Killing newspapers-- increasing cover prices and decreasing quality of reporting

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Rushing Print’s Demise
By Peter Funt, October 3, 2013

The biggest threat to newspapers today might be newspapers themselves — or, to be more precise, the companies that own them.

This week Gannett’s USA Today doubled its cover price from one dollar to two. Can you think of any other struggling business that would raise prices 100 percent?

The U.S. Postal Service, similarly threatened by digital alternatives to its core business, is proposing to hike the price of a First Class stamp from 46 cents to 49. How many people, even those who eschew email, would continue mailing letters if the price was immediately doubled to 92 cents?

Gannett, along with several other newspaper groups, is effectively throwing in the towel on its printed products. The apparent strategy is to extract as much circulation revenue as possible from a small group of diehard readers, with little regard for the damaging effects to the product itself. Meanwhile, publishers wait and hope for digital advertising revenue to increase beyond current levels.

The gambit is shortsighted and, moreover, a blow to journalism — even for those who don’t read or care much about the affected newspapers.

In most businesses, total revenue can be increased either by selling more units at or below the current price, or fewer units at a higher price. However, the second option works a lot better for, say, thousand-dollar designer shoes than it does for mass media. And the first option generally requires improving the product, which many major newspaper owners seem unwilling to support.

Readers of dailies in California owned by MediaNews have watched the newspapers shrink, like prisoners on a starvation diet. The Oakland Tribune, for example, exists now in name only, while functioning as an edition of the San Jose Mercury News. The Merc-News, meanwhile, is shedding pages like a jet dumping fuel before a crash. The chain’s smaller dailies such as The Monterey County Herald and Santa Cruz Sentinel have seen their presses sold for scrap, with production moved to distant facilities.

In the same Bay Area market, Hearst’s San Francisco Chronicle recently cut costs by moving the copy deadline for its first edition to 5 p.m. Papers delivered to many California homes miss everything — news and sports — that occurs the evening before.

Many publishers have concluded, perhaps correctly, that ink-on-paper editions will not survive too far into the future. What is reckless — for papers and their readers — is that management is taking misguided steps to try and speed the process.

When Gannett cut 223 newsroom jobs in late summer, including 29 at its largest regional paper, the Arizona Republic, the Phoenix Business Journal obtained an internal memo from Gannett’s management. A telling passage addressed the future of print:

“While consumer habits continue to change, the print edition remains a preferred format to many of our readers and an effective advertising vehicle for advertisers. A daily print edition will continue to be produced until a point (at which) there is no longer a significant demand for the product.”

Therein lies the rub. By natural process, demand will ebb gradually as digital alternatives improve and as older readers die off. Artificially, it will be hastened by newsroom layoffs, reduced page counts, earlier production schedules and jarring price hikes.

Some publishers see it differently. Aaron Kushner, the entrepreneur who owns southern California’s Orange County Register, has expanded the reporting staff and launched a sister paper in Long Beach, while holding the cover price at one dollar.

Among the national dailies, the Wall Street Journal and the New York Times have high cover prices, but they also charge for digital subscriptions and had double-digit circulation increases in the latest reporting period ending March 31. USA Today, on the other hand, does not have a paid digital presence. Its circulation dropped 8 percent in the same period.

Newspapers are businesses, entitled to operate as they see fit. But in the best-case scenario, publishers profit by providing quality journalism. That’s not happening across much of the media landscape. It is disingenuous to cite reduced demand while working aggressively to reduce it.

On the first day of USA Today’s two-dollar price, the boxcar headline was about the federal government but readers may have wondered if it was also about the paper itself. It said: Closing Time?
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