The Seattle Post-Intelligencer is publishing its last paper edition today, joining the Rocky Mountain News and several other smaller papers in giving up a one hundred and forty-six year traditional business model. Instead, SeattlePI.com will become a web-only product hard to distinguish from the Huffington Post.
The Seattle PI has seen its circulation decline from 200,000 to 117,000 and in fact the decline might be even more precipitous is one accounts for the changes in accounting rules for circulation. On the other hand, its on-line operations log 50 million page views a year, so its clear that some value exists in the brand.
The real question is, how much value?
The on-line version of this institution is going to be a much, much smaller, a literal inversion of circulation measured in hundreds of thousands, and revenues measured in millions. A successful version of the SeattlePI will be roughly equivalent to a nice plumbing business.
Even that is a very optimistic scenario. With all of its advertising slots fully subscribed at a CPM rate of eight bucks per thousand, one is only looking at revenues around 1.2 - 2.0 million dollars a year with the current traffic. Profits will be a fraction of that. To paraphrase a Morgan Spurlock comment, that's telephone bill money, not rent money.
The bottom line is that the newspaper industry still doesn't have an on-line business plan and that has big implications for how Americans get their news.
Paradoxically, in the news business, the low cost of content delivery is accompanied by the high cost of content creation--reportage. The other important factor is how the internet destroys the concept of 'local'. Why do you really need a Seattle PI when Seattle isn't a meaningful concept on the internet?
When you understand these factors, the future of on-line news becomes rather obvious.
Big. Really Big.
SeattlePI.com is a model for the future, but by model I mean like airplane model--a toy-sized replica of a functioning mechanism. What newspapers still have not grasped is that not only has the internet destroyed their content delivery model, its destroyed the notion of local.
If you look through your newspaper, there is comparatively little that you could legitimately call local news. Sports and local politics is almost the only truly local content a newspaper has. Everything else is subject to economies of scale.
The on-line news entity of the future will be a multi-media site with a single IT office for the entire nation, or perhaps even many nations. There is really no reason why you couldn't handle news for every English-speaking country in the world from one facility staffed by a passel of webmasters and IT people.
The impact on reportage will be even more dramatic. A future of independent contractors--bloggers by any other name. I think its entirely conceivable that two or three people could make a nice living reporting sports in Salt Lake City. They conduct interviews, report games, take video and do everything we've come to associate with sports reporting, and sell that product as content for anyone who will pay for it. Certainly there will still be "in-house" reporters, but they will become increasingly rare, perhaps confined to Washington D.C. and other major power centers. The vast majority will essentially be blogger content with a distinction between professional and amateur, original reporting and commentary/special interest--but still blogging.
Like the IT department, advertising sales benefits immensely from the kind of radical centralization I'm talking about, closely resembling Google's sales operation.
The new balance of radically reduced overheads and unheard of page views (Google magnitude) makes for a viable business model, but for whom? The internet and software giants are well-placed with technical resources and existing sales organizations to do very well, but Newscorp, NBC and Time-Warner already have the expertise and infrastructure of cable television, which depends heavily on their affilates for content. I actually put my money on these boys and girls--Fox, CNN and NBC could be the only news media left standing at the end of the day.
I think it rolls out this way: Newspapers continue to go out of business entirely, or try their hand at on-line only. The attrition is devastating, but the survivors are acquired by Newscorp, etal who absorb their sales and web departments into their own, leaving a few reporters working out of their homes or small offices to continue delivering content. The new media giants customize their content for each locality (like the Examiner is already doing).
This of course flies in the face of the Democrat's disingenuous call for "localism" in media, but they can't fight the economics--it will happen, but should they worry? Should Republicans worry? No more so than they do now. The current Pravda model of editing is stupid in the extreme, since it essentially cedes market share to rivals who are only too willing to report what the other guy won't. This is intensified by the realities of the Internet model, which--once again--has no concept of local.
Oddly enough, for what looks like an effective news monopoly, I think you'll actually see a greater diversity of views. Without the traditional local news media monopolies, it becomes nearly impossible to foist objectionable views by sandboxing a market. I took a walk with the lovely bunny this past Sunday because of the beautiful weather we're having and I couldn't help but notice all the newspapers still on the walk at six o'clock in the evening in spite of the fact that they are delivered before 7:00 in the morning. Its an odd reality that in very conservative Utah, the main newspapers are irredeemably liberal, yet that doesn't mean that you can actually get people to read them. I asked my neighbors what the deal was with the newspaper still on the walk in the early evening, and without exception I heard the same thing, "we don't actually read it, we just get it for the sales flyers..." It was an "ah ha" moment for me, because that's precisely why we still get a Sunday paper...
Reportage sourced from independent contractors makes this scenario increasingly impossible to sustain. Not only are they subservient to market tastes, but they can no longer hide behind the skirts of the institution. If no one is reading their stuff, they won't have a job.
There is always the prospect of political interference in how this all develops, but frankly I like the way the future of journalism looks.