RSC Partners, Inc.

Eitaro Itoyama is a blogger. He also happens to be a billionaire who owns a 4% stake in Japan Airlines. This proved to be a lethal combination for senior JAL management, especially for soon-to-be-former JAL President Toshiuki Shinmachi.

Last month, Itoyama launched a series of scathing attacks against JAL management for its failiure to reverse hundreds of millions of dollars in annual losses, and he specifcally called for Shinmachi’s ouster.

The media picked up the scent and the story spread like wildfire. As a result, Shinmachi will relinquish his duties as President in June and assume the largely ceremonial position of Chairman.

Writing in Forbes, Tim Kelly notes:

“His succesor, Haruka Nishimatsu, who will take over in June if shareholders approve, better beware, because the blogger is on a roll. In a posting, Itoyama referred to the new president as “Nishimatsu Who?” and called on him to reinstate dividend payments.”

Skeptics will argue that given Itoyama’s 4% stake in Japan’s largest airline, he probably could have achieved his objective by simply calling a press conference. But as Forbes’s Mr. Harris points out, Carl Ichan called more than his fair share of press conferences in his recent bid to shake up Time Warner and got nowhere.

Blogs are a powerful new tool in shareholder activism because they give a constant, unfiltered voice to dissident shareholders who wish to critique, complain and to advance an alternative agenda. Corporate executives ignore them a their peril.

Memo to Icahn: Try a Blog [Forbes]

The New York Times writes a highly critical but silly piece today on bloggers who have taken information from WalMart’s PR agency and posted the information on their sites.

Under assault as never before, Wal-Mart is increasingly looking beyond the mainstream media and working directly with bloggers, feeding them exclusive nuggets of news, suggesting topics for postings and even inviting them to visit its corporate headquarters.

But the strategy raises questions about what bloggers, who pride themselves on independence, should disclose to readers. Wal-Mart, the nation’s largest private employer, has been forthright with bloggers about the origins of its communications, and the company and its public relations firm, Edelman, say they do not compensate the bloggers.

But some bloggers have posted information from Wal-Mart, at times word for word, without revealing where it came from.

Glenn Reynolds, the founder of Instapundit.com, one of the oldest blogs on the Web, said that even in the blogosphere, which is renowned for its lack of rules, a basic tenet applies: “If I reprint something, I say where it came from. A blog is about your voice, it seems to me, not somebody else’s.”

At the heart of the story is criticism of IowaVoice blogger Brian Pickrell. Apparently he had cut-and-pasted copy from an email sent by P.R. firm about WalMart. I understand why as an ethical consideration, plagiarism is bad. As a blogger, if I am quoting someone else, you’ll see it in “blockquotes” even if it comes from an email they sent. Yet, as someone who has sent out press releases for years, I have seen smaller newspapers and magazines (with circulation similar to a medium-sized blog readership) reprint press releases word-for-word and call them articles. Does that make the cut-and-paste practice excusable? No. But I have to wonder when the New York Times will run a front page story on the local fish-wrapper!

Likewise, the Times makes itself look silly by implying that bloggers ought to be revealing the origin of their information—such as who sent them the sources or story ideas they link to. Hogwash. When was the last time you read the Times or any mainstream paper tell you that they were contacted by the MWW Group, Fleishmann Hillard or Hill and Knowlton?

To cast aspersions on the blogosphere or mainstream media as a whole because of these cases would be a mistake.

As blogs get taken more seriously, businesses, politicians and others will start taking notice. As they do, there will be a new market for public relations firms to facilitate the conversation between them. At RSC Partners, we believe that time has come.

Now brand managers and marketing executives are jumping on the New Media bandwagon.  According to the Washington Post:

For companies like ConAgra, the individual opinions blasted out in cyberspace are becoming an increasingly powerful force. Together, they form the fabric of online word of mouth that can determine the hottest new product, make or break a TV show, or set off a customer revolt. Eager to tap into the buzz, a growing number of companies are turning to sophisticated new technologies that track what’s said on Internet social networks, blogs, message boards, product review sites, “listservs” — wherever people congregate publicly online.

For years, companies have spent ridiculous amounts of money on opinion research like polls and focus groups.  Now, everything they need to spot a consumer trend, gain feedback on a product, or evaluate market opportunities is just a few clicks away.

At RSC Partners, we encourage our clients to embrace this “reactive” component of the New Media as a complement to their efforts to promote, publicize and advocate through blogs and other online media.  

One of the first things we did after opening the doors was to design a comprehensive online monitoring program that can track what is being said in the blogosphere about our clients and their issues and products.  (Just as importantly, we can also track what people are saying about their competitors and their products.)

The Post article notes that all of the blog chatter before and during the Olympics could have– and should have–tipped off NBC to its impending ratings disaster in time for the network to make key changes to its programming:

Even NBC’s weak Olympics ratings were partly foreshadowed by chatter in the blogosphere. A sweep of postings shows that conversations about the Olympics peaked around the time of the opening ceremonies then fell off precipitously to just above the low hum weeks before the Games began, according to an analysis prepared for The Washington Post by BuzzMetrics. The survey, which measured the quantity — not the tone of the statements — also found that bloggers posted their thoughts about the hugely popular Fox TV show “American Idol” with just about as much frequency as they did about the Olympics.  Sifting through the economic carnage after the Winter Olympics, this is no doubt a painful and expensive lesson for executives at NBC, but it is one they won’t soon forget.

Blog Buzz Helps Companies Catch Trends In The Making [Washington Post]

Writing in the March 6, 2006 issue of Fortune, Devin Leonard argues that the pending sale of Knight Ridder, the fourth largest newspaper company in the U.S., will be the clearest indication yet of just how much ground newspapers have lost to New Media.

Leonard notes:

“Circulation continues to erode as readers turn to the Internet to keep up with current events. Craigslist is siphoning away help-wanted classifieds. Analysts fear that classified real estate and automobile ads may follow.”

The best estimate is that Knight Ridder will be sold at a 10x EBITDA (operating cash flow) multiple, which is significantly lower than the 13x multiple Pullitzer, Inc. (publisher of the St. Louis Post Dispatch) fetched just last year.

Perhaps the most revealing observation comes from William Dean Singleton, CEO of the privately held Media News Group (publisher of, among other papers, the Los Angeles Daily News) which is the odds-on favorite to buy Knight Ridder:

“We think we can hold on to the print business for some time, but we are hoping that by 2012 we will get 50% of our EBITDA on the Internet.”

It’s clear that newspaper CEO’s and Wall Street Analysts are starting to come around to inescapable reality that New Media is no longer the “wave of the future”– it’s here, in a big way.

What Price Knight Ridder? [Fortune]

In a lengthy cover story in the February 20, 2006 issue of New York magazine, Clive Thompson looks at blogging almost exclusively through a business prism and we think that is a mistake.

His fundamental premise is that the blogosphere is an oligarchy, with serious barriers to entry. He argues that large “corporate” blogs with huge financial backers are destroying the grass-roots nature of the blogosphere, and he denigrates the influence and credibility of what he calls “C list” blogs.

Thompson muses:

“Yet the rapid rise of the Huffington Post represents a sort of death knell for the traditional blogger…”

He asks the rhetorical question:

“Will professionalization turn blogging into media-as-usual? Or will the idiosyncratic voice of the lone blogger prevail?”

Our point is simple: while we find nothing inherently objectionable about “blogging as a business,” we think there will always be room for the “idiosyncratic voice of the lone blogger.”

Sure, only a handful of sites generate big bucks and command the stratospheric traffic of a boing boing or daily kos (and they actually raise the profile of smaller blogs by linking to them occasionally), but those are not the only criteria by which a blog should be judged.

At the end of the day, all bloggers want more traffic, but one must not forget that, for the most part, bloggers blog because they are passionate about a given topic, and often, a blog’s quality trumps its quantity (traffic).

Two sites that can make or break an issue here in Los Angeles– LA Observed and Mayor Sam– have only a fraction of the traffic of Gawker, for example, but they can shape public opinion in ways Gawker could never imagine.

The blogosphere is the voice of the grassroots, and it is a voice that is growing louder every day. The “corporate” blogs so admired by Thompson will continue to sell their ads, make their money, and they could ultimately morph into the same kind of media gatekeeper the blogosphere was created to circumvent.

But “C list” blogs so readily dismissed by Thompson, will continue to empower the grass roots and they will continue to offer news makers a direct channel to news consumers.

Blogs To Riches [New York Magazine]

The Financial Times examines the business model for blogging and does not come away impressed.

After talking to various people in the new media world, it’s possible to estimate an income of $1,000 to $2,000 a month in ad revenue from a typical blog getting 10,000 visitors a day and playing to a national audience with a popular topic such as politics.

The problem is that few blogs do even that much traffic. According to the monitoring done by thetruthlaidbear.com, only two blogs get more than 1 million visitors a day and the numbers drop quickly after that: the 10th ranked blog for traffic gets around 120,000 visits; the 50th around 28,000; the 100th around 9,700; the 500th only 1,400 and the 1000th under 600. By contrast, the online edition of The New York Times had an average of 1.7 million visitors per weekday last November, according to the Nielsen ratings, and the physical paper a reach of 5 million people per weekday, according to Scarborough research.

It’s true that, right now, bloggers probably aren’t going to quit their jobs. However, looking at the ad rates at BlogAds.com, you’ll see the reason why it’s hard to make a buck blogging.

Most blogs charge around 60 cents to $1 per 1,000 page views. Compared to Wonkette, for example who asks ten times as much, that’s a pittance. If bloggers were able to get market rates for their advertising, a medium-sized blog with, say, 3000 readers a day, running 3 ads, could net $6,000 a month before taxes–enough to survive on in most parts of the Country. When you consider that such a business model would make blogging-for-a-living available to, say the top 250 bloggers instead of just the top 50-100, things begin to look revolutionary!

Via LA Observed.