You Just Don't Understand

Remember the dot-com days, when the most egregious business models were floated around, pet.com was supposed to be the most fantastic thing invented since electricity, and anyone who questioned the long-term viability of (many) start-up companies was ridiculed as a has-been who just hadn't realized yet times had changed? I was reminded of the atmosphere in 2000 when I read "On the brink", a May 3rd article in The Economist on American newspapers. (As an aside - The Economist has redesigned its website. Check it out!) The move of the Wall Street Journal to allow access to its website's contents by non-subscribers, as well as the decision of the New York Times to get rid of the subscriber-only part of its website called TimesSelect, have been well documented elsewhere, and is supposed to reflect the new viability of a different business model, which relies on advertisers rather than subscribers. But according to the May 3rd article, the circulation of the New York Times went "down another 3.9% in the latest data from America's Audit Bureau of Circulations (ABC). Its advertising revenues are down, too (12.5% lower in March than a year earlier), as is the share price of its owner (...) still over 20% below what it was last July."

When I was in Paris, an extremely popular pocket-size magazine in cheap recycled paper was "Pariscope", which detailed the spectacles available in Paris for the week (theater by theater, concert hall by concert hall, movie theater by movie theater with show times). It only costs 2 Francs, which would have been around 40 cents here, but enjoyed mass circulation of the order of several hundred thousands copies sold every week.  When the Internet wave struck, the company of course got a web presence, like every other company worth its name - but nobody bothered paying for Pariscope any more, and I guess the advertisers weren't sold on that "new business model" theory, since Pariscope pulled out of the experiment within a few years of the website's launch.

So is there really a new business model for newspapers out there, or are media executives deluding themselves? I subscribe to The Economist because I don't like reading from the computer for extended periods of time - and I manage to read it from cover to cover. But I recently let my subscription to the New Yorker expire, because reading it was not high priority on my to-do list, and as much as I did like the profiles, I often found myself staring at a pile of unread New Yorker's by my couch, while the content is available for free on the Internet and doesn't take any space in my living-room. And no, I don't even look at the advertisements. Maybe not incidentally, The New Yorker has increased its retail price quite a bit over the last few years, now selling at $4.99 in newsstands. (For a very long time, it did not post its contents on the web, and while making the issues accessible for free will certainly boost the number of visitors to the website, I don't see how it is going to bring The New Yorker - with its distinct image and its lack of competitors, one of the few magazines that could afford "doing it its way" - much more money. How many people do actually click on an advertisement?) All the talk about increased advertising revenue overshadowing the loss in subscriptions sounds empty when you read "Ad revenues are plunging across the board: by 22.3% at Media General, for example. In 2007 total newspaper revenues fell to $42.2 billion (...) a lot less than the peak of $48.7 billion in 2000." It feels like the move to an online presence has locked many members of the American media into a death spiral.