Yahoo & Google's Impacts on the Newspaper Industry

(MoneyWatch)  Just when you thought they had run out of things to cut, some U.S. newspapers have come up with a new strategy: Cutting back on their publication schedule. This is not widespread enough yet to be called a trend but the announcements today that the Lexington (N.C.) Dispatch, a New York Times-owned paper, will eliminate its Monday editions; and the Daily Banner (Cambridge, Md.) will cut back from daily to twice a week (Wednesdays and Fridays) may be early warning signs that we will soon see repeated elsewhere soon.

(Two small daily Illinois newspapers also dropped their Monday editions last month.)
Though we've often reported on falling ad revenue, two additional factors are putting the squeeze on print publications -- the rapid rise in the price of newsprint, and soaring transportation costs due to the rising cost of gasoline.

Meanwhile, news of layoffs and closures continue flowing in. The Newhouse News Service announced that it will close its Washington-based operation after the election -- it had been in operation since 1961.

The Orlando Sentinel announced it has cut 153 jobs so far this year, including 52 newsroom positions in July alone.

Also, according to Editor & Publisher:

• The Newark, N.J., Star-Ledger threatened that if 200 of the paper's 750 employees don't agree to a buyout -- and if the paper cannot reach cost-cutting agreements with its unions -- the paper will be sold.

• The Bozeman Daily Chronicle revealed it has cut six FTEs and three part-time positions, which was 6.5 percent of its staff.

• The Lincoln, Neb., Journal Star said it cut eight newsroom positions and eight other jobs.

Compare all of this with what is happening on the online side of the news business. Yahoo's alliance with more than 775 newspapers is reportedly driving significant traffic to its partners' sites. In an unusual disclosure, the Dallas Morning News said it receives up to 800,000 visitors in a "couple of hours" from Yahoo links. An editor at the paper said that Yahoo links represent "27% of the day's page views, and 65% of the day's unique visitors."

I've made an educated guess here before that Google News sends from between 10-25 percent of the traffic reaching newspaper websites. It seems likely, therefore, that the two search giants collectively account for over 50 percent of the typical newspaper site's traffic.

In this context BNET member Sean Blanda's post noting Google exec Marissa Mayer's recent comment that the company earns $100 million in annual revenue from Google News raises another factor in the equation between the big online operations and the faltering newspaper industry. Although they've pursued radically different strategies with newspapers, Google and Yahoo appear to be achieving similar impacts in terms of referrals.

A key difference, however, is that Yahoo's ad-serving software is suboptimal, which means both Yahoo and its newspaper partners are leaving money on the table. Google, on the other hand, delivers far stronger ad performance -- a reality that may eventually dawn on Yahoo's newspaper partners, and cause them to rethink how they might better monetize all this search-engine-driven traffic to their sites.