Newspapers: shrink your way to excellence

Newspaper stocks are generally down this year. New York Times -30%, Tribune -22%, Washington Post -22%, Gannett -19%, Knight Ridder -16%, Dow Jones -15%.

The newspaper industry is shrinking for several reasons. First, there is a shift to the internet:

• Internet usage and broadband explode.
• The rise of Google, Yahoo! and blogs for news.
• The rise of eBay, Craigslist, etc. in the classifieds market.
• Revenue from online ads is simply lower than for print ads.

Second, several other sections of the advertising market show rapid growth.

Third, advertisers are consolidating (Federated/May) and several industries face difficult times (automotive, film).

Interestingly, the New York Times is launching OnMovies in December, an in-cinema magazine free to ticket buyers. It is to be fully advertising funded.

Conclusions:

• Newspapers are moving online and should embrace blogs, podcasts, etc.
• Free sheets and magazines can capture a so far untapped slice of the ads market.
• Newspapers, like telco incumbents, must shrink their way to excellence.