Balding: 'We must solve the digital payment issue'

Posted by Leah McBride Mensching on December 1, 2009 at 2:46 AM

The newspaper business model is powerless to compensate for falling print ad revenues, and the problem is not going to go away. The print model cannot and will not migrate to the Internet, where there is a "revenue black hole," in which 76 percent of all online revenues go to Google and Yahoo!, Timothy Balding, co-CEO of WAN-IFRA, told the 62nd World Newspaper Congress today.

"To compete, you will need to retain control of your content. In 2013, combined print and digital revenues will be less than print revenues in 2008," he said, citing data from ZenithOptimedia and PricewaterhouseCoopers. "Should we allow aggregators to build their business on the back of our content?"

Timothy Balding, co-CEO of WAN-IFRA. Photo: Brian Powers, Western Integrated Media

"There are outside forces we can't control," Balding said, referring to a chart of the Dow Jones Industrial Index over the past year that rapidly dropped off.

In terms of digital revenues, only Google posted first-half growth in 2009, he said, and in the third quarter this year, compared to the same time last year, newspaper ad revenues dropped 17 percent.

In the United States, which has been hit particularly hard, of 379 daily titles, circulation between April and December is down 10.6 percent, and digital ad revenues have fallen six quarters in a row. In 2009 in the U.S., estimates by PwC show advertising in newspapers in North America are down by more than 20 percent.

"If newspaper wish to maintain their strong content leadership, someone is going to have to pay. It looks like we must solve the digital payment issue," he said. "How deep does the hole have to get before publishers stopp digging?"

On the Internet, in decent economic times, ad revenues grow 15 percent a year, he said. And during that time, the number of online operations seeking ad revenues triples.

However, newspapers continue to grow on a global scale, he said, quoting data from World Press Trends. In 2008, the last year for which data exists for the full year, newspapers grew 1.3 percent. Over the past five years, it has grown 9 percent.

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