Why Big Newspapers Applaud Some Declines in Circulation
Big American newspapers sell about 10 percent fewer copies today than they did in 2000.
The big American newspapers sell about 10 percent fewer copies than they did in 2000, and while the migration of readers to the Web is usually blamed for that decline, much of it has been intentional. Driven by marketing and delivery costs and pressure from advertisers, many papers have decided certain readers are not worth the expense involved in finding, serving and keeping them.
“It’s a rational business decision of newspapers focusing on quality circulation rather than quantity, shedding the subscribers who cost more and generate less revenue,” said Colby Atwood, president of Borrell Associates, a media research firm.
That rational business decision is being driven in part by advertisers, who have changed their own attitudes toward circulation.
In the boom years, “there was more willingness by advertisers to assign some value to the occasional reader, the student, the reader who doesn’t match a certain profile,” said Jason E. Klein, chief executive of the Newspaper National Network, a marketing alliance.
But advertisers have become more cost-conscious and have learned how to reach narrowly tailored audiences on the Internet. Sponsors of preprinted ads that are inserted into a newspaper have been especially aggressive in telling papers that some circulation just is not worthwhile.
“The insert advertisers look to flood the area within five miles of their stores or flood certain ZIP codes,” Mr. Klein said. “They’re not interested in hitting a scattering of readers, and they don’t want to pay for it.”
As a result, newspapers have sharply curtailed their traditional methods of winning customers — advertising, cold-calling people and offering promotional discounts. That strategy was always expensive, and it has become more so with do-not-call laws and the rising number of people who have only cellphones. According to the Newspaper Association of America, the average cost of getting a new subscription order, including discounts, was USD 68 in 2006, more than twice as much as in 2002.
Most of the customers recruited with promotions and cold calls drop their subscriptions when the discount expires, so the cost of pursuing them and putting the news on their doorsteps can exceed what they pay for the paper. And despite falling ad sales, most American papers still make more money from ads than from circulation.
So the industry is accepting that circulation will fall and hoping to find a level that can be sustained with little effort. As a result, the subscription churn rate — the number of people who drop their newspaper each year divided by the total number of subscribers — fell to 36 percent last year from 54 percent in 2000, the newspaper association says.
There are exceptions to the trend; New York City’s tabloids, The Daily News and The New York Post, continue to scrap for as many readers as they can, even if many of them drift away. And some executives and analysts think newspapers have gone too far in cutting investments meant to cultivate new readers, like advertising on radio or distributing papers in schools.
“Newspapers have not spent a lot of money on that kind of self-promotion, and I think that has hindered our long-term growth,” said John Kimball, chief marketing officer at the Newspaper Association of America.
A prime example of the new approach is at The Los Angeles Times, which has lost more circulation in this decade than any other paper, falling to about 800,000 on weekdays in its most recent reports to the Audit Bureau of Circulations, from almost 1.1 million in 2000.
“There is a school of thought these days that you stop actively selling altogether and let the readership seek its natural level,” said Jack Klunder, senior vice president for circulation at The Los Angeles Times. “We’re not at that point, but we’re running far fewer promotions, accepting that some number of people is never going to buy the paper, long run, at full price.”
Like many other papers, The Times has also cut back sharply on advertising itself. “When the profitability stream of the paper is interrupted, you start to look at places to save on the expense side,” including advertising, Mr. Klunder said. “You need to advertise in the long run, but we make a lot of short-term decisions in this business.”
The New York Times’s circulation has held relatively steady in this decade, but that masks two opposing trends. In its home market, circulation is down, as The Times, like others, has cut back on promotions and discounting. But sales are up in other markets where The Times continues to pursue new, mostly affluent readers.
Some large papers have made conscious decisions to limit their geographic range. The most striking recent example is The Dallas Morning News. Last year, it stopped distribution outside a 200-mile radius, and weekday circulation tumbled 15 percent to a little over 400,000. This year, the paper imposed a 100-mile limit. It expects to show another drop in sales when new figures are reported this month.
