Newspapers are losing $7 in print advertising for every $1 of digital revenue gained, according to a study by The Pew Project for Excellence in Journalism last month. Even worse, according to Newsosaur's Alan D. Mutter:
Publishers since 2005 have lost $26.7 billion in print advertising revenues while gaining only $1.2 billion in new digital revenue. Thus, the true ratio of print loss to digital gain is 22 to 1, not the 7 to 1 reported by Pew in March.
According to Pew, the newspaper industry acknowledges several obstacles including “cultural inertia” as a major factor. “The difficulty of changing the behavior of people trained in the ways of a mature and monopolistic industry... 15 years into the digital transition, executives still feel they are in the early stages of figuring out a how to proceed.”
"We have all these [new] products we are working on that we believe are going to deliver results that are part of our sustainability," said one executive. "But we need to eat today."
Newspaper executives are part of an industry “caught between the gravitational pull of the legacy tradition and the need to chart a faster digital course.”
Key findings from the Pew study include:
- Only 40% of the papers studied say targeted advertising is a major part of their sales effort, despite projections that smart or targeted digital advertising is expected to dominate local digital revenue by 2014.
- The majority of papers studied focus digital sales efforts on conventional display, banner ads and digital classified which account for 76% of digital revenue.
- Print-focused sales representatives outnumbered digital-focused reps by about 3-1.
- Daily deals accounted for 5% of overall digital revenue in 2011, but industry opinion varies widely whether they provide a solid revenue source or a bubble that has peaked.
- Advertising on mobile devices accounted for only 1% of the digital revenue in 2011.
- Almost half (44%) of the newspapers are trying to develop nontraditional revenue streams such as special events or consulting or selling new business products, but dollar investment is on average less than $10,000 quarterly.
There are approximately 1,350 U.S. English-language daily newspapers, down from about 1,400 in 2007, and most of them have less than 25,000 circulation. Only 70 U.S. papers have circulations of more than 100,000. The newspaper industry topped the Huffington Post’s list of America’s Ten Disappearing Industries, with a 27% decrease in just four years, and a 9% decline in print ad sales.
“The difference between my findings and the Pew conclusions is that Pew only looked at the performance of newspapers in the last two years, a period in which most publishers put more emphasis than ever on building digital revenues to offset their print losses,” lamented Mutter.
Media theorist Marshall McLuhan wrote ‘we drive into the future using only our rear view mirror,’ as he predicted the demise of print culture.
In this video from 2008, Wikipedia’s Jimmy Wales debates Internet critic Andrew Keen on the fate of print journalism in the digital age. Fast forward to 2012:
The successful media companies understand that they are in the business of providing unique, original and compelling content across platforms, on demand. They are no longer in the cable, radio, magazine or newspaper business. Those companies that get this will thrive; those that don't will fall by the wayside.
[Image via Shutterstock]