Circulation revenue for U.S. newspapers grew for the second consecutive year, rising 3.7% to $10.87 billion in 2013, according to preliminary data from the Newspaper Association of America.

However, that wasn’t enough to offset continuing deterioration in the advertising business. Total revenues for the industry were $37.59 billion, off 2.6% from 2012. The good news is that the rate of decline appears to be slowing. The bad news is that digital advertising is growing more slowly for newspapers than it is for the industry as a whole. The U.S. online ad market grew by 17% year-over-year in 2013, but newspapers’ digital ad revenues increased by just 1.5%. Digital advertising now accounts for 12% of total industry revenue. It’s not clear how native advertising is being factored into those numbers.

Incidentally, online ad spending  surpassed broadcast TV revenue for the first time last year, according to the Interactive Advertising Bureau.

An interesting new area of growth is digital agency marketing services, in which media companies help local businesses build a digital marketing presence through services like online advertising and direct mail. That business grew 43% last year, although from a very small base.

Declines in traditional print advertising continued their numbing downward trend, falling 8.6% from the previous year. Classified advertising was off 10.5%.

An interesting factor in circulation revenue growth is the success of digital-only circulation revenue, which was up 47%. Bundled print and digital circulation packages increased 108%. However, print-only circulation revenue dropped 20%.

Read more on MediaLife.

With BuzzFeed and Upworthy reporting eye-popping traffic growth and planning to hire teams of reporters, many people are wondering whether sharing is the new currency of media success.

The idea is that if you give readers enough top-ten lists and animated GIFs they’ll do all your marketing for you. You don’t even have to worry about search engine optimization because nothing ever went viral on search. This philosophy has even given birth to a new style of headline writing that’s intended to stimulate sharing (“Why’s This Kid Throwing Coins? The Reason May Or May Not Blow Your Mind, But Something Does Blow Up,” reads one recent Upworthy example).

Henry Blodget

But maybe sharing isn’t all it’s cracked up to be. In a recent case study on USA Today, Michael Wolff looks at Business Insider, the hyper-caffeinated new-media brainchild of exiled Wall Street bad boy Henry Blodget. Business Insider is notorious for its fixation on being first and for driving its reporters to exhaustion. It’s a content mill – albeit with higher quality than many of its peers – that churns out large volumes of information in the quest to earn shares on Facebook and Twitter.

And it’s generating traffic: 25.4 million unique visitors in January, says Wolff. The problem is that Business Insider has low reader loyalty:

Only a small percentage of Business Insider’s traffic actually seeks it out and regards it as a worthy destination and a source with particular brand authority. Most other readers land on a Business Insider article because of search-engine results, or because of an engaging — tabloid-style — headline in a Facebook feed and other social-media promotions, which generate 30% of Business Insider’s traffic.

Wolff asserts that this drive-by traffic has little value because readers don’t identify with the brand. Worse is that the drive for big numbers becomes a race to the bottom.  As advertising rates continue to drift lower, publishers must seek ever-higher traffic volumes to stay in the same place. This means resorting to gimmicks like contests, cheesecake photos and celebrity gossip. That attracts poor-quality traffic which has low brand affinity and little value to advertisers. It’s a vicious cycle.

Digital Dimes

Blodget disagrees. In a response on Business Insider he says that the very problems Wolff cites are actually opportunities. New media companies don’t have legacy businesses to protect and so are free to disrupt mainstream competitors and steal revenue, he says. “We are better at serving digital readers than many traditional news organizations, so we can thrive on these ‘digital dimes,’” writes Blodget. His post displays a photo of what are presumably a group of happy young reporters in the company’s New York offices (Wolff says Business insider has hired 70 full-time journalists at a cost of more than $15 million a year. Do the math).

We think Wolff is on to something. Take a look at the chart below from the Pew Research Journalism Project. It depicts traffic to the 26 most popular U.S. news sites over a three-month period. It shows conclusively that visitors who reach a site directly (via a bookmark or typing the address into a browser) stay much longer, read much more and visit more often.

This isn’t surprising when you think about it. Typing “nyt.com” into a browser is an act of brand affinity, whereas headline-clickers on Facebook don’t really care where the headline comes from. The BuzzFeeds and Upworthys of the world must compete headline by headline. Is that a problem?

Attracting readers with gimmicks is nothing new. One of the myths of the news business is that people read newspapers primarily for the news. The reality is that they read for all kinds of reasons. Any veteran of the pre-digital publishing days will tell you that an embarrassingly large number of traditional newspaper readers bought copies for the coupons, Ann Landers, comics, the Jumble and the daily horoscope.

But at least in those days readers knew what brand to buy. Today’s audience has more affinity to the content than to the publisher, and aggregators like Flipboard are constantly looking for ways to supersede publishers’ brands with their own. Brand still matters. A click is not the same as a reader.

 

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Freedom Communications' Aaron Kushner (photo by Jebb Harris, Orange County Register).

Freedom Communications’ Aaron Kushner (photo by Jebb Harris, Orange County Register).

California newspaper defies industry wisdom to stay alive – and prospers” declares The Guardian in an analysis of the Orange County Register‘s death-defying experiment under the leadership of a former greeting card executive with no background in newspapers.

Aaron Kushner (right) and his partner, Eric Spitz, formed Freedom Communications and bought the Register a year ago. They then stunned the shell-shocked newspaper industry by declaring their intention to go completely against the prevailing practice of layoffs and cost cuts. They would invest in print, double their reporting staff,  increase subscription prices and  put up one of the industry’s most rigid barriers to online access.

They’ve kept their promise. Newsroom staff is up to 360 from a low of 180 when Freedom took over. The Register routinely publishes daily issues that are nearly twice the size of its nearby rival, the Los Angeles Times. Page counts have been increased by half, color expanded and even the quality of paper improved.

Daily circulation is holding steady and total circulation is up sharply if you include the 28 weekly papers the company has invested in over the last 12 months. The Register has hired investigative reporters and lured newspaper wunderkind Rob Curley out of exile to rejuvenate the editorial product with a focus on local news and practical advice.

Freedom is showing particular sensitivity to  local businesses. One promotion late last year gave each reader the opportunity to contribute $100 worth of advertising to his or her favorite charity. Some 1,300 nonprofits benefited from the program.

Kushner thinks the time is right to place a big bet on print. “Never before and never again will so many people be in the sweet spot of newspaper readership as the next 20 years,” he told the Guardian. “It’s called the baby boom.”

There’s no doubt the Register is growing, but is it prospering as the Guardian‘s headline proclaims? The jury is still out on that.

Ken Doctor ran the numbers back in January and concluded that the Register may be able to cover its estimated $9 million+ in additional annual costs through higher subscription fees, but that the advertising market is in long-term decline and there’s little that any newspaper can do about that. Doctor contrasted Kushner’s growth strategy with the slash-and-burn tactics being applied by Advance Communications and said we’ll know in about two years whether growth or contraction is the recipe for success. Clearly, we’re pulling for Kushner.

Writing on CJR.com in May, Ryan Chittum said the odds are against Kushner, but noted that if he fails, “he will have gone down investing in journalism.” Chittum also has some revealing stats about the profitability of newspapers, which remains quite strong. When newspapers shut down, it’s because they can’t afford the cost of their debt, he says. Most are still in the black on an operations basis, which makes Advance’s frequency cutback strategy all the more puzzling.  It also suggests that value investor Warren Buffett  isn’t a billionaire for nothing.

Kushner says he’s in it for the long haul and he now has his eyes on a bigger prize: the L.A. Times. Tribune Co. is going to be looking to unload some assets now that it has exited bankruptcy, and many observers believe the Times will be on the auction block. If Kushner buys it, he can all but own the southern California market. Regardless of the  current fortunes of daily newspapers, having a  near-monopoly on even a shrinking media business in the country’s largest media market has to be attractive.

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How are the experiments in reduced frequency that began in Detroit more than four years ago and have since spread to Cleveland, Syracuse, New Orleans and now Portland working out? Not so well, says author and J-school professor John K. Hartman.

Writing on Editor & Publisher‘s website, Hartman says the most from seven-day to three-day home delivery has caused massive subscriber flight and forced publishers to quietly backtrack. Newhouse, which is cutting frequencies across its line of dailies, has already had to introduce a new tabloid to produce on the days the Times-Picayune doesn’t publish.

Hartman blames greed. He accuses Newhouse of sabotaging journalism at the papers it own in the name of maximizing profits for the Newhouse family.

Newhouse is saving big money by eliminating news staff, eliminating office staff, eliminating delivery staff, and eliminating delivery expenses. In other words, Newhouse is getting out of the daily newspaper business and into the tri-weekly advertising shopper business.

We didn’t know this, but Hartman says the Detroit Free Press and News have re-introduced daily delivery to about 15,000 homes. The experiment, which was positioned as a “bold transformation” in December, 2008,

lost so many readers they had to beef up their non-delivery-day newspapers and restore limited seven-day home delivery. The Free Press now offers home delivery to 15,000 households through independent contractors the other four days a week. Nonetheless, hundreds of thousands of readers of the print products were lost in Detroit, and the projected switch of readers and advertisers to digital sites has not taken place.

Continuing a newspaper industry tradition of burying bad news about its business, The Oregonian announced that it will scale back home-delivery frequency from seven to four days a week.

The news is tucked into the fourth paragraph of an otherwise effusive press release on Oregon Live that crows about the launch of a new company that will “expand news and information products in Oregon and Southwest Washington” and “introduce new and improved digital products.”

In reality, the main purpose of the new company over the next few months will be to hire survivors from Oregonian Publishing Co. which produces the state’s largest and longest continuously published newspaper. That company will close on Oct. 1. Oregonian write Brent Hunsberger provides balanced coverage – and leads with the real news.

Like newspapers in Detroit, the The Oregonian will continue to publish in print seven days a week but will limit distribution of Monday, Tuesday and Thursday editions to city newsstands. Its 170,000 home subscribers will see deliveries cut to Wednesday, Friday, and Sunday. In a baffling bit of doublespeak, the company also said home-delivery subscribers would get a Saturday edition “as a bonus.” It also stressed that the “Wednesday, Friday and Sunday editions will be enhanced with more content than current editions while the Saturday newspaper will have news and a strong emphasis on sports content, along with classified advertising.” In other words, a cut of 50% is an improvement.

The bigger story is that there will be unspecific but “significant” layoffs at The Oregonian, which currently employs 650 people. The paper, which has won seven Pulitzer Prizes and five since 1999, employs more than 90 journalists according to Hunsberger’s account. However, Ryan Chittum thinks the editorial cuts have been more severe. Writing on CJR.com, Chittum estimates that the newsroom staff has declined from about 315 in 2007 to 175 today. His assessment is blunt:

[Advance Publications'] new template for its newspapers is now depressingly familiar: End daily delivery; fire a third to a half of the veteran journalists, particularly the editors, particularly in news; replace some of them with young, inexperienced (and most important: cheap) labor; put them on the hamster wheel; toss around insipid buzzwords; spend a bunch of money on new offices; piss off readers; embolden competition.

Seems about right. Chittum also notes that Advance Publications’ cutbacks at the Times-Picayune in New Orleans backfired when a competitor from Baton Rouge moved in to take advantage of subscriber unrest. Advance has had to respond with a tabloid edition on days the Times-Picayune doesn’t publish, thereby negating many of its cost savings. Advance has said that it will make similar frequency cutbacks across its portfolio.

Oregon journalists are already rushing in to show their support. Former Oregonian reporter Ryan Frank has taken to social media to raise funds for a bar tab for laid-off staffers. He’s already raised more than $3,000. Follow the fund’s progress at #OregonianBarTab on Twitter. And give generously.

Thanks to Brian Parks for tipping us off to this news.

 

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The World Association of Newspapers and News Publishers (WAN-IFRA) released an upbeat report on the state of newspapers worldwide, pointing to growing readership levels in emerging economies but cautioning that engagement levels are still low.

The report includes data from 70 countries that account for more than 90% of the industry’s value. It shows:

  • More than half the world’s adult population reads a daily newspaper, with 2.5 billion reading in print and more than 600 million consuming in digital form.
  • The newspaper industry generates more than US$200 billion of revenue worldwide each year. However, that figure is down 2% from last year and 22% since 2008. The numbers are dragged down by plummeting ad sales in the U.S., which has seen print advertising revenues fall 42% since 2008. The good news is that ad revenues are up 9.1% in Latin America, 3.6% in Asia and 2.3% in the Middle East and North Africa.
  • Newspaper circulation remains high, through stagnant, globally. Circulation declined only .9% worldwide in 2012 from a year earlier, primarily due to  rising circulations in Asia. Circulation is down 2.2% globally since 2008, with the steepest declines in Europe.
  • While newspapers are a vital information source, they aren’t engaging online audiences very effectively. Newspapers accounted for only 7% of visits, only 1.3% of time spent online and only .9% of total pages visited.
  • U.S. newspaper publishers now generate 27% of their revenues from non-traditional sources, such as digital advertising, services and ancillary products.

While the report can be seen as a glass-half-full scenario, we think it’s encouraging to see publishers diversifying their revenue sources. The industry’s historic dependence on print advertising in general – and classified advertising in particular – is at the root of its problems. The rapid decline of those revenue sources is prompting some publishers to get creative about finding new revenues. Those that succeed will be stronger for it.

 

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Paywalls continue to spring up across the news landscape while new-media enthusiasts warn that gated news is a throwback to a bygone age.

Britain’s Telegraph and Sun announced plans to erect paywalls almost simultaneously after successful tests. The Telegraph, which claims to have the largest circulation of any U.K. daily, will give away 20 articles free every month and charge £1.99/mo. thereafter for unlimited access to the website and smartphone apps. The Sun‘s move is timed to make the most of parent company News International’s £20M deal to show near-live clips of Premiership football highlights on its websites beginning in August.

In Canada, Postmedia Network will roll out paywalls across all 10 of its properties, including the National Post. The move completes an experiment that began two years ago and has been deployed in stages. Digital-only subscribers will have to ante up $9.99/mo. for reading more than 10 articles in any title within a month.

Perhaps most indicative of the surging popularity of paywalls, though, is Politico’s decision to experiment with the idea. The Washington, D.C.-focused news service, which was once personified the new breed of digital-only publishers, has given in to the reality that advertising rates continue to fall and subscriber revenues must become part of the business. “We believe that every successful media company will ultimately charge for its content” said a memo signed by several of the Politico’s top executives.

Circling the Wagons

We continue to be more interested in experiments that break new ground in publishing economics than efforts to resurrect old models. There’s plenty to report there, as well.

Ken Doctor kicks us  off with a fine analysis of where NewsRight went wrong. NewsRight was a consortium of 20 publishers that sprung out of the Associated Press in early 2012 with the mission of tracking down copyright violators while also creating a subscription model that would permit digital publishers to license quality content for redistribution.

“Publishers have seethed with rage as they’ve seen their substantial investment in newsrooms harvested — for nothing — by many aggregators…” writes Doctor on the Nieman Journalism Lab, “…but rage — whether seething or public — isn’t a business model.”

Bingo. Consortia are good for only two things: setting standards and raising awareness. They’re a terrible way to create new products. The idea of pursuing copyright violators individually is ludicrous, anyway. It’s like trying to stamp out ants. There are always more where the first batch came from.

The only anti-piracy tactic that works is a public awareness campaign, and the newspaper industry has shown little interest in that. NewsRight died because the members inevitably had conflicting priorities, and it was impossible for everyone to find common ground when everyone had something to lose.

Does BuzzFeed Have it Right?

Sponsored Post on BuzzFeedDoctor points to the work being done at NewsCred, BuzzFeed and Forbes, among others, as examples of new ideas worth developing. “In 2013, we’re seeing more innovative use of news content than we have in a long time,” he writes. We’re particularly interested in BuzzFeed, the viral content engine started by Jonah Peretti and others in 2006. At first glance it looks like any other new-age news site, with a bottomless home page stuffed with a jumble of seemingly unrelated content ranging from the profound to the ridiculous.

As New York magazine points out in a lengthy profile, though, there’s a lot more going on there than cat photos. BuzzFeed is tuned to create content that people want to share, and it could care less who the authors are. The home page blithely mixes contributions from staffers and advertisers with minimal labeling. Every element within every story can be shared on every social network you can imagine. Every page is designed to maximize audience interaction with the content.

BuzzFeed makes little effort to segregate advertiser contributions from the work of its own staff. A photo essay on “12 Tips to Have An Amazing Barbecue” from Grill Mates sits next to “Just The London Skyline, Made Out Of Sugar Cubes” by staffer Luke Lewis. Some of the branded stuff is actually pretty good, like, JetBlue’s “The 50 Most Beautiful Shots Taken Out Of Airplane Windows.”

Is this serious journalism? Well, no. We don’t think corporate brands will ever produce that. But if they want to run their grilling tips next to similarly lightweight content from professional editors, why not let them? The genie that goes by such names as “brand journalism” and “content marketing” isn’t going back in the bottle. A recent survey concluded that corporate marketers and agencies consider branded content to be among their most effective branding tactics, and that 69% plan to spend more money on it in the coming year.

The bigger issue is whether sustainable publishing business models can be found that don’t rely entirely upon display advertising or subscription revenue. BuzzFeed and NewsCred are making some progress there. We don’t believe they produce serious journalism, if sex, gossip and voyeurism can attract a large enough audience to support real journalism, then we’re in favor of it. The idea isn’t new. It’s worked in the U.K. for decades.

Content Marketing Effectiveness

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By Paul Gillin | April 13, 2013 - 10:31 am - Posted in BusinessModel, Circulation, Demographics, Newspapers, Paywalls, Revenue20, Solutions

In a dying industry, the sensible thing to do is to maximize your revenues before you die. Paywalls might well make money for newspapers. But that doesn’t mean that newspapers aren’t dying. Quite the opposite.

Felix Salmon, Reuters

That quote, which we first saw in this Mathew Ingram piece on paidContent, gave us new insight on why we dislike paywalls so much. Yes, the newspaper industry seems to be adopting them at a rapid pace, and yes, the paywalls at The New York Times and Financial Times are reportedly successful, but there’s something about putting the subscription genie back in the bottle that strikes us as a step backward.

Salmon puts his finger on one of the weaknesses of most current paywalls: They are defensive strategy. They’re designed to keep loyal readers on board, but they repel potential new readers.

Alan Mutter shares worrisome statistics: More than two-thirds of regular newspaper readers are over 45, their average age is 57 and the average age of the online newspaper audience grows one year older every year. This industry is still headed toward a cliff. Unless those demographics turn around, it’s only a matter of time before the audience dwindles to a size that is no longer economically sustainable.

What’s the answer? Unfortunately, no one has come up with one. In another piece this week, Ingram criticizes paywalls for being a no-growth strategy. His article is mostly a restatement of Mutter’s analysis, but the really interesting part is in the comments section that follows. Both critics and supporters of paywalls vigorously debate the alternatives, and both sides make good points. Done right, it seems that paywalls actually could attract new subscribers, but no publisher is reporting the kind of circulation gains that will be needed to replace this rapidly aging audience.

The time seems right for micro payments, but that idea has never gained any traction. Kachingle was one of the early players in newspaper micro payments, but it has now morphed its business model into a co-marketing app content somethingorother that we can’t figure out. People seem to be OK with using Google Checkout for 99-cent purchases, but not for five-cent purchases. We think there’s a psychological barrier to micro payments. Below 99 cents, people don’t want to be bothered to think about paying. In fact, charging a nickel to read a 5,000-word article seems a little absurd, as if the article has no value. At some point, micro payments work against you.

Reuters’ Salmon argues that paywalls as currently implemented are too inflexible. They impose a limited number of subscription options on visitors regardless of what the visitors want or how they behave. Paywalls should use a sliding scale that maps to the needs of the individual reader, he suggests. People with an intense interest in sports will pay more than those who care deeply about entertainment, so they should pay a different price. Few publishers understand their audiences in that kind of depth, though.

We did see one bit of encouraging news this week. The Newspaper Association of America reported that advertising revenues continued their seven-year-long string of declines, dropping 6% in 2012. However, overall revenues were down only 2%. The reason is that publishers are finally diversifying their revenue streams, and not just by charging readers:

These new revenue sources, which include such items as digital consulting for local business and e-commerce transactions, now account for close to one-in-ten dollars coming into newspaper media companies. They are significant enough in scale that NAA has begun to collect detailed data about these revenue categories and track their trajectory year-to-year for the first time.

Consulting? Affinity programs? Marketing Services? Where have we heard those ideas before?

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The Pew Research Center’s annual State of the Media Report paints a dismal picture of the condition of mainstream media – in particular broadcast and magazines – but Slate’s . Which side are you on?

There’s no question that Pew’s annual media audit and survey of 2,000 consumers is about as depressing as any of the 10 annual reports that the nonprofit media watchdog has completed. Among the lowlights:

  • Nearly a third of U.S. adults have stopped using a news outlet because it no longer met their needs.
  • That’s not surprising when you consider that low-cost sports, weather and traffic information now account for 40% of the content produced on the average local newscast.
  • The population of full-time professional newsroom employees fell below 40,000 for the first time since 1978. It’s down nearly 30% from its 1989 high.
  • In an election year, the declines in coverage were particularly evident. Live broadcast reports fell from from 33% of the news hole in 2007 to 23% in 2012. And 2007 was not an election year. Commentary and opinion, which are cheap to produce, now make up 63% of  news airtime on cable channels, while straight news reporting comprises only 37%.
  • An examination of 48 recent evening and morning newscasts found that 20 led with a weather-related story. Weather coverage is cheap.
  • Only about a quarter of statements in the media about the character and records of the presidential candidates originated with journalists, while twice that many came from political partisans. The report runs down a list of informational websites that political parties and advocacy groups have set up to influence media, but some are now actually becoming the media. Pew notes several examples of major news magazines that have carried partisan reports as part of their branded news stream.
  • In that vein, Pew notes a 2008 analysis of Census Bureau data by Robert McChesney and John Nichols that found that the ratio of public relations workers to journalists tripled from 1.2-to-1 in 1980 to 3.6-to-1 in 2008. That gap has likely grown since then.
  • In summary, “News organizations are less equipped to question what is coming to them or to uncover the stories themselves, and interest groups are better equipped and have more technological tools than ever,” Pew states.
  • Incredibly (to us, at least), the public is mostly unaware that the news media is struggling. Only 39% of the 2,000 consumers surveyed said they have much awareness of the industry’s problems.

Mainstream media percentage change in ad revenue 2011-2012

Newspapers actually come off pretty well in this year’s report. Thanks to paywalls, which are in place or in the works at one-third of U.S. newspapers, circulation held steady year-to-year. The New York Times said its circulation revenue now exceeds advertising revenue for the first time.

Warren Buffett speaking to a group of students...

Warren Buffett (source: Wikipedia)

However, the long-term trends are still negative. Newspapers lose $16 in print ad revenue for every $1 in digital ad revenue gained, and that figure is up from $10-to-$1 in 2011. Equally ominous is that Facebook and Google are doing a better job of figuring out how to target digital advertising locally, which threatens one of the few pockets of revenue strength newspapers have left.

Because the long-term outlook is so bad, newspapers have become an attractive investment vehicle. Pew notes that value investor Warren Buffett has been snapping them up at a rapid clip because they are so cheap. The Philadelphia Inquirer and Philadelphia Daily News were bought for $55 million last year, which is 1/10 of the price they commanded in 2006.

Out of Mind

Perhaps the most surprising finding is the low public awareness of the news industry’s crisis, and that’s where Yglesias’ analysis on Slate is most interesting. “American news media has never been in better shape,” he states at the outset, using the Cypriot economic crisis as proof. We’re not sure the media itself is in great shape, but readers are doing fine.

Yglesias cites a “bounty” of online resources that provide context, analysis and even an interactive calculator that lets visitors try out different ideas for solving the island nation’s financial problems. It’s easier than ever to produce news using public sources and simple publishing tools, and the Internet makes boundless background information available in seconds.

Assessing the state of media by looking only at the health of traditional outlets creates “a blinkered outlook that confuses the interests of producers with those of consumers,” he writes. “[T]oday’s readers have access to far more high-quality coverage than they have time to read.”

The finding that only four in 10 Americans are even aware of the media’s struggles can be interpreted in several ways. The pessimistic view is that Americans are basically dumb, lazy and happy with the partisan screaming matches that characterize a lot of broadcast news.

A more positive view is that Americans have already moved on to using other sources and haven’t noticed the loss of their once-trusted brands. It’s impossible to know without further research, but we have to acknowledge Yglesias’s point that the decline of mainstream media certainly hasn’t resulted in a dearth of information.

No Expiration

One important point the Slate business writer makes is that news no longer carries an expiration date. Traditional media assumed that news would be consumed within a few hours or days. Archival or background information was tedious to find, so readers were mainly limited to whatever the newspaper or broadcast provided within its limited space.

Now everything is part of a grand, searchable archive, which permits people to go as deep as they want whenever they want. Those who don’t have the time to come up to speed on the banking crisis in Cyprus can put off learning about it until later. Then they can go to a resource like Wikipedia’s coverage and spend hours digging into background for more than 40 sources cited there.

We prefer the glass-half-full perspective. While the loss of the media’s watchdog function is troubling, the power of having timeless access to resources we didn’t even know existed is energizing. The challenge is to find ways to fund the valuable services that media has provided in the past so that the information that doesn’t attract search engines and sponsorship dollars still has a platform.

 

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Here’s a news item we didn’t expect to see. Borrell Associates now predicts that U.S. newspaper revenue will rise in 2013, although only by a scant .5%. If the prediction holds true, it would be the industry’s first revenue increase since 2006.

Magazine Print Editions, Websites & Tablets # of Unique Brands Advertising
Time Period Print + Web + Tablet
(unduplicated)
H1 2010 9,536
H1 2011 10,768
H1 2012 14,949
Source: Kantar Media
Base: 60 Publishing Brands with monitored print editions, websites and tablet editions

Borrell’s optimistic newspaper forecast defies conventional wisdom. The research and consulting firm has no particular incentive to bolster the print newspaper business, but it has been forecasting a turnaround for a couple of years. CEO Gordon Borrell said he expects most of the revenue growth to accrue to small newspapers, which have been the most resilient segment of the business during its historic decline. Large dailies will continue to see the annual 4% to 6% declines that have been the norm for the last few years.

The turnaround is shaky, though. Pre-print ads, which typically bring in about 20% of all advertising revenue, could decline as the result of a sweetheart deal between the U.S. Postal Service and a large direct-mail company. The Newspaper Association of America’s howls of protest about the contract have so far fallen on deaf ears.

Borrell is also putting a lot of faith in local online advertising, which it predicts will grow 30% next year. Given that online ad growth at newspapers has been in the single digits annually for the last four years, that seems a stretch. You can hear all of Gordon Borrell’s comments in this recorded webcast.

There’s also good news in magazine land. The Magazine Publishers Association surveyed its members and found a 57% jump  in the number of brands advertising on all magazine media platforms since 2010. That includes tablet, online and print advertising.  The MPA also said magazine apps are some of the highest-grossing titles in the areas of lifestyle, health & fitness and news in the iTunes store.

Publishers apparently are a pretty upbeat bunch. A new study by Michael Jenner of the University of Missouri’s School of Journalism finds that two-thirds of newspaper publishers are optimistic about the future, and only 4% are pessimistic. Jenner said the research is based on 450 in-depth interviews with senior publishing executives. They’re moving ahead aggressively on digital platforms, but 60% “do not envision a time in the future when their individual publications will no longer issue print versions of the news.” We admire their optimism, but that’s just nuts.

The Numbers from Nola

Ken Doctor has no illusions about the future. “We all realize that, at some point, daily print will go away,” he writes at the top of this financial analysis of the New Orleans Times-Picayune‘s frequency cuts. Doctor understands the economics of the news publishing business as few people do (his Newsonomics site is a must-read), and this analysis is a useful insight into the revenue and expense models of metro dailies.

Doctor estimates, for example, that circulation brings in about 30% of total revenue at the Times-Picayune and that the four daily editions that are being eliminated contribute between 25% and 30% of print ad revenues. The net result of the paper’s cutback from seven to three issues per week is about an 11% advantage in profitability, he estimates. That’s good, but there are big risks. One is that the T-P is bucking the trend of deriving more revenue from readers and actually doubling down on advertising as a strategy. In effect, it’s doing more of what got newspapers into trouble in the first place.

Meanwhile, the competitive news environment in the Big Easy has made the paper a tempting target for everything from a startup called The Lens to the Baton Rouge Advocate. “Simply, the T-P’s slimming has opened up a floodgate of competition,” Doctor writes. “That makes the distinctive value proposition of the T-P harder and harder to get paying readers to accept.”

That isn’t stopping owner Advance Publications from methodically duplicating the frequency-reduction strategy across its portfolio. The limited success of that strategy in Detroit, where the Free Press and Detroit News made similar frequency cuts nearly four years ago, isn’t necessarily a reliable guide. The Detroit media market is a lot less competitive than New Orleans’, and the strategy hasn’t stopped the steady drumbeat of circulation declines and layoffs.

Incidentally, Nola residents haven’t taken the T-P cutbacks lying down. Grassroots efforts to reverse Advance’s decision testify to the unsinkable spirit of that unique region.

Update, 10/17/12: A survey by Cribb, Greene reports that newspaper publishers are increasingly confident about the future. More than 40% said their local markets are improving, up from 14% in 2011. The percentage who expect profitability to improve this year rose to 52% from 39%, and those who expect advertising revenue to be higher in 2013 grew by a similar margin. Asked if they would buy a newspaper business in the current economic climate, about half said “no.” However, 69% responded “yes” or “maybe” when asked if they would recommend the newspaper business as a career for their children.

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