Sep
15
Written by:
Len Latimer
9/15/2009 10:03 AM
Will Magazines & Newsletters Die Away Like Newspapers?
I really enjoy stretching out on my recliner, shoes off, sipping a hot coffee and casually reading the Sunday paper. And nothing cleans my reading glasses better than authentic newsprint (it’s the oil). But sadly, almost every week I hear of another newspaper having to shut its doors. Recently, the Christian-Science Monitor shut down, and Hearst’s 146 year-old Seattle Post-Intelligence ceased print operations and became an online newspaper while slashing its newsroom to 20 from 145 employees. This leaves The Seattle Times as the city's only major paper-and-ink daily. Gannett, parent of USA TODAY, may shutter the 140-year-old Tucson Citizen, which competes with the Arizona Daily Star, if a buyer can't be found. A few months ago, E.W. Scripps closed the Rocky Mountain News, leaving The Denver Post as the city's sole major daily.
In recent months, The Los Angeles Times, The New York Times, the Chicago Tribune, the Boston Globe, Newsday, the Philadelphia Inquirer, the Washington Post and dozens of lesser known papers have reduced publishing staff. Many other newspapers have downsized the paper itself – dropping whole sections, such as the Los Angeles Times’ California section or the New York Times’ Sunday TV Guide, or they have simply reduced the number of articles.
Washington Post profits fell 77% in the fourth quarter. The New York Times and Los Angeles Times are losing money. Hearst says it will sell or close The San Francisco Chronicle if cuts aren't made in a hurry.
So why are newspapers dying at record numbers? Will they all go away? And how about their cousins, the magazines and newsletters? First, here are my thoughts on the reasons for the problems of newspapers and the reasons why I think magazines/newsletters are completely different:
Newspaper Economic Problems
- Timeliness and Convenience. When you read a newspaper, you’re actually reading yesterday’s news. That used to be just fine, but along came radio, then television, then cable television, and then the Internet, and now smart phones. People can easily get news faster and cheaper in media other than newspapers.
- Lack of Newspaper Journalism. It used to be that most major papers had foreign correspondents – not much anymore. Most newspapers are just aggregators of news. Their major new stories are coming from AP, Reuters, UPI and other newswires which means that newspapers, more and more, look and read alike. The local news, local sports, and investigative reporting are their only claim to authenticity and necessitating their existence. Yet, local TV still gives faster local news coverage, although not as in-depth as newspapers.
- Craigslist and eBay. The free Craigslist classified website has hastened the death of newspapers. Classified ads, which were once the only way to sell your car or find a job, have given way to the “free” mindset of the Internet. Why buy a local newspaper classified when Craigslist is free. Classified ads are no longer the income goldmine for newspapers as they once were. Classified advertising reached nearly $20 billion in 2000 – that’s about 40 percent of the U.S. newspaper industrys’ revenue. In 2008, classified ads in U.S. newspapers dropped to less than $10 billion, or about one-quarter of the industrys’ revenue. (Subscription and single-copy sales traditionally contribute just 20 to 30 percent of newspapers' revenue.) However, among smaller local daily newspapers with circulations of less than 15,000, classified ad revenue actually rose by an average of 23 percent in the five years ending in 2008. In contrast, daily newspapers with circulations greater than 80,000 saw ad revenue drop 25 percent in the same period. Smaller, local newspapers are more in favor. It seems the bigger they are the harder they fall.
- Politics. More and more, newspapers wear their politics on their proverbial sleeves. Politics have always been around – we all remember Citizen Kane and Randolph Hearst - but more and more, newspapers sponsor just one political side or the other, which questions whether their reporting is fair and balanced. If the United States is half “Red” and half “Blue” politically, then a politically-charged newspaper can easily turn off half its potential audience.
- High Expenses. Staffing journalist and union employees, 24 hour printing press maintenance and truck delivering of daily newspapers is an expensive business, especially in these days of falling profits. Newspapers are responding by cutting staff, reducing page sizes, and cutting down the number of publishing dates. Digital editions have begun to look better and better to newspaper publishers because of their low cost
- Advertising -Trading Analog Dollars for Digital Dimes. Digital ads for newspapers (and magazines) are much harder to sell. Typical rates are only 10% of the display rates obtainable in “printed” publications. This is partly due to the business model many newspapers have chosen - free access to content. That’s simply a bad business model. The Wall Street Journal, on the other hand, has 1.25 million paid subscribers. A recent report from Newspaper Association of America revealed that through the first half of the year, newspaper ad revenue plunged 29 percent to $13.4 billion. Newspapers had ad sales of only $6.8 billion in this year's second quarter compared to $9.6 billion last year.
- Lost Audience. The fact that newspaper circulation is dropping also prompts advertisers to spend less and less. It’s a simple math calculation. Display ads are based on cost-per-thousand names reached. If you reach fewer people – you receive fewer ad dollars. The main reasons for the losses in circulation have to do with many of the reason stated above – timeliness, lack of distinction in their reporting, political turn-off of audiences, and the like.
Tests have shown that the printed version of a publication many times drives the Web traffic. So the question is what happens if the printed version goes away? According to its latest annual study of the impact of online technology in the United States, 22% of Web users stopped their subscription to a printed newspaper or magazine because they could access the same content online. Scarborough Research reveals that online-only newspaper readership during a typical week is only 4%. Only time will tell if the “digital only” version of newspapers will work.
Why Do I think magazines and newsletters will survive?
1) Many magazines serve a specialized, hungry niche. Whether it’s hobby markets like golf, guitar playing, hunting, photography and the like, or special interests like sports, or automobiles, these readers simply can’t do without their beloved publications. And advertisers also love them since they offer a direct, targeted venue to their markets without the wasted cost of a broad medium like television. Newspapers, on the other hand, try to appeal to everybody and don’t offer any “qualified audience” advantage to advertisers.
As an example of hobby/profession example, the photography niche has these following 14 magazines serving this market, according to Amazon.com:
American Cinematographer
American Photo
Aperture
Art On Paper
Digtial Photo
Outdoor Photographer
Photo District News
Photo Techniques
Picture
Popular Photography & Imaging
Popular Photography & Imaging/American Photo Combo
Professional Photographer
Scrapbooks Etc.
Shutterbug
2) Similarly, many other “how-to” magazines exists, ranging from home design to financial advice, from investment books to computer magazines to weight loss/health magazines. They keep their readers up-to-date with the latest techniques and products to help their readers in their chosen special interest. Amazon has 168 listings for computer and Internet, and 40 publications listed for “money”.
3) Subscription Income. Of course, not all magazines receive subscription income. Many trade publications are served free to highly qualified readers, who must answer certain demographic questions as their purchase price. But this high quality niche audience is perfect for selling advertising for their particular market. Newsletters generally depend on 100% subscription income and many times can charge very high subscription rates. Examples out of SIPA’s 2009 membership directory include Intelligent Press’ Natural Gas Intelligence at $759 per year and NGI’s Weekly Gas Price Index at $1,499 per year as examples.
Newspapers, on the other hand, historically earned about 80% of their revenue from advertising. The Newspaper Association of America expects advertising sales to drop 9.7% in 2009 to $34.2 billion, after falling 16.5% in 2008.
4) Magazines are not particularly time specific. Newsletters are generally time sensitive – particularly ones about the stock market or covering specific industries.
5) Low cost and low frequency. The heavy costs of printing daily newspapers, hand and truck delivery, along with union contracts have taken their toll on newspapers. About 85% of a newspaper's costs go to things such as presses, paper, ink and trucks. By comparison, magazine publishers don’t own and maintain their own printing presses but get the lowest possible cost through competitive bidding. And the low cost of delivery via the Post Office’s periodical class rates is a Godsend. Additionally, because most magazines are not published daily, but most often monthly or weekly, far fewer staff is required. And instead of highly trained, news-collecting journalists, publishers can rely on freelance writers whose knowledge of the publications’ special interest is more important than their journalistic credentials.
So, my bottom line: is that magazines and newsletters are here to stay. However, there are many challenges. As reported by the Publishers Information Bureau, total magazine rate-card-reported advertising revenue for the first quarter of 2009 closed at $4,183,426,592, posting a 20.2% decline against the same period in 2008. Ad pages during the first quarter totaled 37,196.43, at -25.9% compared to January through March, 2008. Nevertheless, I feel that drop is more reflective of the current recession than on future trends.
Many magazine publishers have not yet monetized their websites or even know how to do so. The smart publishers, however, are offering “subscriber” or “member-only” areas for premium content, specialized databases, downloadable MP3 interviews, directories, forums, niche classified ads and job boards, and similar premium content. This can either add to the publishers revenues as a separate premium subscription or at the very least, greatly increase the value of their basic subscription in the subscriber’s eyes.
The world –she is a-changing.
Copyright ©2009 Len Latimer
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