Online Newspapers Turning a Profit

PCOL writes "The Asia Times reports that after years of losing money, online newspapers are starting to pay off. The New York Times has gone from losing $7.5M on their site in 2001 to an $8M profit in 2002. The new profitability is attributed to changes in the technology for delivering ads which make it possible to embed advertising in news stories and tie the ads to articles related to reader's interests without resorting to pop-ups and banners. As print newspaper readers age and die, no new readers are replacing them and one survey found that 46 percent of all journalists believe that within 15 years their publication will only be available online."

Comments

How Are Slashdot Subscriptions Doing?

[Anonymous Coward]

just wondering.

inquiring minds want to know.

News, the hot commodity...

[crashnbur]

Could this have anything to do with September 11? I got hooked on using online newspapers for news (as opposed to television news networks and programs) during the election 2000 cycle when Bush and Gore were bickering about chads and dimples -- it gave me something useful to do with the Internet. And while I'm sure most of you didn't care about the election as I did, I think September 11 had a profound impact on how much current events information people crave.

And, as we all know, the television and print news are scripted (at least insofar as they only tell what they have space/time to tell). The Internet, on the other hand, has virtually infinite potential. Concentrating specifically on news, you can find news regarding just about anything online that you can't find in print or on television.

Finally, the absolute best way to find news on any topic: go to Google News and search for a topic in the same way you would typically use the standard Google search engine. The news search scans Internet newspapers from all over the world and delivers instant links to ANY reports containing the search words. Default sorts by relevance, but I prefer to sort by date for the most recent articles first...

I LOVE MY GOOGLE. And for those who were not aware of the wonderfulness of their news site, I hope you love it too. :-)

Re:News, the hot commodity...

[Telex4]

I think September 11 had a profound impact on how much current events information people crave.

I think it has just made many people crave reassurance. Witness the huge ratings for "news" channels like Fox, and the reaction against many channels like BBC News 24 here in the UK for providing such constant, raw (in the sense of live and out of the studio, because it was of course more or less scripted by the military) coverage, which was just too much for a lot of people.

Of course it's probably had the side effect that many people are now far more current affairs savvy, and hopefully it will transfer into more of a current-affairs-savvy culture, not just in relation to America's latest ventures. The Internet is one possible vehicle for this, given it's strength in linking many issues together (though of course on the flipside it will often just as easily contain people through a lack of wider linking). That's one thing that Google is good for - a slightly wider view :)

I haven't read a newspaper in awhile

[IIRCAFAIKIANAL]

I'm 23 years old and I hardly ever read the paper. I get all my news online (not just from Slashdot :) and occasionally from television. A lot of the older people I know still read newspapers, but even my boss at work gets a lot of news online.

I have a question though - how do traditional newspapers make money? Is it mostly ad revenue or is it from actual sales? Whats the split? Why did it take so long for web news to catch up?

Re:I haven't read a newspaper in awhile

[hlh_nospam]

Newspapers charge the ultimate consumer barely enough to cover distribution cost, if that much; the majority of revenue is for advertising.

There are a number of 'news'papers that you can pick up on the way out of the grocery store for free. They not only make all of their revenue from ads, their ad rates are typically lower than the larger papers that charge for subscriptions, and are usually better targeted. That's why I run most of my own advertising in the small specialized local papers.

I sell insurance, primarily to the over-65 market, but I also sell some insurance alternatives. It isn't worthwhile to me to market outside of the area I can easily reach by automobile. Therefore, the local, specialized papers not only save me money on ad costs, but give better returns. There are 10 different freebie publications that cater to the senior market in the Dallas area, and I could place ads in all 10 of them for less than the comparable ad in the Dallas Morning News.

There is a book that I read lately, The 11 Immutable Laws of Internet Branding, by by Al & Laura Ries, that goes into this phenomenon and others in a general sort of way. I listened to the audio book, and I found it to be very informative. I'm planning to put my copy of the audio book up on eBay (actually, my wife will be doing the listing) in the next week or so, in case anybody is interested.

Re:I haven't read a newspaper in awhile

[babbage]

If you take the public tour of the Boston Globe's headquarters, they'll tell you that it costs something like $2.50 to print each copy of the daily paper (more on Sunday, obviously). And yet the cover price is only fifty cents -- obviously advertisements are defraying the majority of that cost. You do the math :-)

The ratio will vary from paper to paper, but I think that consistently you can assume that advertisements are paying for the bulk of the cost for any media.

In some arrangements, advertisement is high enough that the cost for the product is actually free -- radio is free, broadcast television is free, basic cable channels are "free", etc. In other cases, the audience pays for some or all of the cost that goes into production -- subscription fees for newspapers & magazines, the additional cost of premium cable channels, etc. In still others, the publication takes little or not commercial sponsorship, and the audience has to bear the cost explicitly -- think "Consumer Reports", public broadcasting, and technical publications like scientific journals (aren't "Science" & "Nature" each in the ballpark of $1000/year?).

If you look at things in terms of "following the money", then most media are not there to deliver a product (information, entertainment) to the audience, but to sell that audience to their sponsored advertisers. The only [partial] exception I can think of is public broadcasting, where the audience is the sponsor, and is begged for money several times a year. But really, that's not an exception -- that's just making the dynamic that's always there more visible to the general public.

This dynamic sheds a lot of light on the advertiser/subscriber ratio that goes into the costs of any media, including newspapers. The idea is that a non-paying audience is worth some value N, but a paying audience must be more valuable, because the act of paying a subscription fee demonstrates that they actively want this product. That's why, of the three biggest newspapers here in Boston, the Globe & Herald are both fifty cents per day, but the Phoenix has experimented for the past few years with not charging anything for a copy. This has probably increased their readership while impacting their income; if they can sell that larger audience to their advertisers, then maybe they come out ahead anyway -- I don't know. But for the other two papers, I'm sure that both (and every other fee-charging paper in the country/world) are using their paid subscription population as a bargaining chip with advertisers.

So putting all this together, web publications are just another point on the spectrum. Since very few sites have managed to do well with a subscription model (WSJ.com and Salon being maybe the most prominent attempts), most are leaning towards the advertising end of the spectrum -- just like radio, TV, and the "Boston Phoenix". This is a model that has been used for many decades now, so it's not like the web is just starting to "catch up" with traditional newspapers. Indeed, since most newspapers have seen steadily declining readership for the past 15 years or so, its not necessarily that the web is learning the newspaper world's tricks, but that one is coming up while the other is coming down. Maybe.

More optimistically, I prefer to think that the web is starting to mature & hit its stride, and certain areas are beginning to become self-sufficient & even profitable. Not all, obviously, but we're moving beyond nonsense like Pets.com :-)

(Note that, even though I happen to work for a newspaper's site, I don't speak for my employer. Moreover, I'm not giving away anything that I didn't learn in media studies 101 in college -- the economics of mass media is a well studied & analyzed subject. Just to be clear about that

NYTimes website LOSES 7.5mil in year?

[practicalreality]

Somebody better audit these guys. There is no way extending something you are doing in print to a website should cost 7.5 mil a year let alone have a loss of that size after figuring in advertising. The one time cost of setting up this system should not have even cost that much.

Nice to know they'll be around for a while...

[Amiga Trombone]

...since these days the internet is almost exclusively my source for news. I gave up subscribing to dead-tree newspapers years ago. I'd just wind up grabbing them off of the porch on the way out the door, tossing them in the car on the way to work, and having them accumulate until I got around to throwing them out. Just don't have the time to sit down and read 'em.

The great thing about getting news off the 'net is that you aren't constrained to the news your local publishers feel is relevant. Interestingly, I find that some of the most relevant news about the U.S. is published in foriegn papers, and ignored domesticly.

Ten years ago, my chances of ever seeing an article that originated in the Asia Times were pretty much zero.

And then, of course, you have sites like ./, which collect items of interest to a specific audience from all over the world. Things I'd probably never see otherwise.

I can't even imagine having to go back to being limited to what was published on paper. I'm glad publishers have developed a model that will make that unnecessary.

I like reading the paper....

[Anonymous Coward]

I've recently subscribed to Boston globe for delivery to my house. I basically have to stare at computer screen all day long as it is my job...even with Herman Miller Aeron chair, ergonomic keyboard, and trackball mouse, my body aches at the end of the day. So now, I try to do stuff OFFLINE if I can, evenif it costs me abit more money.

Plus, how am I ever going to read the Sporting news when I'm taking a dump???

Re:Main advantage of paper

[eenglish_ca]

I am the opposite. I use the computer for hours every day without any problems at all. I also have my monitor set 17" at 1280*1024@85hz and sometimes a second 14" at 1024*768@60hz. I haven't had my eyes hurt at all. Yet, when I read a book my eyes go into shock as they begin to pool with blood from staring at the paper. The other notable thing is that when I read a book I always have my head at an awkward angle and end up with my neck hurting my seriously. If you do have eye problems with the computer, sit back from the screen atleast 2 feet and look away from the screen whenever you feel everything else in the room begin to zone out as you get tunnel vision. Anyways, I never read the never read the newspaper for the news, only the comics. For the news I read the source we all know and love, the almight: /.

Re:Main advantage of paper

[Telex4]

I had a long conversation with my Aunt about this, who's a university lecturer who loves her books :)

It seems to me that print media won't die out for a while yet (never say never ;), since there are so many advantages to paper copies. They're nicer to hold, and easier/more comfortable to read. They're more intuitive to browse, and they give you a chance to just sit back and drift through the information, rather than whizzing through pages like you do on the web. Going to libraries and looking through newsPAPERS also helps you find stuff you might otherwise not have looked at.

That said, electronic media also have several advantages. They're quicker and easier to access, and so are ideal if you just want to find something out. Being able to word/phrase search, and use powerful tools is also a huge boon for research purposes.

Paper and electronic media both have their advantages. I think we'll just see a reduction in the scale of production of paper reference media, as that's primarily where electronic holds more advantages than paper.

Oh, this is tooo funny

[MrGibbage]

I just posted a reply to the TiVo thread about how in the world did NYT figure out how to get around Mozilla's anti-popup settings. NYT is definitely using popups, and they are getting quite militant about it. Looks like "same 'ol, same 'ol" to me.

A few comments

[Galvatron]

First of all, what does it mean that the NYT is now making $8 million on its website? What expenses are we considering here? Given that last year they lost $7.6 million, we're obviously considering more than just bandwidth costs. Presumably we're counting all technical and administrative people that deal specifically with their online presence. But presumably we're not counting the cost of writing the articles in the first place, presumaby that's accounted for in the cost for making the dead tree version. So, in a sense, the paper version of the NYT is still subsidizing the online version.

Second, I'd like to comment on the fact that the news media made the transition to the Internet without too much difficulty. They're now distributing online, without any form of copy protection, what used to be sold as a physical product. Perhaps as notable, the major comic syndicates have done likewise (although as I understand it, artists are not yet being compensated for people who read syndicated comics online). There are a lot of kinks left to iron out, but it looks like this is going to work, and that most of these companies that could have been wiped out by online competition will survive, even flourish, in an online environment. Perhaps the RIAA and MPAA members ought to look to the newspapers for ideas?

Finally, just one note I find amusing: sci-fi authors have been predicting some form of electronic news reader that gets continious or periodic updates for quite some time. I believe such a device was featured in 2001. Nice to see that some predictions do actually come true :)

Re:I sure hope not.

[jesterzog]

Any library can archive their old papers for reference for all. Electronic media, as we're all aware, is subject to technology shifts, media that decays considerably faster than paper, and so on.

I can't speak for most libraries, but my local library stores all of the old newspapers on microfiche, along with many other old and rare documents that are difficult to get on paper. Keeping the paper copies in the first place simply isn't feasible. From what I understand, most of it comes through various services that archive the content and then pass it on to subscribing libraries.

I'm not as concerned at this point, because libraries generally have a lot of experience with archiving information. The methods they use are quite organised, and they're not going to go away without the information being able to be converted to whatever system takes over.

What I'd be more concerned about is if libraries will start properly archiving digital newspaper content at all. When the information is digital, it puts the archiving much more in the domain of the media companies that produce the newspapers -- I'm sure they'd prefer to charge users directly for access to the content than have their databases distributed to libraries. Even if libraries subscribe to the services so their users can access the database, it's still a single point of failure back at the media company where the main database is stored.

What I hope would happen is that the media companies will introduce local-media subscriptions for entities like libraries, where they'll periodically send out CD sets or DVD sets to the libraries that subscribe, with uncrippled information stored on them. At an appropriate time in the future once CD's and DVD's are no longer used, libraries would need to be able to access the information well enough to transfer it to whatever the new media format is, as they can currently.

that's it?

[binarybum]

46 percent of all journalists believe that within 15 years their publication will only be available online."

This sounds a bit pesimistic to me. The cost cuts that could be made by going digital seem incredible. Competition will likely drive all but the biggest papers into the digital realm. 15 years seems a bit long though. The major obstacle will be portability, but with the cell phone explosion and the implementation of efficient hi-res full color screens and better batteries, this will no longer be an issue.

On a similar note, if bandwidth can ever outgrow demand, the papers will all be buying video cameras and we'll be seeing a blur between newspaper and news channel. In fact, it might not be a bad idea to buy stock in the newspaper companies now. They'll have the upper hand when it comes to delivering you news when they are more like TVmedia. Currently TV media relies on newspapers for finding the stories for them to report on. They could be high and dry when the newspapers are releasing the footage they would normally have grabbed.

Re:Main advantage of paper

[SanLouBlues]

These points are biased since I've read the paper since I was middle school and I delivered it for eight of the years since then (tip your paper person please).

1) Things can catch my eye that wouldn't in an online paper. ie articles on the front of a section that I don't usually read or a little column that's hard to find in the online version (this happens a lot with the W.Post).
2) I can discuss the news by talking to people. Plus I get the visceral joy of seeing people.
3) I don't get ink on my hands because I spread the paper out on my kitchen table and use my hands for breakfast.
4) I don't have to click through five pages to read an article. The most I have to do is find a new page once.
5) Cheaper. I have yet to spend as much money on papers as I do on computers yearly.
6) Comics. Yes, they're online, but seeing complete pages full of comics means about 100 times less effort to read them daily. (Counter-point: Web only comics are succesfully returning to the large formats that have been unused in newspapers for the last 70 years)
7) I like going outside to get the paper every morning whether it's raining or not.

All that said, I can't wait for electronic ink to replace the old paper . . . as long as I can still look through the last week or more of articles.

Misleading

[strook]

When I first read this I thought "Wow, 46 percent of newspapers are going to die?" But there's a very important misrepresentation here. The article does not say "46 percent of all journalists" believe their publications will turn web-only. It actually refers to "46 percent of all trade title journalists." That's much less shocking.

Personally, I'm glad to see the rise of online news. I want to get to the 10-25% of all news that really interests me. That's much easier online than with a physical newspaper. Although television news is the worst of all; you have to wait through everything you're not interested in due to the inherently linear format.

Re:Success of Online News is Good News for the Wes

[Anonymous Coward]

Consider what life was like 15 years ago.

Hmm, let's see. Back then I had an Apple IIsomething. It never gave me problems. Back then, a computer was like a lamp... you just turned it on and it worked, then when finished you turned it off. If you wanted news you turned on CNN, which hadn't started showing a lot of "big media" symptoms yet.

If you wanted an answer to a question you just called the library.

I traded tapes and floppies with my friends, and was blisfully free of the DMCA as I learned about and cracked the various "copy protection" schemes.

"Computer security" meant you had a server with a lock on it. Nothing smaller than a briefcase could be used to track your whereabouts. Calling a company meant you got to talk to a person who actually worked at that company.

Terrorism in the US meant people with beards hijacking airplanes and asking them to be put down someplace other than their intended destination. The constitution meant something and a decent man was president ("government IS the problem").

America was still shaking off fears of communism but was optimistic about the future. My parents weren't making a lot of money but we managed. Things we didn't like about the world were mercifully hidden from view. Sure, people couldn't communicate as easily, but hate-filled groups couldn't get in touch very easy either.

Yeah, that really sucked... but hey, today I can look up stuff on Google really fast.