The good news is, according to a report commissioned by the Newspaper Association of America, that traffic at web sites of the nation's newspapers is growing faster than overall internet traffic. The bad news is print newspaper sales are tumbling. The worse news is, according to an article in yesterday's Wall Street Journal(subscription required), most newspapers won't be able to sustain their business off of internet advertising. The Nielsen/NetRatings study found that traffic at newspaper sites in the first quarter of 2007 was up 5.3% over a year ago, to a monthly average of 59 million visitors. However, recent NAA figures for print sales in the last half of 2006 show an overall decline in dailies readership of 2.1%, a loss of a million readers over the previous year. Sunday editions declined even more steeply, dropping 3.1%.
A timely opinion piece in yesterday's Wall Street Journal, by Walter E. Hussman Jr. of the Arkansas Democrat-Gazette, compared his paper's approach to marketing online content to that of my hometown rag, the Columbus Dispatch. The Democrat-Gazette sells a subscription to access the on-line version of its paper, while the Dispatch's content, once also sold by subscription, is now free. It has chosen to make its money off advertising.
Hussman does not believe that papers of this magnitude can successfully replace lost print advertising revenue with internet ad dollars. He also points out that since the Dispatch changed its model, the Little Rock paper's circulation has grown, while the Columbus paper's declined.
I see several factors at work here. National, international, business and sports news is ubiquitous, shoved in our faces 24/7, and therefore not a reason to subscribe to a newspaper. At present, their competitive advantage is the local story, the small news, the one to one content that no one else is staffed to provide, along with the confidence the public has in their objective and accurate reporting. (Perhaps in some markets, television takes this role, but here they mostly piggyback on the newspaper reports.) Yet this is the most expensive copy to develop, since it requires real employees, and they are too often the first heads into the guillotine at cost-cutting time.
Consequently, papers like the Dispatch continue to descend a death-spiral -- reduced readership causes reduced income causes reduced staffing causes reduced content causes reduced readership....
Neither paper's model of operation, subscription or ad-based, addresses the real issue, which is salable content. Their traditional profit centers are dying. Classified ad sales are lost forever. Obituaries will disappear, as the bereaved find better ways to offer their memories in media-rich internet sites. Inserts have become so burdensome I suspect they account for at least some of the decline in Sunday readership.
The newspaper model is broken, and taking the same content to the internet won't work, whether they give it away or charge a subscription. Unique, atomized content and reliable, authoritative reporting, are products that are in demand and strengths of the newspaper. Will they transition in time?
Or will we (the internet news market in general) eat their lunch?
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