4 Survival Strategies For Struggling Newspapers

Mar 5, 2012
Originally published on March 5, 2012 10:42 am

Newspapers are dying, right?

You probably think so because, for one thing, you're not reading this in a newspaper.

It'd be a reasonable thought. Newspaper readers gradually have been stopping their subscriptions for many years. And the Internet (NPR.org, too) has steadily stolen readers and advertising revenue for the past decade.

Newspapers have chased audiences and advertisers to the Web and other digital platforms, where they are finding strong growth. But that transition has been rocky — newspapers don't make nearly as much money from digital ads as from print ads. And the weak economy, which depresses ad sales, continues to force newspapers into layoffs, bankruptcy filings and even closures.

A new study released by the Pew Research Center's Project for Excellence in Journalism examines the difficult transition by using a novel method. For its study, "The Search for a New Business Model," the Pew Center obtained detailed financial and other data from newspapers that usually is kept private, in exchange for granting the companies anonymity.

Executives interviewed for the study insisted that newspapers, by and large, are not dying. But they also said that, five years from now, papers likely would exist in reduced form: fewer delivery days per week; smaller staffs, possibly "further" weakening editorial content; and a likelihood that some papers would fold or "limp along" until another recession proves "catastrophic."

But it's not all gloomy for the printed word. From the study, Mark Jurkowitz, associate director of Pew's Project for Excellence in Journalism, identified four winning strategies helping newspapers begin to cash in across the digital realm:

1. Ride The Boom

    As is true for any company with locally based clients, regional and smaller community newspapers rely heavily on advertising revenue from surrounding businesses. It's no coincidence that economically struggling cities also include financially troubled local newspapers (see: Detroit or Philadelphia). The trend reverses in good times, as when the booming 1990s helped newspapers pump out annual profits as high as 20 percent.

    The Pew study cites an example of a small unnamed city where the biggest industry ramped up hiring. That increased career ads placed with the local newspaper, both in print and online. The boon helped drive up the newspaper's digital ad revenue by 33 percent in 2011. (In 2010, the newspaper told Pew its digital ad revenue increased 63 percent, more than three times higher than the average compiled in the study. While most other newspapers experienced declines in print ad revenue, this paper saw an 8 percent increase.)

    2. Diversify Digital Ads

    Most newspapers sell classified or display (banner) ads online, the same two types that generate the greatest print revenue. Yet only 40 percent of newspapers are devoting significant efforts to selling "smart" or targeted advertising — the category widely predicted to eventually "dominate" local markets, the study finds.

    A wider mix of digital ads can help revenue grow more quickly, the study indicates. One such case cited is a large metropolitan newspaper that, after deciding that the Web was its top priority for content and revenue, gained 50 percent in digital ad revenue in 2011, in part by developing a wider diversity of digital ads than had most papers.

    3. Get Creative

    Nearly half of the newspapers reported trying to develop new streams of income, from staging events to selling business products. But most of these endeavors have so far yielded "minimal" gains of tens of thousands of dollars per quarter, the study finds.

    One pursuit paying off for some newspapers is consulting. A number of papers are selling their knowledge of digital advertising to businesses looking to target certain types of consumers.

    Two midsize papers (circulations of 50,000 to 60,000) that launched "digital agency" services reported quarterly revenues of $100,000 and $200,000, respectively, according to the study.

    "In medium-sized communities, you're going to have more direct one-on-one relationships with merchants that make doing this much easier," Jurkowitz says.

    4. End Newsroom Culture Wars

      The biggest obstacle to success may be newspaper employees themselves. Ten of the 13 executives interviewed said their biggest challenge is their newspaper's internal culture.

      As one executive put it: "You can change CEOs, executive VPs, digital VPs. You can wave this magic wand all you want. But at the end of the day, the troops in the field hunker down."

      Traditionally, as the study notes, many newsrooms operated with autonomy from their parent company, in part because they enjoyed strong profits and monopolies on local markets. So, there was no need to fix what wasn't broken.

      Now, veteran journalists must learn new ways of gathering and delivering news, and salespeople must figure out how to sell digital ads, which includes mastering an entirely new jargon.

      But shifting too quickly from print carries a risk: An average of 80 percent of total newspaper revenues still comes from print advertising. For every $11 collected from print ads, newspapers collect $1 from digital ads, according to the study.

      "There's a powerful argument to be made: 'How can we disregard the piece of our business that is still paying the bills and signing the checks?' That makes the transition harder," Jurkowitz says.

      The study suggests that a newspaper with strong digital revenue growth is a newspaper that has peacefully ended its culture war and gotten staff retrained and carrying out a new strategy.

      "If you're resolving the culture war," Jurkowitz says, "you are pushing faster into digital."

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