Wednesday, January 21, 2009

Prediction #1

According to Media Memo, The New York Times has taken out a $250 million dollar loan at a 14% (!) annual interest rate from Mexican billionaire Carlos Slim. They are also sitting on $46 million dollars in cash to cover $1.1 billion in debt.

Doesn't this sound like taking out a home equity loan in order to pay the mortgage? We have all seen how well that worked in the current mortgage collapse.

Grim.

The Times needs revenue increases, and fast. This in an industry that could barely grow during the dot com boom. Job cuts won't do it. The Times needs income.

Even grimmer.

Options?

Start charging what it costs to produce the daily publication? I wonder what the price of a single paper would be if that were the case. Something is going to change. Whether it is proactive or reactive. It's gonna happen soon.

3 comments:

Jason/ARCHETYPE said...

I think we're on the cusp of a new era...one in which the traditional model of publishing news/current events will completely give way to inline/digital content. Why do I need a newspaper on my physical desktop if I can get the news sent instantly to my RSS reader on my virtual desktop?

The revenuw needs to come from somewhere other than subscription based services for these guys.

Sounds like a bad time to start a (print) magazine too huh?

Aric Mayer said...

I completely agree that inline/digital content will replace a lot of traditional news distribution. But I don't see how subscription based services can be replaced. There has to be a revenue source, and advertising is a fickle and poor support for journalism. Where else does it come from?

The crux is that internet users don't see the services currently provided online as being worth paying for. They should be free because they ARE free. But the companies generating them cannot stay in business without revenue.

So who is going to pay for it? If no one will, they will simply stop creating content.

The social media/advertising gurus are saying that internet advertising is going to catch up and then it will replace the subscription services. But we can see throughout the magazine world that relying on advertising as your primary revenue kills the content.

There are already some good models working. Bloomberg for one provides expensive subscription services that people pay for because they are worth it.

Aric Mayer said...

As for starting a print magazine... I don't think that it is impossible. We should rethink though the demographic targeting models.

Instead of trying to take over an entire age group or demographic, which is a wide area attempt at audience generation, go deep.

Target a narrow demographic that you can connect with in a very significant way.