Newspapers in 2010: Another Bad Year, But the Bleeding Slows

The tourniquet is finally working on advertising and circ as publishers anxiously await NYT paywall, Murdoch's iPad “Daily”

The newspaper industry, devastated during the recession, had another bad year in 2010.

Overall, circulation for newspapers in the U.S. declined 5 percent during the six months ended Sept. 30, according to the Audit Bureau of Circulations’ Fas-Fax, the industry’s semi-annual scorecard.

Just one American newspaper — the Wall Street Journal — managed to increase its circulation during that period — up 1.82 percent. Some papers, like the San Francisco Chronicle (11.2 percent), saw its paid circulation take a double-digit tumble.

Through September, advertising revenue for newspapers fell 8.7 percent (to $16.3 billion) according to the Newspaper Association of America. And this, on top of the stratospheric print advertising collapse of 2009, when revenue fell nearly 30 percent to $24.8 billion — down from $34.7 billion in 2009 and the lowest overall total since 1984.

While job cuts moderated — with the Miami Herald and USA Today among those announcing the biggest cuts in 2010 — there were very few newspapers adding staff, doing little to replace the 14,000 jobs lost over the last four years.

There were also more figurative signs of the industry’s continued demise. Just last week, the Standard and Poor's S&P 500 index said it would drop the New York Times Company in favor of Netflix.

The Huffington Post’s website and its 26 million unique users (November, per Comscore) is on pace to overtake the New York Times (34 million in November) — and depending on which traffic data you believe (Quantcast says HuffPo has a bigger monthly audience) may already be there. And Twitter — with a new $200 million round of funding at a $3.7 billion valuation — is worth nearly double the Times’ publicly traded “enterprise value” of $2.03 billion.

And according to Ad Age, the Internet (including mobile) passed newspapers in 2010 U.S. ad revenue, "making the Internet the second-largest ad medium behind TV."

“I think 2010 showed the continued decline of an industry,” Ken Doctor, industry analyst and author of “Newsonomics,” told TheWrap. “Unless it makes significant changes, we’re in a death spiral.”

But 2010 wasn’t entirely bloody for newspaper publishers, either.

For one thing, electronic editions — long held up by publishers as their digital saviors – continued to become part of the circulation business. E-edition circulation was up 47 percent during six months ended in September. Last fall, 282 newspapers reported e-editions in their weekday average (totaling 1,577,732 electronic copies), according to PaidContent. In 2010, 445 newspapers reported e-editions in their weekday totals — for 2,314,815 copies, or an increase of about 47 percent. The Journal has by far the biggest electronic circulation, with nearly 450,000 getting an electronic version of the paper. The Detroit Free Press is a distant second (about 100,000), with the New York Times (71,697) third in terms of e-circ.

The NAA has yet to publish full-year advertising figures, but the decline in ad revenue appears to be slowing. Advertising dollars fell 7.1 percent industry-wide during the third quarter, following drops of 7.6 percent during the second quarter, and 11.4 percent during the first.

And based on the quarterly reports of several major newspaper publishers, 2010 was nowhere near as dire as 2009.

The New York Times said in October that while it saw a 5.8 percent drop in print advertising at the Times News Media Group, digital advertising — which now makes up 27 percent of the company’s overall revenue — jumped 14.6 percent during the third quarter. (The Times said it expects “modest” improvement in the print advertising market, and digital ads to continue to grow in the low double digits. But the company also warned investors that circulation revenues will continue to slide, and the price of newsprint is expected to increase.)

In November, News Corp. reported a 50 percent increase in profit from its publishing business during its 2011 fiscal first quarter — a $60 million bump it attributed, in part, to a 13 percent increase in advertising revenues for its newspapers — including the Wall Street Journal.

"The bloodletting has slowed a bit," Joe Strupp, senior editor at Media Matters and former longtime editor of Editor & Publisher magazine. "But so much damage had already been done that if there was any more, the industry would've collapsed completely."

Ken Doctor agreed. “Just because it wasn’t the worst year, doesn’t mean it wasn’t a bad year,” Doctor said. “The newspaper industry was the only medium that did not really recover in terms of advertising.”

Indeed, the most hopeful news to come out of the newspaper industry in 2010 wasn’t about 2010 at all — instead, it was about what awaits in 2011.

The New York Times announced way back in January a plan to charge for access to its website, citing a need to create a secondary revenue stream and finally get paid for online content. The Times said it will roll out its metered model in early 2011, though has yet to announce what it will charge users — a price point that the entire newspaper industry is anxiously awaiting.

The success — or failure — of the Times paywall could have far-reaching implications for other newspaper publishers mulling similar moves for their online sites.

News Corp.’s Times of London rolled out a paywall in July, and has seen its traffic fall through the floor as a result. (News Corp., however, recently boasted that despite the precipitous drop, and converting just 14 percent of its web readers into subscribers, the paywall is just months away from being profitable.)

“We want to remain open to the global web,” Times digital chief Martin Nisenholtz told the UBS Media and Communications Conference in early December, adding that the Times’ approach is “very distinct from the Times of London which has a hard gate and basically has shut 99 percent of its users out.”

The industry’s other major, 2011-eyeing move began this summer, when News Corp. chairman Rupert Murdoch began assembling an impressive team for The Daily, his much-anticipated iPad “newspaper.” (The Daily was supposed to launch before the end of the year, but News Corp.’s David Chase confirmed that it is pushing the launch date back until at least January.)

Murdoch is investing a reported $30 million in “The Daily,” and its staff of about 100 includes some high-priced editorial talent, like former Page Six editor Richard Johnson, New Yorker music critic Sasha Frere-Jones and former ABC News producer Steve Alperin.

“The Daily” and “The Wall” are undoubtedly the newspaper industry’s two biggest launches to watch in 2011 — and could foretell a big chunk of its future.

“I think 2011, there will be a hastening of the print-to-digital transition,” Doctor said. “With the tablet market, for the companies that can figure this out on the fly, there’s a big do-over in terms of digital advertising to be had.”

"People have shown a willingness to pay for mobile," Strupp said, pointing to the launches of several successful sports apps at the Herald and elsewhere as signs of newspaper publishers figuring it out.

Strupp added: "In the end, the success of the Times paywall and others, it's going to come down to money."