- Jeff Fager
Executive producer, 60 Minutes
- David Hiller
Publisher, Los Angeles Times
- Scott Moore
VP content operations, Yahoo!
- James O'Shea
Editor, Los Angeles Times
Let me ask you an economics question, though. It's great you're going to the Internet; the Internet is expanding. But our reporting shows that the revenue coming to CBS, for instance, is like this compared to the revenue that's coming from normal advertising
This is in its infancy, really, from an economics point of view.
It is. It is. You see the figures in terms of advertising on the Internet, though, and they're up 30 and 40 percent a year. So everybody, I think, is crossing their fingers that we start to make real money on the Internet. Right now we're not. Right now we're barely breaking even on the Internet. But I'm optimistic based on the numbers that I see.
So there's faith here. There's hope, ... because the eyeballs are going to the Internet?
Yeah. I don't see it happening as quickly as you're suggesting. When our average audience is 15 million viewers a week, it's a lot of people. In fact, CBS estimates that 100 million people at one point or another tune in and watch 60 Minutes during the year -- 100 million people. So there's still a lot of audience out there. If you think back on it, people have been predicting the death of the evening newscast for years on the three broadcast networks, yet 25 million people are still watching them every single night. I'm not saying that there isn't an issue, ... but I don't think it's as drastic as you're making it sound. ...
... Back in around 2000, there was a lot of belief that being able to offer advertisers marketing solutions that crossed multiple media was going to be a very big thing. Well, it turned out it's very helpful to some advertisers but not to everybody. So, on balance, that's one of the areas where the benefits turned out to be more modest than people thought they were going to be.
You've said that your strategy for Yahoo! News is advertising, advertising, advertising.
Ad revenue, even at Google, has got its ups and downs.
Sure, right. Well, what I meant by that is if you think about our business in a meta way, we're in the attention business. The more attention that we can aggregate across large audiences, the more minutes that people spend on Yahoo! News, and the more people who spend those minutes on Yahoo! News, the more advertising opportunity we have to sell to companies that want to reach those people.
Advertising is proving to be the driver in the business. There have been a few experiments with subscriptions, but for the most part, they have failed miserably, because there's too many people who are willing to put a product out there or an offering out there and not charge for it, so that if you are trying to charge for it, you're at a huge disadvantage from day one. So really, I think that even though you're right, you have the vagaries of the advertising market going up and down with regard to publishing on the Internet. That's just a reality that we have to deal with today.
Now, a big company like Yahoo! that has many different businesses can diversify its revenue streams enough to offset some of that cyclical nature of the business. But even broadcast TV networks and print publishers, magazine publishers, are extremely dependent on advertising. ...
Kevin Sites, the number of hits to this -- or people who came to this Zone, this Hot Zone -- as I understand it, was somewhat disappointing for Yahoo!
I wouldn't put it that way, but --
It wasn't as much as you expected.
Actually, that's not really true. I had expected that we would have an audience of 2 million people a month, that that would constitute success for the project. Our internal numbers are that we have that size of an audience. Now, there's external numbers that show it more like a million or a million and a half for various reasons that are too technical and boring to go into.
"External numbers" -- you mean the outside rating agencies.
ComScore, Nielsen, NetRatings -- yeah, the rating agencies. There's always a sort of discount on the numbers, probably because they don't capture international usage, and Kevin's content, by its nature, is very appealing to people around the world.
But an audience of 2 million people a month for anything is quite significant. That's larger than the circulation of any newspaper in the country outside of USA Today. That's about the number of people who watch The Daily Show [on Comedy Central]. Actually, that's more than people who watch Jon Stewart on The Daily Show. So Kevin clearly established a brand, and the amount of investment that we spent to do that was really quite small.
But the point of that project was really not about how big of an audience can we aggregate. I mean, international news and coverage of war zones that don't directly involve U.S. troops is always kind of a tough sell in the news business, always has been. We did it because we felt those were important stories that needed to be told. We thought that Kevin had a unique point of view and a unique ability to go out and tell the stories in a way that really had never been done before, and in a way that was totally facilitated by technology. ...
These numbers are relatively imprecise, right, for how many people are looking at a site for how long and which service, right?
No, not really. I mean, it's a complex issue to get into. But one of the benefits of publishing online is that, because we're using computers that can track every single activity or interaction that happens with a user, we can count very accurately the number of pages that we serve, the number of users that come and visit us. We can't always track exactly where they are. In some cases we can; in some cases we can't.
But there are third-party ratings services out there who use a sample, just like they do for television. They have a panel of several thousand people. They have software installed, and that software tracks those people's usage. Then they take that sample data and they extrapolate it up to an aggregate number for United States. There's no way that a sample's ever going to be exactly accurate. And because our internal data includes international as well as U.S., there's always going to be some discrepancy.
But it's not that it's imprecise; it's just that you're sort of comparing apples and oranges if you look at internal numbers versus what's done with samples by a third party.
Advertisers are confident in it?
Yes. And then the third-party reporting is very important for establishing credibility with the advertising business. So, generally speaking, we only quote third-party numbers. When I tell you that Yahoo! News has an audience of 34.5 million Americans for September, that's a number that has been validated by comScore as being true.
Now, just to follow up on that, but we know that we have actually north of 50 million users that are actually coming into the site. But that would include people outside the U.S., and it would include -- there's some discrepancy between what they've extrapolated from their panel and what is actually true. …
Is there an inflation, to a certain extent, in how many people come?
No. Actually, it's the opposite. The numbers that are reported by comScore and Nielsen are conservative rather than overinflated. It's very important for the industry that we don't overinflate numbers and give people the wrong impression.
So you're not going to have any ABC [Audit Bureau of Circulation] circulation scandals like certain newspapers have had?
No, I think we're not vulnerable to that in the same way at all. We also don't have the disadvantage [they have] in television, where they have a sample that says the audience for a certain program was a million, but it doesn't capture how many of those million people surfed away during the commercial to another place and never saw the commercial. So we don't have that problem.
You can't TiVo out the commercials on Yahoo!?
Well, not today, and hopefully that won't happen anytime soon.
It could. It could.
And then you would be in a technological bind.
What's good for the goose can happen to the gander.
It's the nature of this business. Technology is disruptive and constantly evolving and changing. I have no doubt that at some point Yahoo! News will find itself in a position where a new technology or a new distribution means challenges our core business and the assumptions that we've been operating under. Then the challenge will be, can we adapt to this new thing, or do we go the way of buggy manufacturers? That's just the nature of the business.
The question seems to be, with declining revenue from the newspaper, the hope is that it will be replaced by increasing revenue online. Is that right?
And then some numbers I just looked at say that a subscriber to a newspaper is worth, to the news organization, approximately $1,000, but someone who's reading it online is worth about $5.
Right. Right, right.
Will the Internet revenue ever catch up to the newspaper revenue? How can that possibly happen if that's the different scale of --
Well, it's a different scale now, but if you can create a larger audience online, you can start charging more for it. ... The Los Angeles Times has to become the premier locally edited and produced newspaper for Southern California that gives our readership the best information about the nation, the world, the local region, the state of California, and it has to deliver it both in print and online.
At this time, our biggest audience is print, and nobody says you can quit investing in that; you have to. But the big key thing is you have to figure out, how can I take some of the assets that I have invested in the newspaper and convert them to online, and build a bigger audience online? ... Well, I say online will become the discovery area of our organization: This is where people will go to discover things, and this is where people will go to find breaking news, and this is where people will go to find out, well, if I want to take a trip, how do I book it, and where do I go? ...