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Comment by protonfish | Hacker News Reader

Newspapers and magazines were traditionally funding by advertising with subscriptions fees only to cover printing and delivery costs and as a concrete measure of dedicated readership. Moving to web publishing, printing and delivery costs are nearly 0 and readership is easily measured. But, instead of pushing ad revenue into the information age, they've thrown their heavy-handed weight behind subscriptions which work like death to online readership, then crying that it's their everyone else's fault they are losing money. I don't know what mental malfunction caused this unilateral suicide spiral, but they should probably stop making the same mistake and expecting different results and start focusing on innovation in online advertising (especially selling its value to your traditional clients.)

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The thing about ad revenue in the information age is that it's a pittance compared to what newspapers used to pull in. Classified ads were a major revenue source of revenue for newspapers. Craigslist has cannibalized that business. Craiglist has cost the newspaper industry billions of dollars[1] and made millions in return.[2] Here's a 2009 article:[3]

"Many newspaper executives view Craigslist as a nemesis because it doesn't charge for most ads. As Craigslist and scores of other websites have offered free or less expensive alternatives, newspapers' total revenue from the classified advertising in print editions has waned from a peak of nearly $20 billion in 2000 to about $10 billion last year.

Meanwhile, Craigslist has been raking in more revenue from the ad listings that it does charge for in major U.S. markets. Most of the money comes from help-wanted ads — another former cash cow for newspapers that has been drying up.

Craigslist's annual revenue has risen from just $7 million in 2003 to $81 million last year, according to the AIM Group. Based on its count of paid ads appearing on Craigslist in recent months, the company's revenue should be about $100 million this year, the consultants predicted."

Craigslist is that whole "your margin is my opportunity" thing everyone loves to throw around. Craigslist took over the market because they charged less than anyone else, and they could charge less because their margin on classified ads was lower than anybody's. Newspapers couldn't compete with Craigslist on margins because they were using those margins to subsidize the actual news-gathering apparatus, which was a loss leader to get people to buy the paper so they could put ads in it.

1) http://www.reuters.com/article/2013/08/13/ny-nyu-stern-schoo... 2) http://aimgroup.com/2012/11/07/craigslist-2012-revenues-incr... 3) http://abcnews.go.com/Technology/story?id=7804695

The internet has been decimating traditional news journalism's profits – whether online or offline – for more than a decade now. What do you mean they weren't "pushing ad revenue into the information age?" What were they supposed to do differently? The only news providers I hear about doing remotely well off of online advertising are ones with click-bait headlines and viral content, quite a different style from the NYT.

And how are they "crying that it's everyone else's fault they are losing money?"

> readership is easily measured

This is probably a big part of the problem. Online ad revenues aren't going to equal those for print, simply because there is so much more visibility into targeting, reach and conversions. Thus, advertisers have a much better idea of the value of an impression/click, and can price accordingly, rather than indiscriminately shot-gunning eyeballs as in print.

Entrenched cost structures contribute to the problem, but the fact is that paying a professional staff to produce quality content every day costs a lot of money, and online there are fewer dollars coming in per reader, even if the total audience is much larger. The exception to this downward trend is if you have content catering to highly lucrative niches such as insurance or banking (although I don't know how these compare to similarly placed print ads).

Premium video has a similar problem; advertising revenue is unsustainable for anything other than indie YouTube shows. The broadcast TV model could never work on the Internet.

At least, that's my theory.

> Premium video has a similar problem

For premium, wouldn't the conversion be easier? Having HBO bill me $12/month through my cable company or $12/month through their app doesn't make a difference to me as an already paying user.

Yes, with premium video, a subscription based model is a necessity. Advertising alone is not an option.

The mechanics of video subscriptions is an interesting discussion for another time, however it's not certain whether a completely a'la carte offering would be sustainable for HBO -- it definitely wouldn't be for most smaller channels. As much as people might dislike it sometimes, there are economies of scale to bundling.

The simple fact is that the Times revenue off print ads was an order (or two) of magnitude in difference. Online, the Times is competing against Google and Facebook CPCs and there's no way to get a high enough value/volume to make up for the lost print revenue.

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