Newspapers -- not dying, but shrinking

The $40 billion newspaper business is not a dying business. 

According to media analyst Ken Doctor interviewed last week in MediaPost, newspapers are a shrinking business that only looks like it is dying.

Doctor says it's not as simple as flipping a switch to go from newsprint to digital.  Digital doesn't yet support some of the high-margin display ads that print still can.  The problem is, fewer advertisers are using newspapers, as their circulations dwindle.

So while dropping print will cut the high production and distribution costs, it will also bring about a big decline in ad revenues.  It's a real catch-22.

So what's a newspaper publisher to do?  Doctor says papers must continue to profit from print as long as they can, as they gradually shift more resources to online editions.  Niche sites, he says, can build a large, highly-focused audience that may eventually command strong ad rates from local, regional and national advertisers.  He points to the MomsLikeMe site that Gannett has created, which is linked to some 60 Gannett papers nationally.  Moving from mass to niche, Doctor says, is a strategy that can help revive the newspaper business.

Doctor also thinks we'll see more papers decrease their print frequency, going from daily to 3 - 4 print issues per week.  He doesn't say -- and I'm not sure -- what those less-frequent print issues will contain to make them relevant so readers will buy them.  Might it be local or regional news analysis?  Lots of hyper-local stories and photos?  Expanded opinion pages with lots of reader-generated content?

A strength of local papers has always been the fact that they are local.  People like to read about themselves and about people they know.  They want to know about news and issues that impact them directly.

The advertising downturn for newspapers will last through the first half of 2009, Doctor says, assuming the recession does not deepen and last longer.  He  thinks papers will see a return of some automotive and  real estate ads, followed eventually by retail, which will put a good portion of its ad budget back into traditional print pages... for now.

So it seems that newspapers will still be around for a while.   And that's good news.

Comments

[Jay Ehret]

David,
I wonder if newspapers will lose some of their localness during this shrinkage. Several years ago when radio went through its consolidation it lost a lot of local flavor in favor of cutting costs. Their short-term cost cutting did not yield long term success.

[David Reich]

Jay, it would be a shame, since localness is one of the biggest strengths of most papers. But take a look at how Gannett has put local into its MomsLikeMe website. There's lots of material that goes on the sites in all 60 cities, but also plenty that's quite local in each market. Interesting.