The Cold Hard Facts
Peter’s blog about the final issue of the Rocky Mountain News and my desire to try and explain the challenges facing online content providers now that I’ve spent the better part of the last year learning everything I can on the subject compelled me to write a blog post on the subject.
I’ve been watching the demise of the newspaper industry with great sadness and interest. Until I took on the task of transitioning No Depression online I did not fully understand why journalism, and more specifically online journalism where writers are paid, was failing.
I come from a newspaper family. My dad spent his entire career from the early 60’s through the mid 90’s at the Spokesman Review and Spokane Daily Chronicle. He started in advertising sales and worked his way up to General Business Manager and spent his last years there at the helm of the business operations for both papers. After I graduated from the University of Washington School of Business I went to work for the Seattle Times and Seattle Post-Intelligencer selling advertising. I worked there for 7 years until the birth of my first son in 1993 and started working on No Depression in 1995 as the first issue was heading to the printer. There is ink in my blood. I’m a music fan for sure, but my first love is business and the publishing industry.
In trying to uncover or invent a viable business model for No Depression online I have been researching all I can about online advertising and have learned that according to industry experts it’s a “broken business model”. The average cost per thousand (CPM) received by web sites for banner ads sold through ad networks is in the range of $.60-$1.10 as cited by this interesting Media Post article, at our current traffic that wouldn’t even add up to $1000 per month, and that would be ALL our ad inventory, with nothing left to sell direct. I opted not to devalue No Depression’s content by taking the pittance we could receive from Google ads and banner ads from ad networks. The banner ads that we are selling directly are in the $6-$10 CPM range and with the challenges facing record labels these days it’s been a struggle to sell even a small percentage of our available inventory. The amount we have been able to sell is not enough to cover even the basic business expenses, let alone the editorial budget, yet we reach considerably more people online than we did in print (over 80,000 unique visitors per month as of 4/10). For comparison an average print CPM is between $30 and $50. If No Depression had VC or investor money to work with I might have held on awhile longer, not that I see anything changing in regards to online business models anytime soon, but since it’s been my own personal cash funding the shortfalls I have no choice but to work smarter and adapt quickly.
I’ve been following the trials of the newspaper industry and surveying other online content providers to see if there are emerging business models that will provide the revenue necessary to sustain business operations and editorial budgets. I attended a Seattle City Club panel discussion on the newspaper industry and got up at the end and asked the question “what’s the business model” of the two panelists who are currently operating online. It was an interesting discussion but having been to several panel discussions on the topic by now along with researching extensively online I have found the outcome is always the same, the best and brightest in the industry have no idea of the path forward. The current economy is a factor but the web was already killing print, and revenue from web advertising is insufficient to support a viable business.
There is currently no workable model to charge a subscription for online content so that piece of the revenue which added a significant amount to our bottom line while in print is no longer available to help support the business.
Some believe that we are in the middle of a transitionary period currently where there is still plenty of quality free content on the web that’s being aggregated from various newspapers who are paying writers to create content but as newspapers continue to fail and the source of that content dries up the pendulum will swing back the other way and people will be motivated to pay for quality journalistic content and business models will emerge to support content providers so they can pay writers. Don McCleese wrote a great piece on the No Depression web site, Yesterday’s News Is Tomorrow’s Loss that touches on this. It’s an insightful article I highly recommend.
The Stranger, one of Seattle’s weekly publications, wrote a great piece on the situation currently unfolding at the Seattle Post Intelligencer. Read it here. The PI is owned by Hearst and they announced a couple months ago that the paper was for sale and if no buyer stepped forward it would be shut down the middle of March. There has been speculation that they will go to an online only format and this article has some interesting insights as to what the future may hold for the PI. Given what I have learned I think it’s probably the only way to go at this point and not entirely dissimilar to the path that I have determined is the path of last resort for No Depression at the current moment.
It saddens me greatly to be unable to pay No Depression writers and also to ponder a future without a daily printed newspaper. I can only hope that change will deliver a brighter future with currently unforeseen benefits. If you haven’t already read the intelligent blog post by David Haskin “The Silver Lining” on this site, please check it out. And here’s to a transformative future!
I’m a lover of quotes and these are some that I have referred to often through the trials and tribulations over the last year trying to keep No Depression alive.
“As for the future, your task is not to foresee it but to enable it.”
Antoine de Saint-Exupery
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”
Sir Winston Churchill
“It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”
Franklin Delano Roosevelt
“We must take change by the hand or rest assuredly, change with take us by the throat.”
“Success seems to be largely a matter of hanging on after others have let go.”
Publisher William Feather