The Los Angeles Times erected its paywall on Monday, and a new study released on the same day shows why.
The latest report from the Pew Research Center’s Project for Excellence in Journalism details plummeting advertising revenue at the nation’s daily newspapers.
Newspapers are losing $7 in print advertising for every $1 gained in online advertising. Because print advertising continues to evaporate and online advertising has not filled the void, advertising revenue is now half of what it was in 2005.
“The shift to replace losses in print ad revenue with new digital revenue is taking longer and proving more difficult than executives want and at the current rate most newspapers continue to contract with alarming speed,” the study, written by Tom Rosenstiel and Mark Jurkowitz, noted.
This severe decline in ad revenue is one reason newspapers such as the Los Angeles Times and New York Times have explored paywalls, hoping to buttress the business with a second digital revenue stream.
Newspapers are missing out even more on another key platform — mobile. Advertising on mobile devices accounted for just 1 percent of digital revenue in 2011. Studies have put the amount of time spent reading on mobile devices at 23 percent.
“Executives are generally excited by the prospects of mobile, but for now it accounts for a tiny amount of revenue,” the report noted.
The PEJ looked at 38 different newspapers, interviewing executives for 13 of them. It tried to reflect the fact that most newspapers are small, as more than half of the newspapers survyed have a circulation of under 25,000.
It found discrepancies between the different newspapers in that some had far more advanced digital revenue programs.
Close to half of the papers were working on some kind of nontraditional revenue, like a conference.
But by and large the trend was the same.
“Cultural inertia is a major factor. Most papers are not putting significant effort into the new digital revenue categories that, while small now, are expected to provide most the growth in the future. To different degrees, executives predict newsrooms will continue to shrink, more papers will close and many surviving papers will deliver a print edition only a few days a week.”