Wednesday, November 16, 2005

Playing nicely with others

Now that we know one out of every four Internet users visits a newspaper web site, the question is whether this phenomenon is a solution or a problem for the publishing industry.

Being a glass-half-full guy, I am going to stick out my neck and say it could be the solution. Or, at least one of them.

The good news for newspapers is that traffic is growing sharply at their Internet sites, even as it generally declines in print. According to the latest statistics from Nielsen/NetRatings, the average number of unique visitors at the 10 busiest newspaper sites grew by 11% in the last year vs. a 3% increase in general web readership.

Interestingly, the combined traffic of the Top Ten newspaper sites (39.3 million unique visitors or 26% of the Internet population), would rank them as the seventh most active web site if they were a single entity. That would put them behind Yahoo, Microsoft/MSN, Google, AOL and eBay but ahead of Amazon, MapQuest, Real and the Weather Channel.

The action is heating up on newspaper web sites at the same time online advertising rates are on fire at such large portals as Yahoo, Google, AOL and MSN, according to the Wall Street Journal.

“More Web sites are hanging ‘sold out’ signs on their most coveted pages and dramatically raising ad rates,” says the Journal. Prime real estate at the portals is committed months in advance, leading to double-digit rate increases as advertisers compete for available spots.

AOL says it has raised prices 20% since January, while MSN is getting as much as $1 million for a choice, 24-hour ad on its home page vs. $25,000 to $50,000 for the same spot four years ago, according to the Journal.

Meanwhile, Google has launched its potential Craig’s List-killer, Base, which enables you to buy or sell goods or services with pinpoint geographic precision, thanks to mapping technology that gives you a convenient aerial photo of the dealership peddling the beater you long to buy.

Now, here’s what this means to publishers:

With formidable brand recognition; deep penetration in their respective markets; powerful relationships with local advertisers, and significant, fast-growing and locally targeted online traffic, newspapers are the perfect partners for the portals, eBay, Craig’s List, Amazon, Expedia and other Internet heavyweights.

If newspapers and the online sites treat each other like partners, instead of rivals, they both can increase audience and revenues by sharing content and advertising orders (at, presumably, ever-higher CPMs if the online ad "shortage" continues). If the next frontier in the battle for web dominance is local stuff -- a la Craig’s List, Kijiji, Google Base and the similar wannabes soon to emerge -- who is more local than your friendly, neighborhood newspaper?

The online operator smart enough to be the first to team with local newspapers will have a long-lasting, unfair advantage over all of its competitors, because (save for a few metro areas) there’s generally only one available newspaper partner per town.

If this is going to work, of course, publishers will have to get over the long-lasting allergy to electronic media that manifested itself when the first radio station signed on in the early part of the last century. And they will have to conquer the reluctance to play nicely with others that seems to characterize any industry that historically grew up in monopoly or near-monopoly circumstances.

The biggest obstacle to this obvious win-win opportunity, therefore, will be pride and petulance. Wonder if everyone can get over it.


Blogger Scott Baradell said...

As a former media exec, I can tell you that, in general, there is an acknowledgment and understanding of the opportunity on the electronic side. But the risks associated with change can sometimes make it difficult to act boldly. The two primary fears of newspaper companies are that:

1) The revenue stream from print will begin to decline before the revenue stream from the Web can fill this gap.

2) The revenue stream from the Web will never reach the level of the revenue stream from print.

Both of these scenarios are completely disastrous, particularly for a public newspaper company.

Hence, cautious treading.

8:03 AM  

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