Murdoch Is Right On Print Growth -- Swapping Fivers For A Pound Has Little Future

Yesterday saw media writers focus on Rupert Murdoch's very frank admission that he had no interest in buying any more newspapers because the company had its hands full trying to make the ones it had "viable." Digital advertising, he revealed, has been "tremendously damaging" to print.

Today we have another issue that goes beyond advertising. Circulation figures are hugely down year-on-year. ABC shows that Trinity Mirror papers are suffering the most with both its Sunday papers and its daily, The Mirror, down between 20% and 25%. At News UK, The Sun and The Sun on Sunday are similarly down very nearly 10%. Nearly all newspapers posted figures that were a handful of percentage points down year-on-year. A simple calculation suggests that this represents several million pounds worth of potential sales disappearing annually.

However, even that is not the real issue with newspapers -- it is more a case of proverbial chickens coming home to roost. Trinity Mirror, the big losers in the latest figures, claims that the declines come from foreign sales and bulks. In other words, it was doing the oldest trick in publishing. When things get tough, you start giving the paper away free so "bulk" copies count toward your circulation but you receive no money. You also send a bunch of issues abroad in the hope that they will sell. In the short term, all looks good -- but then you have to account for those issues that didn't sell. It's the publishing equivalent of a payday loan.

Ultimately, these big losses are just a more honest reflection of the real situation -- a coming clean about free copies and papers sent abroad that didn't sell. They were never turned in to revenue and so, ultimately, were just a short-term vanity exercise.

No, the real issue is the "tremendously damaging" impact of digital advertising that Rupert Murdoch talks about. If you take a macro view of 10% of print advertising disappearing each year, that's around GBP100m worth of revenue being replaced by around GBP20m or so new money arriving in the form of digital advertising.

That's right, as regular readers will know, my back of-an-envelope figures it that print is losing at least five pounds for every new pound it makes through digital advertising. That simply can't go on -- not without some major changes and possibly, a greater reliance on subscriptions or native advertising as alternatives. 

This decision surely must be more pressing than ever, given that it appears some papers are coming clean on bulk copies and bundles of newspapers sent abroad to temporarily massage the numbers, if not the figures. 

Circulations are down, by varying degrees, and print advertising revenue is down around 10% this year. For magazines, the decline is even sharper. 

Given that one in five block ads, and so a fifth of any web traffic increase will always mean nothing for online publishers because no extra display will be sold, it's hard to think that there is a rosy future left for news brands that are not actively seeking subscriptions (or donations in The Guardian's case), native advertising and lucrative events as antidotes to the ever-depressing decline in print.

Given this, it's little wonder that Rupert Murdoch has finally called a day on newspaper expansion. Who would want to enter a trade where the norm is to swap fivers for a pound coin, no matter how shiny the new one is?

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