A financial plan for the news’paper’ of tomorrow

Peter Kafka, former media writer for Forbes and now blogging his own MediaMemo, asks the question (non-rhetorically), “What happens when your newspaper goes digital?” His immediate conclusion: Most of the staff gets canned.blackberrypd3_4001

In his blog, Kafka channels Outside.in CEO Mark Josephson whose business is to support local news operations with broad-based content as they make the move to digital themselves.

Josephson tells Kafka that his prototypical digital newspaper would have 6 content people (reporters and editors), 12 sales reps and a total staff of 20 (that would seem to leave room for 1 administrative type and one boss type — and no room for a graphic designer, web developer or I.T. person, which already makes me suspicious that his plan is too lean). He even provides a basic P&L spreadsheet for do-it-yourselfers who want to use his math as a starting point.

If the site does 40 million pages views a month (that’s a big number), augmented by twice that much traffic through third-party agreements, he figures it could earn about $2.6 million/year on $6.3 million in revenue. That’s a great margin — 41%. But compared to the kind of revenues daily newspapers are scaled for, it’s a pretty small business.

Plans like this are about 25% experience and 75% assumption, and anybody who would use such a plan would deviate from it almost immediately once into real operations.

But the takeaway is that, while existing media executives may not be able to swallow hard enough to scale down their businesses that much, they are currently being forced by the economy to cast aside lots of sales and content talent. It’s only a matter of time before that talent starts to challenge traditional newspapers companies with startups that aren’t burdened by guild agreements, large buildings, printing plants and boards of directors that demand every old-line revenue dollar to be replaced.

Back in the ’90s, when bookstores were being driven out of business by a previously unforseen competitor, new-age jargon had it that they were being “Amazoned.”

I’m curious what we’ll be calling it in the future. Journaled? Posted? Picayuned?

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