For every print subscriber who decides to cancel a subscription and get news from the Internet, newspapers will need from 20 to 100 online readers to replace that subscription.
The U.K.-based MediaGuardian reported from the World Newspaper Advertising Conference & Expo. Vincent Crosbie, a senior associate at Borrell Associates, warned of the dire straits papers face:
“As more and more people shift their news reading from print to online, the newspaper industry must dramatically increase its online advertising revenues or die.”
Despite a robust online advertising market, the revenue derived from it does not cover the massive costs of a newspaper operation. Papers earn far less per online reader than they do per print subscriber, and require a lot of eyeballs to replace each subscriber to the dead-tree edition.
Here is how the numbers broke down per Crosbie’s assessment:
Print editions of American newspapers earn between $500 and $900 per consumer a year from a combination of direct circulation revenues and indirect revenues from advertising, according to Crosbie’s analysis. “If American newspapers continue to lose 2% to 16% of their print circulation each year, they will need to gain 40% to 1,600% more Web site users just to stay even,” he said.
AdAge’s Watercooler opinion page wonders what will happen to search engines, portals, and bloggers who derive their content from that created by major news organizations, should they suddenly vanish.
It looks to us that news companies are doing and will continue doing what all businesses do when the going gets rough: cut costs until they find a level where revenue exceeds expenses and they become profitable again.
Reuters has begun using its India operation to write news for the global audience. Maybe outsourcing news writing will happen on a greater scale, with organizations using more freelancers and more foreign-based operations as they try to find a profitable balance.
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David Utter is a staff writer for murdok covering technology and business.
