Guardian column: The LA Times’ day arrives

My Guardian column this week is a condensation of some of the discussion here about the LA Times’ online revenue equalling the paper’s total editorial payroll and what that could mean for the digital future of news:

So in the LA Times revelation, I see hope: the possibility that online revenue could support digital journalism for a city. The enterprise will be smaller, but it could well be more profitable than its print forebears today and – here’s the real news – it would grow from there. Imagine that: news as a growth industry again.

  • http://mountainx.com Jeff Fobes

    A little off topic, but in the search for sustainable online ad revenue, sponsorships & low-key text boxes (like Google ad sense) seem more in sync with online users’ info-gathering dynamics than do display ads/banners. Do you know of links to good thinking on this?

  • http://sellingprint.blogspot.com Michael Josefowicz

    Jeff-
    There is a line in the column that I think could use some clarification, “Online advertising is often sold in packages with print”. Based on other discussions I’ve had about Print and web, every time I’ve dug a little deeper it turns out that the Print brings in the money, the web builds the audience and the conversation with the audience.

    In your column you say, “(though if and when print disappears, marketers will have little choice but to shift to digital).” I’m not sure that’s correct. These days, unlike the old days, marketers have many choices. And will probably have a lot more going forward.

    If I understand the column correctly, I’m not convinced that the facts support the conclusions you draw. No doubt web revenues will supply a revenue stream, in the cases where fixed costs are very low, it might support the staff. But in my opinion, the new significant revenue streams for newspapers will come with innovations in Print products, that people will willingly buy, not CPMs from web advertising.

    • http://www.buzzmachine.com Jeff Jarvis

      Michael,
      I’m seeing cases in print (especially some magazines) where print is now the value-added to online.
      We won’t know what will happen to the market until one paper goes through this shift, but it will happen.
      I am confident that some amount of print advertising will migrate to online when a paper dies. Some will disappear.
      But I also firmly believe that the real victory will come with a new population of advertisers who never could afford newspapers because they were too big (and inefficient).
      Sadly, Google is way ahead on that score. At the NY Times Bits Blog reported last week, Google now has more than 1 million advertisers. Those are in great measure that new population. Newspapers lost their chance with many of them.
      I’m not making a hard conclusion but showing a direction: something is now conceivable.

      • http://www.adcentercommunity.com Chris Norred

        Jeff, this “new population of advertisers” is interesting. What do you base that on? It does seem that advertisers will need to aggregate fragmented audiences, which makes business bright for lots of small publishers. The idea of long-tail advertisers supporting long-tail publishers is likewise appealing, though I haven’t read much about a changing mix of advertisers?

  • http://civilities.net Jon Garfunkel

    Jeff,

    I’m not sure if you noticed, but Scripps has been doing this with the Cincinatti Post.

    re: “And news organisations carry costs besides payroll, such as rent…”

    The Inland Press Association — I’d be surprised if you’ve never mentioned them has the data on data on cost & revenue across the industry. I figure if anyone could get access to that data and share its summary that would be you. I did find a reference to it from Phil Meyer’s The Vanishing Newspaper. Yes, editorial is ~15% of the cost, but newsprint/production/circulation is only 41%. The rest is advertising costs (the sales staff) and administration/depreciation (e.g., Renzo Piano edifice, and travel/communication expenses).

    This 45% wouldn’t necessarily disappear in the online era. I suppose it would be interesting to see what these numbers are today, but then again, I suppose anybody’s whose business is to know these numbers already knows them.

  • http://mountainx.com Jeff Fobes

    1) Newspapers do bundle (and inflate) their seeming online revs (c.f. Josefowitz comment). LA Times may be case in point.
    2) Consider Google’s million advertisers (c.f. Jarvis comment) as crowd-sourced collaboration, with decentralized, self-organizing wisdom of the hive assisting the process. Compare this “new” advertising to new journalism/media.
    3) When advertisers collaborate with sales transaction (a la Google), it lowers the high cost of administering sales (c.f. Garfunkel’s “the rest is advertising costs”).
    4) Collaborative ad culture/values seem to fit a network; combative values better serve hierarchical structures.

  • http://sellingprint.blogspot.com Michael Josefowicz

    Jeff,

    Google worked because it made the ad purchase easy and measurable. The delivery method was less important. The idea that one could measure the effectiveness of an ad was the true revolutionary business model.

    My take is that the “new population of advertisers who never could afford newspapers because they were too big (and inefficient)” will mostly move to versioned newsPapers delivered in Print.

    It’s going to turn out that for local advertisers the Print ad is the perceived value. The web ad is a nice to have. But since the marginal cost of the web ad is zero, anything that is earned goes straight to the bottom line.

  • http://www.henrykkowalczyk.com Hneryk A Kowalczyk

    Not being an industry insider, maybe I do not see the obvious. Or, maybe it is other way around. How much should I pay for my Chicago Tribune, or LA Times, if there would be no advertising at all?

    Henryk A. Kowalczyk

    PS. Please check my text about the Chicago Tribune bankruptcy, http://www.huffingtonpost.com/henryk-a-kowalczyk/the-perfect-test-that-the_b_153554.html

  • Reg

    Hneryk,

    The short answer is that advertising accounts for about 80+% of revenues at US papers (less in Europe). So if there was no advertising, there would be a big hole to fill – assuming you wanted to keep margins. If you were looking just to break even, it would still be a big hole, but not as big.

    • http://www.henrykkowalczyk.com Henryk A. Kowalczyk

      As a subscriber (of the Chicago Tribune), now I pay about 50 cents per copy. If this is 20% of the cost of delivering the paper to me, it means that delivering the paper to me as it is now, cost about $2.50 per copy. If I recall it correctly from my memory, the cost of printing and paper is in the range of 60%, i.e. $1.50 per copy. Now, at least half of the space is taken by advertising. If we would drop it off, the cost of delivering the paper to me would be around $1.75.

      I used to buy a coffee for 50 cents, and then Starbucks arrived. I used to pay for gas $1 per gallon as well.

      The difference is that, 50 cents per copy, it is almost free. I do not expect much, they do not deliver much either. If the price would go to $1.75, I would expect something for this kind of money. They have no idea what it would be.