McGuire on Media

Our audience is a different problem than we thought

At long last there is some articulation to the obvious fact that audience is not the biggest problem for newspapers. It’s all about the advertising. The latest State of the Media report and Rick Edmonds on discuss a decoupling of news and advertising. “The heart of the problem, especially for newspapers, is not loss of audience but ‘a broken economic model — the decoupling of advertising and news,’ the report finds.

Edmonds points out, as I’ve been saying at dinner parties recently, that declining newspaper readership is not creating this unholy road to perdition.  The changing ad model for newspapers is causing the real carnage.

Audience is certainly declining and this excellent piece from Editor and Publisher crystallizes the problem in a way the ABC reports do not. It says big newspapers have lost 10 percent of circulation in four years and some have lost as much as 20 percent. 

Those are staggering numbers.

The declining advertising numbers carry even bigger implications. Alan Mutter, the newspaper finance guru, wrote me in an e-mail: “I would venture to say that print sales will be no better than $44.25 billion for 2007, which would be 9per cent below their all-time peak of $48.67 billion in 2000.  Over-all industry performance will be somewhat better, because they will book nearly $3 billion in online sales.”

Using the simple formula that ad revenue contributes 80 percent of the top-line revenue for newspapers the ramifications of that kind of drop are huge.  The crumbling of the advertising business model is the culprit behind layoffs, cutbacks and the general panic in the newspaper streets. I think that raises an issue that just doesn’t get talked about much.

The newspaper audience numbers everybody is fretting about are a dramatic problem. The circulation numbers are too big. Most of us know that large newspaper readership numbers have always been a drag on transformational change.  Cutting loose loyal readers in big numbers to attract new marginal readers who are not committed to news has never been an attractive proposition.

Everybody seems to focus on the 10per cent to 20 percent declines in circulation.  When I looked at the Editor and Publisher story the numbers that leaped out at me were: Arizona Republic, 385,214, Star Tribune, Minneapolis, 341,645, Dallas Morning News, 373, 586. Well, you get the drift. 

While the business model implodes, these newspaper are still getting well over 300,,000 customers a day to part with 50 cents to 75 cents for a daily newspaper.  Certainly, if you project out these losses, you can see a sad end. It would also be foolhardy to do a straight-line projection because, at some point, circulation could fall off the table rapidly. Still, it seems pretty clear that newspaper readers may be the last to know about the demise of newspapers.

That creates some serious, even ugly, issues around public service, community responsibility and the free market.  The advertising free market is clearly voting against newspapers as an ad solution.  The reader market’s vote is coming in more slowly.

It strikes me that it is time to test some of the theories about newspaper value. Price increases, value-added content that nets increased revenue and special subscriber benefits that raise revenue have to be considered. 

Rather than focusing on what we don’t have–the revenue of 1998–we need to focus on those 350,000 subscribers big newspapers still have.


The Arizona Republic apparently took my advice and are now crediting the public relations people who write releases the paper uses without any editing.  Despite the fact the newspaper has eliminated plagiarism concerns, I still don’t like it. As a friend of mine, Nick Martin, wrote me in an e-mail: “It’s such an insult to readers, too. There’s absolutely no oversight or verification, which are the basic things readers expect. When somebody reads a news story, they assume the best of the reporter who wrote it and the newspaper that published it. They assume the right questions were asked — sometimes twice — and that the paper would not publish something unless they knew it to be absolutely true. Now, most in the newspaper industry know we fall far short of reader expectations daily, particularly on breaking news, but we still try. This makes the Republic seem as if they’ve just plain given up.”

Sometimes it is just best to let wisdom speak for itself.  That Nick is a real smart fellow.

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