Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Media Disruption Accellerates As Paper Ads Plunge

Posted by Tom Foremski - November 2, 2016

2016 11 02 14 19 20

The disruption in the media industry is far from over as the transformation to a digital business model continues to challenge large newspaper groups according to recent financial reports.

Gannett and The New York Times Company are among companies reporting a steeper than expected drop in print advertising revenue in their latest financial quarter.

Digital advertising, subscription revenues and tech ventures have not able to fill the gap of as much as a 19% plunge in print advertising revenues as reported Tuesday by NYTimes Company, amid an overall drop of 8% in total advertising revenue for its third quarter.

Last week Gannett reported a 35% drop in national print advertising and job cuts. It also abandoned its hostile bid for newspaper group Tronc.

The Wall Street Journal also announced job cuts and changes to the newspaper. Politico reports that WSJ Editor Gerard Baker told staff:

"All newspapers face structural challenges and we must move to create a print edition that can stand on a sound financial footing for the foreseeable future while our digital horizons continue to expand. As I previously mentioned, there will unfortunately need to be an elimination of some positions as part of this process."

Other large newspaper groups are expected to announce similar large falls in print ad revenues.

Print advertising is in a “freefall” reports Pete Vernon at CJR, following years of “relatively stable decline. Between 2010 and 2015, print advertising fell between five and eight percent each year, according to the Pew Research Center … The problem for publishers is that digital revenues have not come close to replacing their dead tree counterparts.”

Foremski’s Take: We still do not have a viable business model that can sustain the work of professional news journalists. It’s one of the most important problems we face as a global society.

We seem flooded by news media wherever we turn so it might seem as if it is a healthy industry. But it is not.

It is important to see that the disruption in the media industry has not ended or slowed.

With all our visionaries and tech geniuses we still have not figured out the innovation that will enable us to monetize and sustain professional news organizations. 

- Digital advertising is not the answer because it continues to decline in effectiveness and revenues per unit.

- Subscriptions are not effective because they limit the reach of the news stories.

- And a combination of many revenue streams such as conferences, has failed to created a stable and predictable business model.

Print advertising is still very important because it is so large, and it has been in less of a decline than the extremely rapid shift from desktop to mobile advertising, which has caused problems for all-digital media companies.

Print’s relatively predictable revenues provided a buffer of time that enabled newspaper management to downsize and experiment with new sources of revenues. This sudden change removes that buffer and will accelerate media disruption. It is clear is that there will be fewer journalists working by the end of this year.

It means companies will have to learn how to produce and distribute their own stories — because if you aren’t seen you don’t exist.

Every company is a media company….but I bet many will wish they weren’t media companies because it’s hard. 

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The Holmes Report names Tom Foremski one of the top 25 Innovators of 2013.




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