New Math at the LA Times: Journalism + Ecommerce = Extra Revenue

Last Updated Apr 28, 2010 4:59 PM EDT

A leaked memo from the Los Angeles Times revealed this week that the paper will begin to include e-commerce links in some of its non-news stories, in the hopes of tapping into a new revenue stream. Where you'd normally only see blue links to other articles (in the Health, Image, Food, Travel, Books, Entertainment and Sports sections) you'll also see green links, which might lead to Amazon (AMZN) or TicketNetwork, two early partners.

The links will be relevant to the story; on a column about Tiger Woods you might find a link to buy golf clubs, for example.

While that's an interesting story in itself, it's even more curious when viewed through the lenses of other papers' coverage. The salient piece is the New York Times, which can both empathize -- it's also starving for money-making ideas -- and condescend, thanks to its self-conscious role as the "paper of record." At the end of a Media Decoder post on the NYTimes.com, writer Stephanie Clifford observes:

The Los Angeles Times has been using editorial formats to create ads for some time. In March, it produced an ad for "Alice in Wonderland" that looked like a fake front page and covered its news sections... In April 2009, it ran a four-page Calendar section designed to look like news to promote the Paramount Pictures movie "The Soloist."... The same month, The Times also ran a "column" on the front page that chronicled a cop's first day on the job, which was actually an advertisement for the NBC show "Southland."
As far as reporting goes, that's as deprecating as you can be without spilling your sherry. Indeed, there's a sense that the LA Times has crossed some Rubicon into the world of spam-writing, where there is no holy partition between advertising -- the oh-so-untouchable corner of the newsroom -- and "journalism." Stephanie Clifford is not wrong to tsk-tsk the crosstalk between reporting and advertising. It's just that the LA Times' new strategy is nothing of the sort. In fact, it may be even less dubious than most newspapers' present political ecosystems.

How? Take a look at Editor Russ Stanton's memo to his newsroom, which was later verified by the LA Times, and you'll see that the new e-commerce links take meddling people -- meaning, ad people that reporters are afraid will try to scuttle their stories -- right out of the equation. He says, with my emphasis:

These post-publication links to sites such as Amazon and TicketNetwork will serve as both a reader service and a revenue opportunity for the company. Every morning the e-commerce producer will review our portfolio of agreed-upon topic areas and add appropriate links... At no time will a blue editorial link be replaced with an e-commerce link.
Imagine for a minute that the LA Times folks went really gung-ho for this strategy; imagine that on the Web it had no traditional advertisements whatsoever; no banners, no sidebars, no pop-ups. Imagine that instead, it derived all its revenue from targeted, user-specific and location-tailored green links. If you, the reader, are logged into say, Facebook, Google (GOOG), Twitter or another service that supports personalization, the LA Times would simply serve up links inside those same sections (Health, Food, Travel, etc.) for you to buy things that you might actually want to buy. What you're imagining would be extremely valuable ad units. As Google's chief economist Hal Varian has said, the special sections are the most valuable advertising fodder a given newspaper owns; add the gold-mine that is semantic Web personalization, and you have click-through and buy-through rates that might actually reach whole percentage points.

Best of all, a recommendation-machine that smartly inserts e-commerce links doesn't have an editorial agenda. Of course, the retail partners do; I'm not saying that Amazon couldn't take a bat to the LA Times linking deal if the paper published a hit piece on Jeff Bezos. But they would definitely think twice.

In the old days, it was easy for a company to "pull" an advertisement from a paper, because, hey -- let's admit it -- ads feel like monetary black holes. With a paper publication, your company gets no feedback on the efficacy of the ad. Paper ads are frankly not very good products. But with e-commerce links, your company is not only getting feedback on your ad's performance. You're getting purchases. Maybe even a lot of purchases.

For the retailer, that's a much harder scenario to walk away from. In short, e-commerce links might be a way for newspapers to regain some clout in their own business models. If the New York Times is smart, it will follow suit.