Paywalls
or No Paywalls, Newspaper Revenue Declines Seen Through
2017

Total
Revenue Expected to Keep Declining Over the Next Four
Years

By: Michael
Sebastian Published: June, 2013

Despite the promise of
online paywalls and gains in digital readers, U.S. newspapers’
total revenue will continue to decline through at least 2017, a new report
said.

Total U.S. newspaper
revenue is projected to slip at a combined annual growth rate of 2.9% between
2013 and 2017, as circulation trends improve but advertising falls at a compound
annual rate 4.2%, according to the latest annual Global Entertainment and Media
Outlook from PricewaterhouseCoopers.

“There are some very
positive signs about the resilience of the industry, but a lot of that lost
revenue won’t necessarily come back,” said Greg Boyer, managing director at
PricewaterhouseCoopers’  entertainment, media & communications
practice.

Some of that promise comes
in the form of more readers online. Newspaper websites drew more than 100
million unique visitors in 2012, according to the Newspaper Association of
America. They also saw a 7% boost in unique visitors between the ages of 21 to
34. As more people go to newspaper websites, digital advertising is expected to
increase through 2017, growing at a compound annual rate of 9.7% between 2013
and 2017, the report said. But the gains won’t be enough to offset the 7.8%
compound annual decline in print ads.

Newspaper revenue from
digital ads in 2017 is projected to hit $5.5 billion, compared with $12.8
billion in print.

Circulation revenue is
projected to slip at an annual compound rate of just 0.2% between 2013 and 2017,
helped by a 29.8% increase in digital circulation revenue thanks to the
introduction of online paywalls. The slide in print circulation revenue will
continue, but at a slower rate, dropping by 1.8% over the next four years. The
bulk of circulation revenue — $9 billion — comes from print, with the other $1
billion a result of digital subscriptions.

The shifting landscape of
the newspaper industry is giving circulation revenues a greater piece of the
overall pie. “As advertising revenue has declined, this shift toward greater
share of income from circulation has been imperative,” the report said.
“Securing the future loyalty of readers, while avoiding large discounts on
subscriptions, is more of a priority than ever.”

This has begun playing out
at The New York Times Company, where combined circulation revenue for The New
York Times and sister publication the International Herald Tribune began
outpacing advertising revenue this year. “Given that one of the underlying
structural problems of the U.S. newspaper industry has been its
reliance on advertising rather than circulation revenue, this was a seismic
change,” the report said.