Internet content reaching critical mass
Two months after Hearst announced its intentions to divest or shut down the Seattle Post-Intelligencer, the Seattle PI is set to become the largest and (arguably) the first newspaper to convert from print to web only delivery. This comes after the Christian Science Monitor announced intentions to cancel daily print editions in favor of a web centric strategy supplemented by weekly print editions.
While the recession may have sped up this migration, increasing penetration of internet readership and the mainstreaming of news aggregators which pay no production costs has been spelling doom for the traditional newspaper industry for years. Little information is available about Seattle PI’s internet strategy, but this switch does raise some questions. The newspaper has slashed staff from 140 to 20-25.
My guess is that the the new venture will focus on editorial and cursory local coverage while supplementing liberally with AP feeds ala the Metro. While this strategy may decrease production costs, it’s hard to say that the new Seattle PI will have any sort of competitive advantage over various other internet news and commentary sources – independent blogs and web portals alike.
If more newspapers begin following suit, will it even be worth the time for these new websites to hire proprietary ad sales teams? With so many undifferentiated web papers and the line between bloggers and “professional journalists” blurring, marketing managers will begin to realize that their web dollars are better spent elsewhere. In fact, this trend has already manifest itself as newspapers and “premium” content destinations have seen ad rates dwindle in favor of ad network inventory.
This could bode well for internet content destinations that typically have not shown a strong ability to monetize with scale. Yahoo (YHOO), AOL (owned by TWX), and Interactive Corp. (IACI) are all likely to benefit as marketers catch on to the consumer shift to web content. Furthermore, ad networks like those run by Google (GOOG), Microsoft (MSFT), and Yahoo will likely become more important as advertisers seek an effective way to distribute their message across an increasingly decentralized and difficult to target inventory. Of these, it seems that Yahoo’s ability to built value added services around high quality content destinations – ala Yahoo! Fantasy Sports attached to Yahoo! Sports – as well as its proprietary (albeit second in class) ad platform could well be in the best position to benefit from the rationalization of the print media industry. I’ve written before that I believe that Yahoo should shift focus from their belief that they are an internet and search business and begin embracing their true role as a content destination. It would seem that the market is now presenting a tremendous opportunity for the business to seize relevance and get out from the shadow of search.
For those looking for the “next big thing,” I would put my money on what services or businesses rise to fill the “localization” void which will ultimately be created as newspapers exit the print business and pare down headcount. One example might include the development of localized blog networks like SB Nation. (Shawn Hoffman discussed this possibility much better than I ever could over at Squawking Baseball.)
Full Disclosure: Author was long shares of GOOG at the time of writing. No positions were held in any other stocks mentioned in this article.
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