Gross Revenue Is Not The Same As Profit

Walter Pincus has a mostly excellent take on the newspaper industry in Columbia Journalism Review, and his analysis on the transmogrification of journalism in to a public relations channel is both trenchant and regrettable. But I think this graf on the business of internet news is faulty.

Meanwhile, most consumers of online news do it from roughly 10 a.m. to 4:30 p.m. They are at work, and what they have time to see primarily are headlines. They don’t pay for what they see and probably won’t. And because the daily readership numbers are relatively small and the audience often geographically dispersed, the advertising hardly covers the cost of gathering the original stories. As Washington Post President Stephen P. Hills said recently, the Post newspaper is a $600 million business; its Web site is a $50 million business.

Maybe so — but as Pincus points out himself, there are still an enormous number of readers who get their news in print. There are obviously a lot of factors that reduce newspaper profits, but the fact that publishers devote large sums of money to running the brick and mortar aspects of the news business is inextricably tied to the fact that the “newspaper is a $600 million business” and the “Web site is a $50 million business.” As more and more readers transition to online sources, the growing scarcity of alternative advertising avenues will drive web revenues while the physical costs of running a business plummet. So perhaps gross revenue will decline, but so will total costs.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: