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Newspapers can go online-only and pay the bills

Howard Owens disagrees with Wired Magazine’s prediction that a major newspaper will stop printing and go online-only in 2007. Although Wired’s punditry might be a little overly optimistic, Howard’s rebuttal is equally pessimistic.

Howard alleges that newspapers can’t possibly support their operations without revenue from the main newspaper. Not so.

If a newspaper stops printing, about two-thirds of its operating expenses are thrown out the window. No more newsprint. No more carriers. No more circulation department, sales kiosks and all that.

When ad reps no longer have the newspaper to sell, they’re going to find a way to make commission. And that means sales online are going to increase fast.

Those who can’t sell will jump ship because they can’t support their families on a waning paycheck. The newspaper shouldn’t replace those positions, in most cases, because the market is actually adjusting. Not all of the original advertisers will move online right away, so fewer reps are needed to address the demand.

An online-only version is more likely in a one-paper town. And my guess is that although the main newspaper is eliminated, some niche publications that still have large profit margins will be retained, or even expanded.

Going online-only is a painful option – and probably the wrong option – but not an impossible option.

Do I think online-only will happen in 2007? It’s possible that with several newspapers experiencing declining ad revenues that don’t turn around and costs increasing, the only apparent option for survival will be eliminating the printed version.

Comments (8)

Do the math ... crunch the numbers ... how much does it cost to run your newsroom. I bet your current revenue is ten percent of what you need ... or something way short. Now put together of all the revenue sources and crunch the numbers on current traffic, now do a reasonable increase over the next five years, so that corrosponding revenue increases. Best case scenario, but honest and realistic. If you're honest and fair, in five years, you're still not making enough money to support the current newsroom operation.

So, you haven't about thinking about trimming cost ... cut the copy editors and let your readers be your editors. Cut photographers and reporters become mojos. Now, maybe you're getting close.

Do you think any major newspaper is going to get that radical about this in the next year or two?

BTW: I've done this exercise at two different newspapers now. I haven't been able yet to pencil out a way that makes it profitable to eliminate print just yet. I think death of print is inevitable, and we will find a way to make it, but we're not ready yet. Our audience isn't ready and we haven't found the real secret sauce of online revenue, yet. Not for online newspapers. But it's out there .....

I agreed with H.O. for the most part here, but I do see college newspapers examining the online-only option much more over the next year. I'm thinking another 18 months to two years before a "major" drops the print edition. Of course, there's always the possibility for a slimmed-down print product that follows the online version.

Crunching the numbers and doing the math are all based on revenue that exists only at this moment and does not account for the market's reaction when a newspaper goes entirely online.

Ad reps must sell. And sell they will.

Advertisers must advertise. And advertise they will.

All of this will benefit online in ways that are not possible now because the newspaper is a familiar crutch to both the ad rep and the advertiser.

The second thing that crunching current numbers doesn’t take into account are the printed niche products that must be expanded. Stop printing the newspaper, but not all of those weeklies and magazines that are experiencing such high profit margins. Turn some of the newspaper sections into new “niches.” For example, the weekend entertainment magazine or weekly business tab.

Furthermore, I call this a painful path to take because it will come with staff reductions, mostly on the advertising side.

It doesn’t take a committee of geniuses to delete the revenue and expenses from the printed newspaper and see that the Web site doesn’t make enough money to cover what’s left. But there will be enough to pay the bills and grow into a comfortable profit margin with the expected surge in ad revenue online, a strategy for niche publications and some staff reductions in the advertising staff.

Furthermore, I call this a painful path to take because it will come with staff reductions, mostly on the advertising side.

Oh, I think there will be much more pain in the pagination and distribution process than in the ad side. Remember, the ad side brings in the money. They will likely be the last to get the axe.

The first newspaper to do so will probably be an afternoon paper when its joint operating agreement runs out. It might go totally online, except for a Sunday paper and maybe a weekend entertainment guide. It might even outsource the printing, since it's starting over without the overhead of a traditional paper.

Alex:

I wonder if this discussion would hold true for major metropolitan newspapers that have an online and a printe version. We would have to look at the operating costs and revenues of the online portion of the business. For example, does anyone know what the budget is of a major publication for its online portion. How much do they spend on not only building and maintaining the website but also advertising for it. Also how much ad revenue do they get from it?

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» The evolution of news, part 2,312 from The Editor's Log
Howard Owens, Lucas Grindley and Terry Heaton are all posting about the evolution of the news business over the past day or two and they are all worth reading. Owens and Grindley are debating the veracity of Wired's 2007 prediction... [Read More]

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