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These days it isn’t too difficult find evidence and stories of Print newspapers rapid descent. More recently, reports are showing that the print newspaper industry suffered it’s largest revenue plunge on record, according to the Newspaper Association of America.

With jobs and margins being hammered from all sides, the newspaper industry is scrambling for solutions. The print newspaper industry is a cost and labor intensive business. In addition, many newspapers are viewed as very resistant to change.  During a recent conversation with a former newspaper executive ( now in the tech world) , he shared how management’s uneasiness is growing across local newspapers and solutions of how to stop the bleeding continue to fall far short of expectations. 

Craigslist just the beginning of the end?
In recent years, the Craigslist juggernaut has decimated classified ad revenue for newspapers around the country. Newspapers with high margins and market monopolies brushed off Craigslist as a threat. In the San Francisco Bay Area alone, projections ran at $50-$65 million of lost newspaper revenue as far back as 2004. With Craigslist now serving hundreds of cities, it doesn’t take a math major to see the severe pain being inflicted on local newspapers.

Newspapers Eclipsed by the Internet?
If Internet advertising continues it’s blistering 25% growth ($21 billion in 2007), and newspaper advertising maintains it’s current revenue (highly unlikely based on current trends), newspaper advertising could be eclipsed in terms of revenue as early as 2010 or 2011.

Advertisers on the Run
Trends are showing that more businesses everyday are waking up to the new reality that Internet advertising often means a significantly better ROI and affordability.

Why? First, younger generations simply don’t read or use a newspaper like the previous generations before them. The younger generation typically has much more expendable income and it’s not being directed toward those that advertise in newspapers. It’s going toward Internet marketers.

Secondly, print newspaper advertising is mass marketing that 1) reaches those at  the top of the sales funnel  2) those that will never enter the funnel and 3) a few that are at the bottom of the sales funnel. The power of the Internet allows a business to direct their advertising dollar almost directly at those residing at the bottom of the sales funnel. In short, higher quality prospects that are ready to buy, all for less cost.

Catch-22
Well why don’t newspapers simply focus their operations on the Internet like everyone else and reap the benefits? It’s really a catch-22. While most newspaper have an online presence, their advertising options are often severely overpriced in the marketplace, making them less attractive to advertisers. The Catch-22? If they lower their prices and are effective for advertisers, advertisers will quickly jump ship from costly print advertising and erode newspaper margins further. Many newspapers have turned to bundling Print and Internet services in an attempt to maintain revenue and margins. However, we see this as simply a ploy that forces advertisers to purchase print advertising that is often ineffective and overpriced for most small business owners.

No Easy Answers
The Print Newspaper Industry has been struggling without success for years to come up with solutions to maintain profit margins and revenue while addressing the most competitive environment in it’s history, the Internet. Unfortunately, we’re still watching newspaper execs grasp at straws and don’t see anything in the near-term forecast for a sunny future in the industry. We expect further job cuts, lower pay for workers and consolidation. It will be interesting to see what newspapers have up their sleeves over the next few years and see if they can battle back.

Our prediction: Tough sledding ahead

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