Dec. 8, 2009, 12:01 a.m. EST ·
Will the news survive?
Commentary: Page views for reporters' stories nowhere near covering costs
By Brett Arends, WSJ.com and MarketWatch
BOSTON -- Can professional journalism survive in the age of the Internet? And if so, how?
I'm not talking about TV or radio, though each has its own issues. I'm talking about written news -- the kind that used to be read in newspapers and magazines, and which now is mostly read online.
On the Web, it's mostly given away for free. There, of course, lies the problem.
Take a glance at the adjacent chart. It shows the numbers employed by newspaper companies in America. They've been sliding for years, but recently they have just collapsed to their lowest levels in half a century.
For those in the business, things just keep getting worse. Layoffs seem to come weekly. Share prices have plunged across the board; many publishers are hemorrhaging money. Warren Buffett, a fan of the industry for decades, now says he would not invest in it at any price.
Last week the issue became big news itself. At a conference in Washington, D.C., Rupert Murdoch -- whose News Corp. /quotes/comstock/15*!nws/quotes/nls/nws (NWS 14.42, -0.15, -1.03%) owns MarketWatch, as well as The Wall Street Journal -- faced off against the likes of Arianna Huffington of the Huffington Post. Murdoch thinks news organizations have to start charging to survive. (As Les Hinton, chief executive of Dow Jones & Co., put it himself a few days ago, "free costs too much.")
The Journal charges for much of its online content, unlike Huffington and others, but the market so far has been resistant. Even the New York Times /quotes/comstock/13*!nyt/quotes/nls/nyt (NYT 8.88, -0.13, -1.44%) , after an ill-fated, for-pay venture with its columnists, gives away its content free online.
What's the answer? Everyone is trying to work that out.
Consultants from McKinsey & Co. are here at News Corp., advising management on strategy. I should emphasize that I am not privy to what McKinsey is telling management. For the record, Howard Hoffman, Dow Jones' spokesman, says the McKinsey strategy study "is not about cutting costs, and you can quote me on that!" However, long before I began writing for the Journal, I was a McKinsey consultant. This seems to be a good moment to look at this industry through my old McKinsey magnifying glass.
The results are pretty stark.
If news Web sites give away their content, they must earn their revenues through advertising. A mainstream, general-interest news site typically earns around 2 cents in advertising revenue per page view. (You can play with that number somewhat, depending on the nature of your audience, the economy and so forth. But several analysts I spoke to agreed that it's a reasonable figure for analysis.)
So in the Internet age, free news sites will have to keep their costs below that. What does this mean?
For reporters, the conclusions are grim. They will have to live on the page views their stories generate, and the most they can earn is around 2 cents per story viewed. After factoring in the overhead for running a professional news organization -- editors, managers, offices, technology, benefits, support and the like -- they'll probably be lucky to earn 1.5 cents.
Someone hoping to earn, say, $40,000 a year as a professional journalist is probably going to need to generate around 2.7 million page views a year to do so. Assuming he or she works five days a week, 50 weeks a year, that's nearly 11,000 page views a day.
Someone hoping to earn, say, $100,000 a year will need to generate about 27,000 page views a day.
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