Dealing with difficult times


In the past few weeks the newspaper has been getting smaller -- due to a decline in advertising lineage.

If builders aren't selling homes, they don't advertise. If auto dealers aren't selling cars, they don't advertise. If businesses aren't hiring, they don't advertise.

Of course you have to wonder if some of this is a self-fulfilling prophecy. A retailer suspects he's not going to have strong sales in the coming month, so he chooses to cut expenses, including advertising. When sales, sure enough, are down he can pat himself on the back for being a good prognosticator.

A few readers have noted the smaller papers and logically asked why they should be paying the same if they are getting less. (The size of the paper has always been a reflection of the robustness of the economy. Sunday's paper is bigger than Monday's. December's are bigger than July's. Our paper is bigger than Reno's.)

Though I may never assuage those giving-me-less complaints, I would like to take the time to offer some insight into the century-old business model for the modern daily newspaper.

Think of it as a three-legged stool. The first leg is the content -- news, sports, entertainment, business, all the assorted information and amusements. The second leg is circulation, the number of home delivery subscribers and people who purchase single copies. The quality of the first supports the second. The third leg is advertising, the value of which is determined by the second, which was determined by the first.

It is sort of a circular causal feedback, one amplifying the other.

Businesses seek out newspaper readers because they have established an interest level through their willingness to pay for the newspaper, thus assuring they will be turning the pages and actually seeing the content and advertising. Unlike fliers and junk mail that often are tossed in bulk.

Newspapers go to great efforts to assure advertisers they are getting what they pay for, hiring independent audit companies to report on actual paid circulation. It is this integrity and transparency that has resulted in the headlines telling of declining printed copies of newspapers, though actual readership in print and online remain high. In fact, the Review-Journal's daily paid circulation is up a few thousand copies from a year ago, though Sunday circulation is down a few thousand.

Over the years this symbiotic relationship has evolved to where the home subscriber has benefited from the paid advertising, which has picked up the bulk of the expense of producing the content. A subscriber's payment does not even cover the cost of the newsprint on which it is printed and its delivery. If you took all the content in any day's paper, much less Sunday, and printed it in book form, it could sell for $15 to $20 as a paperback.

Papers and their advertisers across the country are being hit especially hard by the recession. The New York Times is now running ads on the front page, just as the Review-Journal and The Wall Street Journal have done for some time. The Tribune Company, which publishes the Chicago Tribune and the Los Angeles Times and a dozen other papers, has filed for bankruptcy. The two Detroit dailies are cutting home delivery to three days a week and publishing a paid facsimile online the rest of the week.

Papers have been cutting costs, including content-producing staff.

The Review-Journal is doing its utmost to maintain its level of local news content, the one thing we can provide exclusively and in greater detail than anyone else.

Please bear with us as we and your advertisers struggle through some difficult times. We are not a public utility, we are a business trying to provide you with a viable and valuable daily service at a fair price.

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As an aside, I recently read an interview in Fortune magazine with Google CEO Eric Schmidt, whose company is often blamed for declining newspaper circulation because it aggregates the content of those papers on its search engine and disseminates that for free.

Asked what it would mean if the newspaper industry failed, Schmidt was quoted as saying, "To me this presents a real tragedy in the sense that journalism is a central part of democracy. ... And I don't think bloggers make up the difference. The historic model of investigative journalists in any industry is something that is very fundamental. So the question is, what can you do about this? And a fair statement is, we're still looking for the right answer."

Thomas Mitchell is editor of the Review-Journal and writes about the role of the press. He may be contacted at 383-0261 or via e-mail at tmitchell@reviewjournal.com. Read his blog at lvrj.com/blogs/mitchell.

 

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