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Oct. 26, 2009, 4:34 p.m.

Newspapers take a bus plunge: circulation plummets 10.6 percent

It’s hard to put a good face on this kind of news; in fact, it reminds me of the old “bus plunge” meme. The Audit Bureau of Circulations (ABC) reports that newspaper circulation for the six months ending Sept. 30 dropped 10.6 percent from the same period in 2008 (7.5 percent on Sundays).

And this is an accelerating trend. Here are the results for the three previous six-month reporting periods (in each case, versus the same period one year earlier):

— Oct. 1, 2008-Mar. 31, 2009: down 7.1 percent on weekdays, down 5.3% on Sundays
— Apr. 1, 2008-Sept. 30, 2008: down 4.6 percent on weekdays, down 4.9 percent on Sunday
— Oct. 1, 2007-Mar. 31, 2008: down 3.5 percent on weekdays, down 4.5 percent on Sundays

In each case, the decline was the worst ever reported by ABC. The bus-plunge, cliff-drop analogy will get additional support when the Newspaper Association of America’s third-quarter advertising revenue report comes out (typically at Halloween); it’s likely to continue the trend of the previous two quarters with a drop in the 20-30 percent ballpark.

The NAA has not provided positive spin on the circulation news (it usually distributes an internal memo with upbeat talking points for publishers), but last week it did report gains in newspaper website traffic along with this comment from NAA President and CEO John Sturm:

Newspaper publishers continue to aggressively reinvent their business models, leveraging trusted brands to attract a growing and sophisticated audience in the digital space. At the same time, industry executives have adopted smarter circulation strategies that are growing circulation revenues even though paid circulation numbers are lower. This places the focus where it belongs: retaining core readers who deliver maximum value to advertisers while harnessing digital platforms to broaden our medium’s audience and position us strongly for the future.

Rick Edmonds at Poynter provides a good enumeration of the various factors behind the print decline, including strategic pullbacks by newspapers from fringe distribution and higher prices charged to subscribers and single-copy buyers. NAA also reported recently, as a positive development, that the “churn rate” (which measures how often subscribers fail to renew their subscription), had dropped from 54.5 percent in 2000 to 31.8 percent in 2008. It’s probably even lower today, as papers simply stop trying to retain marginal subscribers and focus on keeping their “core readers,” as Sturm says.

The 10.6-percent decline means that since last year, about 4.5 percent of U.S. households have given up reading a printed newspaper, and that printed newspapers now reach less than 40 percent of U.S. households. About the same percentage of adults say they get “most of their news” from printed papers, but that fraction will very soon be overtaken by the portion who get most of their news from the web.

You could read Sturm’s comment as an acknowledgment of several inexorable trends: news readership is moving to the web; print circulation will continue to fall; print is now a niche product which still reaches our “core readers” (older, higher income readers still desirable to a subset of advertisers); newspapers will charge whatever they can for print subscriptions — but “digital platforms” are going to be the industry’s future.

I’m hopeful that’s the NAA’s real advice to publishers. Taken seriously, it implies that the much-discussed, little-implemented strategy of charging broadly for online content in order to “protect print” is backing the wrong horse. It’s because print is now a niche business that newspapers are able to show the growing circulation revenues mentioned by Sturm. Readers can’t be forced into print by online prices, although they certainly may pay for niche content online and they should pay, handsomely, for the luxury of a home-delivered newspaper. Meanwhile, the industry’s all-out focus should be on seriously growing its online audience.

Unfortunately, in that department it has a ways to go. The NAA is upbeat about the stats outlined in its web traffic report, but (as I outlined also after the Q2 report), seen in context, they paint a picture of an industry that’s lagging seriously in transforming itself to a digital news medium. An “active reach” of 38 percent means 62 percent of adults ignored newspaper web sites. About 48 pages per person per month means the average visitor looked at only 1.5 pages per day. Time spent, at 34 minutes per person in September (and down from the previous two summer-vacation months), is barely one minute per person per day. At most of the top newspaper sites, according to E&P’s compilation, that time spent is even lower — just twelve and a half minutes at the top-ranked NYTimes.com, for example.

Meanwhile, the average web user spends between 30 and 40 hours a month online, depending on which survey you like, and dabbles at Facebook and other social networking sites 17 percent of that time. Time spent at social networking sites has tripled in the last year, while time spent at newspaper sites is flat, at best. (All these stats are from Nielsen, by the way, so there’s no apples/oranges issue going on.)

All of which is to say: newspapers have a pretty tiny share of online attention and are losing ground online just as they are in print. But online is the future the NAA’s Sturm is talking about. The focus for newspapers has to be on growing online attention share, fast.

POSTED     Oct. 26, 2009, 4:34 p.m.
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