Spoiler alert: It’s a revenue model issue, specifically, print advertising versus online advertising.
Some have noted that it could make sense, from the perspective of circulation economics, to induce newspaper readers to switch from print to iPad. That well may be true: The savings on circulation marketing, printing, and delivery costs would be significant. Such inducements could take the form of discounts on iPad purchases. The Times has actually experimented with an analogous program using Times Reader and a Samsung netbook, offering $100 off the hardware to new non-print subscribers to the software.
But newspaper economics are not limited to circulation economics. In fact, most newspaper revenue comes from advertising. And one of the most important realities about the state of newspapering these days is that online advertising revenue, on a per reader or per impression or any other relevant basis, lags so far behind print revenue that it seems destined to never catch up—never to come even close.
Thus, it has been clear, for perhaps three to five years, that any sudden conversion of all print readers to Web readers, while greatly reducing costs, would reduce revenue even more, deepening losses at unprofitable papers and throwing those that remain profitable into losses—losses that would likely be impossible to reverse except through huge further expense cuts, especially in newsrooms. The downward spiral in product quality would be accelerated, likely leading to fewer readers and more cuts.
And this is a pretty major stumbling block. Every time the otherwise quite insightful folks at Buzz Out Loud start in on how it’d be great if newspapers would just stop worrying about paper, they forget about advertising, causing me to yell at my car stereo while I’m driving.
(From The Daily Beast, which I’ve somehow managed to avoid stumbling across until now.)
There are a lot of people jumping up and down about the news that Newsday only got 35 subscribers to its behind-the-paywall Web site after three months, especially in light of the news that, like someone returning to a bad relationship once again, the New York Times will be returning to a pay model again soon. (This time, in a “freemium” model that actually seems pretty reasonable.)
So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com?
The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.
The web site redesign and relaunch cost the Dolans $4 million, according to Mr. Jimenez. With those 35 people, they’ve grossed about $9,000.
In that time, without question, web traffic has begun to plummet, and, certainly, advertising will follow as well.
Of course, there are a few caveats. Anyone who has a newspaper subscription is allowed free access; anyone who has Optimum Cable, which is owned by the Dolans and Cablevision, also gets it free. Newsday representatives claim that 75 percent of Long Island either has a subscription or Optimum Cable.
“We’re the freebie newsletter that comes with your HBO,” sniffed one Newsday reporter.
Mr. Jimenez was in no mood to apologize. “That’s 35 more than I would have thought it would have been,” said Mr. Jimenez to the assembled staff, according to five interviews with Newsday staffers.
“Given the number of households in our market that have access to Newsday’s Web site as a result of other subscriptions, it is no surprise that a relatively modest number have chosen the pay option,” said a Cablevision spokeswoman.
Those are pretty big caveats. The number of people in Long Island that don’t have a Newsday subscription or a Cablevision hook-up is pretty small. And while Newsday staffers may believe otherwise, the rest of the world really doesn’t care about their coverage of national or international news.
And that Web site usage is dropping off because it’s a terrible Web site. It looks like a poorly thought-out site for a CW television station, not a site promoting print news.
The Newsday paywall experience is more about what happens if you have good penetration with other subscription models and a worst-in-show Web site, not the viability, or lack thereof, of paywalls.
(And really, New York Observer? You’re going to take shots at any other paper, while printing yours on pink, excuse me, salmon newsprint? Really?)
You also have to watch out for supervillains destroying your building. Ironically, the newspaper bailout that Electro was apparently so mad about apparently stands little chance of happening in real life. (I couldn’t even find any news references to it after September 2009, which doesn’t exactly suggest it’s still chugging along on Capitol Hill.)
Although J. Jonah Jameson’s newsroom was supposed to be a scary environment for Peter Parker, even as a kid, I realized that the Daily Bugle was a heck of a lot more realistic than the bland Daily Planet that Clark Kent worked at. Jameson and much of the rest of the staff are pretty recognizable newsroom staples, to the extent that I suspect a lot more people with actual knowledge of newsrooms have written stories relating to the Bugle than ever have dealt with the Planet.
Of course, this is comics, after all, where Superman can die, Batman can get his spine snapped, get better, and then later die, and eventually, it all works out. So the Bugle will be back in some form, eventually. Hopefully not as a TV station, which some fans seem to think is a more realistic choice — the issues of Amazing Spider-Man leading up to the Bugle’s destruction in December talked about the state of the newspaper industry repeatedly — when broadcast news is also facing its own substantial challenges. The folks at Marvel Comics’ House of Ideas will probably have to come up with a novel solution all their own on how to revitalize the Daily Bugle — and, frankly, the newspaper industry could use the help in that regard.
Yet another pundit (Megan McArdle, this time) makes a fairly basic mistake when discussing the health of the newspaper industry:
The circulation figures for the top 25 dailies in the US are out, and they’re horrifying. The median decline is well into the teens; only the Wall Street Journal gained (very slightly).
I think we’re witnessing the end of the newspaper business, full stop, not the end of the newspaper business as we know it. The economics just aren’t there.
Maybe, maybe not. (I suspect she’s right, to an extent.) Except, Megan, the top 25 newspapers are not the newspaper industry. In an era where we can get our state, national, international, sports and entertainment news practically anywhere on the Internet, you’re right that there doesn’t seem to be a place for the one-size-fits-all newspaper that tells you about everything from the local school board meeting to what the president ate for breakfast.
Fortunately, that’s not the only sort of newspaper out there. Small newspapers are the majority of papers out there, and while some of them are being dragged under because they’re chained to failing large metro daily dinosaurs, most of them are doing fine.
If, say, the Atlanta Journal Constitution were to go out of business (at least in its current form), it’s unlikely the residents of Atlanta, the suburbs and surrounding towns and cities would say “well, I guess that’s it for news.” It’s also unlikely that local television or radio will take over for everything the paper covers. (Not only is broadcast news not well set up for covering a lot of the kind of stuff print media covers, it’s in worse shape than print journalism; they just don’t talk about it in public the same way as the print folks do.)
Instead, just as new growth springs up in the forest once a mighty tree goes down, new media outlets (some of them “new media,” others print products) will spring up in their place, living off the now freed-up advertising revenue and scooping up many of the now-unemployed AJC veterans.
Truthfully, this isn’t a bad thing. There may be people who don’t get any news from the radio, television or Internet, and rely on their local newspaper for 100 percent of their information, but the four or five of them in the country will adapt.
There is a future in the newspaper industry, just not in the newspaper as a one-stop-news-shopping outlet industry. It would be great if more pundits realized this and helped shift the industry’s focus, rather than insisting that the past model is the only one that matters.
(Via Olga Khazan.)
| Ledger Live: newspapers and porn share economic bind |
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Not a comparison I would have thought of, but this piece by New Jersey’s Star-Ledger does a good job of making the case that both industries are facing threats from consumers who expect to get their content for free. But the porn industry workers interviewed at the Exxxotica Convention all seem to be optimistic that a new model will appear.
(The Los Angeles Times piece on the woes of the porn industry referenced by reporter Brian Donohue is located here.)
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