Raymond Snoddy on Media: Web will have share of woes

Even the sacking of Piers Morgan as editor of the Mirror doesn't seem
like an expert piece of forward planning - he has done all right for
himself since.

But Sly, as she put it at last week's Association of Online Publishers
conference, 'is firmly of the belief' that there will be casualties in
the online advertising world as the downturn bites.

At the very least, she says, there will be consolidation, as the
internet repeats 1999 in a Groundhog Day of the previous recession. The
implication is that the tormentors of traditional media will soon get
their comeuppance, and everyone in the business can breathe a sigh of
relief.

Is there any real evidence that such a Groundhog Day is imminent? A
little. Nearly everyone suffers from the sort of recession we are now
entering, but not equally. There are a few signs of pressure on the
internet. Google's ad revenues are down, and there have been some new
media job losses in the US, although nothing like those seen by
newspapers.

A revealing snippet, though, from successful internet entrepreneur and
former Financial Times journalist Nick Denton, who was involved in
founding the lucrative First Tuesday internet meetings event, Moreover
Technologies and Gawker Media, the New York-based internet gossip
site.

Fifteen years ago, Denton's fellow FT journalists were bemused to watch
him in action. He ignored the conventional computer screen on his desk
and spent all his time surfing the internet on his laptop. As a result,
the difference between him and the hordes of other former FT journalists
is about £100m.

Now Denton has trimmed his workforce by 15%, cutting 19 jobs from a
total of 133, as he battens down the hatches for recession.

That would seem to be a reasonable metaphor for what is likely to
happen: a trimming and slowing of online growth, rather than outright
casualties.

It is wishful thinking on a grand scale to believe that we are heading
for a re-run of the 2001 dotcom bust. The world of the internet is too
well-established and too much a part of our lives. Advertisers are used
to the accountability of search, even if it is not always as accountable
as it seems.

Where Bailey is obviously right is on the inevitable drying-up of
venture capital. Pity the barely established internet company that now
has to go cap-in-hand for second-round finance. More imaginative
enterprises will simply melt, along with weaker free newspapers of the
sort that the Mirror Group has already closed down.

In comparison, regional newspapers are already going through a tough
time as their economic mainstays - houses, cars and jobs - implode
simultaneously. Across the country, regional newspaper advertising
declines average 30%. Managers are all scratching their heads trying to
work out how much of the loss is cyclical, and might come back, and how
much is be lost forever to the internet.

There might be more hope for national newspapers, the specialist
business publishing sector and commercial television. National
newspapers can rely on cover-price cash flow and the power of strong
brands. The best of the professional press, meanwhile, will always
purvey must-have information.

- Raymond Snoddy is a media journalist and presenter of BBC TV's
Newswatch

30 SECONDS ON ... SLY BAILEY

- Sly Bailey is chief executive of Trinity Mirror and a non-executive
director of record company EMI.

- In 2006, Trinity Mirror controversially awarded her substantial
bonuses amid widespread redundancies in the company as its ad revenue
tumbled and it attempted to sell off sports and regional assets.

- In June this year, as the company forecast a 10% drop in profits and a
share price slump, The Independent's Stephen Glover wrote 'it is
difficult to see how Sly Bailey, Trinity Mirror's preposterously
well-rewarded chief executive, can remain much longer in her job'.

- In a speech at the Association of Online Publishers conference on 1
October, Bailey focused on slowing growth in digital publishing, calling
for traditional media to recognise the importance of digital to its own
fortunes.

- She also branded BBC plans to launch local video sites market
'anti-competitive' for their likely impact on emerging businesses in the
local digital media sector.