U.S. newspapers lost $10 in print advertising revenue last year for every $1 they gained online, a deeper loss than in 2010, as competition from Internet companies increases, a study by Pew Research Center found.
Newspaper revenues declined more sharply last year than in 2010 when publishers lost $7 in print advertising for every $1 generated from online outlets, according to Pew’s study entitled “State of the News Media,” which is published today.
“They’re continuing to lose ground to tech intermediaries,” such as Google Inc. and Facebook Inc. (FB) as well as to Apple Inc. (AAPL) and Internet retailer Amazon.com Inc. (AMZN), said Tom Rosenstiel, director of Pew’s Project for Excellence in Journalism, in a telephone interview. “The news industry has been fundamentally disadvantaged in this area,” he said.
The industry, suffering declines in print advertising, hasn’t been able to make up for those losses with digital revenue. Washington-based Pew’s study follows last week’s report from the Newspaper Association of America that revealed total newspaper ad revenue dropped 7.3 percent to $23.9 billion in 2011 from the previous year.
While online advertising among news groups increased by about $207 million, print advertising revenue declined by around $2.1 billion, Pew said.
Newspaper groups have failed to capitalize on the volume of personalized data available online in the face of increased competition from companies including Google (GOOG) and Facebook, which are selling advertising targeted to consumers based on their interests and demographics, typically at higher ad rates, Rosenstiel said.
Newspapers have slowly shifted their businesses online, led in part by the recent success of New York Times Co. (NYT)’s plan to charge readers for access to its newspapers’ websites. Pew’s study estimates as many as 100 newspapers are expected to offer a digital subscription model in the coming months.
Times Co. has about 406,000 paying subscribers to its websites, including those for its namesake paper as well as the Boston Globe and International Herald Tribune.
The Los Angeles Times, owned by Tribune Co., began charging for access to its website last month. Gannett Co. (GCI) said it would move 81 of its daily newspapers to an online paid model before the end of the year, with the exception of its flagship newspaper, USA Today.
“A growing number of executives predict that in five years many newspapers will offer a print home-delivered newspaper only on Sunday,” Pew’s report said.
News groups may consider business models similar to those of Thomson Reuters Corp. (TRI) and Bloomberg LP, Rosenstiel said. They may also consider becoming partners with data-driven companies such as Google and Facebook, he said.
Bloomberg LP, the parent of Bloomberg News, competes with Thomson Reuters in selling financial and legal information and trading systems.