Report: Newspapers growing digital readership & revenue streams; those in developed nations most vulnerable to market threats

Posted by Leah McBride Mensching on June 14, 2010 at 12:52 PM

Newspapers in developed nations are generally facing steeper declines in advertising revenues, titles and circulations than their counterparts in more developing countries, a new report from the Organisation for Economic Co-operation and Development shows.

The Paris-based think tank said overall, however, the industry is finding new sources of revenue, while publishers in developing countries are continuing to grow their readership numbers, Canwest News service reported today. The report, "The Future of News and the Internet," examines the news business in 31 OECD member countries.

Chart: OECD (click on chart to enlarge)

In some of these countries, more than 50 percent read newspapers online (in Korea that number is 77 percent), but at the very least, 20 percent read online newspapers, the report states. However, willingness to pay for news online "remains low." And the share of people getting their news from online-only sources is expected to "grow rapidly with new generations who start using the Internet early in life. The real concern is that a significant proportion of young people are not reading conventional news at all."

Overall, traffic to news websites has "grown rapidly," with 5 percent of all Internet visits "related to reading news online, which is a conservative estimate," according to the report.

Financially, the regional and local newspaper publishing market has been hurt most in the United States, United Kingdom, Greece, Italy, Canada and Spain, the report states.

The global newspaper publishing market still makes more than half (57 percent) of its revenues from advertising, and online advertising accounted for an average of just 4 percent of total newspaper revenues, the report states.

Meanwhile, costs unrelated to editorial work continue to dominate and make newspapers "more vulnerable to the downturns and less agile in reacting to the online news environment." These costs include administration, maintenance, promotion and advertising, production and distribution.

According to the report, declines in newspaper markets in OECD member countries from 2007 to 2009 were:

Japan: -15%
New Zealand: -13%
Poland: -11%
Ireland: - 10%
Germany: -10%
Hungary: -9%
Norway: -8%
Switzerland: -8%
Belgium: -8%
Finland: -7%
Sweden: -7%
Portugal: -7%
Korea: -6%
Czech Republic: -6%
Netherlands: -6%
Denmark: -6%
Mexico: -5%
France: -4%
Australia: -3%
Austria: -2%

In emerging economies, average paid daily newspaper circulation grew 35 percent between 2000 and 2008, the report stated, according to Tech Eye. India saw the largest growth during that time, at 45 percent; South Africa saw growth of 34 percent; and circulation grew 29 percent in China.

"While it is clear that newspapers and other more formalized news outlets are experiencing threats and challenges to their more traditional business models from the Internet, it is also true that we are experiencing a period of great opportunity that must be seized by industry to ensure the success of news outlets with the corresponding benefits to society and democracy that they offer," the report states, according to the Canwest article, posted by the Vancouver Sun.