Warning: Fuzzy math ahead.
As we know, the most deadly problem the newspaper business faces is that very little advertising has migrated from the print to the Web. A dollar’s worth of print advertising translates to pennies online. Thus we have initiatives like Steven Brill’s Journalism Online aimed at getting people to pay for Web content. As I argued earlier this week, it probably can’t be done.
But we do need to shift to a model by which consumers will pick up a decent share of the cost. Even after the recession, classified ads are not going to move back from Craigslist to newspapers or their Web sites. And with far fewer local businesses, display ads bring in less revenue than was the case at one time.
What are people willing to pay for? A premium, well-edited news package, portable and easier to use than a typical newspaper Web site. The print edition meets that definition, which is why I think the Boston Globe ought to charge a lot more for it, even though it would, inevitably, drive down paid circulation. The logic: As it stands, circulation revenue barely covers the cost of printing and distribution. If ad revenue is not going to recover, then readers are going to have to pay.
But there’s another possibility. Fifteen years ago folks like Roger Fidler, then of Knight Ridder, suggested that portable digital devices he called “tablets” would one day be so cheap that newspapers would give them away so they could shut down their presses. It’s possible that moment has come in the form of Amazon’s Kindle — not as cheap as Fidler had envisioned, but maybe cheap enough.
The Globe’s Sunday circulation is about 500,000. Let’s say around 400,000 of those are home-delivered. What if you gave every one of those households a free Kindle in return for a three-year, seven-day subscription to the Globe?
Let’s do the math, such as it is. A Kindle costs $359. Assume the Globe could get a price of $300 apiece in return for buying 400,000 of them. That’s $120 million. Spread it over, say, six years, and that’s $20 million a year.
The Globe already charges $10 a month for its Kindle edition. If it extracted that from 400,000 households, it would come to $48 million a year in guaranteed income for three years. (And I’m not so sure you couldn’t charge double that.) After that, subscriptions would renew automatically once a year, which is how the few online news organizations that charge for online access (the Wall Street Journal, The New Republic) handle it.
And here’s where the big savings come in: You shut down the presses. Permanently. No more paper, ink, trucks, fuel and the like. No more jobs for a lot of hard-working people, either, which would be a tragedy, but not as big a tragedy as closing the Globe.
I’ve never gotten my hands on a Kindle, but I have played with a Sony Reader, which is a similar device. The portability and the clarity of the e-ink are both well ahead of even the smallest, sharpest laptop. The Globe’s Kindle edition gets mediocre reviews. But with no more print edition to think about, I’m sure it could be upgraded considerably. And with a large regional customer base, it might prove to be an attractive platform for new kinds of advertising.
Can this work? I have no idea. As a last-ditch effort, though, I definitely think it makes more sense than simply closing the print edition and trying to sell ads on Boston.com. If we come to that point, then I definitely think the Kindle would be a better option.
Credit where it’s due: There are very few original ideas out there. Although I wrote favorably about the Kindle as a newspaper platform way back in November 2007 (here and here), I want to point out that Mike B1 floated a proposal very similar to the one I’m making today just recently.
And Tim Allik points out that Silicon Valley Insider, in January, looked at the numbers behind moving the print edition of the New York Times to the Kindle.
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Tim Allik
Dan, like lots of people in the Boston area these days, we’ve been blogging about this over at TechPRGems.com. The Silicon Valley Insider did an analysis back in January suggesting that printing The NYT costs twice as much as sending every subscriber a free Kindle. As you point out, the Globe could consider shutting down print entirely and providing every Globe subscriber with a Kindle at no charge. The Globe could make a deal with Amazon to take a cut of any additional content downloads made by the reader — books, magazines, etc. Advertising could be integrated into the Globe pages on Kindle. This might sound a bit Big Brotherish to some, but GPS could be added to the device, so that readers could be delivered advertising messages and coupons that are directly relevant to their location. Reading the paper in a Starbucks? You get a special on French Roast coffee. As Nicholas Carlson writes on Silicon Alley Insider, “What we’re trying to say is that as a technology for delivering the news, newsprint isn’t just expensive and inefficient; it’s laughably so.”
mike_b1
Ahem.http://medianation.blogspot.com/2009/03/next-steps-for-shrinking-globe.htmlCheck the comments.
Southie
Great, A whole new group of nitwits walking down the street attached to an electronic devise clicking buttons all day….. Is that what We really need. Let the Ipod Text messaging generation all crash thier cars and get hit by busses and wait for people who actually like to look at things and say hello to people to wake the hell up…
Dan Kennedy
Mike and Tim: Ahem yourself. I first started writing about the Kindle as a newspaper platform in November 2007, for Media Nation and The Guardian.
mike_b1
But did you suggest they give one out for free? :-)(If so, my compliments to your forward-thinking.)
NewsHound
Dan – the pressmen, truck drivers, wood cutters and paper mill operators might suggest to just get rid of the journalists and print the ads and distribute for free to every household, maybe with funnies on the outside and all the flyers from Best Buy, CVS, etc. on the inside – and as a feature on Sunday, Parade.Seriously, though, the Globe is in the advertising business. Circulation is a must. And advertising rates must be cost effective. Exploring for a new model for delivering quality journalism though, has much merit.
Esther
One of the bloggers I follow just got a Kindle and said she was amazed at how easy it was to use, how book-like it seems. I’m not convinced. While I do read a lot online, it’s still not the same. I bought The Complete New Yorker a few years ago and I don’t use it nearly as much as I thought I would. I’d much rather hold a magazine in my hands. While I could print out the entire text of Truman Capote’s “In Cold Blood,” which appeared in the magazine, I’d rather just buy a paperback copy. But then I never thought I’d get used to writing on a computer, either.
Dan Kennedy
NewsHound: One of the possibilities we have to deal with is that, even when the recession ends, newspapers may find they’re not nearly as much in the advertising business as they used to be.
rozzie02131
There are no ads on the Kindle. There are very few pictures and no color. The Globe can improve its organization and presentation, but I don’t think it can overcome those technical limitations. I love the Kindle for books, but I think newspapers need a larger screen that can include more graphics, and hopefully color.
Berto
Dan,I think you have the sharpest take on how to save newspapers. You offer a smart compromise between the luddites like Brill and the “let ’em burn” types like Kos. You should seriously consider pulling together an eBook on the topic.I love the idea of giving away an eReader in return for a long-term subscription to the Globe, but I think there are a couple of caveats worth mentioning:1. The Kindle is crippled with Amazon’s DRM. And the company seems willing to mess with your Kindle if it whenever it wants. The Globe should be careful not to make an exclusivity deal with Amazon, or2. Skip the Kindle altogether and wait for Plastic Logic’s device to come out. It looks to be far superior a device to the Kindle, has a bigger screen and, most importantly, is open source. I think newspaper readers would really prefer the screen real estate Plastic Logic is promising. Open Source really is key here, because it guarantee’s the Globe’s content is not a slave to Amazon’s device or its business practices. Plus, PL says a second generation device will be foldable, making it even more portable.3. Consider a paid iPhone app that offers better readability and multi-touch tools than the online version. The idea is to charge for added portability and convenience, so why not try this across several platforms? Palm’s coming out with an iPhone competitor, too, so make an app for that. And for Google’s Android mobile OS, etc. In short, what you’d be charging for is not the content, but the enhanced access to that content, and charging advertisers for access to subscribers willing to pay money for what they want. That mirrors the old system of paying for newspapers where consumers paid for subscriptions for access to the content, and advertisers bought ad space for access to those consumers.
GFS3
Regardless of who came up with the idea first – it is a good one. At least it shows some forward thinking and innovation. I think it would be worth exploring.I’m still very disappointed by the Globe’s lack of communication with its readers. All of this “closure” stuff is happening behind closed doors. I’m not quite sure they are listening to ideas – or willing to consider any strategy other than cutting.George Snellhttp://hightalk.wordpress.com/
NewsHound
Dan – “when the recession ends, newspapers may find they’re not nearly as much in the advertising business.” Yes, sadly, agree with your perception. Not to put words in your mouth, but but I think you’re trying to save the newsroom and continue to find a way to provide quality journalism to those who want it, even if it is only to those willing to pay. That has a lot of merit considering the way things look now. I am most likely unrealistic in trying to say that maybe the entire newspaper can still be saved. To me, the newspaper is the Town Common, or Boston Common or public bulletin board that everything, including ads for cars, houses and public notices is posted for everybody to read at a price that almost everyone is willing to pay. We went through evolutions in the 60s and since moving out line casting machines for strike-on composition, then to photo typesetting and now digitally straight to plate.Dan, I think your concept is that any advertising sold is merely to support the continuation of quality journalism, even if by a non-profit. That is a reasonable approach.The newspaper model of the last few decades was to make a lot of money by luring in readers so that a lot of profitable advertising could be sold. Too much wheeling and dealing and the cash cow isn’t so healthy anymore.To me, the newspaper is the local bulletin board on newsprint about everyone and everything read by almost everyone in which there is a fair return on capital that does a little better in good times and struggles a little in recessions.
acf
Even with the free Kindle, they would have to make reading the ‘paper’ more comfortable, and similar in practice to reading the current print edition, for it to succeed. Currently, reading an entire ‘paper’, such as I do with the Globe now, is not viable online. Online leans more to reading an article or two, but not the whole publication with the loss of interesting articles or ads that fill your field of vision on a newspaper page. That aside, the scheme could be a way to move print readers to the online publication. Of course, for casual, occasional readers, being forced to buy the Kindle, then buy access to the online paper, wouldn’t work, much like I refuse to buy an FastLane transponder then pay a monthly fee for the two trips a year that I use the Pike. It’s an intriguing idea that merits further consideration.
O-FISH-L
Dan, I try not to get caught up in new gadgetry, partly because it becomes obsolete so quickly.On that note, what happens when the 400,000 households are six months into a three year subscription and their Kindle becomes obsolete, surpassed by a second or later generation model? Many Globe readers fashion themselves as the more elite class of Boston newspaper consumer, so will they want to be seen publicly with the modern equivalent of the rotary phone when advances to Kindle are inevitably made?
Mark
Great idea Dan. I don’t subscribe to the Globe, but if they offered a heavily discounted Kindle in exchange for a three-year subscription, I would definitely take that deal.
kat
My in-laws are in their 70s and still subscribe to papers for the news and for the ads. They’re suspicious of phones without rotary dialing — you’re now going to give them a Kindle with no coupons to cut out? And then you’re going to maybe upgrade to newer gadget in two years? While I live my life online, I’m guessing the folks who still subscribe do so for a reason.
LFNeilson
On this one, I agree with Fish. Today’s Kindle is tomorrow’s ashes. And then what? This is the weak link in electronic media. Sure, someone will invent a new technology that leaves everything else in the dust. But what does that do for journalism?Okay, it might instantaneously report everything whenever it happens, but don’t bet on it. We’ll still need reporters to dig out the facts.zzzzz
acf
I have a question about the viability of replacing a print edition of a newspaper with an online version. As far as I understand, the kind of revenue that can be expected from an online news publication is peanuts compared to what a print one can generate. Continuing my thought, a reason why online versions of print papers are popular is because of the depth and breadth of its reporting and writing. If an online only publication can’t hope to generate the revenues to compare to their print ancestor, how are they going to maintain the staff of researchers, reporters and editors, to produce the publication that would draw readers? After all, the online publication became popular in part because of the content created by the talent of the print sibling. Without that talent, could an online only publication create the content to draw readers?
mike_b1
Technology doesn’t move that fast, and platforms are generally backwards compatible. Tomorrow’s Kindle’s will read today’s papers, just like today’s iPods play yesterday’s music.
Tim Allik
Reading the print paper is a very pleasurable experience. I spend way too much time doing it myself (just ask my wife). I’m sure that using passenger pigeons to relay messages has its own charms. Sending messages via smoke signal is an ingenius idea. Beating drums to communicate is highly enjoyable, I’m sure. Writing with a quill and ink is something I always wanted to try. The fact is that people under a certain age just don’t read print. It has very little to do with income or education. It’s a tectonic cultural shift that will grow only more extreme with time. When we’re referring to the Kindle I think it’s fair to say that we’re referring to it generically, like Kleenex. We’re talking about a portable digital format that reads like print and can download information without a computer. I agree that the online newspaper experience lacks the element of serendipity that print provides. People tend to tunnel down into vertical search pathways, getting smart on very narrow topics without gaining the broad knowledge on a range of issues that the print format enables. But that’s primarily a formatting issue. Serendipity can be designed into the digital experience. I think it’s one of the reasons that Twitter is so popular. The process of discovery is random and haphazard — in a good way. There aren’t many sure things when it comes to saving newspapers. But one sure thing is that print will not be part of the solution. With every new set of obituary notices the print audience gets smaller — and it’s not being replaced.
Dan Kennedy
Tim: As I’ve written before, I’m not in love with Times Reader. But it mimics the print experience much better than NYTimes.com does. I find that serendipity survives the transition to digital better with Times Reader than with the Web site.We are still in the very early stages of digital media, folks.
Elizabeth
One thing that seems to get left out of these discussions is the usefulness of ads beyond their significance as revenue generators. We can learn from ads, find useful and unexpected information in ads, even get pleasure from focusing on ads (as any subscriber to a special interest or hobbyist mag would tell you, as well as readers of fashion mags). From the POV of the reader, advertising can be another form of ‘content.’ With few exceptions, I don’t think online advertising is as effective as print advertising. Very easy for my eye to ignore it, despite the jumping monkeys or whatever gimmick-of-the-month, and I’m proud of my nanosecond reflexes in clicking off pop-up ads without bothering to read them.The experience of advertising gets left out. (Pop-ups are annoying because they interrupt our focus on reading; print ads are there to be absorbed at will.) And I am not at all convinced that an hour’s worth of online reading produces the same ad awareness as an hour’s worth of newsprint reading (assuming, of course, enough content to fill an hour).
rozzie02131
Elizabeth-excellent points. Ads in most media are despised and ignored, but in newspapers many of them are enjoyed as much or more than the journalism. That’s a position for advertisers to cherish, and I think it’s possible to duplicate that kind of ad success online. Advertisers have to be willing to sacrifice the dancing monkeys we all hate. Ads have to actually become easier to ignore, like print, so we can focus on the messages of interest. They can do much better at targeting likely buyers too: if my local supermarket advertised weekly specials and Amazon advertised new Kindle books on my personal Boston.com, I’d be an eager reader.But as I said above, ads won’t happen on the Kindle as it’s now formatted.
NewsHound
Some of these points are so valid. A real newspaper needs to have advertising and solid penetration in its market – – – it needs an audience of virtually everybody in a city or group of communities. A little bit of good journalism to a few very interested people willing to pay for it and read it on some contraption is not a newspaper. It is not even like a newspaper. In a way, it’s more like radio. Without an appliance it is silent.
Howard Owens
Let’s say your math is right…– What’s going to prevent people from breaking the contract? If somebody just decides, I don’t like the Kindle and I don’t need the Globe bad enough to put up with the frustration of using it? (or, there are all kinds of reasons people don’t like change). Will the Globe sue customers/readers? Ruin their credit? Or just eat it. What happens to your math when 20, 30, 50 or 80 percent of the subscribers cancel?– As another comment alludes to, this plan makes the Globe dependent on another company’s technology. The Globe wouldn’t own the technology, the way it owns, say, the printing press or the servers of Boston.com. This seems a tenuous situation for an entire business model. What if Amazon doesn’t keep pace, or drops the product line for its own business reasons?– What about advertising. That doesn’t figure into your math it appears. Should the Globe just forget advertising? How is the advertising experience on the Kindle? Classifieds still remain a lucrative market. Would classifieds work on the Kindle?– A subscription-based Kindle still doesn’t solve the problem of free online content and competition in the attention economy.– In your math, the Globe realizes a cash flow on distribution of $28 million a year. Is that enough to sustain the kind of news operation necessary to keep 400,000 paying subscribers?
mike_b1
Howard, much of what you say are problems that have already been addressed in other industries.To wit, what’s the difference between the model Dan is proposing and what cellphone providers have been doing for nearly two decades? Sprint, for example, gives (or heavily discounts) the phone to customers, and is dependent on phones from LG, Nokia, etc. Same thing here. And in the unlikely event Amazon were to punt on Kindle (right now, it’s a terrific revenue stream for them), others would move in to fill the void. (Indeed, others are already trying.) And like iPods, phones, etc. standards and the marketplace will ensure platforms are cross-compatible.And you can design almost any page to work advertising in. That will never be the limiting factor.
Dan Kennedy
Howard: Yes, I think there are deep flaws with my idea, as there are with every idea aimed at preserving newspapers at least somewhat as we’ve known them. Maybe it can’t be done. But let me take your points one at a time.What’s going to prevent people from breaking the contract? I’m not suggesting that anyone will be sent a Kindle involuntarily. Which means 400,000 is probably optimistic. Let’s say 300,000 — even 350,000. Why not? It’s a great deal. As Mike B1 suggests above, those willing customers will have to pay a high price to get out of their contracts, just as cellphone customers do. I don’t see a problem with that.This plan makes the Globe dependent on another company’s technology. Yes. Sounds like Windows, or the iPod. The Kindle is clearly the early winner in the e-book sweepstakes. This is a three-year deal. Who knows what will happen after that?What about advertising? Perhaps one of the reasons that the Kindle has been a poor advertising platform to date is that there’s no critical mass. Give out 300,000 to 350,000 to Globe readers, and you’ve created an ad market. The Kindle, especially with its wireless connectivity, seems very much like the interactive ad platform that Roger Fidler was talking about in the early ’90s: click on the restaurant ad while waiting at the bus stop and make a reservation. Why not? And sure, to the extent that newspapers can hold on to some classifieds, I see no reason why you couldn’t include them in the Globe’s Kindle edition.The problem of free online content. Correct. I don’t have a solution for that. The Kindle would replace the print edition, not the Web site. The idea is to keep offering the Web site, but to make the Kindle a better, more portable experience, just as the print edition is currently a better (in some ways), more portable experience.Cash flow of $28 million a year. There has got to be significant advertising revenue if this is going to work. I don’t know if that’s realistic. I hope it is. But at least a newspaper that shifts from print to Kindle will receive some profit on its Kindle edition, instead of losing money on printing and distribution.