I will take issue with the poynter.org headline The one chart that should scare the hell out of print media, for two reasons. First, it’s actually two charts, the second of which is above, from a presentation by KPCB’s Mary Meeker. The two illustrate what appears not to be a blip but a trend in the money end of the news business. The one above extrapolates the advertising revenue.
You may question whether it is reasonable to extrapolate a trend from the greatest economic collapse since the Depression. I would argue yes both because it started before the economic collapse and because of the second chart, comparing where advertising revenue is spent and where consumers spend their time:
Note on the far left: People spend 7 percent of their time with print media, but print gets 25 percent of the advertising revenue. Note on the far right: People spend a combined 36 percent of their time with Internet and mobile media, but those get just 23 percent of the ad revenue. Even if print will be perceived as a better buy (not a bet I would make), at some point those numbers seem likely to come closer to equalizing.
First conclusion: The ad revenue decline of recent years seems likely to continue.
This leads to a point made by Ken Doctor at the Nieman Journalism Lab: Money coming to news organizations from readers (paid circulation/online access) is growing as a percentage of revenue. Partly this is because of declining ad revenue — if you’re total revenue is $100, then $20 is a small percentage, but if your revenue drops to $50 then $20 is pretty big – but it’s also from the growth of various kinds of paywalls. I remain convinced that an all-or-nothing paywall closes a newspaper off from the possibility of luring new customers, but the trend toward metered paywalls seems able to draw in both avid readers and those who wouldn’t pay even for the bigger headlines of the day.
What the combination seems to lead us toward, as Doctor indicates, is a model where many news organizations will be asking for subscriptions more on the basis that NPR stations ask for memberships — not because they have something every day that you want know, but because you want free access because they regularly do. Advertising, in this scenario, becomes an increasingly less important revenue source; readers drive the revenue.
One fear I have read often in the past is that a news model driven by what is popular would gravitate toward the lurid and celebrity gossip, but I don’t think the above situation would do that. The kind of readers drawn by that kind of news would not be the ones who pay for regular access. Those readers would want at least the occasional substantial bit of civic journalism or in-depth news. You might make a living (a la TMZ) if you are at the top level of celebrity gossip, but at the local level that won’t cut it.
But what also seems likely is that the new level of revenue may not support seven-days-a-week newspapers in many markets, as Clay Shirky argued will eventually be the case even with the Washington Post. If that becomes the common model, then would mere daily scarcity of news drive enough people to buy online subscriptions to get news from “newspapers”? After all, in many markets there are TV and radio stations, which already send out news for free, and in many cases there may be small sites such as Homicide Watch (cited by Shirky) that focus on certain high-interest news areas more thoroughly. What then would spur people to pay for access to the mainstream non-TV news site?
Aggregation is part of the equation — if a news organization shows that no matter the source, it will round up all the news in the community, it could gain a loyal local following. But that seems not enough, to me. If less frequency is key, I wonder whether a higher quality of writing in the reduced number of publication days will be a major factor. If that’s the case, then the frequent publishers’ first instinct of holding down news salaries when budgets constrict could be counterproductive.
The keystone of my evidence, besides any manager’s common sense, is from a story by NPR’s “Morning Edition” in early May about new research measuring human performance in groups, which found that a minority of any group typically will account for a majority of the group’s performance. In other words, a few stars get more done at better quality than a larger group of more typical people. That runs counter to my experience of what managers at all levels do in the face of budget pressures, which is to replace departing staffers with someone who costs a lot less and is deemed “good enough.” “Good enough” hires, if you extend the logic of this study, actually cost more in the long run because they are not just a little but a great deal less capable.
There’s a tantalizing hint of this thinking in the memo from Jim Amoss to the Times-Picayune newsroom about changes in New Orleans from the paper’s reduction in days of print:
“Concerning pay in the new companies, I want to dispel some rumors: There could be some salary adjustments, depending on changes in job descriptions. But most people will make what they make today, if not more.”
I will repeat the relevant part: “most people will make what they make today, if not more.” In a world where the competition for eyeballs is not just local, the need for writers who can catch a reader’s attention is heightened, and it would make sense that if you find you have someone who can both produce the daily bits of news needed to keep a news site relevant while also producing stories worthwhile to the remaining partial-week readership, you would pay that person better than someone who could do only one of the two functions.
For that reason, I would reach back all the way to the early 2000s for a piece of advice I heard an executive repeatedly give (mostly in vain) to publishers: You get what you pay for. If you cut the size of your staff but increase the pay of the remaining people, so that your payroll overall is the same, you might be able to attract and retain the people you need. It is guaranteed that if you cut the staff size and hold the line on the pay – or, worse, cut it – you will never have the people you need, and who would want to pay to read your sorry rag at that point?
6/12/12 UPDATE: I’m gaining some hope about the above from an INMA article about the Star-Tribune boosting reader revenue closer to 50 percent:
“We’re asking users to pay more of the freight. But for that strategy to work, we knew we needed to focus on high-quality customers who see value in our products and have low churn. And to get those high-quality customers, we’ve focused on three areas: our core print audience, pricing/retention, and accessibility.”
If you’re going to focus on high-quality customers, you have to have high-quality staff to provide the value needed to hold onto those customers:
“The content we provide isn’t available anywhere else. This is local reporting — business, local sports, city council meetings. You are doing that, and you are relevant. Differentiate yourself from your competitors. Once you do that, you’re going to get people and you’re going to get them to pay.”
But it’s beyond content to a smart strategy on pricing and marketing. Those are not my areas of expertise, but the article’s points sound good to this journalist.
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