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.

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.