Thursday, 5 February 2009

Why newspapers are not dead and why there is still money in local media

US blogger Steve Yelvington has put forward strong arguments on why newspapers are not dead and why there is a huge demand for local media.
He argues: "Let's get some perspective. In spite of the worst economy since Roosevelt, many U.S. newspapers are still turning profits in the 15-20 percent range, and the U.S. newspaper industry is still turning around 50 billion dollars of gross revenue every year.
"Several major newspaper companies are in big financial trouble because they borrowed heavily to finance acquisitions on an assumption that even greater profit margins (over 40 percent in many cases) were going to continue. But do not confuse a poor corporate finance decision with fundamental sustainability of the business."
That might resonate with some of the expansionist regional companies in the UK.
Yelvington says there is still big money to made out of local media and comments: "I was reading a blog post the other day written by someone who had visited a local newspaper and was stunned -- stunned -- to discover that there's a lot of money in the local journalism business. Yes, there is. A lot. "
He accepts: "Look, there's no question that a fundamental restructuring is taking place in a number of dimensions" but adds: "Part of that involves a consumer preference shift from print to digital. Part of that involves an explosion of sources and choices that knocks the local newspaper out of the nonlocal information business. Part of it involves product disintegration -- especially classifieds from news, but also news itself being ripped apart.
"Those changes will present huge challenges and demand painful choices going forward, and both the print and digital product lines of local newspapers will have to adapt, along with all of the people who produce those products.
"But that doesn't roll up to a "newspapers are dead" conclusion. There is tremendous demand for local media, both from the people we usually and falsely call "consumers," and the businesses that we often call "advertisers." The solutions that work to meet that demand will change. Some companies will fail to change and will die, and others will step in. We can be sure that the future won't be like the past, but that doesn't mean there is no future."
Saw this via

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