet a head-hunter if I thought the offer was insincere in any other way – it’s not unknown for people in multilevel marketing schemes to try to pass themselves off as head-hunters.

Likewise some headhunting offers are primarily designed to sew discontent or otherwise disrupt operations. I’ve even come across recruitment consultants who claim they are head-hunters when they are just looking to fill a difficult vacancy.

A head-hunter may call asking for your help finding someone to fill a job or for a reference for someone being head-hunted. The first case may be a subtle way of determining your interest in the job. Both types of call can be a form of sounding out – the same recruiter might ring back months or years later with an offer.

Things might not look too hot at the moment, but pretty soon tech skills are going to be in demand again and the employers who showed a dark side during the recession will struggle to fill vacancies.

Despite the recession, New Zealand still has a severe shortage of building industry skills and there are pockets of the IT business where vacancies have remained since the global economic meltdown began.

Australia is already showing signs a severe shortage of tech skills could hamper companies and government departments as early as next year. In Demand for ICT professionals on the rise, bottom is in Stan Beer at iTNews reports; “The bottom in ICT employment has been reached and demand for skilled jobs is once again on the rise, according to the latest market survey from a major technology recruiter. The news adds to a growing list of evidence of a return to health of the ICT jobs scene.”

A week earlier ITNews covered a report from Australia’s largest recruiter Peoplebank saying the demand for contractors was rising. A similar story appeared in CIO magazine in June with Seek Employment noting the overall job market was stabilising with IT consultants in high demand.

Australia’s ITNews reprinted a story from Britain’s Computing newspaper on July 7 saying the antipodean nation is busily recruiting IT specialist in the UK to meet a shortage.

On a related note, The Australian reported on a skills shortage in research organisations in Upgrade ignores skills shortage. And the New Zealand Herald reports there are many shortages in engineering.

The New Zealand edition of CIO magazine carried a report which suggests the majority of employers in the IT sector still face a skills shortage despite the recession. Despite downturn, opportunities remain for APAC IT candidates suggests one in four tech employers expect to increase their headcount this year. The story singles out specific skills in business analysis, datawarehousing, ERP (Oracle/SAP), web development and infrastructure (architecture) as being of particular interest.”

Some shortsightedness is in evidence in IT training budgets slashed at ITNews which suggests employers have slashed skills spending and can expect to see a serious skills vacuum by 2112.

What does this mean?

First, it’s a safe bet the skills shortage will return to Australia in the next year or so and to New Zealand soon after – the two countries are effectively a single market for knowledge workers. If anything it could be worse than before for a couple of reasons. Many skilled workers will have drifted off into other occupations or even early retirement. At the same time employers have cut back on training during the recession. While there are increased numbers of people taking tertiary courses in technology and similar subjects, many won’t enter the workforce in time for the recovery and they’ll have knowledge, but little experience, which means only a handful will hit the ground running.

Employers who behaved cut back staff, skimped on training or held on to skilled workers and pushed them too hard during the recession will all suffer once the skills shortage kicks in again. Knowledge workers will be able to drive better bargains – and recent experience will teach people to look beyond the pay packet.