Re/considering the economics of moving from print to online. A discussion with editors participating in the Spring seminar, *Innovation and the Market - Understanding Users, Delivering Value & Growing Revenue". See: http://www.ukjournalism.org/jleaders

1. A conversation with François Nel Re/considering the economics of moving from print to online*

3. JournalismLeadersProgramme

5. JournalismLeadersProgramme Media usage Levels UK ABC1s 15+ (%) Advertising Revenue Source: BRMB Internet Monitor & NRS; group M Report June 2006 (£m) 0 500 1000 1500 2000 2500 2000 2001 2002 2003 2004 2005 2006 2007f Internet National Newspapers 65% 46% 67% 70% 68% 69% 68% 67% 53% 55% 60% 63% 45% 50% 60% 70% 2000 2001 2002 2003 2004 2005 National Newspapers Internet

6. The 20-year Chasm LOW REVENUE How and when do we close the gap between losing print revenues & growing online revenues? How do we time the transition so not to lose print revenues & to continue to grow digital revenues ? Source: Shaping the Future of the News, WAN PRINT DIGITAL HIGH YEILD LOW YEILD HIGH REVENUE HIGHER OVERHEAD/ Lower Margin LOWER OVERHEAD / Higher Margin HIGH VOLUME HIGH VOLUME

7. (Numbers in billions) Source: Mark Potts, at recoveringjournalist.com Newspaper ad revenues falling at about 5 percent per year ONLINE revenue growing at nearly 20 percent per year. Scenario #1: Future of Newspaper Ad Revenue YEAR PRINT ONLINE TOTAL 2007 $45.0 $3.5 $48.5 2008 $42.8 $4.2 $47.0 2009 $40.6 $5.0 $45.7 2010 $38.6 $6.0 $44.6 2011 $36.7 $7.3 $43.9 2012 $34.8 $8.7 $43.5 2013 $33.1 $10.5 $43.5 2014 $31.4 $12.5 $44.0 2015 $29.9 $15.0 $44.9 2016 $28.4 $18.1 $46.4 2017 $26.9 $21.7 $48.6 2018 $25.6 $26.0 $51.6 2019 $24.3 $31.2 $55.5 2020 $23.1 $37.2 $60.5

8. ( Numbers in billions) Source: Charles Layton, extrapolating from Newspaper Association of America revenue figures for 2007 and Goldman Sachs newspaper revenue percentage predictions for 2008. "Frankly, I think people might say that my projections are not cautious enough." - Peter Appert of Goldman Sachs NEWSPAPER AD REVENUE - 9.3 % PA ONLINE revenue growing + 10 % PA. Scenario #2: Future of Newspaper Ad Revenue YEAR PRINT ONLINE TOTAL 2007 $42.2 $3.2 $45.4 2008 $38.3 $3.5 $41.8 2009 $34.7 $3.9 $38.6 2010 $31.5 $4.3 $35.8 2011 $28.6 $4.7 $33.3 2012 $25.9 $5.2 $31.1 2013 $23.5 $5.7 $29.2 2014 $21.3 $6.2 $27.5 2015 $19.3 $6.9 $26.2 2016 $17.5 $7.5 $25.0 2017 $15.9 $8.3 $24.2 2018 $14.4 $9.3 $23.7 2019 $13.1 $10.0 $23.1 2020 $11.9 $11.0 $22.9

9. Scenario #3: Washington Post (Numbers in millions) Source: Charles Layton, extrapolating from figures in the Washington Post Co.'s 2007 annual report In his introduction to the company's 2007 annual report, CEO and Chairman Donald E. Graham writes that an economically successful outcome for the Post in future years "is not at all certain, but we have a much greater opportunity than most newspapers do." Print AD REVENUE – 13 % PA in 2007 ONLINE revenue growing + 11 % PA. YEAR PRINT ONLINE TOTAL 2006 $573.20 $102.70 $675.90 2007 $496.20 $114.20 $610.40 2008 $431.69 $126.76 $558.45 2009 $375.57 $140.70 $516.27 2010 $326.75 $156.18 $482.93 2011 $284.27 $173.36 $457.63 2012 $247.32 $192.43 $439.75 2013 $215.17 $213.60 $428.77 2014 187.20 237.09 424.29 2015 $162.86 $263.17 $426.03 2016 $141.69 $292.12 $433.81 2017 $123.27 $324.25 $447.52 2018 $107.24 $359.92 $467.16 2019 $93.30 $399.51 $492.81 2020 $81.17 $443.46 $524.63

11. What percentage of your total cost is editorial ? … is paper & printing? … is distribution? … is administration? JournalismLeadersProgramme

12. 18-25% editorial 10-15% administration 20-25% paper & print 30-40%% distribution a quick ‘guess-timation’ of newspaper costs… Source: Frédéric Filloux / MondayNote, 28/09/2008

13. 100 Journalists @€60k = €6 m Technology & infrastructure = €1 m Marketing & promotion =€2 Administration =€1m TOTAL = €10m, or €830,000 per month a quick ‘guess-timation’ of online site costs*… * stripping out paper, printing, traditional distribution expenses…

14. Ad revenue per unique user per month = € 0.1 to € 0.25 Ad revenue per reader is around = € 18 to € 20 To support € 830.000 monthly costs you’ll need about 83,000,000 unique users / month

15. * Figures from July–Oct 2008. Sources: Nielsen, ABCe & claimed.Figures used for illustration only.

16. Next: innovation = invention + understanding customer / business models . (Our resource-based view starts with deep market intelligence courtesy of Hitwise UK: http://tinyurl.com/lesu5g ) Where now ? François Nel Questions, comments, collaboration ? Skype or Twitter: francoisnel or FPNel@uclan.ac.uk