With circulation falling or stable at best and advertising cash going elsewhere, where is the news and entertainment publishing industry going to find revenue to replace what it’s losing?
US newspaper revenues were down 2 percent to $38.6 billion (£25.8 billion) between 2011 and 2012, according to figures from the Newspaper Association of America (NAA), but that is being seen by many as an achievement given recent performance.
In particular, the NAA has hailed the development of “new” revenue sources such as ecommerce and commercial printing, which now generate eight percent of all revenues, a total of $2.9 billion (£1.9 billion).
This NAA graph shows the breakdown of newspaper revenues in 2012 and 2012, based on data from 15 companies:
“America’s newspaper media are transforming themselves,” says Caroline Little, NAA President and CEO. “In virtually every community they serve, newspapers have the biggest newsrooms, the best-known brands and significant audience market share. Now they are building on those to find new ways to serve audiences and local businesses.”
Is that true? What about those new revenue streams? The NAA specifies four activities in this category which make up the bulk of new revenues. They are: digital agency and marketing services, ecommerce and transactions, event marketing, commercial delivery, and commercial printing.
— In event marketing, commercial delivery and commercial printing, companies which reported how well they were doing actually saw revenues from those activities actually fall in 2012. For a new revenue source, that’s not exactly encouraging.
— Meanwhile, ecommerce, digital agency and marketing services were more encouraging, with revenues up 20 percent and 91 percent respectively.
— Overall, new revenue streams grew 8 percent in 2012, delivering useful new income.
But before we hail these new revenue streams as the future of a diversified media, ask yourself one question – why would publishers be any better than anyone else at delivering those services? These functions are not unique to news media.
So where does that leave US newspapers?
They are still dependent on circulation, print and digital advertising for 84 percent of their revenue. The biggest chunk of that is coming from rapidly shrinking print advertising. Digital ads accounted for just 11 percent of all revenue and 17 percent of ad revenue in 2012.
Those new revenue streams are welcome, but are too small and have limited potential for growth. The only way out seems to be getting users to pay for digital subscriptions – that model is tied to newspapers’ core offering, daily quality content, not the wider ad market.
But in 2012, the industry wasn’t doing a very good job of that. Digital-only subscription revenues only account for 1 percent of all circulation revenue.
That suggests digital subscriptions are helping keep print subscribers on board, but aren’t yet a compelling proposition for many on their own. It will be interesting to see whether the paywall experiments and refinements taking place across America this year change that significantly.
Image via Flickr curtousey of Rusty Clark