Newspaper
outlook for 2010: Thinner
The hurt will continue and so will the downsizing
By Toni Fitzgerald
Dec 23, 2009
After two down years for the newspaper industry, things got much worse in 2009. Advertising and circulation declines accelerated, furloughs became commonplace, layoffs continued and two large metropolitan papers shut down while others were threatened with closure.
Though most media people agree that this year marked a bottoming out for the industry, things won't get a lot better next year.
Their workforces now depleted, papers are trying to do more with less, putting a greater focus on the web and local content. Yet newsrooms have been stretched so thin that many fear the quality of the editorial content will suffer, which could further hurt advertising.
In 2010, the industry can expect to see more papers experimenting with paywalls, though it's a flirtation that may not last. More papers will move to online-only publication on certain days of the week. Fewer papers will shut down, but they will continue to thin, cutting back on opinion, business or sports content to compensate for the loss of production brought about by layoffs.
It will be a struggle, and it may be for years to come.
"I'd say the biggest story in the newspaper world is the huge downsizing of the industry," says Ken Doctor, a media analyst with Outsell and author of the upcoming book "Newsonomics: Twelve New Trends That Will Shape the News You Get."
"It's about 25 to 33 percent smaller than it was three years ago. If you look at the revenues of these companies, the employment numbers, the number of stories that they are creating, you look at the community clout of all these papers -- it's significantly less or fewer than they were three years ago."
The problem is that 2010 will not bring a true recovery. There will likely be fewer layoffs as newspaper budgets stabilize. But analysts don't see newspaper advertising revenue faring too much better next year than it did this year.
Newspaper spending is off 22.8 percent year to date through third quarter, according to data from TNS Media Intelligence. That's following an 11.8 percent decline for full year 2008, and no major forecaster is predicting a year-to-year rise through at least 2014.
Over the past four years, newspaper revenue has declined more than $10 billion, from a high of $49.4 billion in 2005. Part of that is due to huge classified advertising declines. Job ads largely have moved online, and the auto and real estate categories were hit hard by the recession.
At first it seemed as though the web could help offset some of print's declines, with the medium growing by double-digit percentages earlier this decade. But by last year even newspaper web sites were declining, hurt by competition from other local sites.
That just underlines newspapers' ongoing struggle with the web generally. The internet is stealing dollars from papers, which still aren't sure what business or editorial model to apply to the medium.
"Digital advertising is the greatest challenge to newspapers this year," Doctor says.
Still, it's not all gloom for papers, a notable change from the past two years. A new report from Toronto-based Kubas Consultants predicts improvement in all categories of newspaper advertising next year, though that does not mean positive growth. It simply means that the worst is over for the category.
The report notes that virtually all of the strategic initiatives outlined by the 500 newspapers surveyed have to do with the web, including improving ad pricing structures and updating sales technology.
Another area that will receive huge amounts of attention is moving newspapers behind a paywall, because it makes little sense to give away something for free online that you have to pay for in print.
News Corp., Newsday, Media News and other major newspapers and newspaper owners have already begun adopting this model, but it faces many hurdles.
"Readers expect to get general content for free, so they're going to resist having pay for it," says Paul Gillin, owner of newspaperdeathwatch.com. "[Also], pay walls only work when everybody agrees to them. If a few renegades build paywalls, then the traffic will migrate to those who don't."
Doctor says unless the content is unavailable elsewhere -- printed in a small local weekly, for example -- people aren't likely to pay. He suggests a micropayments system, in which people pay for access to a certain number of articles, is more likely to work.
Finally, despite the closure of major metropolitan papers such as the Rocky Mountain News and Seattle Post-Intelligencer this year, 2010 will not see any more than usual shut down. More may go online-only, such as the Christian Science Monitor and Ann Arbor News, but the endangered papers will be concentrated in cities with multiple dailies.
"I don't think we're going to see a lot of closures, but we will continue to see publishers paring back their schedules, reducing issue sizes, raising subscription rates and focusing on profitable circulation," says Gillin. "Where we do see closures, it will probably be in cities like Chicago, San Francisco, New York and Boston where the business no longer supports multiple titles."
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