Friday, April 14, 2006

News Blues in Print as Online Ads and Eyes Grow Rapidly in News and Beyond

Earnings week for many U.S. major newspaper chains surfaced fairly gloomy reports, according to The New York Times, paidContent.org and others this week. Print ads were down in key areas such as automotive where online has started to pay off in a big way for local and national advertisers, even as production costs such as newsprint continue to climb. Online news sites were reporting healthy gains, but the highlight was in Staci's report on paidContent.org where she noted that NYT's About.com was reporting about 40 percent margins on USD 18.8 million in revenues - earnings that the Times believes are highly sustainable. So in part the answer to the "can we afford to be in the news business" dilemma is to accept that today's news is but one form of content that people reference to get answers to key questions.

The About.com portal was in many ways ahead of its time when it launched back in the dot-com heydays, providing a personal editorial voice to knowledge on specific subject matters long before weblogs and wikis ever pushed to the front of the buzz stream. News has editorial control as well, but there is something about having "real-world" experts providing editorial control in the About.com portal that provides a different level of trust in people's eyes when they are researching a topic.

Online news portals are getting more sophisticated as well in providing background content on key topics in the news, but with news finding its value in many contexts beyond newspaper portals such as weblogs and social content sites it's not clear that newspapers have perfected the formula to build online margins significantly beyond their current levels through news alone. As more pressure is put on news organizations to keep margins up during the shift to online consumption expect them to pursue additional acquisitions and alliances that will broaden the range of content that their ad services can support.

While many worry that this drift of revenues away from traditional news organizations is worrisome for the future of journalism, in the long run it is likely to mean that we'll have media organizations that are able to monetize news far more effectively through a broader variety of multi-faceted content outlets. It promises to be a rocky road for news organizations for a couple of years yet, but at the end of that road could be a new "golden age" that will bring new life to quality news production efforts.
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