In Japan, advertising accounts for just 35 percent of newspaper revenue. In Britain, it’s 50 percent. And in the United States, ads have traditionally amounted to a whopping 87 percent of newspaper income. That’s why it can truly be said that, in the U.S., newspapers have always given away the news, charging only for paper and delivery.
These days we pay for computers and broadband access while getting the news for free — same as it ever was. That is among the most important explanations for why news organizations are going to have a difficult time persuading more than a handful of readers to pay for online access. I wish them well. But the challenge is enormous.
One thing some readers will continue to pay for is the convenience of print. (Spare me your nostalgia for the romance of print. Print persists for one reason: it’s still more ergonomically friendly than any electronic version. Someday that will change.)
After yesterday’s newspaper circulation figures were released, showing a continued but slowing decline in print sales industry-wide, Boston Globe publisher Chris Mayer issued a memo — a copy of which was obtained by Media Nation — attributing the Globe’s continued slide to last year’s decision to raise the price to as much as the market would bear. (Here is the Boston Herald’s take.)
The idea is that there’s a sweet spot. Up to a point, you can raise prices and make more money, even if the total number of print readers declines. Somewhere, though, there’s a top to the curve, and the challenge is to find the top and not raise prices so much that revenues start to fall. The result, unfortunately, is that you end up with a niche product for an elite readership. But it’s either that or die.
And here’s a good piece of news. There’s also a sizable subset of readers who will pay for electronic editions like Times Reader and GlobeReader, which are cheaper than print but more convenient than newspaper websites that keep you chained to your desk. Given that iPad editions have barely kicked into gear, that’s a promising sign.
The full text of Mayer’s memo follows.
Earlier today the Audit Bureau of Circulations issued their Fas-Fax report for the six months ending September 30th. The Globe has shown year-over-year declines in line with our expectations, as a result of our circulation and pricing strategy instituted last summer.
The good news is the rate of circulation decline has slowed as we cycle through the impact of the price increases. One indicator is the comparison between September’s report and March’s report. Viewed this way, the declines are 2.8% for Sunday and 4.2% for daily. These are encouraging trends for our business and in line with others in our industry.
The past few months has also seen continued excellence in our reporting and positive contributions to the community. Our Spotlight Team investigation of patronage in the state’s probation department; our sensitive series of stories on bullying; the amazing coverage of the Amy Bishop case; coverage of the earthquake and aftermath in Haiti and its impact in Boston; and our current coverage of the political races are just a few examples of the important journalism we’re delivering.
The Globe’s circulation, now at 368,000 on Sunday and 223,000 daily, still makes us the largest newspaper in New England by a wide margin. The year-over-year decreases of about 15.7% on Sunday and 12.0% daily were expected and budgeted. To offer some context, we raised prices last summer in most areas by 30% to 50% to grow circulation revenue and stabilize the business.
Of course, circulation numbers are not the end of the story. Print and online media work in concert with one another to build audience. It should be noted then that in terms of readership, during an average week, the Sunday Globe, the daily Globe and Boston.com together will reach 51% of all adults in the metro Boston area. It will also be reported in Monday’s Fas-Fax that Boston.com’s local audience grew by 2.9 %.
The recently announced two-brand digital strategy is now officially under way and we are developing launch plans for our new subscription-based Web site BostonGlobe.com, and the next generation Boston.com. And, watch forperiodic launches of digital products in the upcoming months.
So, as we look ahead we will continue to execute on our strategy, building on the strong foundation of quality journalism, original content, broad audience reach, higher reader engagement, advertising effectiveness, and strong connection with the community that is reflected by, and results in, our more than 50% of the market.
We can all share a sense of optimism and purpose as we focus on our future success.