The New York Times today reported that their second-quarter profits fell 82 per cent to $21m, or 15 cents per share, compared with the same period a year ago.
The paper also suffered a 16.4% decline in ad revenues for just one month.
It’s pretty astonishing.
The paper responded by raising the price of the paper from $1.25 to $1.50.
Probably will not help.
And of course, the Times is not alone. Gannett reported a 36% decline for the same period.
The only bright spot for The Times was About.com, which they own. Ad revenues up 15.8%.
What we are looking at is the first wave of the impact of the web.
There is more to come.
The web carried text before it carried video. By about a decade. And when sites like Craigslist appeared, they eviscerated what had been a mainstay of newspaper income since newspapers started – classifieds.
Now newspapers have two choices: they can reinvent themselves or they can go out of business. Reinvention looks a lot better. Because the function that newspapers do – going out into the community, gathering stories and publishing them, is a worthwhile function. The problem with newspapers is the paper part. Fully 85% of the cost of a newspaper is the physicality of the paper: the ink, the paper, the presses, the trucks to deliver them. The web does all this for free. So papers are running to the web.
And as the web goes to video, that is where papers want to be if they’re going to be competitive.
Which puts them in head to head competition with another group that is already doing video news from the community.
There is only room here for one of these two competitors to survive.
Which one will it be?
My guess: the one that is fastest, leanest, covers the most stories (as this is the web, there is no ‘show’ any more, no half hour newshole. The news hole is a black hole. It never ends.
Where will the viewers (and advertisers) go?
To the one that offers the most interesting and compelling stuff.
Which will it be?
How will they do it? How will they ‘feed the beast’ and its limitless appetite?
On this I have a pretty good answer.