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January 20, 2018

Newspaper FAS-FAX Provides Circulation Pricing Gut Check

Important Details:  Print newspaper circulation has taken a strong hit, according to data released this week by the Audit Bureau of Circulation (ABC). Its semi-annual FAS-FAX report is the industry standard, offering the widest picture of circulation trends from more than 350 newspapers.

Daily circulation declined 10.6%, while Sunday went down 7.4%. This report follows March’s, in which daily was down 7% and Sunday 5.3%. A year ago, FAS-FAX showed 4.6% daily and Sunday down 4.8% Sunday. Those declines followed trends down of about 2.5-3.5% for the last four years.

Once again, it was metro dailies that took the brunt of declines. A few examples:

Daily, these losses, as examples:

  • San Francisco Chronicle: 26%
  • Miami Herald: 23%
  • Star-Ledger, Newark: 22%
  • Boston Globe: 18%
  • Houston Chronicle: 14%
  • L.A. Times: 11%

The Sunday losses, same papers:

  • San Francisco Chronicle: 22%
  • Star-Ledger: 18%
  • Boston Globe: 17%
  • Miami Herald: 14.6%
  • Houston Chronicle: 6%
  • L.A. Times: 6%

At the same time, ABC released related research done for it by Scarborough Research, showing new data on combined reach. It lists top gainers, including the The Tampa (FLA.) Tribune, with a 11.35% increase. Most of the gainers are in mid-sized, not large metro markets. Reach is defined as a reader of a newspaper within the last seven days or the website within 30 days.

Implications:  Outsell believes that the latest circulation data is further evidence of the acceleration of readers (and advertisers) from print to digital. It’s a movement that picked up steam during the recession, as migrations not only continued during economic downturn, but quickened.

News publishers have had little choice during the recession to cut costs — and their products — significantly. They’ve also turned to a premium circulation pricing strategy across the nation. Single-copy prices have doubled, in some cases, from a quarter to a half dollar, or a half-dollar to a dollar. Home delivery prices have seen double-digit increases. While McClatchy (6.7%), Media General (11%) and the New York Times Company (6.7%) have been able to recently report circulation revenue increases, the double-digit decline in daily circulation volume should give everyone in the industry pause. What is a significant point of price resistance among readers who have proliferating news reading choices? If volumes continue to dive, how long will it be before circulation revenues accompany them?

For publishers, it’s like dancing on eggshells. They are trying to transform their businesses from mass print to more niched, nuanced print and digital hybrid businesses. The dance is made the more complicated by their reliance on print revenues for about 85% of their income. So increasing print pricing for the declining group willing to pay for that habit makes sense. Outsell’s concern is that the limits of print pricing for the one-size-fits-all daily paper may have hit the wall. Many readers will indeed pay for their habits, but given the countervailing pressures of smaller products, less news, fewer ads and more digital reading choices, it’s now a lot easier to just say no to the print subscription.

Publishers now need to confront pricing on several new levels. With mounting evidence that their online ad pricing may be making them less competitive (the New York Times’ Stephanie Clifford’s report on that is worth reading), publishers are now confronted by a number of reader pricing issues. How do they retain as many of those print readers — justifying large print advertiser commitments — for the next five years, while maximizing circulation revenue? How do they begin to charge for news content, whether in print, on mobile or by e-reader (Kindles, Nooks, Ques and Readers, just to start) in ways that really build a new business?

These are questions that now must move to the forefront of publisher thinking, as the old world disappears a bit more quickly. The answers won’t rely on anything magical, but rather than on the tried-and-true practices of creating superior reader and advertiser value in an increasingly competitive age.