Winter is coming: Print revenue could be headed for another cliff

I meant to write about this when it happened, but I was busy getting ready to fly to Italy for a conference (I know, I know) and so I didn’t get the chance. But I think Clay Shirky pointed out something interesting in a recent conversation with New York Times public editor Margaret Sullivan about what the future holds for traditional media entities like the Times — and it’s something that I confess had not really occurred to me. Namely, the idea that instead of declining slowly over time, print advertising revenue could suddenly hit another cliff and go into free fall.

The subject came up after Sullivan posted a column about the Times’ continued reliance on the print side of its business, something that still generates over 70 percent of the company’s revenue — as it does for most newspapers. According to the public editor, more than a million people still buy the Sunday paper each week, a number that has declined from 1.8 million in 1993. The average age of a print reader is 60.

The suggestion from Times executives was that print would likely be around for some time, and that print subscribers and advertising would also likely continue to generate a large chunk of revenue for some time. But in an emailed response to the column, Shirky suggested a “darker narrative” — in a nutshell, he said he expected the pattern of print-revenue decay, which is currently fairly slow, to accelerate.

“The people you quote — Baquet, Caputo — seem to be betting that the current dynamics of slow decline form the predictable future for your paper. I doubt this, and the alternate story I’d like to suggest is that print declines will become fast again by the end of the decade, bringing about the end of print (by which I mean a New York Times that does not produce a print product seven days a week)”


And why does Shirky think the decline of print-advertising revenue will pick up speed again? Because he argues that there is a kind of cliff approaching when it comes to the willingness of advertisers to support the paper financially when its readership in print continues to dwindle. Beyond a certain point, expensive ad campaigns won’t make sense given the small number of readers:

“Both your Sunday and weekday readerships are already near important psychological thresholds for advertisers — one million and 500,000. When no advertiser can reach a million readers in any print ad in the Times (2017, on present evidence) and weekday advertising reaches less than half a million (2018, using the 6 percent decline figure you quoted), there will be downward pressure on CPMs.”

This is the part that hadn’t occurred to me — that advertisers have a psychological point beyond which it isn’t worth spending much on a print campaign. And although I don’t know for a fact whether Shirky is right about the numbers, the argument itself seems plausible. And as he goes on to point out, even as revenue is declining sharply, the costs of producing the print product will not. The problem with print, he notes, is that “the advantageous returns to scale from physical distribution of newspapers become disadvantageous when scale shrinks.”

“The ad revenue from a print run of 500,000 would be 16 percent less than for 600,000 at best, but the costs wouldn’t fall by anything like 16%, eroding print margins. There is some threshold, well above 100,000 copies and probably closer to 250,000, where nightly print runs stop making economic sense. This risk is increased by The New York Times’s cross-subsidy of print, with its print+digital bundle.”

Is Shirky right about a second cliff? I don’t really know. But I think his argument should be required reading for newspaper executives who still believe that the decline of print advertising revenue and readership will be a gradual sailing-off-into-the-sunset kind of affair. It could be anything but. Sullivan said she plans to post more about her conversation with Shirky, so hopefully this discussion will continue.

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