Bad to Worse, To Worst: Newspaper Revenues Down 7.9% In 2007, As Online Growth Slows

Total newspaper revenues tumbled 7.9% in 2007 compared to 2006--to $45.37 billion, according to a year-end summary released by the Newspaper Association of America. Within the total revenue figure, online revenue grew 18.8%, to $3.16 billion--but failed to offset a much larger drop in print revenues, down 9.4% to $42.2 billion.

The 2007 figures confirm that the revenue decline at newspapers accelerated from 2006-2007. In 2006, total revenues declined a more modest 0.32%, as well as from quarter to quarter within 2007. Over the course of last year, the slide turned into a free fall with a 4.8% drop in the first quarter, followed by 8.6% in the second, 7.4% in the third, and 10.3% in the fourth.

Meanwhile, the sole bright spot--online revenues--actually tell a gloomy story of their own, with online growth continuing to slow. 2007's 18.8% growth rate, while respectable, is less than two-thirds of the 31.46% figure in 2006. More to the point, online revenue added fewer dollars in 2007 ($500 million) than 2006 ($640 million).



That spells bad news for publishers that were counting on online revenue streams to help make up for losses on the print side. Even as total revenues drop and online revenues are growing by double digits, online still makes up just 7.5% of the total. The comparisons for 2007 are striking: the $4.4 billion decline in total print spending exceeds all online revenues ($3.16 billion), and dwarfs the growth in online revenue by almost 9 to 1.

Ken Doctor, a newspaper analyst with Outsell, Inc., summarized the situation: "Given the high rates they charged in print, and that over 90% of their revenue is still in print, even if they could get the growth rate back up to 25% or 30%, they still won't be able to make up for these losses." Thus, the outlook is grim: "These companies are going to get much smaller, with fewer employees, producing less content, both online and in print. The real question is: can they even stabilize at any point in the near future?"

To stem the tide of losses, Doctor said newspapers need to invest heavily in boosting the kinds of news content that are proving most popular on the Web, including business, health, and travel--especially with online video if possible. "That's where you'll get the most bang for your buck," according to Doctor, who said CPMs for online video business news are now around $50 dollars.

Newspaper publishers can save money by entering into content partnerships, rather than hiring dedicated writers for these areas. In 2007, for example, the New York Times Co. struck a deal with A.D.A.M., a company that provides information on health conditions, treatments and insurance, for syndicated health content, as well as breaking news about health-care issues. To deliver the new service, the New York Times Web site launched a new section with news and analysis on health-related topics, including the Times Health Guide, with an index of over 3,000 topics covered by A.D.A.M.

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