Nieman Foundation at Harvard
Bloomberg Businessweek’s editor believes print remains the ultimate “distraction-free news product”
ABOUT                    SUBSCRIBE
March 1, 2012, 10 a.m.

The newsonomics of crossover

The time is quickly approaching when digital is a bigger part of traditional publishers’ businesses than print. How will we know if the crossover is happening sustainably? Here are some metrics.

The signs are everywhere — the signs of crossover. We’re not there yet, but publishers are starting to sense that the time when their business models become more about digital and less about print gets closer every day.

Since the web’s dawn, publishers have lived in a mainly print/somewhat digital world. We’re on the brink of a heavily digital/somewhat print world. The difference means hundreds of billions of dollars, euros, pounds, and yen to content creators and distributors. Get it right, and you win the prize: America’s Next Top (Business) Model.

Let’s take a top-line look at the data that tells us we’re approaching crossover — we’ll return to this topic often, as a defining one for this year and next — and the newsonomics of that crossover. Some quick datapoints:

  • The Money: First, the advertising money. As we’ve pointed out, digital advertising ($39.5 billion) is projected to roar past print (newspaper + magazine) ad spend ($33.8 billion) in 2012. eMarketer’s chart here is the most instructive, indicative of the growing chasm. (By 2016, the spread from digital to print projects as $62 billion to $32 billion.) Then, the circulation money. All-access paid content models — from The New York Times to Gannett to Time Inc. and the L.A. Times — is somewhere between a high-level strategy and a desperation maneuver. With ad revenue tanking, only circulation revenue can fill part of the crater, so newspaper and magazine companies are going to bundled circulation. They are madly trying to stay up with readers, who are way ahead of them in adopting the tablet; all-access (print, tablet, smartphone, online) subscription plans are a recognition that the present and future are digital.
  • The Audience: People are crossing over to digital reading ever more quickly, especially as the tablet becomes a replacement for the paper. Longer tablet session times grab minutes from print, as well as online and broadcast. Even in public radio, the number of digital, largely streaming minutes is growing rapidly, with NPR in the midst of quantifying that crossover. In TV, streaming minutes are on a wild ride, but still nowhere close to catching “TV” as we know it — TV still beats streaming 50-1.
  • The Product Portfolio: Look at where product creation is burgeoning. Take a look in iTunes at Condé Nast’s iPad apps as one index of that. It’s not just B2C. Take the case of B2B publisher UBM. In a good interview with PaidContent, CEO David Levin talks about exiting certain print and content properties as he rightsizes his digital portfolio.
  • The Devices: As the iPad 3 comes onto the market, we’re headed toward 50 percent penetration of tablets and e-readers. We’re already at 29 percent, only two years into the iPad. Expect 50 percent of adults by 2015. In the U.S., 48 percent of adults now have smartphones, a number that will keep marching higher. In Europe, numerous countries have reached 33 percent.

So how do publishers play the crossover game? If there were a magic formula, publishers would happily buy one. Yet, the crossover is so complex and so fast-moving that we are reminded of Einstein at the blackboard, and his observation: “We can’t solve problems by using the same kind of thinking we used when we created them.”

A print-to-web translation: Simply counting dollars, subscribers, pageviews, and unique visitors won’t get us to crossover.

With digital mobility upending conventional truths held as recently as a couple of years ago (“readers only consume news snippets online”; “we’re stuck with the digital ad formats we have”), navigating the crossover is increasingly complex.

What will help us figure it out? For publishers, emerging crossover strategies should be based on good metrics (see “The newsonomics of 2011 news metrics to watch”). But what to measure?

Let’s look at some conversion metrics, signposts on the road to a successful crossover — or a business implosion along the way.

Advertising revenue

  • What percent of print ad loss is made up by digital ad gain? This is the crossover metric driving much of John Paton’s Digital First Media/Journal Register Company strategy. With print advertising down now more than 50 percent in 10 years in the U.S., and even diving more quickly now in some parts of Europe, replacement ad revenue is at the top of the crossover list. In 2011, Journal Register made up about 95 percent of its print ad revenue loss. It intends to hit the crossover mark — making more in digital revenues than it is losing in print revenues — this year.

    Evening the print loss with the digital gain is the first big step in creating new sustainable news business models. Last year, U.S. newspapers, as a whole (as summed up in Newspaper Association of America data), lost eight times more in print ad revenue than they were able to gain in digital ad revenue.

    Why is JRC apparently meeting this crossover challenge better?

    First, the company is hell-bent on selling digital advertising of all kinds, having introduced dozens of new products in its marketplaces, orienting its sales staff squarely at digital. Second, JRC operates in smaller markets, and those have suffered less print ad revenue loss than larger city dailies. Or as Paton would put it: stacks of digital dimes can almost add up to digital dollars, and when they do, the promised land of growing digital EBITDA is in sight.

  • What percent of ad sales are coming from new customers and new products? There are a bunch of ways to measure this one. Essentially, we’re looking for the crossover from milking existing customers to aggressively finding new ones. One we’ve seen cited here and there is the percentage of digital ad revenue that is digital-only — meaning not bundled with print ads. The wrinkle here: Every publishing company uses its own “allocation” metrics; deciding how much of bundled ad sales are credited to print and how much to digital. So what “digital-only” means can be an exercise in Clintonian (Bill more than Hillary) linguistics.

    At best, the digital-only number is a proxy for news and magazine companies’ ability to compete head-to-head in the digital marketplace against non-legacy ad sellers. Combined reach (print + digital) remains a quite salable proposition, but when print props up digital — and publishing sales people continue to undervalue, or “throw in”, digital — digital sales competitiveness is undercut.

Other potential conversion metrics in advertising:

  • At what point do you double the number of advertisers you have? With major metros historically selling to a tenth or so of merchants in their markets (“The newsonomics of eight percent reach“), and many of those merchants having shifted their spending to non-newspaper companies, one solution is to reach many new, if smaller-spending, customers.
  • At what point does more than a third of your ad revenue come from selling other companies’ products? Everyone from Advance to Gannett to Hearst to Tribune is selling more than their own print and online inventory. They are creating regional/national ad agencies, attempting to be local merchants’ best friends, selling search engine and social marketing, mobile products and more. Hearst Media Services products, as offered in Houston, is indicative of the approach. A number of companies tell me such revenue could equal a third of their total “ad” sales by 2015. The sooner that level is reached, the greater the growth in overall digital ad reach.
  • At what point do ad formats other than simple cost-per-thousand (CPM) impression-based advertising equal a quarter or more of publishers’ revenues? Look at the Interactive Advertising Bureau reports on the fastest growing forms of digital advertising. It’s pay-for-performance, video, rich media, social, sponsorship, and lead generation types that are fastest growing — all areas outside the comfort zones of most publishers.


  • When will publishers find reader revenue accounting for 50 percent or more of overall revenues? Circulation revenue used to contribute about 20 percent of U.S. newspapers’ overall revenue; the number in Europe often reached 35 percent or higher. Worldwide, in my work with Outsell, we’ve found the the number now to be just shy of 30 percent globally. Given ad revenue declines and steep circulation price increases, publishers are coming to depend on readers’ for a greater and greater percentage of revenue. Though the amount of total revenue is of course the most important number, many successful publishers will find the 50 percent plateau a more comfortable one, long-term.
  • When will publishers “authenticate,” or register, 50 percent or more of print subscribers? Two years ago, The New York Times found that fewer than 50 percent of its print readers had registered for That number is now at 70 percent, the result of a major push tied to last year’s digital subscription efforts. Many dailies getting into the paywall/digital circulation business have found quite small percentages of such registrations. Getting the number to 50 percent and more is key to proving out the new all-access reader business model — and convincing print readers of the now-greater value proposition they’re enjoying.
  • When will publishers reach the 10 percent mark, adding new all-access, or digital-only, subscribers who are not current print subscribers? Today’s digital circulation pushes are mostly targeted to current customers. The immediate goals: Keep print subscribers from canceling print, since they can no longer move to free online, or upsell print subscribers, one way or another, for digital access. That’s well and good, but longer-term publishers need new and younger customers. So if even 10 percent of their new signups were non-print buyers, that would be a significant number.
  • What percent of print readers will be tablet-mainly by 2015? Few readers are known to be tablet-only to publishers. We’re assuming most are hybrid readers, a little desktop, a little smartphone, some print and some tablet. By the time we have iPad 14 (holographic, perhaps), some top-rank publishers expect many of their long-time customers to be tablet-mainly readers. They expect the mix to be tablet/smartphone/online, with print fading away (and taking as many of its costs blessedly with it). If the number is 50 percent by 2015, then publishers have only a few years to greatly scale down their print operations for the new era.


  • When will publishers be able to devote more than 50 percent of their expenses to content and sales? Traditionally, many newspaper publishers find that two-thirds of their costs are outside the two areas key to their digital futures — content production and sales. Newsprint, presses, trucks, expensive buildings, and more were once easily justified, but are now millstones. As publishers jettison these costs, getting to the 50 percent level to fund the new business is a key.

Finally, there’s one other scary crossover number to consider: When will ad spend meet up with time spent, and maybe cross over there, too?

While TV’s ad take equals the time consumers spend with the medium (42.2 percent of U.S. ad revenue compared to 42.5 percent of time spent), according to eMarketer, newspapers take in 15 percent of the national ad spend, but now only account for 4 percent of time spent with media. Magazines, too, are vulnerable to equalizing forces: Their take is 9.7 percent of the ad pie, while they serve up a thin slice of time spent at 2.8 percent.

Destined to gain share: Internet, with four points less revenue than time — and mobile, with time spent 10x ad revenue. So in this equalization, as newspapers and magazines inevitably lose more core revenue, their potential upside comes in those two categories.

POSTED     March 1, 2012, 10 a.m.
Join the 60,000 who get the freshest future-of-journalism news in our daily email.
Bloomberg Businessweek’s editor believes print remains the ultimate “distraction-free news product”
“I’ve joked about Businessweek(ish); I don’t think that one was really considered.”
The Copa, Euro, and Wimbledon finals collide on July 14. Here’s how The Athletic is preparing for its “biggest day ever.”
The Athletic intends to use its live coverage as a “shop window,” giving new readers a taste of what they might get if they subscribed.
Making sense of science: Using LLMs to help reporters understand complex research
Can AI models save reporters time in figuring out an unfamiliar field’s jargon?