Thursday, May 8, 2008

Circ Numbers: Talking Quantity...and "Quality"

Circ Numbers: Talking Quantity...and "Quality"
How fast can you paddle?
Posted by Ken Doctor

That's the unabated message of today's ABC FAS FAX circulation numbers being reported. They cover the six-month period, through March 31. Overall, the water keeps rising: 3.5% down daily, and 4.5% down Sunday. Those are in line with what we've now seen for more than three years. The waves aren't subsiding, but rising a bit more. Worse, there's not much relief in sight.

As paper-specific reports filter in, we can expect to see more explanations that "we didn't want the circulation anyway."

That's the heavily discounted circulation, next-to-freebie stuff that many dailies have used to prop up numbers for years. Of course, there's some truth to the statement, but it raises a couple of problems:

---As an explanation, it's getting a bit long in the tooth. When circ began to go substantially south more than three years ago, publishers offered the "cutback to quality circ" argument and said they'd cycle through that within a year or so. In Year Four, it seems like less compelling a reason. Just how much how low-quality circ is out there, anyway, or is the definition of it a rolling phenomenon?

---Selling audience to advertisers is in major change, and in that change, newspapers take on new risk. For instance, in Editor and Publisher this a.m., Jim Moroney, publisher of the Dallas Morning News is quoted as saying "We are trying to get out of the churn business." The Morning News is pulling back on its discounted copies. The paper cut one discounted category -- more than 25% but less than 50% paid -- by 75% daily and 80% on Sunday. What did the cut mean? Massive loss with daily circulation down 10.5% to 368,313 and Sunday down 7.6% to 520,215. Metro dailies' market position has long been offering the mass market better than anyone else. Now as household penetration dives toward 40% of households in many metro areas, that mass argument is harder to make. True, newspapers are making more of a niche argument, but niche is a game that internet marketers are having an easier time winning than those who peddle poor non-interactive browsable paper. In the transition from mass to niche, more ad dollars are put at risk to competitors from Google to Spotrunner.

They aren't many winners out of the numbers released today, but you can almost feel the grin of Rupert Murdoch.

His nemesis, the Times, saw a bottom drop out and his Wall Street Journal showed a .35% gain. The Times Sunday number -- down 9.26% or 150,000 copies -- to 1,476,400 is particularly scary. (It was down 3.85% daily.) The Times attributed two-thirds of the Sunday decline to "the elimination of bonus days" and the familiar "third-party bulk." Last year, it took a gutsy price increase to its readers -- and has been showing positive circulation revenue growth, an oddity in the industry. These circ numbers are the first since last year's increase. If they continue to trend significantly down, the make-the-high-demo-niche-audience-pay-more-for-quality strategy -- one watched by the industry -- will be seen as a loser.

I can't help but wonder about the contribution of Times Select's termination here. As it ended, the Times counted about 470,000 paying customers who received Times Select for "free," as long as they were print subscribers. That called to attention the print/web connection. Take it away, and you give readers pause -- do I really need to take that non-green pile of paper when it's all unambiguously free?

Looking at today's numbers, we see a couple of other intriguing trends:
---Optimistic Buyers of Big-City Metros Beware: Both the Philadelphia Inquirer and the Minneapolis Star Tribune -- both bought within the last couple of years -- were down significantly. The Strib: 5% daily, 7% Sunday and The Inqy: 5% daily and 6% Sunday. New owners had counseled optimism that new approaches -- marketing forward -- could turn around those papers.
---Flat is the New Growth: The Strib's competition, the Pioneer Press (my alma mater), was essentially flat. Its fellow MediaNews property -- the Mercury News -- somehow managed to gain 1.7% despite its turmoil, newsprint and staff cutbacks. (Other gainers, here.)
---Seattle's About the Only Place Circ Was Up: Starbucks down; news reading up? Particularly dreary, bone-tingling winter?

Today's news, combined with the spiraling downward trends in print ad revenues, only means more misery. With new layoffs announced in Raleigh, we may see the buyouts/layoffs of 2007 simply as prologue. I think what we're seeing, unannounced, is the radical restructuring of the newspaper industry. The drip, drip, drip of change is now becoming a torrent.