Thursday, October 31, 2013

Struggling industry throttles newspaper metrics

Unable to arrest years of declining ad sales and sliding print circulation, two key trade groups representing the newspaper industry have done the next best thing: 

They effectively have stopped reporting on the metrics that make it possible to measure – and, therefore, understand and manage – the industry’s ongoing challenges. 

Earlier this year, the Newspaper Association of America, an industry-supported trade organization, decided to stop producing the quarterly revenue reports that have charted the advertising slump that has carved aggregate industry revenues from a record $49.4 billion to $22.3 billion in 2012. 

As reported here, my analysis shows that ad sales slipped about 5.5% in the first six months of the year. Assuming the industry does no better or worse in the last half of the year, it is on track to deliver approximately $21 billion in ad sales for all of 2013. 

The NAA, which publishes sales records dating to 1950 here, promises to release a once-a-year revenue report scheduled to debut in March, 2014. 

While the revenue picture may come into greater focus next spring, a series of changes in the way newspapers report readership has made it impossible to authoritatively compare ongoing changes in circulation.  

As has been customary for years, the Alliance for Audited Media, which formerly was known as the Audit Bureau of Circulation, today announced the publication of the second of its semi-annual circulation reports. But this time, unlike all the others, the organization gave no clue as to whether circulation had gone up, down or sideways in the six-month reporting period. 

Because publishers no longer are “required to report the same information, it is not possible to come up with a macro [circulation] number,” said Neal Lulofs, the executive vice president of AAM in a telephone interview. 

Owing to a series of changes adopted by the industry-funded organization over the years, publishers no longer have to provide a five-day average of daily circulation. They also have the liberty of counting a woman who reads the paper in print, on her office computer, on her personal laptop, on her tablet and on her smartphone as five separate subscribers.  

Some newspapers take advantage of these options and others do not, eliminating seemingly forever the possibility of comparing apples-to-apples data across the industry – or even from year to year for the same publication, if it changes its reporting standards over time. 

Notwithstanding the limitations imposed by the inconsistent data, a few hardy analysts have been trying to gauge the public appetite for print newspapers as it has declined over the years. 

One of them, Ken Goldstein of Communications Strategies in Canada, pegs weekday print circulation in the United States at about 38 million copies, as compared with the 43.4 million subscribers reported in the Editor & Publisher Yearbook for 2012.  

The E&P number, which closely matches the last-available AAM data published this spring, appears to include both print and digital editions. Thus, the E&P data are not precisely comparable to Goldstein’s estimate. 

Setting aside the discrepancies in the admittedly imperfect data, one thing is clear: Newspaper circulation today is at, or below, its lowest level in modern history.  

The oldest available records from E&P show that weekday newspaper circulation averaged 41.4 million papers per day in 1940, as compared with 38 million to 43 million today. Daily circulation, btw, peaked at 63.3 million in 1984.   

But there is a big difference between 1940 and now: The population is a lot larger. 

Back in 1940, newspaper penetration actually surpassed 100% of households, because some families took more than one paper per day. Today, with the number of households three times greater than in 1940, there’s a paper in only one out of three homes. 

5 Comments:

OpenID HellAndHighWater said...

Alan:

Thanks for this, and for the heads-up that the AAM semi-annual numbers have been posted.

Because my book about The Times-Picayune and other Advance newspapers is newly out, I'm looking at those reported by Advance, notably the Picayune.

The newspapers' total average circulation figures now include digital replicas and non-replicas, which they didn't a year ago. (For example, the Picayune's 145,608 circulation figure presumably cited for comparative purposes in today's Snapshot report as Sunday's 9/30/12 "total average circulation" actually only represents print circulation during that period, according to last year's report.) To the gist of your post, that seems misleading to include digital replicas/non-replicas beginning this year, when they weren't previously counted. And in the case of the Picayune, the digital replica/non-replica PDF editions can be accessed for free from the newspaper's website. Given that anyone with Internet access can obtain them for free, should they be given the same weight as a print edition to which other readers subscribes?

6:37 PM  
Blogger Martin Langeveld said...

One very telling metric worth watching is the amount of newsprint consumed in the US and Canada, which is compiled and published by RISI (http://www.risiinfo.com/). It peaked in 1999 at 13 million metric tons. In 2012 it was 4 million tons, a drop of 69 percent reflecting the combination of ad page losses and circulation declines.

6:41 PM  
Blogger Unknown said...

Why is it that newspaper publishers are at once criticized for not being imaginative enough to smoothly manage the transition from print to digital but columns like this one only want to focus on print circulation? Circulation, when taken with our digital audience, remains strong. The issue is the failure of anyone, anywhere to find the formula to turn online audience into profit.

Context matter.

Roger Plothow
Editor and Publisher
Post Register, Idaho Falls, Idaho

8:08 AM  
Blogger Martin Langeveld said...

Roger, I think the problem is that a whale of a print business is dying, while only a minnow of a digital businesses is taking its place. The failure to monetize that minnow is because its digital audience is not, in fact, equivalent to the print audience that's disappearing. You can't add together print circulation (paid, longterm, daily readership) with digital "audience" (unique visitors averaging just a few visits a month. When you look at time spent on your website, you'll find that the average visitors spends no more than a minute or two per day. (Just divide total monthly time spent by unique visitors). That's way less than time spent with print, and that's why the online ads don't work. (On top of which, things like the Flyerboard ads on your site are impossible to read...especially on a tablet or phone, where 50% of web browsing now happens).

The failure of "anyone, anywhere" to turn an online audience into profit is a newspaper industry problem, but not an online content industry problem. During the 20 years newspapers have had to get this right, plenty of companies have figured out how to make money online. Google alone has more revenue than the entire newspaper business. The failure of newspapers to do this was first a failure to recognize disruption ("people will always want a printed newspaper"), then a failure to transition to a digital business model ("we need to protect our print business and stop giving away our news online"), and finally a continuing failure to invest in digital strategies.

11:29 AM  
Blogger Steve Ross said...

The industry has done this before, leaving a circulation data gap in the early 1990s. Then there was the outright circulation fraud of 2001-5. The correct metric, of course, is revenue (ad and circulation) per reader or household. Part of the reason digital subscribers look dicey is because 3 of them are often just one. The advertisers know it, and pay accordingly. A larger part, needless to say, is lack of investment in new advertising systems -- mobile, affinity-based and so forth. The industry will survive and thrive, but not under most of today's pundits and managers and certainly not with the dubious advice of most academics. (As a lapsed academic, I can say this....)

Then there is the Boston Globe. My mother (age 94 but still an active consumer) has dropped her subscription over an argument... the Globe's brain-dead circulation staff says she owes 14 cents. My mother is worth $300 a year in ad revenue, at least.

12:02 PM  

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