Now, as advertising revenue continues to fade, and companies raise subscription and newsstand prices, circulation revenue accounts for an increasingly larger share.
Gannett, for example, drew only 67% of its $1.027 billion in second-quarter newspaper revenue from advertising. That's down from a 76% share five years ago, according to Gannett's regulatory filings with the U.S. Securities and Exchange Commission.
Circulation revenue, meanwhile, was 26% during this year's second quarter, up from 18% in the same quarter of 2005, the filings show. (See table, above.)
To be sure, the biggest change evident over the past five years is the plunge in overall newspaper revenue. The second-quarter's $1.027 billion is down a whopping 41% from $1.739 billion in 2005.
The figures in this table are only for Gannett's newspaper revenues; they don't reflect the broadcasting division or CareerBuilder and other digital businesses. (Total second-quarter revenue this year was $1.365 billion. Five years ago: $1.936 billion.)
Yes, but at the same time circulation is becoming more important in Gannett's profit future, the brains that run this concern have been gutting circulation by discontinuing service to low volume stores, eliminating sidewalk news racks, and refusing to deliver to areas outside of the close-in advertising area. Just like computer clicks are the future for digital ads, so circulation is a key to the future of print. But they just don't care. Once again these grads of business schools are driving crazy policies that are made to look good on the profit-loss statement, but which are hurting the company in the long-run.
ReplyDeleteMoney is money, whereever you can earn it. If you can't get it from advertising, then get it from circulation.
ReplyDeleteCirculation, in theory, justifies ad rates. Historically Gannett has subscribed to the same principal that GM did..if we build it they will buy it because of who we are. Monopoly papers in each market made that viable for rate increase after rate increase, all the while with declining circulation.
ReplyDeleteThat model doesn't work any more. Now, after the horse has left the barn, Gannett tries to focus more on circ gains while alternative information sources continue to grow.
Good luck with that after pissing off readers and advertisers alike.
Isn't the real sign of trouble this very fact. If ad revenue trends outpace circ trends, advertisers have already given up on traditional media and aren't willing to spend as much in the online arena. Ergo model shakeup in the making. Hello Kodak.
ReplyDeleteCustomer service is declining. We send people to 1-800 centers of annoyance. Nobody home during critical hours at the papers. 2:34 p.m. is right. Where did corporate park their brains?
ReplyDeleteThe centralized circulation customer service is a nightmare for the clients. They do not run operate proper hours for everyon. I bet they could pay some unemployed people min. wage to work the hours the customers need them to be there.
ReplyDeleteDigital revenues are more important than ever to Gannett yet they are forcing AWFUL templated websites. They are clutterd, hard to navigate and just plain ugly.
Then new streams of revenue such as iphone apps for news are not allowed to be created because corporate is doing them. If the websites are any indication its going to suck and by the time the apps are out every other news medium in the market will have them.
I welcome these reports, not the least because they force corporate to recognize that this newspaper company is nothing without readers. Yes, in the past advertisements have provided the money, and so corporate could ignore readers, drop some who are difficult to deliver newspapers to, dismiss reader complaints, and turn over complaint lines to out-of-town complaint centers. But as Jim points out, readers are become a more important key to the future of this company than advertisers. Advertisers have been the king in the past. No longer. Corporate can no longer afford to ignore readers.
ReplyDeleteYour going to be seeing the same thing for magazines. The net is taking away to much ads. Expect to see 10 dollar tv guide and your favorite monthly twenty.
ReplyDelete