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Monday 02 May 2005

The Woes Of The Newspaper Industry

According to Goldman Sachs as reported in this article in Editor & Publisher, the first quarter of 2005 was the newspaper industry’s ‘weakest quarter in years’.

Now, it must be kept in mind that this was their ‘weakest quarter’ because their revenue only increased by 2.6%, or faster than the official rate of inflation. And it must be kept in mind that in the first quarter of 2005, there were no Christmas sales being advertised by the department stores, and no major elections (or, for that matter, much compelling news of any kind) that would have encouraged people who don’t regularly read the newspaper pick it up. I suspect that the third and fourth quarters of 2004 were some of the newspaper industry’s best quarters in years.

Still, though, the general trend seems to be a downward one, even if it’s still in the range of ‘slowing growth’.

Now, what do you do if you’re selling something and you would like to sell more of it? Or, rather, what don’t you do?

A lot of things, potentially. But one strategy that I’m sure does not lead to increased revenues is making your product harder to purchase. Nevertheless, this is exactly what the newspaper people are doing.

I do not subscribe to any newspapers on actual paper. Not only does this tend to lead to a horrible mess in the house, but ‘home delivery’ here means that the newspaper gets left a little over a mile from the house.

I usually get my news online, but when I eat breakfast or lunch out, I like to buy a newspaper. Using a computer in a public place generally makes me feel like a complete tool, and besides, the hard-copy newspaper is a much, much better method of presenting information than a computer screen. I wind up finding a lot of stories in an actual newspaper that I would have missed online.

Alas, this really isn’t possible any more. In Front Royal, nearly all of the newspaper machines have now been removed. On the south end of town, there used to be a large cluster of newspaper machines outside the Food Lion, and another centrally located outside the post office. The machines at the post office disappeared a few months ago, and the ones at the Food Lion last week.

Not all that long ago, there were newspaper machines all over the place: on the curb at the grocery store, chained to street signs in the middle of suburban subdivisions, at bus stops, at the post office and near almost any other ‘official’ building, and outside just about all restaurants. No more: the newspaper vending machine is almost entirely extinct outside large urban downtown areas.

There are still a very few machines here and there in Front Royal, but to the best of my knowledge there’s only one machine left in town that sells the Washington Post, and, being the only Post machine in town, it’s generally sold out by 8:30 a.m.


This box at McDonald’s sells the Winchester Star. I have no idea how that got picked instead of one of Front Royal’s own two newspapers (only one, admittedly, is a daily), or the Washington Post or the Washington Times or anything else. The McDonald’s used to sell USA Today over the counter, but I have not seen them there for months. I’m not sure whether they have discontinued the practice all together, or whether they just consistently sell out by 8:00 a.m. and have never bothered to increase their order.

Today, if you want to buy a newspaper in Front Royal, you need to go inside somewhere. The best selections are at Martin’s (a grocery store) and a 7-Eleven on the north end of town. Both of them have the Washington Post and Times, the Wall Street Journal, the New York Times, Post, and Daily News, the Baltimore Sun, USA Today, Baseball Weekly, Sporting News, the local papers from Front Royal, Winchester, etc., and things like the Horsey Set Weekly or whatever the hell those papers are. Everything’s up to date in Front Royal.

If you go to the 7-Eleven, though, you will generally find yourself in line behind half a dozen people buying lottery tickets. Selling lottery tickets is one of the least efficient things the store does; I suspect that the process is deliberately slow in order to impress the rubes and to make the whole thing seem like less of a scam. It’s also phenomenally profitable, so there’s no real push to streamline the operation.

In short, it can easily take five minutes — not counting the time it takes to park your car, walk into the place, walk back to your car, and get out of the parking lot — to buy a newspaper at 7-Eleven.

And Martin’s is even worse, though for entirely different reasons. Like most modern grocery stores, there are two entrances. At Martin’s, these are at the north and the south ends of the store.

The newspapers are all located near the north entrance, oddly placed next to the Rug Doctor machines and the 15%-commission loose-change-sorting machine, beyond the cash registers.

The most efficient way to buy a newspaper at Martin’s is to enter through the north door, grab a paper, walk around the end of the row of tills, walk about 150 feet to the self-service checkouts (which are located next to the south entrance), scan your paper, insert your money at the (loud) prompting of the machine, and collect your receipt. At this point you can walk the 150 feet back to the north entrance and make your way to where you left your car in the parking lot.

In the grand scheme of things, this isn’t so bad: you have to walk 300 feet! To get news from all over the world for thrity-five cents! The horror!

But it’s incredibly complicated, and it fails utterly to take into account the way that people actually buy and consume newspapers. Few Americans visit the grocery store every day, and fewer still make a detour around the front of the cash registers to see what might be on offer there before they proceed into the store proper. The busy time of day for the grocery store is about 6:30 p.m., by which time the news in the paper is at least 18 hours old: can anybody guess why these newspapers don’t sell in large numbers?

Part of the problem — perhaps all of it — is that the newspaper companies do not actually sell newspapers to people directly.

You may have seen trucks roaming around that say ‘Hometown Star-Herald’ on the side, and the few newspaper boxes that survive outside of downtown areas all carry the same graphics, but these trucks and machines are, with very few exceptions, not owned by the newspaper. They’re owned by independent distributors.

Even if you call the newspaper’s circulation office to order up a subscription, you are not actually buying the newspaper from the publisher directly: they sell the paper to a guy with a van and a supply of long plastic baggies. He then throws the paper on your lawn every morning and sends you a bill. In most places, you will note that you pay your newspaper bill to ‘Hiram J. Bundy’ and not to ‘Hometown Star-Herald Co.’

The thing is, the guy who owns and fills the newspaper machines also sells newspapers to Martin’s and 7-Eleven, who sell them mainly in order to get people into their stores. The stores don’t want the newspaper machines around, and the newspaper distributor is only to glad to be rid of the machines and the headaches of theft, vandalism, and zoning that come with them.

So you wind up with newspapers being sold in ways that make no sense, and the newspaper companies appear to be either unaware of or uninterested in the problem. If I start to see the newspaper people take real steps to make their product simpler to purchase, I’ll suspect that they might be turning themselves around. Not before.

Posted by tino at 10:34 2.05.05
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The Baltimnore Sun saw one of the largest circulation drops in the country.

Here are exerts from their story:

Officials at various papers, including The Sun, say the reduced numbers reflect intentional cuts in circulation distribution, such as curtailing hotel and school promotions. The start of the do-not-call legislation in 2003 also dried up telemarketing strategies to gain and retain subscribers.


Newspapers across the country also said that new telemarketing laws that restrict telephone solicitations for business have also hampered circulation building efforts. Williams said that the declines had nothing to do with reader dissatisfaction with the paper. He said the company has introduced several new sections that surveys have shown readers are happy with.

and my favorite quote from the Sun’s self coverage of “Bloody Monday”

Williams said the company also halted discounting of the daily paper sold by street “hawkers,” another factor in the circulation falloff. The Sun also recently began dropping subscriptions of people who consistently didn’t pay their bills, he said.
“We brought our billing system in-house and stopped service to customers who had a history of nonpayment,” Williams said. “Before, delivery people would sometimes let people get behind on their payment.”

entire story at: Baltimore Sun: Circulation declines reported for Sun, other large newspapers

Posted by: Paul at May 3, 2005 10:31 AM

Huh, that’s interesting. I’d never noticed the disappearance of newspaper boxes before. I wonder how much they cost to maintain? I can’t imagine very much, unless vandalism or theft-induced damage is really that big of an issue.

Interesingly, while I never purchase a newspaper out of a box locally, I do with some frequency if I’m in a city.

Posted by: Ryan at May 5, 2005 01:54 PM