By Shane Goodman

Learning what not to do is an important lesson

We heard about it. We saw it on the evening news. We even read about it and reported it. But I can’t help but to be amazed at the rapid decline of the paid daily newspaper industry.

When I landed my first job out of college at The Des Moines Register 18 years ago, I could have never guessed that the future would have come to this. I was proud to work for “The newspaper Iowa depends on.” It was part of my family’s morning ritual. My father read it every day, as did my grandfather. Today, I can’t interest my daughters to even turn a page. They tell me the paper “smells.” They might be on to something.

State of denial

For years, management of the paid dailies denied that declining circulation was a problem. Corporate execs brainwashed employees into focusing on readers rather than paid subscribers, at least until that wasn’t a good story to tell either. Their greed pushed decisions to rapidly increase advertising rates, despite the drop in circulation.

The facts

Well, the truth can no longer be denied. A trusted source of this information is The Poytner Institute and the Project for Excellence in Journalism, which shared the following basic indicators from 2007:
• Paid circulation fell at about 2.5 percent year-to-year for dailies and 3.3 percent for Sunday editions.
• Advertising revenues, flat in 2006, fell by 7 percent industry-wide in 2007.
• Despite cost-cutting initiatives, earnings at public companies were down by more than 10 percent for the year.
• Newspaper company stocks were battered for a third consecutive year. Gannett Company Inc. — the parent company of The Register — lost 35 percent of its value.
• A shrinking of news staffs and space committed to news continued though 2007.

The savior

Daily newspapers have focused haphazardly on online ad revenue growth as the savior, but the Poytner Institute report recognized what the rest of us already know — that the effectiveness of ads on news Web sites are in question. So, meanwhile, expense slashing continues at the dailies as they outsource circulation services and ad production to vendors in places like India, as we reported The Register doing here locally. But the most serious threat that newspapers face this year is rising newsprint costs, and this has become apparent in the shrinking of the physical size of the paper. The fact that The Register staff says this is not expense cutting is laughable.

The bottom line

Care to take a guess on how all this is affecting the bottom line for paid dailies? According to the Poynter report, the industry recorded a profit margin of about 18.5 percent in 2007, a tremendous margin for most industries, but a sharp decline for these dailies that once bragged of 30 percent margins or better.

The future of daily newspapers

So what’s next? If revenues continue to decline, the report suggests that many dailies may be forced to “pull the plug on print and roll the dice on getting readers and advertisers to follow to a Web-only format.” Paid daily newspapers, as we now know them, would be dead.

But print is not dead

Before the printing presses are shipped out as scrap iron, let’s set the record straight. Just because paid daily newspapers are on the decline, print publications are by no means dead, and Cityview is proving it today. Consider this:
• The circulation of Cityview hit an all-time high in the paper’s 16 year history.
• The advertising revenue for Cityview grew 21 percent with this publication alone.
• Our profits continue to grow, albeit nowhere near the kind of margins the corporate execs expect. We don’t want to run our publications the way we would need to in order to be that profitable. And we know you wouldn’t like the end result.
• We have doubled our payroll and are adding new positions each month to help staff the 10 new publications we have launched in the past 15 months.
• We see the Internet as a way to add value to our family of publications, not replace them. A new publication we are launching in June will showcase this effort.

We still have a lot to work on, and we know that, but we are going to be diligent in all that we do. At a recent free paper conference in Des Moines, the speaker shared ideas on how non-dailies can grow classified revenue. His ideas mirrored the efforts that the paid dailies have recently tried. I asked him why we would want to model our papers after such failing efforts. My question clearly irritated him, but I did not want to see my peers in the free paper industry make the same mistakes. If we have learned nothing else from the decline of the paid dailies, we certainly know what not to do. And that’s an important lesson in itself. CV

Comment on this story | Return to top