Jun 30, 2009 10:13 am
by Scott Schrantz
Last month I pointed to a “new” online news site, the Seattle Courant. Today everyone is pointing to the announcement that the Courant is shutting down, because the business model didn’t work like he thought it would and he didn’t have the available runway to make the business successful. Of course, one of the most-seen comments about the closure is, “Seattle Courant? Never heard of it.” So he had a short run, only six months, and he didn’t get the readership and he didn’t get the business side and relationships with advertisers going. Maybe you could say he was too ambitious with his plan, to build a site that would support several paid reporters with ad revenue. But sometimes going big leads to a big win; it just didn’t this time.
In his good-bye message he does have some interesting thoughts about why online news will never be as lucrative as paper news. Ultimately it comes down to what the advertisers are willing to pay, but why do they balk at paying high rates for online?
As everyone knows, traditional newspapers generate their revenue largely from selling ads. Running an ad in the newspaper is pretty expensive, but running a banner ad on a Web site isn’t. Let’s face it, online publishers will never be able to charge anything approaching the rates traditional print publishers charge, and here’s why.
Newspapers are able to charge such high rates for their ads was because they are doing something novel. Printing a newspaper every single day is a lot of work, and it requires a lot of skill, people, equipment and expertise. Running a Web site does not require a lot of skill, people, equipment or expertise. Just about anybody with a computer and an Internet connection can do it.
I’d heard of the Courant, but that’s probably because I’m interested in local affairs and online news. I’d wager most “normal” Seattleites never had. I have to hand it to him for trying, though — and using Google ads at launch was a brilliant move. (That’s how I heard about it first — via an add at the top of my Gmail.)
As for online ad revenue, it’s because no online outlets command the sort of distribution monopoly papers once did. If you placed an ad in the Seattle Times and P-I 20 years ago everyone saw it. If you place an ad on Seattlepi.com today, some people see it — but not nearly as many. There are other factors involved, too, of course, but this is a big one.