Tuesday, December 07, 2010

U.S. newspaper advertising declines for 15th straight quarter

The Newspaper Association of America reports that print newspaper advertising declined year-to-year in Q3 2010 for the 15th straight quarter, and in 18 of the last 19 quarters. The last year where there was more than one positive quarter was 2005. The story for national advertising (national advertisers running ads in local newspapers) is even worse: Q3 2010 was the 23rd straight quarter of declines, and the last "up" year for national advertising was 2004.

The declines in advertising revenue were to be expected, given that print circulation has been declining for years, but the newspapers are caught in a vicious circle: As circulation declines, circulation revenue falls, and the reduced circulation causes advertising revenue to decline. After two years of online advertising revenue declines, revenue increased for newspapers in all three quarters of this year so far, but total online revenues in Q3 were less than 14% of print revenues--far less than that needed to offset the print declines.

Most newspapers are going to have to jump to an online-only strategy sooner or later, but how far can they ride their print businesses before they have no choice but to make the transition? Further, can they afford to offer a meaningful newsgathering and editorial service on their online revenues alone?

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