Posted on 10/25/2006 1:14:46 PM PDT by abb
NEW YORK It could take as long as 30 years for online revenue to represent at least 50% of a newspaper’s bottom line, according to a new report issued by Merrill Lynch on Tuesday.
“Even if the rapid [online] growth continues for the next few years, we don’t see online representing over 50% of newspaper ad revenues for at least a couple of decades, suggesting that industry profit could stay flat for the foreseeable future,” wrote analyst Lauren Rich Fine.
Fine did a back of the envelope projection assuming double-digit growth for online ad revenues through 2012 eventually slowing to 5% with print advertising estimated to decline 1.5% annually.
Using these figures, Fine expects cash flow to be flat to slightly down for the next 20 years.
Meanwhile, for the companies that have reported 3Q results, ad revenue was down 2.2%, circ revenue was down 1.7%, and operating income was down 15%. None of this bodes well for the industry.
Based on executive remarks, 4Q is looking to be about the same. Merrill Lynch is projecting a 2% drop in ad revenue. Furthermore, the note suggests the industry is in for another four quarters of declines using the last two downturns in the early 1990s and 2000s as guideposts.
Generally, the industry bounces back but there’s concern that won’t be the case. “We are fearful the recovery coming out of the current downturn could be even more muted as online continues to transform the newspaper’s most lucrative, and most cyclical category, classifieds,” wrote Fine. “Put another way, moving from a near monopoly to a competitive model is having the impact of restraining blended ad rates and absolute dollar profits.”
Jennifer Saba (jsaba@editorandpublisher.com) is associate editor at E&P.
Ping
And what do they think they will have that anyone savvy enough to use the web will pay for?
Rule one is you must
never underestimate
the total number
of AOL types
futzing around on the 'net.
There's more every day.
I will be gone by then and so will most of the lying spinning leftwing Dinosaur Fishwraps.
And, of course, the rest of the on-line media world is going to just stand still while it waits for the dinosaur print media to catch up.
To which I say ... hahahahahahaha
<]:^)
A hundred years ago, quite a few livery stables were finding that they hard to start stocking gasoline as well as the usual equestrian fodder. Some of them didn't like it. The stuff was smelly, dangerous, and it brought in vehicles that were likely to the horses.
I'll bet some livery stable lobbyist declared, "You know, I think it'll be a hundred years before we sell more of this gasoline stuff than oats," not anticipating of course that livery stables themselves would practically disappear.
What's a newspaper?
Save the spotted owl by outlawing newsprint in 24 months and it will pick up qickly.
When high speed is everywhere, all catalogs, classifieds etc. will be online. They will be put there by individuals, entrepreneurs, and businesses.
There will be no need for newspapers.
We're talking less than 10 years. All that will be needed is server farm.
This is a great opportunity for some balanced or conservative person to start a news service.
It should be web based.
It should have sources for the news, and not just link to established news sites.
It should have sections for local news (the only reason I still get my local liberal rag is for the local news)
It should have advertising and be economically viable - the free market economy should rule.
"Rule one is you must never underestimate the total number
of AOL types futzing around on the 'net. There's more every day."
In 30 years AOL will be a nothing but a faded (bad) memory. We can't even imagine what the web will be like in 30 years but I am confident that the print news will have little to offer online that cannot be had for free.
My theory is that the rags have been overcharging for years because of inflated circulation numbers and untraceable advertising rates. Click-throughs can now be tracked and advertising has been shown to be ineffective.
Other than properly spaced type here on FR reading online sucks.
Plus at most papers online they have irritating ads that even if they are not a pop up they make your eyes go crazy.
Exactly when people start realizing that newspapers are really not the most effective way to advertise and theay they have been paying bogus rates for what they have been delivering, they will start pulling the cash and that may have already started.
Being able to track your ads is key and you can on the internet but no one wants to read crap online, with a bunch of garbage pop ups.
Newspapers are going away but probably not all the way just enough away to not be in profit and not to be able to influence anyone.
Oh, I think we can.
The whole trend in computers
for twenty years now [!]
has been point-and-click --
i.e., "let's give computers
to really dumb folks."
Almost certainly
that trend will continue. And
also for decades
the media trend
has been Balkanization
and exploitation.
Almost certainly
that trend will continue, too.
So, decades from now
the 'net will have morphed
into AOL writ large --
vast numbers of folks
pointing-and-clicking
at choices given to them
by marketing types.
Of course, there always
will be non-AOL types,
but greater numbers
of the other type
always seem to drive culture.
What else could happen?
I was kind of hoping they would all just dry up and blow away, even the online editions.
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