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Ivan Petkov

I have recently presented my viewpoint on paid content on the Internet and on the emerging new culture related not only to its use but also to its creation. It is no longer a secret and news that print media are a business with declining profitability. Globally, major publishing companies have been shifting their focus for a few years already, trying to establish profitable practices in the provision of content. Online advertising is also evolving, looking for new and more personalized and interactive forms which are divided into different types of websites such as news, entertaining, search engines, postal services, online video, social networking and much more. More interesting forms for advertisers and users are being sought but, for the moment, online advertising and paid content in the form of subscription are the two main items generating revenue for online media.

Media development overseas is showing some global trends which are being subsequently introduced by their European counterparts. Major and established American media are a “barometer” for the development of the media industry which we are following with interest and which we cannot omit, especially when it comes to financial results that determine the future of the business.

Analysts and media specialists commented on the financial statements of some of the most significant U.S. newspapers and media groups, namely The New York Times, The Boston Globe and Worcester Telegram & Gazette which are part of the New England Media Group, and of Washington Post.

The New York Times reports a 48% drop in its profit in the second quarter of 2013 compared to the same period last year. Although paid subscriptions have increased by 40% and the number of readers has generally increased too, the company is still suffering from a decline in advertising revenue which has fallen by 6%. This is the eighth consecutive quarter in which a decrease in revenues from online and print advertising has been reported. Jeff Berkowitz, a media reporter for Forbes, notes that the good news from the online version is not enough:

"Online subscriptions are still a small part of the total profit of the company. They account for only 15% of the operating revenue and 7.8% of the total revenues which, during the quarter, fell by 1% to 485 million dollars."

According to Mark Thompson, president and executive officer, the decline in advertising is due to the "steady trend" in the split of the media that covers the entire industry. In other words, the time has come when 
business on paper is becoming increasingly burdensome.
The company must grow quickly to be able to survive as stated by Tom Foremski, a correspondent for Silicon Valley. The first results from the merger of new media technologies and new forms of journalism have been already reported. However, The New York Times can reverse the trend and begin to profit from advertising.

Henry Blodgett’s analysis connected with the online business giant in New York is much more optimistic. He sees in the financial results of The New York Times a clear sign that we should not worry about the future of journalism as $ 200 million in advertising revenues and $ 150 million in revenues from online subscriptions were reported in the last quarter. Soon the company will be able to boast that it has a 400 million dollar online business. The author concludes from the analysis of the online receipts of The New York Times, which amount to $ 400 million in revenues and $ 70 million in operating profit, that this is a “healthy” business. If the company allocates $ 130 million to support its journalistic department this would allow it to employ 180 journalists. Currently, the entire editorial office of The New York Times consists of 1,100 journalists. Obviously, it will continue to shrink as concluded by Blodgett.

In New England Media Group, which includes the Boston Globe and Worcester Telegram & Gazette, the revenues are declining. Its operating profit has dropped by 2.3%, the advertising revenues by 9.5% and the revenues from print advertising have decreased by as much as 14%. The Group is for sale. Despite this news, online subscriptions have increased by 70%.

The situation in the Washington Post is similar. The print media reported a loss of $ 49.3 million in the first six months of 2012 and of $ 33.2 million in the first half of 2013. Print advertising fell by 4% in the second quarter whereas the revenue from online advertising increased by 25% in the second quarter and by 21% in the first half of this year.

Social media are the other front. After the fiasco that followed the launch of Facebook's shares on the stock exchange, they are slowly restoring their levels. This is due to the good financial results, combined with the lack of an outflow of users because of other competing networks or services. We can add to this the news that the social network is preparing to launch a number of mobile games.

According to Bloomberg, Facebook is preparing a new advertising service aimed at big advertisers. It includes videos with a duration of up to 15 seconds which will be integrated directly into the homepage of each user as part of the stream of shares with friends. Only "big players" will be able to afford them as their price will be between $ 1 and $ 2.5 million for 24 hours, and the views by each target user will not exceed 3 times. Considering the price and the restrictions, unwanted video advertising should not overwhelm the users of the network. However, this will be clear when the service is launched.

Bearing in mind the announced data and reports as well as the opinions of prominent analysts and experts in the media business we can clearly see that the future of print media is predetermined. For the moment, the online front is still looking for successful models to ensure the sustainable development of media companies. The fight for advertising involves entirely online companies which are successfully coping with it. Facebook has managed to reverse the decline in its shares, recording good financial results. The social media which are retaining an increasing number of people will definitely hinder media companies in attracting advertising. Media companies themselves are also present in social networks. It will be interesting to see if a symbiotic relationship between the news media and social media will develop and in what form.