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Audience

Audience

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

For a third consecutive year, daily and Sunday circulation of America’s newspapers fell sharply in 2006. The losses may moderate in 2007, but few in the industry are now saying the downward trend can be reversed in the foreseeable future. And 2006 in the end was worse than many had expected.

To keep things in perspective, the magnitude of the losses over all is not by itself devastating. Even better, the growth in audience online may be more than making up for the losses in print. The problems facing the newspaper industry are not about readers abandoning what newspaper newsrooms are producing, which is why industry leaders are pushing now for those alternative measures of audience – including the total a newspaper reaches in the course of a week or total reach including the paper, online users and niche publication readers.

Circulation

For the six months ending September 2006 —industry circulation was down 2.8% daily, 3.4% Sunday compared to the same period a year earlier. That was marginally worse than in the same period of 2005, when circulation was down 2.6% daily and 3.1% Sunday.1 And those 2005 results were considered dramatic, producing headlines about the possible death of the industry.

U.S. Daily Newspaper Circulation
Circulation in Millions, Weekday and Sunday editions, 1990-2005
Design Your Own Chart
Source: Editor and Publisher Yearbook data
Note: Based on 2006 E&P estimates
Average Circulation of U.S. Daily Newspapers
Weekday and Sunday editions, 1990-2005
Design Your Own Chart
Source: Editor and Publisher Yearbook data
Note: Based on 2006 E&P estimates

The losses are mounting. For the last three years, cumulative losses total 6.3% daily and 8% Sunday.2

What may be even more significant than the numbers is the change that the trend signifies. Circulation has been falling in absolute numbers since roughly 1990, and as a percentage of households since the 1920s. Yet much of that history could be attributed to the waning popularity and ultimate closing of evening papers. As recently as 2003, morning circulation was as high as it had ever been.

Now, even those surviving morning papers are beginning to shrink, and some of the country’s most famous papers — the Washington Post, the Los Angeles Times and the Boston Globe — are not immune.

Industry analysts attribute the more recent, steeper declines to many factors, not one or two. Some news consumers, particularly the young, have moved online. The current generation of young adults also includes more people who have no interest in news.

Free dailies are a competitive factor, too, especially in larger cities. The availability of media generally is a rival for giving people news.

The net result is not so much that people are giving up on newspapers altogether as that they read less often. Seven-day-a-week subscribers have become a smaller group; many have switched to getting the paper a few days of the week and skipping others.

There are also some more technical matters. The federal do-not-call registry restricted phone marketing and made using that method to acquire new subscriptions more expensive at a time when newspaper budgets had been tightening. Finally, after circulation-padding scandals hit four papers in 2004, many others also set about trimming their reliance on third-party sales and other loophole categories of paid circulation that were of little benefit to advertisers.

Those trends raise a number of questions. Several newspapers had suggested that once some of the softer circulation numbers were trimmed, the losses in 2006 would lessen. That didn’t happen, but there is some anecdotal evidence that it could begin to happen as early as the reporting period ending in March 2007.

It is also not clear how much the circulation losses will hurt advertising rates. It is possible, some industry executives hope, that many advertisers don’t care about a decline of 2% or 3%.

A grimmer scenario is that the current pace of losses continues or even accelerates, confirming an advertiser perception that newspapers are falling out of favor, and thus depressing the lifeblood of advertising revenue.

Distributing the Pain: Big Metros Are the Big Losers

The most severe losses were in large metro markets like Los Angeles, Boston, San Francisco and Philadelphia, continuing a trend we identified in 2005 and 2004. The top 50 in circulation lost an average of 3.6% daily, September to September, according to the Deutsche Bank Securities analyst Paul Ginocchio, eight tenths of a percentage point more than the industry average.3

Yet there were some even more ominous signs of generalized decline in 2006. Admired regionals like the St. Petersburg Times, the Sacramento Bee and The Oregonian did not escape the trend. Each was down more than 3%. For those who hoped for evidence that more news investment and quality would hold circulation, those dips were a tough signal. Each of these papers lost more than the industry average.

In the two previous years, the three national papers had managed to stay even, but not in 2006. The September-period circulation was off 3.2% at the New York Times, 1.9% at the Wall Street Journal, and 1.3% at USA Today.4

A few papers were in positive territory, but they seemed to be special cases: the New York Post and New York Daily News, aggressively promoted tabloids, and the St. Louis Post Dispatch and Cincinnati Enquirer, which had heavy losses in earlier years.

Among publicly traded companies, Lee, with a portfolio of mid-sized papers, was the best performer with a loss of only 0.2% September to September. Tribune Company, which announced in September that it would consider buyout bids, recorded the steepest declines of the large publicly traded newspaper companies. Its circulation losses stood at 5%, with its largest-circulating daily, the Los Angeles Times, leading the other 10 Tribune paper holdings in circulation losses with an 8.5% drop.5

The big metros appear to have three particular negatives as they struggle to hold readers. Their markets typically have a high proportion of Internet users and high broadband penetration, facilitating visits to online sites and the offerings of national news outlets. From the opposite direction, many face meaningful competition from suburban dailies and weeklies that dish out hyper-local news regional papers cannot hope to cover. And the big cities, especially those with lots of public transportation, are most likely to attract free dailies.

A New Story: Weekly Readership and Total Audience Reach

Understandably, the industry is looking for a new and more upbeat story on audience to tell. One thread is the sense that some of the “lost” readership is being lost to newspapers’ own Web sites. The problem, in that sense, is a change in platform, not a migration entirely from what the newspaper is offering.

For some years , the Newspaper Association of America and certain companies have touted readership as a more meaningful measure than paid circulation. Readership is the total number of adults who read a paper rather than the number of copies of the newspaper sold. It is of course a bigger number — on average about 2.3 times bigger daily and 2.5 times on Sunday.6 It also is a more comparable metric to how television and radio measure audience.

Newspaper readership is falling, too, but not as fast as circulation. According to the Newspaper Association of America, the average weekday readership in 2006 was 124 million, or about 57% of the adult population.7 According to the association’s study of the top 50 markets, that represents a 1.7-percentage-point drop from the previous year, and 5.2 percentage points from 2000.8

A similarly positive spin is that while approximately 50% of adults read a newspaper on a given day, roughly 76%, according to the Newspaper Association, read at least one issue in the course of a week.9 That may not mean a great deal to an advertiser placing an ad on a given day, but it is valid rebuttal to the perception that print newspapers have become irrelevant to most adults. Even two-thirds of young adult Americans, 65% of those 18 to 34, are at least once-a-week readers, according to the association.10

A third way to look at audience is to add together traditional print audience, unduplicated — exclusive — online audience, and unduplicated audience for the newspapers’ specialty niche publications. The industry has different terms for what that adds up to — total audience, integrated audience, total reach or market footprint. But they mean the same thing.

A major reason the industry likes this metric is that the audience for newspaper online sites and niche publications continues to grow at double-digit rates. Hence the Newspaper Association was able to headline its analysis of results for the six-month period ending September 2006, “Eight Percent Increase in Total Newspaper Audience.”

Is it a valid measure? Certainly it helps the industry’s battered image. It is less clear how well it sells financially.

Not too many advertisers will simultaneously buy across all platforms to reach that overall audience. But having a portfolio of products to offer (including direct marketing as well) does help newspaper sales people as they make their rounds.

The hitch is that the standard measure of online audience is unique visitors per month. That clearly does not equate to circulation or readership on an average day or even in the course of a week. Stronger metrics are under development, and 2007 may be the year that newspaper companies can build a better case to advertisers that at least some portion of those visitors give the online edition a thorough reading on a regular basis.

The New York Times Factor

In earlier reports we have mentioned the New York Times’s gradual shift over a decade to a more national circulation strategy. More than half the paper’s circulation is now outside the New York metro region, and it still has room to grow as it adds printing plants reaching more of the country. We have pondered whether the Times may be draining business from local papers, especially in big, cosmopolitan cities.

A pair of academics, Lisa M. George and Joel Waldfogel, answered yes to that question in an article in the March 2006 American Economic Review. Studying 600 papers and 11,600 zip codes during the period 1996-2000, they found that the availability of the Times did cut into the circulation of local papers among targeted, well-educated readers.11 They also found that the effect was to make papers more local in their coverage orientation. The Times’s national march has now continued for another six years beyond the period studied. On top of that, the audience for its Web site continues to grow even faster — presumably heightening the effect the researchers found.

Circulation Revenue

Circulation now accounts for only about 20% of a typical newspaper’s revenue.12 In 2006, some papers increased their prices; USA Today, notably, completed a full year at 75 cents a copy and a 1.3% drop in circulation. Some of the circulation losses that resulted from the price hikes were of marginal, deeply discounted subscriptions, so the revenue impact was minimal. Over all, as papers raised prices, the industry managed to keep circulation revenue loss at about 2.5%. Even so, by some estimates, circulation made the difference between gaining and losing overall revenue at some companies.

A question for the future may be whether mainstream papers will consider doing away with paid circulation — giving papers away — or charge only for the convenience of home delivery. Doing so would have several benefits. It might boost circulation. The savings from not having to constantly push for new subscriptions and reducing the delivery fleet and circulation work force, could also be significant. But traditionalists might say that even as new metrics are receiving heightened attention, the commitment of readers who have paid for their newspapers is a plus to advertisers.

A Closer Look at Online Audience, and Online Strategy

It belabors the obvious to say that the audiences for online newspaper sites continue growing and that the Internet is the platform of choice for younger readers. The shorthand description is that news readers are migrating to the Net. But the reality is more complicated, and more nuanced, than that.

As we have reported in earlier editions of the Annual Report, the percentage of readers who get news exclusively from the Net is quite small. Adding the number who go online and watch some television news but don’t read newspapers yields a higher count. But the predominant pattern of consumption is that most people now tend to regularly use a mix of four or five different media.

Efforts to document the total reach of a newspaper Web site reveal that a great many print readers also go online. The Scarborough study of “integrated newspaper audience,” (which is the percentage of a market that weekly consumes only the print edition, only the online edition, or both) found that the Atlanta Journal-Constitution added 10% to its weekly reach with readers who only visit its Web site. But the duplicated audience, or combined print and Web site people, however, was double that — 19%.13 The Washington Post recorded the largest duplicated audience reach, with 25% of its readers consuming both the print and online version. The New York Times and the Boston Globe came in next with duplicated audience levels of 22% and 21%, respectively. The Journal-Constitution was fourth on the list.

A second development, somewhat unexpected, is that newspaper online readership at work is robust. A study of heavy users by MORI Research for the Newspaper Association found that nearly as many visited between 8 a.m. and 11 a.m. as during the leisure hours between 6 p.m. and 10 p.m. Many of the visits are brief, and appear to fly under the radar of employers monitoring for serious Internet abuse like visits to gambling and porn sites.

The industry also acknowledges that a share of those “unique visitors per month” are out-of-area, dropping in once or twice a month from a search engine and staying only a minute or two. The New York Times says the average visitor spends 30 minutes a month on its Web site; the Web sites of local papers are lucky to average a half or a third that.14

Thus, a couple of current strategies. Sites are aiming to maximize the number of visits a day and a month, often with prominently displayed breaking-news updates. They also want to increase so-called “stickiness” — the time a visitor spends on site — with an array of multimedia presentations and interactive features. If successful, such initiatives will help close the gap between the value to an advertiser of a daily reader and a Web site visitor.

Unfortunately for the industry, following readers to the Web comes at a price. If the many readers who sample both print and their local paper’s Web site spend more time online, that is a transfer of attention from lucrative print advertising to sparser and cheaper advertising on the Web. (See Economics).

A U.S. census bureau report released in December 2006 suggested the cumulative impact of the migration. Since 2000, the time a typical adult reports spending with a newspaper fell from 201 hours a year to a projected 175 hours in 2007. For the Internet, average hours were expected to rise to 195, up from 104 in 2000.15 The Internet time, of course, includes great deal of online use unrelated to news. But that is part of the challenge for the industry — competing for time and attention, not just competing as a news source.

Number of Newspapers

Despite the problems with print circulation, the total number of daily newspapers in the U.S. has remained pretty stable.

The number declined to 1,452 in 2006, just five less than the previous year.16 The number of morning papers in daily circulation is up to 817 (over 814 in 2005 and 787 in 2004). The number of Sunday papers is relatively static, seeing gains and losses of no more than four papers since 2000. Evening papers continue to disappear at a continuing rapid rate that portends their likely extinction.

Number of U.S. Daily Newspapers
Weekday and Sunday editions, 1990-2005
Design Your Own Chart
Source: Editor and Publisher Yearbook data
Note: Based on 2006 E&P estimates

Conclusion

Circulation trends were as bad in 2006 as they had been in 2004 and 2005. Those trends are beginning, though, to have the flavor of old news — not nearly so shocking as the first waves of losses. Among industry executives and some analysts, there is guarded optimism that the multi-year exercise in trimming extraneous circulation and building a “quality” core is cycling through and may lead to slowing losses in 2007.

The industry has redoubled its focus on building online audience. But that is no longer a raw numbers game. Here too the focus will increasingly be on building and documenting quality — of time spent reading on the Web and attention to its advertising.