Newspaper revenues are growing steadily despite falling circulation, thanks to a boom in online advertising, a study has found.This content was published on August 28, 2008 - 08:18
The report into the Swiss entertainment and media industry also concludes that the sector as a whole will grow by 4.4 per cent annually until 2012 with website advertising revenues playing a more significant role.
Professional services firm PricewaterhouseCoopers (PwC) surveyed a broad range of media in Switzerland, including newspapers, magazines, television, radio and multimedia.
The study found that traditional newspapers have successfully incorporated Switzerland's high rate of internet connectivity into their strategies.
Last year, print media revenues grew six per cent on 2006 to SFr2.7 billion ($2.46 billion). Online advertising made up SFr89 million of this, but will grow to SFr239 million (nine per cent of total advertising revenues) by 2012, according to PwC.
However, this projection relies on healthy economic conditions and on publishers continuously adapting to meet the demands of new technologies, said Franco Monti, PwC's head of technology sector.
"We expect the traditional media to remain in a strong position until 2012, primarily dominated by the 50-plus generation of consumers," he told swissinfo.
"But publishers should not just copy their classic business model into an internet form. They have to think beyond the borders of their own industry by collaborating with other industries to form a new, cross-industry business model."
This could include partnerships with online shopping portals or direct marketing groups, Monti added.
Roger Blum, professor of communication and media studies at Bern University, told swissinfo that online newspaper portals were not an instant commercial hit.
Following a rash of start-ups in the late 1990s, many publishers had to improve what they were offering to attract advertisers away from television, he said. But revenues have been flowing in the past two years.
"Classic publishers no longer produce just newspapers and magazines, but are multimedia houses with television, radio and online products," Blum said. "This way they can maximise revenues during periods when one product becomes more popular than others."
Free daily logjam
But the PwC study does not paint an entirely rosy picture for the printed newspaper industry, predicting that the profusion of free dailies that have hit the Swiss market in recent years is too large to be sustainable in future.
Titles such as .ch, Blick am Abend, News, 20 Minutes and Cash Daily are competing for too few readers, according to Franco Monti.
"We predict a consolidation in the free daily newspaper market because we have too many of these newspapers per inhabitant. We do not see a business model, based on advertising revenues, which allows this to be sustainable in future," he said.
swissinfo, Matthew Allen in Zurich
PricewaterhouseCoopers' Global Entertainment and Media Outlook: 2008-2012 was presented in Zurich on Wednesday.
It studied a wide range of sectors, including newspapers, magazines, television, radio and multimedia. It also looked at the film, DVD, video games, casino and amusement park segments.
It predicts a global expansion of revenues across the sector of 6.6% annually until 2012, led by the emerging economies of Brazil, Russia, India and China. The Swiss market is predicted to grow 4.4%, just above the average for western Europe.
The revenue increases will be mainly driven by expanding multimedia technologies. Switzerland has an internet penetration of 81% of the population (the same as the United States), compared with 21% in China, 6.1% in India, 90% in Japan and 63% across western Europe.
Online advertising revenues (excluding print media) will grow from SFr2 billion in 2007 to SFr2.9 billion in 2012. This will make the medium the sector's second-largest source of advertising revenue behind print media, surpassing television income.
Not all publishers are doing as well as the PwC survey suggests. Edipresse, the leading publishing house in the west of Switzerland, has just announced 50 job cuts after disappointing financial results.
The publisher said on Wednesday it had lost SFr10 million in advertising revenues compared with the previous year.
Half of the job losses would be covered by early retirements, the publisher said. Some 17 journalist positions would be lost.
The Lausanne-based house publishes Le Matin, 24 Heures and Tribune de Genève.
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