Monday 17 June 2019

Steve Dempsey: 'Print is dead... not the full story'

A new study argues that the print edition remains the most-read newspaper product and the primary revenue driver for newspapers
A new study argues that the print edition remains the most-read newspaper product and the primary revenue driver for newspapers
Steve Dempsey

Steve Dempsey

Print media is dying and the future is digital. That's the narrative that has been peddled and swallowed by media types in recent years as digital reach grew, print circulation declined and print advertising revenue plummeted. But maybe the death of print has been overstated and media outlets have been guilty of hastening the decline of their own printed product.

A new study called 'Charging More and Wondering Why Readership Declined?' argues that the print edition remains the most-read newspaper product and the primary revenue driver for the vast majority of newspapers, despite a multitude of digital offerings. Journalists and media-watchers, however, have focused on circulation decline without also referring to considerable price hikes for printed products which impacted circulation and, in turn, made the 'print is dead' line all the more compelling.

Iris Chyi, associate professor at the University of Texas' School of Journalism, is one of the report's authors. She believes the death of print narrative has always been a popular prediction. "Even when newspapers enjoyed sustained growth in advertising and circulation revenue in the 1990s, closures of afternoon papers and the financial difficulties of some metro dailies led many within and outside the industry to the same conclusion," she says.

"During the recession, quickened declines in circulation and advertising revenue seemed to substantiate that prediction. In addition, US newspapers were doing extremely well before 2008. Circulation revenue peaked in 2003 and advertising revenue, the primary revenue source, also reached an all-time-high in 2005. So the declines appeared to be really dramatic, leading to industry-wide anxiety."

Chyi's research analyses cover prices for American newspapers over the last 10 years, showing substantial price hikes. Seven-day home delivery prices more than doubled, and weekday single-copy prices have tripled. On average, a seven-day subscription now costs $510 a year. That amounts to print subscribers paying on average $293 more for delivery of the same newspaper.

But here's the interesting bit. Despite the price hikes, about two-thirds of print readers kept buying a product that had become much more expensive. "Historically, price elasticity of demand for newspapers has been inelastic," Chyi says, "which explains why many newspapers raised the subscription price. But demand for newspapers is not as inelastic as it used to be." This means that jacking up the price, without reinvesting in the product, is not a long-term solution.

But that's often what publishers have done. And due to the 2008 recession, news outlets also engaged in cost-saving exercises which had a cumulatively negative effect. Many publishers, Chyi points out, slashed resources for their print product, while continuing to invest in their digital ventures. Between 2008 and 2017, overall, newspaper newsroom employees in the US declined by 45pc, from about 71,000 journalists in 2008 to 39,000 in 2017. Other cost-cutting measures included reducing the number of pages, eliminating sections from the paper or eliminating home delivery on certain days.

One of the interesting elements here is the relationship between circulation and advertising: increasing cover prices may also mean reducing reach and advertising. "This is a classic vicious cycle, or a 'suicide spiral'," Chyi says. "Newspapers started raising the price to make up for the loss on advertising revenue, but a reduced readership became less attractive to advertisers, leading to more losses in advertising. The question is, can newspapers survive without advertising at all? In the meantime, newspapers are pushing print readers to their digital offerings, which is literally 'exchanging analogue dollars for digital dimes' when you compare revenue figures."

While this research is specific to the American market, Chyi says previous research on newspaper consumption behaviour shows universal patterns in different markets. So is there a framework for publishers to help them calculate a price that will maximise circulation and revenues from sales? Chyi doesn't think so.

"These are important questions that remain unanswered, mostly because no one questions major US newspapers' pricing strategy," she says. "When iPhone sales go down, analysts question whether the product has become too pricey. But when newspaper circulation goes down, no one even mentions these dramatic price hikes. Most simply assume that readers lose interest or die off."

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