Moderating declines: Parsing the NAA's spin on newspaper circ data

Newspapers could borrow a line from a recent Dilbert comic strip: “We’ve been doing great since we redefined success as a slowing of failure.” Or perhaps it was the other way around, and Dilbert creator Scott Adams was inspired to write that line in a recent strip by the inventive terminology of newspaper executives describing “sequential improvement” and “moderating declines” in their revenue trends despite continuing losses in the double digit range.

Currently, the industry is reporting first-quarter earnings, and last week the Audit Bureau of Circulations released unaudited “publisher’s statements” reporting paid circulation for the six months ending March 31. The numbers are down, but the spin is up.

On the circulation front, the Audit Bureau of Circulations reported that circulation fell 8.7 percent on weekdays and 6.5 percent on Sundays, among newspapers filing publisher’s statements. This compares with drops of 10.6 percent weekdays and 7.6 percent Sundays for the prior six-month period, enough of an improvement for Newspaper Association of America CEO John Sturm to declare that “the data indicates the declines are moderating.”

Actually, it’s hard to discern real moderation in the rate of decline. The losses in the most recent period are indeed a bit less severe than those in the prior (Sept. 30) period, but they are worse than the drop in the period before that, or in any previous period. If we ignore the Sept. 30 data as an outlier, we actually have a trend that’s been worsening steadily for the last six years:

Nothing about that final uptick indicates that it’s a reversal of the trend — it would take two or three periods of “improvement” in the form of “moderating declines” to make that a valid conclusion.

Continue reading this post at Nieman Journalism Lab.

Newspapers take a bus plunge: circulation plummets 10.6 percent

It’s hard to put a good face on this kind of news; in fact, it reminds me of the old “bus plunge” meme. The Audit Bureau of Circulations (ABC) reports that newspaper circulation for the six months ending Sept. 30 dropped 10.6 percent from the same period in 2008 (7.5 percent on Sundays).

And this is an accelerating trend. Here are the results for the three previous six-month reporting periods (in each case, versus the same period one year earlier):

— Oct. 1, 2008-Mar. 31, 2009: down 7.1 percent on weekdays, down 5.3% on Sundays
— Apr. 1, 2008-Sept. 30, 2008: down 4.6 percent on weekdays, down 4.9 percent on Sunday
— Oct. 1, 2007-Mar. 31, 2008: down 3.5 percent on weekdays, down 4.5 percent on Sundays

In each case, the decline was the worst ever reported by ABC. The bus-plunge, cliff-drop analogy will get additional support when the Newspaper Association of America’s third-quarter advertising revenue report comes out (typically at Halloween); it’s likely to continue the trend of the previous two quarters with a drop in the 20-30 percent ballpark.

The NAA has not provided positive spin on the circulation news (it usually distributes an internal memo with upbeat talking points for publishers), but last week it did report gains in newspaper website traffic along with this comment from NAA President and CEO John Sturm:

Newspaper publishers continue to aggressively reinvent their business models, leveraging trusted brands to attract a growing and sophisticated audience in the digital space. At the same time, industry executives have adopted smarter circulation strategies that are growing circulation revenues even though paid circulation numbers are lower. This places the focus where it belongs: retaining core readers who deliver maximum value to advertisers while harnessing digital platforms to broaden our medium’s audience and position us strongly for the future.

Rick Edmonds at Poynter provides a good enumeration of the various factors behind the print decline, including strategic pullbacks by newspapers from fringe distribution and higher prices charged to subscribers and single-copy buyers. NAA also reported recently, as a positive development, that the “churn rate” (which measures how often subscribers fail to renew their subscription), had dropped from 54.5 percent in 2000 to 31.8 percent in 2008. It’s probably even lower today, as papers simply stop trying to retain marginal subscribers and focus on keeping their “core readers,” as Sturm says.

The 10.6-percent decline means that since last year, about 4.5 percent of U.S. households have given up reading a printed newspaper, and that printed newspapers now reach less than 40 percent of U.S. households. About the same percentage of adults say they get “most of their news” from printed papers, but that fraction will very soon be overtaken by the portion who get most of their news from the web.

You could read Sturm’s comment as an acknowledgment of several inexorable trends: news readership is moving to the web; print circulation will continue to fall; print is now a niche product which still reaches our “core readers” (older, higher income readers still desirable to a subset of advertisers); newspapers will charge whatever they can for print subscriptions — but “digital platforms” are going to be the industry’s future.

I’m hopeful that’s the NAA’s real advice to publishers. Taken seriously, it implies that the much-discussed, little-implemented strategy of charging broadly for online content in order to “protect print” is backing the wrong horse. It’s because print is now a niche business that newspapers are able to show the growing circulation revenues mentioned by Sturm. Readers can’t be forced into print by online prices, although they certainly may pay for niche content online and they should pay, handsomely, for the luxury of a home-delivered newspaper. Meanwhile, the industry’s all-out focus should be on seriously growing its online audience.

Unfortunately, in that department it has a ways to go. The NAA is upbeat about the stats outlined in its web traffic report, but (as I outlined also after the Q2 report), seen in context, they paint a picture of an industry that’s lagging seriously in transforming itself to a digital news medium. An “active reach” of 38 percent means 62 percent of adults ignored newspaper web sites. About 48 pages per person per month means the average visitor looked at only 1.5 pages per day. Time spent, at 34 minutes per person in September (and down from the previous two summer-vacation months), is barely one minute per person per day. At most of the top newspaper sites, according to E&P’s compilation, that time spent is even lower — just twelve and a half minutes at the top-ranked NYTimes.com, for example.

Meanwhile, the average web user spends between 30 and 40 hours a month online, depending on which survey you like, and dabbles at Facebook and other social networking sites 17 percent of that time. Time spent at social networking sites has tripled in the last year, while time spent at newspaper sites is flat, at best. (All these stats are from Nielsen, by the way, so there’s no apples/oranges issue going on.)

All of which is to say: newspapers have a pretty tiny share of online attention and are losing ground online just as they are in print. But online is the future the NAA’s Sturm is talking about. The focus for newspapers has to be on growing online attention share, fast.

(Also posted at NiemanLab.)

The Numbers Game

As they do every six months, last week the Audit Bureau of Circulations (ABC) reported newspaper circulation averages for the "FAS-FAX period" from April through September. The news didn't look good, with weekday numbers down 4.64 percent year-over-year, and Sunday down 4.64 percent. This represented an acceleration of the prior-year pace of decline, which was 2.6 percent weekdays and 3.5 percent Sundays.

As usual, the industry tried to put a good spin on the numbers, as summed up by Russell Adams in the Wall Street Journal:

But the reality is in some ways less bleak than the latest numbers indicate: Some newspapers have raised newsstand prices, curtailed discounted copies and halted delivery to the least profitable customers. Also, while print circulation has been declining for years as readers continue their mass migration to the Web, many publishers point out they are reaching more readers than before through print and online. The problem for publishers is the printed paper commands higher ad rates than the Web so even as more people read newspaper content, the papers pull in less money.

Some newspapers were able to point to gains in overall combined audience of online and print readers. In particular, Matt Baldwin, V.P. of Research at MediaNews Group, wrote an indignant memo claiming growth in the total audience of the Denver Post (owned by MediaNews) and Rocky Mountain News (managed by MediaNews as part of a joint operating agreement). This came after the Post as well as the Rocky had each reported their print circulation drops the other day without, apparently, getting the online audience spin from their V.P. of Research.

An obvious question about this combined audience approach might be, aren't we comparing apples and oranges? The print portion of the averages reported (in the first link in the previous paragraph) are seven-day readers. A one-day reader counts as only one-seventh of a reader in that average. But the are adding to that the seven-day "unique visitor" number, in which a one-time, one-day web site visitor counts as one full reader. Apples and apples would demand adding only the one-day unique visitor average, which is undoubtedly much lower. Moreover, as acknowledged by Baldwin, some print readers are also site visitors, and nothing has been done to eliminate the overlap.

A set of web audience metrics that looks more reliable comes from the National Newspaper Association (NAA), which reports:

Newspaper Web sites attracted more than 68.3 million unique visitors on average (41.4 percent of all Internet users) in the third quarter of 2008, a record number that reflects a 15.8 percent increase over the same period a year ago, according to a custom analysis provided by Nielsen Online for the Newspaper Association of America.

The NAA recognizes that both the election and the economy are contributing toward this rise, but their stats show pretty similar reach during July, August and September, which is not what you'd expect if the trend were due mainly to current events. In the NAA's findings, the average unique visitor made eight or nine visits, however, so this is not seven-day readership. In fact, if you examine their stats closely, the NAA is saying that 41 percent of web users spend about 45 minutes a month, or an average of only 90 seconds per day, at newspaper sites. If you look at it that way, it's not much of an audience. In fact, the top half-dozen or so domain names all individually outpull the entire newspaper industry in unique visitors.

Still, there seem to be some optimists out there. Neither the revenue slide nor the circulation decline seem to bother Richard Siklos at Fortune in recommending a bet on printed newspapers.

Miscellany

Sorry about the 5-day gap. Here are some random items not exactly about News after Newspapers, but certainly further indication that we may soon be in an After Newspapers world.

The "September FAS-FAX" numbers are out—that's the self-reported circulation figures of U.S. newspapers for the 6 months ending September 30, versus the same period a year ago. Guess what—they are down: 4.6% on weekdays and 4.8% on Sundays. The rationalization this time is that lots of papers are cutting out unprofitable—that is, not actually real—circulation. This includes gimmickry like Newspapers in Education, "third-party" promotions in which businesses pay for thousands of giveaway copies, "bonus days" in which papers are delivered on, say, Monday through Friday to people who only paid for Saturday-Sunday delivery, and on and on. Since all this nonsense has been going on for years, the current drop really represents years of real, core, paid circulation decline that's becoming visible all at once.

The industry claims that some of the decline represents readers switching to reading their content online, and that the overall audience is growing. But is it? ABC's list of the top 25 "tier 1" papers showing total audience growth (print plus online) is not that impressive—only 4 are in double digits, and below these 25 there must be a number in that "tier" with an overall decline. We can't tell, because the ABC has a membership firewall around the numbers.

Arthur Sulzberger admits that the New York Times might not be around forever. (And another report here.) Instead, says Pinch, "we must be where people want us to be for their information." I'm surprised this one didn't get more play, really—the publisher of the greatest newspaper in the world says, in effect, that he likes print but doesn't really care if it stays or goes. I have to say that of all American metros, the Times is really the most web-centric today, and stands a chance of making the post-print transition. Meanwhile, however, the Times reported a whopping 51 percent drop in earnings (but this beat Street estimates, somehow). At Gannett, the drop was only 32 percent.

Folks in New Jersey must still like the printed Times better than the bleeding Star Ledger, which is laying off 40 percent of its news staff. Forty percent! This is supposed to save the operation. Don't bet on it. Around the country, Paper Cuts has tallied over 12,000 newspaper layoffs and buyouts, and that's just the ones reported—lots of papers small and large leave jobs open or make small cuts without anyone writing about it.

If the audience is moving online, advertising is not following, at least not in the second quarter, when newspapers reported a 2.4 percent decline in online ad revenues. That's not much compared to the print slowdown, but it's not encouraging when newspapers have been pointing to the Web as representing their future. But in the third quarter, the newspaper web site audience grew 16 percent. One would think that ad revenues should resume their upward trend. I also read this week, and can't find the reference, that in September 41 percent of U.S. adults visited a newspaper web site, a new high. As newspapers disappear, however, we won't be talking about "newspaper web sites" anymore—just "news" sites.