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The Top 10 Reasons Why Newspapers Are Sinking Online

Forget the subscription vs. free debate (circulation revenue is a small fraction of advertising revenue), here's the top 10 reasons why newspapers are sinking online:

1. Local brands don't translate online. New mediums need new brands. Localnewspaper.com doesn't work.

2. Local markets don't exist online for users. The web itself is an aggregator - makes everyone a neighbor. Most of the audience to newspaper.com's come from "out of market."

3. Local markets do exist online for advertisers. Local advertisers only want to reach local customers. The newspapers can't deliver that (see point #2). As a result, online, the newspaper has lost its unique value proposition.

4. Display advertising online is a bad deal. It's poorly priced and less effective than its chief competitor, search advertising. Search ads make all the money because they're the better deal. They deliver no wasted impressions (only clicks are charged), they're 100% trackable - so success is measured daily - and are perfectly priced as a result of an auction.

5. Display advertising may also be a bad deal offline, but its untrackable. That 1/4 page ad you want to sell offline, go ahead, charge $20 CPM - no one will know if it was a bargain or not. Online, they'll track it down to the click.

6. Your loss leaders are too heavy. National news, international news, entertainment news, etc . - they don't pay their way. You can't contextualize around them, the audiences aren't segmented and as a result, they don't perform. All of which would be fine except these are the pages that most of your audience is reading.

7. Your money makers are too few. Sure you can sell a $20 CPM on your business or health pages, but that's a small fraction of your traffic. (see point #6). You may say your site earns $20 CPM because that is your rate card, but add up your revenue and add up your pages views and do the math. My guess is your not much above $1.00 CPM.

8. The only unique value you could have now is your stories, but everyone has them. The syndication structure worked offline, but online it's a disaster. The wire service stories that make up most of your site are a commodity. You can't build an audience selling a commodity.

9. Your classifieds revenue has gone away. The brands didn't translate, the products you launched were wrong. Craigslist, etc. are eating your lunch online.

10. You still have print revenue. This is why you are losing online?? Actually, yes. You make a lot of money from your offline operations. It must be protected, to the degree it can. Shareholders, employees, etc. depend on it. It would be easier if you didn't have any revenue to protect and didn't worry about cannibalization. In that case you could make big bets that you can't make now.

In other words, free is the right model. There are just plenty of other issues to work through in the meantime.

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Comments (1)

angie:

Generally, I think you over-generalize.....

You have a vested interest in seeing newspapers fail apparently, but continuing to state something isn't going to make it happen.

Truth is, newspapers can succeed online, and many are doing so, despite your experience. Many are able to capture a local audience by breaking stories first, offering online forums and by offering local content that no other online venue has. And they can typically identify what percentage is local vs. out of market through the ISP used. There are exceptions of course, but for the most part, this can be tracked.

Local newspapers have something that the WSF, USA Today, ABC, NBC, CBS and Fox don't - local news from towns that the big guys don't consider on their radar screens. If you live in NYC or LA, local news might be considered of national interest, but if I want to know what's going on in my town, I have to get it from the paper, because the TV and radio news don't have time to tell me everything, even if they are local.

If every paper in the US suddenly quit publishing tomorrow, that's a country I don't want to live in because ignorance is a great wall behind which government can hide.

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This page contains a single entry from the blog posted on May 8, 2007 1:50 PM.

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