Google Ad Sales Double All U.S. Newspapers COMBINED

That’s the most stunning statement in a Brookings Essay “The Bad News about the News” by Robert G. Kaiser, who worked for a half-century as a writer and editor at The Washington Post. He outlines the fundamental problem of the challenge digital presents to “legacy” media:

Overall the economic devastation would be difficult to exaggerate. One statistic conveys its dimensions: the advertising revenue of all America’s newspapers fell from $63.5 billion in 2000 to about $23 billion in 2013, and is still falling. Traditional news organizations’ financial well-being depended on the willingness of advertisers to pay to reach the mass audiences they attracted. Advertisers were happy to pay because no other advertising medium was as effective. But in the digital era, which has made it relatively simple to target advertising in very specific ways, a big metropolitan or national newspaper has much less appeal. Internet companies like Google and Facebook are able to sort audiences by the most specific criteria, and thus to offer advertisers the possibility of spending their money only on ads they know will reach only people interested in what they are selling. So Google, the master of targeted advertising, can provide a retailer selling sheets and towels an audience existing exclusively of people who have gone online in the last month to shop for sheets and towels. This explains why even as newspaper revenues have plummeted, the ad revenue of Google has leapt upward year after year—from $70 million in 2001 to an astonishing $50.6billion in 2013. That is more than two times the combined advertising revenue of every newspaper in America last year. (Emphasis added.)

Some other interesting nuggets:

  • “Twenty years ago classifieds provided more than a third of the revenue of The Washington Post. Craigslist has destroyed that business for the Post and every major paper in the country.”
  • “Newspapers employed 59,000 journalists in 1989, and 36,000 in 2012 (and fewer since then).”

Kaiser’s essay does a good job of outlining the challenges faced by the big media, which is probably its most significant contribution. It’s short on solutions, but then again, that’s the real issue for the established media: if answers were apparent, the financial situation for newspapers would not have deteriorated to the extent he describes.

It’s not exactly cheery reading, but it’s at least a little less depressing than the latest news about Ebola and ISIS. Read the whole essay.

It’s also interesting for me to read this, because much of my early blogging was about trends in media, given my background in media relations. Here are a few related posts over the years:

Or you can browse through all of the related posts here.

Beyond Hyphenation

As enrollment in rural schools declines, smaller communities have been left with no viable alternative but to consolidate their schools with neighboring towns.

Typically this leads to a lot of hyphenated names for the resulting school districts, such as (in our part of Minnesota) Zumbrota-Mazeppa, Elgin-Millville, Dover-Eyota and the like. Sometimes the district comes up with a whole new name for the school, as when Rose Creek, Adams and Elkton combined to become Southland.

I believe my wife Lisa’s home district set the hyphenation record when New Richland-Hartland combined with Ellendale-Geneva to become…you guessed it…New Richland-Hartland-Ellendale-Geneva, which the sportscasters abbreviate as NRHEG. Sometimes they’ll pronounce each letter, but if they’re in a hurry they just say NURR-heg.

A similar phenomenon has happened over the last half-century in the newspaper business, as competing newspapers in a community combined because neither could sustain themselves economically. So in Minnesota’s largest city the Minneapolis Star and the Minneapolis Tribune, which I remember as separate papers in the 1980s, became the Minneapolis Star Tribune. Likewise in Milwaukee the Journal and the Sentinel became the Journal Sentinel in 1995.

Hyphenated or not, you can probably think of several combo newspapers like this (e.g. Seattle Post-Intelligencer) – feel free to chime in with your examples in the comments.

But what happens when even the combined papers can’t make it? When even hyphenation can’t make the business model work?

We’re seeing that this week with the announcement that the Times-Picayune of New Orleans will be ceasing daily publication in the fall, moving to three days per week: Wednesday, Friday and Saturday.

If a metropolitan area of 1.2 million people can’t support a daily print newspaper, that’s a significant milestone in the decline of the traditional newspaper business model. Employee layoffs are coming there, too, which is the continuation of a trend being tracked at Paper Cuts.

As Seth Godin and others have said, newspapers aren’t primarily selling news to subscribers; they’re attracting subscribers and renting their attention to advertisers. The new publishing schedule of the Times-Picayune makes this explicit, as Wednesday is the traditional day for advertising inserts.

With so many choices for consumers in how they will get their news and entertainment, the mainstream media oligopoly is much less profitable than it was a generation ago. Those traditional media players have some built-in advantages. but the barriers to entry that formerly protected them (FCC licenses and the huge amounts of capital needed to buy transmitters or printing presses) are now practically non-existent.

That’s why I have often said:

Don’t just pitch the media. Be the media.

Do pitch the media. Work with the existing outlets as a resource and help them serve their audiences.

But be the media too. If you have a story to tell, you can do it through a blog. And you aren’t just limited to text: you can embed video, audio, slide presentations, photos and other resources. It costs you literally nothing to start.

Have you taken the blogging plunge? If not, why not?

 

Bankrupt Star Tribune

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Last night, the Star Tribune of Minneapolis, Minn. reported on its Web site that it was filing for bankruptcy:

The filing, which was made with the U.S. Bankruptcy Court in the southern district of New York, had been expected for months. It follows several missed payments to the paper’s lenders, and it comes less than two years after a private equity group, New York-based Avista Capital Partners, bought the paper for $530 million.

In its filing, the newspaper listed assets of $493.2 million and liabilities of $661.1 million.

Like most newspapers, the Star Tribune has experienced a sharp decline in print advertising. Its earnings before interest, taxes and debt payments were about $26 million in 2008, down from about $59 million in 2007 and $115 million in 2004.

I’ve written several times previously about the immense economic challenges facing traditional media, especially newspapers. The Star Tribune case is of particular interest to me as a life-long Minnesota resident. McClatchy bought the paper for $1.2 billion in 1998 and sold it two years ago for $530 million. So the current economic climate has something to do with the bankruptcy filing, but the economic decline for mainstream media isn’t of recent origin.  Other newspaper companies, include Chicago’s Tribune Company, also have filed for bankruptcy.

I think there will always be a Star Tribune in some form, but clearly we’ll be seeing major changes as it tries to find a way to operate profitably.

All the more reason for anyone involved in communications to devote time to learning about social media. A couple of decades ago you could reach a mass “audience” through just a few big media hits, whether via PR or advertising. No more. The so-called “audience” has dispersed to millions of alternatives, mainly on the Web, and its members don’t just want to passively consume. We want to interact.

Newspapers are going to need to take this into account as they go through their Chapter 11 experiences. Many if not most have offered interaction and the ability to comment on their Web sites for quite some time, so simple interactivity isn’t going to be enough. To survive and thrive, I think they’re going to need to find ways to make their communities contributors instead of just commenters on what the “professionals” produce.
What do you think? Can newspapers survive? How do they need to change?

New York Times: “Junk” or Barely Above

This is an assessment of its creditworthiness, not the trustworthiness of its political campaign coverage, but note this report:

The New York Times Co. reported a steep drop in third-quarter profits on Thursday, the latest gloomy earnings report in an industry battered by online competition and falling print advertising revenue.
The New York Times Co. said net profit fell by 51.4 percent in the third quarter to 6.5 million dollars, or five cents per share, from 13.4 million dollars, or nine cents per share, in the same period a year ago.

The company, which owns About.com, The Boston Globe, International Herald Tribune and 16 other daily newspapers besides the flagship The New York Times, said overall advertising revenue fell by 14.4 percent during the quarter.

Shortly after the release of its results, Standard & Poors said it was lowering the Times’s credit rating to “BB-,” or junk status, while Moody’s Investors Service said it was placing it on review for possible downgrade.

Moody’s changed the rating outlook for the company to negative from stable in July. A further downgrade would reduce it to junk status. Both companies said the moves were based on the uncertain outlook for newspaper advertising.

Clearly the current economic situation has potential advertisers conserving cash, which increases the pressure on traditional media companies like the Times Co. But this is just a flare-up in a chronic disease: as I’ve previously noted (here, here, here, here, here, here and here), the big story about big media for the last decade has been gradual decline.

Recessions in the general economy just make it less gradual.

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BuzzMachine: Covering conventions is a waste

As usual, Jeff Jarvis nails it in his take on the number of journalists covering the major party national conventions:

Forbes.com reports that the number of journalists covering the conventions this fall will remain at the same level as 2004 and 2000: 15,000 of them. What a waste. The outcome of the conventions is known. There will be no news. Why are these news organizations sending so many staffers there?

Ego.

That’s it, pure ad simple: Our man in Denver. Instead of your woman. It’s for bylines, bylines the public couldn’t care less about. The coverage will be no different outlet to outlet. We can watch it all ourselves on C-SPAN.

Read Jeff’s entire post, including his counter-argument to the “we’re covering our local delegations” objection…and his interesting perspective on whether bloggers should attend.

When every newspaper in the country has laid off dozens, scores or hundreds of reporters, it’s hard to reconcile how they would send reporters across the country to cover an event in which there won’t be any real news.

If newspapers were flush with cash, this ego could be rationalized. But given that they are all fighting for survival and that there will be no shortage of stories to which they can link, sending reporters to Denver and Minneapolis seems an indulgence they can’t afford.

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