A time-travel fantasy of mine is being a fly on the wall at a newspaper or magazine boardroom at the dawn of the World Wide Web. At some point in 1993 or 1994, editors and business-side people of print publications huddled and, somehow without the help of peyote, exclaimed: “Bingo! Put it all out there on Netscape for free and let’s see what happens. Nothing ventured, right?”
They so rue the day. Now a decimated journalism “industry” is trying to go back and train millions of free blog-consuming readers that they actually have to pay for online content, please/maybe/thank you. Knight-Ridder is gone, having sold itself to McClatchy in 2006, which is not exactly proud of the deal. Tribune, the parent of the Chicago Tribune, Los Angeles Times, and Baltimore Sun, barely endured a costly bankruptcy. The Washington Post Co. spun off Newsweek and can no longer count on the largesse of its challenged Kaplan education unit. Businessweek, and yours truly, was rescued by Bloomberg on its 80th birthday.
The venerable New York Times, whose shares have tanked 89 percent in 10 years, is worth less than the $1 billion Facebook just paid for a photography app, Instagram. Craigslist and Monster eviscerated print classifieds. Google and Facebook hogged online ad dollars. Department stores merged and Detroit failed, taking retail and auto ads with them.
With all that, the numbers reported by the New York Times Co. this week are worth a second look. The Times’ total advertising fell 8 percent, and the company expects continued pressure into this quarter. And even digital advertising sales dropped 10 percent from a year earlier, to $71.1 million. You can blame the company’s underperforming and all-but-forgotten About.com portal, which it bought back in the day for $400 million. But take away About, and the news group’s digital revenue still slipped on its own. “We’ve started to see digital advertising be much more sensitive to the macroeconomic environment,” said Scott Heekin-Canedy, president and general manager of the New York Times, on the earnings call. Ominously, digital ad revenues as a percentage of total company ad revenue fell this past quarter.
And yet circulation sales gained 9.7 percent, to $227 million, the company said. Circulation benefited from a 16 percent jump in its digital subscribers, to 472,000. Finally.
Think about this. U.S. newspapers last year lost $10 in print advertising sales for every dollar gained online, according to the Pew Research Center. That was worse than 2010, when newspapers lost $7 in print advertising for every dollar made from digital. Could the Times, which recently cut the number of its newspaper’s free articles people can read on its site to 10 a month from 20, finally be onto something? Is it finally flexing the pricing power it has with loyal readers to get paid for all the journalism it invests in?
Although the company has been a case study in financial mismanagement, it is now generating an average of $250 annually for every digital subscriber, according to Barclays Capital. If the Times can continue to add paying readers to its rolls, while squeezing more out of its print subscribers, it just might have what it takes to offset declines in print—and now digital—advertising. Might.
This realization might be 19 years too late. And it won’t necessarily apply at less indispensable publications, which have spent a decade gutting their content. But any hint of good news is welcome in the post-apocalyptic business of journalism in 2012.