Are small papers safe? Yes. No. Maybe.

Publishers in small and medium communities largely think they are safe from the readership and advertising declines that are eating away at most metro newspapers. Are they? Yes, no and maybe.

The ambiguity results from the fact that the outlook for any particular non-metro paper depends on the unique characteristics of the market in which it happens to be located. While there is no one-size-fits-all answer, a number of common considerations determine the outlook for a particular publication.

Here are the good, the bad and the unknown factors that every non-metro publisher should consider.

The good

The principal advantage enjoyed by most small papers is a degree of isolation from competing media, thus giving them the opportunity to be the leading vehicles for information and advertising in their communities.

Most small and medium papers have no meaningful print competitors. Typically, broadcast competition consists of a few local radio stations or television signals piped in from a neighboring area.

Many rural communities also lag the nation in the quality of Internet and mobile services available to them, reducing the usefulness of digital media to their residents. Although this represents a competitive edge for the time being for smaller papers, this advantage may decrease as the result of the $7.2 billion allocated in the Recovery Act to extend broadband connectivity to rural areas. The Federal Communications Commission also is scheduled to release a plan of its own tomorrow to extend broadband to rural areas.

Taken together, the above factors tend to support higher and more loyal readership in non-metro markets, thereby potentially leading to higher ad rates than are possible in highly competitive metro areas.

Owing to the strength of their defensible local franchises, sales fell 12.4% at non-metro papers in the second quarter of 2009, as compared with a 30.2% revenue drop across the rest of the industry. The small-paper sales figure was reported by the Suburban Newspapers of America and National Newspaper Association, which since have discontinued compiling sales results among their members. The national figure comes from the Newspaper Association of America.

But...

The bad

While isolation is a good thing when the local economy is going well, it can be devastating if something goes wrong.

If a community relies heavily on a particular mining operation, manufacturing complex, call center, prison or agricultural specialty, then bad news at the principal economic engine in town can be devastating for the paper.

Because small and medium papers are particularly dependent on advertising from local retailers, the arrival of a new Wal-Mart has been known to mortally wound the business of many a Main Street merchant even if the diversified local economy is doing perfectly well.

A number of rural papers face not just economic, but also demographic, exposure. That’s because non-metro communities have aged more rapidly than the urban markets since the 1960s.

By 2000, “the median age in non-metro counties was nearly four years older than the metro population,” said a study published in January, 2009, by the sociology department at Cornell University.

The aging of the rural population results from the ongoing out-migration of young people and the trend in recent years of a notable number of older Americans to move to non-metro areas for their retirement. (The map below, which appeared in the Rural America publication of the U.S. Agricultural Department, shows which areas between 1990 and 2000 gained or lost citizens aged 65 and up.)

In the short term, an older population is a good thing for newspapers, because (as previously reported here) half of newspaper readers are 50 or older, even though this cohort represents only 30% of the nation’s population.

Unless newspapers find a way to replace their aging readers, they will be in trouble as the seniors die off. With many rural papers having older audiences than most metros, the clock actually is ticking faster for them than for their big-city cousins.

Maybe

While non-metro papers typically may not be able to fully counteract the economic and demographic forces arrayed against them, they can fortify themselves by assuring their indispensability to their communities.

This means investing in the production of unique and compelling local content, as well as the creation of highly effective print and digital advertising products.

To the degree publishers emphasize short-term profits over long-term engagement, they will damage their franchises – and open the way to low-cost online competitors.

In the final analysis, the viability of small and medium papers will depend on how much publishers are willing to put into them.