Bruce Feiler - Where God Was Born, Abraham, Walking The Bible

"Newspapers are Screwed"
Thursday, May 10, 2007

Some interesting pieces on the future of online news vs. newspapers. The publisher of the Arkansas Democrat-Gazette wrote a piece on the peril of giving away news on the Internet for the WSJ:

All of this would be fine if newspapers generated lots of additional revenues from offering free news. But the fact is newspapers generate most of their online revenues from classified advertising, not from news. Gordon Borrell, CEO of Borrell Associates, estimated that newspaper Web sites generated 78% of their revenues from classifieds in 2006.

It turns out that a Web site is a very different medium from a newspaper. While consumers often find pop-up ads a distraction and banner ads as more clutter, readers often seek out the advertising in newspapers.

The Inland Cost and Revenue Study shows that newspapers will generate between $500 and $900 in revenue per subscriber per year. But a newspaper's Web site typically generates $5 to $10 per unique visitor per year. It may be that newspaper Web sites as an advertising medium, and free news, just can't generate the revenue to sustain a valued news operation.

In fact, online revenues for the publicly traded newspaper companies in 2005 varied from 1.7% at Journal Register Co. to 5.7% at Belo Corp. The only company higher was the Washington Post Co. at 8.4%. Yet newspapers typically spend 12% or more of their revenues on their news and editorial operations.

And the founder of Craigs List, Craig Newmark, was even more blunt to a meeting of newspaper folks:

The mostly free classified site, which covers such categories as real estate, help wanted, personals, and general merchandise, has been taking important classified dollars away from newspapers. The site claims over 7 billion hits a month worldwide.

But Newmark doesn't feel guilty about the ongoing shift of classified dollars away from the medium. While he is a champion of more investigative reporting in newspapers -- which he admits costs money to fund -- he wasn't going to let the crowd boo-hoo about revenue woes. He deftly mentioned newspapers' high profit margins -- somewhere in the ballpark of 10% to 20% -- as proof there is plenty of money to feed investigative journalism and the newsroom. "I don't understand what the problem is," he said.

"People like Helen Thomas need backup," he said.

Newmark told an all-too-knowing audience that this is a time of "creative destruction" and that he has a "great deal of sympathy for people who run the printing presses. They are screwed." It's not that journalism is becoming obsolete; rather the delivery methods are changing: "Even the kids realize news is important. The problem is paper is too expensive," he said.

Posted by B Feiler at 8:06 AM
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1 Comments:

Winter Patriot said...: Lost in all this analysis was the single most important factor hurting the newspapers:

They are NOT telling us the truth about ANY major issue, and we know it.; May 10, 2007 5:38:00 PM EDT