Record Tablet Sales Could Give Battered Newspaper Industry Hope

Amid plunging readership of traditional print newspapers, devices such as Amazon's Kindle Fire and Apple's iPad may provide a beacon of hope for beleaguered newspaper producers.

I think it (growth of tablet use) is a great opportunity for newspapers, Audrey Siegel, President and co-founder of TargetCast TCM told the International Business Times.

Millions more Americans will have a tablet by the end of this year. Over 1 million Kindle's have been shipped each week for the past three weeks, Amazon reported last week. Apple has also announced record sales during the holiday season, partially driven by the iPad 2. These record sales could help the newspaper industry if it generates both new subscribers and new advertisers.

Industry leaders say a new source of revenue needs to be found. Although the Newspaper Association of America in October reported that traffic to newspaper websites has increased 20 percent compared to the previous year, the revenue for web based advertising hasn't been able to make up for lost revenue in the print product. This has led the industry to shed journalists over the past decade and has resulted in the closing of metropolitan daily newspapers.

The Center for the Digital Future at the University of Southern California doesn't expect the print-to-digital trend to reverse.

Circulation of print newspapers continues to plummet, and we believe that the only print newspapers that will survive will be at the extremes of the medium, director Jeffrey Cole wrote in a recent post on its website.

In five years, he predicts only four major daily newspapers will continue in print form: The New York Times, USA Today, the Washington Post and the Wall Street Journal. He also predicts some local papers will also survive.

But others say taking the paper out of newspapers isn't necessarily a bad thing. For starters, the cost of producing a print newspaper is high. Transmitting news digitally will lead to a significant reduction in print costs, Siegel points out.

Whether the newspaper industry will succeed with tablet growth will depend on whether people will pay as much to subscribe on a tablet as they did with a print newspaper, and if advertisers will spend as much money reaching out to these readers as they do courting other media consumers, news industry analyst Ken Doctor told IBTimes.

We don't really know yet, he said regarding whether tablets will help the newspaper industry. Everything is still in transition.

Will People Pay for News on Tablets?

Many print subscribers receiving tablets for the holiday may still want to keep their traditional newspaper, Doctor believes. For those who make the print to digital switch, the cost of a tablet subscription is usually lower than a print subscription, meaning less revenue for publishers initially.

Yet print subscribers will slowly familiarize themselves with the tablet format, Doctor predicts, which will eventually allow newspaper publishers to charge similar rates for tablet and print subscriptions.

However, getting people who aren't paying for news content to subscribe on a tablet will pose a larger challenge. Initially, many of these people will continue to seek out free web content, Doctor said. He notes that people generally spend the same amount of money over time to receive their news, regardless of the medium of which it is obtained.

It will be a multi-year curve where customers will have to undergo a psychology change on how they receive news content, Doctor said.

Some publishers are looking to change that psychology by placing content behind a paywall. An option Doctor believes many publishers will latch on to is one used by the New York Times. Print subscribers and subscribers on a Nook or Kindle tablet or e-reading device are able to access online content for free of charge, but those without a subscription are limited to 20 free articles a month.

Paywalls likely won't lead to new print subscribers, but it may convince non-paying readers over time to purchase a tablet subscription, Doctor said.

A small percentage of non-subscribers will begin subscribing once they receive a tablet, Siegel predicts. However, that number could grow as people become socialized to reading news on a tablet.

This is just one more platform that newspapers can interact with readers, Siegel said of the device.

Will Companies Boost Advertising on Tablets?

Advertising in tablets is in its infancy, with many companies just starting to take advantage of it. The Interactive Advertising Bureau notes that only about 3 percent of digital advertising revenue comes through mobile advertising (which includes tablets).

Companies advertising in tablets have focused on affluent males roughly between the ages 28 to 45, said Tina Unterlaender, mobile account director at advertising agency AKQA.

When tablets first hit the market, publications would essentially use a PDF version of a print advertisement to reach readers, she told IBTimes. But over the past year or so, publications have placed advertisements with pull-out feeds, where users can obtain more information about an item, and data integration, and car companies such as Audi even allow people to schedule a test drive through a tablet advertisement.

Companies may find it more appealing to advertise in a tablet compared to a print newspaper, Siegel said, because even though major newspapers sometime release basic demographics about subscribers, advertisers have not been really sure which type of people read which sections.

With the tablet, advertisers can place much more focused ads on a digital product, Siegel said, making the tablet more appealing to reach customers.

For now, revenue for a tablet advertisement is less than that of a print advertisement, Unterlaender said, although she expects that to change as people become accustomed to their new devices.

When sales reach a certain tipping point, publishers will get closer to closing the [advertising revenue gap], Unterlaender said.