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Newspaper publishers want control over iPad subscriptions
by Staff Writers
Chicago (AFP) Sept 22, 2010


Times Co. expects revenue decline on print ad slide
New York (AFP) Sept 22, 2010 - The New York Times Co. said Wednesday it expects revenue to fall up to three percent in the current quarter as print advertising revenue continues to slide. Updating its third-quarter outlook, the Times Co., which owns The Boston Globe and International Herald Tribune in addition to the flagship New York Times, said total revenue is expected to fall by two percent to three percent in the July-September quarter. The Times Co. said print advertising revenue is expected to decline five percent in the quarter compared with a year ago while digital advertising revenue rises by 14 percent. Circulation revenue is expected to decline by around five percent while operating costs increase by one percent to two percent, the Times Co. said.

Times Co. shares were down 6.02 percent at 7.49 dollars in early afternoon trading in New York. Times Co. president and chief executive Janet Robinson, speaking at the Goldman Sachs Communacopia XIX Conference here, noted that a five percent decline in print advertising revenue was a "very slight improvement" from last quarter, when print advertising revenue fell by six percent. "So from a standpoint of advertising we are seeing continued positive factors," she said. "I think there is an opportunity for us to see print return to growth, an overall growth factor," Robinson told financial analysts. Robinson also said The New York Times has not seen any impact on advertising from the recent launch by The Wall Street Journal of a New York edition.

"We haven't seen any impact from any of the activities of The Wall Street Journal," she said. "The Times has many competitors, it has for a number of years. We feel that our proposition to the advertiser is strong." Robinson also said the print edition of The New York Times would be around for years to come. "It's very clear that our print business is a very, very profitable business and we will be printing The New York Times for many, many, many years to come," she said. "The loyalty that we see in regards to the print product is really quite extraordinary." Robinson said preparations were continuing to begin charging readers for full access to the newspaper on the Web, a move which the Times Co. expects to implement early next year. "It's extremely important for us to get this right," she said. "That's why we've taken our time doing it." Martin Nisenholtz, the Times senior vice president for digital operations, told the analysts that advertising demand for The New York Times free iPad news application has been "unbelievable."

Newspaper publishers must control subscription services offered on the iPad and other digital devices, top industry executives said Wednesday.

Apple is reportedly accelerating efforts to launch a newspaper subscription service, which could theoretically help newspapers stem massive losses incurred from years of declining print sales and relatively thin online ad revenue.

The foray into newspaper subscriptions would be a new one for Apple, which currently offers free access to The New York Times among dozens of others and sells individual editions of magazines.

Apple has allowed some publishers -- like The Wall Street Journal -- to control the subscriptions to their iPad editions.

But the Journal reported Monday that the subscription service Apple is developing would not allow publishers "easy access to customer names or other personal information."

Another sticking point in negotiations is reportedly over revenue sharing.

The San Jose Mercury News reported last week that the current model would involve Apple taking a 30 percent cut of subscription sales and up to 40 percent of ad revenue generated from the applications.

"Don't concede control of the customer -- just don't do it," said Todd Larsen, president of Dow Jones & Co. which publishes The Wall Street Journal.

"If we start allowing third party companies to own those relationships and fragment the way we talk to our customers we believe that is a very hard model," Larsen told the Executive Club of Chicago.

"It's hard to regain the relationship with the customer once you've ceded it."

Publishers have to be careful not to simply seek to grow audiences without maintaining revenues, cautioned Tony Hunter, chief executive of the Chicago Tribune Co.

"It's not hard to drive audience if you provide interesting content," Hunter said. "Who's going to pay? That's the question on the business model side."

The Tribune Co. has reoriented its business model to use the value of its brand to direct traffic to revenue generating projects like cars.com and using its subscription data to provide "customized solutions" for marketers and advertisers, Hunter said.

While tablets can be "a great content delivery device" the current model "doesn't seem like a savior by any means" if it means "we create the value and have to siphon off a large part of the revenue and don't own the relationship with the customer," he said.

The Journal developed a completely new format for the iPad, and Larsen said he thinks "it's an open question as to whether there will be a true migration" from print to tablets because of the limitations of the tablet format.

"We would want people to still get the print paper, but to use tablets as a way to augment how they read it," he said.

While the tablet is certainly intriguing, it's also not clear if there are "sufficient readers and subscribers out there who would be willing to pay 10 to 15 dollars a month" for access to a newspaper, added Jeremy Halbreich, chief executive of the Sun-Times Media Group.

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