Globe Gets Reprieve, Discovery Finds Success
In a rare good day for traditional media, the Boston Globe got at least a temporary reprieve yesterday as NY Times management reached an agreement with six of the seven unions with which it's been battling for concessions over the last few weeks. The holdout (Boston Newspaper Guild) is now facing significant pressure, not only from management but also from the other unions and its own members to keep negotiations moving forward. Regardless of the result, it appears the paper will keep rolling off the presses for now.
For some interesting statistics around print newspaper distribution, see the Globe online (aka Boston.com) article at http://www.boston.com/business/articles/2009/04/28/circulation_still_falling_at_papers/.
In a related note, TechCrunch columnist MG Siegler points out the folly of believing that a device like the new Amazon Kindle will provide any significant source of new revenue or readership for papers like the Globe, which are suffering significant and ongoing declines in distribution (good follow up post, too). While I'm not sure I buy the premise that even the newspapers are so desparate as to believe this, I do think his repetition of the point that the Kindle makes a much better replacement for textbooks is valid.
Meanwhile, Discovery communications posted a nearly 4x increase in year-over-year profit yesterday, proving that, while recessions don't get people reading newspapers, they are probably at least good for keeping folks at home and in front of their TVs (would that it also proved that educational content was more relevant than Survivor but I don't have that much faith in humanity...). Discovery's success came mostly from US distribution but with a healthy increase (23%) from "Commerce, Education and Other, " which includes all of Discovery's online properties and its educational streaming video service.
The interesting point here is that, while Discovery maintains strength in it's traditional media brand, it has also managed to grow both revenue and profit online, something newspapers like the Globe clearly struggle to achieve. Part of this is certainly due to an image problem faced by "old media" (newspapers) versus "new media" (online and certain cable brands). Yet while the Globe and its parent, the Times, have both managed to build very strong online brands, the biggest feat they've managed to achieve through them so far is to cannibalize their (previously monetizable) print audience.
The only question that should matter to these companies is how they can monetize Web traffic, because the answer to that question is the only thing that's going avert the otherwise inevitable. The Times has, so far, been more aggressive with partnerships around jobs, real estate and other portions of its site. However, these partnerships have been generally unsuccessful, at least in part because they're around commoditized portions of nytimes.com. Most online papers (with WSJ being the big exception) have failed with online subscription or stayed away entirely (probably a good idea), so that's not a viable option either.
The one thing that sites like discovery.com seem to have figured out that most online news sites haven't is the right blend of content, community and commerce to drive more than just under-monetized eyeballs. Obviously this is easier for sites with unique content but this should be a strength, not a weakness, for content brands like the Globe and the Times (even if the pure news part of the business is commoditized). With that in mind, it will be particularly interesting to see what happens with the Chicago Tribune's new offering, due next month. Described as "Huffington Post meets Facebook for Chicago," and with revenues to be based on e-commerce, not ad revenue, the new site might just be the start of a new trend.
This is something we've been discussing a lot at Optaros lately and it will be something I'll be keeping a close eye on. Though I can't remember the last time I picked up a physical newspaper, I have to admit, I'm hoping the Trib, or someone, figures out how to keep them viable online soon.
