I was reading somewhere (and now I have forgotten and am too old to rack the 2.3 neurons I have to worry about where) that the New York Times is one of the most hyperlinked and commented upon source for news for bloggers. It is indeed the most visited newspaper site in the USA. Yes, I would tend to agree. It has great quality, great coverage and is what I would call as a great newspaper. Here's a graphic showing the NYT's coverage of the world from here.
Pretty amazing coverage across the world, wouldn't you say? If you compare that with other newspapers (and I dont have any pretty graphics to show unfortunately), i would have said that this bubble graph is pretty good when you compare other newspapers ranging from the LA Times, Chicago Tribune, Washington Post, The Times, Guardian, Le Monde, etc. etc. You can forget the sub continental papers anyway. The only exception would be the English language papers in the gulf but they appeal to the expat population so I am not sure if that is applicable as a comparison.
But I digress. But blogging and web 2.0 bits (such as facebook, my space, twitter, etc. are changing the world) check out these two graphics which illustrate this issue. View from the blogosphere and from NYT. Quite an interesting difference, no? But life is changing rapidly and the financials of the newspaper world are changing rapidly. The future is not as good, have written about this issue before (see here, here, here, etc.).
But now its the economics of the situation which is seriously blighting the situation. Circulation in the USA is dropping rapidly. and there is simply not enough money. Newspapers after newspapers are simply folding or changing their business model or laying off people what have you. And I am not talking tiddlers, the LA Times and Chicago Tribune have gone bankrupt, but what about the NYT? The NYT has pawned its headquarters and the numbers are not looking good. Here's a bit of an analysis which will send shivers down any US newspaper proprietor's backside.
Take the New York Times Company. It generated $74.4m in online advertising in the third quarter, 10.2 per cent more than in the same quarter in 2007. But the $6.9m increase in online ad sales was dwarfed by the $73.7m decline in print advertising revenues, which plunged by 18.6 per cent. Even if it managed to halve its $677m quarterly operating expenses by dropping the hard copy, online ad revenues would cover just 22 per cent of its running costs.
Strip out the NYT’s other sites, such as About.com, and assume those third quarter online ad sales were generated only by NYTimes.com. That makes the 20.3m unique readers who used the site worth about $1.22 each per month, a fraction of the value of a print subscriber. To break even as an ad-funded digital-only business, with a quarterly cost base of, say, $338m, NYTimes.com – already the number one newspaper site in the US – would either need four times as many unique users or ad rates four times as high as today’s, or a bit of both.
The recession is biting and biting hard, which means that the pressure on the advertising segment is fierce. The revenue/costs scissors are simply yawning wider and wider. A Deloitte report in December 08 predicts that one out of every 10 print publications predicted to half frequency, go online-only or close down in 2009. Plus in such an IP driven business, you cannot change the costs that easily. The solutions as given by the FT are obviously not possible, they cannot quadruple their readership nor can the current (or even the 2 year future at least) think about increasing ad rates. Forget about increasing, currently even the online advertising rates are diving like a dingo down its hole. See the Ad Price Index report from October here. I quote
- Throughout the year, display advertising pricing has generally trended downwards across website sizes and verticals
- All categories moved down from last quarter, with the exception of Technology which stayed flat
- Entertainment had the most significant drop of all verticals, dropping 42% from 57 cents in Q1 08 to 33 cents in Q3 08
And its not just in USA, the impact of the drop in advertising is felt across the pond as well with certain titles reporting drops of more than 50% per year. See the impact on Journalist numbers here with thousands of redundancies in the UK itself so USA will be impacted correspondingly more. You can merge newsrooms, you can adjust staffing levels, use better technology to reduce telecom costs, travel costs, etc. outsource news production to India, reduce training costs, and so on and so forth, but its not going to help much.
But to go back to the title of the post, the chances are high that the NYT is going to go under. And that will indeed be a shame. One of the crucial aspects and guarantors of a free, just, fair and democratic society is the presence of a free and transparent press. If the media suffers as it is doing now, it will cause issues for our society. Would a BBC model help? A model of publicly funded media generation and broadcasting? Hmmm, can the BBC model be enhanced? Such as splitting the production, commissioning, broadcasting and distribution arms? Something of that nature will be required because the loss of NYT will indeed leave our society a poorer place.