I was recently stunned by a conversation with a group of newspaper execs mulling over which U.S. city would be the first to rely on an online-only newspaper. The switch might be faster in one of the handful of surviving two-paper towns.
Last Sunday, Eric Pryne of Blethen’s Seattle Times wrote an article describing how Hearst’s Seattle Post-Intelligencer (The Times’ joint operating agreement partner) could be the first to switch to an online-only format. Under terms of the 24-year-old JOA, Hearst relies on The Times for its presses, warehouses, trucks and carriers. But now The Times claims it is losing money under the deal and wants out. An arbitrator will decide what’s fair by May 31.
If the case goes against Hearst, an online-only edition is being mentioned as a possible solution, although Hearst isn’t talking. Pryne notes in his article that an online-only route would mean a sharply reduced product, with maybe 100 of 200 news employees remaining, supplemented by ad staff of perhaps 20 to 40, plus six to 10 technical support people.
To be sure, the economics are fuzzy. While several money losing magazines have recently decided to keep their brands alive and put out an online-only product (Life, InfoWorld, etc.) the conventional wisdom is it takes more than 10 online newspaper readers to make up for a single print reader and online newspaper readers are in short supply and visit less frequently. The bundled synergy between print and online editions would also be lost.
It’s all too risky, one former Hearst publisher told Pryne. “Going to just an online paper would be suicide at this point,” he said. “That model’s not ready yet.” Nor would the transition to online be seamless. The Times Co.’s New Media division provides the computer servers and sells the advertising for the P-I’s Web site. The P-I newsroom provides its content.
According to several sources cited in the article, The Seattle Times online network Seattletimes.com, Seattlepi.com and two smaller Web sites generated about $17 million in ad revenues last year. The P-I’s Web site accounted for about 40 percent of the network’s traffic.
In any case, Pryne notes that Hearst may have a better alternative. “If it loses the arbitration, the JOA contract allows the company to close the P-I, pocket the money it spends on the paper now and collect 32 percent of The Times’ profits until today’s toddlers are great-grandparents.” It might be a better deal than keeping the paper alive and losing money.
Thanks to The NAA New Media Federation’s Digital Edge for pointing out this one.