Online Moguls To Feast on $42 Billion Newspaper Ad Pie

How bad are things in the (print) newspaper industry? Don't ask. After another jarring 3.5% decline over the past six months, print-paper circulation will drop to about 50 million this year -- the lowest level since 1946 (62 years ago).

That's during a period in which the US population has doubled, meaning that per-capita newspaper consumption has been cut in half. For more on this horror show, read the latest from the Dean of Newspaper Demise, Alan D. Mutter, at Newsosaur. Just don't do it if you've got friends or family (or money) in the industry.

If your career, portfolio, or fortune isn't tied to the newspaper business, however, rejoice. The newspaper industry's loss is your gain!

In ten years, print-paper circulation and ad revenue will likely be a quarter of what it is today, if that.

Why? Because:

• As circulations and ad revenue continue to fall, print economies-of-scale will reverse, cutting further into already shrinking print margins.
• As "green business" practices take hold, a new generation of consumers will come to view the newspaper industry as a horrifically wasteful polluter that eats forests, gobbles fuel and electricity, and farts untold amounts of hydrocarbons into the atmosphere -- all to deliver information that might have been interesting yesterday.
• A generation of newspaper ad salespeople and ad sales buyers will gradually retire or quit, and advertisers will increasingly ask themselves why they are spending billions on ads they have no idea whether anyone looks at.
• As financial and environmental pressures increase and a better grasp of reality sets in, more papers will opt to do what the Capital Times of Madison, Wisconsin, did last weekend: Shut down their print businesses, fire a third of their staff, and put what's left online.

And good riddance -- if not to the staff, at least to papers. And a hearty welcome to a slightly cleaner atmosphere and less need for recycling.

And here's some more good news: The $42 billion that was spent on print newspapers in 2007 isn't going to vaporize -- it's just going to go somewhere else. ($42 billion -- in the US alone!)

Where's it going?

Here's one guess:

Fate of $42 Billion of 2007 Newspaper Print Ad Spending in 2017

• Surviving newspapers: $10 billion (25%)
• Magazines: $0
• TV: $0
• Outdoor: $2 billion (5%)
• Digital: $30 billion (70%)

And what about the newspaper companies -- won't they be fine because of their web sites? No, at least not without major restructuring and pain.

Newspaper web sites are only capturing a fraction of the print revenue the papers are losing, and the growth of newspaper sites has already started to slow. As the chart below shows, in 2007, the industry lost 8%, or $4 billion of advertising including newspaper web sites. Newspaper sites will capture a small portion of that new $30 billion Digital pie, but probably not much more than $5 billion. Some newspaper companies will survive, but only after major restructuring.

In fact, here's another guess:

Fate of $30 Billion Migrating Online From Newspapers By 2017

Newspaper Web Sites: $5 billion (17%)

Google, Yahoo, Craigslist, eBay, Amazon, job sites, blogs, mobile ads, video ads, etc: $25 billion (83%)

So if you're in the digital advertising business, that's good news. $3 billion a year of incremental ad revenue flowing toward you, without you even getting off your bum. Now all you have to do is fight like hell with all the other folks who have seen the future and want a piece of it.

See Also: Running the Numbers: Why Newspapers Are Screwed

Comments

[soylentgreenleftovers]

So, we're supposed to be thankful that the only institution that can keep the bastards accountable is going to die a painful death?

I know, I know, they didn't do such a hot job of it during the runup to Iraq. But seriously, who is going to do it in the future? Craig's List? Monster? You've got to be effing kidding!

[Paul]

I cancelled my subscription to the LA Times after 35 years because it has become a worthless rag.

If I wanna buy something, the first place I look is on-line.

[InofTouch]

I laugh that people wish doom apond people who will lose there jobs.

Second it seem werid that were still be wasting with or without the paper.

[gladiatorpodolsky]

Hooray! The newspapers are dying! Chicago Tribune is dying! Hooray!

[AmandaScriver]

While there have been some decreases in newspaper circulation not all of it can be called failure or a complete shift away from this traditional medium. In many cases the decreases are genuinely business oriented"things like voluntary circulation cutting to outlying areas because of escalating fuel costs. Diego Vasquez wrote an article (http://www.medialifemagazine.com/artman2/publish/Newspapers_24/Why_papers_are_still_a_good_media_buy.asp) about this based on a Q&A with Rick Edmonds, media business analyst for the Poynter Institute.

There seems to be a lot more to the picture than it seems. The one thing that"s certain is that the only real way to tell what"s going on is through the use of audited circulation statements. Furthermore, though there may be a shift to online media that only reinforces the need for the development of realistic audit processes for that medium. We"ve been working with a group called Buy Safe Media (http://www.buysafemedia.com/) and they"ve got some good info on the value of audited media.