The miracle that isn’t

It’s been a big story: A Norwegian newspaper is generating 20 percent of its revenue from online.

People have e-mailed me the story, IM’d me links, blogged about it, spoken to me about it — did you see this story?

There’s one problem: It’s not true.

At least, that’s the way I read this post from Lucas Grindley.

Special note: Unfortunately, the IHT story’s statement that online business comprises 20 percent of Schibsted’s revenue conflicts with the company’s own Web site, which says it’s actually 20 percent of the profit. That’s a big difference, not just a semantic one. I’ve gone with the number cited on the company’s Web site. Truthfully, I don’t know that 20 percent of profits is even noteworthy now that I’m thinking about it. Originally, I wrote this based on the IHT’s understanding that it’s 20 percent of revenues.

Twenty percent of profits is about normal for a well performing newspaper operation. It’s not noteworthy at all.

It’s also worth noting that if the Norwegian paper is reporting profits for online like most US newspapers (all, actually, I think), then the entire burden of paying for content falls on print advertising — the content is essentially free to the online operation. There’s no reason to believe that the web site is any where close to being able to stand on its own as a significant revenue engine.

In the comments on the post, there’s more from Lucas:

I’ve just gone back and read the story for the fourth time very carefully. And with the stats from the media folks at Schibsted in hand, I think I understand now what the IHT was trying to say. It was trying to say that online is projected to become 20 percent of revenues, not that they are now. What is actually happening is that online accounts for 14 percent of total revenues, according to Schibsted’s own media folks.

Fourteen percent of revenue is good, but it is at best average for many US-based newspaper.coms. Certainly, many newspaper sites do worse, but at least some do better.

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2 thoughts on “The miracle that isn’t

  1. The Schibsted Q4 presentation slides ( give some further (and more updated than the web site itself) insight into the balance between the off- and online businesses. The graph on page 27 of online activities share of EBITA (also the profit share excluding new online initiatives) shows that Q4 profit share was 28% including and 38% excluding new online initiatives, where previous quarters in 2006 exhibited a higher share. The slides also illustrates profit levels per online businesses, where one finds that the classifieds businesses (with stand-alone web sites) are the larger part of online earnings, thus the conclusion that the online operation can’t be a significant stand-alone business can’t be drawn. In summary, my view is that the IHT article gave a pretty accurate picture of the transformation of the Schibsted group.

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