Newspaper circulation in the United States has been witnessing a tailspin for years now, with readers increasingly moving online and posing questions for the viability of this industry. The recession that began in 2007 only made matters worse. But now, for the first time, American newspaper organisations have grounds for a modicum of optimism, according to the Pew Research Centre’s just-released annual State of the News Media report.
“Companies have started to experiment in a big way with a variety of new revenue streams and major organisational changes,” it says and points out how more and more newspapers, whether big, mid-size or small, are resorting to digital pay plans to stem the revenue erosion. led by the likes of The New York Times and The Wall Street Journal among the biggies, as many as 450 of America’s 1,380 dailies have introduced digital pay plans and these appear to be finally beginning to work. Thanks to the digital growth over the last two years, The NY Times now says its circulation revenues exceed its advertising revenue. This is being described as a sea change from the traditional revenue split of 80 per cent advertising revenue to 20 per cent circulation revenue.
“Together with the other new revenue streams, these added circulation revenues are rebalancing the industry’s portfolio from its historic over-dependence on advertising,” says the report. So much so, the publicly-traded newspaper companies saw their share prices rise in 2012, with several of them up 30 per cent or more.
Pew, however, warns that these positives are more in the nature of promise rather than performance for now. The most basic indicators have not turned around, it says, adding grimly: “The industry is little more than half the size it once was.” The persisting dangers are being seen with print advertising falling for a sixth consecutive year in 2012. And this drop is of the order of nearly $1.5 billion, or 7.3 per cent. National advertising is a particular weakness, suggesting that corporations are shifting their advertising dollars to other platforms. It has been noted that digital advertising, now up to 15 per cent of total newspaper ad revenue, has grown anemically the past two years and does not come close to covering print ad losses. Even as volume improves, prices are depressed because of the huge range of places to advertise, now including social sites like Facebook and Twitter.
Online indeed has been the only area of newspaper industry to show growth in 2012. While this has definitely boosted digital circulation, with people reading news on mobile devices, notably smartphones, digital advertising is still to come good. “Mobile advertising could be just as disappointing as online advertising has been — with the growth centred on shopping and search applications rather than ads that run alongside news,” says the Pew report, pointing out that newspapers continue to reduce traditional newsroom staff with smaller expansion on the digital side. A few have also cut print frequency to three times a week.
The decline has also prompted several newspapers to abandon their grand headquarters buildings in downtown city areas to smaller, less expensive offices. Gannett, which publishes USA Today, is in the process of selling its 1927-vintage former headquarters in Rochester, New York, where the company was started. The Philadelphia newspapers have moved out of their iconic white tower into a former department store. That could also be the fate of Tribune Tower in Chicago. The redoubtable Washington Post is also reported to be exploring to shift from its headquarters. Other news organisations which are staying put in their premises have started to rent surplus space to other businesses. The New York Times and The Boston Globe fall in this category.
In another downside highlighted by the Pew report, staff cutbacks are said to be continuing across the industry. Newsroom cutbacks in 2012 have put industry employment down 30 per cent since its peak in 2000 and below 40,000 employees for the first time since 1978. This decline has had its impact on coverage. About a third (31 per cent) of those interviewed by Pew for its survey said they had ceased relying on their regular news outlet because it no longer provided them with the sort of news they used to get previously, both qualitatively and quantitatively. A tabulation by American Journalism Review says that over the past decade or so, 18 newspapers and two newspaper chains closed all of their foreign bureaus, while other outlets have reduced the number of correspondents in their bureaus. Even in a place like Washington, news organisations have “drastically reduced their coverage of the federal Government and some of its most visible departments, such as State, Defence, Justice and Treasury”.
All in all, Pew reckons that the US newspaper industry has entered 2013 with some positive signs but still dealing with difficult economic realities.