

Newspapers Lose $10 Dollars in Print for Every $1 Gained Online - bdking
http://www.businessweek.com/news/2012-03-19/newspapers-lose-10-dollars-in-print-for-every-digital-1

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campnic
This title is misleading, the article starts: "U.S. newspapers lost $10 in
print advertising revenue last year for every $1 they gained online, a deeper
loss than in 2010, as competition from Internet companies increases, a study
by Pew Research Center found." Losing $10 of revenue is different then losing
$10.

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mbetter
Not to mention the "dollars dollars" redundancy that made my left eye twitch.

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ghurlman
No, that's your potassium deficiency. Eat a banana.

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ceejayoz
The alternative, though, is losing $10 dollars in print for $0 gained online.

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stephen_g
Exactly. I really struggle to see why companies are often hesitant to
cannibalise their own products - because if they don't, somebody else will...
The newspapers are lucky to be making that dollar given how slow many of them
have been to innovate.

I think Apple's willingness to cannibalise is one reason they're so successful
- for example, when the iPod Mini was a very successful product, they stopped
selling it and replaced it with the Mini. More industries need to learn from
them (especially the movie industry...)

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tstegart
Companies are unwilling to do it because sometimes it means jettisoning
people, which is hard to do. Its difficult seeing people who have been with
you for 30 years become obsolete, and you have to tell them, "sorry, but
you're no use to us anymore." Sometimes you want to try and make the old way
work, or just place your head in the sand and let the whole ship go down
together.

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ceejayoz
> Companies are unwilling to do it because sometimes it means jettisoning
> people, which is hard to do.

The newspaper industry has been quite happy to do this. I survived several
rounds of layoffs (plus furloughs and a wage freeze) at Gannett. (Meanwhile,
the CEO got a $30M+ retirement bonus...)

The problem is, they've mostly been doing it _instead_ of adjusting to the
information era, rather than _in conjuction with_ adjusting.

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tstegart
Agreed. Another consideration is that many newspapers suffer from an outdated
ownership structure. I'm not sure about Gannet, but I know some of the others,
like Tribune before 2007 and NYT had a problem. They were started by famous
businessmen or families that then created a structure to keep the holdings
within the family. The problem with this is that their descendants owned the
trusts that run the company and were unwilling to forgo the dividends that
came their way. People outside the publishing industry are often amazed at how
much money these companies gave away to shareholders as dividends and for how
long, despite it being clear to everyone else in the world that they should
have been keeping the money in the bank.

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cagenut
They have a phrase for this in the newspaper industry, "replacing print
dollars with digital dimes".

If you're interested in a lot more facts & figures plus a graph this post has
them: [http://newsosaur.blogspot.com/2012/03/newspaper-sales-
slid-t...](http://newsosaur.blogspot.com/2012/03/newspaper-sales-slid-
to-1984-level-in.html)

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ghshephard
The graph is apparently not inflation adjusted - so it de-emphasizes the drop
in print advertising as compared to 1984- that is, on the graph, a dollar spen
in 1984 is equal to a dollar spent in 2012. As a side note - anybody who ever
plots $ over time, please add a small caption that either says "inflation
adjusted" or "not inflation adjusted" - the educated reader will appreciate
that greatly.

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nkassis
Has anyone looked at the impact of paywalls on revenues? Has it led to an
increase in online revenues for those who attempted it?

The problem with the metric used in the article is that it doesn't say much.
Was it less online revenues that cause the ratio to drop? Was it an
acceleration of people unsubscribing from the paper version? Are print ads now
worth less than they used too by impressions?

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TylerE
Don't know how much I an really disclose, but, for us (small-ish daily, ~20k
circ), once we went to a (partial) paywall, circulation defiantly went up. Our
model is that you must be a subscriber to get through the paywall, all print
subscribers get online as well - you can get online e-edition/pdf access
without home delivery, but it costs the same.

Our circulation is higher than it was two years ago. Not sure many papers can
say that.

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ghshephard
That's a good point that I don't think most people pick up on immediately. The
pricing of the NYT in particular, is focused primarily on reducing the loss of
print subscriptions (print subscribers get full access) more than it is on
maximizing digital revenue. Once the print subscribers drop off enought that
they don't have that much revenue to protect, you'll see a quick drop in NYT
digital subscription fees so that they can maximize their revenue there.

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nevinera
This headline is implies that it is their shift to digital strategies that is
_causing_ the loss, when in reality that shift is _mitigating_ it.

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bryan11
If the one local area newspaper did more investigative reporting, I'd
subscribe. Currently, it's 90% AP national news and advertisements with one a
couple investigative articles every week or two.

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dsr_
I wonder if there's a business model there -- in joining up with a larger
paper and producing a regional section. Way back when, town newspapers would
receive preprinted interiors, showing national news from AP or similar, and
print their own local news on the front and back. I'd rather have two
reporters local to my town putting stories in the online edition of the major
city paper, than to completely lose the local news when the paper shuts down,
as seems inevitable in a year or two.

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bryan11
Suppose the articles from investigative reporters were rated by readers. The
most valued articles would receive the most views and votes so a newspaper
(i.e. local or regional news aggregator) would see articles that are in
demand. Reporter pay rates could be tied to ratings, encouraging articles that
people like.

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ceejayoz
God, no. Any investigative report involving a political figure would receive a
2.5/5 star rating as the right and left wing trolls on the comments section
battle it out.

View and rating based journalism is what's turned CNN et. al. into the "look
at our hologram! water could cause cancer in your children!" channels.

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iconfinder
This is what happens when supply goes up. It's really hard to feel bad for
them.

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joeybaker
They key part of this research is that newspapers failed to personalize
advertising. That, more than anything is why their online ads aren't worth as
much.

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pixelcort
Where is the $9 going instead? Is it just not being spent by the advertisers
at all, or is it being spent on different kinds of ads?

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TylerE
A big chunk of that is classifieds, so the (no longer any) money is going to
Craigslist.

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Alex3917
Newspapers existed before advertising was invented, and they did just fine.
The problem they're facing right now has everything to do with the tragedy of
the commons and nothing to do with technology or the Internet.

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ryusage
Can you elaborate? How did newspapers thrive before the current traditional
business model?

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Alex3917
Charging people. But then the industrial revolution created massive economies
of scale for the first time, which lead to companies that were global in
scope. So suddenly newspapers could make more money from advertising than from
charging. And this put all of the paid newspapers out of business, because
it's hard to compete against a free newspaper. So essentially what's happening
now is that the corporate newspapers are getting put out of business by their
own business model, the one they used to kill off all the working class and
liberal newspapers. So long and good riddance.

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gamble
As they should. Print newspapers made their money by exploiting the high
barrier to entry in the publishing industry to create local advertising
monopolies. They compete in a much larger market for online advertising, and
very few local papers have anything to distinguish themselves from other local
or national papers. There will probably need to be a wave of bankruptcies and
consolidation around a handful of national papers before print journalism
stabilizes.

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kenrikm
As someone who works with Newspapers and direct mailers daily (advertising
agency) I can confirm that things are not looking good for the industry. There
is a palatable desperation in their marketing and they are fighting tooth and
nail for business. There was a recent article of how they dropped from 60bil
in revenue to just over 20bil, the worst numbers since the 1950s.

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kang
Newspapers probably gather data for $10 Dollars in Print for Every $1 Gained
digitally

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InclinedPlane
I guess I'll trott this out again:

The problem is that the newspaper used to be a communications conduit and
newspapers grew to identify with that role. A proper newspaper reprints
national and international news, and the weather, and sports, and it has a
classified section and a comics page and a crossword and a jumble and an oped
page. And the fantastic thing about reprinting wire reports and cathy cartoons
and classifieds was that it was so very, very profitable compared to the
effort required.

But a lot of that is obsolete today. That wire report is less accessible and
less timely than it is to read the original online. Same goes for the weather.
Etc. Today newspapermen are like hoarders. The amount of strictly original
material in a paper has always been shockingly small, but today that is the
only leg that they have to stand on. But papers don't have the guts to cut off
the rest of their body and run lean and mean in the rough and tumble online
world. Partly because in some cases they can't due to labor agreements, and
partly because they are afraid that their original reporting alone isn't
enough to be successful. But mostly because they can't stomach the idea of
being something else, something that in their eyes is diminished.

Pay no mind that not serving as a broadcast medium for marmaduke strips,
crosswords, and omnipresent wire reports hardly counts as a diminishment. It's
their conception of their world and their role and they will live or die by it
(spoilers: it's the second one).

