September 28, 2014

Community newspapers, wake up and plan for worst case 2025 now!

Community newspapers, a somewhat vague term but one that starts with small-circulation six-day dailies and goes downward in size from there, face somewhat different concerns in today's world of financial perils than do their larger siblings. This is even more true for the non-daily segment of the community newspaper world.

Non-daily newspapers don't have to worry about people going online to find AP news, because that's never been in their papers. They don't have to worry too much about slashed national advertising money. (They do have to worry about that to a degree, though; retailers and fast-food chains have cut their pass-through money for advertising and marketing to local franchises, and Valassis, the nation's No. 1 publisher of insert advertising, has increased its downward pressure on community newspapers after cutting a sweetheart deal with the United States Postal Service.)

That said, that parenthetical comment shows that community newspapers aren't worry-free. And, given that they can look at their bigger seven-day dailies, they have no excuse to be complacent.

For example, the L.A. and Tampa Bay daily newspaper worlds have hit new levels of crisis, as I blogged earlier this week.

That said, back to the community newspaper world, both the daily and non-daily sides.

First, "programmatic advertising," in which major national ad brokers use computer algorithms to find the cheapest slotting they can for their clients, is likely going to partially trickle down to those five- and six-day community daily newspapers.

And, digital ad revenue will fail to make up for print ad declines. Print ads will decline less at community newspapers, to be true, but digital advertising won't pick up much. With no wire stories, local websites just don't get that much traffic. See here for more on ad issues in general.

And, Valassis, and other major inserters, like Red Plum, will continue to apply downward pressure.

Second, circulation revenue will likely continue to slip. There's a couple of reasons for that. At the daily wing of community newspapers, days that are thinnest on community news will continue to fall in single-copy sales. More six-day dailies will thus look at moving to five-day editions. If they don't provide a slight break on subscriptions with that, they'll lose yet more folks. A fair amount of five-day dailies will look at going tri-weekly (with a mini-wire service feed) or even semi-weekly. That will save money, yes, but subscriptions will have to be adjusted at the same time. (Personal experience: CNHI tried going from five-day daily to semiweekly at the first newspaper where I worked, without crediting current subscribers or extending their subscriptions. By the time the mass of subscriptions cancellations told them what a mistake they had made, they wound up deciding to close the paper.)

Circulation revenue will slip for two other reasons. One, for community papers that have put up paywalls, there's not only no more low-hanging fruit, there's no more fruit, period. Unlike a New York Times, you can't price out mini-subscriptions for just op-eds, or just the books review, or whatever. See here for more on digital subscription issues in general; same link as above.

Also, while old white folks are the most regular newspaper readers, they're also the ones nearest death! Most of the obits in community newspapers are lost subscribers.

Meanwhile, the Postal Service is only going to get worse. Even at the NAA, I don't see anybody picking up the Washington lobbying cudgels for my ideal solution of going back to the pre-1971 United States Post Office, either. By 2025, half of the remaining regional service centers may well be closed. And, the kids of the old white subscribers, especially if the parents are dead, the kids that have moved away, will drop their subscriptions. They'll only do a digital one if it's digital-only, and discounted.

That leads to a related issue. Even if you have a paywall, saying the digital comes free with print, as a sneaky way of saying you don't offer digital-only subscriptions, won't fly forever, either.

And, Facebook in particular and social media in general will not be your salvation! If anything, it will be even less the salvation of community newspapers than it has been for major ones. Community gossip, rumor, and occasional fact are easy to get spread digitally with somebody's "community" Facebook page.

Hence, my header.

Community newspaper owners need to brainstorm what they think could be their worst scenario in 2025 — then start planning for that to happen in 2020. And then, of course, figure out how they can prevent, or at least mitigate that.

The worst case? Per that link above, newsprint prices have held pretty low. Picture them taking a major jump. Picture electricity prices for presses taking a hike as the shale gas "boom" turns out to be pretty much of a bubble by 2025. And, the Postal Service is 3x teh suck of today.

Dear community newspapers: Are you really preparing now to be really digital-first newspapers? I kind of doubt it. Even more, are you preparing for the outside possibility that your best realistic financial move 10-12 years from now might be digital-only? I totally doubt that.

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