There was a time, not so long ago, when newspaper presses may as well have been printing money. A combination of hefty advertising revenues and circulation growth saw huge profits flow into the coffers of owners and shareholders. But those days are long gone. The announcement that the U.K.’s Independent titles are to cease printing in March came as a surprise, but many with an eye on the newspaper industry had mused that it was not a question of if, but when, the Independent would go. Circulation had dropped to around 56,000 copies daily and print advertising rates remained in long-term decline.
The problem for newspapers—and their owners—is not that news has suddenly become unfashionable, it’s that making money out of news is proving increasingly difficult. The reasons for the collapse in profits are simple: for more than 100 years newspapers controlled the news and advertising markets, but digital technology has changed everything. Staples such as classified advertising, property and cars went quickly online. Newspapers were too slow to react to classified sites such as CraigsList and Gumtree—and lost the market.
At the same time titles have hemorrhaged circulation as news, once a prized commodity, is now freely available on a diversity of sites. Legacy news organizations initially gave everything away for free online, naively assuming their brands were invincible and that digital advertising would simply replace print loses. However digital revenues have proved elusive, and while online revenues are growing, the growth is nowhere near enough to offset the decline in print advertising and circulation.
