The following is my notes for a speech given Feb. 8, 2011 to the Oneida Rotary Club on the topic of the state of the newspaper industry and the future of the Oneida Daily Dispatch.
Thanks Brian (Simchik) for the introduction and the invitation to speak today. And thank you to each of you for braving the weather.
It seems whenever a journalist is invited to speak, or for that matter, any time we join a conversation at a public function … we are asked to address the vitality of the newspaper industry. It is a fair subject.
As we have frequently reported about ourselves over the last decade – and particularly the last three years – our industry has been on something of a roller coaster ride.
Readers want to know if they will still have “their” newspaper, and advertisers want to know if they need to be thinking about alternative marketing plans. To that end, Brian asked me to talk about the state of the newspaper industry, and how the Oneida Daily Dispatch is responding to changes.
Given the time limit, I am going to cover a lot of ground briefly and in a general tone and then open it up to questions. I think it is best to start by talking about the changes in our personal lives and in the life of this community, as an example of how our audiences and advertising base has changed, and how we have adapted and need to adapt in the future.
Let’s start with the business side of our business. Newspapers have historically relied on advertising from locally-owned retail businesses for the lion’s share of their ad revenue budget. We have always been – much more so than local radio or television – the medium that drove considerable foot traffic into stores.
What happened? We got more mobile as a society and beginning in the 60s and expanding through the 70s and 80s, we started driving further for our goods and services. Shopping centers grew up on the outskirts of places such as Rome and Dewitt, and then came the malls in Fayetteville, New Hartford and Syracuse. Downtown Oneida was no longer as much of a shopping destination for smaller communities contiguous to us such as Sherrill and Canastota … and our local residents were visiting and spending more in Oneida and Onondaga counties. So less of our disposable income stayed local and our retail base shrunk considerably.
The demise of many small local retail stores – think Garofalo Shoes, Joy’s Department Store, Lynn’s, and LL&Js, for example - and their budgets wasn’t fatal to the Dispatch; the change coincided with the rise of the regional department stores and their need to draw large audiences from wide areas. So newspapers including the Dispatch started getting more preprints from the J.C. Penney’s and Lowe’s of the retail world. And our base of ad revenue grew. That pattern continued right through the middle of the last decade, and then in the last few years many papers – the Dispatch wasn’t impacted as much as others – but it was impacted … we saw further erosion of spending from local businesses, particularly in key categories such as automotive dealers and real estate, among others, as they went through upheavals in their industries. Another segment that has been important to newspapers, recruitment advertising, has shrunk as the job market has of late. In other words: As our customers’ businesses have suffered, so have we.
Add to that a fundamental change in retail over the past few decades: the rapid rise of franchise stores and restaurants – many which rely on national marketing efforts rather than local ones – which continue to supplant businesses grown locally. So our challenges persist.
I am going to stop there for a minute and change the subject from our advertisers to our readers … How our lifestyles have changed how we access news. And then I will come back to the business side of the business again.
So … let’s go back 60 or so years to the last mid-century, where many larger cities had not one but two dailies – a morning and an afternoon newspaper - and many people subscribed to both … And where residents of smaller outlying communities frequently subscribed to their local daily as well as one of the regional metro newspapers. Print readership was at an all-time high – the audience was of a size that would seem incomprehensible compared to many of today’s media audiences.
Over time, as more people commuted further and more women entered the workforce, and all the changes that resulted to our lifestyles … our readership habits changed, too. We had less time to read newspapers, and we preferred to have our newspapers delivered before our commute. Afternoon titles went away and most people subscribed to just one daily newspaper. Then lifestyles changed even further – more single parents, more two-income families, and more soccer moms and dads spending their free time with transporting kids from one extracurricular activity to another, and the end result: some folks resorted to reading the newspaper fewer days a week.
So we’ve established that in terms of sheer number of newspapers home delivered, consumption is down, and that we are adapting to a changing advertiser base. But those two factors don’t explain all the doom-and-gloom in the headlines about our industry and they betray some remarkable facts about the current quality and quantity of our audience.
The reality is most newspapers remain profitable. Some major metro papers have some real challenges as they relied more on national/major advertising which has dried up – witness the announcement this week that the Orange County Register is going to be auctioned. But most have respectable – if diminished - cash flow. The big villain - the same one that tripped up the banking industry and so many others – impacted newspapers large and small: Too much access to credit and too much optimism over the valuation of newspaper properties led to purchases and buyouts over the past 15 years. That led to tremendous debt levels that couldn’t be paid back in tough times.
So to answer the original question: How healthy is the newspaper industry? The glass is half full. And it half empty.
Let’s take the optimistic view first … and that has mostly to do with our loyal audience how they use newspapers to make buying decisions, and our growing digital reach:
- roughly 4.5 in 10 American adults watched Sunday’s Super Bowl game .... yet more – 71 percent of adults - read a newspaper each Sunday;
- newspaper readers are more loyal today than a decade ago ... subscriber cancellation rates have dropped 42 percent since 2000;
- 82 percent of all adults took some action as a result of newspaper advertising in the last month;
- 61 percent of all active internet users visited a newspaper website in the past month, accessing 4 billion pages;
- eight in 10 households with an income of over $100,000 read newspapers in print or online each week;
- and even among young adults, newspapers are better read than conventional wisdom might suggest – over a five-day period 45.9 percent of adults ages 18-34 pick one up. (What TV network or radio station wouldn’t envy those numbers?)
I also mentioned there is considerable cause for concern in our industry … If we don’t adapt to a host of changes - technological, societal and more - we face extinction. The three biggest trends that keeps newspapers executives up at night: 1.) newspaper advertising has shrunk in half since 2005; 2.) for the first time, digital ad revenue now exceeds print ad revenue nationally (and newspapers have precious too little of the digital dollars); and 3.) print readership – while it hasn’t declined as steeply as other media – is likely to see further erosion.
So, I promised in light of all the national trends to end by talking about the Dispatch’s prospects. The short answer is they are pretty darn good.
For one, we are associated with the most-forward thinking company in the industry. The Journal Register Company, revitalized over the 18 months with first a new board, and later a new CEO, is the talk of the industry. From a company that emerged from bankruptcy in late 2009, here is our 2010 performance:
- our ad performance was three times better than the industry;
- our classified ad performance was six times better than the industry;
- our retail ad performance was two times better than the industry;
- our digital income was two times better than the industry;
- and while some newspaper companies imposed furloughs in 2010, we announced employee profit sharing.
Two, we’re the talk of the industry not for how we are performing today but where we are headed tomorrow. Our Digital First strategy – from fast to slow, from mobile to Web to print – ensures we are positioned for the long-term. We are going to leverage our print brands’ audience to build and deliver news on the platforms of our readers’ choice. That’s our new reality … the new news ecology. You may want sports scores delivered to your smart phone, and she may want to review season-to-date stats on the Web, and he may want to read a team’s prognosis for the rest of the season in print. We are going to deliver it all. The news you want, when and where you want it.
Three, readership of our products is at an all-time high. We have over 98,000 people reading our Oneida-based print and online daily news products each month, and more reading the Oneida-Madison Pennysaver and our Southern Madison County Living Monthly. In Rome, where we have the weekly Rome Observer and a companion Web site, our monthly reach exceeds 30,600 adults each month.
Fourth, we’re going to focus on producing better journalism going forward. We did a horrible thing as our industry to our newsrooms in the mid/late 80s and 90s as we had our editors take over the pagination of our newspapers. The focus became more on production functions than news ones – and the burden was particularly heavy on the smallest newsrooms such as Oneida’s. We’re going to slowly remove that work from our newsroom in the coming year.
Added to that, if you spent a day at the Dispatch today, you would find so much of our resources – time and money - being spent on repairing equipment and recruiting carriers and billing and so on … and not enough energy on growing our advertiser’s businesses and writing quality journalism. That is typical of newspapers – two-thirds of the costs are infrastructure-related.
Our new business model is to outsource all those functions that don’t add value …. Hence the announcement recently The Dispatch is outsourcing printing and distribution. It was a hard decision in the respect it impacted some terrific employees and independent contractors. But it was an easy decision in the sense it improved the long-term viability of the newspaper and will ultimately, when these and other changes are fully implemented over the next year, allow us to focus on our core competencies. As a result, we will improve the quality and quantity of - and the speed with which we deliver - content.
Fifth, we will invest in technology. Electronic editions and mobile and tablet platforms are coming in the next six months. All Dispatch employees will be working on new computers and new front-end system as we integrate them into the company over the next 18 months.
Sixth, we will make it easier for advertisers to buy our products. We will move to easier-to-understand modular ad sizes this spring, and create new pricing to maximize discounts for businesses that buy across our many products and platforms.
Last but not least, we will engage you, our readers more. We have some terrific ideas for community engagement through a new community media lab. With your help we will continue to publish more videos and we will cover more live events than a newsroom of any size ever could. You will help us lead community-wide discussions on the most important topics of the day, and we will fine-tune our focus on information important to you.
I am proud to say of the newspaper that developed my interest in journalism at a young age and gave me my first job out of college in the field … that we are indeed entering this publication’s golden age. The Oneida Daily Dispatch of tomorrow will be the most relevant, best read, and most engaging newspaper in this community’s history.
Thank you for inviting me to share our story today. I would be glad to answer any questions.
All of the national statistics come from various studies cited by the Newspaper Association of America on its main Web site and its ancillary site, newspapermedia.com. Some of the talking points are from the latter site as well. The readership data for the Oneida Daily Dispatch and Rome Observer and related Web sites is from Scarborough research of the market. The stats about the Journal Register Company's 2010 performance are taken from CEO John Paton's blog.