Deep cost-cutting, online revenue, help Times Co. stay in black

11 02 2010

But for how long?

The owner of The New York Times reported modest profits from the fourth quarter. But its stock fell 9 percent Wednesday with the announcement. The profits were based mostly on severe cuts, moderate earnings in online operations, and a moderation in advertising losses.

But the market knows that the cuts can’t go much deeper, and the outlook for the Times Co. depends on ad revenue increases this year. For last year, ad revenue in the Times Co.’s News Media Group, which includes the New York Times newspaper, the Boston Globe and the International Herald Tribune, declined 27 percent.

The company also is looking to unload its stake in the Boston Red Sox, which might improve the 1Q bottom line. But like its cuts in news operations, that’s a one-time gain that cannot be sustained.

The much discussed online fees won’t kick in until next year, so look for other drastic measures till then.





Searching for promising news sites

2 02 2010

Congratulations to the St. Louis Beacon for gaining mention in the Reynolds Journalism Institute‘s search for promising online news sites.

The Beacon is getting better all the time and is playing an increasing community role offline, as its principals organize and appear in panel discussions, events, and local broadcasts. That is indeed promising.

It succeeds by most of the  RJI’s measures of online news sites. However, the most promising new media will be those that are revenue-positive. The Beacon, established by a grant, is attempting to support itself through membership donations. If that works, it will be a promising prospect indeed.

RJI Fellow Michele McLellan is soliciting suggesting for other promising sites. Your thoughts?





Pole vault over the paywall?

25 01 2010

Turns out, there could well be a chink in the paywall of nytimesonline.com.

In fact, it may not be a wall at all, and may not address the  issue  of news aggregators linking to content generated by newspapers.

Of course, The Times wants to encourage links to its online content, perhaps particularly so once The Times asks us to pay for that content upon reaching a certain number of visits to its site. Naturally, those includes links from bloggers and on Facebook and Twitter and other social media. And if you follow such a link, it won’t count in your “metered” number of visits.

Q. What about posting articles to Facebook and other social media? Would friends without a subscription then not be able to view an article that I think is relevant for them? — Julie, Pinole CA
A. Yes, they could continue to view articles. If you are coming to NYTimes.com from another Web site and it brings you to our site to view an article, you will have access to that article and it will not count toward your allotment of free ones.
But as Jay Rosen points out,

Google News is surely “another Web site,” therefore all articles found that way will be free and accessible. … No matter how often Google News is used to get to the Times, if you come back by that route you will never be charged.

Which means that for those people who get their news from the web itself, using search, aggregators, social media and blogs to find the stuff they want, the stuff they find from the New York Times will always be available, free of charge.  That looks a lot less like a pay wall to me. It isn’t a metered system if I can access the Times via the link economy without limit.  This scrambles a lot of what’s been written on the subject.
This whole paid content issue gets more complicated the further one gets into it. That’s obviated by the fact that the big brains in the business have yet to solve it. But we’ve got to try something. If it turns out the NYT system fails to provide significant revenue for news gathering, let’s tinker some more. The decline of journalism is too urgent to cling to unproven hopes of an new model emerging or to stand on the sidelines naysaying all efforts to make the Fourth Estate viable again.




Miami Herald jangles online tin cup

15 12 2009

The Herald’ online edition appeals to the angels of our better nature, or our guilt.

Beginning Tuesday, The Miami Herald will accept voluntary contributions via its website. At the end of each online story, readers will find an option for making a contribution to support its news coverage delivered via the Internet.

I guess it’s worth a try. It doesn’t hurt to ask. It seems incongruous, though, for a for-profit organization to solicit gratuities.

H/T Matt Frederick





Study projects dramatic shift of ad spending to online sites

13 11 2009

In a study presented today at the Yale Law School Conference on the Future of Journalism, two leading analysts of media economics say there is a wide gap between the ratio of adults who get their content online and the amount of ad spending online, and that gap is about to close. The implication for legacy news providers is dire.

Today, U.S. advertisers spend 8 percent of budgets online, while Americans consumer 30 percent oftheir content online.

If history is any indication, a more appropriate re-allocation of advertising dollars will occur in the not-too-distant future, and daily print newspapers, with declining readership and household penetration, are mostly likely to be losers.

Over the next five years, the authors say, traditional news organization must take the following steps to survive:

  • Shed legacy costs as quickly as possible
  • Re-create community online — in an attempt to regain pricing leverage
  • Build new online advertising revenue streams to replace the loss of traditional print categories

The authors are Penelope Muse Abernathy, who holds the Knight Chair in Digital Media Economics and Journalism at the School of Journalism and Mass Communication at the University of North Carolina, and Richard Foster, a former McKinsey & Company executive who is a now senior faculty fellow at the School of Management at Yale.





Newspapers’ free fall may be slowing

21 09 2009

Ad revenue declines are slowing, according to the Newspaper Association of America, as reported in today’s New York Times:

“In what passes for good news these days, the free fall in newspaper advertising may be slowing, and specialists predict it will ease through 2009 and into 2010. …0921-biz-PAPERweb

Ordinarily, such numbers would be seen as catastrophic, but these times are not ordinary. The drop in combined print and digital ad revenue last year, 16.6 percent, according to the Newspaper Association of America, was the worst since the Depression. But it looks rosy next to 2009, when revenue fell 28.3 percent in the first quarter and 29 percent in the second.”

It’s natural to look for a silver lining, and there are signs of recovery in the retail sector on which newspapers depend for revenue. But forecasts of ad spending are mixed.

But newspapers need to see the revenue bottom soon. Most have cut expenses so deeply that the corresponding decline in quality threatens their ability to bounce back even when the economy revives. When advertisers decide to start spending again, they’ll have to question whether the long-suffering newspapers will bring them the return they so desperately need.

What if newspaper publishers combined their best minds toward cooperatively strengthening their news product, say, with hard-hitting issue-oriented journalism that can shape the important debates on foreign policy, health care, the financial sector and other critical areas just in time for advertisers to notice newspapers when they allotted their dollars? Couldn’t hurt.

UPDATE: I see that some on the Internet are taking Obama’s kind words for newspapers as a slam at blogs:

Mr. Obama said he noted the trend. “I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding,” the President said.

Hey, if the shoe fits …





Consumers have never paid for news

16 08 2009

In his first of “Five Key Reasons Newspapers Are Failing,” Bill Wyman delivers a powerful argument against pay-for-content as a viable business model for newspapers: Newspapers don’t sell news; they sell readers.

The full article is a worthy treatise on the causes if not the solutions, and he admits as much at the outset:

After 30 years in the industry, I know enough to know I don’t know what it should be doing. But if we’re talking about the state of the industry, and we’re not acknowledging the issues below, we’re not fully looking at the roots of the problem.

Rats. I hate that. I have been putting faith in Walter Isaacson’s theories espoused in TIME early this year about micro-payments being the salvation of the industry. Here’s Wyman’s take on that:

It’s shocking that a fundamental lack of understanding of these aspects of the business has been the basis of some of the most high-profile writing about the state of the industry. Walter Isaacson was the managing editor of Time and the CEO of CNN; in a recent cover story for Time on the daily newspaper crisis, he based his argument on the following assertion:

“Newspapers and magazines traditionally have had three revenue sources: newsstand sales, subscriptions, and advertising. The new business model [i.e., web publishing] relies only on the last of these. That makes for a wobbly stool even when the one leg is strong. When it weakens, the stool is likely to fall.
Isaacson didn’t provide any figures. It didn’t occur to him or any of those high-paid Time editors who shepherded his essay into print that the money generated by newspaper subscriptions—$5 or $6 a week in most cities—could hardly be called a leg on a stool.”

Think about it for a moment, and you realize those paltry sums couldn’t come close to making up the cost of merely printing a newspaper and then delivering it by hand to a subscriber’s doorstep seven times during each of those weeks.

Nor can a company make money in 50-cent increments by sending union employees out in gas-guzzling trucks through gridlocked streets several times a day distributing to hundreds, even thousands, of newspaper boxes over scores, perhaps hundreds, of square miles.

That issue of Time was still on newsstands when the editor of The San Francisco Chronicle, which had been losing $1 million a week for years before the current recession hit, was telling his readers that it cost the company $10—10 dollars—to deliver a Sunday Chronicle to their homes.

He didn’t explain his math, but let’s give him the benefit of the doubt. And let’s say that the smaller average weekday paper costs less, maybe $6, to print and deliver. In other words, if we can trust his figures, it might cost the Chron at least $45 a week just to print and deliver a single subscriber’s paper. The paper is currently offering eight weeks’ delivery to new subscribers for just under $8 a week.

Back to Time magazine. Isaacson’s logic took him to this assertion:

“In an advertising-only revenue model, the incentive is perverse. It is also self-defeating, because eventually you will weaken your bond with your readers if you do not feel directly dependent upon them for your revenue. Newspapers will end up producing a lot of sections about gardening and home improvement, which advertisers want, and getting rid of their book review sections, as the Los Angeles Times and Washington Post have done.”

Isaacson, thinking he was offering an analysis of the current business situation of newspapers, was actually describing the previous one. Didn’t newspapers “end up producing” sections about gardening and home improvement decades ago? As for those book review sections, they were gone as well; the ones he mentioned were about the last two remaining of the 1400 daily papers in the U.S. In other words, that “bond with readers,” financially speaking, Isaacson talked about never existed.

It was sacrificed to Wall Street. Those book review sections were early roadkill in the companies’ drive to cut back content and prop up the industry’s comically high returns.

Of course, it’s always much safer to proclaim why things won’t work than to find something that will. Nevertheless, it’s a pretty deflating article, I found.

By the way, here are Wyman’s other four reasons newspapers are failing:

2. Newspapers are the product of monopolist thinking

3. Timidity doesn’t work on the web

4. The staffs of the papers, from management down to the reporters, deserve a big share of the blame

5. Newspaper websites suck

 





FT editor says come on in, water’s fine

4 08 2009

This is rich. The editor of that venerable peach journal of capitalism, The Financial Times, urges other newspapers to hurry up and join the FT in charging for content. The editor, Lionel Barber, says:

“What I would say to the competition and to the rest of the world is that it’s getting late. If we move now we can assure ourselves of a prosperous future.”

Translation: “Don’t leave us hangin’ here, fellas.”

Further, he warns other newspaper editors not to compete on price, because that would be wrong. Some capitalism, there!

But I do think he’s right to focus on brand and business model, and the FT is ahead of the pack there. He doesn’t see ad revenue as the answer, although it ought to supplement paying readers.

Competing with the BBC is a prickly issue for private news gatherers in the UK, and the interviewer badly wants the FT to pick that fight, but Barber won’t go there. Nor will he attack blogs that cut and paste news content. He doesn’t see that as competition. He sees the players as those with big brands built on credibility and value. Lot of sense in that.





AP vs. Internet

28 07 2009

Something else I missed while on vacation: The Associated Press is taking a new hard line against unlicensed use of its stories on search engines and Web sites.

Reaction was swift from bloggers, of course. Then the AP granted an interview to CJR business writer Ryan Chittam, who concludes that bloggers are overreacting and that individual bloggers have nothing to worry about.

Danny Sullivan at Daggle, however, points out many unanswered questions, and the AP is not going to answer them for now.

I think the AP is trying to stand on principle while tacitly acknowledging reality. I agree that the Google news page and other giants should pay for news content. I also agree that neither the AP nor other content providers are going to waste legal fees chasing down the millions of individual bloggers who link to their work. I’m not worried for now.  

I would, however, like to see Google, along with major bloggers, work on a solution rather than always opposing AP. Somebody has got to pay for news gathering else we lose it.





Ad revenue dips for social networking sites

9 07 2009

The research firm eMarketer projects that advertising on social networks will drop 3% to $1.1 billion this year after a period of hot growth, amid spending cuts by marketers and problems at MySpace. The projection is a sharp reversal. In December, eMarketer projected growth of 10.2% for 2009 to $1.3 billion.eMarketer graph

However, the dip is only temporary, the firm says. It predicts that spending will hit the $1.3 billion mark next year.

“The expected rebound in spending will come as more companies focus on creating and implementing an overall social marketing strategy,” says Debra Aho Williamson, eMarketer senior analyst and author of the new report, Social Network Ad Spending: A Brighter Outlook Next Year. “And it is a clear indication that the experimental phase of social network marketing is finally drawing to an end.”

… Social network users create a gigantic amount of data about themselves—their friend networks, likes and dislikes, content-sharing activities and more.

“Harnessing this information to deliver advertising not only within social networks, but on other sites a consumer may visit, is a marketer’s dream come true,” says Ms. Williamson.