Cool headline hey?
I thought I’d borrow a tactic from the mainstream press to get your opinion on a hypothetical scenario.
I had breakfast with a friend of mine who is a lot smarter than me yesterday. We were talking about media and the apparent will of some operators to completely ruin what are extremely robust ‘traditional’ businesses to try and make a fraction of that revenue online in what is a much smaller overall category with 10’s if not 100’s more competitors.
Now this guy isn’t another media loony like me, he’s actually remarkably sane.
From my research, the newspaper advertising market is worth over $4b in Australia. 30% of that is classifieds … the rest is retail or national. That means around $2.5b is non classifieds.
The below newspaper data is sourced from The Newspaper Works, primarily a presentation called ‘The Australian Newspaper Market March 2009’ which is available on their website (signup required, heh)
Metro newspapers account for around $2.3b of that figure. Seeing 70% of revenue is non classifieds, metro newspapers are seeing around $1.6b of revenue come through from brand or retail advertisers.
That’s $1.6b in what we digital people would call DISPLAY revenue.
The total digital display pie in the 12 months to June 30 2009 was $491m. That is the total – across all categories and that includes performance advertising, networks, affiliates etc. This data has been sourced from the most recent IAB PWC Digital Advertising figures (to June 30, 2009)
It would be generally agreed that newspapers offer operators better yield/revenue per reader than digital. So, in essence, a print newspaper reader is worth more than the same reader online.
Given the digital display pie to June 30 2009 was $491m … how much was the revenue proportion going to the online versions of newspapers – primarily News Digital Media and Fairfax Digital ones?
This is a guess, but I’d say around the $80m mark.
$80m versus $1.6b. It’s a big difference. Hell, my estimate could be 25% of the real figures (say the real figure was $320m – which it isn’t) and the diffence would still be massive.
Now – based on $80m being the figure … even if the display market for these publications grew at 15% for the next 10 years the total revenue pie for them would be just over $300m. That’s based off 15% annual growth EVERY YEAR for the next 10 years.
Even if newspapers declined at 15% YOY for the same period (which is doubtful considering their track record over the last 10 years) their metro revenue exc. classifieds in 2019 would be around $314m
So newspapers now are commercially very viable, with steady readership, sales and advertising dollars. They absolutely dwarf their online cousins in a business sense.
So why do their owners seem so determined to kill them? And why are they offering pretty much all their print content online, for free?
Maybe Murdoch is looking at charging as he’s done similar numbers and seen there is really no upside as it currently stands for migrating his perfectly profitable print readers online. He’s seen he could turn a display ad business that is worth almost $2b into something that could potentially be worth not much more than $600m a year.
With that in mind … should Fairfax and News shut down their current online papers and offer a basic feed service to users through their a national or state based masthead?
Then they can focus on making their newspapers a better product and trying to revitalise them and protect their content and unique offering? One area I think print newspapers nail that online hasn’t is the curation of content. Organising and presenting content in a compelling way that appeals to the mindset and needs of the reader.
I’m not saying they should shut them down, but it’s worth thinking about especially given all the current debate.
And crazy ideas are sometimes good ones … at least to consider.
Can I repeat, I’m not suggesting they shut them down.