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Why the general audience exists

Tuesday, March 31st, 2009

One word: classifieds.

By now, most people in the news business know that the collapse of classified revenue is the biggest financial threat newspapers face in the short term. But many fail to realize that not only were classifieds hugely profitable, classifieds were the only glue holding general-audience publications in one piece.

It’s one of the many reasons why startups should generally not seek general audiences.

In media that face a scarcity of supply, like broadcast television or highway billboards, things are different. But the central goal of newspapers — amassing a large general audience — is profitable only because a classified section is a snowball: the bigger it gets, the faster it grows.

(Briefly, here’s why. Obviously, every additional classified-section reader makes that section more valuable to advertisers. But because people who use a classified section want more than anything to maximize their selection of products, every additional classified ad makes the section more valuable to readers. It’s a virtuous cycle.)

All this, I’ve understood for a while. Here’s what I didn’t grok until lately: the need to maximize the classified audience used to be a huge centripetal force on news content, pulling coverage toward the center of public life, toward the things everyone shared. The publisher’s objective: maximize the audience. The editor’s marching orders: please everyone in town a little bit.

Meanwhile, there was an opposing, centrifugal force: display advertising. Unlike classified advertisers, most businesses are looking for narrow demographics. They don’t want to pay for a big display that everyone will see. They want to pay for a cheaper display that only the right people will see. The narrower your audience, the less of your marketing budget that you’re wasting.

So: retail ads would seek diversified audiences, classified ads would seek general audiences — and for a while, classifieds would win.

Then the sea change.

These days, newspapers aren’t scarce; a printing press comes free with every Internet connection. For a few years, even the lure of free classifieds on Craigslist couldn’t offset the value of the big audience offered by a newspaper. But one by one, advertisers slipped toward the free service, and the classifieds audience has followed. A tipping point came in 2007, when Craigslist’s growing audience (and that of other listings sites) got big enough to be really valuable.

More or less, this is why the crisis is happening now.

Today, retailers are still looking for niches. Retail advertisers want to push newspapers and other audience-generating businesses away from the center of public life, into all the demographic nooks and crannies.

And today, there are no classifieds to pull us back.

Poynter, day one: Bundling and portals

Tuesday, May 16th, 2006

The biggest question I have about the local news business is the extent to which we can preserve the bundles that have worked so well with our print product. For example: Jane buys the Longview newspaper for its real estate ads. Jim for its movie times. Julia for its op-ed page.

Between them, Jane and Jim subsidize Julia’s op-ed page, and vice versa, keeping the quality on all three high even when one goes through a slack period. This has always been the case. See what I mean?

Offering and promoting RSS will surely accelerate the destruction of our portal. But can unbundling be slowed? Stopped? Nope, says Jay Small, one of Poynter’s teachers this week:

“The new newspaper.com should therefore be maybe 50 different products, instead of one bundle. And even if you lump all 50 together, they shouldn’t combine and bake up into what we know as a newspaper.

“Which 50 products make sense? Ah, if I knew that, I’d have them out there already. The one thing I know is the same 50 won’t work in every newspaper market. And we better get started figuring out which 50 we need, one or two at a time.”

I’m sure we’ll return to this issue soon.


In related news, Jupiter Research found that most young folks start looking for news from portals like Yahoo. (Tx Will Sullivan.)