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Newspapers have historically earned about 80% of their revenue from advertisers and about 20% from subscriptions. However, newspapers typically lose money on th

Newspapers have historically earned about 80% of their revenue from advertisers and about 20% from subscriptions. However, newspapers typically lose money on these subscriptions since the cost of producing and delivering paper outstrips the revenue. It is advertising that subsidizes most of what people think content and delivery costs. - The true unburdened cost of a yearly New York Times subscription in paper is north of $1000. Advertisers cover 70-80% of this cost. - Uniques to nytimes.com are down approximately 20% since paywall implementation. This wasn't supposed to be the case. A porous paywall should lower pageviews but not uniques. This suggests that users are being trained to assume that they cannot access the Times even when they can. This is certainly a harbinger of a decline in influence. - Pageviews are down significantly as well. - Most of the nytimes digital subscribers are print subscriber dollars that they've allocated to the digital product. The problem is that newspapers with paywalls are now optimizing their business to run on the 20% of revenue they never actually used to have instead of advertising which has historically paid the bills. While some may believe this is necessary, I think there are better solutions (especially on the local newspaper level).

TylerE 14y ago
> The problem is that newspapers with paywalls are now optimizing their business to run on the 20% of revenue they never actually used to have instead of advertising which has historically paid the bills. That's a gross oversimplification. Online ad revenue isn't even in the same zip code as print ad revenue. While I can't really discuss our actual ad rates, it is a significant difference. The sites I run, 3 daily newspapers, total print circ is ~80k for all 3 combined - would barely pay for my salary and the servers from ad revenue, if that. Certainly wouldn't pay for the newsroom. Since we went to a moderately strict paywall (approx 50% of stories are paywalled - typically the in-depth stuff) - page views are done a bit, but subscription revenue is up more than enough to compensate for the loss in page views. It's an old saw, but it's true: Print dollars become digital dimes.
- jeremymims 14y ago
  The reason I go with the simple analysis is because most people aren't aware that their newspaper costs quite a bit more than the subscription cost. I'd be really interested in hearing what's working for you and what isn't. Shoot me an e-mail and we can chat: j@ownlocal.com
smackfu 14y ago
>However, newspapers typically lose money on these subscriptions since the cost of producing and delivering paper outstrips the revenue. That just seems like a silly definition of "lose money" though. Like you get income from the subscriber, and income from the advertisers to show ads to that subscriber, but only one is counted against the costs? Doesn't make sense.
- jeremymims 14y ago
  What I mean to say is that as a newspaper subscriber, you've never really paid the full cost of what it cost to write, research, produce, package, and deliver a paper to your door. It's a loss leader with the assumption that print ads would make up the difference and then some.
tsunamifury 14y ago
I've worked with NYT.com on some of their pre-paywall strategies and have several friends who work there currently. All these points aside, the only significant issue is that Newspapers we're propped up on an ad-based bubble that was based on keeping ad-buyers in the dark. Real-time analytics proved that advertising was not as effective as it was sold to be, ad-buyers only had (relative to todays) made up metrics that inflated the value. Now when ad-buyers can see the true value of advertising through real metrics, they are far less willing to pay top dollar for it. Rupert Murdock foresaw this very clearly when he told the founders of Google "... you're going to ruin this for everyone" in reference to allowing ad-buyers to see metrics and bid on performance. To make a very broad conclusion, marketing divisions were allowed larger budgets when they could tell executives they 'took out full page add in the New York Times' vs far less dramatic and less visible campaigns with targeted online markets, conversions, and engagement ratios. The market become less useful when the total audience of an ad turned out to be far less than 100% of the distribution.
- w1ntermute 14y ago
  That's a very grave statement. You're essentially saying that the entire newspaper industry has been propped up on the basis of misinformation regarding the effectiveness of advertising. While this was a lucky flaw that allowed the Fourth Estate to remain afloat, it doesn't look like it'll last much longer. We're really going to be fucked as a society if the journalism industry falls apart.
  - podperson 14y ago
    Perhaps it's more of a transition. In the old world we had centralized media -- paper is expensive, printing presses are more expensive, typeset articles more expensive still, then there's distribution, etc. -- so we need to optimizes the quality of the material that gets printed and distributed. Today you can set up a wordpress or blogspot account for free. So the question is how do we get from a world of edited news written by professional journalists to a new world where a lot of the content is provided more-or-less for free, but we still need reliable places to go for news? We have parasitic sites like Huffpost and Business Insider which essentially SEO content created by professional news organizations -- what we need is something that assembles equivalent stuff from citizen journalists, bloggers, and so on.

TylerE 14y ago

> The problem is that newspapers with paywalls are now optimizing their business to run on the 20% of revenue they never actually used to have instead of advertising which has historically paid the bills. That's a gross oversimplification. Online ad revenue isn't even in the same zip code as print ad revenue. While I can't really discuss our actual ad rates, it is a significant difference. The sites I run, 3 daily newspapers, total print circ is ~80k for all 3 combined - would barely pay for my salary and the servers from ad revenue, if that. Certainly wouldn't pay for the newsroom. Since we went to a moderately strict paywall (approx 50% of stories are paywalled - typically the in-depth stuff) - page views are done a bit, but subscription revenue is up more than enough to compensate for the loss in page views. It's an old saw, but it's true: Print dollars become digital dimes.

jeremymims 14y ago
The reason I go with the simple analysis is because most people aren't aware that their newspaper costs quite a bit more than the subscription cost. I'd be really interested in hearing what's working for you and what isn't. Shoot me an e-mail and we can chat: j@ownlocal.com

smackfu 14y ago

>However, newspapers typically lose money on these subscriptions since the cost of producing and delivering paper outstrips the revenue. That just seems like a silly definition of "lose money" though. Like you get income from the subscriber, and income from the advertisers to show ads to that subscriber, but only one is counted against the costs? Doesn't make sense.

jeremymims 14y ago
What I mean to say is that as a newspaper subscriber, you've never really paid the full cost of what it cost to write, research, produce, package, and deliver a paper to your door. It's a loss leader with the assumption that print ads would make up the difference and then some.

tsunamifury 14y ago

I've worked with NYT.com on some of their pre-paywall strategies and have several friends who work there currently. All these points aside, the only significant issue is that Newspapers we're propped up on an ad-based bubble that was based on keeping ad-buyers in the dark. Real-time analytics proved that advertising was not as effective as it was sold to be, ad-buyers only had (relative to todays) made up metrics that inflated the value. Now when ad-buyers can see the true value of advertising through real metrics, they are far less willing to pay top dollar for it. Rupert Murdock foresaw this very clearly when he told the founders of Google "... you're going to ruin this for everyone" in reference to allowing ad-buyers to see metrics and bid on performance. To make a very broad conclusion, marketing divisions were allowed larger budgets when they could tell executives they 'took out full page add in the New York Times' vs far less dramatic and less visible campaigns with targeted online markets, conversions, and engagement ratios. The market become less useful when the total audience of an ad turned out to be far less than 100% of the distribution.

w1ntermute 14y ago
That's a very grave statement. You're essentially saying that the entire newspaper industry has been propped up on the basis of misinformation regarding the effectiveness of advertising. While this was a lucky flaw that allowed the Fourth Estate to remain afloat, it doesn't look like it'll last much longer. We're really going to be fucked as a society if the journalism industry falls apart.
- podperson 14y ago
  Perhaps it's more of a transition. In the old world we had centralized media -- paper is expensive, printing presses are more expensive, typeset articles more expensive still, then there's distribution, etc. -- so we need to optimizes the quality of the material that gets printed and distributed. Today you can set up a wordpress or blogspot account for free. So the question is how do we get from a world of edited news written by professional journalists to a new world where a lot of the content is provided more-or-less for free, but we still need reliable places to go for news? We have parasitic sites like Huffpost and Business Insider which essentially SEO content created by professional news organizations -- what we need is something that assembles equivalent stuff from citizen journalists, bloggers, and so on.