Report shows US newspapers having the greatest revenue decline

Posted by Carole Wurzelbacher on June 15, 2010 at 10:33 AM

The Organization for Economic Cooperation and Development is set to release a report that examines the state of the news business in 31 countries and the United States isn't looking so good, reports the New York Times. The report states that from 2007 to 2009 newspaper industry revenue fell 30 percent in the US, while the second greatest decline was 21 percent in Britain. Moreover, the report shows that fewer than half of adults in the US read newspapers regularly, while 96 percent of adults read newspapers regularly in Ireland.

Moreover, the report shows that United States' newspapers have a higher reliance on advertising revenue, rather than revenue made from sales or subscriptions. The report claims that in 2008 advertising contributed 87 percent to newspaper revenue in the United States, while it contributed 53 percent in Germany and 35 percent in Japan (although, Japanese newspapers are apparently immune to current journalistic industry problems). However, Eric Pfanner, writing for the NYT, points out that many US newspapers provide much of their content online for free.

However, despite the downturn, the OECD reports "large country-by-country and title-by-title differences and the data currently do not lend themselves to make the case for the death of the newspaper', in particular if non-OECD countries and potential positive effects of the economic recovery are taken into account."

The graph below depicts the dependence of differnet countries on advertising revenue. The newspaper industry derives about 57 percent of its revenues from advertising, reports the OECD. Yet in the US, reliance on advertising is comparitively high.

Moreover, the report shows that government run subsidies are not particularly successful, considering that some of the countries with the biggest subsidies (France and Italy) have the lowest readership. This news comes as particularly important as the US Federal Trade Commission is currently attempting to determine the best course of action for newspapers and one of their suggested solutions is a government subsidy.

Furthermore, the report shows that many of the countries reported on attempted to raise the quality of online journalism in response to newspapers' decreasing revenues. Logically, if the quality of online journalism improves, then the loss of print journalism would not be quite as lamentable. Yet, while many countries hope offering subsidies to online only news sources will improve the quality of online journalism, it remains to be seen if online journalism could in fact take the place of print journalism even with government subsidies.

The following graph shows the proportion of individuals who read online newspapers and magazines. The OECD also predicts "the share of people who only read online news is likely 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."

At any rate, despite being home to industry giants like the New York Times, The United States' newspaper scene is apparently not the one the one to imitate. While it has been a leader in the past, the United States newspaper industry would be well advised to observe other countries like Ireland and Japan and model a future plan based on those industries. There is no denying that the time is ripe for a change in the newspaper industry, particularly that of the United States. While there are no guarantees, perhaps a solution can be found through international collaboration, and a really productive brainstorm.

For more news on the OECD's report, visit our sister publication, sfnblog.com.

Sources: New York Times, OECD