Newspapers are in the midst of a shift that has transformed them from a mass medium to a niche product, and the advent of more sophisticated e-readers will further accelerate that migration.
Ken Doctor, affiliate analyst with Outsell Inc. and author of the book “Newsonomics: Twelve New Trends That Will Shape the News You Get,” told News & Tech columnist Doug Page in a Press Room podcast posted March 6, 2010, “Publishers are fully embracing the idea that it’s digital first and that print is now a niche.
“Newspapers have always been a mass medium even though there might have been some niches. Now newspapers are the niche, the Starbucks buy. If you are a baby boomer and are willing to spend twice as much as you did even two years ago (to buy a paper) you can still read your paper.”
Doctor, a former editor at the St. Paul (Minn.) Pioneer Press and a Knight Ridder Digital executive, said the emergence of Apple Computer Inc.’s iPad “has the potential of changing the news reading experience exponentially and could further move people away from print.”
“It may return the day of the pleasurable reading experience,” Doctor said of the gadget. “We all use desktops and laptops, but they are essentially work devices. You can find news from anywhere in the world, but that is a (version) 1.0 experience. With the iPad, you control the experience, so it returns the notion of reading for pleasure, and that’s one of the main reasons people like reading newspapers.”
Monday, March 8, 2010
Thursday, March 4, 2010
Forrester Research presentation at paidContent 2010
Here's the fascinating interpretation of this theorem that people don't -- and never have -- paid for content, they will pay -- and always have -- for access. So the subscription to the newspaper used to be what people paid for access, in my opinion. So that puts into a stranger-than-ever context the experiment of charging for content that paywalls online are contemplating.
Check out this SlideShare Presentation:
Check out this SlideShare Presentation:
Friday, February 12, 2010
INMA in tune
Richard Hall of Digital Technology International gave a presentation at the International Newspaper Marketing Association convention in Copenhagen which is pure individuated news, down to the estimate that individuated content would have a $.05 per person per ad value, which of course is a $50 CPM. Check the powerpoint out and enjoy.
If that link doesn't work here is the URL: http://www.slideshare.net/TomCorbett/richard-hall-3102448
If that link doesn't work here is the URL: http://www.slideshare.net/TomCorbett/richard-hall-3102448
Wednesday, February 3, 2010
How do you build a wall?
For many newspapers that are stymied with how to charge for online there is Journalism Online, founded by a well-known media celebrity Stephen Brill.
Here reprinted:
Published: February 2, 2010, New York Times
By RICHARD PÉREZ-PEÑA
Extracting payment from online readers has been called everything from the next great folly of print journalism to its salvation, but to get a glimpse of how it really looks, head to Lancaster, Pa.
Specifically, head to the offices of The Intelligencer Journal-Lancaster New Era, one of the first handful of news outlets to acknowledge in interviews that it intends, in the next few months, to start using a software system developed by the entrepreneurs Steven Brill, L. Gordon Crovitz and their partners, which they are calling Press+. Others interested include The Fayetteville Observer in North Carolina and GlobalPost, a news site based in Boston.
A very small number of news organizations, including The Wall Street Journal, The Financial Times and Newsday, already charge online readers, each with a system developed largely in-house, and The New York Times announced recently that it planned to do the same. But with advertising plummeting, many other publishers eager for a new source of revenue are considering making the switch, despite the risk of losing audience and advertising.
Last year, Mr. Brill and company seized on that interest, founding their operation, Journalism Online, with the aim of developing a highly flexible system that would become the industry standard, and keeping 20 percent of their client’s online revenue as their fee.
They say they have worked with potential clients from around the world, most of whom they will not name, who operate more than 1,300 news sites. The News Corporation, owner of The Wall Street Journal, is also marketing an online pay system to publishers, but industry executives say that it has made little headway.
So if it turns out that Lancaster is in the vanguard of a mass movement — and there are plenty of skeptics who say that charging could be a short-lived experiment — then Press+, if it works well, could be the movement’s chief organizer.
But in their first extended interview in months, Mr. Crovitz and Mr. Brill, while offering a look at how the system works, also cautioned against high expectations and said they had urged their clients to take small steps. It will take years before charging Internet users significantly changes the economics of a deeply troubled industry, they said.
As newsprint becomes a smaller part of the business, “you want to establish the notion that it’s worth something online,” Mr. Brill said. “What we have convinced people of is they don’t have to make a drastic decision. You can experiment.”
For those who have signed on, such lowered expectations are part of the appeal.
“We’re starting small, so if this really turns people off, we’re not playing with a huge chunk of our readership,” said Ernest J. Schreiber, editor of the Lancaster paper’s Web site, LancasterOnline.com. The site has been using and adapting the Press+ software for a while. He said it would go into effect in a month or two.
At the outset, the paper, owned by a local company, Steinman Enterprises, will charge only readers outside its immediate area and only for reading obituaries, with a little green Press+ logo next to each headline covered by the system. It will allow a reader to see a certain number of obituaries free before a box pops onto the screen demanding a flat fee to keep reading, but the paper has not yet decided what that number will be, or how much it will charge.
“We have news that no one else has, like these obituaries,” Mr. Schreiber said. “We would eventually take other sections of our online content into the system. I’m thinking local sports, perhaps.”
The system may generate only a few hundred thousand dollars a year in revenue, he said, but “that’s enough to pay for a few reporters.”
Philip S. Balboni, president and chief executive of GlobalPost, a year-old site that focuses on international news, said it would take a different approach to using Press+. Frequent users will see messages urging them to join and pay, but it will be voluntary; there will be levels of membership with different prices, and those who do pay will be able to suggest topics for articles and have access to premium content. Those who do not join will still have access to most of the site.
“We anticipate rolling it out by the end of March,” and hope to have tens of thousands of paying readers by year’s end, he said. “By Year 2, it would become a very significant contributor to our total funding, but advertising I anticipate would still be No. 1.”
Mr. Crovitz is a former publisher of The Wall Street Journal, where he oversaw its online pay system, and began to develop a new version of that system.
Mr. Brill has a long record of starting ventures in untested waters, some more successful than others. He founded The American Lawyer magazine and the Court TV channel, which succeeded, and Brill’s Content, a magazine about media, which did not. He also founded Verified Identity Pass, whose system, called Clear, allowed frequent travelers to speed through airport security, but he severed ties with the company before it ceased operation last year.
Their partners in Journalism Online include Leo Hindery Jr., a former top executive at Tele-Communications Inc. and the YES Network, and Ken Ficara, who helped develop and run The Journal’s Web site.
Here reprinted:
Published: February 2, 2010, New York Times
By RICHARD PÉREZ-PEÑA
Extracting payment from online readers has been called everything from the next great folly of print journalism to its salvation, but to get a glimpse of how it really looks, head to Lancaster, Pa.
Specifically, head to the offices of The Intelligencer Journal-Lancaster New Era, one of the first handful of news outlets to acknowledge in interviews that it intends, in the next few months, to start using a software system developed by the entrepreneurs Steven Brill, L. Gordon Crovitz and their partners, which they are calling Press+. Others interested include The Fayetteville Observer in North Carolina and GlobalPost, a news site based in Boston.
A very small number of news organizations, including The Wall Street Journal, The Financial Times and Newsday, already charge online readers, each with a system developed largely in-house, and The New York Times announced recently that it planned to do the same. But with advertising plummeting, many other publishers eager for a new source of revenue are considering making the switch, despite the risk of losing audience and advertising.
Last year, Mr. Brill and company seized on that interest, founding their operation, Journalism Online, with the aim of developing a highly flexible system that would become the industry standard, and keeping 20 percent of their client’s online revenue as their fee.
They say they have worked with potential clients from around the world, most of whom they will not name, who operate more than 1,300 news sites. The News Corporation, owner of The Wall Street Journal, is also marketing an online pay system to publishers, but industry executives say that it has made little headway.
So if it turns out that Lancaster is in the vanguard of a mass movement — and there are plenty of skeptics who say that charging could be a short-lived experiment — then Press+, if it works well, could be the movement’s chief organizer.
But in their first extended interview in months, Mr. Crovitz and Mr. Brill, while offering a look at how the system works, also cautioned against high expectations and said they had urged their clients to take small steps. It will take years before charging Internet users significantly changes the economics of a deeply troubled industry, they said.
As newsprint becomes a smaller part of the business, “you want to establish the notion that it’s worth something online,” Mr. Brill said. “What we have convinced people of is they don’t have to make a drastic decision. You can experiment.”
For those who have signed on, such lowered expectations are part of the appeal.
“We’re starting small, so if this really turns people off, we’re not playing with a huge chunk of our readership,” said Ernest J. Schreiber, editor of the Lancaster paper’s Web site, LancasterOnline.com. The site has been using and adapting the Press+ software for a while. He said it would go into effect in a month or two.
At the outset, the paper, owned by a local company, Steinman Enterprises, will charge only readers outside its immediate area and only for reading obituaries, with a little green Press+ logo next to each headline covered by the system. It will allow a reader to see a certain number of obituaries free before a box pops onto the screen demanding a flat fee to keep reading, but the paper has not yet decided what that number will be, or how much it will charge.
“We have news that no one else has, like these obituaries,” Mr. Schreiber said. “We would eventually take other sections of our online content into the system. I’m thinking local sports, perhaps.”
The system may generate only a few hundred thousand dollars a year in revenue, he said, but “that’s enough to pay for a few reporters.”
Philip S. Balboni, president and chief executive of GlobalPost, a year-old site that focuses on international news, said it would take a different approach to using Press+. Frequent users will see messages urging them to join and pay, but it will be voluntary; there will be levels of membership with different prices, and those who do pay will be able to suggest topics for articles and have access to premium content. Those who do not join will still have access to most of the site.
“We anticipate rolling it out by the end of March,” and hope to have tens of thousands of paying readers by year’s end, he said. “By Year 2, it would become a very significant contributor to our total funding, but advertising I anticipate would still be No. 1.”
Mr. Crovitz is a former publisher of The Wall Street Journal, where he oversaw its online pay system, and began to develop a new version of that system.
Mr. Brill has a long record of starting ventures in untested waters, some more successful than others. He founded The American Lawyer magazine and the Court TV channel, which succeeded, and Brill’s Content, a magazine about media, which did not. He also founded Verified Identity Pass, whose system, called Clear, allowed frequent travelers to speed through airport security, but he severed ties with the company before it ceased operation last year.
Their partners in Journalism Online include Leo Hindery Jr., a former top executive at Tele-Communications Inc. and the YES Network, and Ken Ficara, who helped develop and run The Journal’s Web site.
Thursday, January 28, 2010
I-Pad-dy pat pat
No matter which end of the spectrum the new I-Pad falls -- on the laptop or smartphone extremes -- is a moot point. Platform is not the decisive factor for people. Everyone will have their favorite platform. It's getting the news and advertising that you want on that platform you've chosen that's important. The corollary, individuated media (news and advertising you've chosen) must be available on all platforms. That's today's digital liberation.
(full text from NY Times)
SAN FRANCISCO — After months of feverish speculation, Steven P. Jobs introduced Wednesday what Apple hopes will be the coolest device on the planet: a slender tablet computer called the iPad.
The Takeaway With Nick BiltonFor all the hoopla surrounding it, however, the question is whether the iPad can achieve anything close to the success of the iPhone, which transformed the cellphone and forced the industry to race to catch up.
Apple is positioning the device, some versions of which will be available in March, as a pioneer in a new genre of computing, somewhere between a laptop and a smartphone. “The bar is pretty high,” Mr. Jobs acknowledged. “It has to be far better at doing some key things.”
Half an inch thick and weighing 1 1/2 pounds, the device will vividly display books, newspapers, Web sites and videos on a 9.7-inch glass touch screen. Giving media companies another way to sell content, it may herald a new era for publishing.
But the iPad, costing $499 to $829, also lacks some features common in laptops and phones, as technology enthusiasts were quick to point out. To its instant critics, it was little more than an oversize iPod Touch. A camera is notably absent, and Flash, the ubiquitous software that handles video and animation on the Web, does not work on the device.
Another thing missing is an alternative to the AT&T data network, which is already buckling under the strain of traffic to and from iPhones. Some versions of the iPad can, for a monthly fee, use a 3G data connection like cellphones, but the only carrier mentioned was AT&T.
The event, in typical Apple style, was tightly scripted and heavy on theatrics and hyperbole. But the success of the iPhone, and the hive of rumors and leaks surrounding the iPad, raised expectations and made this perhaps Mr. Jobs’s most highly anticipated product unveiling yet.
It was one that he clearly cared deeply about. Mr. Jobs, a consummate showman, presented the iPad to an enthusiastic crowd of around 800 employees, business partners and journalists, some of whom shoved their way in when the doors opened to grab the best seats. It was only his second public appearance since a leave of absence for health reasons last year.
Mr. Jobs posited that the iPad was the best device for certain kinds of computing, like browsing the Web, reading e-books and playing video.
The iPad “is so much more intimate than a laptop, and it’s so much more capable than a smartphone with its gorgeous screen,” he said in presenting the device to a crowd of journalists and Apple employees here. “It’s phenomenal to hold the Internet in your hands.”
One question Apple faces is whether there is enough room for another device in the cluttered lives of consumers.
“I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod Touch,” said Charles Golvin, an analyst at Forrester Research, adding that he expected the iPad to mostly cannibalize the sales of other Apple products.
Mr. Golvin said book lovers would continue to opt for lighter, cheaper e-readers like the Amazon Kindle, while people looking for a small Web-ready computer would gravitate toward the budget laptops known as netbooks.
But other analysts say they have heard similar criticism before — once aimed at the iPhone, which has now been bought by more than 42 million people around the world. These believers say Apple’s judgment on the market is nearly infallible.
“The target audience is everyone,” said Michael Gartenberg, vice president for strategy and analysis at Interpret, a market research firm. “Apple does not build products for just the enthusiasts. It doesn’t build for the tens of thousands; it builds for the tens of millions.”
Apple says the iPad will run the 140,000 applications developed for the iPhone and the iPod Touch, but the company expects a new wave of programs tailored to the iPad.
One of the most significant applications for the iPad may be Apple’s own creation, called iBooks, an e-reading program that will connect to Apple’s new online e-bookstore.
Mr. Jobs said Apple so far had relationships with five major publishers — Hachette, Penguin, HarperCollins, Simon & Schuster and Macmillan — and was eager to make deals with others. Publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfiction books.
Apple’s announcement that it was diving into the growing e-book business put the company on a collision course with Amazon. Mr. Jobs credited Amazon with pioneering e-readers with the Kindle but said “we are going to stand on their shoulders and go a little bit farther.”
John Doerr, a Silicon Valley venture capitalist who serves on Amazon’s board and is also an adviser to Apple, said there could be room for both companies, noting that Amazon sells many books to iPhone owners who use its Kindle application, which will also work on the iPad.
“I don’t think Jeff Bezos is going to leave the e-book business,” he said, referring to Amazon’s chief executive, “and I don’t think it will be confined to the Kindle.”
Three models of the iPad, $499 to $699, will connect to the Internet only via a local Wi-Fi connection. Three other versions will include 3G wireless access and will be available later in the spring, costing an additional $130 and requiring a data plan from AT&T. Owners of the iPhone who already pay at least $70 a month to AT&T will not be getting any breaks.
Other companies have sold tablet computers for years, but they never caught on with consumers. In 2001, Bill Gates predicted at an industry trade show that tablets would be the most popular form of PC sold in America within five years.
“The fact that he and Microsoft didn’t deliver is surprising,” said Tim Bajarin, a longtime industry analyst. “It has taken Apple to bring this to consumers and make it work.”
Apple has been working on a tablet computer for more than a decade, according to several former employees. Improved technology has helped the company to finally bring a model to market, as has the ubiquity of wireless networks.
The success of the iPhone and its cousin, the iPod Touch, have shown a path for tablets. People have been willing to pay to customize those devices with applications, turning them into video game machines, compasses, city guides and e-book readers.
The iPad will be a big opportunity for software developers, said Raven Zachary, president of Small Society, an iPhone development company based in Portland, Ore. “Although I think some of us were a bit surprised we only have 60 days until it launches to develop for it.”
(full text from NY Times)
SAN FRANCISCO — After months of feverish speculation, Steven P. Jobs introduced Wednesday what Apple hopes will be the coolest device on the planet: a slender tablet computer called the iPad.
The Takeaway With Nick BiltonFor all the hoopla surrounding it, however, the question is whether the iPad can achieve anything close to the success of the iPhone, which transformed the cellphone and forced the industry to race to catch up.
Apple is positioning the device, some versions of which will be available in March, as a pioneer in a new genre of computing, somewhere between a laptop and a smartphone. “The bar is pretty high,” Mr. Jobs acknowledged. “It has to be far better at doing some key things.”
Half an inch thick and weighing 1 1/2 pounds, the device will vividly display books, newspapers, Web sites and videos on a 9.7-inch glass touch screen. Giving media companies another way to sell content, it may herald a new era for publishing.
But the iPad, costing $499 to $829, also lacks some features common in laptops and phones, as technology enthusiasts were quick to point out. To its instant critics, it was little more than an oversize iPod Touch. A camera is notably absent, and Flash, the ubiquitous software that handles video and animation on the Web, does not work on the device.
Another thing missing is an alternative to the AT&T data network, which is already buckling under the strain of traffic to and from iPhones. Some versions of the iPad can, for a monthly fee, use a 3G data connection like cellphones, but the only carrier mentioned was AT&T.
The event, in typical Apple style, was tightly scripted and heavy on theatrics and hyperbole. But the success of the iPhone, and the hive of rumors and leaks surrounding the iPad, raised expectations and made this perhaps Mr. Jobs’s most highly anticipated product unveiling yet.
It was one that he clearly cared deeply about. Mr. Jobs, a consummate showman, presented the iPad to an enthusiastic crowd of around 800 employees, business partners and journalists, some of whom shoved their way in when the doors opened to grab the best seats. It was only his second public appearance since a leave of absence for health reasons last year.
Mr. Jobs posited that the iPad was the best device for certain kinds of computing, like browsing the Web, reading e-books and playing video.
The iPad “is so much more intimate than a laptop, and it’s so much more capable than a smartphone with its gorgeous screen,” he said in presenting the device to a crowd of journalists and Apple employees here. “It’s phenomenal to hold the Internet in your hands.”
One question Apple faces is whether there is enough room for another device in the cluttered lives of consumers.
“I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod Touch,” said Charles Golvin, an analyst at Forrester Research, adding that he expected the iPad to mostly cannibalize the sales of other Apple products.
Mr. Golvin said book lovers would continue to opt for lighter, cheaper e-readers like the Amazon Kindle, while people looking for a small Web-ready computer would gravitate toward the budget laptops known as netbooks.
But other analysts say they have heard similar criticism before — once aimed at the iPhone, which has now been bought by more than 42 million people around the world. These believers say Apple’s judgment on the market is nearly infallible.
“The target audience is everyone,” said Michael Gartenberg, vice president for strategy and analysis at Interpret, a market research firm. “Apple does not build products for just the enthusiasts. It doesn’t build for the tens of thousands; it builds for the tens of millions.”
Apple says the iPad will run the 140,000 applications developed for the iPhone and the iPod Touch, but the company expects a new wave of programs tailored to the iPad.
One of the most significant applications for the iPad may be Apple’s own creation, called iBooks, an e-reading program that will connect to Apple’s new online e-bookstore.
Mr. Jobs said Apple so far had relationships with five major publishers — Hachette, Penguin, HarperCollins, Simon & Schuster and Macmillan — and was eager to make deals with others. Publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfiction books.
Apple’s announcement that it was diving into the growing e-book business put the company on a collision course with Amazon. Mr. Jobs credited Amazon with pioneering e-readers with the Kindle but said “we are going to stand on their shoulders and go a little bit farther.”
John Doerr, a Silicon Valley venture capitalist who serves on Amazon’s board and is also an adviser to Apple, said there could be room for both companies, noting that Amazon sells many books to iPhone owners who use its Kindle application, which will also work on the iPad.
“I don’t think Jeff Bezos is going to leave the e-book business,” he said, referring to Amazon’s chief executive, “and I don’t think it will be confined to the Kindle.”
Three models of the iPad, $499 to $699, will connect to the Internet only via a local Wi-Fi connection. Three other versions will include 3G wireless access and will be available later in the spring, costing an additional $130 and requiring a data plan from AT&T. Owners of the iPhone who already pay at least $70 a month to AT&T will not be getting any breaks.
Other companies have sold tablet computers for years, but they never caught on with consumers. In 2001, Bill Gates predicted at an industry trade show that tablets would be the most popular form of PC sold in America within five years.
“The fact that he and Microsoft didn’t deliver is surprising,” said Tim Bajarin, a longtime industry analyst. “It has taken Apple to bring this to consumers and make it work.”
Apple has been working on a tablet computer for more than a decade, according to several former employees. Improved technology has helped the company to finally bring a model to market, as has the ubiquity of wireless networks.
The success of the iPhone and its cousin, the iPod Touch, have shown a path for tablets. People have been willing to pay to customize those devices with applications, turning them into video game machines, compasses, city guides and e-book readers.
The iPad will be a big opportunity for software developers, said Raven Zachary, president of Small Society, an iPhone development company based in Portland, Ore. “Although I think some of us were a bit surprised we only have 60 days until it launches to develop for it.”
Monday, January 25, 2010
So the numbers don't "ad" up
Since when do numbers point the way?
The New York Times would sacrifice traffic and clout for a charge for content that won't replace the loss of advertising revenue caused by the fall-off in traffic and clout. That's what the numbers say, according to several reports.
But no one is talking about the value of choosing your news -- of Individuated Media -- which is a part of this equation. Through metering you are helping people choose their news and only charging them as they gain momentum. Ingenious.
Running the numbers on the NYT paywall
Jan 20, 2010 21:54 EST
By Felix Salmon, Reuters
Apologies for being something of a one-trick pony today, but reading John Gapper’s column on the NYT paywall makes me realize that a lot of people fail to appreciate exactly what’s at stake here. Gapper seems to think that online subscription revenues can make newspapers profitable again; they can’t. In fact, insofar as the paywall makes any sense at all, it does so only as a tool to boost print subscriptions.
Gapper notes that the Guardian’s parent company lost $93 million in the last fiscal year, despite having a website attracting 35 million unique visitors globally, and 13 million domestically. He reckons that charging some of those subscribers could make the Guardian’s problems disappear:
Outsell, a research group, reported this week that only 6 per cent of US online readers say they would pay online news sites if they charged.
If we are to take the figure at face value (which I don’t think we should), then The Guardian could get 2.1m people to subscribe to it online, making it highly profitable at a stroke.
The logical flaws here are huge. Let’s just count a few:
•Gapper is assuming that if 6% of online readers would end up subscribing to some site or other, that’s the same as saying that any given site can persuade 6% of its readers to subscribe. But that’s not the same thing at all.
•Gapper is taking a poll of US internet users, who are more likely to pay for things online than other nationalities, and extrapolating the numbers globally.
•Gapper is assuming that foreign readers (say, Guardian readers in India) are just as likely to subscribe as domestic readers (Guardian readers in the UK).
•Gapper is assuming no overlap at all between the 6% of readers who would pay online, and the percentage of readers who already pay for a newspaper subscription in print form. The NYT has already said that its print subscribers will get an online subscription for free, and I’m sure the Guardian would do likewise.
•Gapper is ignoring that putting up a paywall will always reduce advertising revenue, which means that in order for the new subscription revenue to make the newspaper “highly profitable at a stroke”, it would have to not only make up existing losses but also cover the drop in online advertising revenue.
Once you understand what Gapper can do to statistics like these, then, it becomes a bit easier to make sense of something like this:
Rates for online display ads have been falling steadily as competition has proliferated, with most sites now finding it hard to get more than $4 per 1,000 impressions on their pages (or $14m for the 3.5bn hits on all US newspaper sites monthly).
I have no idea where Gapper’s getting his $4 CPM figure from, but it’s clearly much closer to being a minimum than an average. Papers might find it hard to get more than that, but you can be sure that the NYT, for one, is succeeding all the same. In fact, the WSJ reports today that nytimes.com is pulling in $100 million in revenues annually — more than you might think the US newspaper industry as a whole was making, if you read Gapper too literally. Indeed, in the third quarter of 2009, the New York Times Company made $79 million from its internet businesses, of which $68 million came in advertising revenues. Newspaper advertising was $39 million — and that was in a very weak quarter. On an annual basis, I’d be surprised if nytimes.com didn’t make significantly more than the $100 million that the WSJ is talking about.
It’s also worth noting that Gapper has managed to confuse CPMs — the amount of money that an advertiser pays per 1,000 pageviews — with RPMs, or the amount of revenue that a publisher receives per 1,000 pageviews. There’s nearly always more than one ad unit per page, which means that RPMs are some multiple of CPMs, depending on how much of a newspaper’s inventory is sold.
Gapper, then, is systematically overestimating the upside of subscription revenues, while underestimating the magnitude of advertising revenues. Erick Schonfeld, by contrast, is much more realistic, concluding that total subscription revenues from nytimes.com would optimistically reach only $9 million per quarter, or $36 million per year. With the New York Times Company making the best part of $300 million a year from online advertising, it’s hard to see that the extra revenue boost would really be worth it.
The point here is that with the powerhouse nytimes.com site front and center, the New York Times Company as a whole is a major online media player, serving up billions of high-prestige pageviews and building strong relationships with every major online advertiser and media buyer in the country. Even under the most optimistic scenario, a majority of the NYT’s loyal readers will desert it when it moves to a paywall. And with those readers gone, media buyers are by no means guaranteed to stick around.
Gapper makes great play of the fact that websites can target ads more accurately when readers are registered, but you can’t target ads at readers who no longer exist. And the NYT is a mass-market general news publication: it’s not the kind of place where high-end business-to-business advertisers will pay $90 CPMs to reach C-suite executives. Or if it is, the numbers involved would be so small that they wouldn’t make a visible dent in its overall online advertising revenues.
What’s a realistic number for how many people will pay to subscribe to nytimes.com? David Carr says that the NYT wants to target “10 percent or so” of the 17 million current readers of nytimes.com. That’s 1.7 million people. Subtract the print subscribers who will get nytimes.com for free, and you’re left with 1 million, more or less. How many of those could you dare hope to persuade to subscribe? One third? Once again, just as Schonfeld did, we get to somewhere in the region of $35 million a year, assuming a subscription price of $100 each per year. For a company with annual revenues in the billions, the hit to the value of the brand alone has to be bigger than that.
There is one other dynamic at work, here, however, and that’s the price of the print subscription, which has proved to be surprisingly inelastic: David Carr in fact lauds the way in which “The Times has shown a great ability to leverage prices once they have custody of a consumer”. But pushing existing consumers to the limit of what they can pay only makes it that much harder to attract new ones.
The NYT aspires to be a national paper, which makes sense, since it either already has or is never going to get most New Yorkers as print subscribers. But the annual subscription rate, if you live at say 1600 Pennsylvania Avenue, is $769.60, and it’s really hard to get people to pay that kind of money, in the middle of a recession, for a newspaper they’ve lived happily without for all their lives, and which they can get online for free.
So I see the decision to implement a paywall not as an attempt to build a significant revenue stream for the website alongside ad revenues, but rather as an attempt to shore up — and maybe even increase — the print subscriber base. Even a Monday-Friday subscription, at $384.80 a year, brings in much more money than any online subscription ever will. Yes, it probably costs more than that to print and deliver the paper. But for the time being at least, print advertisers are still willing to pay top dollar for a full page in the physical New York Times. And so long as that’s the case, the NYT will do anything to keep its physical circulation numbers as high as it can — even, it seems, if that means dealing a serious blow to nytimes.com.
The New York Times would sacrifice traffic and clout for a charge for content that won't replace the loss of advertising revenue caused by the fall-off in traffic and clout. That's what the numbers say, according to several reports.
But no one is talking about the value of choosing your news -- of Individuated Media -- which is a part of this equation. Through metering you are helping people choose their news and only charging them as they gain momentum. Ingenious.
Running the numbers on the NYT paywall
Jan 20, 2010 21:54 EST
By Felix Salmon, Reuters
Apologies for being something of a one-trick pony today, but reading John Gapper’s column on the NYT paywall makes me realize that a lot of people fail to appreciate exactly what’s at stake here. Gapper seems to think that online subscription revenues can make newspapers profitable again; they can’t. In fact, insofar as the paywall makes any sense at all, it does so only as a tool to boost print subscriptions.
Gapper notes that the Guardian’s parent company lost $93 million in the last fiscal year, despite having a website attracting 35 million unique visitors globally, and 13 million domestically. He reckons that charging some of those subscribers could make the Guardian’s problems disappear:
Outsell, a research group, reported this week that only 6 per cent of US online readers say they would pay online news sites if they charged.
If we are to take the figure at face value (which I don’t think we should), then The Guardian could get 2.1m people to subscribe to it online, making it highly profitable at a stroke.
The logical flaws here are huge. Let’s just count a few:
•Gapper is assuming that if 6% of online readers would end up subscribing to some site or other, that’s the same as saying that any given site can persuade 6% of its readers to subscribe. But that’s not the same thing at all.
•Gapper is taking a poll of US internet users, who are more likely to pay for things online than other nationalities, and extrapolating the numbers globally.
•Gapper is assuming that foreign readers (say, Guardian readers in India) are just as likely to subscribe as domestic readers (Guardian readers in the UK).
•Gapper is assuming no overlap at all between the 6% of readers who would pay online, and the percentage of readers who already pay for a newspaper subscription in print form. The NYT has already said that its print subscribers will get an online subscription for free, and I’m sure the Guardian would do likewise.
•Gapper is ignoring that putting up a paywall will always reduce advertising revenue, which means that in order for the new subscription revenue to make the newspaper “highly profitable at a stroke”, it would have to not only make up existing losses but also cover the drop in online advertising revenue.
Once you understand what Gapper can do to statistics like these, then, it becomes a bit easier to make sense of something like this:
Rates for online display ads have been falling steadily as competition has proliferated, with most sites now finding it hard to get more than $4 per 1,000 impressions on their pages (or $14m for the 3.5bn hits on all US newspaper sites monthly).
I have no idea where Gapper’s getting his $4 CPM figure from, but it’s clearly much closer to being a minimum than an average. Papers might find it hard to get more than that, but you can be sure that the NYT, for one, is succeeding all the same. In fact, the WSJ reports today that nytimes.com is pulling in $100 million in revenues annually — more than you might think the US newspaper industry as a whole was making, if you read Gapper too literally. Indeed, in the third quarter of 2009, the New York Times Company made $79 million from its internet businesses, of which $68 million came in advertising revenues. Newspaper advertising was $39 million — and that was in a very weak quarter. On an annual basis, I’d be surprised if nytimes.com didn’t make significantly more than the $100 million that the WSJ is talking about.
It’s also worth noting that Gapper has managed to confuse CPMs — the amount of money that an advertiser pays per 1,000 pageviews — with RPMs, or the amount of revenue that a publisher receives per 1,000 pageviews. There’s nearly always more than one ad unit per page, which means that RPMs are some multiple of CPMs, depending on how much of a newspaper’s inventory is sold.
Gapper, then, is systematically overestimating the upside of subscription revenues, while underestimating the magnitude of advertising revenues. Erick Schonfeld, by contrast, is much more realistic, concluding that total subscription revenues from nytimes.com would optimistically reach only $9 million per quarter, or $36 million per year. With the New York Times Company making the best part of $300 million a year from online advertising, it’s hard to see that the extra revenue boost would really be worth it.
The point here is that with the powerhouse nytimes.com site front and center, the New York Times Company as a whole is a major online media player, serving up billions of high-prestige pageviews and building strong relationships with every major online advertiser and media buyer in the country. Even under the most optimistic scenario, a majority of the NYT’s loyal readers will desert it when it moves to a paywall. And with those readers gone, media buyers are by no means guaranteed to stick around.
Gapper makes great play of the fact that websites can target ads more accurately when readers are registered, but you can’t target ads at readers who no longer exist. And the NYT is a mass-market general news publication: it’s not the kind of place where high-end business-to-business advertisers will pay $90 CPMs to reach C-suite executives. Or if it is, the numbers involved would be so small that they wouldn’t make a visible dent in its overall online advertising revenues.
What’s a realistic number for how many people will pay to subscribe to nytimes.com? David Carr says that the NYT wants to target “10 percent or so” of the 17 million current readers of nytimes.com. That’s 1.7 million people. Subtract the print subscribers who will get nytimes.com for free, and you’re left with 1 million, more or less. How many of those could you dare hope to persuade to subscribe? One third? Once again, just as Schonfeld did, we get to somewhere in the region of $35 million a year, assuming a subscription price of $100 each per year. For a company with annual revenues in the billions, the hit to the value of the brand alone has to be bigger than that.
There is one other dynamic at work, here, however, and that’s the price of the print subscription, which has proved to be surprisingly inelastic: David Carr in fact lauds the way in which “The Times has shown a great ability to leverage prices once they have custody of a consumer”. But pushing existing consumers to the limit of what they can pay only makes it that much harder to attract new ones.
The NYT aspires to be a national paper, which makes sense, since it either already has or is never going to get most New Yorkers as print subscribers. But the annual subscription rate, if you live at say 1600 Pennsylvania Avenue, is $769.60, and it’s really hard to get people to pay that kind of money, in the middle of a recession, for a newspaper they’ve lived happily without for all their lives, and which they can get online for free.
So I see the decision to implement a paywall not as an attempt to build a significant revenue stream for the website alongside ad revenues, but rather as an attempt to shore up — and maybe even increase — the print subscriber base. Even a Monday-Friday subscription, at $384.80 a year, brings in much more money than any online subscription ever will. Yes, it probably costs more than that to print and deliver the paper. But for the time being at least, print advertisers are still willing to pay top dollar for a full page in the physical New York Times. And so long as that’s the case, the NYT will do anything to keep its physical circulation numbers as high as it can — even, it seems, if that means dealing a serious blow to nytimes.com.
Print growth
Yes, Virginia, there is print growth.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004061230
While Newspaper Ad Revenue Plunged, FSI Coupons Hit Record Levels in 2009
By Mark Fitzgerald
Published: January 22, 2010
CHICAGO Even as newspaper advertising revenue was falling off the cliff in 2009, retailers were ramping up their use of free standing insert (FSI) coupon by eye-popping rates, according to the best-known FSI measuring organization, Marx Promotion Intelligence.
In a year when consumers looked for every shopping advantage and traded down in brands and stores, discount retailers greatly increased their buy of FSI pages with coupons.
Dollar General, for instance, increased its number of pages by 386.2% with more than 885 million pages. It was third among the top ten retailers measured by FSI "pages circulated," up from 10th place in 2008.
Family Dollar, which ranked just 17th among retailers in 2008, took sixth place last year with a 227.4% increase in FSI pages.
Target remained the top retailer using FSI coupons, with more than 1.8 billion pages -- up 43.9% from 2008. It was followed by PetsMart,
Dollar General, Walgreens, CVS/pharmacy, Family Dollar, Kroger, Publix, Safeway Food & Drug and Rite Aid.
Overall FSI "coupon activity" measured by the number of coupons dropped grew 8% during 2009 to more than 272 billion, said Marx, a division of TNS Media Intelligence. The 2009 level of activity surpassed the second-highest annual drop of 257 billion in 2007.
Retailer promotion pages also jumped 37.7% to 9 billion pages in 2009, continuing what Marx said has been a pattern of substantial annual growth rates begun in 2007.
"As consumers adapt to new economic realities, marketers are increasing their use of FSI coupons within their marketing mix to deliver advertising impact, influence consumer behavior, and secure retailer distribution and merchandising," TNS Media President Mark Nesbitt said in a statement. "Leading retailers are also increasing their use of FSI vehicles to drive planned shopping trips and build shopper loyalty."
All those coupons in 2009 amounted to consumer incentives delivered by FSI totaling more than $385 billion, a 15% increase from the year before.
The average face value of an FSI coupon increased 6.5% from 2008 to $1.45. But shoppers were hurried to use the coupons, which on average expired in 9.3 weeks, down about 4% from 2008.
This higher face value with a shortened expiration period -- known as the Fuse in the industry -- shows manufacturers are delivering more coupons with higher value, "but are managing their financial exposure by reducing the length of time that these offers are available in the market," Marx said.
--------------------------------------------------------------------------------
Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is editor of E&P.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004061230
While Newspaper Ad Revenue Plunged, FSI Coupons Hit Record Levels in 2009
By Mark Fitzgerald
Published: January 22, 2010
CHICAGO Even as newspaper advertising revenue was falling off the cliff in 2009, retailers were ramping up their use of free standing insert (FSI) coupon by eye-popping rates, according to the best-known FSI measuring organization, Marx Promotion Intelligence.
In a year when consumers looked for every shopping advantage and traded down in brands and stores, discount retailers greatly increased their buy of FSI pages with coupons.
Dollar General, for instance, increased its number of pages by 386.2% with more than 885 million pages. It was third among the top ten retailers measured by FSI "pages circulated," up from 10th place in 2008.
Family Dollar, which ranked just 17th among retailers in 2008, took sixth place last year with a 227.4% increase in FSI pages.
Target remained the top retailer using FSI coupons, with more than 1.8 billion pages -- up 43.9% from 2008. It was followed by PetsMart,
Dollar General, Walgreens, CVS/pharmacy, Family Dollar, Kroger, Publix, Safeway Food & Drug and Rite Aid.
Overall FSI "coupon activity" measured by the number of coupons dropped grew 8% during 2009 to more than 272 billion, said Marx, a division of TNS Media Intelligence. The 2009 level of activity surpassed the second-highest annual drop of 257 billion in 2007.
Retailer promotion pages also jumped 37.7% to 9 billion pages in 2009, continuing what Marx said has been a pattern of substantial annual growth rates begun in 2007.
"As consumers adapt to new economic realities, marketers are increasing their use of FSI coupons within their marketing mix to deliver advertising impact, influence consumer behavior, and secure retailer distribution and merchandising," TNS Media President Mark Nesbitt said in a statement. "Leading retailers are also increasing their use of FSI vehicles to drive planned shopping trips and build shopper loyalty."
All those coupons in 2009 amounted to consumer incentives delivered by FSI totaling more than $385 billion, a 15% increase from the year before.
The average face value of an FSI coupon increased 6.5% from 2008 to $1.45. But shoppers were hurried to use the coupons, which on average expired in 9.3 weeks, down about 4% from 2008.
This higher face value with a shortened expiration period -- known as the Fuse in the industry -- shows manufacturers are delivering more coupons with higher value, "but are managing their financial exposure by reducing the length of time that these offers are available in the market," Marx said.
--------------------------------------------------------------------------------
Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is editor of E&P.
Subscribe to:
Posts (Atom)