Newspapers urged to raise their prices to combat declining advertising revenues

By Ian Tennant

Recent data showing print advertising revenue continues to decline in the newspaper industry has emerged just as some observers suggest newspapers should consider price increases for their print product, a strategy that doesn't impress one Wall Street Journal editor.

According to the Newspaper Association of America's (NAA) second quarter results for 2012 (released Sept. 4), nearly $4.8 billion was spent on print advertising but that number reflects a 7.85 percent decline from the same period last year. While print and online ad revenues improved from the first quarter of 2012 to the second quarter, the overall trend is still pointing downward.

If the advertising dollars are adjusted for inflation, the projected $19 billion in total print ad revenue for 2012 will be less than what the newspaper industry received in 1950 when the NAA started tracking ad revenue, notes Mark Perry for DailyMarkets.com.

Newspapers have been experimenting with online paywalls, with some success in increasing circulation numbers, but industry observer Frédéric Filloux has re-issued his call for higher newspaper prices.

Filloux highlighted a survey of 25 top U.S. newspapers by the Germany-based Simon-Kucher & Partners that suggests revenue generated by a price increase will not negatively impact circulation as much as some may fear because loyal readers will stay with the print publication. Reflecting the reality that the print product is still the primary source of revenue as newspapers migrate to the Web, Filloux says the survey's authors conclude: "The print business is not your legacy, it's your bank."

The Dallas Morning News is one example of a newspaper trying to diversify its revenue sources away from a heavy reliance on advertising, including raising its home-delivery subscription rate and launching a paywall in March 2011. A summary from Simon-Kucher & Partners says the Morning News increased its circulation revenues by 11 percent when it raised its price from 75 cents to $1 in 2009.

However, Raju Narisetti, managing editor of the Wall Street Journal Digital Network, cautioned on Sept. 3 that newspapers may be making a mistake focusing on readers as a revenue source at the expense of advertisers. Narisetti told Rachel McAthy of Journalism.co.uk that there is potential for growth in the digital advertising market, but "my concern is why are we not focusing on the advertising end of the business which is … much larger and is growing, rather than focusing on the subscriber end of the business where we’re going to have a much harder time convincing people to pay for content?"

Speaking at the International Symposium on Online Journalism (ISOJ) in April this year, Narisetti said it was essential for journalists and developers to work together to improve storytelling to enhance the reader's experience. “My basic premise is that the future of our business and newsrooms is going to play out at the intersection of tech and content,” Narisetti told participants at ISOJ, the annual two-day symposium held at the University of Texas at Austin.

Note from the editor: This story was originally published by the Knight Center’s blog Journalism in the Americas, the predecessor of LatAm Journalism Review.