Here’s how little hope executives of newspapers see for our industry: The idea that reportedly excited them most at last week’s secret meeting could make up about 3 percent of last year’s decline in advertising revenue.
Zachary Seward of Nieman Journalism Lab, who is doing an outstanding job of reporting on the meeting, tells in his latest report about the Fair Syndicate Consortium‘s plan to track down splogs (spam blogs) that reprint news web site content in its entirety and get advertising revenue from third-party vendors such as Google and Yahoo!
The report is interesting and I don’t fault newspaper executives for protecting their copyrights and their rights to advertising revenue from content they produce. But here’s what I found discouraging in Seward’s report:
- Jim Pitkow of Attributor, who made the “Fair Syndication Consortium” pitch, estimates that pirated content is costing newspapers $250 million a year.
- Seward reports: “Nearly everyone I’ve spoken to with knowledge of the Chicago meeting, where newspaper companies were pitched on a variety of online business plans, says that Pitkow’s presentation of the Fair Syndication Consortium was by far the most popular.”
OK, let’s do some math on that. As Alan Mutter reportedin his Newsosaur blog, advertising revenues plummeted by $7.5 billion last year (and that pace accelerated in the first quarter of 2009). So the $250 million that newspaper executives got excited about was a mere 3 percent of last year’s decline in revenue, less of what we appear headed for this year.
Sure, save that $250 million if you can. But that’s a tourniquet, not a plan for a healthy future.
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Fair points Steve – in retrospect, we probably shouldn’t have tried to estimate the revenue impact as it’s been the main question about the consortium’s impact.
The $250M estimate is intentionally conservative and for U.S. only audience. The most accurate way to frame this is to look at the audience viewing publisher content on ‘unauthorized sites’. Across all publishers studied it was 5x as large as the audience on publishers’ own destination sites.
Everyone’s mileage will vary, but we have yet to find a publisher where the audience opportunity was less than 2x. While the revenue that can be derived from this multiple is a fraction of total revenue, it does pave the way for a new model that allows newspapers to profit from an online audience that is increasingly more reliant on the reading news online.
Rich
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Thanks for clarifying, Rich. I would add that if enforcement of copyright stops the splogs from stealing content, then newspaper sites could get less than the $250M. Ditto for if they figure a way around your enforcement plan (I don’t know what that would be, but I would count on sploggers trying to figure one out). Your plan has merit, but it’s no slam dunk.
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I agree that we will see some new splogging techniques when the revenue share is enacted.
The opportunity is hard to quantify and we’ll only really know with results. Since it’s so easy to find out, there is no downside in finding out the size of the check.
Another point that really hasn’t been explored and adds additional upside: Once fair syndication through is “legitimized” through frictionless ad revenue sharing payments, it opens up a world of new revenue opportunities.
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[…] companies need to learn this lesson. Both Attributor and the Associated Press plan to protect its members’ content (which the AP told Danny […]
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