I came across an interesting article on the dramatic decline of the US newspaper industry – from both an advertising and circulation perspective. This article comes hot on the heals the comments made by Greg Ellis, the CEO of the REA Group, about the “mind numbing” decision of Fairfax in Australia to buy The Melbourne Review print publication.
In the US, there has been a dramatic decline in the circulation of most major newspapers – especially in the last 5 years. The chart below shows the circulation numbers of major newspapers from New York to Los Angeles. The New York Times has had a 20% decrease in circulation while the LA Times has almost halved its circulation in the past 20 years.
Interestingly the Wall Street Journal started including online subscriber numbers in their circulation numbers in 2003 with the result that the circulation hasn’t decreased.
Clearly (and not surprisingly) there has been a migration from print to online in the habits of the readers.
There has also been a migration from print to online for advertisers. In the chart below we can see the gradual growth of print newspaper advertising from 1950 through 2000. It was almost a consistent year on year growth starting at around $20bn and peaking at $60bn. Then the last 10 years has seen $40bn in revenues wiped off the cumulative income statements of the US’ newspapers. That has got to hurt.
While $20bn is still a significant amount of revenue for the print industry, the reality is that it is a high cost industry and there is clearly on long term outcome – the number of papers will contract with a few large ones remaining in the future that can achieve the scale to survive in a much smaller pool of print ad revenues.