Commentary

Reliance On Circulation Revenue Marks Shift For Newspaper Industry

Circulation revenue for newspapers last year overtook advertising sales for the first time, according to a study that highlights the significant shift in the economics of the publishing industry. Total estimated circulation revenue edged upward to $11.1 billion in 2020, but that growth wasn’t enough to offset the 29% drop in ad revenue to $8.83 billion, according to Pew Research Center.

The pandemic’s negative effect on the economy and media buying was partly to blame for the decline in ad revenue.

However, newspapers have seen a steadily decline in ad sales from a 2005 peak of $49.4 billion, according to Pew’s analysis of publicly available data. Since then, the newspaper industry has endured two recessions and the migration of ad dollars to digital media that accelerated with the shift to programmatic media buying.

The estimated growth in circulation revenue coincided with a 6% decline in U.S. daily newspaper circulation to 24.3 million for weekday and 25.8 million for Sunday editions, according to Pew’s analysis of data from the Alliance for Audited Media (AAM).  
However, those numbers don’t include digital subscriptions for The New York Times, The Wall Street Journal and The Washington Post, which don’t fully report their digital circulation to AAM. By adjusting its calculations to include information from other sources, Pew estimated that total weekday circulation of U.S. daily newspaper had grown to 35.6 million last year from 32.5 million in 2019. 
The growth in digital readership also was reflected in traffic numbers for the top 50 U.S. daily newspapers tracked by Comscore. The analytics firm found average monthly visitors to those publications rose 14% from a year earlier to 13.9 million in the fourth quarter of 2020. 
There are signs that newspapers were able to monetize that traffic somewhat. Amid declines in print ad revenue, digital advertising last year made up 39% of total ad revenue in 2020, up from 35% a year earlier, according to Pew’s analysis of publicly traded newspaper companies. 
Web traffic growth also presents an opportunity to convert readers into paying subscribers, perhaps with metered or hardened paywalls. As newspapers seek sources of revenue aside from advertising, their circulation strategies are more imperative to developing a sustainable business model. 

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