So ad revenue for publishers has dropped nearly 30% in 2009, with little sign of a slowdown. Well, recently, a survey of some 500 newspaper executives revealed their beliefs about what the upcoming year will bring. They expect, get this, a .2% decline in revenue for this year. That’s right, there is a decimal point in front of that number. Significantly less than 1 % drop in an area that’s been free-falling for nearly three years now. Now I’m all for being optimistic, but come on. Here’s another point of view on the delusions that these 500 publishing executives seem to reveling in.
Of course, it could be that they genuinely believe that all of the cutbacks, corner cutting and cost savings that have decimated the quality of the industry (not to mention its supply of actual talented individuals needed to lead a rejuvenated charge) is enough to stem the declining tide. And I have a bridge in Brooklyn for you. Cheap.
I also came across this piece this morning, detailing another industry effort to help the bottom line: gouge the people who still want to pay for your products. This effort shows off something I have long been opposed to but is rampant in corporate thinking. Make decisions based on budget sheets and win! I have mentioned this a few times with any number of things, but the gist is the same. Spread sheets, no matter how detailed, do not give an accurate predictor of the cost or savings of cut backs. In an overly simplistic sense, they do to some people who don’t understand the nuances of the industry or reader or advertiser behavior. But just saying, “we’ll cut this line here, and that line will still stay the same and we’ll make more money,” is a refuge of small imaginations. Jacking the price of an ad up $100 from $900 to $1000 doesn’t necessarily mean that you’ll actually collect $100 more for each ad. In many cases, the question is not about making $100 more if we do this, it’s how many current $900 advertisers will we lose doing this. The spread sheet, unfortunately, doesn’t have a column for that.
The same logic applies to the cover price of publications. You have a current number of paying readers. Up the price, and we make that much more from them. Cut back on coverage, lay off some reporters, outsource some design, and we’ll make even more. Make the issues smaller, we’ll save on paper and ink, and even more money comes our way. But in lessening the product and raising the price, you will lose paying readers. And again, the spread sheet can’t account for readers seeing a lessened product and stop taking out their wallets. So all these other cuts are made, but the expected increase in revenue never comes. So what’s next? Let’s cut some more! It’s a vicious cycle, and one that can’t be stopped until someone throws out the budget sheet and starts thinking like a reader or advertiser. The Industry seems to have lost that capacity long ago. And that, more than anything else, may account for why they believe their products are valuable enough to make a comeback in 2010, weakened as they are.