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April 01, 2007

Could a Newspaper Succeed Completely Online?

Interesting article in the Seattle Times about whether their rival paper, the Seattle Post-Intelligencer, might switch to being available only online. The fact that this story is in the Times gives an indication of what is going on. The two papers are linked under a Joint Operating Agreement, with the Times handling all circulation, advertising and production for both papers, but maintaining separate editorial staff. About 4 years ago the Times tried to trigger an escape clause in the JOA based on continued losses. Part of this agreement is that on Sunday the P-I does not publish, and subscribers to both papers get the Times. That's why the article is in the Times, although I will say that as far as I can tell, the coverage of the situation in both papers has been completely objective.

Anyway, one of the possibilities suggested is that the P-I might switch to being online only (one possible benefit of this for me is that it would now be a website, thus I might be spared the hassle of italicizing the name every time I mention it). Looking at the numbers, the P-I accounts for something like $7 million of the website revenue (which is also combined between the two papers) but spends about $20 million on its staff (and would have to grow that by 10 percent or more if they created their own website). BUT, there is an intriguing extra fact that if the JOA is dissolved, the P-I gets 32 percent of the Times's profit until 2083.

Thus, while an online-only newspaper (maintained to the full editorial standards of a print edition) might fail financially, in this case the e-rag would be partially supported by the 32 percent, which might allow it to succeed until they figure out how to make money with an online-only newspaper. Since the 32 percent comes from its most direct competitor, there might be a finesse possible in which the 32 percent keeps the online P-I afloat long enough to establish itself, at which point it would start to take revenue away from the Times (and thus reduce the pie that the 32 percent was carved out of), but this wouldn't matter because the online version was now established. Then again, the Times claims it is losing money right now and how much that would change if the P-I went online-only is not clear (the P-I counter-sued the Times claiming it wasn't losing money at all; this has been dragging on for four years, with an arbitrator scheduled to rule by May 31).

The article has a few quotes from people commenting on the viability, or lack thereof, of an online-only "real" newspaper. I have commented before that I find online news to be vastly inferior, in terms of the customer (me) experience, to paper. But this is the final quote in the article, from Philip Meyer, a journalism professor: "The people who run newspapers are generally very conservative. But the future is going to be invented by someone who is reckless." Although I still think it won't work, the 32 percent cushion could create the perfect testbed for measured recklessness.

Posted by AdamBa at April 1, 2007 08:09 AM

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Love the term e-rag, will have to add it to the lexicon.

Posted by: Brier at April 4, 2007 11:53 AM