Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

MediaWatch: Newspapers May Have Even Further To Fall

Posted by Tom Foremski - April 4, 2011

It may seem as if the downward spiral of newspaper's fortunes has slowed, and maybe even stabilized but that could be a false observation according to a new study.

Alan D. Mutter in Reflection of a Newsosaur reports on an eMarketer report that newspaper ad revenues could be three times more than they should be, given the amount of time people spend reading printed news versus reading online content.

"Those of us focused on the internet channel have complained for years that it hasn't been getting its fair share of media dollars based on time spent," said eMarketer CEO Geoff Ramsey.

But will advertisers realize their mistake and shift to online or do they value ads in print more than those online?

That's the challenge and opportunity newspapers have: to prove that print deserves and earns its higher ad rate. Otherwise there is more pain ahead for the newspapers and there will be additional cuts in the newsroom.

Mr Mutter points to this example of newsroom cutting:

Clark G. Gilbert, the CEO of Deseret News and Digital Media Co., who axed 43% of the news staff of his Deseret News in Salt Lake City, merged it with a local television station owned by his parent company and started an independent digital division that he says is on track this year to sell more advertising than its legacy media counterparts.

He did this by paying attention to the costs of producing news:

Though Gilbert does not go into specifics... industry sources say he calculated his content cost prior to the layoffs at an average of $227 per story, as compared with $10 for articles at Demand Media or zero for the 9,000 bloggers who contribute to the Huffington Post.

Yes, the $227 news story is a lot better than a $10 news story but it's not 22 times better.

Advertisers won't pay newspapers 22 times more for their stories. Even paying three times more is a stretch.

This illustrates the huge disparity between the cost of producing quality news and the advertising revenues you can earn. It's the reason "you can't get there from here," why many newspapers won't be able to transition their business model to the digital world.


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