“With total ad sales sliding 5.1% in the third quarter of this year, newspapers have set what must be some sort of record in the annals of American business by having their primary revenue stream fall for 25 quarters in a row,” according to the Newsosaur blog, written by a former colleague Alan Mutter (a longtime editor at The Chronicle and COO of cable TV giant Intermedia Partners, among other positions).
“In 75 months of unremitting declines, the industry’s consolidated advertising sales have plunged from an all-time high of $49.4 billion in 2005 to what I estimate will be no better than $22.5 billion in 2012. The year-end revenue projection is based on historic trends.
“It is a testimony to the legendarily high operating margins of the industry and the considerable cost-slashing skills of contemporary publishers that nearly all the newspapers in business in mid-2006, when the trouble began, are still plugging along today.
“But no industry ever cut its way to success. And the question, as newspapers mark six-plus straight years of contracting revenues, is what, if anything, they are going to do to turn things around. The nearly universal answer we have heard from editors and publishers is that they are going to transition from print to digital publishing.
“That is the right answer. But the objective record shows that, to date, they have manifestly blown the opportunity. Let’s look at the numbers:
“On the eve of the Thanksgiving weekend, the Newspaper Association of America quietly updated its website on Wednesday to report that print advertising revenues in the third quarter fell by 6.4% from the prior year to $4.5 billion, the lowest level for the period since 1982. To put the decline in perspective, $4.5 billion in 1982 dollars would be worth more than $10.3 billion today.
“On the plus side, the NAA, a publisher-funded trade organization, reported that digital revenues advanced by 3.6% in the third quarter to a bit under $759 million. But the $23.5 million year-to-year gain in digital sales was too small to offset the $311 million year-to-year drop in print revenues. Thus, newspapers in the quarter lost more than $13 in print revenue for every $1 they gained in digital sales.
“Unfortunately, as illustrated in the chart below, the pivot from print to pixels has been far too feeble for the last six years for digital sales to come anywhere close to replacing print revenue.”
The rest of the article is here. (You’ll need to scroll down a little).
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