The Continued Downward Spiral of Newspapers

The downward spiral of print newspaper continues: as readers and advertisers move their interest to the digital and mobile arenas. The above graph from The Atlantic shows that print newspaper advertising revenue in the US has fallen by two-thirds from $60 billion in the late 1990s to $20 billion in 2011. The graph was produced by University of Michigan economic and finance professor Mark Perry.

“So the reason newspapers are in trouble isn't that they aren't making lots of money -- they still are; advertising is a huge, huge business, as any app developer will try to tell you -- but that their business models and payroll depend on so much more money. The U.S. newspaper industry was built to support $50 billion to $60 billion in total advertising with the kind of staffs that a $50 billion industry can abide. The layoffs, buyouts, and bankruptcies you hear about are the result of this massive correction in the face of falling revenue. The Internet took out print's knees in the last decade -- not all print, but a lot,” writes The Atlantic’s Derek Thompson.

“Don't just blame the bloggers. For decades, newspapers relied on a simple cross-subsidy to pay for their coverage. You can't make much money advertising against A1 stories like bombings in Afghanistan and school shootings and deficit reduction. Those stories are the door through which readers walk to find stories that can take the ads: the car section, the style section, the travel section, and the classifieds. But ad dollars started flowing to websites that gave people their car, style, travel, or classifieds directly. So did the readers. And down went print.”

In South Africa, the picture for print newspapers is equally gloomy with Q4 2011 figures just released by the Audit Bureau of Circulations (ABC) showing continued decline in newspaper sales. Compared to the same period the previous year, the latest ABC figures revealed a sales decline of 6.7% for daily papers and a 4.9% decline for weekend newspapers.