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Profitability and Staffing Trends

Partnerships, Profitability and Staffing Trends

One area of development in 2008 was news operations looking for ways to pool their strength. Revenue-sharing partnerships with other news entities, distributors, advertising firms and technology companies popped up throughout the year. But among these respondents, just a third said their website is in a revenue-sharing partnership. And of those in these partnerships, most do not see them as a key to their economic stability: 45% say they will help the outlet diversify but are not essential and another 23% say they will always be of secondary importance.

The vast majority of these respondents (77%) work in for-profit models. And, contrary to what seems to be state of most online news ventures, a majority, 61%, says their sites are currently turning a profit. But “making a profit” may not be as clear-cut here as in other genres.

First, few of these sites are being forced to carry the full weight of those profits. Two-thirds of those in for-profit models (67%) say their sites are subsidized by their legacy media outlet. Less than a third (29%) are either an online-only entity or fully separate from the legacy outlet.

Looking at the biggest group—those with sites that are subsidized—59% report earning a profit. But the true meaning of profit is often murky, and may have more to do with accounting procedures than actual dollars. If most expenses, such as online staff, for example, come out of the legacy outlet’s budget, it takes little revenue to claim profit.

Profitability of Respondents with For-Profit Websites
Legacy-subsidized Non-subsidized No Answer Total
Making Profit 59% 69% 30% 61%
Not Making Profit 32 31 10 31
No Answer 9 0 60 9

One executive, in charge of both editorial and sales for his organization’s website, expressed the economic challenge of a news organization trying to straddle between the old and new product. “Things were getting much better, until the economic slowdown hit . . . Now most of those responsible for generating online revenue in our company—traditional broadcast sellers who had been embracing online—face intense pressure to bring back traditional dollars that no longer exist. The result is less concentration on online selling.”

Still, online-only entities or those financially separated from their legacy unit were even more likely to cite profits, fully 69%. Granted, this was a smaller group to begin with, and there could be some respondents that work for the same entity, but the high response here may provide some reason to be hopeful.

On another somewhat positive note, these respondents report that for the most part they have been spared the kinds of staff cutbacks their legacy brethren experienced in 2008. Indeed most (39%) reported staff increases compared with a year earlier, and another third said their staff numbers have remained the same. Less than a quarter (23%) saw staff decreases.

And, finally, cost does not seem to be the biggest impediment to learning new technology. While 47% named cost as the biggest obstacle, nearly two-thirds (64%) said the biggest factor was time.

“Major Obstacles” in Adapting to Technology
Design Your Own Chart

Source: PEJ/ONA 2008 Survey of ONA Members