Newspapers have never made money from news

“Newspapers could save a lot of money if the primary access to news was via the internet."

That's the opionion of Google's chief economist Hal Varian speaking to a workshop on the changing economics of the newspaper industry. (via Techcrunch)

He continues by saying that

“The fact of the matter is that newspapers have never made much money from news, They make money from “special interest sections on topics such as Automotive, Travel, Home & Garden, Food & Drink,, and so on.” The problem is that on the Web, other niche sites which cater to those categories are a click away, leaving the newspapers with sections which are harder to sell ads against, such as sports, news, and local.

All you need to know about newspaper circulation is that it’s dropping rapidly

Yesterday's ABC's will have been poured over in minute detail to look for trends but I think that Patrick Smith sums them up in one paragraph

All you need to know about newspaper circulation is that it’s dropping rapidly, and the decline shows no sign of slowing. According to the July ABC figures, the UK’s 13 national newspapers collectively saw sales drop 4.1 percent year on year to a daily average of 10.9 million sales (and giveaways)—a loss of 465,895 copies a day compared to July of last year. For the Sunday papers, it’s worse: they suffered a 6.2 percent year-on-year drop to a weekly average of 11.17 million, a drop of 742,719 a week.

Capital Ideas to buy the Observer?

Rumour's abound about the Observer which according to some sources is now about to be sold to investment group Capital Ideas.

Not a particually good idea thinks the Indy's Ian Burrell

Capital Ideas consultant Renwick Haddow has told City AM that its plans would involve cutting down the number of staff and turning the 'Obs' into a weekend review in the style of The Week, a publication that is not known for doing original journalism. What a sad fate that would be for a maverick paper with a fine tradition of investigations, breaking stories and publishing the criticism and analysis of writers as famous as George Orwell, Conor Cruise O'Brien and Clive James.

Fairfax the latest in a long line of write downs

Australia's Fairfax corporation has posted record half year losses.

According to FT.com the group which owns 350 titles down under

After reporting a net loss after tax of A$365m for the period ended December,warned that trading conditions in the opening months of 2009 had weakened.

The losses are a result of the group writing down the values of its titles and incurring restructuring costs in relation to the media downturn as well as a slump in advertising.

Excluding the one off items profits were down 23 per cent

How the New York Times could profit for selling online for $1 a month

Over at Poynter Online, Jim Romenesko is looking at the business model for the New York Times a paper which he describes as

daily miracle of fresh, smart, crucially important content.

which is worth saving beacause

saving it can become a model for saving other quality journalism.

And now he adds

the Times has done so much so well to build its online offerings it's time to turn the dynamics around -- by getting paid for that content, while using the Internet to eliminate the huge costs of producing and delivering it. The Internet should be a publisher's dream, not nightmare.

So here is the model

Charge its 20m unique monthly visitors a $1 a month which would produce $240m in new annual income.

Of course it misses a point that a payroll not matter how samll would probably turn away many of those unique visitors but he gets around this by planning the following

1.To help preserve the Times' search results, the headline and first paragraph of each article will appear online (and on mobile and other electronic devices) for free.

2.All online articles will cost 10 cents each to read in full, with simple, one-step purchases powered by an I-Tunes-like Journalism infrastructure.

Would it work.Well read the full content for a more detailed explaination but I wonder how much a paywall would put the barriers up for the general browser.

Nevertheless an interesting proposition?

Go online says Greenslade to the Indy

I understand that Simon Kelner has already dismissed it but it is worth reading Roy Greenslade in last night's Evening Standard.

The Independent has taken risks in the past. Now, surely, it's time for the paper's owners to make the most revolutionary leap of all. It should stop publishing its newsprint editions and go entirely online

His logic is to build on the sucess of the online operation

Despite INM's initial reluctance to acknowledge the growing potential of internet news outlets and its misguided attempt at first to charge users, The Independent website is not doing too badly at all nowadays. It is certainly growing its audience rapidly, having registered 8,408,910 unique users in September, an increase of 93% compared with the same month last year.

and scrap all the costs associated witgh print bu going exclusively online.The big if aboout this is that online advertisers are unwilling at the moment to pay the rates needed to pay for quality journalism,an argument that Kelner will no doubt continue.

Will a combination of models save the media?

Take a look at Mark Glaser's guide to alternative business models for newspapers.

There won't be however

a "silver bullet," an idea that will catch on as the savior for the newspaper business. Instead, a successful online newspaper will need a mix of many different revenue streams to survive in the digital age.

Instead Mark thinks that a combination of news aggregation,crowd funding,hyper local advertising,niche sites and paid content will be the model to get the news industry back into profitability.

It's the owners not the internet stupid

An interesting comment from Peter Preston in the Observer.

Looking back at a manic week in the US press he concludes that

The central problem isn't the internet (a dampener on profits and spreader of uncertainty, at worst; not the end of everything). The problem is newspaper ownership flawed by misplaced ambition and short-sighted management.

It's a good point.There is plenty of evidence that the management of media enterprises has contributed at least partially to the crisis

According to Peter,

Why is the New York Times having to turn its new home into a crutch? Because it has a $400m debt repayment due next spring, and this is the only way left to meet it. Why are the Denver Post and 53 other MediaNews-owned dailies in such straits? Because their debt is eight times earnings, before tax. Why did Trinity Mirror, Britain's biggest chain, drop out of the FTSE 250 last week? Because its shares have tanked - down to a seventh of recent value.

Regional newspapers must be run locally to survive

After another day of decimation in the regional media with Scottish journalists having to reapply for their jobs on mass,I have to agree with the sentiments of Jeremy Dear general secretary of the National Union of Journalists.

Writing on the Guardian's Organ grinder blog he says that

If regional newspapers are to survive and prosper, they must be locally owned, involved in their communities and more accountable - not run by faceless, remote corporations

and he reminds us that

Times are tough and it's an incredibly difficult advertising environment. Yet, not major local newspaper group currently axing jobs made a loss last year. None expect to do so this year.

Ht-Dave Lee

More bad results

The trail of bad news from the industry continues today with DMTG group reporting profits down and plans to cut costs worldwide by £100m in the face of declining advertising revenues.

Perhaps most worrying in the figures were the results for Northcliffe media,the groups regional arm,which saw profits down 32% and an alarming drop in revenue from advertising particually property classifieds and recruitment.

Let's all blame Johnson Press

Who are getting rather a hit today what with the Scotsman website and now the Grey Cardigan who blames the Trinity Mirror pay freeze on the group

Stand back as the rest of the big regional groups gallop to follow suit. These greedy fools are wrecking our industry and inflicting misery on thousands of loyal employees, and all because Johnston Press - through acquisitions and back-of-house synergies - once hit a profit margin in excess of 35 per cent.
When the time comes to record the demise of this great game, that will be identified as the point that it all went tits up.

Funding the media-the cross subsidization model

The network’s genome carries the “free” nucleotide. As in both freedom and free goods and services. Like it or not, its publicly funded origins (universities and the Pentagon) led to the emergence of widely adopted services such as search engines or Wikipedia. In turn, these have sealed the fate of the paid-for model as the dominant one. Right. I intentionally emphasize dominant. Because like everywhere else, hybrid forms are likely to emerge

That is Frédéric Filloux talking about how to acertain extent the media has shot itself in the foot by making the internet to all intent and purposes free

Consequently the fully paid up model no longer works online unless you are selling specific and specialised information.

However in Filloux's mind there may be exceptions in the form of a cross fertilisation between the paid for and the free

The online magazine Slate came up with an interesting idea: charging people. In fact, a small fraction of them. Introducing another flavor of the hybrid model: a tiny proportion of users paying a fee that will subsidize the vast majority of non-paid ones

and then there is China where

the software industry has been working that way for long: 80% is bootlegged versus 20% generating license fees, but the market is so huge that even a tiny monetized slice is sufficient to insure a sizable revenue stream for software makers

The most savage job cuts so far.

The bad news continues to roll in from the media with the Independent group announcing that 90 jobs are to go.

Independent News and Media says that it will save around £10m as it cuts a quarter of its editorial staff from the Independent and the Independent on Sunday.

Speaking to the FT,Simon Kelner its managing director said that

“If we are to safeguard the future of the papers, there is no other way to do it.”

The paper is estimated to be losing around £10m a year and its last circulation figures suggest that it is struggling more than the other qualities.

The Company employs a total of 430 staff in London

Even profitable groups are making cuts

Yesterday it was the Metro,today it is the Financial Times.

The paper that has seen,in contrast to most other papers growth is making redundancies.Over 60 staff look likely to leave although it will not effect editorial content.Those concerned being advertising sales, finance, IT, conferences and marketing.However the loss of some staff in the editorial library is threatened.

It is not the first media company to make cuts in its library,News International making the same move back in July.

It is a starnge one as the group reported profits growth only last week of 11% and continuing advertising growth.

Metro struggles with its online content

Is it not rather ironic that Metro International announces that it will not breakeven in 2008 and its third quarter results show losses 69% bigger.

And it's all down to its online operations.

Paid content reports that

So strong in print, Metro International seems unable to find a coherent online money-making proposition and so far this year has lost a total €3.97 million (£3.08 million) from its seven websites in Sweden, the Netherlands, Denmark, Hungary, Chile, France and Spain. We now can’t rule out site closures: Metro says it’s “actively engaged in a strategic review of its websites to ensure that the product continues to deliver growth

It's web traffic has seen rises but it is unbale to,in its own words

to exploit the sales opportunities for online at a lower cost”.

As Roy Greenslade points out though,

Karen Wall, assistant managing director of Metro in the UK, focussed on good old print, arguing that the free newspaper model was growing

So a challenge-how to make hyperlocal pay

I thought that this story piece summed up the state of the media industry at the moment.

If you are ultralocal or hyperlocal enough to be interesting to your community you are almost by definition serving an audience niche too small to be funded by advertising

(Ht Charlie Beckett)

And that's the dilemma for the media.Technology has created the platforms,the demand for content is there but nobody is willing to pay for it

As the piece continues

There is a paradox for local news - it can’t support its industrial era costs in a world where interest in news is moving online. But at the same time conventional local news isn’t interesting enough to people because it isn’t local enough. So it faces a lose-lose situation - to cut costs (and still broadcast or print) it has to concentrate production at a regional level and so is less interesting to its audience. Communities lose out as they lose an albeit imperfect voice.

So this is the challenge.How can we make content interesting,relevent to the audience and most importantly profitable?

Don't give up on the media just yet

There is more contemplating of the future of journalism today both in the dead tree business and the super information highway.

Tim Bradshaw,the FT's digital correspondent reports that

A slowdown in online advertising, for years the fastest-growing part of traditional media businesses, is forcing newspaper and magazine owners to experiment with ways to shore up website revenues

But there are some encoraging signs for those that want to innovate to survive

Many are diversifying out of advertising into revenue-sharing partnerships with e-commerce sites, such as travel or dating. But some are also experimenting with techniques and technologies, with increased targeting of advertising to readers widely seen as the best way to raise yields.

The Guardian has recognised the potential of this in their targeting of foreign nationals who log onto its website.

Now he reports

the Independent, The Telegraph, Johnston Press and Bauer UK (which owns consumer magazines such as FHM and Empire) have all enlisted a small company called Adgent 007, which has sales teams in the US, Europe and Asia to explain the advantages of a UK title or site to advertisers and media buyers. Through these local relationships, Adgent claims to improve rates by 10-20 times.

Meanwhile Rachael Gallagher at Press Gazette reports that

The death of traditional media has been exaggerated, according to global leader for entertainment and media practice at PriceWaterhouseCoopers in Hong Kong.
Speaking at the World Association of Newspapers readership conference, Marcel Fenez said that although digital advertising will continue to soar over the next five years it will still only globally represent 10 per cent of total advertising for newspapers by 2012.

Ian Burrel in the Indy looks at another economic model

Having run the London bureau of Newsweek magazine for 12 years, McGuire rejects the apparent consensus among modern news organisations that the public has lost its appetite for in-depth journalism. So while the rest of the world speeds up towards immediate online publication, Stryker wants to slow down the pace and publish every three months, in print. While others offer bite-sized news, he wants 6,000-word articles.

McGuire plans to launch a journal which will

cost £8 per issue and pays writers the (quite unheard of) rate of £1.50 a word. "

This is the argument that has yet to be proved.Are the public willing to pay a premium for quality journalism?

Why 2009 won't be the same as 1999

The Independent this morning picks up on Sly Bailey's comments that the current economic meltdown may lead to another meltdown,that of the internet similar top that which occurred in the first dot.com collapse.

Is he right-well Ian Reeves takes a long hard look at the proposition and adds the comments of Maurice Levy, the chairman and chief executive of Publicis, who says

"Far too many people are building plans based on advertising and they may well be disappointed because there is not enough money for everyone," he said. "It's exactly the same situation as we saw at the end of the 1990s, when everyone thought that because he had a website he'd get the valuation. Now everyone building a Web 2.0 operation believes he will receive the advertising."

Whilst there are signs that an advertising downturn is upon us Reeves is mildly optimistic pointing to signs that

internet advertising spend has been above expectations for the six months to June, despite the downturn. "We're seeing serious consumer demand, and an increasing realisation that online is the most efficient way of satisfying that need

The problem he says is that publishers

don't see much of that cash. And the hopes that online display advertising would close that gap simply don't seem to be materialising. The buzz word is "accountability". If you're a marketer in the current economic climate, it's much easier to show your finance director the precise benefits from your search-based campaign – you can literally count the clicks – than from brand-awareness campaigns.

Indy breaks the £1 barrier

Is this the Independent's final fling at the market for printed media.

It has announced that it will be raising its price to £1.00 for its week day paper and its Saturday price to £1.60.

That makes its 20p dearer than both the Guardian and the Times and 10p more than the Telegraph.

Maybe the paper is trying to take advantage of a number of price moves in the last couple of weeks.Maybe the other qualities will follow suit and break the £1 barrier or maybe it will be the death knell of the print edition of the paper?

Times puts prices up

Guardian media is reporting that the Times is putting up its price from Monday.In line with its competitors in the broadsheet market,it will be selling for 80p.

industry analysts believe, for the first time since the price wars that began in 1993, when Rupert Murdoch dropped its price from 45p to 30p and sent circulation soaring.