Digital publishing revenues were down in the final quarter of 2019, before the coronavirus broke out in Europe and the US, suggesting the pandemic has accelerated an existing downturn.
Publishing revenues for members of UK trade body the Association of Online Publishers fell by 6.2% year-on-year to £131.1m for the three months to the end of December last year, according to its Digital Publishers Revenue Index.
- April 21, 2021
- April 20, 2021
- April 19, 2021
Boosts in revenue from digital subscriptions (up 24% year-on-year) and sponsorship (up 10%) were unable to offset declines in display advertising (down 22%) and job adverts (down 20%) for the quarter.
The “subscriptions spike” was the highest in a year-and-a-half, according to Dan Ison, lead partner for media at Deloitte (which helped compile the report), who said it underscored the UK’s reliance on digital publishing as a “key source of information”.
The DPRI report is based on a survey of 21 UK digital publishers, comprising 15 B2C publishers and six B2B publishers, who are members of the AOP.
These latest figures suggest that the writing was already on the wall for news publishers before the Covid-19 crisis hit and caused ad revenues to plummet, forcing companies to take action to mitigate the impact.
Last week Buzzfeed closed its UK and Australian news operations, while Vice, Quartz and the Economist all cut staff. This is despite record traffic for most news websites as they match high demand for Covid-19 updates.
B2B revenue rises as B2C falls
Taking 2019 as a whole, digital revenues fell by 6.3% on the year before, driven by an 18 per cent drop in digital display advertising income and a 7% fall in video revenue. But subscription revenue was up 16% year-on-year.
Revenue at B2B publishers was up 2.2% to £80.4m in December 2019, compared to December 2018, driven by increases in sponsorship revenues (27%), display ad revenue (6%) and online video (5%).
Over the same period, B2C publishers saw revenue fall by 7.9% as display ad revenue decreased by 20% and online video by 7%, partially offsetting a 30% rise in revenue from subscriptions.
According to a survey of AOP board members taken as the implications of Covid-19 were becoming clear, the proportion confident in the financial prospects of the digital publishing industry dropped by 80% from the previous quarter, reflecting uncertainty across the industry.
Similarly, the proportion confident about the financial prospects of their organisation’s digital business fell by 93%.
The AOP board member’s priorities have also shifted as Covid-19 took hold, with the growth of non-advertising revenue now a top priority.
‘Subscription revenue will grow in importance’
AOP managing director Richard Reeves said: “The latest DRPI findings indicate the challenging times ahead for the UK publishing industry, set to be further exacerbated by the impact of Covid-19.
“Publisher plans in 2019 looked primed on diversifying revenue sources in 2020, but a difficult Q4 2019, and tougher times ahead indicate this is to be stifled as publishers retract to their core services.
“While digital publishers have been seeing great audience figures during the global pandemic, this has not been matched with advertising revenue coming in and so we expect to see publishers place a greater emphasis on alternative revenue streams such as e-commerce to compensate.
“Collaboration has always been to key to addressing industry challenges, and in difficult times we often see true innovation. With seismic change on the cards, digital publishing could well reshape for the better over the next 12-months.”
Deloitte’s Ison said: “As households and business leaders remain cautious of discretionary spending during Covid-19, communicating the value of subscriptions will be fundamental in ensuring revenue growth in the year ahead.
“In the longer term, subscription revenue will grow in importance as a solid bedrock for publishers looking to diversify their business models.”