Aug 13th, 2007 | Media 2.0 | No Comments
Henry Blodget — who used to be a Wall Street analyst and now runs a content hub called Silicon Alley Insider — recently wrote a provocative analysis of the online newspaper business entitled Running the Numbers: Why Newspapers Are Screwed, which ran at the Insider as well as Blodget’s personal blog, Internet Outsider (I guess he’s an insider and an outsider).
Henry’s point is a relatively simple one: publishing content online costs a lot less than publishing it on paper, and therefore newspapers can save a lot of money by running their stuff online. Unfortunately, online content also generates a lot less revenue than printed content does, so newspapers actually wind up worse off if they move online.
To justify this line of argument, Henry looks at the New York Times — presumably because if the New York Times can’t make the math work, no one can. Using (for the sake of argument) the idea that the Times immediately stops publishing in print and moves entirely online, here’s what Blodget says would happen to the company’s bottom line:
Revenue drops by more than half, 40%-50% of employees get fired, and the company still loses money. Using the NYT’s Q2 numbers and these assumptions, for example, revenue would have dropped from $789 million to $285 million.
More importantly, EBITDA (earnings before interest, taxes, depreciation, and amortization) would have dropped from $118 million to -$64 million.
Not a great picture, is it? But there are a number of problems with Henry’s analysis, as several people — including my friend Mark Evans, who has posted some thoughts on the subject, and Seamus McCauley of Virtual Economics. Seamus in particular takes issue with many of Blodget’s assumptions.
Among other things, Seamus makes the point that a proliferation of online content actually makes certain kinds of content more valuable — particuarly content that has been verified by trusted sources, which he believes is the true core competency of mainstream media organizations (Jack Trout has some ideas about what makes newspapers valuable here, while others think a paper’s most valuable asset is its useability).
Are Blodget’s projections unrealistic? Pretty much, yes. Obviously, printed newspapers aren’t going to vanish overnight, nor is online advertising going to remain static. But thinking about what might happen if they did is definitely a worthwhile exercise.
Aug 7th, 2007 | Media 2.0 | No Comments
According to a report in the New York Post, the New York Times has decided to drop the Times Select pay wall that keeps most of its opinion and editorial content, including its popular op-ed columnists, locked up for paying customers only. The Post says that publisher Arthur Sulzberger Jr. has made the decision but the paper is trying to resolve various software issues before announcing it.
The story also notes that the Times has seen its subscription base for Times Select flatten (the Post report says the number dipped in June to 221,000 from 224,000 in April, but the Times has said those figures are wrong). As Henry Blodget points out at Silicon Alley Insider, it has been obvious for some time that Times Select was not growing and would never become a substantial part of the newspaper company’s business.
One could argue that getting people to pay $11-million is better than nothing, but $11 million in revenue for an operation the size of the NYT is a rounding error. It hardly seems worth it — especially when columnists like Maureen Dowd and Thomas Friedman (love them or hate them) are among the best draws the paper has. To keep them locked up for paying customers only instead of maximizing their traffic-drawing abilities seems increasingly absurd.
I hope the Post report is for real. In other newspaper-related news, a new report says that online advertising revenue is expected to eclipse newspaper advertising revenue by 2011.
Jul 25th, 2007 | Media 2.0 | No Comments
The New York Times Co. released its financial results for the latest quarter Wednesday (PaidContent has a good overview), and it was pretty much the same picture as in previous quarters, but painted with a newer brush: advertising revenue is growing online, but nowhere near fast enough to make up for the downturn in newspaper ad revenue. As a result, ad revenues overall were down 5.7 per cent over the same quarter the previous year, despite a growth in Internet revenue of 27 per cent, including an online ad revenue increase of 22 per cent. This is a story that my friend Scott Karp of Publishing 2.0 has told before and will likely be told again.
Jul 24th, 2007 | Media 2.0 | No Comments
According to a post at PaidContent, the online audience for newspapers is growing twice as fast as the overall Internet population is growing. That comes from a study that Nielsen/Net Ratings did for (not surprisingly perhaps) the Newspaper Association of America. According to the study:
An average of more than 59 million people (37.6 percent of all active internet users) visited newspapers online each month during Q1, a 5.3 percent increase over the same period a year ago.
During the same time period, the overall internet audience grew just 2.7 percent.
The study also found that more than 88 per cent of newspaper website visitors have bought something online in the last six months, compared with less than 80 per cent of the online audience. And about four in 10 online readers or 40 per cent work in professional or managerial jobs, compared with one in three or 33 per cent of the Internet population).
Jul 4th, 2007 | Media 2.0 | No Comments
Jack Shafer of Slate.com, a veteran journalist and all-around smart guy, has a great piece in which he looks at what newspapers were like decades ago — in terms of size, coverage, layout and staffing levels — and asks the provocative question: After the staff cuts, will the newspapers of the future look like the newspapers of the past? What you think of the answer may depend on whether you work at a newspaper or not:
“By my personal measure, the national and foreign news published in the summer of 1972 by the Times and Post matches the current product, even though it is less “featurey.”
That both papers did fine work with half the current manpower should encourage serious readers—even though it may depress journalists.”
(Thanks to Rob for the link)
