The contrarian in me wants to believe that people are over-pessimistic about the prospects for newspaper, and so I’m feeling more and more like advertising remains underrated as a savior for high-traffic news sites. Nevertheless, judging by my own reading behavior, I very rarely buy papers, and while I pay for two — the FT and the WSJ — I can’t imagine paying for any more.
The Washington Post has a nice piece on the subject, arguing that papers are seeing readership decline faster than expected, while even the top papers playing chicken with one another over online subscription fees:
…daily circulation across the industry has declined every year since 1987; Sunday editions, since 1990. The Washington Post, for instance, has watched its average daily circulation drop from 779,898 to 709,500 in the past five years.
Circulation loss in itself is not debilitating from a revenue standpoint. In general, paid circulation accounts for about 20 percent of a paper’s revenue, with the rest coming from advertising. But ad rates are set by circulation figures: As circulation drops, so too will the amount papers can charge advertisers.
The result can be a vicious cycle. As advertising declines, newsrooms find it more difficult to afford overseas bureaus, extensive national operations and other editorial additions that help produce an authoritative daily report. As they cut back, they risk sending readers elsewhere for news, leading to further circulation declines and lower ad rates.
Even the big papers with widely-viewed online sites aren’t sure what do, as the piece rightly points out. After all, having so many readers outside their region limits the likelihood that people will pay for the privilege of viewing the site:
General-interest papers such as The [Washington] Post and the New York Times are playing a sort of game of chicken with each other: None wants to be the first to charge to use the Web site, fearing that users will refuse and simply migrate to a competitor whose site still is free. Papers, however, have begun using their Web sites to provide Internet-only content that gives in-depth information on everything from football to politics beyond what is available in the newspaper. In future scenarios, such content may require a paid subscription. A potential model is ESPN’s Web site, which includes a great deal of free content but charges $6.95 a month for its premium “Insider” reports. In the online news industry, this is called moving content “behind the wall.”
Caroline H. Little, publisher of Washingtonpost.com, said the site has considered charging for premium content, but she is worried by examples she has seen elsewhere in the industry. The New York Times recently hinted it may start charging for some of its Internet content.
“So, not to say that it’s not a possibility in the future, but our first priority is growing our audience, and this would clearly hinder that,” Little wrote in an e-mail. About 80 percent of washingtonpost.com users live outside the Washington area, the site’s research shows.