Newspapers: Three Nails, One Coffin 11 comments
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Line by line, newspapers’ businesses are falling apart as they shrink and become less efficient for advertisers against the competition and reach of online media. Consider:
* Coupon giant Valassis abandons newspaper distribution for the postal service in three more markets. Says Crains: “The move represents the acknowledgement that newspaper circulation is on the decline and advertising clients want to continue to reach as many people they can in markets with shrinking newspaper coverage.”
This is significant for two reasons: First, consider that a primary reason papers are reducing frequency but maintaining print editions a few days a week is that they can still make money by distributing coupons and circulars. Second, readers value those coupons. I’ve told the story before of my time as Sunday editor of the NY Daily News when we regained coupons after a strike and circulation jumped more than 100,000 – that is, those readers were buying ads, not news. So this becomes a vicious cycle: the more papers shrink, the more value they lose and the more value they lose the more they shrink.
Coupons and circulars are media and they merely use newspapers as distribution vehicles. When they can be distributed online, for free, then the distribution business will fade away.
* Next, newspapers are starting to lose movie listing ads. That advertising used to be content with value – like, say, home and job ads – but now that value can be delivered online, for free – next to a ticket sales opportunity – online. There go a few more dollars and a bit more value.
* Newspapers were smart to start an online company to serve their ghoulish but lucrative line of business in death notices, Legacy.com. But now it has a competitor in Tributes.com. And I wonder how long either of them can continue to convince people that they need an obit service when any web page will do.
None of these, in and of itself, is a killing blow to papers. Just three more dull blows to the kidney.
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This article has 11 comments:
When I was in the biz, many newspapers took the Valassis insert package for FREE. I knew of some that paid Valassis to get them! The reason was readership. Same with movies. Without the coupon package on the weekend, a very significant number of people will stop subscribing...which will increase the death spiral.
Moving to direct mail is more a function distribution control. Advertisers want high propensity geography, with minimal waste. Most newspapers now have less than 50% circulation in the core area, and less than 20% in the suburbs. Too much missed opportunity at too high a price. Right now, that works due to the ability of carrier route distribution. As the USPS becomes less viable, the government will be forced to increase prices dramatically- which will drive these advertisers online....and harm Valassis. It's not a matter of "if"....but actually "when".
And Jarvis... Valassis may have said they are moving away from newspapers in 3 markets due to circ declines, but that is just an excuse. Valassis is a competitor to newspapers and is happy to steal business away whenever they can.
On Aug 25 10:11 PM Relayer10 wrote:
> The move by Valassis and movies are even more insidious...
>
> When I was in the biz, many newspapers took the Valassis insert package
> for FREE. I knew of some that paid Valassis to get them! The reason
> was readership. Same with movies. Without the coupon package on the
> weekend, a very significant number of people will stop subscribing...which
> will increase the death spiral.
>
> Moving to direct mail is more a function distribution control. Advertisers
> want high propensity geography, with minimal waste. Most newspapers
> now have less than 50% circulation in the core area, and less than
> 20% in the suburbs. Too much missed opportunity at too high a price.
> Right now, that works due to the ability of carrier route distribution.
> As the USPS becomes less viable, the government will be forced to
> increase prices dramatically- which will drive these advertisers
> online....and harm Valassis. It's not a matter of "if"....but actually
> "when".
Other media, including the internet, trailed newspapers by 20 percentage points as the primary medium for checking advertising, the study found."
www.marketingcharts.co...
I work at a newspaper whose trend line has bucked the system.
I can't ignore facts. We’ve gained circulation in the last several publisher statements and by ABC audits.
We have new movie studio advertising as recent as this week.
For core reach in the Twin Cities Market, advertisers know that they need the Saint Paul Pioneer Press.
It’s very true that we have on online component of reach with TwinCities.com that is a powerful piece to our strength as well as Yahoo!
We are also one of the highest coupon redemption states and Valassis surely knows this and that’s why they’ve used our newspaper quite a bit for building response among a variety of brands.
Obituaries have always been one of the most meaningful and respectful of placements in newspapers. It indicates a level of community as well. So, the attempt to crack on them as “ghoulish and convince people that they need an obit service” indicates to me that the writer of the article has never lived in a real community or had any true life-understood relationships outside of his keyboard.
The information he presented appears to be as plastic as his word-coating efforts. We only accept real journalism as a rule backed up by facts, of which I don’t see a lot of sourcing inherent in his article. Hmmm…. Makes intelligent people raise a red flag I’d assume.
Mister, there’s no nails in our coffin here. Thank you very much.
This will bottom out soon. Whether news guys have jobs then, I don't know.
"I’ve told the story before of my time as Sunday editor of the NY Daily News when we regained coupons after a strike and circulation jumped more than 100,000 – that is, those readers were buying ads, not news."
They were buying both.
In the old days, a picture of Lady Diana would move the merchandise.
It is a long known that the farther you move from the City Zone center, the lower the circulation home delivery number, in the vast majority of cities. Many dailies have expanded their reported City Zone in their ABC to artificially inflate the suburb number, using the far denser City Zone numbers averaged out.
I will concede that the defined suburb will be different..., market to market. Amend "most" to "many". In major metros, the suburbs expand up to 50 miles away. In small towns, that distance is much smaller. In those instances, SOME of the suburbs might be legitimately within a City Zone. In most major cities, many of the most affluent suburbs are well outside the City Zone...and the Retail Trade Zone (EXCLUDING the City Zone, and NIE and all other Single Copy) are FAR below the numbers of the City Zone. Many dailies have TMC's that cover non subscribers because their density shrunk so low that they had to. Most national advertisers (and Media Buying companies) did not place ads in those TMC- because it was not paid.
Your customers wanted to trim expense, and believe that a lot of single copy just can't be verified as legit- due to NIE and event sales reported as average daily paid- (which artificially inflates paid numbers). They began zoning out single copy years ago. I've been out of the biz for several years, and the practice may have changed in some areas- but I suspect it has not.
Valassis is absolutely a competitor to newspapers- and they take as much national business as they can.. Newspapers were very short sighted during the rise of Valassis...and took them (and the national coupons) either free, or so cheap it actually LOST money.
As a sidenote...I no longer have access to ABC numbers, and do not have the vast research capabilities of the NSA...but I will take an educated guess that almost all newspapers have seen very significant drops in home delivered paid circulation. Advertisers vote with their feet...and judging by the draconian drop in the stock price and market caps of newspaper companies...they have voted.
First, movie listings have never been a big source of revenue for newspapers. They are often given for free to drive circ numbers.
Secondly, Tributes is a dud and is failing.
Third, online coupon redemption is nowhere near what print is. Secondly, retailers need to update their POS system to accommodate digital redemption through Blackberrys, cell phones, etc.
Must have been a slow day dude for you to make this up.....
Valassis is in worse shape than newspapers. Their stock has dropped from $45 to $14 in about 2 years. They have larger hard costs and are nowhere nearly as diversified.
wake up!!!