Oh God What’s Going On (With Newspapers)?

31 Jan

Again, calm down. It’s true – newspaper ad spending has gone down 3.5% since last year due to the ever decreasing readership of print dailies. And I hear you when you say the trend of switching ad spending from traditional measured media over to unmeasured media has hit newspapers hardest of all. I won’t deny it. And when you tell me many of these newspaper companies are in unimaginable debt – finding it hard to even pay interest on debts acquired when overpaying for newspapers in the 90′s – even I must admit things look bleak for newsprint as a medium. But there is still a future for newspapers, just maybe not in “paper.”

You ask me “how did we get here? Why are these papers having trouble keeping in the black?” I’ll get to that, but first I’ll tell you how these papers used to run. In the olden days (the 1980′s), newspapers only got 20% of their revenue from circulation – the other 80% came from selling advertisements. From full-page spreads to the tiny classifieds (which actually earned more money per ad unit than any other part of the paper), advertisers were willing to pay top-dollar for ads to appear in those pages, next to content produced by a sprawling newsroom of professional journalists. By doing this, newspapers were generally able to achieve profit margins of 25%, even after the high costs of employing writers, operating a press, and distributing papers by personal delivery, one of the most expensive forms of distribution.

So what happened? The internet happened. First came Craigslist and Monster – free, and more importantly, more efficient ways of doing classifieds. This cut revenue from all areas of the classifieds – especially for job search and cars. Then newspapers started putting their stories online for free and charged low, low rates for online ads. By the time most papers put up paywalls and really started focusing on digital, people weren’t willing to pay for something they had gotten for free, and advertisers were used to low rates as well. Newsrooms had to be cut down and many papers had to turn to centralized printing presses to stay afloat through economies of scale. Print advertising still made up for 80% of revenue, but with circulation dropping, papers couldn’t charge as much for ads. This combined with the massive debts acquired during the 90′s, when they assumed a 25% rate of return when buying other firms, to create the bleak financial situation we see now. With dwindling readership, states are even considering eliminating the “paper of record” system used for public notices, one of the last untouched sources of revenue for papers.

But again, don’t panic. I know that was tough to read, but I’ll bring you back. You see, there is still hope. Though late to the game, newspapers are starting to find their place in digital. Some have gone completely digital, while more have chosen hybridization – only publishing in print on days when people read the paper most. And people are becoming more okay with the idea of paying for an internet site. “A month’s subscription for the price of a Starbuck’s coffee” is starting to sound reasonable. And innovation is starting to be seen in other areas. For example, The Missourian, in conjunction with other Mid-Missouri papers, is working on a new way of doing classified ads online to compete with Craigslist. Though people would still have to pay for it, they would have access to search functions and be free of scammers, spammers, and poorly written pages. So while newspapers are going through an especially tough transition period, don’t worry your head about their future. They’ll make it.

-Joe Simmons


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