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Ken Doctor has a fantastic post up at the Nieman Lab on the Orange County Register, which has actually been investing in journalism (!) rather than going the cut-yourself-to-prosperity route taken by the rest of the industry (out of necessity in many cases, I should say).
Since Kushner’s arrival, the paper has added about 90 positions. Today, the newsroom total is 270, up from the pre-Kushner low of 180. Included in the 270 are 24 full-time, full-year interns — drawn from around the country for an intern program that is the place to be. The numbers, themselves, are impressive, a 50 percent increase. They represent one of the largest hirings of journalists since Patch placed 900 or so solo journalists in outposts across the U.S. two to three years ago.
Owner Aaron Kushner has fattened the paper by 40 percent and added investigative reporting and a thick business section. He’s charging readers more for a better product and putting up a paywall to dissuade freeloading and, hopefully, to get incremental digital-only revenue. Doctor roughly estimates that the new spending is at $10 million a year and runs numbers that show how the Register may have done all this investment without hurting its operating margins.
Long story short, it’s possible the Register could take in about as much new money in circulation revenue as it is putting into its expanded news products. It still wouldn’t be enough to make up for ad revenue decline, but that’s a problem common among metros.
So Kushner’s bet is a bet on the core. Core product. Core readers.
The key to success will be the medium-to-long-term transitioning of paying readers to digital and causing advertisers to question whether they should continue cutting their newspaper budgets.
This is the anti-Advance, anti-liquidation approach.
— The NYT has a nice overview of the Spotify/Pandora business model and how artists are getting hosed by super-low royalty rates.
But this doesn’t make sense to me:
Cliff Burnstein, whose company, Q Prime, manages Metallica and other major acts, said that even if streaming hurts sales, all is not lost as long as the number of paying subscribers continues to climb rapidly.
“There is a point at which there could be 100 percent cannibalization, and we would make more money through subscriptions services,” Mr. Burnstein said. “We calculate that point at approximately 20 million worldwide subscribers.”
If 20 million people paid for Spotify–a big if, since the number is 5 million today, that would bring in roughly $2 billion in gross revenue at Spotify’s current average subscription prices. That’s less than the $2.6 billion brought in now by digital-music sales on iTunes and much less than the $7 billion total sales.
There would still be ad revenue from free users, but as with newspapers, it’s a pittance. Just 17 percent of Spotify’s revenue comes from advertising.
— Nick Bilton of the New York Times wrote a while back about how much he spends on digital media, which turns out to be more than he spent back in the analog days (his $2,000-plus a year is surely an extreme outlier).
But wait, people are spending money online? On media? Didn’t music industry executives declare, “People won’t pay for things online!”? Yes, as did movie industry executives. TV, radio, book, newspaper and magazine bigwigs, too, have all made similar claims over the last decade.
Well, those apocalyptic predictions turn out to be wrong.
Well, wait a second. Was it the entertainment industry executives telling us people wouldn’t pay online? I don’t recall a whole lot of that. I heard most of it from the techno-utopian Silicon Valley types Bilton covers.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.