eMarketer: Newspapers Face Harsh Reality

The outlook for newspaper publishers in the U.S. is grim; their business model is broken and advertisers are bailing, according to eMarketer.

Newspaper ad revenue will decline 16.4 percent in 2008 to $37.9 billion, eMarketer said. By 2012, that figure will slide to $28.4 billion. Revenue in the category is falling more quickly than in any other major medium. Classified advertising is plummeting thanks to craigslist and its brethren.

Circulation for newspapers continues to deteriorate because consumers increasingly go online for news that is timelier and — in many cases – free of charge. And the relatively high fixed costs of paper, printing and distribution show no signs of waning.
The financial pressure on newspapers is enormous. To attract both readers and advertisers, they have invested in beefing up their Web sites. But even online ad revenue — which offered a glimmer of hope — has begun to slow.