The Promise and Peril of Flipping the Switch
Important Details: US papers, beset by industry and wider economic woes, are beginning to flip the switch, moving from big print-oriented operations to daily digital publishing, supported by some print publishing.
In late October, the Christian Science Monitor announced it was ceasing daily printing in April 2009, moving to a weekly edition, and telling its readers it was time to move to the web with the 100-year old paper. The Monitor is an old institution, revered for its even-handed reporting, but an institution that has steadily fallen out of favor, dropping to a low of 52,000 in circulation, after hitting a high-water mark of 223,000 forty years ago. Its business model also differs from other US dailies — getting a larger percentage of revenue from subscribers and receiving a subsidy ($12 million this year) from the Christian Science Church. It will reduce its $210 annual subscription charge (for five papers a week) to $89 (for a single weekly edition).
In January, the Freedom Communications-owned East Valley Tribune, which claims a 100,000 paid/free daily circulation, published just outside of Phoenix, will move to a four-day-a-week (Wednesday, Friday, Saturday, Sunday). Significantly, the daily paper will now be available for free, distributed in racks and thrown on driveways in four target cities, its circulation areas significantly cut back. In addition, the paper is cutting 40% of its staff.
Earlier this year, both The Capital Times in Madison and The Superior Telegram in Wisconsin moved to two editions per week, down from six.
Implications: Flipping the switch is a big step. Journalistically, it’s an important mind-shift, making the statement that it is the journalism and not the print medium itself that’s important. What’s troubling journalistically, is that both papers have cut newsroom staff. In the East Valley Tribune case, the paper’s geographic cutbacks will mean more targeted coverage of affluent areas, and less of non-well-off ones.
On a business level, it’s a dicey proposition. As Outsell’s reports have shown, less than 15% of overall revenues are driven by digital business lines. So flipping the switch has to be done carefully. It is the East Valley Times example that’s most interesting here. The aim is to hold on to as much of those print revenues — squeezing them into four days — as the paper can, while building up the digital business. Foregoing printing those other three days saves some of the costs of the old business, with less newsprint used and less production and distribution cost. The critical arithmetic here, and why other publishers will be watching, is how the reduced costs line up with new revenues. That’ll take a good six months to a year to understand.
Freedom’s Tribune has also made peace with the notion of paid circulation, long an industry shibboleth. It is making the paper free, on a par with free weeklies and of course the web itself. This is one of the two alternatives that dailies are pursuing: the other is pricing up, further reducing circulation but keeping circulation revenue growing slightly or stable.
Most challenging may be the question of human habit. For fairly loyal readers, baby boomer and up in age, the paper is breaking their daily habit. Once broken, it’s hard to say how many of those readers will take the hint — go to the web for the most current news — and then stop reading in print those other four days. This is an experiment worth watching. By going free in print, though, the Tribune has removed a reason not to pick up the paper, and that’s a smart move.
Publishers have talked about flipping the switch for the past couple of years, having done the math of how much legacy cost could be saved if the “newspaper” were to stop printing on paper tomorrow and go all-digital. Lots of legacy cost goes quickly out the door, but, given the realities of web traffic levels and advertising pricing, so does most of the revenue needed to pay journalists and ad salespeople — the people key to the new business. Against that backdrop, the East Valley Tribune has taken a bold step, one which Outsell believes will soon be copied across the country.