U.S. papers hope to reverse decline with new revenue sources

April 09, 2013 11:22 am | Updated 11:18 pm IST - New Delhi:

There is a whiff of fresh air for the U.S. newspaper industry which has for long been buffeted by reports of imminent demise, and figures of drastically declining revenue.

The findings of the Newspaper Association of America (NAA) released on Monday suggest that while traditional print advertising continues to dip, newer categories of revenue — particularly through circulation and digital marketing services — are emerging, throwing up the possibility of a robust reversal in the decline of the industry.

The NAA compiled data from 17 companies, publishing 330 papers, which represent 40 per cent of the weekday print circulation in the U.S. and about half the newspaper media revenue. The names of the companies were withheld. After including new revenue categories, which was not tabulated until this year, the NAA concluded that media revenue for 2012 was $38.6 billion. This is a drop of 2 per cent compared to 2011, which experts say is less than expected.

Print newspapers contributed 46 per cent of the total revenue compared to 49 per cent in 2011. Circulation makes up 27 per cent, digital advertising 11 per cent, new revenue sources 8 per cent, and marketing and other services contribute another 8 per cent to the revenue kitty.

Digital ads and circulation

Advertising in print dailies dipped by 9 per cent; the drop was secular across retail, national and classified categories. But digital advertising rose by 4 per cent. This now accounted for 17 per cent of the ad revenue for the 17 companies which participated in the study.

But variations among the different publications showed ‘different approaches and market can have substantially different impact on the bottom-line’.

With circulation revenue rising 5 per cent in 2012, the study said, “The online subscription model is vital to newspaper media’s future, particularly as consumers begin to adapt to reading newspaper media on mobile devices, especially tablets.” Twelve companies provided detailed breakdown, which showed that digital-only circulation revenue increased by 275 per cent; this however constitutes only 1 per cent of the total circulation revenue. The print-cum-digital bundled revenue, for its part, grew by 499 per cent. This is significant when compared with the fact that print-only-circulation revenue dipped by 14 per cent.

Newspapers are also adopting newer revenue models, including digital agency and marketing which “helps local businesses market their products, particularly digitally, in social and mobile,” and e-commerce “helping businesses connect directly with consumers.”

Revenues for nine companies saw a growth of 91 per cent in the digital marketing category.

Cautious optimism

The findings come a month after another research by PEW Research Centre had shown a crisis in American media, with newspapers employing 30 per cent less journalists compared to 2000.

It also highlighted a drastic reduction in news-reportage across mediums. Many traditional outlets are undergoing a transition.

The Newsweek shut down its print edition; The New York Times introduced a pay-wall for online content; The Boston Globe has undergone a major organisational restructuring to survive.

In a commentary on the NAA findings, Rick Edmonds, an analyst, wrote for the media institute, Poynter, “Results show the industry doing considerably better than the doomsters say, with at least a chance to turn total revenues positive this year or in 2014. That will not happen, however, if the shift from print advertising to an array of digital marketing options accelerates.”

Ken Doctor, an expert on the digital news industry, pointed out in a post titled “NAA findings: Been down so long looks like up to publishers’ for his site, newseconomics.com, “In a time when reader revenue is what is working…publishers have got to figure out how to spend more on that single source of growth: readers.”

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