Newspaper Publishers Offer Digital Services through BPO

After years of cost cutting, why are some newspaper publishers actually staffing up their in-house digital production operations and investing in technology and tools for new interactive services like video advertising, deals-of-the-day, social media services, etc.? As newspapers rethink and reinvent their business model, they should engage business process outsourcing to generate profitable revenues that will sustain their businesses and pay for quality journalism well into the future.

In 2010, advertising revenues for newspapers continued to fall, about 6.3% for the year. Print circulation also continued to decline (5% daily and 4.5% for Sunday), according to The State of the News Media 2011, Pew Research Center's Project for Excellence in Journalism. On top of that, the past year saw a surge in expenses, which puts limits on funding both for experiments and for maintaining editorial quality in print and digital formats.

Declines of last year weren't as horrendous as those in 2009, and publishers have moved decisively to increase digital revenues (in some cases charging online readers and in others branching into new businesses like e-commerce). New business models are proliferating as news organizations search for novel sources of revenue and cost reduction ("Bulletins from the Future", The Economist, 7/9/11).

Although revenue from online advertising is growing, it's not fast enough to fill the gap opened up by declines in print ads and circulation. As The Economist notes, "Online advertising typically brings in less than 20% of a newspaper's ad revenues and rates on all but the most prominent pages are falling." As a result, online ad revenues will not be enough to cover the cost of running traditional new organizations.

Now this August 22^nd article in the Wall Street Journal, "Newspapers Edit Down Outlooks," indicates there might be a return to job cuts and other belt-tightening moves.