I sat down to write this editor’s message on the same day that Journal Register Co. — pioneer of the “digital first” battle cry — filed for Chapter 11 bankruptcy. Again.

To say this news didn’t exactly come as a surprise would be an understatement. Chief executive officer John Paton has touted a 235 percent growth in digital revenue since 2009, but this figure becomes less remarkable once you consider that the 2009 starting point was likely somewhere in the neighborhood of zero.

With every news release about an ambitiously-named initiative (Project Thunderdome, et. al.) there were lingering questions: How will they profit from this? How are they funding these projects? What’s the point? With JRC’s second bankruptcy in three years, we finally have some answers.

For those interested in a straightforward analysis of JRC’s financials, I recommend Ryan Chittum’s take at Columbia Journalism Review (“Journal Register opens the kimono a bit”). Chittum got Paton to come out with some hard numbers, revealing that the rosy percentages indeed did not paint a complete picture. According to Chittum, “Of JRC’s $295 million in revenue last year, $167.1 million of it was print ads, $86 million was print circulation, and $30.1 million was digital ads.”

$30.1 million in digital advertising is nothing to turn your nose at, but it isn’t enough to offset the $43 million annual loss in print revenue, nor is it enough to even chip away at the debt and pension obligations the company hopes to shed through the reorganization.

While I’m confident that JRC will emerge from this bankruptcy as a leaner, stronger, more viable entity, the greater question is, where does this leave the rest of the industry?

JRC, with its aggressive digital-first strategy, was in many ways a role model for other publishers seeking to reconcile declining print readership with the low value placed on digital content and advertising. But for all the hype about embracing digital platforms, the constant drum beat of new projects, and the relentless self-promotion, digital first wasn’t enough to keep JRC from sinking back into bankruptcy, leaving other publishers wondering, “If digital first won’t work, what will?”

It’s clear that the enormous costs of legacy media are unsustainable in a digital-first landscape. But at least for the time being, legacy media still account for the lion’s share of revenue at most companies, leaving publishers in a very sticky dilemma.

I talk to publishers every day who say it makes more sense to double down on their profitable print products than go gung ho on digital products that won’t even keep the lights on, and I have a hard time arguing against that point. We’ve heard from a litany of media experts and self-proclaimed “gurus” who say print is dead. They push a digital-first content strategy without defining a digital-first profit strategy, and now one of their own is fielding some tough criticism for steering his company down the path to bankruptcy. Rightly so.

Digital first may well come to be the industry standard, but we’re not there yet, and we won’t get there until we figure out a way to make some money doing it. The next time a media guru comes along to tell you how to run your business, take it with a grain of salt.

Comments

Confused

Richard Willner | Tuesday, October 9, 2012

I don't understand this piece at all...what's the point of it? To me, it says: Print profits are falling and digital profits haven't made up a shortfall so therefore publishing companies shouldn't provide news as it happens. Is that the point?
And what's the point being made about digital profits not making up the print shortfall? Are you suggesting that print profits would be higher if there was no digital activity?
And then, just like so many of these pieces, the conclusion is: Well, nobody knows what to do now...let's just keep our fingers crossed, eh folks?
I'm not suggesting for one moment that Digital First has got it right and, living in the UK, I don't follow the content sites much so can't comment on the quality.
But surely we simply must look at providing content digitally ahead of print. What print then needs to do, surely, is move that content on and provide added value.
And I would argue that a 5-page piece in print (front and two spreads inside) on the big issue of the day or week could well provide that added value...but the issue, as it unfolded, surely must be covered digitally first.
I would argue that we, as an industry, needs to properly, seriously look at what we do. All too often, we've paid lip service to consultants etc and maybe implemented the odd thing we liked. After they've packed up and deposited their healthy cheque in the bank, we've gone back to how it (nearly) always was.
And that's not serving readers because they're going elsewhere.
And that's not serving advertisers because they're going elsewhere.
Get the content right, offer a truly valuable service to all concerned - and that may well mean having to drop a lot of traditional jobs we've blindly thought important - and then we stand a chance of maintaining a firm foothold in our communities.

Without content, you're doomed

John C. Peterson | Monday, October 8, 2012

As a former long-time competitor and now a consultant with clients competing with Journal Register products, the real story here is content and relevance, because without them print and digital and any other platform are doomed.
Twenty years ago as publisher of a Connecticut weekly newspaper group in the New Haven Register’s shadow I wanted to make the case to a major advertiser that our papers should have more of their business. We tracked every edition of the Register and our competing editions for six weeks. We outscored the daily in advertising by a ratio of 3-1 in ad count and double the amount of space.
In a seven day period (giving them the full opportunity of the Sunday edition) in the five towns compared, we offered 5,011 inches of news to the daily’s 359. The point we wanted to make was that people follow the news and that the local business community had already voted on the best place to advertise.
We took the account which was worth $100,000 back then.
JRC bought the company several years later and cut one-third of the staff on day one. That move contributed to the start of a new company which would dismantle what was left of JRC’s weekly business on the Connecticut shoreline.
Things haven’t changed much in 20 years. Seven weeks ago the following story ran in the Register.
Police, fire marshal investigating fire that killed Guilford man
Published: Friday, August 24, 2012
By Register Staff
GUILFORD — A 33-year-old man is dead after sustaining third-degree burns on over 70 percent of his body in an incident Wednesday that is being investigated by Guilford detectives, the town fire marshal and the state fire marshal, according to police.
A fire that burned the man, who was in the backyard or side yard of a Guilford home, was extinguished by someone who found him, according to Police Chief Thomas Terrible. The man was taken to the Bridgeport Hospital burn unit, where he was pronounced dead.
Investigators found “fluids” on the scene that are now being studied in a state lab for analysis. Terribile believed that the state fire marshal was called in to collect evidence. An autopsy is scheduled for Saturday.
In the old days this would have been news, but to date, no follow up has appeared. Not even after reader string comments and my note to an editor there three weeks ago.

Like many in the industry, I was fascinated by the JRC digital effort in Connecticut. Live online news meetings open to the public, constant notes on the website asking for reader tips and input, even an “open newsroom.” Apparently I was not the only one unimpressed. As of today the “open newsroom” had only 100 likes.
JRC talked a great game, but never really took the field. The greatest delivery system is wasted without content.
Content is still king.

Free Content Drives Online Revenue

allen media | Monday, October 8, 2012

Sadly we all want to charge for reading content, but readers can get it free someplace else, and will always be able to get it free some place else.
So to win the war we need to build a bevy of related and linked products, such as a free newspaper, with full articles, stunning photos, video and online radio, that is now able to reach autos, we need to add a online guide to clients who can run logos, ads, coupons, maps and video, and in turn build advertising opportunities in to our product, rather than sell ads on to them. My company has tested many formats, many ideas, we hope to launch the first fully intigrated product in the next 30 days, the idea is to get the news to the user, any time, any place and anywhere they are. If we can do this, we can win the local hyper local media war, but never the worlwide news domination battle.

It’s Bottom Line that counts

John Juliano | Monday, October 8, 2012

Hi Kristina,
This is the quote that counts: "$30.1 million in digital advertising is nothing to turn your nose at, but it isn’t enough to offset the $43 million annual loss in print revenue."
If Paton can double his digital revenues again, he’s golden.

Time will tell

steventodd | Monday, October 8, 2012

Good conclusion, albeit inconclusive. The fact remains that I was sent the link to this article via email. If that email had read: "There's a great article on page x of y publication. Go get it and read it," I would have not likely done so.
My local newspaper is the only hardcopy publication of any kind I buy, and it is only because I work there. I usually read the online edition of that anyway.
Digital is the next (or, current) wave. Print everything is on its way out. Everything. I would much rather pay for online content. But unless it is not available free, I am not likely to.
The news industry must coordinate a fee-for-access policy, or start charging higher online ad prices. It has to be coordinated across the industry, though. The good ol' free market will eventually make that happen, by putting those who give away content out of business. Will that happen in time for there to be any decent reporters left? Time will tell.

Great column! Our thoughts parallel each other.

Kevin Slimp | Monday, October 8, 2012

Hi Kristina,
A publisher in Colorado sent a link to your column to me today. It parallels much of what I've written since the Newhouse debacle in New Orleans back in May. I thought you might like to read something I wrote in my syndicated column, read in more than 50 industry pubs & journals throughout the world, a couple of months ago. It's one of several I've written concerning Newhouse, the transference of funds & energy to online, etc.
http://kevinslimp.com/why-jcpenney-and-newhouse-have-a-lot-in-common-cms-227
Keep up the good work.
Kevin Slimp
"The News Guru"

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