 2008 was a year that many businesses want to forget. The newspapers were inundated with one bad news after another - from the financial crisis to the real estate market bust. Ironically, the newspapers themselves were commenting on other's misfortunes while managing their own - a dual-sided beating from the current economic crisis and because of changing models due to online competition. The challenge thus becomes whether newspapers can quickly find a way to earn from online content before traditional print revenues collapse.
One of the influential think tanks in the US - the Pew Research Center - recently released its 2009 State of the News Media study, its sixth annual research that measures trends and provides analysis of the news media industry.
Just this year alone, there have been several major shakeups. Hearst (one of the largest media organizations in the world), shut down its print edition of Seattle Post-Intelligencer - a newspaper that existed for 146 years! It will now be available only as a scaled-down online publication offering mostly commentary. Gannett, parent of USA TODAY (the largest general daily in the US), may shutter the 140-year-old Tucson Citizen (in Tuscon, Arizona), if a buyer can't be found quickly. The Detroit Free Press and The Detroit News announced plans to cut home delivery to three days a week beginning 30 March and urged readers to go online to follow the news on other days.
While the newspaper industry will generate more than $34 billion this year (a decline of 10 per cent from 2008), and boasts of an average profit of 10 per cent, the outlook for publishers is grim. The business model is broken and advertisers are wailing. Newspaper advertising revenues in America declined 16.4 per cent in 2008 to $37.9 billion. By 2012, spending is expected to drop to $28.4 billion. In the last 8 years, the number of journalists has decreased by 20 per cent. People are going to the internet for news that is free and more frequently updated. In addition, the comparatively high fixed cost of paper, printing and distribution isn't getting any cheaper.
This migration of readers to online sources is increasing at a quicker rate - the number of people in the US going online for news regularly increased by almost 20 per cent in the last two years. However, the traditional advertising model will not be adequate to fund and support this. Online ad revenue to news websites is actually declining.
Even before the current economic crisis, journalists were worried about whether the newspaper industry could beat the clock for a reincarnation: can it find a profitable way of managing news online while using the constantly declining revenue from the old platforms to finance this transition?
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