Print journalism is changing fundamentally. Three dramatic events last week make the point: On October 18, Newsweek magazine announced it will become a digital only publication in 2013, ending 80 years in print.
The same week, John Stackhouse, Editor-in-Chief of The Globe and Mail, announced that the paper will launch a paywall for its articles. You will get to read the first 10 articles a month for free and then have to pay for the remainder. Finally Huffington Post Canada announced it has become Canada's largest national news site, with a record 3.9 million monthly unique visitors. In the US HuffPost's traffic has trumped the New York Time's.
Print journalism is in serious trouble: Advertising revenue for North American newspapers has fallen to the lowest level in 60 years (when adjusted for inflation and measured in constant 2012 dollars) -- plummeting from a peak of $63.5 billion in 2000 to just $19 billion in 2012. Adding in online revenue improves the picture to $22.4 billion -- but it's less than the $22.5 billion from 1953. The graph below is created from data from the Newspaper Association of America and then adjusted for inflation. You can access the raw data here:
Graph published with the permission of Mark Perry, you see details here.
In 2012, the value of the Search business -- paid search marketing, Search Engine Optimization (SEO) (also called natural organic search) and spending on search engine tools and platforms -- in North America is predicted to be $22.9 billion in 2012. Paid search involves Google Ad Words, Facebook and LinkedIn ads. An SEO firm helps its clients improve their natural - or organic search rankings. Today this is critical as 35-42 per cent of the search traffic goes to the #1 result in a search, the top three results take 58 per cent of the traffic while the 11th result typically has less than 1 per cent of the traffic. In short, the search industry's revenue is greater than newspaper industry's ad revenue:
This graph is published with the permission of SEMPO, you see details here.
I attended the Canadian Journalism Foundation event on this topic last week in Toronto titled: "Gutenberg's Last Stand: Reinventing the Modern Newspaper." And asked the panel of industry leaders: "Now that SEO is larger than the newspaper industry in North America -- why haven't newspapers expanded into this area?" I didn't get a satisfactory answer. It's simple: SEO is out of the scope of the traditional newspaper business model.
I had to smile when the editor of the Toronto Star was commenting on how the Star's articles weren't winning top ranking in Google's organic search -- some pieces ranked below those from the Brandon Manitoba Sun. Toronto Star editors then had to learn how Google algorithm works, and how to optimize headlines and articles for that ranking. So newspapers on the print side have begun to optimize for Google rankings, but the business side of newspapers hasn't. They are choosing, instead, to leave billions in revenue to a highly fragmented market of SEO firms.
Print industry leaders have blamed Google and Huffington Post for their fall calling these new aggregators "news parasites." It is interesting to note that recently Rupert Murdoch's News Corporation has reversed an earlier decision to stop articles from its UK The Times and The Sunday Times from appearing in Google's rankings. Apparently Murdoch's papers need the traffic. (Google sends a billion page views a month back to news sources. That's traffic that news sources can monetize with advertising).
It's a classic case of disruptive innovation that I talk about in my book, Blindsided! The print industry enjoyed rich margins for decades. Then along came Google and it was willing to make only pennies for advertising revenue where the print made dollars. Google made up the difference on volume.
Online traffic was so minuscule when Mosaic launched in 1993, Netscape in 1994 and Internet Explorer in 1995, that the newspaper industry could legitimately ignore this new medium. But as the Chinese say: "It is easier to step on a dragon's egg than it is to step on a dragon." The time to get involved was early when the stakes were low. The Huffington Post launched in 2005 and Google News in 2006. But the print industry's decline began years before the launch of either.
So what are the other causes of this precipitous plummet? In part it's been death by a thousand cuts. In 2009, I wrote about how Craigslist had taken billions out of the classified ads market, and autoTRADER, Monster.com and Monster.ca and many other niche-focused sites are all having an impact.
People are increasingly consuming information through video. While I, for example, have shot some videos for The Globe and Mail -- newspapers -- in print and online -- are still 99 per cent print. YouTube has hit four billion views per day and is the second largest search engine worldwide (it's also owned by Google). So what business are newspapers in? The business of print? Or the business of news? Of insight? Of commentary? Of immediacy? And if so, it should be in a 21st century form.
Ultimately it has been the newspaper industry's failure to adjust to market forces -- the failure to change as swiftly as the public news consumption patterns. Newspapers have failed, so far, to acquire the skill sets required for print journalism in the 21st century. And the industry has failed to understand just how deep and profound these changes are.
Here's another irony: I pitched this column to a number of print publications -- because it's an interesting story in my opinion -- but none would print it (surprise!). So I decided to publish it here on my HuffPost blog. If you like this, please subscribe to my RSS feed, tweet about this (I'm @JimHarris on Twitter)
Jim's HuffPo blog on electoral fraud was the #1 HuffPo blog of the day, week, and month when it was published with ~20,000 likes, shares, tweets and comments.
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