WASHINGTON – People in the news business have the collective sense these days that we are crossing the River Styx toward the land of the dead. Business guru Warren Buffet voiced that mortal danger when he told his shareholders a week ago that U.S. newspapers face the possibility of “unending losses” and that he wouldn’t invest new money in the industry “at any price.”
It’s never a good idea to bet against Buffett, but I think the panic about the news business is overdone. In their angst about declining revenues, great news organizations are in danger of destroying what made them valuable in the past – their skill in gathering information that informs, surprises, amuses, exposes, educates – and that will make them valuable again, if publishers can avoid committing suicide.
To avoid the hara-kiri impulse myself, I’ve been looking at some numbers about my favorite newspaper, The Washington Post. They illustrate the paradox of our industry: Despite complaints that the Internet is killing us, we actually have far more readers now than in the ink-on-paper era. The problem is that the online readers are less desirable to advertisers, in part because we don’t know enough about them. We have to sell them mostly as a mass audience now, as mere eyeballs, even though they comprise particular niches that advertisers would love to reach.
But we’ll figure out a solution. We have some very smart people at the Post using technology to understand our online readers, so that we can sell their demographics with more precision. And before long, we should also be able to create specialized content for users, based on what we know about their interests and past habits. The Post’s new chief digital officer, Vijay Ravindran, helped create Amazon.com’s shopping experience, including launching its “Amazon Prime” program.
Study the numbers and you get a clearer sense of where the problem lies. It’s not declining readership, but declining advertising revenues. The Post currently has an average paid daily circulation of 642,600, and an average readership (people who read at least one issue a week) of 2.7 million. As of March, our Web site, washingtonpost.com, had 9.4 million visitors – an audience three times as large!
But this larger online readership brings us much less advertising revenue. You can see the numbers in the Post’s latest quarterly financial report. In the first quarter ended March 29, the Post received $74.3 million in print advertising revenue. That was down 33 percent from a year earlier, but it still dwarfed the company’s online revenue (mainly from washingtonpost.com) of $22 million.
Why are Internet news sites less valuable to advertisers than their print forebears? One reason is that people spend less time on news sites than with newspapers – an average of 16 minutes for users of the Post’s Web site in March, compared with a median of 30 minutes daily and 60 minutes Sunday for readers of the paper. But that’s our challenge: Web users will spend more time as we make our online offerings more compelling.
We’re in the bundling business (we call it editing), and a big challenge is that younger readers are less interested in our branded bundles of news and information. They want to create their own bundles – whether it’s assembling their own “albums” from iTunes, or their own news.
But that’s not an insoluble problem, either. We will have to learn to unbundle our product, and find different revenue streams for the different strands of it. Brands such as “Michael Wilbon” and “Dana Milbank,” to name just two, should do just fine.
What’s missing in the new world is a sense of surprise – that serendipitous experience of stumbling across a piece of essential information on Page A-17 of your – pardon the quaint term – “daily newspaper.” In the old days, people went to a newspaper looking to be informed; now, they go to the Web looking for specific information. More than half of washingtonpost.com’s March traffic came from users who arrived not via our home page but by clicking a link on another site or through a search engine.
We refer to the ubiquitous screens in front of our noses as “browsers,” as if we were taking a leisurely stroll through the information landscape. But the Internet is closer to a specialized data-retrieval tool, where you go looking for things you already know you want. Our job is to make this user experience less rote and instrumental – and more fun.
David Ignatius is a respected analyst who writes for the Washington Post Writers Group. Contact him at email@example.com or 1150 15th St. N.W., Washington, D.C. 20071.
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