TagMedia Futurism

Newspaper industry stabalizing?

dollar bill

Across the board, the reporting of public news companies reflects a new, if unsteady reality. In short, that reality is one of profit. Not the big profit of 20-percent-plus profit margins — the envy of many other industries — that were a truism as recently as five years ago. Now, the profit’s more tepid, mostly in single digits: The New York Times, 8 percent; Gannett, 8 percent, McClatchy, 1.5 percent. Expectations run that news companies will show a five to 10 percent profit for the year, absent unforeseen calamity.

But that mild profit is good news. Recall that a year ago, much of the industry was in freefall. A number of companies — stunned by the quick near-Depression downturn of ad revenues — went operationally into the red. They responded with draconian cuts in staff and newsprint, and as the recovery has emerged, they’ve positioned themselves as smaller but profitable companies, though their first-quarter revenues still largely lagged the first quarter of the horrific Q1 2009. Wall Street has rewarded them with improved credit ratings and advanced share prices. There seems to be, say investors, some future here. This week’s tenacious auction in Philadelphia with lenders led by the Angelo Gordon private equity company — now a big player in the U.S. daily business — winning the papers with a $135 million bid only reinforces the notion that newspaper valuation may have been trashed too much.

Nieman Journalism Lab: The Newsonomics of reborn newspaper profit

Running the numbers: the best case scenario for newspapers on the iPad

New York Times iPad app

I’ll be playing catchup on a few links today. First up:

With newspapers like The San Francisco Chronicle losing $1M per week, it’s going to take a hell of a lot to more than the iPad to save the industry. In what I consider a best case (and far fetched) scenario, 7% of iPad owners have downloaded The New York Times’ paid app by the end of 2011; the NYT is generating $200k/month in advertising revenues from the platform; and they are able to charge $15/month/user for subscription fees. In this case, NYT is still only generating approximately $20M in net revenues. This would be fantastic for any new venture launching a news-based app; but does little for a company that has around $2.34bn in annual expenses (and approximately $600M associated with print operations). As the NYT acknowledges in their annual report, “significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues.” In other words, they’re not going away anytime soon. And a $20M bump in net revenues is going to mean little to nothing.

This is, of course, what I would consider the best case scenario. It is far more likely that the NYT will be lucky to see 1% of iPad owners download the app for a $15 subscription fee—and, this figure will undoubtedly drop dramatically if they charge more than $15/month. If they are lucky enough to generate $200K in incremental (rather than cannibalized) advertising revenues, they might see an increase to net of $3.4M by the end of 2011. Not a world changer.


Writers: you can make a living selling e-books on the Kindle

J.A. Konrath

Mediabistro’s GalleyCat interviews thriller author J.A. Konrath on how he’s making a living self-publishing through the Kindle:

I’ve sold 40,000 ebooks since last April. At first, I was amused to be paying my mortgage with Kindle earnings. But now it’s turning into serious money.

This all happened by accident. Some Kindle owners emailed me, asking if I could make my early, unpublished books available for them to read. I uploaded them using Amazon’s Digital Text Platform (dtp.amazon.com) and charged $1.99. Readers like low prices. And why wouldn’t they? Two or three bucks is less than a cup of coffee. It’s an impulse purchase, and perfect for intangible, digital content which costs almost nothing to copy and deliver. […]

My first Jack Daniels novel, Whiskey Sour, has sold 2500 ebooks since 2004, and earned me around $2500. Compare that to the ebooks I’ve self-published. My top five titles are now averaging 800 sales per month, and those numbers are going up. On my top selling ebook, I’ve earned more money in 45 days than Whiskey Sour has earned in 5 years.

Why? Price. My publisher (and all publishers) are pricing ebooks too high. […]

You can still get the ebooks I’m selling on Kindle for free on my website.

Mediabistro: Writers: Making a Living Off of Kindle?

Projection: digital textbooks will be 18% of the market in 5 years

five year digital textbook projection

I take projections with a heaping lump of salt, but this is interesting:

Considering current digital textbook sales increases, and basing our assumptions of the favorable evolution of factors contributing to increased digital textbook availability and access, we project the digital textbook market to surpass 18% of combined new textbook sales for the Higher Education, and Career Education markets in the U.S. by 2014. Overall digital textbook sales will increase 100% year-over-year in 2010, and continue to grow at rates of 150% and 120% respectively in 2011 and 2012. As publishers struggle with the eventuality of transforming their product models to digital-first, and as they adjust their sales efforts to address the growth in the digital market, we expect a certain amount of churn and an adjustment to sales growth in 2013 and 2014. In those years, digital textbook sales will increase 90% and 80% respectively.

Digital Textbook Sales in U.S. Higher Education — A Five-Year Projection

(Thanks Wes)

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