After years of failing to innovate on the digital front, the newspaper industry is now jumping in, with the next few years critical to whether traditional print brands can survive in a new era of decentralized news consumption, according to a recent report from PricewaterhouseCoopers. 

The newspaper industry continues to lose money as consumers migrate to digital content destinations. Publishers? first efforts to follow them were lackluster but more recent attempts are promising, including the New York Times? virtual reality push, San Antonia Express-News? playSA mobile application and The Washington Post?s new experimental attitude. 

?The promise of mobile revenue for newspaper publishes has not yet come to fruition, and core business declines still override mobile and digital growth,? said Chris Lederer, principal at PwC Strategy&. 

?Readership ? across all formats ? is growing at 6.9 percent per year across the business,? he said. ?The issue, of course, is that free and trade down revenue models continue.?

The paywall issue
Total newspaper revenue is expected to decline at a negative 2.9 percent compound annual growth rate leading up to 2020. 

While newspapers have been signing up digital subscribers, they are still losing circulation overall. However, higher prices are offsetting these losses, with both print and digital newspaper circulation revenue expected to grow in the near future. 

After initially mostly keeping their distance from paywalls, today approximately eight in 10 newspapers have deployed some kind of paywall. Most have settled on a metered model that offers continued free access to drive premium subscriptions. 

Charging for digital content has boosted newspapers? bottom lines. However, it is not clear if the strategy is here for the long haul. Some newspapers quickly ended charging for online editions while the New York Times turned its paid NYT Now mobile app free after failing to build a meaningful paid customer base. 

Digital payments are likely to begin to lose their power to bolster circulation revenue as digital circulation and revenue growth rates begin to slow. The report forecasts that by 2020, digital newspaper circulation revenue will account for only 8.4 percent of total newspaper circulation revenue. 

One possible alternative, micropayments, could start to gain steam, as evidenced by the New York Times? investment in Blendle. 

Advertising revenue
The picture is even bleaker for newspapers? advertising businesses. Print newspaper advertising revenue is forecast to drop to $9.26 billion in 2020, down from $15.07 billion in 2015. 

Publishers? Web sites are facing severe competition for advertising dollars from social media sites and digital-native titles. 

One strategy that is picking up in response is newspapers launching branded content studios to enable brands to reach consumers through editorial content from trusted sources. The Washington Post, New York Times and Wall Street Journal all have such studios. 

On the other hand, publishers? own online ad operations are finding it tough to compete against Google, Facebook and new video and mobile channels. 

As a result, growth in digital ad revenue for newspapers has slowed and is expected to continue to remain so over the next few years. 

The growth in ad-blocking is compounding the problem, making advertisers less inclined to spend where exposure is uncertain. 

All of these factors taken together mean digital newspaper revenue from both circulation and advertising is forecast to be the slowest of all surveyed markets over the next five years. 

Digital crossroads
Newspapers are at a crossroads as pure-play digital giants turn their attention to news content, resulting in publishers becoming suppliers instead of destinations. 

Facebook?s Instant Articles, Twitter?s Moments, Snapchat?s Discover and Apple?s News app offer quicker load times, delivery within social networks, attractive presentation and a slice of revenue from inside Apple?s product. 

These platforms can help newspapers find audiences where younger, mobile users are spending their time. 

However, publishers must weight the promise of greater distribution with the risks of lose of control. Will returns from giving away content on social networks outweigh the possibility that consumers will stop visiting their own-brand Web sites? The answer is likely to become clearer as the first results from these efforts become available. 

Facing numerous challenges, newspapers are beginning to create products that let consumers engage with their content in uniquely digital ways. 

The New York Times is commissioning immersive virtual reality reporting and put the means of consumption, Google?s Cardboard VR headset, in the hands of a million of its print home delivery subscribers. The effort is already profitable thanks to brand sponsorships from GE and Mini. 

While more content is planned, it remains to be seen if this new space becomes a significant business driver. 

Other recent successes include San Antonia Express-News? playSA mobile app, which offers local entertainment listings and The Washington Post, which has overtaken The New York Times for Web traffic under the ownership of Amazon chief executive Jeff Bezos as it embraces digital experimentation. 

?Mobile readership is the future, and those that will succeed will crack the code on monetizing mobile communities,? Mr. Lederer said.