Digital Media and the Newspaper Industry: an Interview with Michael Fogel of Hearst
This blog post lays out Mr. Fogel's views on the newspaper industry and explains how Hearst is riding the wave and leading the industry.
Digital Media Has Disrupted the Newspaper Industry
According to Mr. Fogel, the split in revenues for the newspaper industry used to be 80% advertising and 20% circulation. That was prior to double-digit declines in print revenues.
Not only have print revenues dropped dramatically, but newspapers are struggling to offer online services. Even as news publishers find ways to create and deliver digital products, margins on online services are lower and publishers need higher volumes to compensate.
How Hearst Uses Digital to Its Advantage
Unlike many of its counterparts, Hearst is surviving and even thriving in the digital world. The company was very close to realizing a year-over-year revenue gain in October. To Mr Fogel's knowledge, no other news publisher can say this.
When faced with declining revenues, Hearst responded with a multi-pronged strategy that is working well. Hearst doubled, tripled and, in some cases, quadrupled circulation pricing. Consequently, circulation has become a larger percentage of the total, accounting for 30% of revenues while advertising represents about 70%. And Sunday home delivery circulation numbers are actually up.
Hearst also focused on new digital services that would be of value to its customers, developed products and trained its staff to deliver them.
The Advantages Newspapers Still Have
Newspapers are competing in advertisers' minds and wallets with companies like Google, Facebook and Groupon. There is overwhelming choice and small-business advertisers are struggling to keep up and get the most for their time and money.