Six Pixels of Separation - The Blog
October 25, 2008 5:15 PM

New Media Might Not Be Able To Save The Newspaper Industry

The newspaper industry is in big trouble.

That's the general sentiment you hear when looking at how that industry is performing year over year in terms of revenues. We see more and more newsrooms shutting down. We hear the harrowing tales of how journalists are being let go. There are the woes of advertising revenues shifting from newspapers to other media channels, and let's not forget how heavily leveraged these publishers are due to investments in printers, etc...

Then there are those who think that the newspaper industry must do doing a lot more to embrace new media and the Internet if they want to survive at all.

On Thursday, the Newspaper Association of America issued a press release surrounding a custom analysis developed in conjunction with Nielsen Online for the Newspaper Association of America titled, Newspaper Web Site Audience Increases Sixteen Percent In Third Quarter to 68.3 Million Visitors, but that's not the big news. Here's how Marketing Charts breaks it down:

"Newspaper websites each month attracted, on average, more than 68.3 million unique visitors (41.4% of all internet users), during the third quarter of 2008 - a record number, and a 15.8% increase over the year-earlier quarter... Moreover, newspaper website visitors generated an average of 3.5 billion pageviews per month throughout the quarter - an increase of 25.2% over the 2.8 billion pageviews a year earlier - and the highest level for any quarter since NAA began tracking the data in 2004."

With over 41% of Internet users and over 3.5 billion pageviews per month shouldn't newspapers be reeling in the revenues?

Maybe the ad revenue is not enough? What about selling from the website? Contextual ads like Google AdWords? Affiliate marketing initiatives? cross-channel promotions? Premium content? Something more?

What is going on here?

“Newspapers are continuing to enhance their Web sites with dynamic features, video and other interactive tools that deliver high levels of user engagement,” said Randy Bennett, NAA’s senior vice president of Audience and New Business Development. “The dramatic increase in page views suggests users are visiting newspaper Web sites frequently throughout the day.”

There's no doubt that the upcoming U.S. presidential election is also igniting a lot of this traffic. Just yesterday, I noticed that the number one ranked Blog in Technorati was The Huffington Post (I thought Gizmodo, TechCrunch, Engadget and Boing Boing battled for that position).

Looking at the size of audience newspapers have online, thinking about their revenue streams and listening to the woes of this industry over the past few years, it's hard to understand how things are going to significantly change with new media if they're already having difficulty figuring out how to make money from almost half of all Internet users.

By Mitch Joel


Comments Comments Feed
  • Posted by Carmi
    Mitch Joel

    I still see too many newspapers playing the "look at us, we 'get' the Internet" card and not truly embracing the technology as a fundamental driver of change.

    They still see themselves in the business of selling content to subscribers and selling display ads to advertisers - which is a dangerous set of blinders to wear when online resources have seriously eroded - and continue to erode - both of those revenue streams.

    The eureka moments will continue to elude the business as long as its leaders cling to their spreadsheet-based models of revenues and costs. Up until now, the basic MO has been to slash overhead to manage the business down as revenue plummets. At some point, the product becomes so diluted that even the most ardent consumers abandon it. What then?

    National chains have so gutted their local newsgathering capabilities that the value proposition for such a publication no longer exists. Flagship websites with zero support of such new media basics like RSS feeds and blogs with actual comments only make a bad situation worse.

    I'm probably sounding more cynical than I ought to, but the prospects are dire unless the business transitions from its preserve-yesterday stance to one that eagerly invests in whatever comes next.

    Reply
  • Posted by Radu
    Mitch Joel

    Newspaper embracing new media is still a conflict in paradigm for 2 simple reasons: advertising inventory and the cost of producing content.

    Running a full page ad in a national newspaper is expensive. The inventory is limited and that scarcity creates value that brings up the price of traditional/interruptive advertising. The business model works in a traditional setting, and has worked very well as long as the audience/reach is there to justify the cost nd the number of pages is limited in a paper version. Inventory in online newspaper sites is clearly not as scarce as it’s offline big brother. More trafic means more inventory and the growth in trafic and uniques created much more inventory for ad sales team to sell. Again using the same offline paradygm of scarcity. While the average CPM of ad networks keep dipping, some news sites follow the ad network trend to play the volume/reach game, thus entering a race to the bottom of ad commoditization. So even as growth keep increasing the audience, inventory fails to increase in value. Search advertising and other web-native advertising models countered this effect by putting in place the per-click or per-action model. Integrated content sponsorships to some extent also managed to create a relative scarcity. But as long as the value of inventory is based on the commodity of the impression, theres serious trouble ahead.
    The cost of producing content is masive. Media newsrooms cost a lot by the very nature of timeliness and relevancy of material they create. While the paper model drove the revenue to sustain it, their pixel counter parts have another challenge. These compete with portals and networks that have a much smaller price tag for generating content, think feeds and wires.
    This brings us to a crossroads. Is the CPM model enough in a highly commoditized impression market? Some sites have chosen to play the brand card and commed a much higher CPM. Integrated buys including paper and pixel is another hail-Mary strategy. While these may solve the inventory value solution and facilitate media selling, the elephant in the room is still here. Web-native advertising programs based value around user action. Without user engagement nor scarcity, growth in trafic further reinforces a race to the bottom for CPM. My advice : stick to your brand, name your price and create unique and engaging advertising possibilities. Users can find most news items on an endless list of aggreators and portals and even RSS feeds. Less focus on reach and more focus on user behaviour might be a good place to start.

    Reply
  • Mitch Joel

    Looking at the numbers and comparing it with some numbers that Nielsen pulled for Asia - specifically Malaysia - you notice straight away that the patterns seem to change significantly. Here we're seeing tremendous growth in Internet penetration rates, use of the Internet for news gathering, dissemination and consumption and for other uses as well. However, where it distances itself from the trends in the US is that our traditional media - in multiple languages, including broadcast and radio - are having healthy growth rates in readership, advertising and online. Makes me wonder if we're going to see a different model emerge in Asia as opposed to the US and Europe when it comes to the path that media outlets see in their future ...

    Reply
  • Posted by Malcolm Bastien
    Mitch Joel

    Do you think it has something to do with just how broad of an audience print news papers cater to and how that translates into designing a website and an online visiting experience?

    A site like The Wall Street Journal (http://online.wsj.com/public/us), has just a massive amount of content across so many topics, it's a different reading experience compared to smaller, more topic specific websites. Even a large portal site like MSN (which probably pushes out a equal amount of content to one newspaper) has it's topics sectioned off and themed differently providing a different visiting experience for green, lifestyle or tech readers. Though I can't say if they are actually bringing in good revenue or not.

    So maybe something like "The WSJ online" is just too big of a single site for advertising revenue, but if it were broken down to its parts and themed/targeted towards specific viewing audiences in more of a "WSJ Publishing Network" type of architecture, that would work?

    Reply
  • Posted by Randy Belham
    Mitch Joel

    I think that the most important and the most direct link to revenue is content. Newspâpers that are not investing in their web content are missing the boat. Compare the price of a printer, the people to print and the cost of distribution versus a few high-end powerful servers. The math is easy to calculate. As I mentioned, the key is content. The experience has to be easy for the customer to browse through. The content has to be easily read, meaning colour and font size and font type. It must have fast loading pages to prevent frustration on the reader or they will go elsewhere. I know somepeople still like the feel and smell of a newspaper but as the Tech age is getting faster and more savvy newspapers needed to embrace this medium as the future of their business model.

    For example I often read my news on my cell phone through its browser. I can find the lastest stock quotes, stories and sports scores within seconds.

    When I receive my paper in the morning it seems almost like its old news!

    Reply
  • Posted by Erin
    Mitch Joel

    My haulage company has been heavily involved in the distribution of newspapers for the last 8 years. We are based in Northern Ireland, where, in general, not a massive amount has been spent on the latest gizmo's and technology in the printing processes.

    Our sales have slipped slightly but, despite having a media savvy and technology enabled individuals, people, like to buy and carry a newspaper. From national and regional and localized newspapers, there is a following not only of the older generation but younger individuals who wish to buy and read the articles. Being devils advocate here - but shouldn;t the editors and freelancers write about what people want to read to continue sales??

    Reply
  • Posted by ErikJ
    Mitch Joel

    Good newspapers need to be cut at the knees it is such a hige waste of resources it is frightening

    it is an outdated energy waster that can be solved by not buying it anymore

    Reply
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