Tuesday, February 03, 2009

Why Newspapers Will Disappear Sooner Than You Think

Nicholas Carson of Silicon Alley Insider runs the numbers to show just how much it costs to print an ink-and-paper version of the New York Times, and he reaches this conclusion:

It costs the Times about twice as much money to print and deliver the newspaper over a year as it would cost to send each of its subscribers a brand new Amazon Kindle instead.

Carson estimates the figure is $644 million per year, with a subscriber base of about 830,000. That works out to about $745 per subscriber, which is a problem, since the $8 per week subscription fee works out to $416 a year. That means they have to generate $300 million a year in advertising revenue just to break even, and we're still just talking about printing costs. We haven't factored in delivery costs or salaries for reporters, photographers, and other content creators.

How can that type of business model ever compete with an electronic alternative?