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Audience

Audience

By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute

In 2004, the newspaper circulation losses that had been building slowly over 15 years began to accelerate.

In 2005 things got roughly three times worse.

And in 2006, newspaper executives at best hoped only to slow the bleeding. Few were arguing that the numbers would head back up or even stabilize.

Those results for the six months ending September 2005 — industry circulation down 2.6% daily and 3.1% Sunday from the same period in 2004 — were ugly. During that earlier period, in turn, the industry had recorded losses of 0.9% daily and 1.5% Sunday.1

Thus in just two years, daily circulation fell about 3.5%, Sunday 4.6%.

U.S. Daily Newspaper Circulation
Circulation in millions, weekday and Sunday editions, 1990-2004
Design Your Own Chart
Source: Editor and Publisher Yearbook data
Average Circulation of U.S. Daily Newspapers
Weekday and Sunday editions, 1990-2004
Design Your Own Chart
Source: Editor and Publisher Yearbook data

While daily circulation had been on the decline since 1988, and Sunday’s since 1993, we’ve now seen a fairly significant change. Until 2004, daily losses were less than 1% a year, and those were driven in significant measure by the closing of evening newspapers, a problem that seemed to be reaching its limit. Sunday circulation was shrinking by less than 0.5% a year.

Between 2001 and 2003, moreover, the losses in daily circulation slowed, and it looked as if circulation could be stabilizing.2

But in 2004 the declines resumed, and in 2005 they gained a new momentum. Perhaps even more worrisome, the key factor driving the circulation losses now was the movement of readers, especially young ones, to online alternatives — a pressure that is likely only to increase.

Who Is Losing and Who Isn’t

The losses of the last two years have been most severe at big-city metros, in places like Washington, Los Angeles, Boston, San Francisco and Philadelphia. The top 50 papers in circulation lost 4.1% daily from September to September, according Deutsche Bank Securities, a percentage point worse than the industry average.3

A few of those posting big declines in 2005, notably the Atlanta Journal Constitution and the Boston Globe, had actually recorded gains a year earlier. More often, however, losses were substantial in both years. Over the two years, the Los Angeles Times saw declines of 9.3% daily and 9.8% Sunday. The Washington Post was down 7% daily and 5.8% Sunday.4

There are three notable exceptions to the trend. The three truly national papers have all held close to even in circulation over the last two years, with slightly different factors at work for each. The Wall Street Journal is able to count 300,000 of its 700,000-plus online subscribers as paid subscribers to the newspaper. (The others already are paid subscribers to the print paper). This ruling let WSJ go from 1.8 to 2.1 circ just like that.

The New York Times put the brakes on price increases (a new round had been announced for February 2006) but was still expanding daily delivery availability into new national markets. That covered continuing losses in the New York metro area; circulation in the five boroughs of New York City fell about 19%, from 321,000 to 261,000, since 2001.5 USA Today, with its intricate distribution system in hotels and airports, was able to stay even in 2005. That was accomplished despite a single-copy price increase from 50 to 75 cents, which would typically lead to losses.

The second bright spot is in growth markets like Phoenix or Sarasota and in smaller markets where competition is more muted.The National Newspaper Association, representing 7,000 smaller dailies and weeklies, reported that the number of papers moving from weekly to twice-a-week publication had grown sixfold since 2001, and that a large majority of the publications either had a Web site or planned to start one in 2006.6

A final category of papers with better than average circulation performance included the McClatchy papers, led by the Star Tribune of Minneapolis and the News and Observer of Raleigh, and several Advance papers including the Oregonian, of Portland, and Star-Ledger, of Newark. All are known for commitment to editorial quality and steady investment in their newsrooms. Their success is something, in turn, to watch. If it continues, it may hint that the more frugal and short-term approach of others was, as some critics charged, a self-fulfilling prophecy toward newspaper decline .

Scandal Redux

To add to the sense of alarm in some quarters, the losses of 2005 came on the heels of circulation scandals at several major publications in 2004. In particular, disclosures of padding of the numbers at Newsday, the Dallas Morning News, the Chicago Sun Times and Hoy’s New York edition resulted in corrective measures. In Dallas, for instance, the Morning News took distribution inside the company to tighten controls. Part of what caused the scandal had been a system of aggressive quotas for independent distributors, and something of a don’t-ask-don’t-tell attitude toward how they met those goals.7

It is worth noting that the 250,000 or so phantom readers who were purged from the totals at the four papers still do not show up in the Audit Bureau of Circulations reports and NAA estimates of industry circulation losses. That is because the papers remain on probation, and audited figures for year-to-year comparisons are not available. If those losses were added to the circulation losses of the last two years, they would add another half-percent.8

All of which raises the question, sometimes overstated in death-of-the-industry rhetoric, whether continued and quick decline in paid circulation is now inevitable.

Industry Response

Industry associations and newspaper company executives in 2005 offered a host of rejoinders. A main strategy was to shift the discussion to newspaper readership and total audience reach.

Readership (which takes into account the pass-along effect of newspapers and is discussed at length below) is of course a much bigger number than circulation, roughly 126 million on the average weekday, according to the Newspaper Association of America, compared with 51 million daily circulation. Readership is declining, too, but more slowly than paid circulation.9

Another response among some executives is that the situation is not as bad as it looks. Some of the biggest losers in the September 2005 reporting period, like the San Francisco Chronicle (17%) and Orlando Sentinel (11%) said they had deliberately made big cuts in lower-quality promotional circulation sponsored by hotels and other businesses.10

Executives also argue that even after the losses of the last two years, newspapers remain the most effective way to reach a broad audience and deliver results for advertisers. That will be put to the test as newspapers try to raise advertising rates in 2006 even in the face of the negative circulation trends.

Are these industry responses just PR, or is there substance to the calmer response that the circulation losses do not, in the end, amount to the beginning of a rapid descent?

Most of those we have consulted who follow the situation closely believe that for now, the industry is not on the precipice of a sudden and dramatic loss of audience. Gary Meo, an executive at Scarborough Research, provided a candid summary for Editor & Publisher. “The perception that newspapers are losing readers in droves isn’t true,” he said. “They’re losing them in a trickle.”11

To assess whether “trickle” is too sanguine a word, after nearly two decades of circulation losses, a closer look at what is causing the losses would help.

The Accelerating Losses

Part, but only part, of the story is a shift to online news reading, often at a newspaper’s own site. How much that is a factor probably varies, but it may be significant. The NAA estimated that online newspaper readership was up 15.8% in September 2005 compared with September 2004, reaching 47.3 million unique visitors (a total probably helped by interest in Hurricanes Katrina and Rita).12 Surveys about online consumption also suggest that those who visit newspaper Web sites spend less time with the print product. And privately, executives report that some major newspapers’ Web sites now attract as many users in a day as they sell papers. To the extent that newspapers are losing readers to their own Web sites, the issue becomes one of whether they can begin to change the economic model of the Web.

But there is a wealth of other online news options, especially for readers mainly interested in national and international news. They can turn to the sites of national newspapers, to those of CNN, MSNBC, BBC, listen to NPR or even watch Comedy Central’s Jon Stewart. That may explain why bigger papers that try to offer a comprehensive national report rather than just local news are now suffering more. More broadly, newspapers compete for time with a range of Internet activity — shopping, searching, blogging, iPod, games and e-mail.

On stories like Katrina, cable TV kicks into high gear as a competitor . Niche competition like youth weeklies, or the free commuter dailies that are aggressively hawked at transit stations, whittle further on circulation.

Another factor, well understood in the industry but not much discussed, is a steady switch from seven-day subscribers to occasional buyers. The most frequent pattern is that readers, except sports fans on Mondays, skip the first busy days of the working week, then pick back up for the weekend cycle.13 The stronger online sites become, the more appealing that consumption pattern is; for the semi-regular reader, a check to see that he or she is not missing big local news on a given day is free and only a click away. (At the instigation of its advertiser members, the ABC is phasing in required reporting by each day of the week — allowing advertisers to see just how many fewer papers go out on Tuesdays and Wednesdays.)

Finally, there are some technical reasons for the recent declines. The ABC tightened its rule on how many holidays and bad-weather days a year could be exempted from accounting. The rules on “other” circulation have also tightened, and a number of companies are voluntarily trimming such circulation.

The federal do-not-call rule that was phased in during 2004 and 2005 has also had an impact on phone solicitation, which had been the No. 1 source of new subscription sales. Consequently, it has become more expensive to recruit new subscribers. Many newspapers have opted to take the hit rather than invest in different approaches to attract readers.

Financial Implications

Typically, circulation losses translate into declines in circulation revenue. The Deutsche Bank analyst Paul Ginocchio estimated that public companies lost close to 3.2% on average in circulation revenue in 2005 and forecast another flat or declining year in 2006.14

But circulation revenues are only about 20% of total income for newspapers. The bigger question is whether two years of losses in circulation will translate into a loss of pricing power and revenues in advertising. The worst case, Ginnochio said, was that ad revenues could actually fall in 2006.15 Newspaper executives insisted not. A number of companies announced aggressive rate increases — between 3% and 6% — for 2006 at the December 2005 Media Week conferences with investors and analysts. (See Economics).

Readership

There has been debate in the industry for years about which is the better measure of audience reach, paid circulation or readership. The NAA, and some companies like Tribune, have long touted readership as the superior measure of how many eyeballs look at ads in each day’s paper.

The let’s-talk-about-readership argument reached a crescendo in 2005. Jay Smith, president of Cox newspapers and chairman of the NAA, distributed an op-ed, timed to coincide with the release of the September 2005 circulation results. He wrote that circulation is a “flawed measure of the true vibrant audience newspapers attract,” comparable to counting the number of TV sets rather than TV viewers.16

Including households where several adults read the paper, “pass along,” and copies read in public places by several people, a typical newspaper increases its circulation total by a factor of 2.3 daily and 2.6 Sunday, according to the NAA.17 By that measure 77% of adults read a paper at least once a week (a positive spin on declining seven-day-a-week readership).18

But as Editor & Publisher reported, there is a question whether advertisers find the argument persuasive. They have been paying very high rates for years in part because of the commitment implied by a reader’s decision to pay for the newspaper but also with knowledge that the real reach is greater . So advertisers may see the emphasis on readership numbers mostly as a sign of eroding commitment.19

Total Audience

A variant on the readership story is that some executives want to include online audience, and sometimes unduplicated additional audience reached by youth papers and other niche products, to a new measure called Total Audience Reach. It is clear that by this standard, the typical newspaper company’s audience isn’t shrinking — it’s growing.

There is a new push for a measurement of this dimension. For example, at the Arizona Republic , which is considered a model of strong online presence and strong niche publications, internal research suggests that its website had added its reach beyond its print circulation by 7% online and specialty publication by 13%

It is not yet clear, however, whether such sets of facts will prove persuasive to advertisers. The standard online audience measure is unique visitors per month. Many of those visits are quite brief, not comparable to the half-hour a reader may give to that day’s newspaper. That is partly why online display advertising, while growing quickly, commands much lower rates.

Number of Papers

Beyond the basic circulation numbers, there are other indicators to watch. Although it appears circulation has been declining since the early 1990s, the total number of daily newspapers has remained generally stable over the last several years and even increased by one in 2004. The total number of daily papers in the U.S. now stands at 1,457, according to Editor & Publisher.20

Number of U.S. Daily Newspapers
Weekday and Sunday editions, yearly increments, 1990-2004
Design Your Own Chart
Source: Editor and Publisher Yearbook data

The trend toward fewer evening editions apparently continued to accelerate. According to the last year for which data are available, 2004, the number of morning papers increased by 27, to 814, while the number of evening papers fell by the same number, dropping the p.m. total to 653. The number of evening papers has dropped for nearly three decades as evening network news, market consolidation, and now presumably the Internet, have siphoned off their audience. And circulation remains heavily oriented toward the morning, with over six times more papers sold then than in the evening, also up from last year.21

Finally, the total number of Sunday papers fell by two, to 915.

Distribution

Circulation remains highly skewed toward the country’s largest papers. While just 11 papers (less than 1%) have a daily circulation of more than 500,000, they account for 19% of total circulation. And while just 7% of all papers have a daily circulation of 100,000 or more, those papers make up 69% of all circulation.22

Daily Newspapers by Circulation Category, 2004
Design Your Own Chart
Source: Editor and Publisher Yearbook 2005
* Due to rounding, percents do not add up to 100.

Who is Reading: A Question of Demographics

To get a deeper understanding of overall readership patterns, it may be helpful to look at the similarities and differences among various demographic groups.

These three observations stood out in 2005:

  1. First, readership continued to decline among almost every demographic group.
  • Second, newspaper readership among Hispanics remains well behind that of other racial and ethnic groups; and
  1. Third, readership among Americans with graduate degrees continued to decline in 2005 after significant increases earlier in the decade.

Age Groups and Readership

We have reported in earlier editions of the annual report that while older Americans are more likely than younger ones to be newspaper readers, people of every age group are reading them less often each year. That trend apparently continued in 2005.

In 2005, daily and Sunday readership generally fell a percentage point or two for each age bracket. Indeed, there has been a consistent and slow decline on that order since the late 1990s.23

According to Scarborough Research, a consumer marketing company, 38% of people aged 18 to 24 read a newspaper during the week and 46% did so on Sundays. Fewer people in the next age bracket, 25 to 34, were weekday readers (37%) and they were only slightly more likely to be Sunday readers (47%).24

We also looked at older readers. Americans 34 and older generally came of age at a time before the emergence of the Web as a mass information tool. Moreover, they are usually more likely to have higher incomes to spend on a newspaper subscription. But they too seemed to have abandoned the newspaper — at least in its print form — and at the same rate as younger Americans, in 2005.25

None of this is to minimize the generational dilemma newspapers face. As some of their loyal older readers are literally dying off, the youngest adults look first to the Internet for news. In a study for the Carnegie and Knight foundations, Merrill Brown found that baby boomers read newspapers a third less than their parents and Gen Xers another third less than the boomers.26

Daily Newspaper Readership by Age Group
Percentage reading newspapers in an average week, 1999-2005
Design Your Own Chart
Source: Scarborough Research survey data
Sunday Newspaper Readership by Age Group
Percentage reading newspapers on an average Sunday, 1999-2005
Design Your Own Chart
Source: Scarborough Research survey data

Race, Ethnicity and Readership

A recent study shows that around a quarter of the adult U.S. population now consumes some form of ethnic media. Hispanic newspaper readership, however, remains lower than that of non-Hispanic whites, though it should be noted that newspaper readership in 2005 declined among all racial and ethnic groups.

Newspaper readership both during the week and on Sundays was slightly higher among whites than other racial and ethnic groups. According to Scarborough Research, readership was particularly low for Hispanics. Around a third of Hispanic adults said they read newspapers.

Daily Newspaper Readership by Race/Ethnicity
Percentage reading newspapers in an average week, 1999-2005
Design Your Own Chart
Source: Scarborough Research survey data
Sunday Newspaper Readership by Race/Ethnicity
Percentage reading newspapers on an average Sunday, 1999-2005
Design Your Own Chart
Source: Scarborough Research survey data

Education and Readership

Historically, newspaper readership increases with education. While that remained true in 2005, every education level experienced declines, even the most educated.

For several years, Americans with postgraduate degrees had reversed the overall trend of declining readership. Indeed, readership in that group rose nearly 10 points between 2002 and 2003. But it started falling in 2004.

Daily Newspaper Readership by Education
Percentage reading newspapers in an average week, 1999-2005
Design Your Own Chart
Source: Scarborough Research survey data
Sunday Newspaper Readership by Education
Percentage reading newspapers on an average Sunday, 1999-2005
Design Your Own Chart
Source: Scarborough Research survey data

Conclusion

In the end, the circulation erosion of print newspapers appears likely to continue. An optimistic read is that it may slow to the more typical annual level of 1% or less as papers finish working though their adjustment to the Do Not Call rule, tightened ABC guidelines and volunteer shedding of that excess third-party circulation advertisers did not really want. Conversely, there is every reason to think that the losses to online sources of news or other Web shopping and leisure activities may accelerate.

What is clear is that 2005 solidified the reality of a multi-platform strategy; it is no longer rhetoric. Newspapers’ operations are not just about the print edition with “other” an afterthought. Increasingly companies are putting cash and focus into developing online and niche audience as the traditional one wanes.

Footnotes

1. Newspaper Association of America, “NAA Releases ABC FAS-FAX Analysis,” November 7, 2005. Available online at: http://www.naa.org/utilartpage.cfm?TID=NR&AID=7291

2. 2004 Editor and Publisher Yearbook Online data, 1940-2003, www.editorandpublisher.com

3. Paul Ginocchio, “Circulation Declines Accelerate Again,” Deutsche Bank Securities, November 8, 2005.

4. “Free Fall for U.S. Newspapers’ Circulations,” Digital Deliverance, November 1, 2004 . Available online at: http://www.digitaldeliverance.com/MT/archives/000474.html. Mark Fitzgerald, “Editor of the Year 2004: Being Julia, In Atlanta,” Editor & Publisher, February 1, 2005. New York Times Company presentation at UBS Warburg Media Week Conference, December 2004. Jennifer Saba and Joe Strupp, “What? You Gained Circ?” Editor & Publisher, December 2004. “Top 20 Papers By Circulation, According to New FAS-FAX,” Editor & Publisher, November 7, 2005.

5. “N.Y. Times circulation plummets in Big Apple,” The Boston Herald, January 12, 2006.

6. National Newspaper Association, “ America’s Community Newspapers Grow; Thrive through Change,” December 2005.

7. Belo Corp. presentation to CFSB Media Week Investors Conference, December 2005.

8. Rick Edmonds, “Ignoring the Elephants in Newspaperland,” Poynter Online, December 3, 2004. The four papers were still not included in the Audit bureau of Circulations FAS-FAX totals for the period ending September 2005 (see Paul Ginocchio, “Circulation Declines Accelerate Again,” Deutsche Bank Securities, November 8, 2005).

9. Newspaper Association of America, “Daily and Sunday Newspapers 2005 Readers Per Copy,” prepared by NAA Business Analysis and Research Department, August 27, 2005. Available online at: http://www.naa.org/artpage.cfm?AID=5137&SID=1022.

10. Jennifer Saba, “Report Finds Drop in ‘Other Paid’ in FAS-FAX, Lists Gains and Losses,” Editor & Publisher, November 8, 2005.

11. Jennifer Saba, “Dispelling the Myth of Readership Decline, Editor& Publisher, November 28, 2005.

12. Newspaper Association of America, “Over 47 Million People Visited A Newspaper Web Site in September, Representing Nearly A Third of All Internet Users,” November 1, 2005.

13. Variations day to day are well recognized but rarely discussed by newspaper executives. Many papers offer a Thursday through Saturday or Sunday package for those who want to plan their weekends. The new ABC reporting requirement will be phased in for larger papers this year. http://www.accessabc.com/pdfs/briefsummaryday.pdf

14. Ginocchio to co-author Edmonds, e-mail, January 23, 2006. His projection is from a sample of eight of the 13 public companies. He notes that 2005 expenses compensating the delivery force for their driving were much higher than budgeted because of the gasoline price spike.

15. Rick Edmonds, “The Next Bad Thing for Newspapers? More Circulation Woes,” Poynter Online, November 3, 2005.

16. Jay Smith, “‘Scorekeepers’ Understate Vibrancy Of Newspaper Readership,” The Tampa Tribune, November 7, 2005.

17. Newspaper Association of America, “Daily & Sunday Newspaper Readers Per Copy Trend,” Simmons and Market Research Bureau (1994-1997); MediaMark Research Inc. (1998-Present); SRDS Circulation prepared by NAA Business Analysis and Research Department, January 9, 2006.

18. Newspaper Association of America , “New Newspaper Audience Database (NADbase) Report Provides Advertisers With Expanded Audience Measurement Data Across Media Platforms,” October 3, 2005.

19. Jennifer Saba, “Dispelling the Myth of Readership Decline,” Editor & Publisher, November 28, 2005.

20. “International Yearbook,” Editor & Publisher, 2005.

21. Ibid.

22. Ibid.

23. In 2005, slightly more than half of all U.S. adults said they were reading a newspaper during the week, while 6 in 10 said they did so on Sundays, according to Scarborough Research. Scarborough Research survey data.

24. Scarborough Research survey data.

25. Ibid.

26. Merrill Brown, “I Webbed the news today – oh boy!” Seattle Times, September 11, 2005 .

27. Jennifer Saba, “Onward ABC Soldiers,” Editor & Publisher, April 2005.