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Newspapers Decline Caused By Market Penetration

02/25/2013

reading-the-newspaper11I picked up a copy of the local Sunday newspaper as we were getting hammered with 9″ of snow and it seemed like a good day to page through the Sunday in front of the fire.

Boy was I disappointed.

It is not news that newspapers, as businesses and as a connection to consumers, are in a serious world of hurt.

According to The Pew Research Center’s Project for Excellence in Journalism, “Rapidly declining advertising revenues continue to be the industry’s core problem. The losses in 2011 were slightly worse than those of 2010 – 7.3% compared to 6.3%. Ad revenues are now less than half what they were in 2006.”

I disagree with the diagnosis.

The newspaper industry’s “core problem” is actually market penetration.

Supported by statistics the core problem becomes readily evident.

  • Only 6% of people in their 20s and 16% of 40-year-olds regularly read newspapers, compared to 48% of people over 65
  • Only 29% of the U.S. population regularly read a newspaper in 2012, down from 56% in 1991
  • Three-quarters of the audience at the typical newspaper is 45 years of age or older. In comparison, over-45s comprise only 40% of the population
  • Print advertising still generates between 80% and 90% of revenues at the typical major metro daily

Once armed with supporting information it is immediately clearer that newspapers are losing share to something else…and it’s probably online.

Taking a look at the symptoms is a logical way to identify a problems causes.

First is content. There are obvious issues with article length (usually too long), lack of supporting graphics, charts and images, political over-tones (usually to the left).

Then there’s relevancy. By the time the newspaper lands in your hands you’ll have been exposed to something like the crash at the Nationwide race on Saturday dozens of times on TV, via emails, online – perhaps even on your phone.

There is also a presentation symptom. In the paper I read the first section was 24 pages long. Twenty of those pages were 90% ads and 10% article. Imagine reading something online with that kind of ratio. Probably wouldn’t happen.

Rolling these symptoms together it becomes clearer why penetration is down, which in turn leads to lower advertising rates and revenue, ultimately deteriorates profitability.

Allegedly online subscriptions to newspapers is propping up some newspapers’ circulation numbers – but resistance to paid content online remains a challenge to convert the newspaper business model to an online model.

A quick skim through yesterday’s paper was all I needed. And I don’t remember a single thing I read.

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