No one is gaing readership ... the winners are those who have lost the least

No one is gaining readership ... the winners are those who have lost the least

The newspaper industry as a whole is in dire straights. Several large publications, including dailies in Chicago and Minneapolis-St. Paul, have declared bankruptcy in the past year while traditional powerhouses, like the New York Times, are bracing for an unprecedented 18% losses in revenue for the coming fiscal year.

 

The financial quagmire — which has forced deep cuts in staff from Spokane to Tallahassee – is the result of two very real, very difficult-to-resolve problems:

 

1. Loss of ad revenue

The economic slowdown has spurred more careful ad spend as companies look to maximize what remains of their often depleted marketing budgets. Sinking circulation numbers are making newspapers far less attractive than newer forms of digital media that are reaching more people for less money. In this economic climate, no company is prepared to pay more for the chance to address fewer people (See the included graph for an eye-opening look at the loss of readership – no one is making gains, the winners have just lost less). So newspapers just need to attract more readers, right? Easier said than done, as we’ll see in issue #2.

 

2. Doing it for free

More and more audience segments are turning to the Internet and mobile sources, like RSS feeds, to get their daily dose of the world around them. While newspapers are enjoying a rise in the number of visitors (a 12 percent increase from 2007 to 2008, according to the National Newspaper Association), the measure is doing little to bolster the medium’s weak financial position. Online ad revenue has yet to follow the rise in traffic; no one seems quite sure why but the companies who once were willing to pay for ads in the physical paper are not buying with regularity on the Web sites and publishers have been slow to push their salespeople to find companies already embracing Internet ads. In addition, the content on the Web site is provided free of charge. Essentially, newspapers have traded their paying customers (loss in circulation) for readers seeking free access (rise in Web traffic). It’s no coincidence the two actions have occurred in the same stretch; it’s human nature – why pay for something you can get for free? How many of you would pay for a haircut on Tuesday afternoon if the same barber was going to cut your hair for free on Tuesday morning?

 

But don’t take my word for it. Check out media mogul Ted Turner’s take on the shift from traditional newspapers to digital media.

 

The final bark

Publishers must figure out a way to better leverage their established roles in their local communities via the Web content. Growing readership in the traditional product is losing proposition. How best to accomplish this is the million dollar question. Readers are not apt to pay for access to the Web site; just ask the New York Times. But, newspapers can’t afford to continue providing the content without generating revenue as a result. If you have a good idea, you have a bright future!