News Is Not Just Any Old Business

28 Aug

Somehow I missed this news about The Onion (via Tank Riot):

Andrea Hansen, advertising sales manager at Capital Newspapers, which publishes The Onion locally, sent out an email this week explaining that the newspaper was not renewing its contract with The Onion. Hansen could not be reached for comment. Todd Sears, Capital Newspapers’ general manager, did not respond to a request for comment.

Bob Marshall, a spokesman for The Onion’s corporate headquarters in Chicago, confirmed the news in an email.

“Unfortunately, yes, the Madison print edition will discontinue at the end of the month,” Marshall wrote. “The local readership of the paper remains strong, yet with the changing landscape of media, the advertising dollars needed to keep a Madison print edition going just weren’t there.”

I can’t help but lump this mentally in with the sale of The Washington Post to Jeff Bezos, and related developments, such as the blog, The Monkey Cage, moving from independent to WaPo listing (via Marginal Revolution). Leaving aside that The Monkey Cage‘s new paywall deal sounds improvised, Neil Irwin at Wonkblog explains the problems newspapers have today.

The economics of news have shifted fundamentally. At one time, the great constraint was the physical ability to get information into the hands of readers. If you were a dominant big-city newspaper, you had the printing presses and the distribution network to present a package of information and advertising on every front lawn in town every morning. That was a remarkable power. It had enormous barriers to entry–a competitor couldn’t swoop in and replicate it easily. And it meant that every department store wanting to advertise a sale, every car dealer looking to move cars, and every employer looking to hire a new accountant had to place ads.

Media economics have, of course reversed. Now the great constraint is not on the ability to deliver information, but on the capacity of readers to consume it. Every media organization competes with every other one, and the cost of information is something very nearly free.

The winners in this new world of media economics, if there are any, will be those who are willing to take big financial risks, and endure the possibility that those risks won’t pay off for years, if ever. It is the kind of patience that public companies that report earnings every three months do not have.

A Price Waterhouse Cooper goes into more detail about the “Outlook for Newspaper Publishing in the Digital Age“.

The newspaper publishing industry is facing a structural challenge in which paid titles have seen a long-term decline in circulation volume while advertisers have been moving from newspapers to online channels and into new formats. These trends are forecast to continue, and structural changes are now being exacerbated and accelerated by the global economic downturn.

How can newspaper publishers successfully address these
challenges? In this report we look at consumer and advertiser trends, and at how industry leaders in a number of countries are responding.

Our research shows that:

  • Although there is a huge potential for growth online, print remains the largest source of revenue generation for newspaper publishers, and will continue to be so for some time.

  • Newspapers have a long-term future and will coexist with other media. However this is unlikely to be either in the formats or volumes seen today and there will some casualties and losses of well-known papers along the way.

  • Consumers place high value on the deep insight and analysis provided by journalists over and above general or breaking news stories.

  • Consumers see breaking news and general interest news as commodities, but there is always a market for high value online content in specific topics. Our consumer research indicates that consumers are willing to pay for this content, but newspapers need to develop strategies for monetising their content and intellectual capital.

  • Newspapers have been able to earn their readers’ trust and loyalty, giving them the opportunity to both lead and follow audiences as they migrate online and into the use of portable electronic media. Indeed, with the core principles of deep analysis and trusted editorial, the medium is secondary to the brand.

  • Use of video in online news sites gives the feel of a ‘TV-like’ experience (consumers’ favourite medium for news) giving newspaper brands the opportunity to secure online audiences beyond their print readership and into the television audience more generally.

  • Newspaper publishers have responded to the economic downturn by increasing their focus on cost reduction. Many are also using multiple platforms and new technologies as channels for content distribution in order to reach their audiences. However, many have still to fully review their existing business models to take full advantage of the innovation in the marketplace and the demands of consumers.

  • The rapid adoption of the Internet and mobile technology have created a market for mobile devices – particularly for the ‘net generation’, those under 35 in age. Though the devices give immediate access to breaking news and information, they are low on the list of preferences for accessing information due to the difficulty of reading content on the devices.

  • Sustainability has increased in importance both for the newspaper publishers and for their readers, who attach high values to a publishing company using sustainable production methods. Some newspapers have addressed this issue, but many have not.

  • For advertisers, access to mass markets remains key, so major newspaper brands with large loyal customer bases will be high on the spending plans of advertisers. The overall shift from print to online will continue however, so newspaper publishers must continue to develop innovative advertising packages combining both print and online to secure the advertising spend for their brands.

  • Niche audiences continue to demand specialised, targeted and relevant information. This creates both an opportunity for advertisers to reach their consumers and for newspapers to develop ‘hyper-local’ or ‘local-local’ sites addressing content at the neighborhood and suburban level. This is particularly prevalent in the USA.

Or, shorter version, consumers want excellent content for free; content providers want instant gratification, but aren’t true producers.

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