Monday, October 26, 2009

Newspaper circulation plunge "may be evidence of a tipping point"

Ken Doctor says the stunning declines in daily circulation over the past 6 months published today by the Audit Bureau of Circulations -- daily circulation is down 10.6% nationally and down 23% at the Miami Herald -- may be evidence of a tipping point.

So what's happening?

More of the same, though now with evidence of a tipping point. Inevitably, for the print product, less is less.

Newspaper readers have hung with their local papers through thick and through increasing thin. The value proposition they now see, though, is a lesser one: Smaller product, less news, fewer ads of all kinds, more e-reading choices -- and higher prices.

Yes, most newspaper companies have embarked on a premium print pricing strategy, in some cases doubling single-copy prices and upping home delivery significantly. And, yes, these increases have provided a circ revenue bump just as ad revenue tanked (both McClatchy and Media General recently reported 6.7% quarterly circ revenue gains). Yet, they've made the value proposition for print harder to justify. Now, add the recession-induced pocketbook concern to all the greater changes in the news world, and publishers may have shone a spotlight on the print newspaper product.

They have moved it from being a necessity, a habit, to a discretionary buy.

It's been a tough formula, but one that did make a kind of sense. Acknowledge that newspapers are a niche buy (while Google, Yahoo, AOL and MSN have become the mass daily stop), and price accordingly. Take a hit in volume, but make it up in pricing. It looked like that strategy was working for the past couple of years, as circ revenue's been flat to slightly up at most companies.

The risk: Too many readers would opt out. One ABC survey isn't enough to tell us whether we've reached that point definitively, but it's a huge warning sign.



Anonymous said...

With all the Chapter 11 type earnings carnage reported today, wasn’t it just a few months back, in maybe July, the scuttlebutt was that McClatchy was going to reinstitute their policy of giving out raises?

What was that all about?

Was it a troll, a McClatchy representative, or a stock pumper that posted about raises?

Anonymous said...

Tipping point? Speaking of which, I wonder how old Three-Tire-Lokeman is doing these days?

Anonymous said...

It may be evidence of a tipping point? It may be? The tipping point was many moons ago. You're witnessing the flood.