The Consumer IS paying more for news

Posted: August 10, 2010 in Consumer Power, Content, Convergence, Digital Media

The most recent quarterly reports from companies in the newspaper industry saw the drop in advertising revenue begin to slow down. According to David Cole’s newsletter, News Inc., newspaper ad revenue at nine publicly traded newspaper companies dropped 5.9 percent this past quarter. In the first quarter, that drop was about 9 percent year over year.

But just as interesting is this tidbit from media business blogger Ken Doctor, who says that most publishers have begun to see revenues shift away from what had become the 80/20 (circulation vs. advertising) breakdown (In recent years ads were 80% of the revenue, while circulation revenue, ie. subscriptions and street sales, provided the rest).

And it isn’t just that the ad dollars are dropping faster. Actual circulation revenue numbers are up, despite fewer copies being sold. At Dow Jones, there was an 11 percent increase in circulation revenues. At the E.W. Scripps company, Newspaper ad revenues were down 7.7 percent, but circulation revenues were up 4 percent.

According to Doctor, the percentage of revenue coming from circulation is now growing, as is a new line, “other revenue.” He further points out that in Japan, circulation is now the largest revenue stream for newspapers. In Europe and the UK, circulation revenue is 35-45% of the pie.

What this means is that people are paying more for news already, technology aside. No reason to think the same model won’t develop on all platforms.

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