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| GCI founder's gravestone |
How much additional revenue would that generate? Let's use Martore's figure at the high end, and assume a net increase of 250,000 without any loss of print subscribers switching to digital-only. Gannett now charges around $12 a month for digital-only. So: 250,000 x $144 = $36 million.
How meaningful is that? Let's assume a best-case scenario. Fourth-quarter circulation revenue was $313 million, according to yesterday's report. Multiply that over four quarters, you hit $1.3 billion annually. Bottom line: $36 million is a nice piece of change. But in the grand scheme, it doesn't move the needle much.
Note: Overall fourth-quarter revenue was $1.52 billion.
Further down the road
All these numbers reflect a whopping increase in circulation revenue after GCI raised print subscription rates an average 25% last year with the introduction of paywalls in the U.S. community newspaper division. Circulation revenue soared 17% year-over-year in the fourth quarter alone, when the paywalls were in place across all markets.
But the rate hikes came at a cost. During the quarter, circulation volume fell 11% as many customers rejected the higher prices. Still, that was only half the projected loss, Martore said.
In the long run, of course, Gannett will eventually lose all print subscribers as the newspaper industry switches solely to digital. We don't know when that will happen.
And it won't come all at once. For GCI, the switch might look like Detroit in 2009, where home delivery was reduced to three advertising-rich days a week: Thursday, Friday and Sunday. Single copies are still sold daily at newsstands and racks. Eventually, print will collapse to Sunday-only and then -- poof! -- gone.
The bigger question all publishers face: What will digital-only revenue total after print dies? GCI now charges $22 to $23 monthly for seven-day delivery, which includes digital access. Obviously, that's not all profit; embedded costs include newsprint, pressroom labor, and distribution. Back those out, and digital-only at $12 monthly might net out more profitably.
But how many of the current millions of print-only subscribers will exist as digital-only? We'll get an early clue later this year if Martore's projections pans out.
[Photo: Founder Frank Gannett died Dec. 3, 1957; he's buried in Mount Hope Cemetery in Rochester, N.Y., the company's home for many decades. A drawing of a paper carrier adorns his gravestone.]
Digital subscriptions go to $200 annually in 2015, and only subscribers will be exempt from datamining stories showing who has a gun, what they make, where they live, how often they change their underwear and how often they schtup the neighbor's wife. And we'll throw in some news too, if you get the premium subscription.
ReplyDeleteNow THAT'S a revenue model!
Digital subs will not work long term. The industry had its chance 10 years ago to implement this strategy. Consumers are too entrenched in their habit of getting information free and not from traditional newspapers. GCI is delusional if they think digital subs will save them from the envitable.
ReplyDeleteAt this point, with the exception of digital subs, GCI only has two other major ways of generating revenue and all of them are declining and one (print adv) will will go away altogether in 2-3 years. Local television news viewership will never be what it was in the 70s, 80s, and 90s. There's too many options capturing consumers attention and the ONLY thing anyone cares about when they turn on the local news is the local weather and that takes all of 1mins of someone's time to digest and they are off making breakfast and getting ready for their day.
GCI has absolutely no other ways to make money and absolutely nothing in the pipeline that offers anything more than kibble and bits of revenue. I hardly think Deal Chicken is "killin' it" or will grow any more than it already has in the coming 2 years.
For those who think digital subs and digital advertising will save GCI and the newspaper indsutry, good luck with that.
They're projecting to grow digital subscriptions by 400% this year? Good luck with that. Maybe if the Gannett sites had content worth a click, that might be a marginally realistic goal. Plus, they're still giving away USA Today, which, arguably, has the best content the company has to offer.
ReplyDeleteUSA Today will never be able to implement a sustainable digital sub model online or on tablet or anywhere else. The expectation is that product in any form other than print is "given away." And, there's absolutely nothing unique about 95% of USA Today's content. Nearly every piece of content that most people would care about can be found tons of other places. And, people will not pay for that. So, good luck with that. If USA Today can't sell digital subs, how will they make money when print adv dries up? No one on the senior citizen management team can answer that question. Oh wait, there is an answer - furloughs and staff reductions. Yes, that is how GCI will actually make money in the future.
ReplyDeleteThe deeper problem, my friends, is the lost of the dedicated audience that print once possessed. Advertisers and influencers once sought out our print products because they reached people who were ready, willing and able to buy. To that end, print is still better than digital; even though the print audience is shrinking, those who do read it to respond better to it. Digital advertising on our sites doesn't have the utility and telescoping range as the old print platforms once enjoyed.
ReplyDeleteHere's a great example: When everyone read the Classifieds, every one who wanted a successful Garage Sale knew that you had to advertise it in the Thursday, Friday and Saturday sections. The section had enough eyeballs and reputation to get the job done. These days, there's nothing on any platform that rivals what that once was. Same for cars. Same for real estate. This really isn't Gannett's fault; the Interwebs caused this amazing, interconnected infrastructure to collapse. But nothing that we are doing can, or will, be as successful as we were post-wired.
Final food for thought: What happens when we eventually lose legals? That was, and is, money for nothing. When they migrate, there's nothing we can do to replace that revenue.
Newspapers were once the #1 source for news and information. With the Internet and all things digital, other resources, including advertising, are at the tips of our fingers. Newspapers are a thing of the past, which is so sad. We no longer stand alone. Our new digital platform/ products makes us one with a million competitors! Who will survive?
DeleteGood stuff Jim. So does all the growth in digital come at the expense of print? If there any organic growth in these locals?
ReplyDeleteNever mind, some of this addressed in the next article.
DeleteI bought a local paper on Saturday and it had one classified help wanted ad. I know most of it has gone to sites like Career Builder but only one ad that is disappointing when paying 1.00 for a paper.
ReplyDeletePrint doesn't have to die. There should always be a place for Single Copy papers. It's the customer service that has dropped and with the Revenue it still brings in the cuts made were not justified. The Expense of delivering a Single Copy Newspaper with dedicated drivers was so small but GPS got greedy, and cheap
ReplyDeleteLet's go backwards from the single copy delivery person. At best, the carrier will pick the papers up at the dock to save the truck and driver expense.
DeletePapers still have to be bundled and maybe segregated by zone. Papers have to be printed on a big expensive press. By big expensive pressmen. Using BIG rolls of newsprint. Along with a large amount of job-specific chemicals. All of which are stored in a BIG warehouse which generates a MASSIVE electric bill.
Once home delivery goes, single copy makes NO sense financially, unless you go to a totally advertiser-driven, free-on-the-street product.
1:58 What are you talking about at best to save the truck and driver expense? The truck and driver expense is nothing compared to what single copy brings in. If Home delivery stops more people will be looking to by a single copy paper and it would still be a good driver to online sales. Your short sighted thinking is exactly why this company will not last.
DeleteHere's the operative sentence: "During the quarter, circulation volume fell 11% as many customers rejected the higher prices."
ReplyDeleteUnlike Hollywood, which spends more on its product each year and CAN pass the cost onto its consumers (that would be theaters, which then pass the cost on to YOU), print can't make up bigger and better stories. But movies aren't that far behind home-delivery print.
From the MPAA 2011 Statistics Summary:
2011 U.S./Canada box office was $10.2 billion, down 4% compared to $10.6 billion in 2010
The decline in U.S./Canada box office was due to an equivalent decline in admissions (-4%) compared to 2010
Here's the real relevance to print . . .
Ticket sales continue to be driven by frequent moviegoers, who represent only 10% of the population but purchase half of all movie tickets. In 2011, more 25-39 year olds were in the frequent moviegoer category, particularly males
In other words, frequent moviegoers skew young. We all know the major demo for newsprint.
Lastly . . . movie admissions are down 20% from 2001 to 2011 from 1.57 billion to 1.28 billion. The upward march of ticket prices masks that decline. Print can't do that.
More good news for print. Ask yourself: Do you still clip coupons, or do you get them online and sent directly to a mobile device or loyalty card? Or a mix? If you do a mix (as I do) my guess is the mix skews ever-more toward getting coupons online.
ReplyDeletehttp://newsosaur.blogspot.com/2013/02/how-mobile-coupons-could-clip-newspapers.html
People are wasting to much money on mobile devices and contracts. Either it has to get cheaper or it makes no since to get coupons online. Have you noticed like I do that I can't find coupons for products I use online. Or one place online to check out store ads locally?
DeleteThe comments at the end of the blog say alot about what people think of the idea. Also I lIke how the writer mentions unless all the large media papers get together to start there own digital coupons for leverage they will lose out. That has been exactly the problem with Newspapers in their race to go digital they have been undermining their core business which was and still is print.
DeleteMy local supermarket (Fry's aka Kroger) sends me a digital version of their Wednesday ad at midnight Wednesday. My local pharmacy (CVS) sends me a digital version of their Sunday ad ON FRIDAY. So does Staples. FSI's may pay the bulk of the freight. But they are increasingly less exclusive to print.
DeleteTo suggest newspapers should forgo digital and force print on their customers (or withhold certain items from digital transmission) is like Kodak demanding cell phones not contain cameras.
For print to survive, it has to give customers what the CUSTOMER wants. Increasingly, customers aren't buying what print is selling.
I also get weekly ads from Walgreens, Wal-Mart and local stores. Shopping for a car, house or used item? Better do it on-line because its not in your paper's classifieds anymore.With e-mail ads and loyalty programs, I don't look to the paper for ads or inserts anymore.Our classifieds are now 80% obits, and if politicians ever realize that more people would see legal notices on the web than in the paper print will officially die quickly.
DeleteBut they won't see more public notices on the web because not everybody is on the web. As far as all those coupons being sent to you you had to sign up for them at the stores and turn over your personal information to them. Hope you don't mind when your identity is stolen or you are receiving tons of information you don't want and have to go through deleting it.
ReplyDeletePay wall was nothing but a way to wring more $ out of the old folks who will always get the paper no matter what. Once they die off, we are stuck with the same problem. Very few people willing to pay for a digital sub.
ReplyDelete