Buggy Whips & Printing Presses
That doesn't mean I don't sympathize with the 35 folks laid off from The San Jose Mercury News (a very good newspaper with a first-rate online product) today. But I don't suffer needlessly when I see the venerable The New York Times flail about like a blind elephant in a bamboo forest, trying to figure out how to keep its gargantuan presses rolling and its mammoth news-gathering organization clanking along. Papers like the Times are not exactly in the buggy-whip business; like many other commentators, I believe that timely, incisive, well-reported journalism becomes more valuable, not less, in an era of information overload. Rather, they are trying to keep making money off of buggy whips while trying to design the new Model T at the same time (how's that for a belabored metaphor?)
Take Gannett and The New York Times Co., two of the biggest dead-tree guys. Saddled with bad decisions and huge overhead, NYT Co. has seen its share price fall by 7.5 percent this year, while Gannett has actually staged a comeback over the last several months to close today about where it started on Jan. 1. Both companies came out with bullish predictions for online advertising today: Speaking at the Credit Suisse Media Week Conference in New York, Gannett execs said advertising revenues for USAToday.com would climb by 18 to 20 percent in 2007, and the NYT expects an even bigger jump of 30 percent in online revenue next year. The brightest performer in the NYT Co. stable of properties? About.com, which it acquired last year for around $410 million.
So what's the problem? Why can't climbing online ad revenues make up for declining readership and ads in print?
It's mainly a cost structure dilemma: CPMs ("cost-per-thousand readers," the traditional way of measuring advertising rates) are much lower online than in print, and probably will be for the foreseeable future. It's hard to pay salaries to a newsroom of nearly a thousand overpaid reporters on online ad revenues alone. That's why the online news/information/entertainment ventures that have succeeded either charge subscription fees (like The Wall Street Journal) or have virtually zero overhead (YouTube, Google News, etc.).
I'm also one of those people who don't think you need a thousand bodies to put out a good news product (see the About Us section of Unstrung to get an idea of our rather smaller headcount). And the advent of mobile advertising -- which I think has been overestimated but will not be negligible in five years or so -- will also provide a new source of revenue to offset the steady drainage of print dollars.
If I'm a newspaper exec, I'm definitely not building new printing facilities -- I'm thinking up ways to be innovative, and make money online. That's why dow Jones recently hired a Viacom exec to spearhead new digital ventures. And it's why it's nice to not be a dead-tree guy anymore.
— Richard Martin, Senior Editor, Unstrung