state of the newspaper industry

Society for News Design

Magazine


Power pointsUnderstand what’s happening

in the media business in {11} steps

By Ken Doctor


Ken Doctor, a former Knight Ridder news executive, now advises companies on strategy and writes about

the print-to-digital news transformation. He is president of Content Bridges (www.contentbridges.com),

where he blogs regularly. In addition, he acts as lead news industry analyst for Outsell, Inc. ( www.outsellinc.com),

a market research and advisory company that focuses on the entire information industry, worldwide.


Sometimes it’s hard opening up the morning paper, or Yahoo or Google News, for fear of seeing more stories about the imminent demise of the newspaper business. You know them all too well: more staff cutbacks, print circulation down; younger readers moving online in big numbers; ad dollars migrating to companies that didn’t even exist a decade ago. We’re in uncharted territory. Call it Terra Incogdigito. From a mainly print/somewhat digital land to a new one that is mainly digital/somewhat print.


In this strange new land, readers (and viewers) of news have unprecedented access to news and information, from their neighbors’ blogs to coverage of India by Indian (and British, and Japanese and American) journalists. If you’re not in the newspaper business, it’s a wonderful time — more empowerment, more news, more viewpoints. If you’re in it, you’re wondering how you’re going to maintain your staffs as revenues flat-line and new business models prove as hazy as a day in Shanghai.


Consider these 11 points just a starting point in looking at the bigger picture. Some show in stark terms the predicament of the news industry. Others point directionally to where news users are going — and where the money and the jobs may go as well.


A long decline in readership

{1}


The Skinny: About four in 10 U.S. households now take a daily newspaper. It’s a number that has been affected by Internet usage, but it’s also one that’s been slipping for half a century. Back in 1950, household penetration was greater than 100 percent — evening papers and multiple titles in lots of cities meant lots of readership. In the chart, you can see the continued slippage of the Internet decade.


What’s Next: The major selling point of dailies is the mass market they serve advertisers. As that mass thins, and advertisers find more online spending options, newspapers’ ability to “price up” gets more difficult.


An agingreadership

{2}


The Skinny: Take a snapshot of the print business today, and you see a wealthy, but challenged, industry. Consider demographic trends, and you see why the stresses are more worrisome going forward. At the top, the chart shows preference for news delivery medium by age. Sure, readers of all ages take in all media. But, as you can see on the left, it’s the 50-plus readers who show the greatest preference for newspapers and for TV. It’s no surprise that 18-39 and 18-49 readers show greatest affinity for online delivery overall.


What’s Next: Extend these trends forward and you see that the old saw — young people get real jobs, get married, have families and subscribe to print papers — is unlikely to last. Younger readers appear more agnostic about the brand of who’s bringing them the news — they are not biased against Old Media brands — but they’re more comfortable with online deliver


Growth innew media

{3}


What’s Next: The 2006 numbers show an even greater disparity. Online growth rates move in strong double digits while legacy news and information companies struggle to stay even. Growth and amount of revenue matter in lots of ways — giving companies war chests for investment and development.


The Skinny: The growth is coming in new media. The chart (for 2005) shows the relative revenue growth of just two (but significant) companies, Google and Yahoo, as compared to the (then) top 10 information companies in the world. Google and Yahoo’s new revenue exceeded those top 10, $4.7 billion to $3 billion.


Morecompetition

{4}


The Skinny: Go back 10 years and daily newspaper competition could be summed up on one hand: TV and radio broadcasters, maybe some suburban competition, and rambunctious direct mailers. Fast forward, and you can’t fit all the competition in one picture. Classifieds players, large and small, gobble and nibble at recruitment, real estate and automotive revenue. Big search aggregators take audience. And now communications companies like Verizon and Comcast are becoming “content” companies.

What’s Next: The Internet has broken down many traditional definitions. Anyone can be a publisher now. Anyone can deliver the information. And anyone can connect buyers and sellers more efficiently. For such enterprises as newspapers used to doing it all themselves, the new era means the need to partner and move much more quickly into the marketplace. Recent agreements with Google and Yahoo in ads and stories point in that direction.

Flow of peopleto the Web

{5}


The Skinny: One billion people out of the world’s six-billion population are Web-capable, with marketers talking about The Next Billion. A few numbers provide a snapshot of where we stand, circa 2007. Newspaper readers are baby boomer-centric, with the only older audience belonging to TV News, at four years older. Only 50,000 daily newspaper journalists are responsible for getting the news out to 300 million Americans through newspapers. And that number appears to be dropping more than 2 percent a year. But teens — digital natives — are consuming more media than ever. And it’s the Web children — Yahoo, eBay and Google, among others — who are winning the numbers race.


What’s Next: Numbers do matter, especially over time. In news company plans, we can see trends addressing the numbers. Companies seek to create better online products for younger readers, engage community members to replace journalists and to mix in the magic the Googles and Yahoos have found.


Flow of moneyto the Web

{6}


The Skinny: The days of the general news source are receding. News of the moment — especially national and international news — is everywhere. Between the Web, TV, radio and cell phones, we live in a news bubble. We don’t find the news; it finds us. Specialized news and information — from personal finance to health to family to education and beyond — is what a lot of us want. And the Web is great at finding needles in info haystacks. Take personal finance, as shown below. Already, the Web is the number one place Americans go for personal finance information. The same holds true for health and travel information. Note that while newspapers have remaining strength here, their online products fare poorly, not translating the brand customer experience from print to online. We see that trend across the board, with “online newspaper sites” a sixth- or seventh-place source.


What’s Next: Advertising money inevitably follows readership. Readers spending money on investments, on travel and on health care are prime targets for advertisers. As those readers migrate away from print and TV, so will advertising dollars.


Print vs.online revenue

{7}


The Skinny: Newspapers depend on advertising for about 80 percent of their revenue. So while the online reading trend is troublesome for print circulation, the digital advertising revolution is more worrisome. While publishers overall in the information industry (think science, technical, academic, market research, etc.) now derive some 42 percent of their revenue from digital products, newspapers still take in less than 10 percent of theirs from online. In addition, an online customer is just not worth what a print one is. Time, Inc, CEO Ann Moore recently said that a Sports Illustrated subscriber was worth $118 per year to her company; a SI.com visitor only $5. It’s that disparity in revenue models that leaves print publishers perplexed as they contemplate the print-to-digital transformation.


What’s Next: No one is sure what will happen to ad pricing. On the one hand, online is an efficient medium, delivering customers well. That may push rates up. On the other, it is an efficient medium with lots of competitors, pushing rates down. On the horizon: BT, or behavioral tracking. We’ll see advertisers using BT to deliver ads to you that better match your buying needs, reducing waste.


How peopleuse the Web

{8}


The Skinny: Newspapers have been the ultimate, portable, browsable medium. But the world has zeroed in on that ubiquitous search rectangle. Top three web activities: e-mail, search and news.


What’s Next: For journalists of all kinds — editors, writers, designers — the key to online presentation is understanding and working the triangle. That means designing products that assume search, assume sharing of material and know that news still matters. Those products will be very different than the too often repurposed, too often static online newspaper pages of today.


Holding onto local news

{9}


The Skinny: National and international news may be commoditized, and niches may be targeted by many start-ups. Local, though, is a bastion of old media, newspapers and TV. Why? It costs a lot of money to gather and produce the news and information. In the chart above, you can see that online players have not yet been successful here.


What’s Next: Newspapers see Local as their last bastion — the place they still dominate and may be able to extend that dominance online. Many companies are redeploying resources to focus on local and hyper-local, some using community-generated publishing platforms in addition. Online, the trick is how to gather and present local data — think school scores, recreation activities, crime reports, neighborhood characteristics — in ways that win and keep readers.


A newtwo-way street

{10}


The Skinny: It’s a new Pro-Am World out there. The Web offers more than the old one-way conversation. The “people formerly known as the audience,” as press critic Jay Rosen has called them, want to talk back, talk to each other and participate. MySpace and YouTube have opened many eyes, and now we see the sprouting of geographically oriented online communities. Above is YourHub.com, a user-gen site started by the Denver Post and Rocky Mountain News, and now being franchised to other cities.


What’s Next: Expect to see most newspapers trying something in the user-gen space. Keys are a robust platform that makes interaction easy and fun and adding calendar/events functionality that makes frequent visits valuable.


Time toreimagine

{11}


The Skinny: News content used to be the proverbial birdcage bottom. Now it has enduring value, part of a long tail for research. Google’s Archive Search, though only semi-developed, is surfacing news stories long hidden from most users. “More Like This” boxes, after several starts and stops, are coming of age with such products as Sphere’s boxes connecting news, blogs and archives on top news sites.


What’s Next: Many lines are being blurred. The listy, linear nature of much presentation may seem very old school soon, and those with experience re-imagining the Web experience should find many opportunities.


End.


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