Monday, May 28, 2012

Newspapers Cope with Lower Print Ad Revenue

You're reading this on a screen, so you won't be surprised to learn that newspaper ad revenues (from classified ads and display ads) are going down, down, down.

According to the Newspaper Association of America, total newspaper ad revenues now stand at half of the 2005 level. In other words, where the industry used to take in $49.4 billion in ad revenues, it now takes in $23.9 billion.

Forecasts are notoriously tricky, but the American Journalism Review published a piece in 2008 that discussed the possibility of industrywide print ad revenues falling to $25.9 billion by 2012 and plummeting further to $11.9 billion by 2020, by which time online newspaper ad revenues would hit $11 billion. If the dramatic drop in print ad revenues continues as it has in recent years, the actual number will be far, far below $10 billion by 2020.

Exactly how much U.S. newspapers currently earn from online ad revenues is unclear, but one study found U.S. newspapers to be losing $10 in print ad revenue for every $1 in online ad revenue they gained. This isn't just a U.S. phenomenon: U.K. newspapers are also losing print revenue and testing different ways to attract ad revenue online.

In Canada, Postmedia Network is dropping Sunday editions for three of its newspapers. The explanation: “Well, we’re really not making any money at all in those markets [on those days],” said chief executive officer Paul Godfrey. “So we’ve decided to keep everything online there and do away with print copies to reduce legacy costs.”

A few U.S. newspapers, including the Times-Picayune of New Orleans, are also cutting expenses by reducing their print schedule. Effective this fall, the Times-Picayune will publish on Wednesdays, Fridays, and Sundays, the days when it has the highest demand for ad space. The paper will continue to post news and features even on days when it doesn't print a paper. (New Orleans readers are unhappy about losing their daily printed paper, and protests include a Facebook page with lots of negative comments.)

Will newspaper readers accept only three-day subscriptions? Will they adopt the habit of reading online when no printed paper is delivered? What will these changes mean for the efficacy of newspaper ads? And will online ad revenues grow fast enough to keep newspapers alive in some form?

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