4 ms·

Interesting analysis, but with 80% of the profit going direct to the journalist, I have a hard time imagining how they give their sales staff a decent commissio

by morisy 17y ago

Interesting analysis, but with 80% of the profit going direct to the journalist, I have a hard time imagining how they give their sales staff a decent commission AND cover their overhead. In such sales-driven industries, the commission alone regularly hits 15% and upward. That means at best, without a dedicated sales staff, there's going to be a lot of that remainder traffic that doesn't require sales staff and pulls in even lower margins. Edit: The blog post goes into all these issues quite well, including factoring in a commission in his calculations. So, yay original poster

michael_dorfman 17y ago
What it really means is that online ads simply don't pull in enough money to support journalism, except in weird edge cases-- another business model is needed. Exactly what that business model might look like is left as an exercise for the reader.
- morisy 17y ago
  Great point. I would add the caveat that "online ads as they currently exist simply don't ...". Jeff Jarvis (http://www.buzzmachine.com/ http://www.buzzmachine.com/) has been pushing papers to jump into marketing packages that go beyond the ad/CPM model. It requires better sales/marketing/ad staff and innovation, and isn't as simple as "We have your target market hostage," but then again, the pay is a lot better.
  - Perceval 17y ago
    One wonders why the major news/media corporations haven't simply cartelized their ad space. If NYTimes, News Corp, Knight-Ridder, and Conde Nast got together and decided the ad space in their properties would cost $X, where X is enough to sustain good journalism, people would probably pay X in order to advertise in those websites, because they have large prestigious markets.
    - michael_dorfman 17y ago
      I'm not so sure of that. The problem with web-based advertising is that it is so damned measurable-- it's trivial to see if your ad is working or not (where "working" is defined as leading to a conversion appropriate to the task at hand.) In the old days, a company might pay $X to run a print ad, and suspect that it was helping business, and then run it again, etc. Now, it's trivial to know for sure, one way or the other. Which means that ad prices get tied to actual effectiveness, not to some amorphous notion of "prestige". In other words: a lot of print advertising was horribly overpriced. I don't think a cartel is going to be able to put that toothpaste back into the tube....
    - morisy 17y ago
      Only slightly related, but a number of media outlets are currently talking about cartelizing their web subscriptions. I think that Michael_Dorman's largely correct on this issue, however: If they do find they can even legally follow on your suggestions, there is still the next question of whether it's the most cost-effective buy. For some branding purposes (the prestige buy you mention), it might be. But while that is a substantial spend, it's not the majority spend and at the end of the day, cartel or not, the revenues simply won't reach where they need to be to support their businesses.
    - anamax 17y ago
      > If NYTimes, News Corp, Knight-Ridder, and Conde Nast got together and decided the ad space in their properties would cost $X Those folks have been selling ads for some time. What evidence do you have that they're doing it (significantly) wrong? Note that all of those publications are losing off-line subscribers like crazy and the on-line numbers aren't growing as fast. Are there anti-trust implications in your proposal?
      - Perceval 17y ago
        As far as I can tell, those corporations have been using third party ad networks to serve ads on their web properties. I think that limits the amount of control the NYTimes or WSJ might have over the pricing of ads, since the same ad might be run on a high-status newspaper like Washington Post and also on middling web-only pages alike. I'm sure there are anti-trust implications if done improperly. But "The Deck" advertising network works on the same principle: limit ads to a certain network of blogs with a certain type of content, charging a different rate, having control over the type of ads, and delivering a certain known target market to advertisers. My idea for the big news/media corps is essentially the same. http://decknetwork.net/ http://decknetwork.net/
- mchafkin 17y ago
  Right on. The problem is the advertisements. Someone needs to figure out how to charge print CPMs for online content. It means thinking beyond banner ads--maybe even the whole CPM model. Meanwhile, the calculations in this post are very conservative. Lots of journalists make more than $300 for a 1000 word article. The financial situation for working online journalists is even more difficult than suggested by the post.
greyman 17y ago
Moreover, in the so-called "real" journalism, in many cases the reporter actually has to physically go somewhere to witness what is happening, and then the total cost of producing an article is even higher, in other words journalism work is not only writing. But still, in certain sectors like Tech or some other niches, the best outlets actually are profitable online; those are typically something between media and blog, like Techcrunch, gadgets blogs etc., where about 10 reporters are pumping out articles 24h/day, and maybe about 25% of articles can be called journalism (they called someone or went to some event). But where this model doesn't work are general news, since they are quite expensive to produce and yet not perceived as very valuable. There it doesn't work.

by morisy 17y ago

michael_dorfman 17y ago

What it really means is that online ads simply don't pull in enough money to support journalism, except in weird edge cases-- another business model is needed. Exactly what that business model might look like is left as an exercise for the reader.

morisy 17y ago
Great point. I would add the caveat that "online ads as they currently exist simply don't ...". Jeff Jarvis (http://www.buzzmachine.com/ http://www.buzzmachine.com/) has been pushing papers to jump into marketing packages that go beyond the ad/CPM model. It requires better sales/marketing/ad staff and innovation, and isn't as simple as "We have your target market hostage," but then again, the pay is a lot better.
- Perceval 17y ago
  One wonders why the major news/media corporations haven't simply cartelized their ad space. If NYTimes, News Corp, Knight-Ridder, and Conde Nast got together and decided the ad space in their properties would cost $X, where X is enough to sustain good journalism, people would probably pay X in order to advertise in those websites, because they have large prestigious markets.
  - michael_dorfman 17y ago
    I'm not so sure of that. The problem with web-based advertising is that it is so damned measurable-- it's trivial to see if your ad is working or not (where "working" is defined as leading to a conversion appropriate to the task at hand.) In the old days, a company might pay $X to run a print ad, and suspect that it was helping business, and then run it again, etc. Now, it's trivial to know for sure, one way or the other. Which means that ad prices get tied to actual effectiveness, not to some amorphous notion of "prestige". In other words: a lot of print advertising was horribly overpriced. I don't think a cartel is going to be able to put that toothpaste back into the tube....
  - morisy 17y ago
    Only slightly related, but a number of media outlets are currently talking about cartelizing their web subscriptions. I think that Michael_Dorman's largely correct on this issue, however: If they do find they can even legally follow on your suggestions, there is still the next question of whether it's the most cost-effective buy. For some branding purposes (the prestige buy you mention), it might be. But while that is a substantial spend, it's not the majority spend and at the end of the day, cartel or not, the revenues simply won't reach where they need to be to support their businesses.
  - anamax 17y ago
    > If NYTimes, News Corp, Knight-Ridder, and Conde Nast got together and decided the ad space in their properties would cost $X Those folks have been selling ads for some time. What evidence do you have that they're doing it (significantly) wrong? Note that all of those publications are losing off-line subscribers like crazy and the on-line numbers aren't growing as fast. Are there anti-trust implications in your proposal?
    - Perceval 17y ago
      As far as I can tell, those corporations have been using third party ad networks to serve ads on their web properties. I think that limits the amount of control the NYTimes or WSJ might have over the pricing of ads, since the same ad might be run on a high-status newspaper like Washington Post and also on middling web-only pages alike. I'm sure there are anti-trust implications if done improperly. But "The Deck" advertising network works on the same principle: limit ads to a certain network of blogs with a certain type of content, charging a different rate, having control over the type of ads, and delivering a certain known target market to advertisers. My idea for the big news/media corps is essentially the same. http://decknetwork.net/ http://decknetwork.net/
mchafkin 17y ago
Right on. The problem is the advertisements. Someone needs to figure out how to charge print CPMs for online content. It means thinking beyond banner ads--maybe even the whole CPM model. Meanwhile, the calculations in this post are very conservative. Lots of journalists make more than $300 for a 1000 word article. The financial situation for working online journalists is even more difficult than suggested by the post.

greyman 17y ago

Moreover, in the so-called "real" journalism, in many cases the reporter actually has to physically go somewhere to witness what is happening, and then the total cost of producing an article is even higher, in other words journalism work is not only writing. But still, in certain sectors like Tech or some other niches, the best outlets actually are profitable online; those are typically something between media and blog, like Techcrunch, gadgets blogs etc., where about 10 reporters are pumping out articles 24h/day, and maybe about 25% of articles can be called journalism (they called someone or went to some event). But where this model doesn't work are general news, since they are quite expensive to produce and yet not perceived as very valuable. There it doesn't work.