It’s Official: The Newspaper Industry Has Given Up on Newspapers

Pile of Various newspapers over white background.In the past couple of weeks, three of the major legacy media companies announced they were splitting their companies into separate-but-unequal broadcast and print ventures. The decisions by Gannett, E.W. Scripps and Tribune to divide their once “synergistic business models” into separate and very distinct businesses indicate that we are now at the beginning of the end-of-the-end for this industry. The pronouncements followed similar moves recently by News Corp, Belo, Media General and others.

One newspaper consultant recently remarked to me that the sophistication of these businesses being split is analogous to the kind of surgery that took place on Civil War battlefields — hacking off the damaged leg to save the life of the injured soldier.

After the surgery is completed, the legacy print spinoffs (a.k.a. the detached limb) are left with little to suggest future success — some have been saddled with tremendous debt, limited capital, little culture to innovate, and damaged brands. It’s never good for your brand reputation when your own company does not want you.

The Impact and Opportunity of Change
In 2000, the newspaper industry in the U.S. had over $60 billion in advertising revenue — today that number is less than $20 billion.

Mary Meeker’s 2014 report on Internet Trends unveils that print is over-indexed for revenue – print advertising revenue significantly outpaces the time consumers spend with the medium — by a factor of 4 to 1. Consumers spend approximately 5% of their media time with print, but the industry still receives 19% of the ad spend (chart below). According to Meeker, both of these numbers are expected to decrease rapidly.

Thus, billions of dollars in ad spend (according to Meeker) are searching for a place to land: a place where their advertising, promotion or sponsorship message can align with content.

Meeker Audience

Few brick-and-mortar consumer businesses ever won the marketing war via AdWords and Groupons alone. Even as newspapers decline, local advertisers still need to be aligned with content — the type of content that delights and educates a community. The type of content that gets shared on Facebook, influences a decision of whether your child goes to public school or private school, and helps you understand the candidates for Mayor.

The delivery system of news is no longer a de facto eight-hour manufacturing process involving ink, giant spools of newsprint, trucks, plastic bags and rubber bands. It is a nearly immediate process from reporter through media platform and distributed via social media.

The newspaper industry’s model lasted decades and created nearly perfect local monopolies. First, family-owned newspapers dominated the industry, and then consolidation into corporate media groups comprised of TV, newspaper and digital. Both as family businesses and as conglomerate media structures they generated billions annually over the past 50 years in mid-sized cities like Hartford, New Orleans, and Dayton, Ohio.

The Cavernous Content Gap
The truism is that in most markets the legacy newspapers still  generate 70-80% of the fact-based journalism. Local television and radio rip-and-read or pivot off of the journalism of the local paper. But before our eyes the amount of original local reporting in local markets is decreasing exponentially.

Democracies flourish when the local media is keeping an eye on the corrupt mayor. The local furniture retailers also flourish when their summer sale can be adjacent to local content about how to remake a living room on a budget.

The Wildest of the Wild West is Coming
The next phase in local content, journalism and advertising will be the most innovative and dynamic since the transition from town crier to printed word. Meeker also explains that there is a $30 billion opportunity transferring to online and mobile.

Adventures in new models began with Microsoft’s Sidewalk that was launched in 1997 and was later sold to Citysearch. As the San Francisco Examiner wrote in 1997, “In city after city, including San Francisco, Microsoft has wheeled out an expensive slickly-packaged Internet entertainment guide called Sidewalk, closely watched by nervous newspaper executives worried that the new Web sites would divert advertising dollars once earmarked exclusively for print.”

Microsoft’s CEO Steve Ballmer later lamented selling off Sidewalk. The recreation of the local content, newspaper-based advertising model has been in transition for almost two decades, but now we know that legacy media has recognized the fate of newspapers and their Web properties.

Opportunity in the post-newspaper world is endless — the next local content models will have the potential to create a new and deeper relationship with consumers. With the average smartphone user touching their phone 125 times per day, content producers can create endless ways to provide high-value content, experiences and opportunities to monetize.

The newspaper is completing its life cycle, but content may be just beginning its maturation.

Fenton, JoshJosh Fenton is the co-founder of GoLocal24, a digital news company focused on local media in midsized markets (not hyperlocal).

  1. Sara Bendetson
    August 11, 2014

    Really enjoyed this article, Josh. I completely agree that social media has become overwhelmingly important in terms of consuming regular news. The average American spends 3.2 hours per day on social media- you can only imagine how much information a person can consume in that amount of time as opposed to reading a daily newspaper.

    1. Shellipova
      August 12, 2014

      This article resembles a 1940s TV staffer writing about the end of radio and newspaper. Do we still have radio and newspapers today? Yes, radio has expanded to satellite radio options, and internet.. Many newspapers continue to thrive albeit on different platforms and formats. The author, Josh, works for GoLocal24, a fledgling company which is trying to compete with tv, radio, and newspaper as well as other digital companies. The article appears to be a virtual “rah-rah” rally, and an unpaid advertisement, to promote the GoLocal24 cause and add to the doom hype about any traditional media. It’s any traditional media’s game to lose. They own the trust earned over generations of service, and can play just as hard on any platform as a newbie. Traditonal media just has to plan one step ahead from here on. Go Local who?

  2. Darlene
    August 12, 2014

    There are lies, damn lies, and statistics.
    -Mark Twain

    Q. Why are some of the wealthiest, and arguably some of the smartest people in this country buying up newspapers if they are truly going to perish? Firstly, the newspapers are trusted brands with high quality, local reporting. All the new newspaper owners have to do is strategize, analyze the scavenger start-ups, analyze what content people want and need, circle the troops and release on platforms and formats that people want these days, including possibly print. Yes, some people still want to read in print but the content will need to evolve with the most current thirst. Newspapers are under-valued so they can be purchased at bargain basement prices by people with the means. Smart people can do wonders with these brands. When they do, many start-up vultures will begin starving. Newspaper powerhouses should have invented and launched many communication outlets including sites, search engines, and social media channels that exist today. They’ve had the cash flow to do so and but admittedly have been slow to act. Shame on them. There is still time and many new owners have the cash to disrupt the Facebooks and Googles of today, leveraging their many century-plus brands. In the meantime, the gazelles will keep bouncing pebbles off the sleeping lion in an attempt to prove the lion is dead, announcing they are about to be king of the jungle.

  3. August 21, 2014

    Nothing about this article is accurate.

    Newspaper companies still have 8-12% profit margins.

    Please do more research before writing nonsense.

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