Pew: News revenue drops by almost one-third. Time to panic?
According to numbers released today from the Pew Research Center, news revenue has declined by nearly one third since 2006. Pew estimates that the annual revenue in 2006 was about $94-$95 billion. Today the Center's estimates put that number somewhere between $63-$65 billion.
What's important to note, however, is the evolving channels from which this revenue is coming. In 2006 the vast majority of the money came from advertising -- 82 percent to be precise. While advertising is still the leader in terms of incoming money today, it has dropped significantly, now representing only 69 percent of the total annual revenue.
In turn, audience revenue as a percentage of the whole has grown -- that is, money coming in from "subscriptions, cable fees and individual charitable giving." Today that represents nearly a quarter of the newsgathering industry's annual revenue, compared to only 16 percent in 2006. The "twist" however, as Pew puts it, is that while the percentage of audience revenue is higher, the dollar amount is about the same if you factor in inflation. As Pew's Jesse Holcomb writes, "While audience revenue is becoming more critical to the business, it cannot fully compensate for the loss of ad dollars."
So what can make up that loss? News outlets (like Pando) have increasingly looked to venture capital or other private investments -- these are up from 2 percent in 2006 to 8 percent today. But there are plenty of reasons why a huge influx of cash from billionaires may not always be the best thing for journalism. Meanwhile, digital and print subscriptions grew 5 percent in 2012 alone, but Pew excepts this number to hold steady or grow only slightly going forward.
So is it time for consumers and producers of the news to panic?
Not necessarily. Individual outlets have found ways to weather the storm: Take the Guardian, for instance, which grew its digital revenue 25 percent over the past year, hitting nearly £70 million annually. And the New York Times has been seeing a large boost in its digital subscribers over the last year. Then there are upstarts like BuzzFeed which reportedly expects to hit $120 million in revenue this year. Its key to pageview success, at least right now, relies heavily on viral, listicle-like content, which is what ad execs just adore. The publisher also relies a great deal on native advertising -- a tactic Forbes utilizes as well.
Will this sort of long-form advertorial will sustain over the next few years? Forbes sure hopes so, as that's where 10 to 15 percent of its revenue comes from. But Business Insider CEO Henry Blodget isn't so sure. At a PandoMonthly last year, he questioned its efficacy. He wondered how successful advertisements in the form of stories really are when all you get is a "tiny little message" saying who sponsored it.
Despite sinking revenues, the good news is that the demand for news and the distribution channels for delivering it are greater than ever. On his blog, Marc Andreessen* sums up the reasons why he's bullish about the news industry, listing all the revenue streams journalism outlets should experiment with going forward. Sure, it mostly amounts to "here's a bunch of things that could work," but the reality is, that's where we are right now in the industry. Pew calls it an "all-of-the-above" approach. Others would call it "throwing everything at the wall and seeing what sticks." But whatever you call it, it's become the new normal.
[image adapted via thinkstock]
*[Marc Andreessen is a personal investor in Pando]