Diving circulation? Raise newspaper prices
That means, among other things, proving the passion and loyalty of their readers by raising the single-copy and home-delivery prices of their daily papers to at least the cost of a venti, double-shot, half-caf soy latte. They go for $3.90 apiece at the local Starbuck’s.
Serious newspaper readers will be glad to pay the price, especially now that nearly all of them have gotten the message that the industry needs their support to continue producing the product they value.
And advertisers of many premium products and services will gain new respect for a medium capable of attracting affluent, well-informed and passionate individuals willing to spare the price of a venti latte for a newspaper.
As proof that premium circulation pricing works, look no further than The Economist, whose single copies sell for the cost of the approximately 1½ venti lattes. Named the top-performing magazine of the year for the last two years by AdWeek, the Economist in 2008 grew ad revenue by 25.5% last year to $131.5 million and boosted its circulation by 9.2% to 786,977.
The Economist’s success in 2008 compares with the average drop of 7.09% in daily newspaper circulation and an average decline of 5.4% in Sunday sales in the six months ended on March 30 that was reported today by the Audit Bureau of Circulations, the industry-funded body. The record 7.09% decrease in daily circulation in the last six months rivals the 8.1% fall in daily circulation in the prior 12 months.
The decline in circulation is long running, accelerating and seemingly irreversible.
The last time daily newspaper circulation increased was in 1984, when it peaked at an average of 63.3 million papers per day. Using ABC numbers and historic data provided by the Newspaper Association of America, it is possible to estimate that daily newspaper circulation today has fallen to 43.8 million copies. Sunday sales now are 44.3 million vs. an all-time high of 62.6 million in 1990.
The last time newspaper circulation was this low was in the mid-1940s, when the population of the United States was half the size that it is today. Today, only 18 out of every 100 adult Americans buys a newspaper. That is less than half the penetration the industry enjoyed in 1945.
Not surprisingly, metro newspapers suffered the steepest declines in the latest circulation reports. Leading the carnage was the New York Post, whose daily sale plummeted a staggering 20.6%. As you can see from the table below (click to enlarge), the Post was followed closely by the Atlanta Journal-Constitution, Newark Star-Ledger, San Francisco Chronicle and several other double-digit losers.
Many of the drops were self-inflicted, as publishers reined in their distribution areas to reduce the high costs of shipping comparatively small numbers of newspapers to distant counties.
Significantly, the Wall Street Journal, which pursues a premium subscription and advertising strategy was the only one of the top 25 papers to show a circulation gain. Comparatively modest circulation declines were reported by New York Times, which sells in my neighborhood for $1.50 (plus tax) during the week and $5 (plus tax) on Sunday.
After years of increasingly accelerating circulation declines, there can be no denying that print newspapers have become niche, not mass, products. This means publishers need to begin marketing them in a different way.
When the traditional newspaper model was to maximize reach by maximizing audience size, it made sense to keep subscription prices as low as possible to be able to charge advertisers the highest possible rate for the largest number of readers.
“I sell bellybuttons,” said my friend Bob McCormick back in the 1980s. He was an ace ad salesman who at one point headed the agency that published the San Francisco newspapers.
But mass quantities of bellybuttons don’t cut it for most advertisers in an age when they can connect rapidly and oh-so-cost-effectively with a prospect on the Internet by offering an ad that appears only when a customer Googles whatever magic words the advertiser has selected.
Best of all, the advertiser pays only when a prospect clicks on a Google keyword ad; the rest of the dozens of times the ad appears, the advertiser doesn’t pay at all.
Printed newspapers can’t compete with Google, of course, because they are unable to offer targeted, interactive advertising. But they can take a cue from successful magazines by targeting their customers geographically, demographically and in other ways.
By charging premium prices to carefully targeted groups for single copies and subscriptions, newspapers will reinforce the value of the product to their customers and re-establish their value to advertisers.
In so doing, the demoralized practitioners struggling with the challenges of the industry also may end up proving the value of the product to themselves.