Media journalist Patrick Smith asks on this blog today How much is an article worth? His answer, as far as likely online readers are concerned, is very little.

This got me thinking. How much does a news article cost to produce? Journalism.co.uk is an online-only operation – a bootstrap operation as Kevin Anderson once called it – and obviously has much lower overheads than London-based national newsaper businesses. But if we could work out the cost-per-article for our own business, then that would at least provide a baseline guide to the likely costs to Murdoch et al.

Taking into account wages, expenses and a percentage of overall overheads (rent, bills etc), but discounting non-news-related administration, aggregation, tip of the days etc, we calculated the average cost of an article (feature, news story or blog post) to be around £37.00.

We have no intention of erecting a paywall around our news content, but if we were to, just to recoup that expenditure we would need 370 people to pay 10p each to read each article, or 3,700 to pay 1p each. In 2009, the average number of page views per article on our blog and main site was 440 (this includes all our aggregation posts, which probably skew the figure downwards slightly) but that means at current traffic levels we would need a model of 10p per article to be paid for by 84 per cent of our current readers.

Factoring in the much greater overheads of national newspaper publications, I would guess that the cost per article could be as much as 10 times the cost to us, perhaps around the £400 mark. I could be wildly off, and would be very interested to hear from anyone who has actually analysed this properly, but I think it is pretty obvious that there is a serious problem with the paywall model as a sole path to profitable news production.

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According to parent company Pearson’s preliminary financial results for 2008, released today, the Financial Times’ website saw a 9 per cent growth in paid-for subscribers to 109,609.

Register users – the free-part of the access model – increased from approximately 150,000 at the end of 2007 to 966,000 by the end of last year.

In September last year, FT.com managing director Rob Grimshaw told Journalism.co.uk that the financial crisis had caused an explosion in registrations and subscriptions to the site.

Advertising revenues for FT Publishing as a group fell by 4 per cent, but overall profits for 2008 rose by 13 per cent to £195 million.

“[G]rowth of digital and subscription businesses and strong demand for premium content exceed decline in advertising revenues,” said a release from Pearson.

“At the FT Group, we anticipate continued strong demand for high-quality analysis of global business, finance, politics and economics; a tough year for advertising; strong renewal rates in our subscription businesses; and continued growth at Interactive Data.”

The group’s publishing division posted a 9 per cent increase in sales to £74m (£56m in 2007).

Pearson itself recorded an adjusted operating profit rise of 11 per cent to £762 million in 2008.

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The Observer’s Women’s Special in the Review section, spanning 80 years of history, made interesting reading over the weekend: apparently men still dominate the top levels of media, politics, finance and … church. Of note were the ‘big lists’ split into male/female ratio. Here are those relevant to the media sector (percentages refer to the female portion of the list):

• Sunday Times Rich List: 1%
Of 95 women listed in the top 1,000, 56 are half of male-female partnerships.

• Vanity Fair ‘New Establishment’ 100: 9%
Three women feature as part of male-female partnerships; only one woman – Angelina Jolie – in top ten.

• Telegraph 100 Living Geniuses: 15%
No women feature in top 30.

• Media Guardian Top 100: 21%
One woman, BBC’s Jane Tranter, in top ten.

• Entertainment Weekly 50 Smartest People in Hollywood: 24%
Two women in top 25.

• Evening Standard 1001 Powerful Londoners: 27%.

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It’s hardly like newspaper jobs were all that secure anyway, but this month’s financial situation (something about a recession) hasn’t helped things either over the last couple of weeks.

This week news broke that two of the UK’s biggest-selling regional daily newspapers will cut 135 jobs.

The family run publishers Midland News Association are looking to merge their publications, the Express and Star and the Shropshire Star, with the aim of reducing costs by around £3 million a year.

After a decline in advertising revenue, the publishers considered it a necessary move, as reported over at the Guardian. There are plans to merge some parts of classified advertising, production and finance.

Press Gazette reported that despite the merger, both publications will maintain their individual identities, while also keeping separate editors and reporters.

• At the beginning of last week we learnt that the Metro in Manchester will be axing ten jobs. It has since been announced that the jobs lost will be in editorial, sales and adminstration roles. The Liverpool office has been closed and relocated to Manchester.

• Three of Trinity Mirror’s East Midlands publications ceased production last week, as reported over at Hold the Front Page: the 126-year-old Long Eaton Advertiser, The Nu News and The Long Eaton Trader. A distribution worker and 3 members of advertising were made redundant. Due to staff reassignments, no editorial job cuts were made.

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Le Figaro is predicting that 20% of its revenue will be generated by its online operations by 2010.

But the French newspaper has plans to beat this, Pierre Conte, deputy managing director for new media and advertising for Le Figaro Group, told delegates at the World Association of Newspapers (WAN) conference today.

After rising from 2 million unique users to its websites to 8 million in two years, the group’s web traffic now accounts for 1 French internet user out of every four.

Last year its online revenues accounted for 13% of its total income – so how will the publisher build on this?

Gradual integration
Online success will only be achieved if all the group’s editorial teams want to take part, Francis Morel, managing director, said.

As such Le Figaro adopted an ‘invite not assign’ policy, giving journalists the opportunity to do work for the websites if they wished (though initially for no extra pay).

According to Morel merging editorial teams for print and online was seen as essential, despite concerns raised by the unions.

Journalists became increasingly enthusiastic about working for the websites and now both editorial teams are on the same floor under the same editorial head, though Morel insists this has been about building bridges and not enforced integration.

Advertising
The group has sought to recoup floundering revenues from print classifieds by making a concerted push with this advertising online, setting up a team to find advertisers for online-only.

Contextual and behavioural advertising is also being experimented with.

E-commerce and diversification
Building around the flagship portal of Le Figaro, the publisher has launched specialist sport, finance and lifestyle websites, in addition to acquiring several e-commerce sites.

Content has also been syndicated to other websites, though this is not a long-term business model, Conte says.

“This business [selling content to other websites] will continue to be weak and limited. We need to work on ad revenue. We are not reinventing anything by saying that, but we need to integrate our sales house.”

Content
News remains a priority online for all the group’s content-based websites. On the Le Figaro site a commenting function has been added to articles and submissions from users are welcomed.

Le Figaro has also set up its own TV studio to produce video clips for online and mobile.

As a word of warning, Morel stresses that the digital developments in these areas have not been at the expense of the print product.

“It is indispensable to continue to invest and focus on print, because while the internet is a key territory, it will not replace print.

“We need to be extremely cautious and prudent. The internet is a very volatile market. We need to be very flexible at any time to change our course because we do not know what tomorrow holds.”

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