Newspapers have put themselves into a pickle. For the past decade they have made their content available online for free, while serving up the same content to their print subscribers, the next morning, for a fee.
What has this business model reaped?
Plummeting print circulation. Over 6% loss on average over the last year, and accelerating. Add to this plummeting share prices, and mutinous shareholders, and in some cases the break-up of national chains.
Haven’t the readers who once had home delivery moved over to the online edition?
Yes. However the online edition does not enjoy the wide range of revenue streams that print does.
Print has newsstand sales, paid subscriptions, the ability to sell the subscription list to outside marketers without the subs’ consent, full-page ads, small space ads, pre-printed inserts, Sunday magazines with ads, and the ability to expand and shrink in size as ad demand fluctuates. They can have an ads-to-edit ratio of 3:1 or more (try that online). Yes, print can be very profitable.
Online, newspapers have very few advertising options. There is no chance of adding a pre-printed advertising insert from Target or Sears. No local car dealers buying up pages in the classified section. Full-page ads? Yes, but the IAB says you MUST have a skip-the-ad button on these interstitial units.
Pop-ups? Well, Internet Explorer now blocks ALL pop-ups by default.
What’s left? In-page IAB units, like leaderboards, towers, and the like, and crawl-over or take-over pages.
But there’s an added wrinkle. In the print version, a newspaper can publish hundreds of ads per day, in all variety of sizes, and get paid for each one based on the number of copies printed, even if readers skip over many or most of the pages.
Online, the paper is at the mercy of the reader. What if there is an average of 5 page views per user session? It becomes impossible, therefore, to sell the same quantity of advertisers at the same impression levels as the print version. The difference in ad revenue between print and online is staggering. For the Tribune Company (Los Angeles Times, Chicago Tribune, New York Newsday), Internet revenue is forecast to account for just 6% of their total income for 2006.