Outsell: Newspapers Too Slow to Make Digital Transformation

Despite the fact that the newspapers have been all but crippled by the advertising slump and the recession - there have been six bankruptcies in the newspaper industry, along with colossal cutbacks - papers have failed to move as fast as other media categories in the transition from print to digital revenue, says newspaper analyst Ken Doctor in his latest report released by Outsell.

The print-based business model has been in decline, which has been exacerbated by the recession. Publishers’ ability to move quickly to digital platforms is a necessity, but the news segment is still the biggest laggard in terms of moving to digital, Doctor says (via BtoB).

Newspapers are the largest of the segments tracked by Outsell, but the segment has consistently pulled the lowest portion of digital revenue - as a percentage of overall revenue - of any of the segments Outsell covers, pulling just 11% of its revenues from digital in 2008, according to the report.

The technical and medical information publishing segment, on the other hand, got 69.3% of its revenue from digital, up from just 44.9% in 2005, while the b-to-b trade publishing and company information segment, a closer cousin to news publishing, took 36% of its revenue from online during the year, up from 24.4% in 2005.

In the information industry in general, non-news publishers now earn almost seven times the revenues from digital sources than news publishers.

But Borrell Associates predicts that newspapers will begin to better “redefine” their products, which will help them cease their declines this year and rebound 2.4% in 2010.

Things for the industry will start to improve even more after next year. By 2014, newspaper income will be up a total of 8.7% over the 2009 figures. Though this rebound will be mild and still short of its 2008 level, it will be enough to increase newspapers’ overall share of total ad revenue 1.5 points, from 14.4% to 15.9%, according to Borrell.

In order to make their digital content bear more revenue, newspaper companies including MediaNews Group and News Corp. are moving to paid content models.