Bacon's Rebellion

Who Will Gather the News?

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by

James A. Bacon
in

The newspaper industry will experience a cumulative $20 billion revenue shortfall by 2010, only four years away, concludes Outsell, Inc., a research and advisory firm for the information industry, in its report, “Deadline with Destiny.” (See the press release.)

The estimated shortfall is even larger than newspaper executives have acknowledged,” says Outsell lead analyst Ken Doctor, who headed the research. “The perfect storm of print circulation decline, accompanying pressures on print advertising, and the rapid growth of lower-revenue-producing online news media is eroding the industry. The business of news faces an unprecedented transformation as these trends likely accelerate over the next five years.”

Key points:

  • The decline of paid circulation revenues for print newspapers will speed up as key 18-39-year-olds continue their online migration, undermining newspapers’ traditional mass market claims.
  • Newspapers’ online ad revenue growth rate of about 30 percent masks the larger problem that online revenues aren’t replacing lost print revenues fast enough.
  • Workforce cuts, already underway, are insufficient to meet the accelerating financial challenges.
  • News companies must consider lowering their operating margins from an average of 21 percent to levels more commonly seen.

The year 2010 is four years away. There’s a good chance of hitting a recession before then. Print media have been increasingly vulnerable to advertising recessions. That will be truth-or-consequences time for the newspaper industry.

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4 responses to “Who Will Gather the News?”

  1. Toomanytaxes Avatar
    Toomanytaxes

    One of the newspaper industry’s problems is that it generally focuses on its own perspective of the world and not that of its customer base. In this diverse nation, we have people with a variety of political and economic views, yet the newspaper industry tends to deliver its product solely through liberal perspectives. There are, of course, exceptions, but by and large, most newspapers offer a liberal perspective on the news and on the editorial page because that is the belief of the overwhelming majority of the people in that industry. Ut’s my way or the highway.

    But those views are not shared by all in society. Thus, I maintain a big problem of the press is that it simply ignores a large segment of its market and wonders why demand is falling.

    Years ago, I wrote a strategy paper along these same lines for a television network. While my paper was ignored, hindsight shows that my paper was a blueprint for what is today Fox News. Enough said.

    There certainly is a market need for a liberal perspective on the news. But there is also a similar need for a conservative prospective. How has Fox succeeded?

    Let’s look at the issue of transportation funding in Virginia. One proffered solution is higher taxes. The House GOP has offered another vision. Yet the mainstream press writes every story and editorial from only one view — raise taxes and maintain the status quo. Enough said.

    One of my long-time friends and quite a marketeer once told me that I should ask the questions: Who is my customer? What does she/he want? How do I know that? How do I know when I have satisfied my customer? Has anyone in the newspaper business ever asked these questions? I doubt it. Enough said.

  2. Anonymous Avatar
    Anonymous

    Newspapers are not the only media outlets w/ an uncertain future.

    Evening news is also in trouble. The viewership of 18-39 year olds is declining sharply for the major networks. Stated differently – young people are not interested in the news.

    The networks, by their own admission in many cases, point out that they produce a product that is geared for older people. So, it’s really no surprise that the 18-39 crowd doesn’t watch.

    However, the thing that blows my mind when I read my local paper is the fact it simply rehashes a lot of stories that I saw on CNN or ESPN the night before. The editor’s obviously pluck a few stories from the wire and mix them in with a few (and I stress few) local stories and go with it.

    IMO, there really is no need for local papers to report worldwide or even national news on a daily basis. There are so many outlets for it that they are always, “a day late and a dollar short.”

    If they focus primarily on the local stuff I think many will survive and may even prosper.

  3. Anonymous Avatar
    Anonymous

    Newspapers are not the only media outlets w/ an uncertain future.

    Evening news is also in trouble. The viewership of 18-39 year olds is declining sharply for the major networks. Stated differently – young people are not interested in the news.

    The networks, by their own admission in many cases, point out that they produce a product that is geared for older people. So, it’s really no surprise that the 18-39 crowd doesn’t watch.

    However, the thing that blows my mind when I read my local paper is the fact it simply rehashes a lot of stories that I saw on CNN or ESPN the night before. The editor’s obviously pluck a few stories from the wire and mix them in with a few (and I stress few) local stories and go with it.

    IMO, there really is no need for local papers to report worldwide or even national news on a daily basis. There are so many outlets for it that they are always, “a day late and a dollar short.”

    If they focus primarily on the local stuff I think many will survive and may even prosper.

  4. Anonymous Avatar
    Anonymous

    As someone in the newspaper industry, the trends are troubling. However, I think the bigger papers are probably in more trouble than the mid-size and small dailies or weeklies.

    Our franchise is local news, sports and features. FOX news covers the national and state level political scene, but it won’t tell you who’s who in the race for city or town council. It won’t tell you who won the big crosstown football game and spotlight the key players. It won’t tell you who’s building what on your block.

    Curiously, I still get a small percentage of readers who call and are angry because we didn’t put the latest news out of the Middle East on page 1. Usually, these folks are of a certain age and quite a bit older than me. My age cohort doesn’t read national news in the paper. They google it.

    Andrea

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