Digital technology is increasingly competing with print media by opening access to endless sources of news. It may now seem that the need of the reader to buy a newspaper for news and the need of the advertiser to advertise in it, is slowly receding. Thus it is for the newspapers to look at emerging options and to rework their traditional sources of revenue.
Advertising and Circulation Revenue
There are two basic sources of revenue for the newspapers:
1. Advertising.
2. Circulation.
The circulation revenue recovers only a part of the cost of producing a newspaper. The onus of making a profit after all costs, is on the advertising revenue. If circulation falls, advertisers shy away from using the medium. On the other hand an increase in circulation to take reflect on ad revenue takes time. Newsprint account for about 70% of the cost of production, but any increase in circulation does not decrease per unit cost. Also any marginal increase in advertisement revenue due to increase in circulation is not apparent in the short run.
Unique Success of Local Newspapers
The present economic downturn has hit newspapers very hard. Globally, many are facing closure. But there is a clear divide between big-city newspapers and their relatively healthier brethren in small cities and towns. When big newspapers fight for survival, often small community newspapers thrive. While classified advertisement revenue has taken a hit for big-city papers from competition from free or cheap on-line listing, many smaller newspapers have retained their appeal to local advertisers who target customers who live and shop nearby.
Cost of Increasing Circulation
In the past, newspapers have tried to increase circulation in far flung and scattered areas. By touting circulation figures they hoped to attract advertiser. The cost of generating these numbers have proved to be heavy for the newspaper. On the other hand, over the years, advertisement media buyers and planners have reduced their dependence on absolute readership numbers. Instead they look they look at the qualitative aspects of the targeted readership. No wonder the elusive advertiser is much more inclined to use other less expensive media for the quality and quantity reach instead of depending on traditional media like print.
Thus, if inconsequential circulation can be reduced even by a percentage, it would be a great savings for the beleaguered industry. Yes, it also means leaving vacant spots to smaller local players. But then perhaps it is the only way for the market to evolve.
Secondly, the revenue earned from the cover price after distributor commission recovers only a small part of the cost of production and distribution. If the cover price can not be tinkered with for fear of losing circulation, then the industry must look at the question of page level. Should a newspaper or for that matter a magazine must have so many number of pages or it will not sell ? In these tough times it would be a folly to assume that advertising revenue, will make up for all the shortfalls.
New Strategy for Print Media
Today web is a data retrieval tool for the people who are looking for specific information. They know the basic facts of news as it happened and would be interested to know what would happen tomorrow. They would spend more time on a newspaper, if the content is more compelling. It is the transient nature of the message on electronic media that drives audience to look for corroboration and authenticity in print or visual text. Therefore, editors could craft a new, forward looking role for print, alongside what is happening-right-now focus of digital news.
Modern newspapers must be compact, a less-is-more approach would help cut newsprint, printing, distribution and other costs that do not add to the journalism.
As for the revenue to sustain print media, it will have to come from a high degree of integration between the static and the dynamic mediums. For example, a dynamic browser tool-bar may aggregate news from different sources, allowing not only targeted advertising but also for charging micro-payment from readers.
In the true sense of the word no two media can be rivals. New technology rarely replaces the previous technology completely. As both print and digital media is completely dependent on computers for their production process it would be easy for both to be complementary to each other. The wise perspective would be one of digital and print media rather than digital vs print media.
The economic downturn has thrown up a challenge and an opportunity for the print media to transform itself.
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