Saturday, May 19, 2007

Chron unable to 'monetize online eyeballs'

The Chron ran a more in-depth story this morning on the layoffs in its newsroom than the brief it printed yesterday revealing that it would reduce its newsroom by 25 percent or 100 jobs. The most striking information came at the end, where the Chron acknowledged that despite having one of the nation's most widely read Web sites — SFGate — the paper hasn't been able to "monetize online eyeballs."
    "Although online usage is gaining, no one has monetized it on a newspaper basis to the point that equalizes what is happening on the print side," [Chron Publisher Frank] Vega said.

    The Chronicle does not charge people to visit SFGate, nor does it ask them to register. Vega declined to say whether that would change.

    In a recent commentary in the Wall Street Journal, Arkansas Democrat-Gazette publisher Walter Hussman Jr. said newspapers create $500 to $900 in revenue per subscriber annually, according to the Inland Cost and Revenue Study. But, Hussman wrote, a newspaper's Web site "typically generates $5 to $10 per unique visitor."
The LA Times brings up the same issue in today's story about the layoffs:
    Unlike many big-city newspapers, which have continued to make solid profits despite new-media challenges, the Hearst Co. publication has been losing money for years. The paper's daily circulation has declined by a third, from its 1990 peak of 566,020 to 373,805 in September.

    But its website,, has a robust following, with the sixth-largest audience of unique viewers (4.2 million) in April among American dailies. In another measure, by page views, ranks only fractionally behind, the fourth-place Los Angeles Times website.

    The problem for newspaper companies has been making money from those Web audiences. Big-city papers typically get about 5% of their ad revenue from the Web and 80% from print ads. (The rest comes from subscriptions and newsstand sales.)
The newspaper industry has been trying for more than a decade to "monetize" its Web sites. To get people to their sites, newspapers have put all of their stories online and taught readers to go to the Internet if they want news. The plan was to phase out print and convert newspapers into online businesses. Now newspapers are finding that, after years of trying, they can't make much money off of the Internet and that their content is being stolen by online news sites.

Not only has the content of newspapers been ripped off by Internet companies, but newspapers have willingly — and enthusiastically — allowed Google and Yahoo to use their ad reps. Newspapers have sales forces that literally go from door to door calling on businesses, something those Internet companies lack. So now newspaper ad reps are selling ads for Google and Yahoo. But what do these Internet companies think about their new partners? On May 10, Google CEO Eric Schmidt was asked by reporters if his company was interested in buying newspapers. Nope, he said, according to Reuters.
    Surrounded by reporters ranging from Ken Auletta of The New Yorker to Michael Arrington of Silicon Valley blog TechCrunch, a Financial Times reporter asked the Google CEO if he would acquire a news organization like Dow Jones & Co Inc. , publisher of the Wall Street Journal.

    Schmidt said no."We made a decision to focus primarily on user-generated content, and not on businesses where we would own the content," Schmidt replied to reporters.

    He was reiterating Google's oft-repeated stance that it sees itself as a technology tools maker, not a media content owner.

    Schmidt said Google was better off partnering with companies that produce news and other content, rather than buying them.

    "It is better to partner with Dow Jones and the Financial Times...," Schmidt said. Blogger Arrington jumped in to add "...and TechCrunch."

    Schmidt rolled his eyes and replied: "Yes, yes, yes ...and the San Jose Mercury News," acknowledging a reporter for Silicon Valley's main local newspaper.

1 comment:

Anonymous said...

the chronicle is doomed