Online newspapers up, print ads sliding further: larger slice of a smaller pie

I’m not sure the swings and roundabouts match up. The latest release of numbers from the US advertising market shows online newspapers enjoying another 19% leap year on year in advertising earnings while the print editions slide 9%. Doing that maths, that’s a vast net loss to the US newspaper industry). US newspaper websites took $3.2 billion in 2007 (about 7.5% of all newspaper ad income last year), that’s not much more than Google earned just from the UK market, so there’s little to party about in newspaper land.

The Newspaper Association of America had to dole out the bad news that print revenues slid over 9% in the same period. While it may have been the thirteenth consecutive quarter of double-digit growth for online newspapers (note the NAA data only started in 2004), the numbers just don’t stack. As the profitability of print collapses, the only route forwards are editorial and product cuts. The web revenues are not covering the print losses for most titles most of the time which means the firms are being squeezed just at the time them need to ramp up investment. The classic response of publishers then swings the other way: cutting the quality of what you sell at a time when many customers are nolonger wanting to buy leads in a depressing direction.

While web teams are celebrating a larger slice of the pie, I’m thinking that the pie isn’t going to feed the family the way it use to.