Seattle Times executive editor David Boardman has announced that the paper will erect a paywall for non-print subscribers but provided no details. Part of the rationale:
Since The New York Times began charging for full access to its website two years ago, more than 400 daily newspapers across the country — including most in this state — now have digital subscriptions. Full, unrestricted access to their websites is no longer free.
The other part:
The economics of the news business, and of the newspaper industry in particular, have changed dramatically over the past decade. More people than ever are reading our content in print and digital formats, but our primary source of revenue — advertising — is declining locally and nationally and no longer supports our costs to the degree it once did.
I’ve already beaten this horse to death. One of the differences, however, is that the Seattle Times is a family-owned, not Wall Street-owned, news organization.
And we know that online revenue cannot rescue the existing advertising-supported business model. And that subscriptions have, on average, covered only 3 percent of costs.
But the minimal distribution costs (paper, ink and delivery trucks versus Internet connectivity and web servers) did not offset the challenge presented by unbundled content. Advertisers shifted from placing an ad in “the paper” to inserting one on “a story” and the reader, well she more easily skipped all those bits and pieces that posed no interest. But now the advertisers knew she had skipped. John Wanamaker’s adage about advertising was now measurable.
Most newspapers cannot continue to support a daily print edition. The Christian Science Monitor announced in 2008 that it was going weekly in 2009. PC World went print-only in 2009. That’s because in 2000, newsprint accounted for 15-30 percent of operating costs.
News Corp. announced earlier this month that is is splitting its entertainment businesses in two: publishing on one side and movies/TV on the other.
In the publishing division, which includes newspapers such as The Wall Street Journal, the Australian and the Times of London, book publishing and marketing inserts, revenue was roughly flat at $2.1 billion.
Meanwhile, most of the entertainment businesses increased their earnings contributions. The strongest performer was the cable-network programming division, where revenue rose 18% to $2.6 billion. The group, which includes Fox News and FX, reported a 7% increase in operating income to $945 million.
The subscription fees that News Corp. charges pay-TV operators rose 13% in the domestic market, led by the Fox News Channel and regional sports networks. In international markets, subscription fees rose 42%.
Note that News Corp owns the Wall Street Journal – one of the few newspapers with content not widely accessible elsewhere. In other words, even with a monopoly on information and a pay-to-view model, revenue is flat and the parent is kicking the child out of the house. And yet it sees the inevitable.
On the other hand, the most of the information in the Seattle Times can be found elsewhere. From 2009:
Subtract the percentage of news in a local daily newspaper that comes from a wire service. What’s left? Today’s Sunday’s Seattle Times, for example, had two locally-produced news stories in the “A” section (three if you count the front-page photo); three locally-produced stories in the “B” section; one in business; and one in real estate. (I didn’t check sports.) The remainder (excluding opinion and columns) was wire stories. This means that today’s newspaper reader has less and less of reason to buy the local paper: its relevance has dropped off a cliff.
So will there be enough local content — content not available else — to entice more income from subscribers than the paper will lose from advertising?
Only time will tell, but I’m not putting my money on it.
- Online Revenue Cannot Rescue Newspaper Biz Model, February 28, 2011
- MythBusters: Subscriptions Don’t Cover Salaries, March 9, 2010
- Digital Information: Business Models In Flux, January 27, 2010
- Newspaper Consumers Have Never “Paid” For Content, January 4, 2010
- Thinking About “Free”, October 22, 2009
- The Future of Journalism Discussions Need Reality Economics, May 18, 2009
- Follow Up Note On “No More Free Content”, March 15, 2009
- “No More Free Content”, March 8, 2009
- Print Model Shifting, November 20, 2008
- Publishers Experiment With Online Editions, February 10, 2008
- Economics of Scarcity, November 6, 2006