Twitter  Quartz found an unlikely inspiration for its relaunched homepage: The email newsletter.  
Nieman Journalism Lab
Pushing to the future of journalism — A project of the Nieman Foundation at Harvard

An imaginary conversation about the Seattle Post-Intelligencer


As the Seattle Post-Intelligencer’s fate continues to hang in the balance, Steven Swartz (CEO of P-I owner Hearst) and Lincoln Millstein (Hearst’s Senior VP-Digital) have lunch:

Millstein: Steve, we need to make up our minds about the P-I.  The 60-day clock we put them on stopped three days ago.

Swartz: Yes, I’m sorry — I’ve been tied up dealing with the Chron, shuffling management, getting that e-reader going, and whatnot.  But you’re right, let’s figure it out.  I’m running out of time in my “100 days of change,” also.  What’s your thinking?

Millstein: I’m thinking we go with an online-only P-I.  We’re going to end up facing that choice in other markets, including San Francisco, and Seattle gives us the opportunity to test the model and find out what works and what doesn’t.

Swartz: But can we make money?  We’ve been losing more than $1 million a month there — $14 million last year.  I’m not interested in an experiment to see if an online-only brand can stand up against a print/only combo — I’m interested in making money.  In the immortal words of Jack Welch: “fix it, sell it, or close it.”  There’s no buyer in sight, so we’re down to fixing or closing.

Millstein: I say we fix it.  We’ve got the numbers down to breakeven.  That’s doing pretty well, in this economy.  We can build profitability going forward. We’ve got a staffing plan: with just a few dozen content people we’ll have an operation that can cover Seattle well enough.  We need to hire a sales and marketing staff, some tech people, some admin types, but overall we’ve cut that $ 14  million loss down to total expenses of $5 million.   We can sell ads to cover that — the site is leading the market in unique visitors and pageviews.

Swartz: OK, but just to cover $5 million in cost, you need $100,000 a week in ads, and as I said, breaking even is not good enough — this is still a business.  The right number would be $250,000 a week, or more.  $13 million a year in revenue.

Millstein: Look, the Seattle Times has been selling all the ads in the JOA, so we’re going to have to ramp up to that number, but it can be done.  We get 4 million visitors, 45 million pageviews a month.  We outpull the Times.  We’ll be selling online and nothing but online; their folks still have to straddle print and Web.  If you want to get to $13 million in sales [pulls out napkin and pencil], that’s a page CPM of $24…

Swartz: That would beat any newspaper we’ve got, in the current ad climate.

Millstein: It would, and we’re not going to get there on day one.  Again, it’s going to have to be a ramp-up, but we can get to $10 CPM pretty quickly and build from there.  $10 gets us to a small profit in the first year. [Clarification: "Millstein" means total page CPM throughout.]  By year two, we’ll build in some other revenue sources: e-reader subscriptions, some niche products in print, like visitor guides, and some subscription revenue for premium online content that goes beyond what we’re publishing now.  We’ve built capacity to do that into our budget. And as business improves we’ll get to $24.

Swartz: You’re making me nervous, Lincoln.  There’s too many “ifs” — if you can operate with the staff that lean, if you can get $10 CPM, if you can get subscription revenue, if you can launch niche products, if the economy improves, and if you can built it up to $24 CPM down the road.  If you owned it, what would you do?

At this point, both of their cell phone ring.  The waiter brings the check.  They both have planes to catch.  “Call me tomorrow,” says Swartz. “Maybe we can figure it out by next week.”

What to read next
Joseph Lichterman    Aug. 26, 2014
Previously proudly without a homepage, the business site is trying to shift its email success to the web to build loyalty.
  • Someone on the inside

    Hearst goes online, busting the union, slipping out of the JOA and when the Seattle Times flames out, the corporate suits bring back some kind of print product so the city will not be left a no-newspaper town. Kinda evil genius, huh?

  • Martin Langeveld

    Insider: well, that’s a different imaginary conversation, isn’t it. But if that were the strategy, Hearst would have been better off keeping the P-I alive rather than having to relaunch print down the road.

  • MichaelJ

    @Someone on the inside…brilliant.

    @ Martin . . .brilliant double!

    Where “Millstein” got it wrong:

    CPM on the web is never going to $24/CPM. That’s a pipe dream. It’s only going down, not to rise again.

    And the better position is their folks: as in “We’ll be selling online and nothing but online; their folks still have to straddle print and Web.”

    As my grandmother might say, “from print, you can make a dollar.”

    The trick is what they are doing in Iowa. Separate creating and storing the content from the media in which that content is delivered.

    I would be on “their folks.”

    Interesting post about Gazette Communications in Cedar Rapids Iowa.

  • Martin Langeveld

    Just to clarify, “Millstein” is talking about total page CPM throughout, not individual ad CPM.

  • MichaelJ

    Print page or web page?

  • Martin Langeveld

    Ha! I know you’re the print evangelist, but we’re talking web here. “Millstein” is talking web, that is.

  • MichaelJ

    $24 cpm on a web page? Don’t know enough to know, but how does that work? I assume that the money to be made on the web is click throughs. the whole thing is about demonstrable metrics. If you are willing to pay for eyeballs only, why not do it in Print.

    Remember classified ads? Nice business while it lasted. So…business cards ads for local business in local papers.

    The marginal cost of delivery is next to zero. The local business understand what it is. They’ve been buying it shoppers for ages and still do. The problem is the ad sales force and process. If that’s fixed, it should be a no brainer.

    Fair enough. There is no growth story to help those overleveraged public newspaper companies. That’s a harder problem.
    But for everyone else

    I can’t figure out what I missing.

  • Martin Langeveld

    Michael, the fact is that most online advertising is still paid for on a CPM basis, and even if it all became based on clickthroughs, you could still compute the equivalent pageview CPM.
    $24 is high (again, as a total for all the ads on a page) based on reported single-digit ad CPMs, but reachable.
    But stay tuned, you’ve prodded me into looking deeper into the question of what kind of revenue yield per pageview newspapers are really getting. Once you start digging into this question, things get murky. So it’s going to have to turn into a separate post, soon.

  • MichaelJ

    I just found this at Terry Heaton’s Pomo Blog,
    a great site by the way…
    Here’s the lede
    If your web advertising strategy is built around page views, you’re going to have to find another way to sell. We’ve been saying this day would come for a long time, and today, The Wall St. Journal is reporting that Nielsen NetRatings will drop the page view as a metric to measure web traffic and instead rely more on time spent on a site. ComScore, according to the report, will also begin de-emphasizing page views.

    So, given the ratio of visitors to stayers on the NYTimes site, I’m thinking this is going to be a dead end.

    Here’s the link:

    BTW, if you want the full Print is NOT dead screed, here’s my story..