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Summary:

Last year was the worst year since 1986 for newspaper ad revenues (unless you use inflation-adjusted numbers, in which case it was the worst since 1963). Some papers are looking to pay walls as a solution, while others are hoping the Apple iPad will save them.

If you’ve been following the newspaper industry at all over the past year or so, you probably won’t be surprised to learn that 2009 was the worst year in decades as far as advertising revenues are concerned. But the sheer scale of the declines over the past few years is staggering. Last year saw a drop of 28 percent from 2008 –- and that year was already the worst for the industry since the Depression. Over the past four years, print advertising revenue has plummeted by more than 47 percent, to $24 billion from $47 billion. Online advertising has been growing (except for last year, when it shrank by 11 percent), but it still amounts to just 10 percent of what papers make from print. If you’re interested, the full numbers in all their gloom are available here.

According to the New York Times, the last time advertisers spent such a small amount on newspaper ads was in 1986. But Ryan Chittum at the Columbia Journalism Review notes that if you use inflation-adjusted dollars, the last time newspapers took in less in ad revenue was actually even further back — around the time John F. Kennedy died. Depressed yet? The head of the Newspaper Association of America, John Sturm, came out with this ray of sunshine in a response to Martin Langeveld at the Nieman Journalism Lab:

The velocity of the advertising decline for print classifieds continued to moderate, and adverse trends for national advertising and newspaper Web sites lessened considerably as last year came to a close.

While it’s great to hear that the velocity of the decline is moderating (remind me to tell that to someone the next time their parachute fails to open at around 10,000 feet), there are no signs that those figures are rebounding at all — and in fact, former newspaper executive Alan “Newsosaur” Mutter says that things could get even worse. Nor is there any indication that online advertising revenue is going to make up more than a thimbleful of that gap any time soon. If anything, online ad rates have been falling, at least for the kind of broad, mass-market reader that newspaper web sites cater to, because of the vast explosion of inventory from providers such as Demand Media and Associated Content.

So what are newspapers doing about it? Well, the main thing they seem to be doing is putting up walls. The Times of London said it will soon charge users for access to its web sites at the rate of 1 pound ($1.49) for a day and 2 pounds for a week under the mistaken impression that the way to determine the value of something is to put a price on it (the only way, of course, is to find someone willing to buy it). Meanwhile, the Wall Street Journal is turning to new technologies such as the Apple iPad — but is taking a distinctly old-school approach to the new device, saying it’s planning to charge $17.99 a month for the newspaper on the iPad (this interesting fact appeared at the very bottom of a story in the Journal itself, quoting someone described as “a person familiar with the matter”).

So will this plan help turn the WSJ into a money machine? Possibly, although CJR contributor Ryan Chittum argues that the proposed pricing “doesn’t make sense.” As he explains:

A WSJ.com subscription costs less than half — $8.62 a week. A print subscription delivered to your door costs just $9.92 a month. A print and online subscription costs $11.66 a month. But you’re going to charge $18 for the iPad app?

So if the iPad isn’t going to rescue the traditional media, what does the future hold for newspapers? Although it’s still too early to tell whether it will succeed, a model based on what David Weinberger has called “small pieces, loosely joined” seems to be emerging, with third-party sites such as GlobalPost and Politico and others filling in the gaps left by newspapers. And former Washington Post executive editor Len Downie suggests that non-profits can also help. Or do newspaper companies need to “burn the boats” and focus entirely online, as Marc Andreessen suggested recently? (Note: Please don’t beat me up about how Cortes didn’t *actually* burn the boats — that’s irrelevant for the purposes of the metaphor). Perhaps we should we just wait for Russian billionaires to buy them all.

The reality is that most newspapers simply don’t appreciate how different the online world is when it comes to content. Too many are still laboring under the misapprehension that the Web is just like print, except without all the tree-killing — you put your content on there just like it was in the paper version (except maybe you add a link or two, or a video clip) and readers line up to read it, and you go home. There are a few exceptions, of course, such as The Guardian — but even it has been struggling for profitability, weighed down by its legacy print operations. Too few mainstream media outlets realize that despite their similarities, the world of digital content is completely different from the world of print publishing, and needs to be thought of and treated differently. And walls don’t help.

For a great overview of the issues confronting traditional media in a digital world, check out this video of Clay Shirky speaking at Harvard’s Kennedy School last year, in a talk sponsored by the Joan Shorenstein Center on Press, Politics, and Public Policy:

And the Poynter Insitute has a clever (and depressing) interactive timeline that tracks all the newspaper industry layoff notices going back to 2007:

Poynter on Dipity.

Related content from GigaOM Pro (sub req’d):


Are Sponsored Apps the Key for Traditional Media in Mobile?

Post and thumbnail photos courtesy of Flickr user Zarko Drincic

  1. The short answer to your headline question is: “Uncertainty”. That’s what the future holds for newspapers. The fog hasn’t cleared yet.
    “The reality is that most newspapers simply don’t appreciate how different the online world is when it comes to content.” hits it on the nail, and is an understatement.
    iPhone & iPad apps offer interesting new revenue streams, but in no means will save newspapers. The reality is that not all newspapers are salvageable.
    I’ve been following the metamorphosis of this industry via a dedicated news environment http://bit.ly/KOlc, and based on what I’m seeing, we’re only about 30-40% into the tunnel.

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    1. Thanks for the comment, William. As the old saying goes, there is light at the end of the tunnel, but in some cases it’s an oncoming train :-)

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  2. I’ve been tossing around the idea of a global news organisation based on a twitteresque platform. Everyone (with their mobile phone) becoming a “reporter” of sorts. Crowd-sourcing news. Not a new idea, I know, but with Scoble’s recent rant (wish I could link to the article) about gaps in curation tools, I feel its time to start taking that idea much more seriously.

    Most Twitter apps merely replicate the Twitter stream. What would be even more advantageous to news seekers at large will be exchange apps built on top of Twitter, truly making it a “platform” (or whole new info-exchage platforms all together)

    Yes, the challenges of identity verification and attribution need to be addressed, but the underlying idea of free news (by-all, for-all) is here to stay. The future of newspapers (as they are now) is not very bright.

    Op-Ed will be the final domain news organisations will be able to hang on to (if at all), but “influential” bloggers will give them a run in that space. And if curation tools improve to add greater depth and background to posts, the newspaper, as we know it, is surely dead.

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    1. Thanks for the comment, Udeme — I think smart newspapers can take advantage of some of these tools, but not many seem all that interested in doing so, to be honest.

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  3. There is no future for newspapers.
    Even if they somehow figured everything out — went hyperlocal, embraced social media, delivered news real-time, enabled you to link and embed stories, fostered user-generated content, the harsh reality is that:

    the cost structure of newspapers is not sustainable, period.

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    1. It has been sustainable for a century or so now… Why not in the future? Cost wise, it would be very effective if these newspaper companies can invest both online and on hard copies because some people prefer one medium more than the other. And vice versa. As long as the newspaper is maintained properly, I don’t see it dying in the next century.

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    2. I agree that the cost structure of printed newspapers is a big part of the problem, and it’s still not clear how to get from that model to a new, lower-cost model that works.

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      1. Raul Chavarria Monday, April 19, 2010

        Let me give you a real life perspective. In 2007 I left radio and joined a suburban newspaper chain. I was floored when I saw their Chicago revenue at $20 million. That was far more than most radio stations in Chicago. I was very impressed until I began to count the number of managers, assistant managers, co- managers, department heads etc, in the room. The shear bulk of the staff and management meant lower margins vs. radio where most stations had 5-6 managers or department heads. I realized then that newspapers didn’t have much of a future.

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  4. The short answer to your headline question is: “a decline into obscurity”.

    1. The entire business model of a newspaper rests on advertising revenue as derived from businesses attempting to reach and influence a general audience.
    2. Cheap, widespread broadband connectivity has shattered this century-old advertising model.
    3. Companies now funnel money into online marketing, branding, web development, social media, SEO, SEM, PPC models, eNewsletters, and direct mail where the audiences are specific and conversions can be tracked.

    As a business owner I cannot imagine spending a dime on a newspaper ad if i have not yet exhausted all the other methods first.

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    1. Thanks for the comment, Robert — your last sentence hits the nail on the head as far as one of the big problems for newspapers.

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  5. Here are some thoughts I had, does anyone agree?

    Subscriptions costs are not the way to fund the eReader content.

    Unless:
    1.The content is HIGHLY targeted for the end user
    2.The eReader is provided to them with a 3 year subscription and maybe the bundle gives them the sunday print aditon (Or whatever length makes sense on the subscription) etc..
    3.If it’s exclusive content* and a high end eReader experience
    4.A free product that teases a paid model that adds some highly exclusive content or niche content (Example below)
    5.Free version but some of the exclusive content* has been embargoed. So, they will still get 100% of the content but select pieces have been held back for a small length of time. – Don’t like this one as much but it is added it anyway.

    My example of number 4 – I’m using a magazine but it’s not hard to come up with something for newspapers (Local Sports, Coupons, maybe you get the classifieds the night before (if you have any left)

    Example of number 4: Martha Stewart magazine, offers recipes and gardening tips in the free product with 1 to 2 videos only. If all the videos, alternative versions of the recipes for diabetics or lactose intolerant people you pay a small monthly fee.

    Thoughts or job offers?

    http://www.justinmakler.com

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    1. I spent the last 19 years in media (Newspapers, Magazines and Broadcasting) 17 of those years around interactive development. This article made me post one of my own.

      My point of view: 10 things to consider as well as some models to think about for eReaders and Tablets. Skip down to 10 things Newspapers need to consider The post would be a little long to post here but so you can read it over at http://justmakler.wordpress.com/

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  6. [...] What Does The Future Hold For Newspapers (Mar 2010) Possibly related posts: (automatically generated)In the basement…An introduction to Chapter 14 of “Crossing Enemy Lines”Feeling Unoriginal (40 Odd Things) [...]

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  7. The problem is that no innovation has come from the newspaper industry which enhances the use of technology which in turn not only keeps the existign user base but attracts new ones. Look at their apps on smartphones, it does nothing to innovate but simply push out news like they did on the print side of things. There are so many interesting ways in which they could have innovated their apps to make it really interesting which I believe would be the key to their success online.

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  8. [...] What Does the Future Hold for Newspapers? Same old questions … no new answers March 29th, 2010 Goto comments Leave a comment By Mathew Ingram @ Gigaom.com: The reality is that most newspapers simply don’t appreciate how different the online world is when it comes to content. Too many are still laboring under the misapprehension that the Web is just like print, except without all the tree-killing – you put your content on there just like it was in the paper version (except maybe you add a link or two, or a video clip) and readers line up to read it, and you go home. There are a few exceptions, of course, such as The Guardian – but even it has been struggling for profitability, weighed down by its legacy print operations. Too few mainstream media outlets realize that despite their similarities, the world of digital content is completely different from the world of print publishing, and needs to be thought of and treated differently. And walls don’t help. What Does the Future Hold for Newspapers?. [...]

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  9. [...] What Does the Future Hold for Newspapers? (gigaom.com) [...]

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  10. I really don’t see newspapers lasting much longer. I’ve kept my subscription going to support the company here in Arizona and I’m starting to regret it. If the paper arrives on time or at all it, I find myself noticing a downward spiral in content and quality. Hopefully the push of ereaders and iPads will turn this back around. smi.sh

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