Newspapers aren’t dead, part 2

Ah, much food for thought today. In his ongoing look at the transition from print to digital, Alan Mutter points out that traffic to newspaper sites is derived largely from readers of the print product:

One of the biggest reasons to question the potential for standalone newspaper sites has been identified by Greg Harmon of Belden Interactive, who since 2001 has polled 300,000 newspaper website users in 250 markets across the country.

In his work, Harmon has discovered quite consistently that fully two-thirds of the visitors to newspaper sites say they visited the site because they are readers of the print newspaper.

Jeff Jarvis — BuzzMachine guru, noted “Blog Daddy” and author of What Would Google Do? — thanks Mutter for doing the math, but offers this counterpoint:

Some papers simply cannot afford the cost of print now and so they’d better figure out life post-print or there won’t be any.

Not entirely irreconcilable positions, both with something important to say about the state of media today. Let’s revisit one of Steve Yelvington’s assertions, which inspired this post:

Several major newspaper companies are in big financial trouble because they borrowed heavily to finance acquisitions on an assumption that even greater profit margins (over 40 percent in many cases) were going to continue.

I can’t speak to profit-margin expectations, but I am familiar with one newspaper company that borrowed heavily — not to find its fortune in print, but to transition to the online market.

Indulge me.

Ben Eason, CEO of CL, purchased Washington City Paper and Chicago Reader in July 2007.

Eason had this to say to Chicago Reader’s Michael Miner in a December 2007 column, which covered that month’s layoffs at the Reader and City Paper:

How do you keep putting out a newspaper at a quality people expect and how do you migrate this stuff to the Web, which is ultimately the future? …

… The Web is where it’s at.  … But the challenge is make that turn. I guess I felt that if I was doing fundamental damage to the Reader I wouldn’t have bought the Reader.”

In the wake of the layoffs at the Reader and City Paper, Ken Edelstein, former editor of Creative Loafing Atlanta, repeated Eason’s view of the Web as his make-or-break gamble:

Eason’s always argued that small players such as Creative Loafing Inc., which he runs out of our Tampa headquarters, will only be able to compete in today’s highly competitive media environment by becoming effective platforms for national advertisers, in addition to the local advertisers who traditionally provide the bulk of the revenue for altweeklies. In his view, he had little choice but to seek out the financing to expand.

After the bankruptcy filing, Eric Deggans, media critic for the St. Petersburg Times, questioned Eason’s strategy of relying on the Web to bring in revenue:

But given the turbulence in the nation’s credit and financial markets, can Eason be sure completing the company’s online plan will bring the revenue it needs?

“We think so…this is an opportunity for a fresh start,” Eason said. “I don’t look at this as a failure or a (a sign) we haven’t been prudent or haven’t been smart.”

CL got an even fresher start in December 2008, as the CL newsroom and sales staff dwindled further. Michael Miner, while reporting the latest developments in the bankruptcy, wrote that the Reader’s newsroom staff, which had numbered 38 when Eason bought the paper, had been reduced to 17.

On December 19, seven employees, including yours truly, were laid off from Tampa’s Creative Loafing. The company had filed for Chapter 11 bankruptcy last September.

Regardless of what you might think about Eason (and he got his detractors) give him this: He’s gone full steam ahead with his plan, revamping the both the print and Web versions of Creative Loafing Tampa in a brief amount of time. It seems like a smart play (I’m still learning the business side of journalism) — endeavoring to attract more readers to the website while maintaining the print version as a conduit to his digital venture.

But will it work?

Mutter points out that while increasing numbers of readers are reading the Web, they’re not staying very long, spending only “1.5 minutes per day in a 30-day month” on newspaper websites.

Meanwhile, online ad rates declined significantly in the fourth quarter of 2008. And while overall ad revenues for the same period were up, online ad sales for newspapers were down 0.4 percent in 2008 and are expected to drop 4.7 percent in 2009.

Read Part 1 of this topic.