Study: Newspapers Need to ‘Shed Legacy Costs’ to Capture Online Ad Spending
Bill Mitchell talks about who newspapers will need to transition from print to online, bringing its community with them and finding new innovative ways to produce a revenue.
This is almost obvious to a point, but what could be scarier is that some publishers don’t realize it. Smaller newspapers are putting up pay walls to protect print circulation, instead of using creativity to find new revenue streams.
This has to be the biggest challenge and the highest task on the agenda of every journalism thinker. Online journalism will have a difficult time surviving online if it doesn’t find different ways to produce.
The arguments against strict pay walls aren’t new, in fact they’re at least a decade old at this point. They leave out a portion of the population, do a disservice to the community and encourage free sites to start up that may not cover the community with as much vigor.
Mitchell says 8 percent of advertising dollars are spent online, while 30 percent of people consume information online. This gap will close, Mitchell says, to the dismay of print publications as they lose the print advertising dollars.
While one may say that the dollars may move online, but stay within the organization, they must look at the Internet in a different light. No longer does an advertiser need a news organization as a platform to get a message out. That advertiser could launch a social media campaign on YouTube, Twitter and Facebook. They could team together with other businesses and form a self-servicing site.
In other words, journalism shouldn’t count on advertisers to keep them as business partners when they make the switch to the online world.
New ideas are needed, but more importantly, well thought out and concrete ones.
The rise of local at CUNY New Business Models for News
Sean Blanda discusses a few tips for journalists making the transition to entrepreneurship when beginning a start-up news Web site.
Here is my take on the article:
One of the biggest issues with a journalist branching out on his or her own and into the entrepreneurial spectrum, is that journalists don’t have sales experience.
It’s well documented that journalism should have a “church and state” relationship between publisher and sales manager, but when a new business is beginning, a journalist needs the basics.
It’s not that a journalist will mold church and state, or tear down the wall. A journalist needs to scale that wall each time a story needs publishing and climb back to sales to earn the revenue. The wall should never get shorter, because that will eventually lead to flat ground and complete mix of business and editorial.
Instead, the journalist needs to grasp new strategies for keeping the balance.
Blanda’s article says journalists need to:
- Build a relationship with mainstream media. This is because most start-ups will be more local than what exists. A partnership can help both sides of this equation with content-sharing and brainstorming.
- Knowledge of non-advertising sales. Making money on the Web for a news site could stretch beyond display and video advertising. In my interview with Chris Anderson, a journalism professor at CUNY, he mentions using a Web development team to work on local business’ Web sites.
- Join a local ad-network. This one probably only exists in the bigger urban areas and its suburbs. But joining with other local sites or news blogs and sharing advertisers could be beneficial - provided you’re not in competition.
- Communicate. This is probably one of the harder ones for a journalist turn entrepreneur to do, ironically. Work the town. Put your name out there as a site, not just to get stories, but to generate excitement that leads to traffic that leads to ad revenue.
Newspapers’ Decline Started Long Before the Web
“The profit motive ultimately is not compatible with the public service of journalism.” — Robert McChesney, communications professor at Univ. of Illinois and co-author of “The Death and Life of American Journalism”
In this interview, the authors of “The Death and Life of American Journalism” argue that the decline of newspapers happened long before the advent of the Internet. It happened when profit-minded bosses started running newsrooms, instead of bosses looking out for what’s best for a democratic society.
When the industry sees the Seattle Post-Intelligencer go Web-only and the Rocky Mountain News shut down, as the authors point out, there becomes less and less original reporting. When thousands of layoffs happen across dozens of newsrooms and furloughs become the talk of the town, less deep reporting is done.
The authors say with fewer reporters searching and investigating stories, many newsrooms are turning to two places for copy to put in the paper and online:
- aggregation from other sources (i.e. The Associated Press, Politico.com)
- government itself (i.e. “the mayor says” stories)
These are two examples of stories journalists can’t control, and do little to inform citizens.
“So here’s what we have: The shutting down of newspapers, the decline of newspapers, while at the same time with no real replacement by the Web. All the Web is doing is aggregating what little coverage is still done by the newspaper. It’s a disastrous circumstance. If the Web was replacing newspapers, great, wonderful. But that’s not happening. What we’re doing is creating a void.” — John Nichols, Washington correspondent for The Nation and co-author of “The Death and Life of American Journalism”
The conclusion that Nichols and McChesney draw at the end of their book is government should subsidize news to save it. They argue that for the first 75 years of the nation’s history, the U.S. government provided (by their calculation) $30 billion in 2010 dollars in media subsidies. These included postage and printing subsidies for newspapers.
The pair also say government controls broadcast (television and radio) media by controlling the airwaves, and in the past have created laws that go against the notion of a completely independent media.
While other reasons exist for radio and television airwave control (limited supply), I can’t disagree more with the thought of the government handing money out to media organizations.
Signing up for a government subsidy by a media outlet only leads to licensing of some kind (look at RTE in Ireland or the BBC for example). Because they’ve received cash to operate, they’ve been forced to abide by certain laws that would go against freedom of the press rights.
Government subsidies would have the opposite effect than the authors are in search for: it would cause government control of information and lead to a misinformed citizenry.
New Online Journalism Production Model, Not Revenue
“I would suggest that publishers work to cultivate their relationships with their community, to maximize the amount of donation income that they can receive, either in direct donation or via advertising campaigns.” — Robert Niles, former Internet editor of L.A. Times
Robert Niles says it’s a waste of time to pursue a new revenue model for online journalism, and that there are still just three basic ways to create revenue:
- subscriptions
- advertising
- donations
While I agree there may not ever be a fourth avenue to pursue, I think what journalism needs to figure out is which one of those three choices (or what combination) allows journalism to survive on the Web.
It’s simple, advertisers don’t want to pay as much. Subscribers don’t see a benefit to e-editions or want to leap over a pay wall. And leaving a site open to the winds of charity isn’t a great model for sustaining a presence.
Niles says we need to come up with a new production model. He’s right. There isn’t a textbook way to operate a local news Web site. All too often it is an after-thought for many TV stations, newspapers and magazines.
Finding a way to standardize the process may help us reduce costs, thus helping to shore up the bottom line. Instead of concentrating on what is coming in, maybe editors should figure out how to control how money is going out.
There is no new revenue model for journalism
“I would suggest that publishers work to cultivate their relationships with their community, to maximize the amount of donation income that they can receive, either in direct donation or via advertising campaigns.” — Robert Niles, former Internet editor of L.A. Times
Robert Niles stresses what his headline shouts, and that there are three basic ways to create revenue:
- subscriptions
- advertising
- donations
While I agree there may not ever be a fourth avenue to pursue, I think what journalism needs to figure out is which one of those three choices (or what combination) allows journalism to survive on the Web.
It’s simple, advertisers don’t want to pay as much. Subscribers don’t see a benefit to e-editions or want to leap over a pay wall. And leaving a site open to the winds of charity isn’t a great model for sustaining a presence.
Niles says we need to come up with a new production model. He’s right. There isn’t a textbook way to operate a local news Web site. All too often it is an after-thought for many TV stations, newspapers and magazines.
Finding a way to standardize the process may help us reduce costs, thus helping to shore up the bottom line. Instead of concentrating on what is coming in, maybe editors should figure out how to control how money is going out.
Five Ways Journalists Can Build Unique Value for Paid Digital Content
Article by John Einar Sandvand
Unique Content - i.e. niche and hard-to-find content not readily available elsewhere for free
Unique Convenience - i.e. availability in different ways like Amazon’s Kindle; iPhone/Blackberry/Android app that allows for mobile viewing
Unique Usefulness - i.e. tools for loan calculations, calorie counter etc
Unique Packaging - i.e. personal customization of content
Unique Experience - i.e. social media within a site, interaction with other users
Ads in Small Newspaper 10X more in print than online
Example of web ad rates for a small daily newspaper chain. Circulation of one of its largest papers, the Dalles Chronicle, is roughly 5,000. Here is Dalles’ print ad rates. The city of Dalles, Oregon has a population of 12,000, according to the 2000 census.
By my calculation, a 124 pixels x 124 pixels ad online for the Dalles paper costs $80/month. If one were to take that same ad size (so 1.72 column inches wide), it would equal $896/month.
Here’s the math: Convert pixels to inches: 72 pixels = 1 inch. 124/72 = 1.72 inches. Convert pixels to column inches: 1 column inch = 1.58 inches. 124 pixels = 1.58 inches x 1.72 inches = 2.71 column inches.
A 124 pixel online ad is equal to 2.71 column inch ad in print.
2.71 column inches x $11 per column inch (print rate) = $29.89/ad = 896.81/30 days of ad.
Of course, the longer one runs an ad, the more of the discount. But, the Dalles newspaper, which according to its numbers has 3 times the number of unique visitors/month than print subscribers, charges 10 times less for an online ad than a print ad.
