Thursday, December 15, 2005

Decline of the Daily

It’s only a sign, but it is also a sign of the times.

Workmen were dangling from the side of the big white “Charlotte Observer” building on South Tryon Street May 13 adjusting the words “” next to the familiar gothic script of “The Charlotte Observer.”

Elevating the Web site to the same position as the paper was a significant step, according to Philip Meyer, a University of North Carolina-Chapel Hill professor and the author of the recently published “The Vanishing Newspaper.”“Daily newspapers are dying,” said Meyer. “They’re still making lots of money, but that won’t last,” he said. “According to my calculations, based on trends I’ve been studying from the National Opinion Research Center, the last everyday reader of a daily newspaper will completely disappear in October 2044.”

So the “Observer’s” elevation of “” to a place beside what was once one of journalism’s proudest names is a graphic indication of changes that have been taking place, and are to come. Changes that now even leaders at the major daily newspapers across America – including the “Charlotte Observer” – openly acknowledge. These questions, however, remain: What, exactly, are these changes? What caused them? And what will they mean for the cities – including Charlotte – that these newspapers serve?

What’s Going On?

John Morton is arguably the most influential and most often quoted analyst of newspapers in the country. And he says that 1987 was a defining year for the daily newspaper industry. “As a percentage of the adult population, newspaper readership had been going down since the early 1960s, but the actual number of readers had held steady because of population growth and demographic shifts to major cities,” he said. “But 1987 was the first year that the actual number of readers declined.”

Morton said that for many years, newspaper publishers viewed the trend as “troubling, but not critical,” in part because during the 1970s and 1980s the afternoon daily newspaper was disappearing in most markets, including Charlotte, and the remaining daily paper could exercise more control over advertising pricing. And cable television and FM radio were creating chaos in the electronic media. In Charlotte, in 1970, there were only three major commercial television stations, and almost everyone listened to AM radio only. WBT-AM had more than 40 percent of the radio listener market. Today, it is still the leading station in the market (total listenership), but the latest Arbitron rating showed it with less than a 7 percent market share.

“Newspapers can still claim to be a mass medium,” Morton said. He acknowledged that only about 40 percent of households in most major markets take the daily paper – down from 80 percent in the 1960s. However, he said, “they tend to be the most attractive 40 percent.”

But Philip Meyer says that daily papers are reaching a “tipping point.” Meyer admitted that it was easy to claim to be a mass medium when you penetrate 80 percent of households. It was possible in that environment for newspapers to offer “one stop shopping” for advertisers. “You can buy an ad with us and reach the entire market,” Meyer said. And both Meyer and Morton say that this claim of being a mass medium – especially the claim to be the only mass medium – is critical for daily newspapers, because it allows them to set the price of advertising.

“This is the reason,” according to Morton, “that newspapers have been able to maintain 20 percent profit margins with declining readership.” And he said that Knight-Ridder, the “Observer’s” owner, usually beats the newspaper industry average. But that era is over, virtually everyone now says.

Mark Ethridge, who was managing editor of the “Observer” from 1979 to 1988 and now publishes “Charlotte Parent,” said Knight-Ridder, the publicly traded company that owns the “Observer,” “still believes the ‘Observer’ is a mass medium, but it can’t be described as a mass medium if the masses don’t read it.”

Desperate Times, Desperate Measures

Of course, the “Observer” isn’t the only paper feeling these pressures. According to the “American Journalism Review,” the “Observer” was part of the two-thirds of daily newspapers that lost circulation during the six months ending Sept. 30, 2004. And even the numbers that get reported are becoming increasingly suspect. The “Dallas Morning News” is embroiled in a scandal in which it has allegedly padded its circulation numbers. In the aftermath of the scandal, the paper fired 150 employees, including 65 in the newsroom.

The “Observer” has been responding with less draconian measures, but no less desperate measures. Stories are often labeled “Exclusive” in bright red letters, though often these stories are originated by local public relations firms and are leaked to the “Observer” before the rest of the local media so the “Observer” will give them bigger play (see related editorial on page 29).

“I certainly wouldn’t call them ‘exclusives,’” said UNC-Chapel Hill’s Philip Meyer. “Scoops, maybe.” Meyer calls the labels a “sign of something generally wrong with the newspaper. They’re trying to get something for nothing.”

But perhaps the most desperate measure of all is what the papers themselves think of as a kind of salvation: the development of younger readers. According to John Morton: “The fundamental problem is that young people have never been avid newspaper readers. But historically they reach an age when they take it up. That’s not happening now.”

Meyer says that today, when young people reach an age that they want to be more informed, they’re already comfortable with alternative media, especially the Web.“But traditional papers have been reluctant to develop new web products that will intentionally cannibalize their current products,” Meyer said. “That’s an emotionally difficult thing to do. Even those who are doing it are sort of half-hearted about it.”

That’s why the “” sign going up on the “Observer” building was so significant. But it’s also why the media market – both locally and nationally – will continue to fragment. “Advertising on the web is different than advertising in print,” Meyer said. The daily newspaper model is built upon aggregating the largest possible audience and then selling it to advertisers. Advertisers knew that there were lots of people who wouldn’t be interested in their ad on any given day. In fact, there’s an old joke: “I know I’m wasting half my advertising dollars, I just don’t know which half.” But that joke is no longer funny, because the audience is no longer large enough to support that kind of inefficiency.The Web has the ability to aggregate audiences temporarily around a particular story, and the advertising can relate to the story or the user profile. And advertising on the web is “pay for performance,” not pay for market position, which is the daily newspaper model.

John Morton sees the problem slightly differently. He thinks print has a bright future, but it will be a future that looks different from the past. He notes that weekly, alternative newspaper readership has been going up since the 1970s. He points to the “DC Examiner,” a new daily paper in Washington, which delivers 200,000 copies of a free 64-page tabloid newspaper each day, and is being bankrolled by billionaire Philip F. Anshutz, who has bought the “Examiner” name in 62 other markets, including Charlotte.

“The problem is not print, per se,” Morton said. “There’s been talk for decades about a paperless society, but there’s more paper than ever. The issue is fragmentation. Print is not dead. Mass media are dead, or at least dying.”

That thinking was partly behind Mark Ethridge’s decision to leave the “Observer” and ultimately become publisher of “Charlotte Parent,” which now owns sister publications in the Triad and in Raleigh. “The market is moving our way,” he said. “It’s a niched world. Knight-Ridder clearly understands that, and they periodically mimic niche publications. But they have a huge investment in the 'Observer' as a mass medium. And the 'Observer' still is the biggest thing around, but things are changing fast.”

Observing The Observer

Some are concerned about what effect that will have on journalism, both locally and nationally. An indication of that change took place on May 2, 2005, when Managing Editor Frank Barrows announced he would be leaving. It was a significant event, said Mark Ethridge, because Barrows was one of the few remaining staff members with active, hands-on involvement in the stories that won Pulitzer Prizes for the “Observer” back in the 1980s. He was, Ethridge said, a major link to the high-quality journalistic tradition of the paper.

For years, John Morton said, the “Observer” and other dailies have been cutting the “news hole,” that part of the paper dedicated to news and analysis. The “Observer” cut the size of the page nearly a decade ago to reduce paper costs. It has increased the size of the print, an acknowledgement that its readership is aging, which also reduced the length of most stories. There are fewer pages dedicated to news. Over the years, Barrows had been troubled by these changes, changes that all papers were making, but which Knight-Ridder makes more quickly because it is more sensitive to Wall Street than most other media companies. Because it has only one class of stock, the company is potentially vulnerable to takeover, said media analyst John Morton. He said that Knight-Ridder papers have not hesitated to cut newsroom costs to keep margins high. Morton said most publicly traded newspaper companies have net margins of about 20 percent. But Knight-Ridder papers are pressured by senior management to bring much more than that to the bottom line. Former “Observer” employees and other who have had access to “Observer” financial information, say the paper is used to margins in the “high 20s.” Morton said he did not know specifically about the “Observer” situation, but he said that managing editors are often advocates for the newsroom staff with the rest of senior management. “Managing editors [often] get canned for resisting cost cutting measures with good grace,” Morton said.

Barrows himself would not say whether business pressures played a role in his leaving. “I don’t want to say anything about my experiences on that point,” Barrows said. When asked whether his leaving was his decision or the “Observer’s,” he was likewise circumspect: “I’m not going to comment on that.”

Peter Ridder, “Observer” publisher, downplayed the departure, even saying that the managing editor position was not a “top management position.” That comment, when it appeared in the “Charlotte World,” outraged current and former “Observer” staffers, some of whom e-mailed and called the “Charlotte World,” though few wanted to be quoted on the record.

Ridder denied that stock price and profit margins are driving decisions in the newsroom. He bristled at the suggestion that the fact that his name is “Ridder” and that his family owns significant stock is a factor. “I own less than one percent of the stock,” he said. John Morton is unconvinced by that denial. “Tony Ridder [the chairman and CEO of Knight-Ridder and Peter Ridder’s brother] has been very clear that they want to keep profit margins higher than the industry average. That means cutting costs in the newsroom.”

Liberal Bias?

One of the ironies in the decline in readership at the “Observer” and in dailies in general is that most of them are spending millions of dollars on focus groups and market research, but are somehow “tone deaf” to what their markets are saying.

This disconnect was no more evident than in 2002 when Peter Ridder met with representatives from the national Gay & Lesbian Alliance Against Defamation and Equality North Carolina PAC, a political action committee representing gay, lesbian, bisexual and transgender people. The groups wanted the “Observer” to run ads for gay and lesbian couples, and Ridder ultimately decided to do so, though since 2002 only one such advertisement has ever been run, so it is difficult to make a case that the market was asking for it. To conservatives and Christians in the community, it seemed a clear case of promoting an ideology at the suggestion of a few gay activists.

At the time, Northside Baptist Church Pastor Dan Burrell organized a meeting with Ridder that included pastors from some of the area’s largest churches. Burrell called the conversation “very cordial, but very pointed.”Burrell said that the purpose of the meeting was to “express our collective concern” about the “Observer’s” decision and to communicate to the “Observer” that the “leadership of the faith community won’t sit passively by while we see traditional family orientations dismantled by extremists.”Many conservatives cancelled their subscription to the “Observer” over the issue. Though the “Observer” would not say how many, since that meeting, the paper’s daily circulation has fallen by nearly 10,000.

Today, Ridder denies that a slide to the left has been responsible for any of the “Observer’s” woes, though he does not deny a liberal bias. “Everyone is biased,” he said. “I would say we are moderate to left of moderate.” He said that “Observer” endorsements of Ruth Samuelson and Pat McCrory, both Republicans, indicate that they are balanced.

So is there any validity to the idea that the “Observer” and other dailies, because of their long-standing monopoly position, have gotten liberal and arrogant and are simply not good matches for the communities they serve? Ridder: “Well, ‘any’ is a big word. I would perhaps put some credence in that theory. But we do not have a liberal agenda.”

John Morton agrees with Ridder on this question. “Liberal bias could have some impact,” Morton said. “But the overriding factors for the decline of the daily newspaper are technology and demographics.”

The Future

No one the “Charlotte World” talked with for this story believes that the daily newspaper will disappear soon. But almost all of them acknowledged that the daily newspaper is now a niche medium, just like all other media, and that this reality is irrevocable, and will change both journalism and the American culture.

But UNC-Chapel Hill’s Philip Meyer says it’s a change that will be to the good. “The downward slide in readership of the dailies will get steeper,” Meyer said. In fact, he said he believes that the “last everyday reader” of a daily paper will disappear long before October of 2044, which is where the current trend line points. “But that’s not a bad thing,” Meyer said. “The market will work its will, and the dailies will have to decide if they want to harvest their current market position until it erodes completely, or if they want to invest in the future.”

(Originally published in "The Charlotte World": 6/2/2005)