This comes on the heels of the news that newspapers lost 18% in Q3, the worst drop on record. You probably heard that too.
These numbers and their related news seem so benign when we’ve spent the last 3 months talking about hundreds of billions and trillions of dollars. While the financial and auto companies falter quickly, the advertising based business parasites who live off those big advertising clients are following into the grave.
Interactive companies will survive, print media, probably not. Will it completely fail? No. Print will become basic arbitrage plays. Bottom of the barrel, low profit margin businesses. They live off the laggard customers who by choice or circumstance stay in the old way of doing things. This has been the fate of many industry segments that once were the king but never quite die off. (Think of Amtrak, dial up ISPs, land line phones, most radio networks, music stores,
Having trouble believing it’s happening?
Consider these stories:
… Christian Science Monitor all digital, Men’s Vogue Folded into Vogue… and so on.
This probably isn’t news to anyone reading this blog. Perhaps the numbers are surprising or the speed at which it is happening makes you wonder.
Many consultants and veterans want to paint a rosy picture and claim there are opportunities and silver linings (usually because they depend on this delusion to pay their own bills). There is no stop gap solution for straight print companies nor anyone that maintains homages to that glorious past.
These businesses aren’t just losing ground with readers, they aren’t making money any more – not just making less money, they are LOSING money. There’s no vintage business here. No retro glory days thing. No way to suck it dry before it dies.
Why? There’s no money to support this old ecology. New media makes WAY LESS profit than print and print no longer provides an on ramp for digital users. You aren’t trading ad dollar for ad dollar, reader for user. I’ve talked about it before. The issue is that new media has data behind it and the data destroys a lot of the promised pitches of the past. The biggest failed promise was that “impressions” equal sales. They don’t. They didn’t in print and they don’t online.
Clicks and transactions. That’s what people are counting and most sites produce less than a .5% Click Through Rate on those impressions. It’s not uplifting and media buyers can’t stand to see their budgets flushing down the drain with non-transactional impressions.
The other promise that fails under data analysis is demographics/audience composition. Magazines used to get to claim they were “women’s” or “men’s” and 18-34 year olds (people with money! and time!) and agencies and advertisers sort of believe them (there was no data to refute!). Now you have data that says a “women’s site” is luckily to be 65% women. No advertiser who sells a woman’s only product wants to blow cash on 35% male audience. So they don’t. They lower the price they are willing to pay or force you to cut the inventory way down.
There are 1400 or so magazines and maybe a couple of 100 newspapers. There are 20,000 websites (at least) that are taking ad dollars from those advertisers who used to spend their money in newspapers. There are at least 30 large classified sites, 100s of travel sites, 1000s of local information sites that take all the other print revenue. Point is, the average campaign size for any online publisher is MUCH LOWER than for the print equivalents. There’s an obvious spreading of the wealth.
And to put it all together… writing, filming, and creating good content is not any cheaper. (and no, user generated content doesn’t count yet because it’s quality still sucks for the most part).
Spreading less high margin wealth means the old model is dead. It died a long time ago, we’re just rolling in the bodies now.
Well, dude, what’s the answer? how do we save it?
We don’t. We can’t.
Think about it. Look at the election coverage. Did you read a paper to get results? get your facts? listen to the candidates? get a verified opinion?
Did campaigns blow a wad of money on print ads? no.
The election killed whatever life was left in print. CNN’s coverage literally choked its last breath. Obama’s campaign made sure that you’re going to go direct to the source online.
So what should old skool media companies do?
Other stuff. Maintaining any substantial competence in print operations or print audience development is a waste. Get programmers and interactive designers on staff now.
Sponsor open source projects.
Buy some cheap blogs.
Experiment with mashups.
Try everything you can. The whole bit is in transition.
Buy transactional businesses.
Learn about Video Games and Social Networks and Second Life.
Hell, I don’t know, and no one else does.
Just get crackin.
or hop on board an Amtrak train with your local paper with your am radio (they need all the customers they can get).