The Newspaper Industry Is On The Ropes

There has been a modest recovery in the health of the US media business as measured by change in revenue from 2009 to 2010 according to the Pew 2011 State of the Media Study. Notably, the newspaper industry is not sharing in this reversal of fortune.

As I wrote almost one year ago, newspapers are on their way to becoming irrelevant. The newest revenue trends underscore the seriousness of the decline, with newspapers declining by 6.4% while all other channels showed improvement.

At the core of this decline is the rapid adoption of the web as the preferred delivery channel to obtain news and information. Last year, for the first time, more people reported getting their news from the web rather than newspapers.  Concurrently the gap between the web and television, the leading source of news, is closing.

The newspapers face a complicated set of challenges. Along with the commoditization of news as it becomes widely available on the web from old media sources and burgeoning social media options, classified advertising is in long term decline.

Long one of the most profitable segments of the newspaper, classified advertising faces headwinds from the slower economy, but the larger problem is competition from new channels.  Everything from Craigslist to Realtor.com to Monster have become the preferred ways to conduct traditional classified ad commerce such as selling a car or house or finding a job.  Only paid obituaries and legal notices have remained steady.

It remains to be seen if the newspaper industry will find success with replacing the revenue streams lost over the past several years with paywalls and new subscription delivery platforms like The Daily, but for the industry to have any hope of surviving in some recognizable form they need to find answers fast.