Newspapers in 2020: A Disappearing Industry

We are witnessing the death of the local newspaper and the industry seems to be doing little and caring less. Here's the economic reality confronting newspaper publishers.

Newspaper print advertising peaked in 2000 at $48.4 billion dollars. But indications of the industry's problems were already evident in newspaper advertising's 29.8% share of total ad spending, down from 31.5% in 1999 and 32.8% in 1998. This year, Jack MyersMedia Business Report's advertising and marketing analysis projects newspaper print advertising's share of total ad spending will be a stunning 14.8% and it is projected to decline to only 12.8% in 2012. In this context it's worthwhile looking forward to 2020 and to the Jack MyersMedia Business Report projection that the newspaper industry as we know it today will have all but disappeared by then.

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Between 2001 and 2010, marketers' investments in newspaper print advertising declined an average of 5.24% annually. This includes a 16.8% drop in 2008 and a steep 22.8% decline in 2009. The industry consensus is that newspaper ads will experience a slowing drain of 8.0% in 2010 and another 5% to 6% annually in 2011 and 2012. Based on a conservative estimate of continuing 5.0% declines in newspaper print advertising annually, newspaper print advertising will total only $16 billion in 2020, representing a projected share of the total ad marketplace of only 7.5%.

The newspaper industry rejoinder, of course, is that an analysis of print advertising revenues unfairly fails to reflect the industry's growing digital businesses. Based on newspaper publishers' efforts and investments to date, it's difficult to imagine a scenario in which today's newspaper industry captures anywhere near even 7.5% of marketers' digital advertising investments.

As marketers tap into promotional, direct, event and public relations budgets to fund digital marketing initiatives, the potential value of newspapers is even more questionable. In 2010, newspapers are capturing less than a 5.0% share of total advertising and marketing expenditures. In 2020, it's unlikely newspapers' share of total marketing budgets will exceed 3.5% of the total volume. While 3.5% of a projected trillion dollar industry is still a $35 billion business, it reflects a depressing future for an industry that generated nearly $50 billion in ad revenues in 2000. This 2020 projected total also includes revenues that will be generated by new digital-only local media news publishers, suggesting that today's leading newspaper companies will be sharing an even smaller pool of declining dollars.

Perhaps newspaper publishers can offer a compelling counter argument to my prognosis. But in the past year I have met with senior executives of several leading newspaper companies and reached out to several others. I've introduced ideas for restructuring their businesses to be better positioned for the future and introduced companies that are prepared to make investments to help newspapers rebuild their declining ad revenues. Instead of responding positively, they have uniformly planted their heads firmly in the sand and maintained their commitment to dying enterprises and failing business models.

In the past few months, Hearst Magazines and Conde Nast Magazines have announced organizational restructuring. And Gannett's USA Today has suggested it will begin to wean itself off print. Even within these companies, newspaper executives are failing to effectively respond to their companies' declining revenues and dismal future.

The future of newspapers has probably already been written; maybe publishers have 24 to 36 months to change that future and begin a process of radical transformation. But the industry's management, mostly in their late 50s and 60s, sees little self-interest in making personally risky transitions or introducing radical change for which they are ill-equipped individually or corporately. Better to hold onto their inflated salaries and maintain the status quo as long as they can.