Back in July I argued that broadcast television would be the first heritage media medium to fall. The reasons I gave hold true today: broadcast television is the least prepared for the changes ahead, and not having experienced a gradual hit upfront, they will fall the hardest and quickest.
Four months later and the economic premise used in that post has changed. Heritage media is imploding around us, and the end is now nigh for newspapers, whereas television has received a reprieve. My case for television falling was based on substitution and the rapid uptake of internet enabled television sets. Every major manufacturer (except LG) has an internet enabled television hitting the market next year (something I didn’t know when I wrote that post), but likewise, the rapid replacement of television sets by consumers has gone the same way as the economy: down. Without a major turnaround in the global economy, the reach of internet enabled televisions will grow more slowly, and hence broadcast television gets a time reprieve.
The end of print newspapers
We’ve known for a long time that newspapers were in trouble, but the economic crisis has been a stake in the heart of the business. Here’s a few recent stories from our media section:
Journal Register Company: two papers to fold, upto 13 in trouble
Seattle Times: 10% cut in workforce, second 10% cut this year, more cuts next year
Sun Times/ Boston Globe cuts, NY Times cash crisis
Tribune Company: $124 million loss
News Corp drops 30%.
McClatchy Co: advertising down 19.9%
NY Times: advertising down 16%
and that’s just a short list of some of the horror stories coming out of the newspaper business at the moment.
The big story was The Christian Science Monitor giving up its print edition altogether and switching to online only, the first big paper to do so, and likely the first of more to come.
The scariest story for the newspaper business is the financial state of the New York Times. Many newspaper companies are facing debt issues off the back of big loses, but the New York Times is in the most trouble, and must deliver $400 million to lenders in May of 2009 but only has $46 million cash on hand, and a short term debt facility that it may not be able to draw on.
Death of classified advertising
Figures released by the Newspaper Association of America in September showed the death plunge in advertising accelerating to a second quarter drop of 14%. We don’t yet have industry totals for the latest quarter, but nearly every major newspaper has reported an even larger drop for the 3rd quarter, some as high as 20% or more. Classified advertising is declining even more quickly, with some papers reporting drops of 40%.
Within the next 18-24 months, the print newspaper classified market will die. Perhaps not completely (you may still see classified ads in newspapers) but as a tangible income source for newspapers classifieds will no longer even register a small blip on quarterly financial statements.
The internet, driven in the United States by Craigslist (eBay and Amazon are also partly to blame) will hold a 99-100% market share of classified ads that less than a generation ago were the bread and butter of newspapers.
Display advertising: enough to save the day?
Display advertising (also known as retail of general advertising) is the only thing bringing money through the door at newspapers today, but even here the decline is accelerating, and post-election will continue to fall. All types of heritage media are predicted to fall in retail advertising well in to next year, and once again, newspapers will take the biggest hit.
Those that switch online only first may last the longest
Ultimately newspapers will kill themselves. The need to stick to a print edition at a time their advertisers and readers are switching online will be the death of most of them. As I’ve argued in the past though, newspapers don’t need a print edition to keep doing what they are doing. The Christian Science Monitor is leading the way, proving that the newsrooms of old may have a strong future in a digital only age.
The problem is both one of history, and stupidity. Newspaper owners won’t easily give up the print edition because print has often been the cornerstone of many of these companies for hundreds of years. But that sentimentality is also stupidity: those that dump the print edition now and focus their efforts exclusively online, cutting the deadwood as they go (printing plants cost money) will have a better chance than papers who make the switch as a last ditch attempt to survive. I still believe that some “newspapers” have a long future, but as news gathering and publishing organizations who publish online, not print editions.
Conclusion: or how long
The figure used in the past for the death of newspapers always placed the death at around 10-20 years. Given the slide into oblivion even the United State’s largest newspapers are now experiencing, I’ll give it 6 years to 2015, but with half gone by the end of 2010, and a significant number folding (10-20%) in 2009. Newspapers were a great party lasting hundreds of years, but the party is over and the end is nigh.