New and Old Media Begin Working Together
JOHN YDSTIE, host:
The Internet companies Yahoo and Google have both announced new partnerships with major newspapers in recent weeks. In doing so, the papers are embracing some of the very Internet competitors that have been hurting them. Fewer people are reading newspapers because they're getting their news online, and that's been bad for newspaper ad revenues.
But now the papers are deciding they might have a lot to gain by striking deals with the most popular sites on the Web. NPR's Chris Arnold reports.
CHRIS ARNOLD: These days, your local newspaper has to compete for your attention with hundreds of Web sites. There are major national news sites, rental listings of Craig's List, stuff for sale on eBay, blogs, movie reviews -all things most people used to just look for in their local paper, and papers made a lot of money selling ads around all that content.
Lauren Rich Fine is a newspaper stock analyst with Merrill Lynch.
Ms. LAUREN RICH FINE (Newspaper Stock Analyst, Merrill Lynch): Economics 101 will tell you if I had a near-monopoly before and was able to charge accordingly and I now have a competitive model, I'm not going to be as profitable.
ARNOLD: With readership and revenues dwindling, the stocks of some major newspaper companies have been driven down by 40 to 50 percent in recent years. But some Internet companies differ with Wall Street's gloom and doom take on newspapers.
Mr. DAN FINNEGAN (Senior Vice President, Yahoo): I think it's exaggerated.
ARNOLD: Dan Finnegan is a senior vice president at Yahoo. He used to run all the Internet operations for Knight Ridder newspapers. Yahoo's just announced a deal where it's joining forces with the parent companies of 176 different papers, including the San Francisco Chronicle, Atlanta Journal Constitution and the San Jose Mercury News.
Mr. FINNEGAN: Well, we both bring a lot to the table in this partnership. And I think it is a very big opportunity for both of us.
ARNOLD: Finnegan says Yahoo will get local news content from the local papers. The papers will get help from Yahoo designing and running their Web sites, and they will share ad revenues. Finnegan says take the classifieds. If a hospital places a help wanted ad for nurses in the paper, that ad can also go out on Yahoo's HotJobs site and in direct e-mails to Yahoo users.
Mr. FINNEGAN: Many Yahoo users tell us what their occupation is, their industry is and tell us they want additional information about jobs. So that if you're a nurse in Seattle - and maybe you're not looking for a new nursing job - a recruiter who may be willing to pay you more money or may have a job that's closer to where you live can message you either through e-mail or even as a banner ad when you're, you know, checking out Yahoo news.
ARNOLD: Finnegan thinks this added reach will allow newspapers to once again make some more money on classifieds even after Yahoo gets a cut. Google recently announced a different deal with a bunch of major papers, including the New York Times and the Washington Post. In that deal, Google has created an online marketplace for advertisers to place bids to buy actual print ads. It's similar to how people bid for hotel rooms on Priceline.
Mr. BEN SCHACHTER (Internet Analyst, UBS): Many traditional media companies -newspapers, TV - have to basically say to the online guys, are you our friend or our foe?
ARNOLD: Ben Schachter is an Internet analyst at UBS. He says these kinds of creative partnerships signal a change in thinking on the part of newspapers.
Mr. SCHACHTER: In a way, it's basically saying, hey, we can't do this on our own. That's not our skill set. We are not a company that knows how to best monetize ads online. Companies like Google and Yahoo, that's what they do. That's what's in their DNA. That's how they're set up. And the newspaper guys didn't want to share the economics for many years.
ARNOLD: But Schachter says with online readership growing, this is a good move for the newspapers to make because they've been stumbling online. He says often their Web sites are poorly organized and don't make it easy for advertisers to place ads. The Google auction system is supposed to fix that. Denise Warren is chief advertising officer for the New York Times Media Group.
Ms. DENISE WARREN (Chief Advertising Officer, New York Times Media Group): Our hope is that we'll be able to open up a whole new segment of advertisers to the New York Times.
ARNOLD: Warren says the auction system has already brought in ads from smaller companies who had never advertised in the paper before.
Chris Arnold, NPR News.