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June 13, 2012, 6:25 p.m.
Business Models

Lessons from the Motor City: What New Orleans might expect when the printing presses slow

In 2009, The Detroit Free Press and Detroit News cut back to three days of home delivery a week. Three years later, their struggles continue.

— It was exactly the kind of story you want a newspaper for: In 2008, Detroit Free Press reporters uncovered a trove of incriminating text messages that ultimately led to the resignation and jailing of the city’s charismatic young mayor. It earned the newspaper a Pulitzer Prize in local reporting.

Win a Pulitzer and you’ve got a guaranteed path to the next morning’s front page, your picture staring up from all your readers’ porches, a couple bottles of champagne in the background. But by the time the Free Press’ Pulitzer was announced in April 2009, the paper had cut back home delivery to only three days a week. Since Tuesday wasn’t one of those days, readers had to head to a gas station or supermarket to see the traditional celebration pics in print.

“Unfortunately, when I won my Pulitzer, I wasn’t able to see it on my doorstep,” M.L. Elrick, one of the reporters on the story, told me. “It was a non-delivery day. Universally, we’re disappointed that the paper isn’t delivered seven days a week.”

American newspapers are caught in a bind. They still earn the vast majority of their revenue — around 80 percent — from their print editions. Print ads sell for higher rates; print readers spend more time with the product and make it part of their daily routine. But newspapers are also aware that their attachment to print makes it harder to be fully, natively digital, to respond to audience needs and market opportunities with the agility an online-only outlet can. Those printing presses cost money to own and run; those delivery trucks take a lot of gas. Print is at once newspapers’ most important asset and their greatest albatross.

In 2009, the Freep and its jointly operated partner the Detroit News tried to navigate that bind by continuing to print seven days a week, but only deliver the paper to subscribers on Thursdays, Fridays, and Sundays. (The Freep has the only Sunday paper in the deal.) Now, a thousand miles south, another paper is preparing to go a step further: In New Orleans, the Times-Picayune will cut print down to three days this fall. Papers in Alabama, Canada, and Oregon are all cutting out days.

What happens to a newspaper when it’s no longer a daily front-porch habit? And what happens to a city?

One thing that happens is that a new market is born: people who want home delivery that the newspapers won’t provide for them.

Free Press editor and publisher Paul Anger says that before the reduction, delivery trucks were driving the equivalent of “to the moon and back” each week. Scrapping the majority of Detroit Media Partnership’s home delivery schedule meant that Detroit’s two metro dailies were cutting hundreds of thousands of miles of transport-related costs each week — not to mention the paper-and-ink savings from not having to print nearly as many newspapers.

But for some, that delivery job simply shifted from unionized drivers to a small army of retirees, housewives, and others who started their own ad hoc paper routes on non-delivery days. Long-time Detroit media commentator Jack Lessenberry, a former editor at the News, is one of those customers: He pays a woman in his neighborhood 50 cents above the $1 newsstand price to get the paper delivered on the days the newspaper won’t. He gets billed every three months for the service.

The newspapers took notice of the fact that people were buying papers in bulk from area gas stations to deliver to their neighbors. So about two years ago, the company formalized its relationship with contractors and starting offering them wholesale batches of papers. The papers now have 82 carriers under contract in 132 Zip codes, with about 15,000 people still getting daily delivery of either paper from independent contractors who set the price. So in a sense, rather than being eliminated, home delivery has more been outsourced, four days a week and on a much smaller scale.

What have been the cost savings? Anger declined to put a precise number on it. The papers’ September 2011 publisher’s statement says that the Free Press’ Monday-to-Friday print circulation is just over 138,000. But that average hides a big gap between delivery and non-delivery days: about 80,000 Monday, Tuesday, and Wednesday versus about 225,000 on Thursday and Friday. In other words, around 145,000 people in the Detroit area care enough about the paper to get home or office delivery — but don’t hunt down a print copy the other four days a week. (Some of that gap is made up by digital replica editions.)

“Some people thought we were nuts,” Anger told me. “But whether you’re in Detroit, or New Orleans, or elsewhere, you have to emphasize the opportunities. The opportunity here is to break away from a very narrow publishing model that emphasizes print. That’s not where the business is going, it’s not where the market is going, and it’s not where our readers are going. Yes, print is still extremely important. But there’s a whole other lot of opportunity out there, digital-related, that’s really our future. So you have to keep talking about that.”

Talking about it. But what about doing it? Anger says that the digital effort that was promised as a result of delivery changes has been successful. In addition to rolling out new iPhone and iPad apps last month. Free Press reporters are encouraged to engage with readers on Facebook, Twitter and Pinterest, and to experiment with platforms like Storify — one reporter told me that three separate social media training sessions were scheduled for last week.

The newspapers are also working to modernize their approach to advertising. Rich Harshbarger, vice president of consumer marketing and communications for Detroit Media Partnership, emphasized that online ad revenue has grown by “double digits” since the delivery change. (Of course, online ad revenue is growing rapidly in lots of places.) But print advertising is still what pays the bills. Predictably, advertisers have gravitated toward editions of the Free Press that are still delivered to homes. Thursday, Friday, and Sunday were already the most popular days for advertisers, and that’s why those days were selected for print delivery, Harshbarger told me. “Before the conversion where the delivery model changed, we were at maybe 77 percent of all ad dollars fell on those three days,” Harshbarger said. “Our hope was to get that to 80 percent. Now I think we’re at 95, 96 percent.”

Could the Free Press have survived without cutting back on delivery days? After a slight wince and a full seven-second pause, Anger said: “That’s a question we didn’t want to answer — I’ll tell you that.” Instead, he says the Detroit Media Partnership relied on extensive research and the belief that Detroit would rally around the struggling newspaper despite changes that meant breaking readers’ morning rituals with the paper.

“We involved them in our reasoning and the challenges, and I really think that people looked at what we doing and said, ‘You know what, we cannot be without the Free Press,'” Anger said. “People in Detroit have been through a lot. They’ve seen that it doesn’t do any good to panic. They’ve seen tough times, and they’ve seen better times. They love Detroit. They identify with Detroit. They root for Detroit. And they’re adaptable. They have a lot of grit. There’s a feeling that, if you’re in Detroit, we’re in this together. I think that that’s a little bit of a more of a emotional explanation but I really believe that. I really do believe that.”

It’s easy to draw connections between Detroit and New Orleans. Both have seen better times financially; both have contributed greatly to American culture; both are great news towns. But the Times-Picayune and the Detroit papers are in different situations, even if they’ve both walked away from print in strategic ways. For one, Detroit’s metro area is still more than three times larger than New Orleans’, and it still has two newspapers.

Harshbarger says there’s another difference. Already, he says, the Times-Picayune made an enormous miscalculation by keeping staffers out of the loop, allowing them to hear about their paper’s restructuring first from The New York Times’ David Carr, who broke the story, rather than from their supervisors. That’s not how things went down in Detroit, he said.

“There were about 200 employees from the Detroit News, from the Free Press, and the JOA partnership that knew about what we were going to announce in the December press conference, and it never leaked,” Harshbarger said. “That’s how much buy-in and support we had from our employees. I mean, especially with newsrooms, right? I think that understanding that the employees are having this announcement in New Orleans, and they’re hearing it from a third-party media outlet — that couldn’t have been more different.”

But the biggest difference is that New Orleans won’t publish a physical paper on non-delivery days, whereas Detroit still publishes papers seven days a week. Yet some media observers in Michigan, including at least one Free Press reporter, think daily printing won’t be around too much longer.

“Very soon, sooner than most people expect, we’ll only publish on Sunday,” Elrick, the Pulitzer winner, told me. “We’re still losing money. I think they were smart to do a lot of research. I think they were smart to communicate to people what they were doing and why. But there’s no question that they did this because there was no better alternative. To my mind, this was cutting off your arm so you can get out from under the boulder. This was not, ‘I’ll be so much faster and lighter with one arm.’ Anybody who’s telling you that is full of baloney.”

Anger insists that the delivery change has been “extremely successful,” but that doesn’t mean things are bright. Weekday circulation continues to drop — nearly 6 percent between March 2011 and March 2012. (And as lovely as Anger’s description of Detroit’s moxie may be, a pragmatist might point out that it took all of Detroit’s grit, passion, and loyalty — plus billions of dollars in federal aid — to resuscitate the auto industry.)

“Well, we’re not immuned to industry trends,” Anger says when asked about the circulation drop.

That was obvious on a walk around the newsroom. A large section of one of the two floors that the Free Press occupies is now deserted — the newspaper has cut about 30 percent of its editorial staff since 2005, bringing the current count to about 200 people, Anger said. (The editorial staff is slightly smaller at the Detroit News, according to its publisher.) Even the areas of the Free Press newsroom that are still occupied were hushed, dimly lit and largely empty on a recent Tuesday afternoon. Bobbleheads perched around cubicles easily outnumbered reporters in the room.

“We have some morale problems,” Elrick said. “We’ve endured layoffs, and we took substantial paycuts, and at a higher rate than most of our managers. I must say with some chagrin that I think our staff is resigned to the notion that we’re only going to deliver on limited days. The only reason this was accepted with anything short of vocal consternation is because there are more sheep in newsroom than there ever have been, and also that people were convinced that [there was a choice between] fewer home-delivery days or fewer people on staff.”

Elrick calls the desire to have more bodies in the newsroom than papers delivered to readers a “very selfish perspective, and a very human perspective,” and he says without hesitation that it was a disservice to the newspaper’s loyal readers. “Those people who still read us, they’re very disappointed that they don’t get it on a daily basis anymore,” Elrick said. “They miss the paper. So do I.”

What’s worse is the idea that people might not actually miss it. The disruption to daily home delivery may have made readers realize that they don’t need the Freep or the News any day of the week. Once a habit is broken, is relevance the next to go?

Charles Eisendrath, director of the Knight-Wallace Fellowship at the University of Michigan, puts it bluntly: “They do not matter,” he told me. “They’ve been fading for a long time. The decision to get rid of half of your [delivery] schedule accelerated the rate by two. What advertisers think is, ‘This isn’t going anywhere. It doesn’t carry any influence.’ What readers think is, ‘There’s nothing in this.'”

(For what it’s worth, The New York Times last week quoted a marketing spokesman for Ford Motor Company as having said that “print frequency of a local paper is not a major concern for a company like Ford, as there are so many different channels to reach consumers now.” But that’s also a marker of how much more competition there is for ad dollars than there used to be.)

Eisendrath says what’s happening at the Times-Picayune reminds him of the auto industry in Detroit just before it imploded. “I see the Times-Picayune as two things: Same old mistake made by a company that’s already made the mistake,” Eisendrath said. “And it’s a privately held company, so you don’t really know, but they say they’re doing okay. Maybe. It’s like General Motors saying, ‘We’re doing okay.’ They said the same old thing. ‘We’re making money — why should we change? Why shouldn’t we take a few more dollars out of the minivan?’ And the answer was because of the Japanese, that’s why. Well, we don’t have ‘the Japanese’ in journalism — but we do have entrepreneurs, and that’s going to be just fine. The survivors will be forced to get better.”

At the Detroit Public Library, a trio of long-time librarians told me they haven’t noticed any increased demand for the paper on non-delivery days. Attendants at a couple of local gas stations shared similar anecdotal evidence. If more people are heading out to buy the paper on days it doesn’t get delivered, some of the people selling (or lending) it haven’t noticed. But the Free Press and the Detroit News are still visible around the city: There are bright newspaper boxes on corners, and at one intersection, across the street from a bus stop, there’s a billboard with both papers’ logos and, in big black letters, “Time to engage” — presumably, a slogan meant for the digital age.

The papers’ own audience data shows shrinking attention from Detroiters. In its March 2009 publisher’s statement, the Freep and News reported a print market reach of 38.1 percent on Sundays, 28.3 percent on weekdays, and 51.7 percent over seven days. By September 2011, those numbers had dropped to 34.1 percent, 17.8 percent, and 43.4 percent, respectively.

Even adding in digital, total combined audience reach (print plus web, over seven days) dropped from 55 percent to 48.8 percent. (The same numbers for the Times-Picayune increased slightly, from 64.6 percent to 64.9 percent.)

The e-replica editions of the Detroit Free Press and the Detroit News both seem to be popular, ranking in the top five among large daily newspapers in 2010, according to Pew. However, subscriptions to the paper automatically include the replica editions, so those rankings don’t accurately reflect the number of people actually accessing e-replicas. Harshbarger says about 20,000 readers use the e-replica editions on non-delivery days. The Free Press’ Anger points to the success of the paper’s e-replica as proof that older readers are willing to change their habits.

“Do some people still prefer the crinkle of the paper with their morning coffee? Yes,” Anger said. “Have a lot people moved to tablets, and are blown away by the experience there? Yes. And some of those are former I-love-the-crinkle people.”

“I think it’s worked out great,” said Jonathan Wolman, the News’ editor and publisher. “You know, would you rather have a home delivery seven days a week? Yes, and for a certain slice of our readership we’ve been able to reintroduce seven-day home delivery in certain neighborhoods where there’s a critical mass that the carriers choose.”

But media critic Lessenberry maintains that Detroit’s two dailies have done little but alienate an already dwindling base of loyal subscribers. “The older you are, the more faithful a newspaper reader you are, and the less likely you are to read a paper on the Internet,” Lessenberry said. “What they’re doing is outraging their best customers. It seems newspapers are trying very hard to produce newspapers for people who don’t want to read them. I think you would be hard-pressed to find anybody else who would say this model worked in Detroit.”

In one sense, the success or failure of the Detroit experiment could be judged be the fact that it continues. In late 2008, when the plan was announced — in the depths of a terrible recession, in a city on the ropes — few would have been shocked if told that, three years later, Detroit would be down to one newspaper, “daily” or not. The auto industry’s troubles made the newspapers’ seem small. The 2010 Census showed that Detroit’s population had plummeted, losing a quarter of its residents in a decade — the equivalent of one person every 22 minutes. “The city is shrinking about as fast as the newspapers are,” Eisendrath said.

Instead, both papers are still churning.

Where will the Free Press be in 10 years? When asked, Elrick’s default is humor: “Our editor will be Ted Williams’ frozen head, news will be delivered through a portal in the back of your neck, and people will drive around in DeLoreans fueled by banana peels.” But when he gets serious, Elrick says he expects big changes within five years, and sees the end of print as inevitable.

“I dread that day, but that day is coming,” Elrick said. “If we’re lucky, that day comes before we’re out of business. Despite all the pitfalls, and the uncertainty, and a lot of the unhappiness, this newsroom continues to be very committed, and takes a lot of pride in being the best group of journalists in Michigan. A lot of my colleagues worry about what’s going to come next. I always say we’ve got these great jobs. We should do them until we can’t.”

On Tuesday, in New Orleans, 201 Times-Picayune employees were told their jobs were disappearing. In the newsroom, 84 — about half the staff — got the news.

On Tuesday, in Detroit, Paul Anger presided over a staff meeting and told Freep employees that — as much as he views the three-day-delivery strategy as a success — there would need to be more layoffs and that the cuts “won’t be tiny.”

“This is all I can tell you: We had a staff meeting, and I talked about some budget reductions that we’re going to have to make,” Anger said when reached Tuesday afternoon. “The model has been very successful. There are industry trends and changing priorities. The model is not affected by that. The model is the model, and the industry trends and challenges that all of us face are a different story.”

POSTED     June 13, 2012, 6:25 p.m.
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