Advance makes its move on Cleveland

Perhaps raising subscription prices is the way to go. I don't know. They evidently think they can make money on rack sales, or they're willing to take those losses. I don't know the costs of that relative to home delivery.
I would think (but I wouldn't bet) that subscription prices would have to drop by about half after they cut back delivery. And I'm guessing that a lot of subscribers are just going to say "Screw it--if I can't get it every day, the hell with it." Especially when it means they can't get all their Browns stuff on Monday mornings in the fall.
I know that as loyal a newspaper person as I am, if one of my papers randomly stopped delivering more than half the time, but yet the paper was still in the racks, I'm not going down to the mini-mart for a paper four days a week. Their circulation's going to fall like a rock, and so will their ad rates. And despite all the pie-in-the-sky crap about tablets being the future, ads in the paper are still paying most of the bills.

 

They will. And the response of "But it's online all the time, updated, daily, just a different format" won't matter to a lot of them, either.

 

I suppose yet another option is to copy Aaron Kushner in Orange County: Hire dozens of journalists, add pages, add editions, charge for all internet access, and treat your print subscribers as the center of your universe. It's journalist heaven, but even Kushner will pull the plug if he can't find enough new print advertisers to cover the millions in additional costs he has taken on.

 

The Detroit papers have been doing this for about four years now (since March 2009). Home delivery on three days, newsstand seven days.

As far as content, the news stand only days are slightly smaller, but content hasn't hugely suffered (as opposed to suffering from other cutbacks).

 

The Detroit papers on non-delivery days are about 30 pages. I know in other Advance markets the newsstand editions are 16-18 pages.

If what Cleveland gets on the non-delivery days is closer to Detroit, this might work. The Monday edition might be slightly bigger in Cleveland during Browns season, at least. Time will tell.

 

From the article.

"The Northeast Ohio Media Group, a new digitally focused company, will launch later this summer to help meet the rapidly changing needs of our readers and advertisers. "

Is the new company a way to set up a non-union shop and fire many of the exisiting, more expensive staff?

 

This post shows absolutely no understanding of how newspapers make the little money they do make or a blatant disregard for it. Not sure which.

 

Then please let us know how they do make their money.

 

Papers haven't made money on subscriptions for decades. They lose money because it raises their subscriber base. More subscribers means higher ad rates. So, while they lose money on the subscription side, they make up for it on the ad side.

While print advertising has declined in recent years, making a move that would lower subscribers doesn't make sense because, bottom line, print ad rates are still where papers make most of their money.

You're right that in some cases the solution is to raise rates. You'd probably lose fewer subscribers, so ad rates wouldn't fall. Maybe I'm wrong, but dropping to three days delivery would make a paper hemorrhage subscribers in a lot of markets, which would mean lower ad rates.

It seems like Advance is taking quick savings through layoffs and less cost for printing the product (which FAR exceeds the cost of delivering it in a lot of markets) by cutting days. I can't see this as a long-term solution to their problems, though, unless their intent is to shrink the paper's reader base enormously to justify a smaller product and even more staff cuts.

 

Same format as in Louisiana and Alabama. Create a new company, effectually shut down the old one and fire everyone, then 'invite' some to come or stay and also hire new people.

 

I agree fully with this decision. The more obstacles you put in someone's way in getting a print copy, the more valuable they'll find the final product. If Advance made papers available willy-nilly seven days a week to anyone who bought a subscription, everyone'll think they're cheap and easy.

They should also raise the price and - quite possibly - switch to editions published only in German.

 

. . . which is exactly the point that I made, rather at length. Subscribers have had their print habit subsidized, which means advertisers, not subscribers, paid for it.

Once upon a time, yes. But as the links in my previous post indicate, ad sales have been on a steep decline for 7 straight years. 2012, it turns out, was a banner year because <a href="http://newsonomics.com/naas-new-revenue-report-been-down-so-long-looks-like-up-to-publishers/">the drop was "only" 2 percent</a>. More subscribers used to mean higher ad rates. But that was only because advertisers were captive to newspapers. They had no other place to go, other than local TV. Now they have a zillion other places to spend their ad money, such as Google Ad Words. Today Google, which barely existed a decade ago, alone collects more than twice the amount spent with all American newspapers for print and digital ads combined.

Your local paper might have a million subscribers. It might have 100 percent of the market. Every last man, woman and child old enough to read might have a fully paid subscription in their own name. Does that mean you're going to buy a classified ad in your local paper when you need to sell your baseball card collection? No. You're going to use Craigslist. Why? Because it's free and because you're likely to have a buyer calling you up within 10 minutes of placing the ad. Why in the world would you spend $150 on a classified just because the paper has high circulation? You can sell your cards for free, or you can sell your cards after spending $150 on an ad. Ask anyone who works with you in the newsroom about the last time they bought a classified ad. They'll laugh in your face.

Saying print advertising has "declined" in recent years is like saying the Titanic felt a bump somewhere. It took a century for annual advertising revenue to reach its high point in 2005. Today, just 7 years later, the annual spend on newspaper advertising is <a href="http://newsosaur.blogspot.com/2013/04/newspaper-sales-skid-for-seventh.html">down by more than half</a> from its high point. That's a free-fall.

Print ads still pay the lion's share of what's left of profits. And they do because 1) newspapers have laid off more than a third of their employees, lowering the bar that must be exceeded to become profitable, and 2) newspaper companies have not been able to grow digital advertising revenue nearly fast enough. Print ad revenue is the largest slice of a much smaller pie. The fact that print ad revenues still account for the greatest share of profits is damnation by faint praise: It's more of an indictment of the failure of newspaper companies to make digital ad revenues their primary source of income.

Sum it up: print advertising continues to decline (much faster than circulation decline) and digital revenue is not making up for the loss. That overall downward revenue trend will mean more layoffs at some point, unless something is done.

No one's disputing that print ad revenue remains the main source of newspaper income. No one disputes the aircraft remains your primary source of oxygen as it nosedives into the ground.

Which brings us to . . .

But ad rates are already falling -- not because of fewer subscribers, but because of greater competition from digital advertising alternatives. The jury is in: For most advertisers, targeted digital advertising costs less and is more effective than mass-market print advertising, regardless of subscribers.

No, you're probably right that it would depress circulation, and that advertisers would press that to their advantage.

But the publisher's alternative -- continue flying the plane into the ground -- is even worse. Newspaper companies need new sources of revenue in an environment where advertisers have fled in a thousand different directions -- not because of lower circulation, but because they can. Advertisers have alternatives now. It's a buyer's market. Prices are dropping. Yet it remains supremely expensive to fill up a printed newspaper every single day of the year and deliver it to driveways. The issue is, who pays for it?

Of course. Legacy printing/distribution costs are the iron albatross around the industry's neck. Advertisers used to bear the greatest share of this burden. Advertisers have left the building.

Pissing off paying subscribers is a very uncomfortable business strategy, to put it mildly. But their anger doesn't change the reality that to continue to print a newspaper 7/365 is a tremendously expensive proposition. Their anger doens't make it any cheaper to produce the paper. Somebody needs to pay that bill. Advertisers have stopped paying more than half of it.

That leaves subscribers. Their bills must go up, or their portion size must go down (or the company must find new revenue streams, such as marketing services). That's just plain math, as discouraging as it may be. Advance has chosen to reduce portion size. If Advance can keep enough subscribers, and if it can collect enough ad revenue while it devises new streams of revenue, it at least has a theoretical path to continued operation.