• by Erik Sass , August 26, 2009

"The news industry has so far failed to make the digital transition," is the blunt synopsis offered by veteran industry analyst Ken Doctor in a new report from Outsell, Inc., titled "Top 15 U.S. New Companies Print-to-Digital Market Size and Share." Reviewing the last few years, Doctor -- a former newspaperman and close follower of the ailing medium -- finds little but disappointment in the efforts of newspaper publishers to build online revenues.

According to Doctor, newspapers earned just 11% of their total revenues from digital sources in 2008, including both advertising and circulation revenues. The best performers in this regard, the Washington Post Co. and Rupert Murdoch's News Corp., still had fairly low proportions of online revenue in the total mix (15% and 14%, respectively).

Here there is a yawning divide between newspapers and other sectors of the information industry, like technical and medical publishing. While the proportion of news revenues derived from digital sources grew from 7.2% in 2006 to 11% in 2008, the rest of the information industry (excluding news providers) grew from 65.3% to 70.2%. In other words, those other sectors had already substantially completed their transition from print to digital revenues in 2006 -- but newspapers have scarcely begun theirs.

There are other reasons to worry: the growth of newspaper Web sites audiences has slowed and these are now "static," according to Doctor. Even more troubling, online revenue growth rates went negative for many newspaper publishers in 2007 and 2008, while the rest of the information industry remained positive. All the major newspaper publishers, except for Dow Jones, have also seen their share of the online market decrease.

In other words, Doctor summed up: "While the wheels are coming off the industry -- with six bankruptcies and massive product and job cutbacks -- it remains dependent on print revenues. The news segment still stands out as the biggest laggard in the information industry overall."