Portrait of a Failing Business Model

2012 revenues for U. S. newspapers were 2% lower than 2011 revenues:

Overall, total revenue for U.S. newspapers declined by 2% in 2012 from a year earlier, according to new data compiled by the Newspaper Association of America.

In total, the U.S. newspaper media industry took in $38.6 billion in 2012 compared with $39.5 billion in revenue in 2011, according to NAA’s projections.

The numbers reveal that while advertising revenue continues to decline—down 6% in 2012—several other categories of newspaper media revenue are now growing. Circulation revenue grew 5% in 2012, while a host of new revenue sources not tied to conventional advertising and that barely existed a few years ago grew by 8%. These new revenue sources, which include such items as digital consulting for local business and e-commerce transactions, now account for close to one-in-ten dollars coming into newspaper media companies. They are significant enough in scale that NAA has begun to collect detailed data about these revenue categories and track their trajectory year-to-year for the first time.

The new data offer a more granular and comprehensive picture of how newspaper media are operating today than was previously compiled by any source. This more complete accounting identifies approximately $6 billion in additional revenue, $3 billion that was not counted before and another $3 billion that did not exist a few years ago, comprising about 16% of all newspaper media revenue in 2012.

The numbers portray an industry that, faced with significant disruption in the last decade, has begun to measurably change its essential revenue model. That has begun by turning more to circulation, to digital, and to developing new revenue sources.

I think they’re whistling past a graveyard. Newspapers’ problems are not the Internet or, more accurately, they’re not merely the Internet. Newspaper revenues started declining sharply in 1987. That’s long time before the rise of the World Wide Web. The Internet as most people know it didn’t exist when newspapers began their slide. By 1992 newspaper revenues had fallen by 1/6th in real terms.

They recovered slightly right along with everything else during the boom of the 1990s. Since 2000 they’ve plummeted and are now roughly a third of what they used to be.

People turning to getting their news online, whether it’s from their computer screens or from their phones, is just part of newspapers’ problem. Add to that CNN and debt-financed consolidation in the newspaper industry along with the decline in local reporting accompanied by a decline in local advertising. And it’s not just the consolidation of the newspaper industry, either. It’s the consolidation of retail.

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  • TastyBits Link

    Tablets are a good format for a newspaper layout, and magazines look stunning with the HD screens. I have the Nook HD (7″ screen), and it is great for books. It is small for magazines, but they look great. This is not the website on a tablet.

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