Can Online Make Up for Lost Newspaper Revenues?
I am very late in coming to this, but it is interesting information , from Vin Crosbie delivered at the Paris: World Association of Newspapers’ Advertising Conference.
He talks about the loss of newspaper revenue and circulation and the challenges of retrieving that revenue online.
This is a chart of daily newspaper circulation in America from the year 1960 to 2003. Circulation has declined steadily for more than 20 years. Although this chart shows a drop from only 63 million weekday copies in 1985 to about 56 million in 2000, remember that the U.S. population almost doubled during that time.
Moreover, this has gotten much worse. Last year, during a good economy in America and a year full of news, most newspapers suffered significant– accelerating –declines. The Los Angeles Times lost 6.5 percent of its weekday circulation last year. The Chicago Tribune, 6.6 percent. The San Francisco Chronicle, 16 percent. The Boston Globe, 8 percent. Printed newspaper circulation in the United States is now in free fall, like a skydiver but without a parachute. Anti-telemarketing lists and new Audit Bureau of Circulation rules have little to do with these real declines.
Many publishers will tell you, don’t worry. They will tell you that they may have lost tens of thousands of readers for their printed edition, but that they have gained hundreds of thousands of readers for their online editions.
That sounds good. However, I will tell you why it is a false solution today.
This is a chart of how much American newspaper websites earned during 2004 per user. Each column represents a different print circulation range of newspapers. The range shows an average of 5.89 dollars per user per year at small newspapers to 25.17 dollars per users per year at metropolitan newspapers.
I say again: these are revenuers per user per year.
How wonderful that these online revenues are growing at 25 to 60 percent compound annual rates!
However, there is a problem: The printed editions of these newspapers earn between 500 and 900 dollars per consumer per year. That is the combination of direct circulation revenues plus indirect revenues from advertising (advertising revenues divided by circulation). The printed edition earns nearly 20 to 100 times as much per consumer than per consumer of the newspaper’s website.
So, for every print edition reader we lose, we now must gain between 20 and 100 website users to replace lost revenues.
If American newspapers continue to lose 2 to 16 percent of their print circulation each year, they will need to gain 40 to 1,600 percent more website users just to stay even. Unless we can greatly increase our online advertising revenues!
So, the United States is the epicenter of a seismic shift in the newspaper business from print and to online. As the Internet becomes a primary source of news, advertisers and their spending follow.
Because people will not pay to access newspaper websites, advertising revenues become paramount online.
