Newspapers: 30% print revenue decline; 16% online revenue drop | Hacker News Reader

Newspapers: 30% print revenue decline; 16% online revenue drop

niemanlab.org

9 pointsjrwoodruff11 comments

This article contains some interesting analysis of second quarter Newspaper industry financials. Among them: - Adjusted for inflation, the newspaper industry is now half of what it was in 1986. - Newspaper share of the ad market is less than 15%, compared to >25% in 1989, despite a steady ad market. - When analyzed against personal consumption expenditure, newspapers appear to be in a free fall unrelated to the economic downturn.

I don't agree with the common diagnosis of what ails the newspaper industry. If newspapers focused primarily on their online products, people would probably enjoy them more.

What would that cause? Existing online readers would generate more page views. Many print readers would switch to the digital version. Attracting new readers is unlikely. Local publications have about as much market share as they could ever hope to have[1]. The rest of the market probably just doesn't want their news via text, or doesn't care about news at all.

If most of the effects from improving online content are from moving readers from print to online and increasing page views from existing users, you've just lost money. Print ads are more profitable than online ads, so losing a print reader to the online version is a loss. More page views from existing readers isn't much of a gain. Newspapers rarely sell out their online ad inventory. From my understanding, that gives us two scenarios for advertisers:

1) The advertiser has bought as many ads as they can afford.

2) The advertiser has bought ads for their entire desired audience, and would buy more if it were available.

Advertisers in group 1 can't afford more ads at all, so there's no hope there. In group 2, increasing page views of existing readers accomplishes little to nothing. The advertisers already advertise to those readers, and are unlikely to want to show more ads to them.

That leaves us with few significant avenues for increasing revenue. You can try to kill Craigslist, or increase ad yield by targeting and delivering ads more effectively, both of which seem rather difficult.

Improving the online news experience would be cool, but it's not profitable enough to save the industry as so many claim.

[1] For example, http://www.statesman.com/search/content/advertising/media_ki...

This is exactly the problem. After 5 years in newspapers and being very tech-oriented, I cannot see a way that any major newspaper company (McClatchy, Gannett, et. al.) will be able to transition print revenues to online profitability. The print model is the heart and soul of every newspaper out there, and profiting in online news (or at all, for that matter) is not as straightforward as simply turning off the presses or 'improving' web content.

The nail in the coffin occurred the moment it became illegal for newspaper companies to telemarket. The US government granted no exception to newspapers when passing the 'National Do Not Call Registry' and thus signed newspapers death warrant. It is worth nothing that Canada DID grant exception to their newspapers when passing similar legislation. More here http://www.washingtonpost.com/wp-dyn/content/article/2005/05...

That's a piece of the puzzle, but I don't think it was the final one. A confluence of circumstances seems to be the cause, a proverbial death-by-a-thousand-cuts, so to speak. I would cite the conglomeration over the last few decades of most newspapers into large, profit hungry corporations that became used to solid profits with little investment in development required. An industry steeped in decades of pride and tradition (What other industry still measures things in picas?) has further dampened innovation. There are many other things I could point to, but I think the do-not-call registry is nothing if not another industry scapegoat.

I don't completely disagree with you here. But I think a distinction needs to be made between national papers and local papers. I find it completely plausible that small city papers, such as the AnnArbor and RockyMountain Newspapers, could have continued operating profitably if it were legal to telemarket. If the stats are correct, newspapers were suggesting that 60% of their print subscription sales were generated using telelmarketing. Let's be real here, there is an entire (older) generation of people who don't yet feel comfortable reading news online. Since these old newspapers did not adjust well to the operating on the internet in the first place, it can be assumed that their core market for print must have still existed only their sales channels were murdered. What do you think?

Yes and no. The core market was indeed still there, and there is in fact still a very significant core market for print products. I don't think the sales channel was 'murdered,' and frankly, telemarketing (and 'house ads,' for that matter) are not the only sales channels. Radio, television and outdoor advertising are all channels that newspapers, in my experience, are reticent to utilize, preferring their own in-house methods instead.

Also, the one major flaw in this argument is that the article states: "As a result of the registry, newspapers have cut that figure down to 50 or 55 percent..." from 60-65% Significant? Sure. Dead? If newspaper executives let a 10-15% drop in ONE method of obtaining subscribers kill their business, they probably shouldn't be a newspaper executive.

I think you won me over. I'm not a journalist, but I do work as a web analyst for a conglomerate of local newspapers. Not having access to real financials, I've always convinced myself that there had to be a definitive reason behind the decline of print newspapers, apart from the growth of the internet. But the collapse does seem to be a complex cause. If I may ask, what are your expectations for the newspaper industry in the next 5 years?

Yea. If there is one definitive cause, I would vote for the internet, or even more broadly, the information revolution. The newspaper model was profitable because of scarcity. Before, say, 1995, the primary information channel was the newspaper. Need to sell used car? Newspaper classifieds. Need to sell a widget to everyone in town? Newspaper display ad. Need to buy a car? newspaper. Need to find out when a city council meeting is? newspaper.

Problem is, information isn't scarce anymore. We can do all that and much much more online. Businesses can publish their own information and sell their widgets around the world online, consumers can buy and sell on craigslist, advertisers can advertise cheaply and effectively on AdWords and many other sites... add it all together and the monopoly newspapers held on a relevant and unique information pipeline is gone. They're simply hanging on by the thread of the luddites who haven't jumped to the information era. Yet.

As for the next five years I think major newspaper companies will be sold off and split up. Watch for more individual newspapers for sale. Smaller papers might make the transition, particularly smaller independent papers. They've likely maintained local ties, have a good reputation in the community and are able to react to change quickly. The deciding factor for them will be whether or not they react and how. Unfortunately, many of the luddites I mentioned earlier seem to be running these organziations.

Otherwise, I think in a year, maybe two, there will be a LOT of heavy competition from very serious local-news web sites. They'll be lean, quick, aggressive and employ some of the reporters currently getting laid off in droves right now. The smart ones will use technology as a tool and competitive edge instead of tripping over it and outsourcing their development. Industry-wide, it'll look more like the 1920s publishing landscape than the 1980s.

That may have contributed. But its sort of like saying cigarette companies took a downturn when states made it harder to sell to minors. This is something they shouldn't have been doing in the first place.

Note: I'm not comparing being disturbed during dinner to having lung cancer.

Recent stats from a reporter friend at a city business publication with a strong web presence: 50% of overhead is in printing, while >50% revenues are from print ads. hits to the site are increasing, while circulation is decreasing. They'll have to, at some point soon, to take out printing altogether.

This is the story of every print publication in the united states.

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