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Vin Crosbie Vin Crosbie
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Dorian Benkoil Dorian Benkoil
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Bob Cauthorn Bob Cauthorn
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Ben Compaine Ben Compaine
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Dorian Benkoil senior consultant at Teeming Media. An award-winning journalist and editor, he was a foreign correspondent for AP and Newsweek, and international and managing editor for ABCNews.com. At ABC News he moved to the business side, handling sales integration and business development, before joining Fairchild Publications as General Manager for their Internet division, becoming editorial director for mediabistro.com, then a consultant for Teeming Media in New York. He graduates this year with an MBA from Baruch's Zicklin school of business. Learn more about him at Benkoil.com or his blog - MediaFlect.com.

Robert Cauthorn is a journalist, former vice president of digital media at the San Francisco Chronicle, and was the third recipient of the Newspaper Association of America's prestigious Digital Pioneer Award. He launched one of the first five newspapers web sites in the world and is generally considered to have delivered the first profitable newspaper web site in 1995. Cauthorn has been in the middle of the transition from old media to new and is recognized as frank-talking critic when he believes newspapers stray for their mission. In mid-2004 he became the president of CityTools, LLC a new media startup based in San Francisco.

Ben Compaine has divided his career between the academic world and private business. He was a journalist when manual typewriters were considered state of the art, but also led the conversion of his college newspaper to cold type. He has started and managed weekly newspapers. His dissertation at Temple University in 1977 was about the changing technologies that were going to unsettle the landscape of the staid and low profit newspaper industry. Since then he has focused his research and consulting on examining the forces and trends at work in the information industries. Among his most well-known works (and the name of his blog) is "Who Owns the Media?".

Vin Crosbie has been called "the Practical Futurist" by Folio, the trade journal of the American magazine industry. Editor & Publisher magazine, the trade journal of the American newspaper industry, devoted the Overview chapter of executive research report Digital Delivery of News: A How-to Guide for Publishers to his work. His speech to the National Association of Broadcasters annual conference was one of 24 orations selected by a team of speech professors for publication in the reference book Representative American Speeches 2004-2005. He has keynoted the Seybold Publishing Strategies conference in 2000; co-chaired and co-moderated last year's annual Beyond the Printed Word the digital publishing conference in Vienna; and regularly speaks at most major online news media conferences. He is currently in residence as adjunct professor of visual and interactive communications and senior consultant on executive education in new media at Syracuse University's S.I. Newhouse School of Public Communications, and meanwhile is managing partner of the media consulting firm of Digital Deliverance LLC in Greenwich, Connecticut.
About this blog
Two forces have shattered the news media. Technology is the first. Although media technology is undergoing its greatest change since the day in 1440 when Johannes Gutenberg first inked type, for more than ten years now the news industry has mistaken new technologies merely as electronic ways to distribute otherwise printed or analog products. Estrangement is the second. The news media has lost touch with people's needs and interests during the past 30 years, as demonstrated by rapidly declining readerships of newspapers and audiences of broadcast news. How we rebuild news media appropriate to the 21st Century from the growing rubble of this industry is the subject of this group weblog.

Rebuilding Media

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August 30, 2007

Survey Data Points to Need for New Thinking for Newspaper Publishers

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Posted by Ben Compaine

A poll conducted in May by Harris Interactive for INNOVATION International Media Consulting indicates that online news and information will supplant television network news as the leading news source over the next five years. But news from television in general (including from cable networks) should continue to be dominant. It also confirmed continued erosion of the role of newspapers, although by my interpretation of the findings newspapers may be in a position to benefit from the ascendency of online news if they can navigate some tricky shoals.

By the numbers

The poll, covering the U.S., Australia, UK, Spain, Germany, France and Italy, asked about media habits today, expectations about media sources in five years (always an “iffy” kind of question) and about attitudes towards newspapers, such as credibility, importance and image. You can see all the results here. I have focused today on just several pieces of data that I think most useful for publishers.

In the U.S., 39% of adults claimed to get most of their news from television, compared to 24% from newspapers and 18% online. By 2012, 37% respondents projected they still would be relying on television, newspapers down to 19% and online news sources up to 26%.

But the poll does not differentiate between online news that is provided by today’s newspaper publishers and that coming from a non-newspaper Web site. Much to its credit, the INNOVATION poll does follow up with this question:

“When most people think about ‘reading a newspaper’ today, do you think that they include the newspaper’s online news and information websites as part of the definition of reading the newspaper?”

Nearly half—49%-- said that they did not consider a newspaper’s online site as within the definition of “the newspaper.” Another 21%-- a large proportion—were unsure.

This finding raises some strategic uncertainty for newspaper publishers and editors. At this point, many consumers still consider the “newspaper” the physical product. So, for example, at the top of its main Web page it may say “The Philadelphia Inquirer” in the familiar Old English script, but it’s not the "newspaper” for these readers. It’s just online news. So should newspapers be focusing on transferring the newspaper’s brand to the online arena?

I don’t know, based on responses to another question that asks simply,

“Do you personally consider online news from a newspaper site to be as credible as the news printed in the newspaper?”

Two thirds of the adults in the U.S. agreed that credibility was equal to the printed paper, only 14% did not (the rest were undecided). However, this finding is undercut by what the same poll found in measuring the credibility adults place on the newspaper in the first place: On a scale of 0 (no credibility) to 100, the median was 57, a rather so-so vote of confidence. (It bested the publishers in the U.K., where newspapers only had a 50 score, but lagged Germany, where they garnered a median of 67).

Responses to another question also should raise a red flag. Given a list of reasons why the respondents might not read newspapers, 55% agreed that they are “Biased or too narrow of a viewpoint” in their reporting. And, consistent with the previous credibility score, 38% said they are “Not viewed as a credible or trustworthy source of news and information”

Implications for strategy

If the credibility of newspapers in the U.S. is so tepid and objectivity so questioned, then might not publishers be better off distancing their online product from their print products? If online news is viewed as a new or different product, should publishers try to present themselves to the pubic with a new brand? Something like what General Motors did with Saturn: Create its own identify, a fresh platform, a different business model. To some degree that has worked for GM and Saturn.

Another approach, also borrowing from the auto industry, is to create a new, perhaps high end product, as Toyota did successfully with Lexus. Instead of creating a Toyota model with more bells and whistles, it created a separately dealer network for a separate brand (sharing some components under the hood only). Might publishers want to keep their current print and online brands for the mass audience but establish new brands with distinctly new content and a different business model for the high (or low) end?

I’m not necessarily advocating for either one. But looking at this empirical data suggests that there there is a need for fresh thinking, for opportunities to be tested—and perhaps some swamps to be avoided.

[Full disclosure: I have occassionally been a consultant for INNOVATION.]

Comments (2) + TrackBacks (0) | Category: Newspapers | Online | media industry

August 15, 2007

Looking back: Communications industry spending outpaces GDP growth. Looking ahead: Internet advertising poised to overtake newspaper ad revenue

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Posted by Ben Compaine

There have been a number of developments and announcements in recent weeks, which, individually, amount to little more than the now-normal background noise of the media business. But seen collectively, they add further arrows to the growing quiver of ammunition that the media landscape is continuing to sift beneath our feet.

For today, I want to highlight the data and analysis published last week by the media-centric private equity firm, Veronis, Suhlis & Stevenson (VSS) in its latest Communications Industry Forecast, covering through 2011. This has nuggets which, if accurate (this is a forecast) would bring to higher resolution the winners and losers in the media arena. For example, total spending on all communications grew substantially faster than GDP between 2001 and 2006. Furthermore, VSS predicts that communications industry spending will continue to grow faster than the overall economy through 2011, making it the third growing sector of the economy.

That’s some good news. On the other hand, the report finds that, for the first time since 1997, consumers spent less time with media in total last year than in the previous year. VSS believes this decrease, though small in percentage terms, is due to changing consumer behaviors and digital media efficiencies. “The drop in consumer media usage was driven by the continued migration of consumers to digital alternatives for news, information and entertainment, which require less time investment than their traditional media counterparts.” It continues: “Consumers typically watch broadcast or cable television at least 30 minutes per session while they spend as little as five to seven minutes viewing consumer-generated video clips online.”

VSS does not see this decrease as part of a long term trend, expecting consumer media usage to stabilize in 2007 and increase slightly through 2011. However, this would be driven by time spent with out-of-home media and videogames as the only major segments to achieve accelerating growth in this timeframe. Overall consumer time spent with media is forecast to increase at a compound rate of 0.5% from 2006 to 2011, down substantially to the 0.8% in the previous five-year period.

The real headline, however, is this prognostication: “In what would be a watershed moment in communications history, VSS predicts that Internet advertising – including pure-play websites and digital extensions of traditional media – will replace newspapers as the largest ad medium in 2011.”

I assume they mean that advertising in printed newspapers will be supplanted by advertising online—which includes the advertising that newspaper publishers generate from their online sites. Still it would be another stake in the heart of what once the biggest rooster in the barnyard.

But here’s another bombshell: “In addition to shifting their attention to alternative media, consumers are also migrating away from advertising-supported media, such as broadcast TV and newspapers, to consumer-supported platforms, such as cable TV and videogames.” Time spent with consumer-supported media grew at a compound rate of 19.8% from 2001 to 2006, while time spent with ad-supported media declined 6.3% in the period. This is not a measure of revenue but of consumer time spent. But with all the buzz about everyone moving to totally ad supported models (see Rebuilding Media’s latest foray into this space), this finding more than suggests that consumers are willing to part with their discretionary income for the right content or platform.

Another data point is found in a piece by Bobby White in The Wall Street Journal (sub. required). "Across the cable TV industry," writes White, "… independent channels are also turning away from TV to the Internet." Black Family History, The Lime Channel, The Employment and Career Channel, Horror Channel and HorseTV are among those that pulled the plug on their cable affiliation in favor a going Internet only.

“The shift illustrates how the Internet is offering a second chance to certain segments of old media. Web-based TV is now becoming a more viable business route, and Internet video is exploding. Running an online-only video channel, which doesn't require expensive cameras and broadcasting gear, is cheaper than operating a cable TV channel. While starting a new cable channel today takes an initial investment of $100 million to $200 million, a broadband channel needs just $5 million to $10 million to get going, says Boston-based research firm Broadband Directions.”

It’s a constant challenge when in the midst of change to separate trends from simple data points. One needs a series of data points over time that show direction. The Journal article may well be a data point that fits into the trends the VSS study provides. It seems though that enough data points are aggregating to confirm some direction with far reaching strategic implications for and broad array of players in the media industry.

Comments (2) + TrackBacks (0) | Category: Convergence | Internet | Newspapers | Online | Revenue models | Television | media industry

August 10, 2007

How Pogue Does Video

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Posted by Dorian Benkoil

New York Times tech writer/videographer/blogger and general wise guy man David Pogue has created an avid following for his tech videos on NYTimes.com. It's not uncommon to hear someone at a conference or gathering ask if you've seen the latest one – whether a goofy review of the iPhone, some rant done around his town at his Connecticut home, or other ways of amusingly imparting his judgments about what's good and not so about the latest devices, doo-dads, and services. And, as he notes in the interview below, he's landed a show on the Discovery Channel.

His videos, by Internet standards, are pretty high quality – crisply shot, nicely edited, easy and clear to view and understand. And that has little to do with technology. He uses a Mac and an "old" Sony camera and just recently got an intern to help. He also puts in many hours, creatively conceives and crafts his pieces, and lets his personality show.

And therein lies a lesson. A lot of people (me included sometimes) spend time fretting about what technology to use and how to assemble the bits and pieces and get creative to garner an audience. Of course, being on NYTimes.com doesn't hurt. But what makes the videos work is the effort Pogue puts in. While the technology enables that, makes it so one guy can do it all, it isn't what made the videos successful. Pogue just does it. Here's the interview, done via e-mail, with minor editing.

How did you go from being a print guy to a video guy? Did you always want such an outlet?

Nope. I always thought I'd be a Broadway composer. From the time I was a teenager, I was playing piano and writing songs. I went to Yale, was a music major, wrote a musical per year. Then I went to New York and worked on Broadway for about ten years as an arranger/conductor!

The transition to tech was slow and sneaky. I bought a Mac in 1985 to run sheet-music software on. For years, I wrote about software and gave personal computer lessons while doing Broadway at night.... Finally, the balance sort of tipped, and I found my teaching skills in more demand than my musical ones!

Of course, the Pogue-trackers have noticed that my musical career has lately been sneaking back into my tech career (see my iPhone "musical" on YouTube,for example)...

How did you arrive at the persona? What made you feel you had the freedom to> let it out like that? (NYTimes is generally thought of as a "serious" place?)

The persona!? That's no persona-- that's the way I am!

I don't know -- I've always just been sort of a goofy guy who likes to be the class clown. I don't think the Times ever had a problem with it. They've never, EVER suggested that I tone it down. The humor is part of why the Times hired me to begin with --and that's also why I love the Times!

The Times reporters aren't a very funny bunch when it comes to news reporting. But you can find some really funny writers in opinion columns and reviews!

How do you get such high production values? Do you have a videographer, producer, editor? Who does all the work we don't see (lighting, shooting,> editing, etc.?)

HAH!! You call those high production values!? You're kiddin' me, right?

There are NO production values!

I just shoot with an old Sony camcorder, and dump it into iMovie for editing. (I'm trying to learn Final Cut Pro.) When I need to film myself, I stick the camcorder on a tripod. I also have a video light for use when I'm shooting at night.

This summer, I have a 17-year-old intern who operates the camcorder, which makes the whole thing go a lot faster. Ordinarily, though, I just do the whole thing myself.

How long does it take to produce each video? What's the process you go through?

It usually takes 5 to 10 hours. Maybe 45 minutes to film (if I've done the preparation, like plotting out the shots) and the rest to edit and compile.

The Times has a wonderful stock-music library they've made available to me, and that's where I get the background music.

I really wish the videos didn't take so long. I'm actually trying to make them a little simpler these days...

How has appearing on video changed your professional life?

Well, I've been very surprised. To me, they're not really a big deal—nobody even noticed them the first couple of years--but now they've won awards, they occasionally rise to the top 10 on YouTube, and they have a HUGE following of fans (plus the vindictive hatred of a few humorless bloggers!).

They also led to my Discovery TV series, "It's All Geek to Me," which just finished airing, as well as to some other TV opportunities that are coming up.

And, finally: Do you spend most of your time at home? Your videos look suspiciously suburban so much of the time.

Correctamundo! The videos are almost entirely shot at home, or around town here in Connecticut. :)

Thanks for your interest!

Comments (0) + TrackBacks (0) | Category: Newspapers

August 6, 2007

The Wall Street Journal, Free and Strategy

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Posted by Dorian Benkoil

There's been some good discussion of whether the Wall Street Journal should go free since the original post here. I have to admit I was thinking tactically, rather than long-term strategically, and may have been in the mindset of the old Journal, not the new Murdoch. WSJ publisher Gordon Crovitz said there'll be a mixed model -- so for now it's a moot question. I can see how longer term it can make sense for the Journal to go free -- IF they are willing to bear the cost for a few years; bearing costs for years is something Murdoch has shown himself willing to do in New York, Boston, London, Australia and elsewhere.

First, here are some clarifications of the original post:

1. Subscription revenue is damn hard to come by on the Internet and getting a million paid subs at $79 each for nothing but content is an incredible feat. That's tough to give up for any company. I've been asked to analyze that in the past, and it's the classic difficult position for a business. Will you forego, say, three-five years of revenue -- bust up your own successful business -- to make more revenue farther out. Are you willing to eat your own lunch? Sometimes it's wise, but it's tough to try -- even if you are thinking big. ... but thinking big is something Murdoch does, and can afford to do.
2. Subscription revenue can be better income than ad revenue. It's more reliable through economic downturns, the cash comes earlier and revenue is realized as cash at a higher percentage than for ads (which can be canceled at almost a moment's notice and can be difficult to collect on). Subscriptions can be lower cost maintenance than advertising (which comes with client handling, managing multiple creatives, serving costs, and so on). Yes, there's churn. But once you get a subscriber, they have a "lifetime value," of whatever revenue you'll make from them. Replacing subscription dollars with ad dollars is not a 1-to-1 replacement.
3. I purposely did not include Marketwatch, video and other items that are already free on the WSJ site because those things are already free and have advertising, and I'm not sure making WSJ.com free will raise those other boats significantly. OK, with a big and strong strategic push that really integrates them all, and uses the force of Dow Jones I could see it. But it'll take time
4. The assumptions I made were just that. Assumptions. As Henry Blodget points out, you can make different assumptions and come up with different numbers. My numbers were educated guesses based on what I know of the market, and I took Murdoch's words at face value. To really assess the situation would require an actual look at the WSJ books and experience, and maybe some experimenting. I assume that Lehman Bros. have better numbers than I do. They estimated $115 million overall revenue for WSJ.com. I said $137 million. I also had subscriptions at 58% of the revenue, while they put ads on top at 54%. Either way, we're making assumptions.

Jeff Jarvis suggests not only going free but also having the Journal prepare to leave the print realm, other than some sort of specialized, analytical product. Certainly, the Journal audience is the kind of high-income adopters that will be a good test case for giving the content on every device imaginable. And if you're going to go free, distributed content to every device imaginable (all ad-supported, of course, with various upsells) is certainly the way. As one competing example, Forbes launched widgets this summer -- they've even managed to line up Visa as a sponsor, and the ad is served, which means it's also tracked and can be swapped in and out. (The company that made the widget for Forbes even claims the ads can be different sizes).

In other words: Sure, by all means, go free. Think big. Watch it grow over time. Grab mainstream news readers from the NYTimes and elsewhere. It's a difficult, but do-able formula. News is commoditized. But financial may give the Journal that extra "oomph" even as a free product to charge a higher than usual ad rate. If the Journal goes free, it should be done in a considered, coordinated way, using the distributed media Jarvis suggests, stronger linkage with Marketwatch, increased use of video, multimedia and social aspects, and improved personal finance capabilities (here's an idea: open it up to widgetizing, just like Facebook, and give prices for the best financial widgets or other gizmos, apps, etc.). Would the journal consider taking the even bolder step Jarvis suggests and I concur with of opening up its API to developers, for all kinds of mashups, further data, and what not? Not likely near term, but that would be big.

Comments (3) + TrackBacks (0) | Category: Newspapers

August 1, 2007

The Press Will Be Outsourced Before Stopped

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Posted by Vin Crosbie

Dorian Benkoil last month e-mailed me asking what I thought about Business Week columnist Jon Fine's recent article, When Do You Stop The Presses?.

In the column, Fine ponders which major American newspaper will be the first to stop publishing a print edition and publish online only. He speculates that it will be the San Francisco Chronicle, which has reportedly lost $330 million this decade, approximately $1 million per week. Fine wonders if how the Chronicle should consider stopping its presses and start delivering news only online.

On the surface, that sounds like a good idea. The Chronicle's print edition is losing money. It has a large potential online-only audience in San Francisco. And if the Chronicle stops using its presses, it will no longer have to bear the costs of purchasing, printing, and distributing paper edition, costs that probably total 50 to 60 percent of the Chronicle's expenses.

But before roaring off with this idea, check under its hood to make sure it has an engine. I don't know what percentage of the Chronicle's revenues its website produces, but my guess is 5 to 10 percent. The printed product generates the rest. So, if the Chronicle were to stop printing paper, it would reduce its expenses to only 40 to 50 percent of their prior level, but the will have also removed 90 to 95 percent of its em>Chronicle's revenues. So, it's rather obvious that the Chronicle would be in a much, much worse predicament than it is now if it were to stop its presses permanently and publish online only. A not-so-fine idea.

But what really troubles me about Fine's speculation—and for that matter most newspapers' attempts to shovel their printed content onto their websites— are two two unconscious and linked presumptions that I think underlie such ideas: (1) That there is nothing inherently wrong with the Chronicle's product (i.e., its package of journalism and advertisements) except (2) that it should be delivered online rather than on paper because more and more people are getting their information online.

A lot of publishers suffer from these presumptions. They see less and less people reading printed publications, more and more of those people reading things online, and believe that all they need to do is shovel their printed editions over to online (and add video and audio) to reverse their newspapers' declines in readership.

These presumptions ignore the fact that newspaper readerships have been declining for more than 30 years and that approximately half of those declines occured before the Internet was opened to the public or the public had any online access. Shouldn't that give publishers a hint that the major cause of their readerships' declines isn't the Internet or their content not being online?

And is adding video and audio to that content (so-called 'multimedia') going to reverse those declines? Consider that television station's news viewerships have been declining for more than 20 years and that radio station's news listenerships have been declining for even longer. Do you think that if radio or television stations add newspaper-like texts to their own websites that this will reverse the declines in their viewerships or listenerships? So, why do publishers think that newspapers adding video and audio to their own texts online will reverse newspapers' declines in readerships? Adding together two or more declining media do not an ascending new-media make.

The real problem, Mr. Newspaperman, isn't that your content isn't online or isn't online with multimedia. It's your content. Specifically, it's what you report, which stories you publish, and how you publish them to people, who, by the way, have very different individual interests. The problem is the content you're giving them, stupid; not the platform its on. But I digress.

Back to Fine's column. If the San Francisco Chronicle, despite losing money, cannot afford to stop its presses and go online only, what it is likely to do?. I think that daily newspaper presses will be outsourced before being stopped.

I think the Chronicle will try to do what another troubled newspaper is considering. Boston Herald owner and Publisher Patrick Purcell has been talking about outsourcing his newspaper's printing. Dow Jones & Company has a printing plant with spare capacity 80 miles outside of Boston, a plant that prints the regional edition of The Wall Street Journal. This plant in.Chicopee, Massachusetts, is far more efficient than the Herald's antiquated presses. Purcell is calculating whether eliminating his own presses, pressmen, ink, and paper costs would save him money against whatever markup on those costs that Dow Jones would charge him.

Two footnotes:

First, we frequently see much larger dollar amounts printed in the business sections of newspapers ('Murdoch Buys Dow Jones for $5 billion', etc.), making us somewhat inurred to smaller financial figures such as $330 million or $1 million per week. However, the San Francisco Chronicle's latest weekday circulation figure is 386,564, so if that newspaper has lost $330 million during the past six years, it's lost approximately $853.67 per reader during that time or $142.28 per reader per year! Now does its amount of loss impress you? It does me. The Chronicle would lose less money if it just bought each reader a fine meal each year at San Francisco's best restaurant instead of delivering a newspaper each day.

Second, earlier this week I posted on my own company's blog some reasons why I've not been blogging here or there lately. I apologize for my absence.

[Update: when I wrote this post a few days ago, I didn't (and I suspect Fine didn't either) that the Chronicle has already signed an agreement to outsource its production to a third-party printer. A tip of my hat to Alan Mutter's blog. The outsourcing deal will cost the jobs of 230 unionized press operators when the new plant opens in 2009. When this outsourcing contract was signed, I wonder how large a newspaper the Chronicle's executives thought they'd be producing in 2009?]

Comments (12) + TrackBacks (1) | Category: Convergence | Newspapers

If the Wall Street Journal Were Free

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Posted by Dorian Benkoil

NOTE An update to this post is here.

= = = = = = = = = = = = = = = =

In the last paragraph of one of the many stories in today's Wall Street Journal about the purchase of parent Dow Jones, Rupert Murdoch is quoted as saying if the paper went completely free it would be a "wash" financially. It would certainly be a huge step to go free (and one I'd be perfectly happy with, paying as I now do.) Let's explore whether Murdoch's assertion is really likely to be true.

First a few assumptions:

- The soon-to-be 1 million paid subscribers referred to in another piece in WSJ are paying full price, $79. - There are seven million unique visitors and 90 million monthly pageviews, as WSJ claims. (That's almost 13 pageviews per unique.) - The two display ads per page (large rectangle, narrow skyscraper) run at an average CPMs of $35 and $20 (reasonably possible rates for a targeted, subscription audience in a financial/business publication). The performance based ads at the bottom are together worth an effective CPM of $12. (I know that may be high, but there are a lot of them, and it's the Journal.) - 80% sellout on average in all ad spots (some spots will be without paid ads in some instances, there has to be some room for ad serving and so on). - Each pageview is equally valuable.

So, we've got, yearly:

- 1 million subscribers * $79 = $79 million from subscription

- 90,000,000/1000*.8 * (35 + 20 + 12) = $4.8 million monthly in advertising * 12 = $58 million in ads

Grand total: $137 million revenue from subscription and ads.

Murdoch predicts in the piece that a free site would have 10 times as many visitors and five times as much advertising. But the number of pageviews per unique would drop significantly, because a lot of the traffic – especially new traffic – would be inbound single hits or quick dips from blogs, search engines and so on. The ad rates would also drop because advertisers could not be convinced they were buying as exclusive a subscription audience. Let's take Murdoch's assertions as true and assume:

- Pageviews per unique will drop to a more normal news industry standard of 4 per unique. (We'll also assume that by "visitors" Murdoch means "uniques".) - Ad rates will drop to 60% of their previous levels - A lower level of sellout on pages (as Murdoch acknowledges in saying ads won't go up as much as visitors will).

So we have:

- 70 million unique visitors at 4 pageviews per = 280 million pageviews per month. - Five times as many ads and 60 percent sellout.

Which in my estimation comes out to a total of about $67.5 million.

At 80 percent sellout it's $90 million. Even at the same number of advertisers, that's still only $108 million.

Now, maybe to Murdoch the difference between $137 million and $108 million is so small as to be pocket change and therefore "a wash." Or maybe my assumptions or math are way off (if you want a spreadsheet with my calculations, just ask and I'll send it.) But that's still a lot of newsroom jobs for that extra $29 million, or more under the poorer ad scenario

Plus, subscriptions are pre-revenue, cash collected up front that can then be spent over time. They're great for cashflow and provide a "float." Ads on the other hand are typically paid months after they're billed, and can be a real problem for cashflow. Subscriptions also tend to be more stable in down times than advertising, which can be canceled with little notice. Subscriptions are a more stable business and take less overhead to maintain.

I don't see that making a successful subscription product like the Journal free makes economic sense. Tell me what's wrong with my thinking.

Comments (11) + TrackBacks (0) | Category: Newspapers