New Times celebrated its 10th year anniversary Saturday night at the Voodoo Lounge. Saucy joint. Good time had by most. Quote of the night heard by the Pulpman: "My wife is dancing with a cigar-smoking lesbian midget." New Times always did know how to throw a party.
So what will the next 10 years hold for the newspaper business? Paul Farhi, a Washington Post reporter, has an interesting article in the latest edition of the American Journalism Review titled "Online Salvation?" Here's a taste:
Consider a few distant rumbles of thunder:
--After years of robust increases, the online newspaper audience seems to have all but stopped growing. The number of unique visitors to newspaper Web sites was almost flat – up just 2.3 percent – between August 2006 and August 2007, according to Nielsen/NetRatings. The total number of pages viewed by this audience has plateaued, growing just 1.8 percent last year.
--Newspaper Web sites are attracting lots of visitors, but aren't keeping them around for long. The typical visitor to nytimes.com, which attracts more than 10 percent of the entire newspaper industry's traffic online, spent an average of just 34 minutes and 53 seconds browsing its richly detailed offerings in October. That's 34 minutes and 53 seconds per month, or about 68 seconds per day online. Slim as that is, it's actually about three times longer than the average of the next nine largest newspaper sites. And it's less than half as long as visitors spent on the Web's leading sites, such as those run by Google, Yahoo! and Microsoft.
Many news visitors – call them the "hard-core" – linger longer online, but they're a minority. Greg Harmon, director of Belden Interactive, a San Francisco-based newspaper research firm, estimates that as many as 60 percent of online newspaper visitors are "fly-bys," people who use the site briefly and irregularly. "Everyone has the same problem," says Jim Brady, editor of washingtonpost.com. The news industry's continuing challenge, Brady says, is to turn "visitors into residents."
--As competition for visitors grows, news sites are rapidly segmenting into winners and losers. In a yearlong study of 160 news-based Web sites (everything from usatoday.com to technorati.com), Thomas E. Patterson of Harvard University found a kind of two-tier news system developing: Traffic is still increasing at sites of well-known national brands (the New York Times, CNN, the Washington Post, etc.), but it is falling, sometimes sharply, at mid-size and smaller newspaper sites.
"The internet is redistributing the news audience in ways that [are] threatening some traditional news organizations," concluded Patterson in his study, produced for the Joan Shorenstein Center on the Press, Politics and Public Policy. "Local newspapers have been the outlets that are most at risk, and they are likely to remain so."
Patterson suggests that some of the declines at newspaper sites may be due to increased competition from local broadcast stations, particularly TV. Although they got a late start on the Internet, local TV stations are beginning to catch up, thanks to copious video news clips and strong promotional capabilities. "A lot of papers are close to maxing out their local audiences," Patterson said in an interview. "It's hard to know where more readers will come from... They have to figure out how to deal with a pretty difficult future."
In other words, for many, that first-mover advantage has vanished.
Most ominous of all is that online ad growth is beginning to slow. Remember those confidence-building double-digit increases in online advertising revenue? They're fading, fast. In the first quarter of this year, the newspaper industry saw a 22 percent gain in online revenue. Not exactly shabby, but still the smallest uptick (in percentage terms) since the NAA started keeping records in 2003. In the second quarter, the industry rate slipped again, to 19 percent. The third quarter promises even less, considering what various companies have been reporting lately. E.W. Scripps Co. saw a 19 percent increase. The Washington Post Co. said its online revenue was up 11 percent in the period, the same as Gannett's. Tribune Co. saw a gain of 9 percent. McClatchy was almost in negative territory, with a weak 1.4 percent increase for the quarter and the year to date.
All of which begins to hint at one of the deeper economic challenges facing online news providers. Even as advertisers move from traditional media to new media, a big question lingers: Can online ad revenue grow fast enough to replace the dollars that are now being lost by the "old" media? And what happens if they don't?
And an interesting tactic comes from Arkansas Democrat-Gazette publisher Walter Hussman:
Hussman has an idea that's so old and abandoned it seems almost new: Make people pay for the news they want, even in the Internet age. Hussman obviously is swimming upstream with this notion. Not long after the New York Times stopped charging for its op-ed columns under the now-jettisoned TimesSelect initiative, the Sacramento Bee dropped subscription fees for Capitol Alert, the paper's Web site for political news.
The newspaper Hussman publishes, the Arkansas Democrat-Gazette in Little Rock, is one of the few that charge a fee ($4.95 a month) for full access to its site. The site has a modest base of 3,000 subscribers, but Hussman says walling it off protects a more lucrative franchise: the newspaper. He believes it's no coincidence that the Democrat-Gazette's print circulation is growing – about 2,000 daily in the latest six-month period that ended in September – at a time when so many others are sliding.
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