Metros Take Brunt of Circulation Declines
Important Details: For 25 years, newspaper circulation has been like a rollercoaster slowly ratcheting down a hill, each yearly click marking a 1 percent – more or less – decline. Now the incline appears to be steepening, with today’s release of the industry’s twice-yearly circulation numbers.
The numbers might have caused hearts to skip a beat or two a year ago. Now, though, the industry may be getting accustomed to them, as is Wall Street, which had expected the reports and gave a bit of boost to newspaper-company share prices across the board.
The decline of 2.6 percent in daily circulation and 3.1 percent in Sunday circulation paralleled closely the numbers released last September and the acceleration of loss first noted in March 2005. Overall, daily circulation comes in at 45.4 million and Sunday at 48.5 million.
Looking closely at the numbers, we see other deepening trends:
- A trifurcation of the newspaper market.
Unlike European nations, the U.S. has supported relatively few “national” papers. The most prominent – USA Today (flat), the Wall Street Journal (1% down) and the New York Times (0.5% up) – all beat the average. Smaller community dailies, less confronted by big market media saturation and perhaps in greater touch with local concerns, fared better than the average as well. Circulation here was fairly stable.Metro papers, though, got hammered. The list of the top 20 reveals that in addition to the New York Times being up, only two other papers, the Chicago Tribune and Newark Star-Ledger (both up 0.9%) were in positive territory. Among those hit hard: L.A. Times (down 5.4%), Washington Post (down 3.7%), the Denver dailies (down 4.5%), the Atlanta Journal-Constitution (down 6.7%), and two Bay Area papers hit very hard, the San Jose Mercury News (down 7.6%) and the San Francisco Chronicle (down 15.6%).
- Mass isn’t what it used to be.
Newspapers have long sold advertising on their ability to reach the broadest mass of customers in any geographic market. That’s still their main pitch, even as their mass has been reduced. Now in addition to absorbing print losses due to Internet reading, publishers are also voluntarily reducing. They are cutting back on copies less coveted by advertisers – hotel drops, Newspapers-in-Education school copies, and employee copies. Such cuts reduce costs, of course. The thinning of the newspaper market mass – both market-driven and self-induced – is a new fact of life. Look at a list showing newspaper circulation as a percentage of potential audience, and you see how newspapers’ print reach has now dropped well below half the market, into the 30th and 40th percentiles. - Ability to price will inevitably be affected, and soon.
The industry has managed to sustain the combination of decreasing circ and increasing ad prices for a long time. Managing eroding margins on a 1 percent annual circ decline is one thing. It will be far harder if declines continue at a pace two-and-a-half times faster. Eighty percent of newspaper revenue derives from advertising. Newspapers are finding themselves under increasing pressure from those advertisers to 1) meet the new price competition of paid search and rich media; 2) provide measurable results, beyond the “exposure” long offered by print advertising.The circulation decline only makes those challenges harder.
In light of the declines, the industry is making a greater point of “readership,” in place of circulation. “Copies sold” becomes a less-sold metric, and “reach,” measured both in pass-along print copies and increasingly in online extensions, becomes the focal point of advertising sales.
In fact, the Newspaper Association of America (NAA), which released the data, simultaneously released recent online ratings – the first time it has offered both print and online numbers at the same time. Those numbers were positive, with data indicating that 37 percent of all online users visited a newspaper Web site in the first quarter of 2006, an 8 percent increase year over year.
In Outsell’s Opinion: The print decline numbers are not unexpected. Outsell’s research shows that news-reading and information-obtaining habits are tipping. The tipping means that the news and information users – especially younger ones – are increasingly comfortable and adept at using the Internet as a go-to news medium. Today’s news indicates that news companies must continue, and probably accelerate, their own restructuring and reinvention if they are successfully to make the transition with both their reader and advertiser customers.
Implications: