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.