I was chatting with Jason the other day and he mentioned an interesting notion he had of providing condensed versions of a newspaper or newspapers designed specifically for 8.5×11 printing, emailed as a PDF each night. (Maybe including some method for auto-printing so it’s waiting on your printer when you’ve got your coffee ready.)
I liked the notion, mainly because it reminded me of the fax version of the NYT that I remembered reading at a somewhat remote Hawaii resort years back. I really loved it–like the International Herald Tribune but pared down even more. It was eight or ten pages, and included top articles from the various sections, including OpEds (and–crucially–the crossword puzzle).
It was just the amount of NYT I wanted on vacation, and just the amount that most people have time and inclination for on a busy working day.
The publication reaches over 125,000 readers daily … Among the 400 subscribers around the globe are hotels and resorts, corporations and organizations, cruise ships and yachts, and United States Navy ships.
Institutional subscribers pay for rights to reproduce a given number of copies. Two key facts to note: News articles are edited for length (though OpEds aren’t, for obvious reasons). And there’s no advertising.
So I pointed out to Jason that the Times already has such a thing, and any other paper could create one pretty easily. There’s no real third-party business model there, lying around waiting to be launched.
But it got me thinking: is there some kind of business model there for newspaper publishers?
Why do I care? Like many others, I’m rather frantic to see some way of saving those fantastically expensive news-gathering operations. (And not only because I and the rest of the blogosphere rely on them so desperately for actual factual content to discuss and link to).
And for purely selfish reasons, I also want someone to figure out how to save the printed New York Times. I’ve been reading it daily for thirty years, but my fondness is not just dewy-eyed nostalgia. That expertly laid-out and edited, brilliantly browseable/scannable/skimmable 17-by-22-inch, ultra-high-resolution display–which rolls up and fits in my pocket without concern for damage–is not going to be matched in electronic form any time soon, if ever.
For me, the whole cohesive package of content, design, and format is far superior to what any electronic device can deliver, given those devices’ inevitably tiny display windows (tiny, at least, compared to a double-truck newspaper spread).
So does this digest idea have any large-scale potential? Could it contribute to a business model (think: revenues and profits) that might help support major-league worldwide news-gathering–and maybe even traditional printed newspapers?
For instance: suppose the Times offered to deliver this digest to subscribers on the subscribers’ chosen days, in lieu of delivering the whole physical megilla. (Their delivery systems are already set up for this; you can stop delivery for a specified string of days when you’re on vacation, for instance.) It seems sensible–they get the same subscription fee, but the cost of delivering the digest is basically zero. What’s not to like?
That got me digging into the numbers, because that’s where God is.
The Times prints about 400 million individual copies of the paper a year. (All these numbers are estimates, but they’re based on published info and are right in the ballpark.)
Annual ad revenues are $1 billion. Some portion of that is digital advertising–they don’t break it out–so let’s be generous to digital and assume $700 million in print advertising.
So each copy represents $1.75 in print-advertising revenue. (Those big branding display ads with no click-through accountability are really wonderfully filthy lucre…)
Now suppose they offer subscribers the digest, advertising-free, instead of the full printed edition avec les advertisements. How much would they save?
I checked with a friend who’s the publisher (from a family of newspaper publishers) of a 50,000-circulation small-city newspaper. (Let’s call him Albert; for obvious reasons he didn’t want me to publish identifiably proprietary numbers.) The answer can get complicated, of course–there are fixed, semi-fixed, and variable costs, so cost per copy varies a lot depending on how many copies you’re printing and distributing, and the number of pages per copy.
Short story, Albert’s incremental printing and delivery cost per subscriber copy is about 34 cents (14 cents in newsprint and ink, 20 cents for delivery). Albert figures the Times prints about 25% more pages per copy than he does, so let’s put the Times‘ print-and-deliver cost per copy at about 38 cents.
Which makes the problem pretty clear: The $700 million in ad revenue is dependent on circulation. (Ad rates are somewhat loosely but still fundamentally linked to cost-per-thousand, or CPM.) If 100,000 of the Times‘ subscribers opt for the ad-free digest on a given day, the Times saves $38,000, and sacrifices $175,000 in ad revenue, for a $137,000 loss. Not a profit deal.
Q. Holding up your thumb and squinting, do you think my friend’s notion
has any legs at all as a business-model tweak for newspapers?
A. Not unless he develops an advertising model.
Now they could presumably put some ads in the digest, though they’d be pushing against the page-count limit that’s sort of the thing’s sine qua non. (They’d essentially be turning it back into a newspaper, ink-jet printed by each subscriber at a high per-copy cost that I won’t even discuss here.) But assuming you could find some space, how do the numbers sort out?
You need to pick up $1.37 in ad revenues per copy. That’s $1,370 per thousand.
The Times currently charges about $15.72 per thousand for an ad, and industry rates range from $11.19 to $24.62, according to The Washington Post. (“based on a 31.5 column inch ad at the annual agreement rate requiring the lowest dollar or linage commitment.”) They’d need something like 50 ads per issue in the digest, at $2,750 per ad, just to break even.
So much for that idea.
Instead, the Times charges $360 a year for an individual Digest subscription. (Print subscribers take note: it’s free for you.) That yields them about a dollar an issue in almost pure profit, and it’s coming from people who don’t otherwise subscribe. They’re additional subscribers. This leads me to believe that the folks at the Times have already done this arithmetic. Ya think?
Bottom line? No: Jason hasn’t saved the newspapers. Damn.
The photo at the top of the post is a CC-licensed image from FlickR.
Steve Roth has been working in publishing–mostly books and magazines, but with some daily and weekly work–since the early 80s (writer, editor, packager, publisher, sundry and various other). He’s been an equity partner and/or principal in several publishing startups (all successful, believe it or not).
For ten years he was business partner with Steve Broback, who’s now Jason’s boss at Parnassus Group. Roth’s opinions (decidedly pinko by Joe-the-Plumber standards, but Steve has data to back them up) are on display at his blog, The True Conservative. You can also experience his Hamlet obsession, at princehamlet.com.