|
Wyatt’s World
By Wyatt Emmerich We will keep cranking the presses When
people learn I am in the newspaper business, I invariably get asked
about the Internet and its effect on printed publications. Ink
on paper has been around for 500 years and I believe it will be around
forever. That being said, the Internet is an exciting, vibrant new
medium that has created more competition for advertisers and readers. It’s
not unlike what happened in the restaurant business. Twenty years ago,
there were only a handful of fine dining restaurants in Jackson. Now
there are dozens. It doesn’t mean the restaurant
business is not healthy. It just means more competition. You have to
operate efficiently or you’re history. This is the inevitable result of
free markets. Over the years, the newspaper
industry has proven to be a survivor. In the early part of the last
century, unionization and intense competition made publishing a tough,
low margin business. Then came a successive
series of electronic competitors: radio, television, cable, satellite
and the Internet. Not to mention direct mail, shoppers, hand flyers and
just about anything else you can think of. The ad
business had a good long run of higher than normal profits. Profits
attract capital. Capital creates competition. Competition lowers
margins. Lower margins discourage capital. Lack of capital reduces
competition. Lack of competition increases margins. It’s a natural
cycle. Think about how many specialty
publications now exist in Jackson compared to a decade ago. There are
literally dozens of new printed publications. Technological advances
have vastly lowered the cost of production, allowing more choices for
readers and advertisers. Most people don’t realize it only costs about 25 cents to print and deliver a paper. You
see this trend in every industry, not just in publishing. The Internet
has altered the business model of virtually every industry from
manufacturing, to retailing, to shipping to accounting. There
is clearly a viable demand for print. I see that every day. My
challenge as a manager is to operate efficiently. This central aspect
of what I do is the only thing that hasn’t changed about my business. In
fact, the Internet has been a bit of a bust as an advertising medium.
Print ads command almost 10 times the price of Internet display ads on
a per eyeball basis. To be sure, ‘search’ has been a huge bonanza for Google, but the pop-up display ads have experienced far less success. I
like to use the analogy of a driver versus a passenger in a car. The
passenger has the luxury of looking out the window at the billboards,
but the driver has to watch the road. Online, you
are in the driver’s seat, busy choosing the content. In contrast, print
readers are passengers. The content has already been chosen. This makes
print readers more open to advertising messages. Politico, a famous political web site, only makes money from its print magazine offshoot. If
web display ads can track surfing habits and serve up custom ads to
individual readers, web advertising will be very profitable. Two
problems with behavioral targeting: One, Congress is on the verge of
banning it based on privacy concerns. Second, the content providers
(such as newspaper web sites) are getting peanuts while the
intermediaries (ad agencies) are making all the profits. Right
now, newspapers, magazines and other content providers are trending
toward hybrid pay web sites. The headlines are free, but you will have
to pay to get the full story. This is not unlike what has happened in
the music industry. Consumers may have to make
a choice: Either let web sites track your surfing and serve you up
customized ads or get ready to start paying for a lot of previously
free content on the web. Quality content costs
money to create. If there is not a viable way to monetize local
content, content will suffer. This is happening now. There are 25
percent fewer journalists in America today than five years ago. The
current web business model is not working for content providers. Get
ready to see some changes. My company operates a
dozen web sites across the state. Most are the dominant web sites in
their markets. Two will be going to a ‘hybrid’ pay model this month.
The headlines are free, but to read the whole story you must be a
subscriber. Pay versus free? Printed products
have wrestled with the dilemma forever. Some publications are free.
Some are pay. Web sites will be the same. One thing is for sure: To get
people to pay, you must have quality content that is unique. Looking
at the stats on print and screen readership and advertising trends from
25 local Mississippi markets, print is hands down the more popular
medium for local news. Readers prefer it 10 to one. Advertisers 20 to
one. Until those numbers change, we’ll keep cranking up (and improving)
the presses.
|
