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Did your parents read the daily newspaper? I can still remember my father sitting on the living room couch every day after dinner, reading the Cleveland Press. That was the afternoon paper. The Cleveland Plain Dealer was the morning newspaper. Many cities supported two large newspapers. I picked up the paper reading habit from my dad and have read a daily newspaper since I was in high school. But I don’t receive a physical newspaper at my door. And the Cleveland Press folded in 1982. These two facts are not unrelated.

The Headline Everyone Knows

People that follow the news know this: the newspaper industry is under duress. The statistics are stunning:

  • The Global Newspaper Publishing industry shrank -7.6% from 2015-2020[1]
  • More than 1 in 5 U.S. newspapers have closed their doors over the past 20 years[2]
  • Revenue from print advertising is projected to drop $5.5 billion in the next five years[3]
  • A 2015 report from the Brookings Institution shows that the number of newspapers per hundred million population fell from 1,200 (in 1945) to 400 in 2014
  • Circulation per capita in the United States declined from 35 percent in the mid-1940s to under 15 percent
  • The number of newspaper journalists has decreased over 25% from 1978 to 2015[4]

 And the reasons for this demise have also been widely discussed:

  • The internet has taken away critical advertising revenues
  • The consolidation of large department stores has also hurt advertising revenues
  • Social media sites are becoming the main source of news for younger generations
  • The capital intensive structure of traditional newspapers handicaps them against nimble, digital only competitors[5]

There has been much hand-wringing concerning this demise. The deterioration in the United States newspaper market led one senator to introduce a bill allowing newspaper companies to restructure as nonprofit corporations with an array of tax breaks[6]. It has not passed. And the downward spiral continues unabated. Or does it?

The “Rest of the Story”

New business models often emerge from the ashes of industry decline. When enterprise printer hardware commoditized, Xerox, HP, and others leaned into a new business model called “managed print services.” This forced transformation is exactly what is happening in the newspaper industry.

In May of 2019, The Wall Street Journal published an article titled In News Industry, a Stark Divide Between Haves and Have-Nots.”  The articles states:

“The results are in: A stark divide has emerged between a handful of national players that have managed to stabilize their businesses and local outlets for which time is running out.”[7]

The article states that three papers are dominating the national newspaper landscape: The New York Times, The Washington Post, and The Wall Street Journal. All three are doing this by embracing the digital delivery of their product on a global basis. The figure below provides the trends on paper vs. digital subscriptions to The New York Times.

new york times subscribers chart

These three dominant newspapers are also leveraging all the benefits that come with digital delivery:

  • Less capital infrastructure required to print and deliver each edition
  • Ability to update editions throughout the day
  • Ability to leverage multi-media content within editions

On-Premise Technology and the Day-Old Newspaper

The state of the newspaper industry is relevant to technology companies selling on-premise technology:

Growing Gap: Just as The Wall Street Journal highlighted the growing gap between the haves and have nots of their industry, TSIA has published a paper highlighting the growing gap between the haves and have nots of the technology industry: “The State of the Technology Industry 2021: The Haves and the Have Nots.” Technology companies selling on-premise technology are more likely to be on the “have not” side of the equation. Read the paper to understand the assertion.

Die Hards: 54% of surveyed newspaper subscribers said they prefer print and 53% of print subscribers have their subscriptions for five years or longer. However, these hard copy die hards are not going to represent growth to the newspaper industry. There are many TSIA members we hear from that state their customers seem very content with running technology on-premise and managing that technology themselves. That is great, but this customer profile will probably not drive double digit growth in future revenues.

Dated Delivery Model: When a newspaper aggressively invests in a digital platform, they unlock new capabilities. They can update editions throughout the day. They can change digital ads on the fly. They can see what articles are trending and promote that content more aggressively. Traditional newspapers have none of those options. The same is true when comparing unconnected on-premise technology to connected or cloud offers. Suddenly, that unconnected on-premise software application looks just about as valuable as a day-old printed newspaper.

Yes, on-premise technology providers have many worrisome commonalities with the media titans of old. We can see from the newspaper industry that many well respected brands did not make the bend through industry disruption. The same will be true in the technology industry.

The newspaper industry proves, yet again, that leaning into the reality of new industry trends is the only path to survival and eventual growth. Over the next decade, that reality will undoubtedly play out in the technology industry.

Snowy Morning

It is a snowy, crisp morning in my neighborhood. I sip on a cup of coffee and finish reading the sports section of my local paper--on my Ipad. There is a big news conference scheduled by the head football coach later today. I’ll read the recap in the afternoon update.

Suddenly, I see a car slog through the snow. It is the paper getting delivered to my neighbor. She is the last one on the street to stay with the print edition. Today, it arrived two hours late because of the heavy snow. And already, some of the news printed on the pages is woefully out of date.

Learn More at TSIA Interact

“The Haves and the Have Nots” was chosen as the theme for this spring’s TSIA Interact virtual conference, taking place May 4-6, 2021. Join TSIA and industry leaders as we discuss the critical business capabilities that will separate the haves from the have nots in the technology and services industries.

 

[1] https://www.ibisworld.com/global/market-research-reports/global-newspaper-publishing-industry/

[2] https://letter.ly/newspaper-statistics/

[3] https://letter.ly/newspaper-statistics/

[4]https://en.wikipedia.org/wiki/Decline_of_newspapers#Performance_in_the_market_(2000%E2%80%93present)

[5] https://en.wikipedia.org/wiki/Decline_of_newspapers#Causes_for_decline

[6] https://www.congress.gov/bill/111th-congress/senate-bill/673/text

[7] Between Haves and Have-Nots: Local newspapers are failing to make the digital transition larger players did — and are in danger of vanishing. Hagey, K., Alpert, L. I., & Serkez, Y. (2019, May 4). 

 

 
 
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Thomas Lah

About Author Thomas Lah

Thomas Lah is executive director and executive vice president of TSIA. Since 1996, he has used his incisive analysis, strategic thinking, and creative solutions to help some of the world’s largest technology companies improve the efficiency of their daily operations. He has authored several books, including, Bridging the Services Chasm (2009), Consumption Economics (2011), B4B (2013), and Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business (2016).

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