Although the overall amounts are small, a handful of alternative revenue streams pursued by daily newspapers are throwing off double-digit profits.
And while monetizing digital operations remains a challenge, daily newspaper publishers expect digital revenue to represent a significantly greater share of their revenue stream in the coming three years.
Interviews with 416 publishers in a recent telephone survey revealed strong expectations that their papers’ reliance on print revenue would decline in the coming three years and that digital and alternative sources would represent a growing share of overall revenue.
The survey, the annual Publishers Confidence Index conducted by the Missouri School of Journalism and the Donald W. Reynolds Journalism Institute, is the largest of its kind: respondents represent 30 percent of all American dailies.
Participating publishers were asked how much of their advertising revenue presently comes from print, online (Web) and mobile ad sales. Print continues to bring in the lion’s share of revenue, averaging 86.7 percent of ad revenues for the surveyed newspapers. The publishers estimate online ads now represent 11.7 percent of revenue, while mobile represents 1.7 percent.
In three years, estimates averaged 71 percent from print, 21.6 from online and 8.2 percent from mobile advertising.
Publishers also expect revenue from digital subscriptions to represent a larger share of overall circulation revenue. According to their estimates, print now averages more than 93 percent of circulation revenue; digital makes up the remaining 7 percent. But in three years, they project print circulation will comprise 78 percent; digital circulation will represent 22 percent.
Alternative revenue sources
Frustrations with flat revenue have pressured newspaper publishers to explore new revenue streams and develop new products, and publishers said they were trying a number of non-traditional initiatives to supplement revenue from the core.
- Niche products: Nearly two-thirds (65.6 percent) of respondents said their papers had published niche products such as directories or special interest magazines, and 94.8 percent reported that these efforts were profitable. The average profit reported was 22.6 percent of revenue from the niche publications.
- Digital ad agencies: Almost half the newspapers surveyed have launched “digital ad agencies” to help local businesses market by selling local digital marketing services. Forty-five percent said they’d launched such an effort, and 66 percent of those said their efforts were profitable.
- Event marketing: Almost exactly half the publishers (49.8 percent) said their newspapers had tried event marketing. The investment levels were small — most said they used existing staff and resources — and so were revenue levels. But almost all (90.7 percent) said their event marketing efforts were profitable at this point, albeit to a small degree.
- Commercial printing: Nearly six in 10 (58.3 percent) have begun or expanded commercial printing operations, and nearly all of those (97 percent) reported those efforts were profitable, with an average profit of 21.4 percent.
- Video production: A smaller number reported pursuing video production. Some 21.5 percent reported efforts to develop video as a revenue source; 44.4 percent said the efforts were profitable. The average profit percentage reported was 13 percent of revenue.
- E-commerce: Nearly a quarter of the publishers (24.5 percent) reported experimenting with e-commerce, handling online sales in exchange for keeping a piece of the revenue, and a little more than half (53.5 percent) said their efforts in this area were profitable. Those who found it profitable reported an average profit of 18.6 percent.
Next: An expanding mobile footprint
The Publishers Confidence Index is funded by the Houston Harte Endowed Chair at the Missouri School of Journalism. Telephone interviews were conducted by the Center for Advanced Social Research. Faculty members of the Missouri School of Journalism crafted the questionnaire with input from Tom Rosenstiel of the American Press Institute.