Newspaper publishers continue to hope for a break in the plunge of their revenue. Based on information from publicly traded newspaper chains, revenue dropped at a rate that approached 10% in 2018 and has headed in the same direction this year. The depth of the trouble was reinforced today when Pew Researched released a study showing that 27% of America’s large newspapers cut staff last year.
Pew defined large newspapers as those with Sunday circulations over 50,000, and 97 daily papers were in that category. The 27% figure layoff number was down from 32% in 2018. However, that is not entirely good, as Pew points out:
The specific papers with 50,000 or more Sunday circulation can vary year to year, but the vast majority (85%) fell into this category in both years included in this analysis. Of these, 9% had layoffs in 2017 and 2018. In other words, the papers that experienced staff losses in 2018 were for the most part different from those that did in 2017, widening the span of outlets with depleted staff.
Some papers had more than one layoff in 2018. Thirty-one percent of the papers fell into the multiple layoff category.
The primary cause of the problem is no longer just a falloff in paid print circulation and print advertising. Digital advertising increases have slowed at many newspapers, and in some cases they have flattened. One reason for this is that Google, Facebook and Amazon get nearly 70% of the digital advertising run in the United States. This leaves hundreds of large websites and portals to fight for what has become shrinking digital market share because of the growth of these three tech companies.
Newspapers have turned to digital subscriptions as their final large source of revenue to stabilize themselves financially. Several newspaper companies have announced increases in digital subscription counts over the past several years. However, with the exception of a very few papers, total digital subscription numbers are small.
There is evidence that many subscribers have not renewed or have canceled their digital subscriptions. The most recent sign of this is a report on the digital subscriber trouble at the LA Times, among the largest newspapers in the country. The LA Times has another advantage. It is in the country’s second-largest city. The Los Angeles metropolitan statistical area has a population of 13.3 million people. The stated goal of management was to get paid digital subscribers from 150,000 to 300,000 this year. Executives at the paper said this week that it had added 52,000, but only posted a net increase of 13,000. According to nonprofit Poynter, which provides education to journalists, the reason for the shortfall was “significant cancellations during the same stretch.” In a note, the paper’s top editors wrote, “Performance for the first half of the year … has been disappointing.”
The trouble in Los Angeles means only two newspapers in the country have had significant success in terms of gaining large numbers of digital subscribers. The New York Times had 4.5 million digital-only subscribers at the end of its first quarter. Most of these were to the paper itself, although several hundred thousand buy other products such as the Times Crossword. Management’s goal is to have 10 million paid digital-only subscribers by 2025. The other daily newspaper that has had success with digital subscriptions is the Washington Post, which is owned by Amazon founder Jeff Bezos. The paper does not give out numbers. Industry experts put the figure at above 1.5 million.
The conventional wisdom about paid digital subscribers is that their growth is based on the quality of the newspaper product offered to consumers. As newspapers cut staff, that quality drops. As the quality drops, people are less likely to renew their subscriptions. Although there is no conclusive proof this is true, most of the current data point to the accuracy of the theory.
There is no reason to think that the layoff trend is over or that it will slow. Margins at most larger dailies continue to drop. Some papers have started to lose money. That leaves them with layoffs as one of the few ways they can lower expenses.