|
 Previous
| Next
| Home
Intro | Content Analysis | Audience | Economics | Ownership | News Investment | Public Attitudes | Conclusion | Charts & Tables
| Guest
Essay
Audience
By the Project for Excellence in
Journalism and Rick Edmonds of The Poynter Institute
"Newspaper circulation is in decline," the inaugural
edition of this report declared a year ago. After the events
of 2004, it's clear that things are worse than people thought.
Figures for 2001 to 2003 suggested that a 30-year decline
in circulation was at least slowing and might even be leveling
off. The circulation decline for dailies had slowed to a mere
.0015 in 2003.
What's more, much of the long slide came at evening papers,
many of which simply folded. Morning circulation was near
its historic peak, and one could argue that the surviving
papers were slightly bigger on average, and stronger. Count
in the steady growth of newspaper online sites over the last
decade, and you could even make the case that total audience
was growing rather than shrinking.
U.S. Daily Newspaper Circulation
|
|
Circulation in millions, weekday and Sunday editions,
1940 to 2003
|
|
|
|
Design
Your Own Chart
|
Average Circulation of U.S. Daily Newspapers
|
|
Weekday and Sunday editions, 1990 to 2003
|
|
|
|
Design
Your Own Chart
|
That promise, however, was thwarted in 2004. Save for online,
the story of newspaper circulation was a return to accelerated
decline. For the six months ending September 30, 2004, circulation
at the 841 daily papers and 662 largest papers for which audited
totals were available was down 0.9% daily and 1.5% Sunday.
At both the June and December 2004 meetings of analysts and
investors, the industry leader, Gannett, reported year-to-year
daily circulation losses, at slightly less than 2% excluding
USA Today.
Gannett's president, Gary Watson, cited two factors: a business
decision to price aggressively and the added cost of selling
subscription starts now that the federal do-not-call registry
limits telemarketing. At USA Today, which has been growing
robustly and has a comfortable circulation lead among the
national papers, Gannett raised the cover price from 50 to
75 cents in September, likely to lead to at least some circulation
drop.
The September results suggested that many other companies
were following Gannett's lead, essentially concluding that
propping up circulation with expensive new pricing and determining
churn needed to be scaled back.
It would have been a tough year for circulation in any case.
And the audited September 2004 totals do not include purging
the books of almost 250,000 phantom readers claimed by the
four metropolitan papers (the Chicago Sun-Times, Newsday,
Hoy and The Dallas Morning News) implicated in a circulation
scandal. Long story short, each revealed that they had been
bolstering their numbers the Enron way - by faking them, particularly
by claiming single-copy street sales for papers that were
literally dumped.
The succession of embarrassing announcements over the summer
had several common threads. The cheating was extensive - overstatements
from 50,000 to more than 100,000 - and had been going on for
years.
All four papers were in big cities and owned by public companies,
which took large charges against earnings, almost $100 million
for the Tribune Company's Newsday and Hoy and tens of millions
for the other two.
(Circulation directors in Dallas and publishers at Hoy and
Newsday departed. At the Sun-Times, a new management team
had discovered practices of its predecessors).
By the summer's end, aggressive New York prosecutors were
looking to build a criminal case in the Newsday/Hoy situation.
The Securities and Exchange Commission had launched its own
investigation.
If it could happen at those four newspapers, two of them
often rated among the nation's 15 best, were there more shoes
to drop? So far not. A couple of the larger companies, Gannett
and Knight Ridder, said they were confident their own controls
would prevent such fraud. E.W. Scripps hired a director of
circulation compliance to double-check the work of its papers.
Other companies simply announced they had charged publishers
with making sure their numbers were clean.
As unraveling fraud schemes tend to do, this one revealed
a number of unpleasant truths:
- Especially in big-city, competitive markets, circulators
are under intense pressure to hit a target total, with senior
managers asking few questions about how. Field managers
and distributors both in Dallas and on Long Island were
told to make their numbers or else. Those who complained
or who couldn't stomach the blatant practices (for instance,
tossing big stacks of returned papers in dumpsters and counting
them as sold) found work elsewhere.
- Large-scale cheating is relatively easy to bring off and
hard to detect. Some of the fraud was built on top of loose
procedures, fully within ABC rules, for newsstand sales
and returns, reduced-price or free start-up offers, bulk
and third-party sales and other deeply discounted versions
of "paid."
Newsday's aggressive reporting after the fact on its own
troubles revealed that agents were carefully coached in
how to fool the auditors.
- Any paper is likely to have a good-sized complement of
these loophole cases in its paid total. The variations,
and their use, have ballooned in recent years. The analyst
Paul Ginocchio of Deutsche Bank Securities examined the
circulation statements of 40 large newspapers and found
a "hair-raising" decline in fully paid circulation.
Heavily discounted and "other" (like group sales
or employee copies) had risen from 4.8% to 10.3% of the
total paid circulation at the 40 papers in just two years.
The ABC has already tightened up some rules, for instance
halving the number of days that can be excluded from the audit
count because of holidays or bad weather. Other rules are
under review. Papers may also feel pressure now to tighten
up on loophole categories on their own.
Those things add to the difficulty and expense for newspapers
if they seek to stabilize circulation numbers.
Shaky numbers and quality of circulation matter greatly to
a business that draws about 75% of its revenues from advertisers.
If there is damage, it will probably play out in a resistance
to rate increases in 2005, which will in turn form the base
for rate increases in years to follow. With many other factors
at play, the damage could be substantial, yet also impossible
to quantify exactly. It is part of what analysts see as soft
industry prospects.
At the affected papers, the scandal is also translating into
reduced news investments. The Morning News announced plans
in September to eliminate 250 positions.
The company didn't specify how many of those would be in the
newsroom, but other sources indicated news-editorial would
take a hit of more than 10%, about 70 jobs. Newsday announced
cuts of the same magnitude weeks later.
Silver linings were hard to find, but there was one: advertisers
may demand rebates and will exert some leverage in pricing,
but they still want to be in the paper. That played out at
Newsday, where a group of car dealers suing the paper were
banned for several months from placing ads. They protested,
and Newsday relented.
It is important to note exceptions to the downward circulation
trend. McClatchy newspapers, which have long emphasized circulation
growth, recorded 0.2% growth both daily and Sunday in the
six months ending in March 2004. The chain has recorded 20
consecutive years of circulation growth. Lee Newspapers were
up 0.5% Sunday.
The Boston Globe was up despite a price increase. In the longer
run, national papers - The New York Times, The Wall Street
Journal and USA Today - have all grown, The Times steadily
substituting national for regional circulation, and at a premium
price. Not coincidentally, all these papers would be classified
by most newspaper industry insiders either as excellent or
improving editorially.
It is also worth emphasizing that generally the papers with
the best circulation performance tend to be those that are
investing in news resources.
Readership
For the rest of the industry, one alternative may be to find
a new and better way to describe their business performance.
And the events of 2004 gave a fresh push to the preference
of many to make readership, rather than paid circulation,
the standard measure of audience reach. They consider readership,
defined as the number of people who actually read a newspaper,
more meaningful than the paid circulation number (especially
now that a bright light has shone on the ways the system can
be abused and gamed). Readership has fallen through the years,
but not as fast as circulation. There is evidence that more
people are reading the newspaper at work or in settings like
coffee shops and waiting rooms and that the demographic groups
newspapers have a harder time reaching, like women and young
people, are well represented among occasional readers of this
kind.
Commercial information services like Scarborough have been
measuring readership in large markets for years, and it has
been the standard measure in Canada for two decades. Since
1999, the ABC has begun offering "reader profile"
reports, which not only estimate total readership but provide
demographic information that helps advertisers design tailored
multi-media campaigns for their clients. After a slow start,
a majority of larger newspapers - 102 of the top 150 - have
now done ABC profiles.
This slow shift in emphasis to readership dovetails with
the work of the Readership Institute at Northwestern University,
a five-year-old, $10 million industry-sponsored research initiative
aimed at helping papers halt the slide. The Institute prefers
an even broader measure of readership than a number count
- looking at the time a reader spends with the paper, how
thoroughly the different sections are read and how many days
a week. These factors are combined into a measure called Reader
Behavior Score (RBS).
The most current estimates of industry-wide readership are
78,285,000 (53% of the adult population) on an average weekday
and 90,765,000 Sunday (61%). That is a slippage of about 1%
daily since 1998 and 1% Sunday. By comparison, circulation
had fallen 2% daily and 2.5% Sunday through 2003 (the latest
year for which industry-wide estimates are available) with
more decline coming in 2004.
Daily and Sunday Newspaper Readership
|
|
Percentage reading newspapers in an average week, 1999-2004
|
|
|
|
Design
Your Own Chart
|
Readership provides an apples-to-apples comparison for selling
advertising against competing media like television and radio.
But it is not risk-free. At least some advertisers may devalue
pass-along readership as well as the deeply discounted elements
of paid circulation. Even though it is more comparable to
broadcast, some hesitate to embrace the readership standard
since the traditional metric of paid circulation often leads
to a higher cost per thousand (CPM). And the readership approach
may also prove only a short-term solution. Were that new standard
in place, stabilizing readership numbers over time would probably
still be a challenge as fewer people turn to newspapers.
Number of Papers
Despite declines in circulation, the number of daily papers
seems to be leveling. In the latest full year of data, 2003,
there was a loss of only one paper, leaving 1,456 total daily
papers in the U.S.
Number of U.S. Daily Newspapers
|
|
Weekday and Sunday editions, yearly increments, 1990
to 2003
|
|
|
|
Design
Your Own Chart
|
A shift from evening to morning editions has been going on
for decades with the rise in evening television news and the
decline in the number of cities with multiple newspapers (see
2004
State of the News Media Report). In the last year for
which data are available, 2003, the number of morning papers
rose by 10, to 787, while afternoon papers continued their
three-decade decline by dropping 12, to 680. Circulation remains
heavily tilted toward the morning, with 5.7 morning copies
sold for each afternoon copy.
In 2003, total Sunday circulation was down 0.5% from 2002,
at 58,495,000. That is right in line with the annual decline
of 0.5% in Sunday circulation since 1991.
Strangely, the latest circulation decline came in a year
when the total number of papers with Sunday editions rose
by 4 to 917, tying 2000 for the most-ever Sunday papers. The
combination of declining circulation and a rising number of
Sunday papers means that the average Sunday circulation of
63,790 is the lowest ever.
Distribution
The majority of circulation is still clustered at the top,
with the 12 largest papers (those over 500,000 circulation)
accounting for 20% of all circulation. The smallest category,
on the other hand (50,000 or less), comprises 1,239 papers
and commands just 31% of overall circulation.
Readership Trends
While readership calculations suggest that the picture may
not be so bad, survey data offer more reason for concern.
According to polling by the Pew Research Center, in April
2004, 60% of people said they read a daily newspaper "regularly,"
the lowest number since Pew began asking the question in 1990.
Through the 1990s, the number was stable at around 70%.
When asked whether they had read a newspaper "yesterday,"
a stricter measure, the numbers appeared more stable, though
lower than for "regular" reading; 42% of people
said yes, compared with 41% in April 2002. Readership also
increases with age - 23% for people aged 18 to 29 compared
to 60% for people 65 and older. As with other media, this
is another worrisome trend, and the 2004 data suggest it has
not abated.
Given the problems of attracting the next generation of readers,
it can be only temporary solace that newspapers still have
a hold on what many advertisers consider attractive demographics.
Readership among college graduates was high, 72%, as it was
for families with incomes greater than $75,000 (74%).
When it comes to how much time people spend with the paper,
Pew found that among those who read a paper the day before,
62% spent half an hour or more with it. Another 12% spent
less than 15 minutes, and 26% spent 15 to 29 minutes. Those
who read regularly, in other words, made a significant time
commitment. (By comparison, 85% of television news watchers
spent more than half an hour with TV news, though that can
be a more passive activity and involve doing other things
at the same time.
)
Readership by Party Affiliation
There was much discussion, too, of declining trust in the
media on ideological grounds, particularly among Republicans.
Did that affect readership? The broad answer is no.
In the spring of 2004, Republicans and Democrats were at
nearly the same level for readership of a newspaper the day
before at 45% and 46% respectively.
Solutions
While a realistic prognosis is that paid-circulation erosion
will continue over the next decade, there is heightened focus
on possible solutions. Embracing the readership standard as
an alternative to the circulation standard is one. Broadly,
companies seem to be choosing some mix of that and these three
additional strategies:
- Increase the aggregate audience, part online, part print.
Viewed from this angle - as providers of content across
several platforms - newspaper organizations are watching
their audience grow rather than watching it shrink. In a
little-noticed program titled "Complete Community Coverage,"
Gannett has been encouraging its publishers to increase
the audience in either medium, figuring that in time a business
model for the online portion or the two together will take
shape.
Of course, with a very few exceptions - like the Wall Street
Journal with 700,000 paid online subscribers - that hasn't
happened yet.
Access to the sites is typically free. Most ads are cheap;
the acceptance and effectiveness of Web advertising with
readers is hit-and-miss.
- Accept decline, and manage costs and revenue. Gannett
and Tribune, along with national papers like The New York
Times, The Wall Street Journal and USA Today and a few regionals
like The Boston Globe, are going ahead with price increases.
Since circulation is very price-sensitive, especially among
the less affluent, this has the added effect of delivering
a higher demographic audience. Advertisers may be relatively
satisfied, though critics see some default on newspapers'
traditional role of reaching deeply to all segments of their
communities.
- Niche publications are a related attempt to increase audience
with something different from the daily newspaper. Papers
large and small are venturing into Spanish-language publications
and supplements targeted to other immigrants, too - Vietnamese
in San Jose, for example - if there is a critical mass of
potential readers. The youth market, not so long ago ceded
to the shaggy-haired alternative-weekly crowd, is now being
courted by giveaway quick-read dailies in big markets and
weeklies in smaller. It may be too early to assess the impact
of these "giveaway" publications. It is not entirely
clear yet whether the strategy behind them is to make them
free-standing businesses, to help advertising sales staff
by having multiple products reaching more audiences, or
to lead the readers of the free papers (usually younger
people) to the main paper over time.
- Then there are a host of special-interest publications,
Kansas City Home Design and the like, which typically can
be in the black within a few issues. Gannett has started
500 of these small-scale publications.
The common thread among such start-ups is that they are
comparatively inexpensive to produce and distribute within
the infrastructure of an existing newspaper. And much of
the advertising can be sold as an add-on by the newspaper's
existing sales force. Some dissenters in the newsroom say
well and good, but is this news? Is it being done at the
expense of more ambitious reporting and public service?
It is not clear whether newshole and staff are being shifted
to these new publications or whether resources are being
added. It may be some of both. But the simplest way to look
at it, in part, is that these efforts represent an alternative
to investing in the newspapers' main product.
So consider 2004 a watershed year for newspaper circulation.
It brought a whiff of scandal to an industry long considered
a model of business probity. That will harm at least a little
- maybe more than a little - pricing power to advertisers.
And two transitions speeded up: to valuing readership above
paid circulation, and to increasingly running newspaper companies
as providers of content across multiple platforms rather than
newspapers first, foremost and forever.
Click
here to view footnotes for this section.
Previous
| Next
| Home
Intro | Content Analysis | Audience | Economics | Ownership | News Investment | Public Attitudes | Conclusion | Charts & Tables
| Guest
Essay
|
Go to Journalism.org | View 2004 Edition 
Print
this page