Monday, October 15, 2012

The incredible shrinking newspaper audience

Once the definitive mass medium, newspapers – in both their print and digital incarnations – have shrunk to being niche players in the typical market, according to a number of must-read research reports released in the last few weeks.
With approximately a third of adults in the average community saying they use either a print or digital edition of their local paper to stay informed, newspapers today remain “super niches,” a term I heard for the first time a few years ago from Ron Mulder, who now works at Scarborough Research.  But a distinct lack of interest in newspapers among those under the age of 50 suggests it is only a matter of time before the niche turns from “super”  to “sliver.”
As detailed in a moment, a steadily accumulating body of research shows that consumers are using computers, mobile devices and even Facebook to shop actively for news and information. While the research shows that newspapers have slightly more market clout in small and isolated communities than in cities and suburbs, the trends all point in the same direction. Although publishers in small and medium markets have slightly more time to adapt to the digital revolution than their metro colleagues, the challenges causing the New Orleans Times-Picayune to abandon seven-day print publication will affect all but a few outlier markets in the fullness of time.
Here’s what we know from the wealth of research that has come our way:
∷ The number of people who used a print newspaper in the last week to get local news ranged from 36% in metro areas to 42% in small cities, according to a study released in late September by the Pew Research Center.  The survey found that newspaper website consumption was weaker than print, with use running from 31% in metro areas to 20% in smaller markets.  By contrast, the reliance on local television broadcasts was 65% in metro areas and 72% in small cities and rural markets. The use of TV websites ranged from 27% in big cities to 21% in small ones. 
∷ In a second study released this month, Pew found that 44% of Americans own smart phones and 22% own tablets, the latter of which, incidentally, represents a doubling of tablet penetration in just one year. After accounting for people who had both types of devices, Pew reported that fully half of the population has some sort of mobile device – and that two-thirds of this group uses their wireless devices to surf for news.  Pew reported that news consumption was the second most popular mobile activity after email. 
∷ In its September study, Pew found that, notwithstanding some variances based on market size, roughly two-thirds of consumers go to three or more sources for local news each week.  “Urban and suburban residents also use a wider variety of local news sources on a regular basis,” said Pew. “Close to half of urban (45%) and suburban (51%) residents use a combination of traditional, online and mobile local news media to get their local news, compared with 38% of those living in small cities and 27% of rural residents.” So, audience fragmentation is well under way.  
∷ The sharp generational divide in newspaper readership is illustrated in a national study  released earlier this month by a research unit at the New York Times.  While 53% of the Boomer generation (those 55 and older) said they read print newspapers, only 22% of Millenials (ages 18-34) and 32% of Generation Xers (ages 35-54) used the medium.  As illustrated below (click to enlarge), online news consumption is reasonably consistent across all ages, but smart phone use is far higher in the younger cohorts than among Boomers.

:: Another dimension of the generational divide is illustrated in a study produced in April by Burst Media, an ad-targeting service.  The company found that Facebook ranked second only to news sites as the place where sub-Boomers consumed political news.  While 44% of Millenials used news sites for political information, 22% of the cohort used Facebook and 17% used YouTube to learn about politics.  At the other end of the spectrum, 53% of Boomers relied on news sites and only 8% used Facebook and 7% used YouTube.  The usage pattern for GenXers was 49% for news sites, 12% for Facebook and 6% for YouTube.      
Assuming young’uns don’t suddenly ditch their Droids in favor of print, publishers hoping to maintain the value of their franchises must invest aggressively in broadening their audiences and revenue opportunities beyond the narrow confines of their existing, monolithic, and increasingly fragile businesses.
While this admittedly is easier said than done, the alternative to a profound commitment to strategic audience development is to let readership and revenue shrivel to the point that the costs outweigh the benefits of being in the local news and advertising business. 
Based on the 6.6% drop in newspaper advertising revenues in the first half of this year, industry-wide sales likely will be no better than $22.5 billion in 2012 – or less than half of the industry’s peak production of $49.4 billion in 2005.  While Borrell Associates (which, like most of us, is not always perfectly prescient) bravely has predicted 0.5% growth in newspaper advertising next year and further gains in the low single digits in the out-years, publishers should not be beguiled by any bounce occasioned by an improving economy.   
Unless newspaper companies find ways to connect to younger audiences, there is a clear and present danger that they will be marginalized to the point of irrelevance. 

7 Comments:

Blogger Steve Ross said...

The drop in market share is perfectly understandable -- newspapers have been spending almost nothing on building circulation. So how much is due to that and how much is due to new technology that newspapers choose not to invest in?

7:27 PM  
Blogger Marc Matteo said...

Look at what we used newspapers for 20 years ago. In addition to news, newspaper were also used for everything from finding a job to finding a movie, from recipes to comics to crossword puzzles.

Seriously mull it over. Now think about how many of those things are delivered today simpler, faster and more conveniently in an online or digital format -- often right to your phone no matter where you are?

The answer, of course, is all of them.

Worse (for newspapers, not for consumers), consider that most of those things are delivered simpler, faster and more conveniently by companies that are not and never were newspapers.

Now consider the overall lack of serious investment in digital delivery that the industry formerly called the newspaper industry has exhibited over that 20 year span (full disclosure: I'm a 16 year veteran of newspaper online ventures) and explain to me how the result could be anything other than what it has been.

8:59 PM  
Blogger John H said...

All of this is true - but much of the collapse in the major markets is self inflicted. The executives need to stop thinking of themselves as heading newspapers, which do indeed face serious competition, and, instead, think of themselves as heading news organizations which have virtual monopolies on the generation of news.

For example, to this day most newspapers remain members of the Associated Press so that the news they generate is then provided to their broadcast and Internet competitors without compensation.

Look at it this way: General Motors does not provide cars for Ford to sell; but most major market newspapers provide news to their local broadcasters and the Internet to sell and are not paid for it.

It is hard to change the mindset of long-time print executives. A better way for directors is to hand them a list of the necessary changes and get on with making money.

In essence, it's time for a new approach to news in the major markets. The investors in our company think it will be highly profitable because the demand for news and information is insatiable. We are willing to invest substantial monies in any major market served by only one daily - not because we like newspapers but because we think their news organizations will be highly and permanently profitable if (repeat if) properly managed and monetized.

9:45 AM  
Blogger G. B. Miller said...

I still read newspapers, but now the problem is having spend an increasing amount of money for a product that is slowly sinking in size.

To whit, one of my local newspapers out here just increased their price to $1 for a daily, but the total page count remains around 40.

3:04 PM  
Blogger Steve Ross said...

Newspapers still get (Gawd knows how...) $450 dollars per paid subscriber per year ad revenue. Facebook gets $4.

7:23 PM  
Blogger Tony Walker said...

Tony Walker says...
Newspapers committed suicide when they chose to give away their news product on the internet years ago. No other industry has ever had more skill in gathering, verifying, and editing the news and they could have done the best job of providing internet news with their vast news gathering apparatus, but they made a bad decision to give away the product of their labors without charge and killed their golden goose. There's little chance now of convincing folks to pay for what has been free, so accurate and verified news and the industry that provided it is going the way of the dinosaur. Sad.

8:46 AM  
Blogger Boss said...

same thing is happening to TV

4:48 PM  

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