Friday, October 30, 2009

More than advertising loses value in transition to web

A clip of Sam Zell discussing the Tribune bankruptcy on Bloomberg TV is popping up all over the place today [ disclosure – I do freelance work for Patuxent Publishing, owned by Tribune]. You can see the full clip from Bloomberg here: Yeah - he says the Tribune deal is the most money he’s ever lost (on 1 deal) and that no newspaper can survive. But people running the shorter YouTube version of the clip leave out that Zell expects Tribune to emerge from bankruptcy in the first quarter next year. However, I wouldn’t say he’s exactly enthusiastic when he says it, and he originally said it would come out of bankruptcy at the end of this year.

Looking at the cause, to the Tribune’s effect, aggregation has gotten most of the press as the slayer of the industry. Jason Fell discusses another big wrench in the works in an article called “The Value of Online Content: Practically Nothing” - It is not just advertising that loses value in the transition to online. While it may be easy to dismiss this as “you get what you pay for,” look at the numbers. According to the article, Demand Media is bigger (based on visits) than, and gotten there paying $15.00 a story. If you produce content, that has to make you sit up and say “Yikes!”

“…other media companies, which have been trying to increase the value of their content to at least match the cost of producing it, have the equation backwards. As he’s done with Demand, Rosenblatt said the trick is in cutting costs until they match market value for your content.”

– “Yikes!”

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