Stop the Presses

The news has been busy reporting on how the news is going under. Newspapers, specifically. People are consuming more news than ever, but they are getting it online (often times from newspaper-run sites) which kills the economic model. I don’t understand this.

Someone on NPR last week did an interesting analysis. I’ll spare you the details, but the conclusion was that hard copy sales (subscription + newsstand) don’t quite cover the costs of the blank cut paper that newspapers use. Just the paper here…no content, no editing, no reporting, no headquarters building, etc. Everything else is paid for by ad revenue.

In theory, going online should be great. Papers don’t make money on subscriptions anyway, since that portion of their revenue doesn’t quite cover the paper costs. But they are all still having trouble with the online switch because they can’t make as much with online ad sales as they do with hard copy ad sales. This is apparently because online ads sell for a very small fraction of the price of hard copy ads.

For me, the Macy’s ad next to the wedding announcements in the hard-copy NYTimes is just as effective as the Orbitz ad next to the same section in the online version; I pay very little attention to either. In fact, the online one is probably more effective because there is some chance that I’ll throw out my hard copy NYTimes before I even get to that section, whereas if I’m on the weddings section online, I’m certainly looking at it. I thus find the price differential surprising.

Question for Evil and KillerB and anyone else working in the marketing world: are advertisers paying too much for hard copy newspaper ads, or are they paying too little for online newspaper ads? Why is there such a huge difference? I know online ads have miniscule click-through rates, but hard copy ads have no click-throughs at all. Why do advertisers assume one is more effective than the other?