The digital publishing industry will hit a significant milestone this year when for the first time it will book more ad revenue than all print newspapers and magazines.
The really bad news for print media, even those with robust web operations, is that most of the revenue is going to non-print publishers such as Google, Yahoo, Facebook and others.
In the five years from 2005 to 2010, the newspaper industry in the U.S. saw its advertising revenue fall by nearly 50%, or $25 billion. Where did it go? Part of the decline could be blamed on the recession, but to a great extent, advertisers and readers were fleeing the print versions of newspapers for the web.
Paywalls don’t produce enough
As I mentioned in a recent post, many more newspapers in the U.S. are adding paywalls to generate revenue from their web operations — some 500 new paywalls in two years alone. But they will not begin to replace the revenue they have lost to the digital publishers mentioned above. (See PaidContent’s analysis of Gannett’s paywall plan.)
Ken Doctor has published an excellent piece in the Nieman Lab blog on the metrics to watch for as print media make the inevitable crossover to digital.
Digital First
Traditional print media had made such handsome profits for so long and had so much capital investment tied up in their old business model that it was difficult for them to change their own culture and convert to a digital model.
John Paton, CEO of Digital First Media, is one of the few news executives who has made the kind of radical changes that others have talked about. He has taken over two newspaper groups and redefined them as 800 multi-platform products.
In the process Digital First is selling off buildings, trucks, printing presses and other capital assets in order to invest more in the news and sales operations, and focusing both news and sales teams first on their digital offerings.
He has ruffled a lot of feathers with his speeches criticizing newspaper executives, but he has lived by his words.
Whether Paton’s tactics and strategies are correct will be tested over time. He is the first to admit that he does not have all the answers. But he has made the digital crossover; the readers and the advertisers have already beaten publishers to it.
Related:
More paywalls won’t save journalists’ jobs
Language barrier helps publisher paywalls
Google takes magic out of advertising sales process
Social media challenge Google for news distribution
Facebook to overtake Yahoo in display advertising
Total users and pageviews are misleading measures of web traffic
Robert Niles: How to Make Money Publishing Community News Online