My take on Tribune Media’s buyout of ForSaleByOwner.com – this is a desperate yet essential bid to shore up their revenue streams in the face of the Internet threat. It’s going to have big impact throughout the industry however.
To understand their motivations, you only have to look at how the Internet impacted another side of their business – how craigslist decimated their classifieds and employment advertising. In a 2004 report titled Competing With Craig, it was estimated that craigslist cost Bay Area newspaper publications between $50 and $65 million in annual revenue alone.
Or as Phil Meyer put it (Knight Chair in Journalism at the University of North Carolina at Chapel Hill) in a 2005 speech:
[Newspapers] don’t have a monopoly… they don’t have a monopoly on classified advertising, and there’s lots of other stuff they no longer have a monopoly on. They have a monopoly on being newspapers. But that’s not the point. The point is that the services they provide are being provided cheaper and more efficiently…by somebody else.
Newspapers sense there’s a seismic shift underway in real estate marketing as well. Many brokers are starting to realign their advertising dollars onto the Web because ultimately, just like Prof. Meyer said, many of the online real estate sites are cheaper and more efficient.
So who going to be the craigslist of real estate? There’s no clear winner right now, but there are certainly a lot of contenders.
And just like the diminished classified sections in today’s papers, the days of full page real estate spreads in the Sunday Homes section are probably numbered too.
The bottom line is the Internet has created a much effective platform for house listings, and Realtors are starting to realize this. I believe Tribune presciently saw this coming and were looking for a way to shore up content for their pages.
The real question is how will Realtors in Tribune’s markets (see below) react to this deal in the short term? Why would they continue to support a publisher that, with this deal, has made such a tacit endorsement of an alternative to their very livelihood?
By effectively encouraging home sellers to make an end run around the same Realtors that supported them in the past, are they hastening their own demise?
It’s a risky move but probably inevitable.
Tribune Media’s major markets:
Los Angeles Times
Long Island, N.Y.
South Florida Sun-Sentinel
Fort Lauderdale, Fla.
The Morning Call
Newport News, Va.