P&L of New (local) Media

What happens when your local paper goes online only? It loses most of its staff, that's one outcome. I picked up the information from Fred Wilson's blog where a really good discussion around aggregating, curating, and publishing new media is under way. The P&L chart does make a fair argument for staff reductions. Yes, readers did point out that the $5-15 RPM is rather high.

The pitch to make such publication possible is from Outside.in, a three-year-old company that has just rolled out a new tool to (supposedly) make pulling extra content created by local bloggers, Twitterers and lots of people who don’t even think of themselves as content creators, like people who post real estate listings, easier for local publishers, which could be a newspaper site but doesn’t have to be. 

And if there aren't any local bloggers and twitterers? The discussion at Fred Wilson's blog included so many examples, that I thought you might enjoy taking a stroll through them:

• Toronto City blog from Freshdaily
• Wikicity - over 22K U.S. towns
• Seattle PI and Seattle Post Globe
• Village Voice
• Milwaukee, WI - using Outside.in for Publishers

Given that many media companies are still milking the print cash cow to subsidize the online version, figuring out what's next for online profitability seems to be a tall order. But print is not dead, and probably will not be for a long time.

I was intrigued by a comment in the discussion made by Joshua Karp about how online is about exploration and print is for consumption. Reading the printed word is a physical, tactile experience. It is not the same as reading something on a 22 inch monitor, or on a 2 by 3 inch glass screen sitting in the palm of your hand. That's the same observation Tim McHale made when we had our conversation on new media.

What's interesting about Karp's project is that The Printed Blog was written up in the New York Times and in more than 200 major media publications around the world, on US and national radio, TV, on thousands of blogs - guess this counts as +1. In case you're wondering, they distribute in New York, Chicago, San Francisco, and LA.

Maybe The Huffington Post is planning a glossy magazine of its best content. I know for sure that media properties like Fortune would do well if they offered special editions of their archives as souvenirs, or posters of their board of directors' photographs - something I enjoy a lot (recently, they published a fun photo of Twitter's BOD's).

Karp shares The Printed Blog financial model in the comments to Wilson's post (republished with permission):

10 pages, 18 "small" ad spots per page, $30.00 per ad spot: equals 180 "small" ad spots per edition inventory and a potential $5,400.00 in revenue - each edition equals 1,000 copies in a single location. Publish 5 times per week, and total potential weekly revenue is $27,000 per location. Assume you can only sell 70% of inventory, and our weekly revenue per location is $18,900.00.

We've sold a LOT of ads at that rate, and could fill each edition.

In terms of costs, each issue (10 pages) costs $1.00 to print; this equates to $5,000.00 per week.
Each issue requires two people to hand it out each day, at $100.00 per person; this equates to $1,000 per week.

We pay bloggers / photographers a rate equal to 20% of the ad revenue that appears on the same page as their content, with avg. 3 blog posts and 3 photographs, that's 6 pieces of content per page, 60 per issue, 300 per week (5 issues per week). Twenty percent of $18,900.00 (weekly revenue) is $3,780.00, divided between 300 pieces of content, that equals $12.60 each (ask a blogger how much money they earn for EACH posting, and it's less than $12.60 - and, with TPB, you would get this amount for EACH edition you appear in; if a blogger appears in 10 editions, they would earn $126.00 for that one post.)

We pay an ad sales person (community relations person) to walk the community each day to learn what is going on and to sell ads; a college student at $125 / day is $625.00 per week.

Overhead costs are editorial and layout, but each editor and graphic designer can handle 5 editions per day. If an editor costs (burdened) $65,000 and a graphic designer costs (burdened) $55,000, their weekly cost per edition is $250.00 and $212.00, respectively.

Add up all of those costs and you get $10,867.00 per week. That leaves $8,033.00 PER WEEK per location for other overhead. Yearly location revenue is $982,800.00, yearly costs are $565,084.00, and $417,716.00 remains for executives, technology, and marketing - and this is per location, representing 1,000 copies.

In Chicago, where we are based, the Tribune's circulation is somewhere around 400,000 per day. If The Printed Blog could circulate 150,000 (which can be supported by ads - there are 150 neighborhoods where I can easily distribute 1,000 copies AND there are local / regional / national advertiser interests to earn $18,900.00 per week), could we make, pure profit, of $1,000.00 per week? I EASILY think we can - that equates to PROFIT of $150,000 per week, or $7,800,000.00 per year, in Chicago ALONE.

It might be expensive, but if you look at the only newspapers that are doing well, they are community newspapers, i.e. the model above.

If you think new media is just about being online, you're wrong. I think new media is about finding new ways to package content that meet customers' demands for it where they are and for what they do. RSS is pull online and there are tools that will help journalists pull paper stories in the medium, but there is still a case for offline pull.

In both cases, I'm wondering what the new role of public relations professionals and agencies is. In  guest post here, Christine Needles wondered about that, too. If marketers are to be in the content creation business, and I know we are, then is public relations going to help out? Would PR professionals become community content curators?

What are your thoughts / ideas?

[image of Scrooge McDuck: The Expert by Carl Barks]

Comments

[Carolyn Ann]

I *strongly* disagree with Mr Karp. Online is consumption, print is most assuredly for exploration.

We may not explore the immediate in print, but we do explore the world around us. Online communications tend to be more of "this is what I see immediately around us". A bit like Henry Stanley describing what he saw, and not asking "Dr Livingstone, I presume?"

The online reading "experience" can be used for exploration, but it's usually used for the immediate. Perhaps Stanley would have described the trees, the village and the surroundings in Twitter?

I shudder to think of Henry V (Shakespeare) as "consumption". The Illiad, as mere consumption? "Howl" (Allen Ginsberg), a mere consumable? I have yet to see the Internet's "Leaves of Grass".

I have to see the Internet produce anything that has a beauty beyond itself, or any real permanence. I'm sure it has, but I'm equally sure it's well hidden. It seems to me that the ephemeral is called wonderful, the permanent stodgy and the trendy is simply accepted wisdom.

Print is dying, but let's not kick it, yet. Mr Karp might do well to remember that without print, there would be no "online". Without Shakespeare, Homer, Thucydides, Whitman, et al - there would be no language for him to use the impermanence of the Internet as an excuse for "exploration".

One does not explore on the web - one simply reacts to what is presented. We don't explore, on the web. We passively accept what is presented. A click is not an active event, it is a curiosity (perhaps), a feeble one, but it is not an exploration.

At some point, the web will offer what we can gain from print - but until then, the arrogance of trend will count the dead trees, and fail to count the train loads of coal it takes to produce electricity. And the web. You don't "need" electricity to produce a book, or to read it.

Personally, I explore the world through literature, music, art and movies and motorcycle riding. I can't say I've ever found the Internet anything but passive. Exploration is active, the Internet isn't.

Carolyn Ann

PS I think the numbers are, while mathematically accurate, wrong. If that were the case, he could expect a slew of competitors who would drive his costs, and profits, into areas unknown. In other words: if it were that easy - we'd all be doing it.

[Joe Mescher]

Online is most assuredly about exploration (though I do snack here and there thanks to Twitter...)

Print offers me the chance to skim from page to page, but not outlet to outlet, unless I have a thick stack of material sitting next to me.

By the way Carolyn Ann, I don't think arguing about trees vs. coal is a fair fight.

Alternative fuel sources like wind and solar (although not widespread yet) exist to reduce the damage wrought on the planet by our web surfing.

Print needs trees day in/day out no matter what.

Great article, I'm sure it will inspire plenty of constructive debate!

Joe Mescher
Social Media Commando
www.Twitter.com/JoeMescher

[Carolyn Ann]

My metaphor flunked! :-)

Clearly, I wasn't very clear [sorry...] about my point. :-)

The web is ephemeral, print has a permanence. Sure, both can be destroyed, but in general print has the upper hand in presenting to us ideas that go beyond the simplistic. It's the difference between skimming, and contemplating. Currently, the web offers so little that can be contemplated, compared to print.

As the electronic readers, like that little box I saw someone on a Manhattan bus using, become ubiquitous, this will change. But the biggest problem I see all this is demonstrated ably by Wikipedia: the need for the information to be absolutely contemporary. Changes to the metaphorical and virtual record reflect current thinking; there's no permanence. The original writer is subsumed to the audience. Who, in turn, demand compliance to their attitudes. It's much harder to demand that in print!

I read a lot of books, some of them good, many of them instantly forgettable. I tend not to turn to the web for literature!

I don't know. Perhaps I'm just being a Luddite, and worrying about something I can't do anything about. Permanence of thought, of words, is a tenuous idea, anyway. It's just that the temptation to tweak something, over time, may be too much for some writers. I've seen this in the blogosphere; a writer will remove their work from public view, or change entire phrases of past posts to reflect either new thinking, or (as I discovered, once) to change a readers' perception of the writer. The original wording reflected badly upon the writer, the new wording reflected badly upon the person they were "debating" (me); indeed in one post, anything about the entire argument was summarily removed! When it's so easy to change what is written, how can we trust what we are reading? The implications are staggering - how do you get "Leaves of Grass", in such an pro tem environment?

Carolyn Ann

[Valeria Maltoni]

@Carolyn Ann - can I just say how much I enjoy your writing? I love the metaphor in the beginning of your first comment. I think - and I might presume here - that Mr Karp meant print news, not art/literature. I, too grew up loving (even when I hated translating them from Greek and Latin) the classics. I'm thinking the beauty is inherent, it's inside the people who do make the connections and further projects and their own learning... at least that has been the evolution for me. But I do have the benefit of a top shelf education in the classics to begin with, so it's hard for me to assess this objectively. I do think and strongly believe that the people who use the Internet are active. They are in my stream and in my email. Think about it - we would have probably hardly crossed paths had it not been for this blog. That is huge.

@Joe - most of what I do online is exploration, so I do identify with the distinction as presented by Karp.

@Carolyn Ann - the work of a writer that does not sell in print gets pulled, too. It just doesn't get published or reprinted. Online, there is a permanent record cached somewhere, even though the author might delete the page or comment on their site. Permanence is n the minds and hearts of those who connect with something, not so much in the medium in which they are presented. That, I know, is just one piece of the conversation.