The NBR is in trouble – what should they do?

I’ve been really impressed with the NBR in recent times – their website was going from strength to strength, and their writing was increasingly excellent.

I even praised writer Chis Keall, who writes for (but I understand is not employed by Chris tells me he is, in fact, employed by NBR – my apologies) the NBR for his handling of the Vodafone/Telecom suit over filtering of their 3G networks.

NBR in turn praised Chris by placing a one page advertisement on page 14 of the June 19th edition. They even quoted me, “technology commentator, Lance Wiggs” from that very post:  The XT network debacle – Winners and Losers. Quoting bloggers – whatever next?

Why is this relevant?

Yesterday we heard that NBR has decided to make about 20% of their website subscription only, charging an impressive $298 per year for the privilege. (The oft-quoted $89 is for six months, and an introductory rate only)

This is a troubling decision on a number of levels. Let’s look at NBR’s letter, and then at why NBR has made this move.

There has been endless discussion for a number of years about the crazy model adopted by newspapers in most parts of the free world in which they pay the enormous costs of running professional newsrooms only to give their content away free – while at the same time slashing newsroom numbers to save money as circulation and advertising revenues fall.

Clearly the model is changing – but there is an answer, and it is ably provided by NBR.co.nz’s competitor – interest.co.nz. They keep the overheads to a minimum, use modern technology to eliminate the archaic newsroom practices and deliver timely, high quality and original content with great journalism and analytics. NBR may or may not have changed their newsroom practices to reflect the modern era – but until they do so they will struggle to be profitable. The process of getting news, from finding the facts through to publishing on the web or in print should be simple these days. Ask Idealog about print, and I refer again to interest.co.nz for how to do it for the web.

And to add to the madness it has been the aggregators that have profited the most from the supply of that free news copy.

This is an indication that the NBR leaders don’t really understand the current news internet business model. The aggregators, such as google news, are driving traffic to the NBR site, and without them the NBR would be even worse of than it is. By locking them out of the subscription area NBR will dramatically reduce their ability to make their compelling, orginal and timely content available to the world. The writers behind the wall will lose relevance, and the newspaper itself will diminish.

Google News does not host advertisements on their home page (in NZ), so all they are doing is directing traffic to the best original content. If NBR has the best, fastest and highest quality content, then they will derive more traffic.

Speaking of traffic – here is how NBR is going – as you can see they have been growing steadily.
Net-ratings

I’m afraid to think about how this chart will look over the next few months.

Worse still the model has spawned a huge band of amateur, untrained, unqualified bloggers who have swarmed over the internet pouring out columns of unsubstantiated “facts” and hysterical opinion.

Beautiful phrasing, and guaranteed to get the aforementioned bloggers going. Cactus Kate, Whale Oil, and Julie Starr have plenty of commentary. I wonder, given Whale Oil’s profile in the SST last Sunday, whether there is a bit of emotional decision making happening here.

Meanwhile Whale Oil isn’t helping the NBR team to make rational choices when he wrote “Oh really Barry “Fucking” Colman? It is stuck in the mud old f**kers like you that are harming the media industry.”

Whale Oil’s colic words reflect rather sharply the impact that the NBR letter has on bloggers, and it is again an indictment on NBR’s understanding of how the internet works. Bloggers drive traffic to the NBR site – not a lot per blogger, but there are plenty of bloggers out there. Bloggers also pick up on great reporting, such as Chris Keall’s articles on Vodafone, add commentary and thus increase the reach and relevance of the source.

Most of these “citizen journalists” don’t have access to decision makers and are infamous for their biased and inaccurate reporting on almost any subject under the sun (while invariably criticising professional news coverage whose original material they depend on to base their diatribes).

Many bloggers have no advertisements, and all but one or two make a trivial amount of money. However all have access to the internet, all bring their own distinct background – often highly experienced – and all can find their own facts on the internet. A great blogger will parse the facts and opinions, add their own perspective and write compelling original content.

Meanwhile while some larger bloggers do have access to key decsion makers, and write well if not better than any newspaper journalists. They are the new competition. Sure many are biased but at least they are honest in their bias, often naming their site to reflect that.

But every newspaper has bias, particularly a business paper like the NBR. There is nothing wrong with that – I find, for example, that the WSJ content is superb, but their editorials are laughably right wingnut.

It is only a matter of time before the model collapses. The alternative is newsrooms decimated to the point of processing public relations handouts or unedited government propaganda from their fully staffed team of spin doctors.

Yes – the model will collapse – we can no longer afford the expansive, expensive and Byzantine daily processes  required in the cycle from writing to reading. Interest.co.nz is one model that has changed the approach – and there are plenty of others out there to replicate. I very much wonder whether NBR is facing legacy issues with cumbersome technology and processes, and that these are making costs unsustainable. The coming disruption to the newspaper and magazine industry means that the NBR along with Fairfax and APN will at some stage need to throw the old rulebook out.

Overseas the Wall Street Journal and The Australian Financial Review have successfully instigated subscriber paid policies for premium content and legendary publisher Rupert Murdoch has promised the days of the internet’s “free lunch” news service from his newspapers is about to end.

These are great examples, and yet don’t make the point.

I pay the WSJ US$151 per year, and for that I get the world’s best source for global market news. It’s often the fastest, almost always amongst the best written and the analysis is superb. They are also, well, the Wall Street Journal, and the paper of record that everyone who is anyone in finance and business has to read. It’s no wonder they are successful online.

The AFR offers little – their website is unusable and their prices, at AU$1308 per year are not even close to passing the giggle test. Their content is blocked off from the rest of the web, and, well nobody really cares about them except for The Australian, which has picked up the traffic.

Murdoch’s News Corp owns the WSJ, and as a paper of record he has the ability to charge a price – but note the price that he charges are low in relation to the quantity and quality of content, and the market dominance of Dow Jones.

The NYTimes, also a paper of record, failed in its attempts at a paid model – all it did was to hide their most insightful writers and opinion formers behind the wall and reduce the influence, traffic and relevance of the newspaper. I would compare NBR’s approach to this, though NBR is a niche paper with circulation of 10,000 and daily unique browsers that has just risen over 7,000.

At $298 NBR’s price for 20% of their content is laughably high – and I question what percentage of those 7000 daily browsers (let’s say 5000 people) will actually convert. It will probably be over 1% (50) but almost surely under 10% (500). Even 50 people at $400 per year is only $20,000 – which is a handful of advertisements worth of income. Wouldn’t it be better to keep the readership growth and concentrate on selling the advertisements?

Overall this makes the website less attractive, makes marginal revenue and most of all it is hiding the decent content that differentiates NBR from other sites.

Why is this happening?

Our move to Subscriber Only Content has been driven by our belief that laying off journalists as a cost-cutting tactic is a route to oblivion for newspapers. I know there have been previous attempts by New Zealand publishers to charge for their news and these have failed and left them so far scared to attempt new initiatives.

Colman seems to believe that laying off journos is the only alternative. As I mentioned above, I suggest he look to his other costs first – keep the journalists but redesign the processes so that much less cost and time stands between writer and page.

But that’s not the real story here. The answer to why NBR is instigating pricing lies back in that one page self-congratulatory advertisement above.

NBR isn’t selling enough advertising.

I suspect that the one page ad was a bit last minute – as neither Bill Bennett (who was quoted far more extensively than me) nor myself were contacted by the paper. Was the page was kept aside for a paid advertisement, with the NBR sales team unable to sell it? Is the number of advertisements and the amount paid per advertisement falling? The answer to that second question is almost certainly yes – these are tough times.

Meanwhile back in 2006 NBR had circulation of 12,394 (to Sept-06), while the latest figures show circulation of just 10,772 to Dec 2008 – a 13% drop. I strongly suspect that NBR has seen circulation continue to drop, and sharply, in calendar year 2009.

It’s not hard to see why – the cover price is astonishing – $9.50 per copy at the news stands, and an annual subscription will set you back $456. That doesn’t, by the way, appear to include the $298 in annual fees to access the website, so NBR is asking you for an outrageous $756 per year, or $14.50 per week.

As they so able report, there is a recession on, and every item is being looked at by individuals and businesses. Even I struggled (and failed) to justify subscribing to the NBR paper.

So let’s recap.

  1. Subscriptions are down – and the price is far too high
  2. Advertising volume is probably down due to the recession and drop in circulation
  3. Costs appear to be high (a wild guess based on inference from Coleman’s letter)

Therefore NBR is most likely facing some significant financial issues – they need to turn the profit situation around, and probably need to do it fast.

Meanwhile Whale Oil and the like have made NBR leaders angry, and compounded with a narrow understanding of the internet news space, the decision was made to start charging for content.

It’s really sad – NBR’s website was going from strength to strength and their writing was becoming more relevant. I for one will miss them.

Here is my take on what the media players could do – it’s unconsidered free advice

Fairfax and APN: Hire Chris Keall and any other top flight journalists, create longer more analytical business articles, published in HOS, The Business Herald, SST, The Independent and on NZHerald/Stuff.

Interest.co.nz: Extend into NBR’s space – grabbing 2 or 3 top journalists from NBR

NBR: Reduce production (not journalism) costs sharply, make the website free again and ramp up advertising sales efforts. Consider dropping the cover price of the newspaper and definitely offer crisper deals for subscribers. Oh – and hire Chris Keall properly.<Turns out Chris is already hired – my apologies>

Readers: Don’t subscribe to the NBR’s newspaper (too expensive) and definately do not subscribe to NBR’s website. Keep reading blogs though.

About Lance Wiggs

@lancewiggs
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36 Responses to The NBR is in trouble – what should they do?

  1. Ronan says:

    I’m not sure why there is such a big to do over this.
    Markets will decide the success of this move and aside from the pros and cons for this particular publication, this model needs to be looked at. Content costs money and there is a market out there for premium content.

    Back in 2003 I was involved in a project which had over 300 subscribers paying 250 euros a year for a monthly emailed pdf publication – not enough to make it viable (in Ireland), but enough to prove there is a market.

    The NBR move has similarities to how the new Financial Times iPhone application is structured, with a number free articles, additional content being available to subscribers.

    I don’t see it working long term though. It is too cut and dry, separating paying and on-paying users in a rigid, I would say lazy manner. Some form of micropayment/pay as you go model for more in-depth analysis would be more viable I think.

    Now back to my current project developing a system to sell magazine content online….

    Like

  2. Lance
    Brilliant. A devastating fisking of NBR’s strategy.
    It’s a pity they’ve taken the turn down a dark, dark alley.
    I only hope the NBR turns back before they lose their way.
    They have such a strong base to work from and a pretty good website now.
    Barry will just have to get used to a much lower cost base and probably much lower margins if the NBR wants to thrive in an online world.
    He needs to trade in the Rolls for a push-bike like the one I use.
    I’ll race him up Parnell Rise…

    cheers
    Bernard

    Like

  3. Mark Harris says:

    Very Solid analysis, Mr Wiggs. It’s not just the NBR that should take notice.

    Like

  4. Peter says:

    Looking forward to them really putting their money where their mouths are, and blocking Google using Robots.txt.

    Then NBRs free lunch really will be over.

    Like

  5. Peter Driscoll says:

    Lance,
    great article – surely one identifies their unique audience (upper socios/business decision makers) and offer a combined off-line and online advertising package with the combined numbers enabling it to stack up – the end game is eyeballs – to charge is to die – cheers

    Like

  6. Perhaps Barry Colman might like to read these instructions:
    “Use a noindex meta tag to prevent content from appearing in our search results. When we see a noindex meta tag on a page, Google will completely drop the page from our search results, even if other pages link to it. If the content is currently in our index, we will remove it after the next time we crawl it. (To expedite removal, use the Remove URLs tool in Google Webmaster Tools.) Other search engines, however, may interpret this directive differently. As a result, a link to the page can still appear in their search results.

    Because we have to crawl your page in order to see the noindex tag, there’s a small chance that Googlebot won’t see and respect the noindex meta tag (for example, if we haven’t crawled the page since you added the tag).”

    http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer=93708

    Like

  7. craigadolph says:

    Great post Lance. Keen to see how this plays out.

    Like

  8. Matt Harman says:

    Amazing that they haven’t even bothered to come up with a sales pitch for the online subs on their site….nothing…it’s the classic ‘give us your credit card number…cause we want it’. Surely there should be some indication on the site of what $298 a year will buy me. ….Perhaps some magic beans.

    Bizarre.

    Looks like they are largely looking to section off the opinion piece content. Not exactly high value stuff — cheap or free to replicate and how many opinions do we all really need to hear — let alone pay to hear. Seems very NZ Herald circa 2005.

    Like

  9. Peter says:

    “Perhaps Barry Colman might like to read these instructions”

    It’s easier than that. It’s one line in robots.txt

    User-agent: *
    Disallow: /

    Then NBRs Google “problem” is gone.

    Let’s see them do it. They won’t, because they’re all mouth.

    Like

  10. Thanks Peter

    I was very taken with the You Tube video by Matt Cuttss , Google guru, explaining the ins and outs of blocking Google :-)

    How many companies can afford to show poeple how not to do business with them ? Probably only Google.

    Bryan

    Like

  11. Peter Salmon says:

    Lance

    I found your analysis excellent. I hope you do not mind, but I used it as a reference in some comments I made here
    http://petermsalmon.wordpress.com/2009/07/17/mediabut-not-as-it-was/

    Like

  12. Good stuff Lance,

    I did a trite, facile analysis of the online charging structure on my site: http://billbennettnz.wordpress.com/2009/07/16/the-nbrs-cheeky-online-offer/

    In a nutshell, 20 percent of copy should equal 20 percent of standard print subscription less cost of printing and distribution, which, works out at… oh yes, zero dollars.

    Like

  13. Paulwiggins says:

    Mr Bennett and myseld might raise a wry smile about the assertion ”redesign the processes so that much less cost and time stands between writer and page”.

    Like

  14. Jonno says:

    Good post.

    I reckon they will soon change their policy to something like the WSJ where clicks from Google/Digg/Reddit bypass the so called “paywall” and get access to the article.

    Another publication that still makes money is The Economist. I think it is overpriced, but has high quality reporting and marketed towards those who can afford it and want to be seen reading it.

    Newspapers just do not have enough content to warrant paying for. Have a look at this image showing just how much actual content their was in a recent daily issue of the press:

    http://brucealdridge.posterous.com/original-content-in-the-press

    Like

  15. Falafulu Fisi says:

    Lance said…
    I pay the WSJ US$151 per year, and for that I get the world’s best source for global market news.

    US$151/year? That’s a few steinlager trays for me. I sometimes read NBR (excellent stuff), the NZ Herald Business and some overseas sites which I frequently visit. In terms of deep financial market news, economic/financial researches, I regularly check out new publications that are freely made available from RePEC & SSRN.

    Perhaps, I could act as a pointer to journos at NBR on a regular basis, whenever I come across some interesting research publications which they may be interested in digging further for possible publications (on the specific topic). In this way, their readers will always, get access to the latest economic/finance R&Ds by various academic/industry researchers from around the world.

    I am keen to do this for free, since all I am doing is just pointing out the title of the publication to their journos, where they still have to do the hard work themselves, in exchange that I attend their weekly Friday night drinks after work for free.

    Whadya reckon Barry Coleman? A good suggestion?

    C’mon man, invite me to your weekly Friday night party.

    Like

  16. Rod Drury says:

    I do pay for the NBR magazine sub, have for years. Mainly because I like the jokes.

    Nuts that they haven’t made it free or even an offer to existing subscribers, Hows that for rewarding loyalty.

    Unfortunately many of our great journo’s have left the building. Sad to see SarahM join the list – she was doing great work.

    Seems the full page promotion is the kiss of death. Chris, look over your shoulder.

    Like

  17. Peter says:

    >>I was very taken with the You Tube video by Matt Cuttss , Google guru, explaining the ins and outs of blocking Google

    Indeed. The difference is that the no-index meta tag works on a page by page basis. The downside is you have to add it to every page, whereas robots.txt only requires one two-line entry, and the entire site is out of Google. You can also use it to selectively block.

    For all their blather, no major news outlet has used it to block Google’s spider.

    Because they are FOS :)

    Like

  18. elliot says:

    Gutted, I cant afford a sub to read news. No other nz news site has the detail of nbr, http://www.nzx.co.nz is improving though.

    All you super expereinced business people (my heroes) seem to know it all. So why does NBR not call you up and say “hey we are think of doing this, got an opinion” Instead of risking all and making a desperate change. Then waiting to see what people think. A phone call is not that hard to make.

    Like

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  20. Steve says:

    Why is this chap at Whale Oil such an angry little man?

    I had never heard of him until last Sunday. Visited his site once and left with the opinion that he was another Kiwi whinger trying to make himself relevant through the overuse of foul language.

    I’m sure Barry from NBR was not referring to him as the kind of blogger taking advantage of his content. In fact I reckon Barry wouldn’t have a clue who the hell this guy is.

    Does anybody?? (actually I don’t really care, I’ll continue to read NBR online and take the free stuff (except anything to do with Suzzane Paul)).

    Like

  21. Sarah says:

    “I do pay for the NBR magazine sub, have for years. Mainly because I like the jokes.”

    It has always been a mystery to me why so-called right-wing newspapers have the best jokes. But they do.

    Like

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  23. ted says:

    Lance, in case you haven’t ntoiced, the web based advertising model is very very close to death. Network pricing and the absence of differentiation in metrics has driven prices to zero. Inevitably, people with news web sites are trying now to charge. Because they have to. Or close them. It’s just arithmetic.

    Like

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  32. Paul Wiggind says:

    Lance, what’s your assessment on how they are doing now?

    Like

    • Lance Wiggs says:

      I’m guessing they are probably doing better than they used to in pure revenue, but perhaps not making a profit. I’ve noticed a drop-off in online articles and it seems like a push to read the physical NBR rather than online. While they own the top end of the market they do need to make sure that it remains fun to read. The paper NBR is increasingly irrelevant to me, while the online was very relevant but is now losing it. Just getting my hands on the paper is difficult – I move around a lot and am often not at the location where it is delivered each week.

      Ultimately we want to pay once and read in any form – be it paper, iPad or web.

      Like

  33. Paul Wiggins says:

    Thanks. I have a great respect for them, long back on the challenges they have had to steer themselves through.

    Like

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