Newsonomics author Ken Doctor finds that newspaper companies are turning to higher prices for the paper itself to battle revenue declines, rendering the traditional 80/20 ad-circulation split obsolete. And the ones that are doing it well are getting away with charging readers more because they’ve made their papers better, he says.
“While the digital news world seems consumed with conversations about paywalls and memberships, it is old-fashioned print circulation revenue that is the gainer in the post-80/20 formulas,” Doctor writes for Nieman Journalism Lab. “Sure, advertising’s ski slope decline has greatly altered the 80/20. So has, though, the significant up-pricing of both subscriptions and single copies over the past three years.”
A leader in the trend is apparently The Dallas Morning News, which raised the price of monthly subscriptions from $18 to $30 and is earning 38 percent of its revenue from circulation, 54 percent from advertising, and 8 percent from “contract printing plus,” he says.
The Dallas paper’s parent, A.H. Belo, reported a 6.6 percent increase in circulation revenue in the second quarter, while The New York Times Company reported a 3.2 percent increase and Scripps had a 4.5 percent increase in the first quarter (Scripps’ 2Q report is due Monday).
“Significantly, I think, each of those companies may have done a better job of minimizing newsroom cuts and reinvesting — at least a little — in that now higher-priced product,” Doctor says.
Better than whom? Better than McClatchy, which reported a 2.5 percent circulation revenue decline in the second quarter (and has raised prices); Lee, which was down 4.4 percent; and Gatehouse, which was down 2.5 percent.
Doctor has the current splits for each of the four publishers, and for McClatchy, the one we follow, it’s pretty much the newly declared old-hat model of 20 percent circulation, 76 percent ads and 4 percent other.