David Kaplan over at PaidContent dissects some interesting tidbits from a WSJ article that quotes an assortment of sources, from Borrell to Jupiter Media, that give newspapers a reason to worry but that offer web entrepreneurs a ray of light, so to speak.
First, the tidbits:
– Online ad spending for newspapers will likely fall to a percentage in the low 20s this year from 28 percent last year, Borrell Associates estimates, reflecting a broader trend, as EMarketer predicts the overall growth of U.S. online-ad revenue will slow to 18.9 percent this year from 30.8 percent last year. It predicts newspapers will do slightly better.
– Competition from TV stations’ and magazines’ websites represents a new challenge, with outlets in those categories stepping up their digital efforts, as PC reported last week. Other challenges are coming from sites like MySpace’s recently launched news feature. Also, advertisers are taking blogs and newsgroups more seriously, says one digital ad agency exec.
– The areas that have so far proved strongest for newspapers – banner ads, pop-ups and listings – are losing ground to forms like search marketing, which provide better targeting and measurement.
– Some publishers worry that entering into deals like the Yahoo Newspaper Consortium, which announced its expansion last week, will reduce their control over their newspaper advertising initiatives.
– Primarily, it seems that marketers need more convincing when it comes to moving their ad dollars online. A survey of 273 U.S. advertisers last year found that 67 percent of the companies with annual revenue of $500 million or more will dedicate less than $1 million to online ads, according to JupiterResearch.
First off, to better illustrate why newspapers are shooting themselves in the foot, look no further than this post, and who and how we’re quoting things.
I quote Paid Content, who skimmed and paraphrased the meat of the article from WSJ. Legally, Paid Content will archive this information, and marketers, consumers and everyone in between will be able to access it, for years to come. Good for PC. On the other hand, if you click on the WSJ article, what you get is the first two or three paragraphs. I link to them out of courtesy - and for copyright reasons - but WSJ offers little to readers and naturally will get little value by not leaving the content for free.
You would think that years after the free, ad-supported text content emerged victorious, newspaper (and print companies in general) would get it and adopt a free, ad-supported model. The WSJ is a fine institution, and one of the few to go for a hybrid model, but it would win long term if they simply unleashed their text content online for free. After all, as this blog proves, I can get the meat of their content for free elsewhere. In fact, the sources they mention, and Paid Content paraphrases are not even proprietary, meaning that WSJ is making their lives very hard.
Anyway, like with most of our posts, we took a detour to say that newspapers’ online revenues are stalling, and that is a great thing, for us.
Let me explain.
Most web startups tend to focus on products, services, features or applications - tech oriented things essentially. These are coveted by the likes of VCs, and most online giants like Yahoo!, Google and MSFT. While I have argued that content is the new software and sooner than later these tech players will begin to scoop up content shops (again in the case of MSFT - remember Slate?), the simple fact is that one reason why content poses a financing challenge is the lack of exit options and the difficulty in immediate scaling opportunities. Don’t get me wrong, once you create a lot of content, or build a decent sized audiences, content scales better than technology (been there, done that in text publishing; doing it again, in a different sector now: video; after all, only an uneducated peasant would think that text and video are one and the same).
After all, once you are big enough to generate a huge audience, the ad revenue will follow and investors will come rushing in. And by then, media companies will make you offers to buy. But until you get there, content is not a very obvious business to be in. Content is king but monarchies have always been messy, as I like to say.
Long story short, seeing newspapers online revenues slow down means that they will:
- look to partner with online content companies like ours truly who pose little threat (yes, we’re talking about Yahoo!, Google and company who are out to put the KO punch to newspapers);
- look to acquire rich media content companies like ours truly who have video and broadband programming in droves that they can monetize at higher rates than their existing content, and who pose a challenge to traditional TV stations who are caught in their own soul searching debates about what to do with the Web.
I have covered this in “Understating the TV Executives’ Angst and Envy” here and explained why news has an actual advantage to magazines in adopting video in “Video might indeed be the killer app, but not in a good way for all magazines” here.
Back to my point (I swear there is one, folks, I swear!), I’m not saying “selling out is an option” when you wake up in the morning, an entrepreneur should always seek to build a company to become a stand alone entity, but I am certainly saying that “having more potential would-be buyers” makes your company a lot more attractive to partners, clients, investors, advertisers, employees, etc.
Frankly, I think the greater issue is that newspapers are impotent to seize on their natural core competencies, which is a shame, because they have a lot to offer… but there is so much wrong with the decision making process at some newspaper companies that by the time they realize what is what, it’s too late. This happened to magazines in 2000-2005 and is happening now in newspapers at a fast rate.
I am doing some pontificating on whether these trends affect TV more or less than print, and you know what? The answer I am getting to more and more is shocking, and surprising…
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