The Gap Between Usage and Revenues
There have been several interesting stories over the past couple of days (including in the WSJ and NY Times) about how circulation and subscriptions are declining at major print newspapers, such as the Tribune Co.'s Los Angeles Times and Chicago Tribune and Hearst's San Francisco Chronicle (declines of more than 6%).
Yet print newspaper revenues have remained very strong, with classifieds, for example, topping US$16 billion according to the NAA. Is there a disconnect?
As readers have started to move online — Jupiter recently reported that people are stating a preference for getting news online — newspapers have tried to respond in a variety of ways, including acquisition of high-traffic sites and high- profile online brands (e.g., About.com, MarketWatch, Slate).
In addition to Jupiter's data, there are other data in the marketplace that confirm the overall trend toward online news adoption. And, for the first time, the WSJ's online edition was more profitable than its print edition. This was something of a watershed moment.
Print Yellow Pages are in a similar predicament. As an industry, print usage is generally flat (some would argue "stable") and in some circumstances declining, but revenues are maintaining or growing slightly. How can this be explained?
There are several responses, all of which may be true:
- There's a good deal of advertiser inertia, especially at the local level
- Per Lincoln Millstein, there simply isn't enough quality ad inventory online, so ad dollars of necessity remain offline — at the very least until the quality inventory can grow
- Of course both traditional print newspapers and Yellow Pages have performed very effectively for their advertisers and continue to do so, which is also a critical factor
Both industries find themselves with a tough balancing act — the bulk of revenues are offline but most of the growth opportunities are online. However, online, they are faced with intensifying competition and audience fragmentation.
But both industries will have a great deal to say about the future of interactive local media but they will have to raise their voices in order to do so.
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In response to this post, someone sent me a note that print newspaper revenues in fact not as strong as I represented and that margins were falling.
Whatever the truth about print, it's clear that online is the bright spot/growth area for the industry.
Classified revenue might have less to do with circulation since when someone is looking for a specific item – a job, a house, a used piano – they might well go pick up a newspaper for a couple of days from a rack or stand. Just because circulation is down does not mean that the printed newspaper classifieds never get seen. It just means it might be easier for me (if I am connected and aware) to go online to find the job, house or used piano than finding a newspaper rack or stand.
If Yellow Pages circulation (or possession) were down, and we don't know if it is or isn't, it would be more problematic – there is no rack or newsstand from which you can find a current Yellow Pages if the need for a plumber or roofer arises.
In both cases, circulation (NP) or possession (YP),any substantive decline cannot have a happy ending.
Neal,
Some local alternative weekly free publications are getting thinner by the week. Editorial content seems to be decreasing, however, rather than total advertising (lucrative, back of the paper "adult" advertising seems to be increasing). Is such a model sustainable? Will consumers continue to pick-up the "editorial" publications if they become mostly advertising vehicles?