Friday, January 02, 2009

Bad news, good news -- in context

You may be interested in Jeff Jarvis' collection of "Bad news, good news" facts about the news business. As you might guess, his list is heavier on the bad news, so I tried to help by adding some good news in a comment, which I'm pasting in here:

I can’t speak for “the newspaper industry,” but I can report on the state of affairs at my former employer, McClatchy.

What these individualized statistics and measurements fail to show is that companies like McClatchy are already far down the road to transformation. (I write from memory and approximately; I am not a spokesman for the company).

In 2000, about 97% of McClatchy’s revenues came from daily newspapers. Today it’s less than 70%, with the remainder coming mainly from online and other digital operations, niche print and targeted marketing. While print advertising revenues are falling (at least partly due to economic conditions) online ad revenue at McClatchy continues to grow by double digits, even in recession.

In the larger cities where surveys are available, McClatchy’s total audience reach (print plus unduplicated online) often exceeds 70% of adults 18 and older each week. It’s likely higher in smaller markets, where the print component remains somewhat stronger. Indeed, the total audience for information produced in McClatchy newsrooms has never been larger. The company’s sales forces are being retrained and compensation structures changed to optimize their ability to sell that portfolio of audience reach, not just ads in daily papers.

Meanwhile, the company’s cost structure has been radically altered, reduced by more than $350 million in the past two years alone. Much of that has come from staff reduction, but a large and growing percentage represents efficiencies like out-sourced production work, accounting and billing, and even printing. This process will continue as technology continues to make further efficiencies available.

The company also enjoys productive relations with third parties, like CareerBuilder (of which it is a part owner), Classified Ventures (likewise), Yahoo (a strategic cross-selling and ad serving partner), aggregators like DayLife and Outside.In, and many others. These can work both to reduce operating costs and extend revenue opportunities into new realms.

In short, statistics about falling daily newspaper circulation and the like are by themselves of little value in projecting the future. You should use care in over-interpreting these.

You also should not ignore the fact that the economic collapse that has ruined many businesses has also hurt news company performance and obscured much of the progress outlined above. When conditions improve, even marginally, you will see dramatic reflection in the capacity of companies like McClatchy to move forward toward their historic mission: public service journalism.

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