Newspapers making more money from readers than advertisers
The times they are a-changin’
Title of Bob Dylan song
Particularly for newspapers. In a surprising way.
Advertising used to provide up to 80% of a newspaper’s revenue. Now
newspapers are making more money on circulation (subscriptions) than on
advertising.
Wow!
That’s the word from the annual World Press Trends survey released by
the World Association of Newspapers and News Publishers.
Readers, not advertisers, are the big source
of revenue. A reversal of a century-old business model.
There’s a catch, as there are with most
statistics. It’s not that circulation went up; it’s mostly static. It’s that
advertising revenue has gone down so much that it freefell below the readers’
subscriptions payments.
World Parress Trends: Newspaper Revenues Shift
To New Sources
2015-06-01
A profound shift in the newspaper business
model, evolving for years, is finally here.
Global newspaper circulation revenues are
larger than newspaper advertising revenues for the first time this century,
according to the annual World Press Trends survey released Monday by the World
Association of Newspapers and News Publishers (WAN-IFRA).
"The basic assumption of the news
business model -- the subsidy that advertisers have long provided to news
content -- is gone," said Larry Kilman, Secretary General of
WAN-IFRA, who presented the survey at the 67th World Newspaper Congress, 22nd
World Editors Forum and 25th World Advertising Forum in Washington, D.C.
"We can freely say that audiences have become publishers' biggest source
of revenue."
Newspapers generated an estimated US$179
billion in circulation and advertising revenue in 2014 -- larger than the book
publishing, music or film industries. Ninety-two billion dollars came from
print and digital circulation, while 87 billion came from advertising, the
survey said.
"This is a seismic shift from a strong
business-to-business emphasis - publishers to advertisers - to a growing
business-to-consumer emphasis, publishers to audiences," said Mr. Kilman.
Throughout the 20th century, advertising
brought up to 80 per cent of revenues in some markets. The ratio varies from
market to market: in some European and Asian markets, advertising might bring
40 per cent of revenues.
But the survey showed that newspaper
advertising revenues are falling nearly everywhere, while circulation revenues
are relatively stable.
"Print used to be one of few traditional
marketing channels and often the one that was the most ubiquitous for branding
and logical choice for all marketers," said Mr. Kilman. "This direct
relationship of mutual dependence no longer exists. Advertisers nowadays have
more than 60 different advertising media channels available to them."
"However, in 2015 it is clear that the
story of the newspaper industry is not one of doom and gloom and decline.
Newspapers around the world are successfully proving their value to advertisers
despite booming competition. They are discovering new markets and new business
models that are today as pertinent to news production as advertising and
circulation revenues. From print newspaper businesses, they have transformed
into true multiplatform news media businesses."
Though newspapers are now ubiquitous on all
media platforms, the measure of their reach and influence continues to be mired
in the 20th century, largely relying on print circulation and a variety of
separate, non-standardized measures of digital reach. The challenge for the
industry is to measure reach of newspaper content on all platforms with new metrics.
The World Press Trends survey includes data
from more than 70 countries, accounting for more than 90 per cent of the global
industry’s value. The data is compiled through an enormous undertaking by
dozens of national newspaper and news media associations and generous support
from global data suppliers: Zenith Optimedia, IPSOS, ComScore, the Pew Research
Center, RAM, and the ITU.
The survey, presented annually at the global
summit meetings of the world’s press, revealed:
The Future is Mobile
Eight out of 10 smartphone users check their
device within 15 minutes of waking up. It’s a fight for audience’s attention
and mobile has it.
-- Globally consumers spend an average of
almost 2.2 hours per day with mobile (97 minutes) and tablet (37 minutes),
which together account for 37 per cent of media time, ahead of television (81
minutes), the desktop (70 minutes), radio (44 minutes), and print (33 minutes),
according to the InMobi mobile media consumption report.
-- App usage represents about half of mobile
engagement, with leading media now seeing 30 per cent or more of their monthly
audiences coming exclusively from mobile platforms.
-- For the first time, desktop audience
numbers are falling. Time spent using smartphones now exceeds web usage on
computers in the United States, the United Kingdom and Italy. For 19 of the top
25 US newspaper sites, mobile traffic exceeded desktop by at least 10 per cent,
according to Pew Research. Those who use only mobile devices to consume
newspaper digital content increased 53 per cent in March 2015 from the same
month a year ago, according to a report from the Newspaper Association of
America.
"When it comes to new revenues, we have been talking about the year of
mobile for the last 10 years," Mr Kilman said. "It has finally
happened. In 2014, desktop Internet usage globally decreased in favor of
mobile. And mobile app usage is becoming the majority of all digital media
activity in the United States."
