Overseas and online-only newspapers – including Crikey, the New York Times and the Guardian – are showing the move towards subscription models walls and investment in quality journalism is continuing to draw readers and advertisers, according to an IbisWorld insight.

The company says the recent woes across the Australian media landscape reflect the perils of a dramatically changing marketplace. “The speed and depth of technological change led consumers to migrate online to get their news and entertainment,” it says. “According to Fairfax estimates, about 65 per cent of ‘The Age’ and ‘Sydney Morning Herald’ readers access their news digitally, be it through computers, tablets or smartphones.”

This has resulted in rapidly falling print circulation figures and advertising revenue, which has led Fairfax to announce the closure of two printing presses, $235 million in cost-cutting initiatives and 1,900 job losses over the next three years. In the year through March 2012, the circulation of Fairfax’s flagship brand, the Monday-to-Friday Sydney Morning Herald, fell by 13.6 per cent, while the Saturday edition declined by 13.8 per cent. Circulation of Melbourne’s The Age also fell, with the weekday edition declining by 13.5 per cent and the weekend editions falling by 12.5 per cent.

Testament to these figures, revenue in the newspaper printing or publishing industry is expected to fall by an annualised 6.1 per cent over the five years through 2012-13.

“The move away from traditional print advertising and towards online advertising has cannibalised a part of the revenue pool, with online advertising expected to grow from $800 million in 2005-06 to $3.3 billion in 2012-13 – representing growth of 312.5 per cent,” says the report. This is being driven by websites such as Seek.com.au, which accounted for 67 per cent of all online job ads in 2011 and is thus encroaching on the tradition of classified ads as being a preserve of print newspapers.

News Limited’s decision to move away from its reliance on print advertising and towards pay TV, subscription models and online content also indicates this trend. The flow-on effects of declining circulation figures will affect retailers such as newsagencies, whose revenue is largely dependent on newspaper sales. Magazine sales could provide a niche market for these retailers, although it is unlikely that they will offset the decline of newspaper revenue, which constitutes 21 per cent of all sales.

“The future of the newspaper industry, while pessimistic, presents some opportunities for proactive and innovative publishers,” it says. “The industry will continue to be affected by cost pressures, declining advertising revenue and the introduction of new channels of consumption. Print margins are being eroded as readers and advertisers shift to the internet, causing newspaper companies to cut their legacy print infrastructure and integrate their print and online businesses.

“However, the experience of overseas and online-only newspapers such as Crikey, The New York Times and The Guardian has shown that the move towards subscription models through the erection of pay walls and investment in quality journalism will continue to draw readers and advertisers alike.”