Newspapers and magazines aren't making money online
By Tom Foremski - March 22, 2007
Here is an interesting post from BizReport. It shows that publishers aren't making money from their online operations.
Publishers aren't profiting from online operations - Internet - BizReport
Out of 350 international newspaper and magazine executives gathered in Hannover, Germany, for a media conference, only one was able to claim making a profit from their online operations.
Furthermore, despite investments totalling millions in marketing dollars, only a handful of the industry players present could claim more than 3 percent of their sales came from online.
The economics of publishing online can't support the people and processes that are needed to produce it.
This is a serious issue because as the "paper" based economic models get trashed, it is clear that online publishing isn't going to save old media publishers anytime soon. Even if their online revenues were to double tomorrow, it still wouldn't be enougth.
It is another example of "you can't get there from here" when it comes to old media transitioning to the new media world.
It's because publishers have to compete against online publishers such as Google whose costs of publishing a page of content and ads is miniscule. The reason GOOG or YHOO or Craig's List can sell advertising cheaper is because they don't have to pay for their content.
Mostly, their content is machine-generated, or harvested by their spiderbots roaming the Internet, or it is user-contributed as in Craig's List.
Online advertising rates reflect this economic reality and thus are held down at low levels. These are levels that won't be able to support old media publishers.
It costs tens of thousands of dollars for newspapers and magazines to produce, market and distribute a "page" of content.
There is no way that they can compete against competitors whose comparable costs are pennies per page.
Therefore we have to figure out a new economic model for media--it has to be something more than online advertising.
By Tom Foremski - March 22, 2007 | Permalink | Comment
| Category: Media Watch
| SVW Toolbar | SVW Newsletter | SVW Mobile
- NEW STORIES:
- Intel Experiment Could Save Millions in Data Center Power Costs
- Will East Coast Flood West Coast in Search of Jobs?
- GOOG Founders Could Buy All US Newspapers and Still Have $12bn
- Microsoft in Bay Area Recruiting Blog Sites for AdCenter Ad Network
- Silicon Valley Rocks! Charity Event for Local Schools
- Fishwrap: Changing Media and PR . . . Plus a Great Pep Talk
- Top of my 2008 Watch: Berlin Based Plista . . . and Online Dopplegangers
- The "Experiential Gap" . . . and the Growing Cosmos of Twitter Applications
- FT Anger on AIG Bailout
- Shift Happens . . . A Visit With One of My Favorite PR Companies
Comments (6)
Newspapers also have to compete against other newspapers, even those of the same chain, online because only a small part of their content is truly local. For the biggest papers most of that isn't local enough. Mountain View (where I live) is less than 15 miles from the San Jose Mercury News' main office yet their coverage of Mountain View is trivial; the same is surely true across the board.
Why do we need almost the same syndicated articles from AP, Reuters, Wall Street Journal, NY Times, LA Times and so forth on every newspaper (and TV station) website? Or coverage of the same TV shows, movies, comics and out of town sports?
If I ran the web for MediaNews, Gannett, Tribune or one of the rest I'd build one big site for the whole chain, with local content contributed from each owned paper (articles, blogs, podcasts) and focus all web traffic on the megasite with more salable pages. Sure, keep paper-specific portals for local reader brand recognition but going in from a portal send you to the megasite.
Posted: March 22, 2007 10:30 PM
I want to see MSM survive and thrive. And if the Fourth Estate flounders, what will Google News and everyone else online serve for content? Blogs? This is NOT what the world needs.
Blogs supplement, but will never replace MSM. And they shouldn't: Each has their place.
For all the problems in traditional print publishing, I'd still be more likely to cite an article in the New York Times or Wall Street Journal than I would a blog posting about the same topic. (Of course, this depends on the topic. That's why I said, "more likely".) Credibility is still an issue with blogs. So is transparency. So is personal bias. This is not to say that MSM doesn't have any bias (e.g., The National or The National Review), but at least we tend to know where MSM is coming from, i.e., I may know the biases that they have, may even prefer a certain slant on content for that very reason.
I've heard that TechCrunch is a FOM -- Friends of Mike -- kind of thing, that his forthcoming DEMO-killer conference might be a showcase for his buddies. Then there are the Jihadists, like the Twitter Jihadists (e.g., Scoble, Rubel) ... people living in an alternate reality and justifying their perspectives as early adopters when in fact they might really be "way-too-early" adopters or only adopters.
Anyway, whenever I hear that MSM is in trouble and that we might have to rely on web-based news sources, I sense that a critical aspect of democracy is truly in peril.
Final remark: I like the idea proposed by "BillSaysThis" regarding content aggregation.
Posted: March 23, 2007 5:24 AM
Bill: Yes, exactly. Local coverage is pathetic. Even coverage of "Silicon Valley" is pathetic that's why I've been marketing Silicon Valley--it's a huge global brand. But the local papers want to have their own bureaus around the world, etc, and they miss the local opportunities.
Annonymous: (Please use a real name.) Blogs won't replace MSM, no one is saying that.
I've been saying for a long time that we are in trouble as a society because we haven't worked out the economic model for media--that includes blogs. Neither MSM or blogs have a workable business model right now...
What will pay for high quality journalism?
Posted: March 25, 2007 4:33 PM
Maybe I'm too hopeful, but here's what I see. TV and cable are expensive and requires lots of ad dollars to survive. Print costs lots of money, too. Blogging is inexpensive and could benefit all media if more dollars trickled down. Traditional media companies could invest even more in blogging -- embrace and enlist -- rather than treat bloggers as a threat. Blogging could bring traditional media ROI simply by spreading better understanding and passion for the great things we can find on TV, Radio and print. Maybe the next wave of corporate leaders will be mavericks of integration, swiftly forcing efficiency and open communication into everything their company does. Feels frustrating to see resistance, yet it's fascinating to see true colors of people trying to find the best way to move ahead. These things are happening and we are moving ahead.
Posted: March 25, 2007 10:12 PM
Ken: That's exactly it, it is about MSM and citizen journalism ...and... what I call "smart machine media" in a holy trinity of sorts :-)
Posted: March 25, 2007 11:56 PM
As I laid out in "Papers charging would be death-knell...," I really don't think that publishers can't make money online. It's clear (from the WaPo numbers) that when a company invests strongly in online reporting, the readership and the ad dollars are there. Newspapers' chief problems are: high cost of union employees; high cost of presses and physical plants; falling readership.
Investment in content and infrastructure, a sophisticated sales and marketing effort and a great brand = successful online operations. Online can pay for professional journalism, but what professional journalism is needs to change.
Posted: March 26, 2007 11:28 AM