Internet/Telecom/Social Media

Ad revenues at newspapers: More bad news

Conditions at American newspapers are going to worsen, and there’s a billion reasons why.

Because of incompetent or inept or unimaginative top management scared silly by Wall Street profit expectations, you can hardly recognize newspapers any more.

Newspapers have physically shrunk. They’re narrower and not as deep. That means less space for news despite protestations to the contrary and “smart business decisions” such as front-page ads and he-said, she-said arguments about the future of news.

Staffs in all departments of newspapers have decreased through layoffs and attrition. All this means less credible news as fewer people do more work, as reporters with less time use fewer sources — sometimes just one — or lean more heavily on “anonymice.”

You know why. The current business model in the news biz says: “Maintain profit margin” because Wall Street demands it. But advertising revenue — the money coming in — is decreasing. Therefore expenses — the money going out — must decrease. Ergo: Cut the size of the paper. Cut the size of the staff. “Enhance” the Internet presence. Sacrifice a necessary role in how a democracy functions and blame Craigslist.

Well, folks, don’t count on better things ahead for newspapers, because they can’t afford it (or so they say.)

Reports the Associated Press:

Advertising revenues at newspapers fell 8.6 percent in the April-to-June period of this year, as an accelerating decline in print ads more than outweighed gains in online advertising, an industry group reported Friday.

The Newspaper Association of America, ever eager to put a nice gloss on this, says newspaper revenue from online advertising increased by 19.3 percent to $796 million in the second quarter over a year ago.
But print-only revenue is falling faster and in larger amounts than online-only revenue is climbing. Reports the AP:

Print-only advertising at newspapers slumped 10.2 percent to $10.5 billion in the second quarter of the year, marking the fifth consecutive quarter of declines …

In other words, newspapers made about a billion dollars less on print ads in that quarter than the same period a year ago.

If you’re dreaming of better newspapers; more accurate newspapers; newspapers that are delivered in rural areas instead of just central cities; newspapers that cover international news; newspapers that actually run reviews of books, music, culture and art; newspapers that follow state and regional news as closely as they follow local news; newspapers that cover business with consumers and workers in mind rather than just CEOs and “the markets”; newspapers that run locally written editorials about local issues instead of buying edits on bland issues from syndicates; newspapers that demand accountability at all levels of government; newspapers that run more stories written by their staffs than from wire services … then keep dreaming.

They can’t afford it, because the execs at the top are unwilling to sacrifice more of their shrinking but substantial 17 percent profit margin — still greater than any other American industry — to reinvest in and reinvigorate their product to compete more effectively with other news and information venues.

Perhaps next year, top executives will reduce the size of the newspaper to a thin paperback book — like the ones we read in grade school. Hey, papers that small will be easy to carry, and newspapers will save more money on newsprint.

7 replies »

  1. Overall, yes. Newspapers can’t be run like the other bad business models that corporate America is fond of deploying and destroying. Like the Tribune company has done countless times as in the case of the LA Times and others.

    But here’s a couple of instances, one an exception to the norm and one a trip down memory lane to the good ole days.

    The Bloomberg Lesson and The lost world of Joseph Pulitzer.

    What amazes, but not amuses, me is how all the “smart” guys constantly get it wrong, which has been the norm since 1981. Most of these problems are fixable. But the “smart” guys (like Sam Zell) don’t / won’t “get it”.

  2. I told my father-in-law this weekend that newspapers are on their way out, and someday they will no longer exist in print format. His response “not in my or your lifetime”. Considering that my lifetime could be at least 50 more years (putting my death at age 80), that was a foolish bet on his part.

    He’s yet to live down claiming in the 80’s that computers were “just a fad”.

  3. Lara,

    You’re apparently 30. May I ask you these two questions:

    1. What is “news” to you and how do you follow it?

    2. What do you want to hold in your hands 10 years from now that provides what No. 1 asks about?

    I know, it’s really three questions. But your answers — and those of others at your time of life — will determine whether you or your father-in-law is right.

    Thanks for reading.

    Denny

  4. I get my news from several sources:

    Websites associated with official news outlets: cnn.com, bbcnews.com, denverpost.com
    Blogs: like, say, here
    Television: cnn, bbc world news, the daily show
    Other: fark, friends, etc sending me a link to a story

    Newspapers (the corporate entity) will survive. A physical paper with ink will disappear. People will want updates faster (why was the highway closed down on my commute in this morning), embedded video, and links to further information. With more and more people carrying PDAs, phones with web access, ipods, and laptops, I expect people will be getting their news from the web. Especially if municipal wireless takes off or the cost of satellite connections drops. If they don’t take off, I can see people plugging in their PDA or electronic paper (currently under design) to charge at night and at 5:30 am while they are in the shower, it downloads the local paper (or multiple papers), skipping the sections they don’t like.

    Heck you even see this concept in BGC 2040. Linna goes to a newsstand, swipes her magazine, and it updates to the latest issue in her hand.

  5. Thanks, Lara. (I had to Google BGC 2040 … This stuff I gotta see.)

    Imprinting comes to mind when considering the form in which news will survive.

    I cannot, or rather, do not want, to imagine 2040 without a physical newspaper — because I’ve been conditioned, or imprinted, to read the paper at a diner in the morning.

    In the 1950s, I read the paper section by section after my dad finished each. The TV had three channels; there were no video games or digital playthings.

    The students I teach now, of course, have been conditioned in other ways of consuming media — and news. Their habits, as you wisely point out, will drive how news is delivered.

    But I’ll be damned if I’m going to read some sort of digital device over ham ‘n’ eggs at my diner. I’ll print the paper out somehow.

    Thanks for your insight (again).

    Denny

  6. I confess. I belong in this group. People Are Promiscuous In Their News Sources

    I do love getting the Financial Times and paging through it, especially the weekend edition. But, for me to read anything digital, it has to have a decent sized screen so i don’t have to squint and wear my eyes out. Plus I like to keep some pages for future reference.

    But I also predict a local movement too for newspapers. They’ll still be around for awhile.

    Wanna know what’s making a comeback? Moleskines. So, there seems to be an anti-tech movement afoot (albeit small) where people want simpler things.

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