Stop The Press!

American Demographics, July 1, 2003 by Peter Francese

Byline: Peter Francese

Newspaper publishers have heard rumors of their imminent demise again and again. It's always about new media rising up and devouring the good old broadsheet: first radio, then television. And for the past few years, the Internet was thought to be endangering newspapers' ability to thrive, just as many have viewed e-mail as the Grim Reaper for the Postal Service.

Well, not so fast. Lots of dot-com enterprises have gone to their grave, but the Postal Service is still delivering the mail, and most - if not all - newspaper publishers continue to operate profitably. As a dramatically deregulated media environment plays out over the next 18 to 24 months, it's newspaper companies that are likely to acquire radio, TV and cable-distribution outlets as they lock in local market dominance.

The newspaper industry certainly has its share of problems, credibility not the least important of them Still, what the Internet gurus have failed to recognize fully, up to now, has been the bond between a community and its newspaper and the ability of creative publishers to adapt to change.

Nevertheless, daunting demographic trend lines and the rapid spread of broadband into American homes suggest that newspapers have to step up the pace of their adaptation to change. They must formulate new content and distribution strategies to meet the evolving needs of readers and advertisers.

Here are the demographic red-flag warnings challenging newspaper publishers today.

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One-size-fits-all content: Putting out a single edition for all readers fails to address increased diversification in demographic and lifestyle segments. "Communities" need to be redefined beyond geographic market designations.

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Workplace information access: One in every two workers has Internet and publication subscriptions at the office, competing with local papers.

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Women at the office: 70 percent of married women with children are employed, the Census Bureau reports. That translates into less time, less need for newspapers as a smart shopping tool.

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Aging Boomers' second homes: Sunday papers can't reach these readers if they are not at their main abode.

And the reddest flag of all for last:

*Young readers, missing in action.

A newspaper that tries to serve all households in a metropolitan area may find that more households in the inner city are likely to consist of recent immigrants who cannot read an English-language paper. And at the same time, more suburban households may be in gated or condominium developments that provide most municipal services, thus weakening their ties to the larger community.

Older people, an important category of newspaper readers, are also exhibiting more diffuse community ties. It has been assumed that as Baby Boomers got older, they would settle down in one place and subscribe in large numbers to a local paper, much as their parents did.

But older empty nesters today are much more likely to own a second home some distance from their primary residence and to spend their vacations or holidays or weekends at this haven, away from their community newspaper. The market segment most likely to subscribe to a local paper, retirees, is also the segment that in the Northeast or Midwest is most likely to go south for the winter.

The most ominous trend for the newspaper industry, however, is the steep decline in readership among young adults. The worrisome aspect about this is that by the time these young consumers reach the age where people used to start reading a paper, they may have found alternative sources for their news and local information and may never feel the need to subscribe to their local newspaper.

Consider that in 1985 nearly two-thirds of the 25- to 35-year-old respondents to the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey said they had recently bought a newspaper. But by 2001, only one-third of respondents in that age group reported any spending on papers. Most of that decline occurred in the prior six years.

Between 1985 and 1995, the share of households that bought one or more newspapers slipped only 4 points, to 63 percent from 67 percent. From 1995 to 2001, the BLS reported a far steeper drop, this time by 20 points, to 43 percent. If the trend continues, newspapers will reach the point where they will no longer be the dominant voice in their community, but just another niche media.

Speaking of niche media, the BLS reported that in 1995 household spending for an Internet connection ("computer information services") was trivial. But by 2001, it found that households headed by people under 65 spent, on average, twice as much for Internet services as they did for newspapers.

Newspapers have countered this trend by building robust Web sites, many of which have become the most visited sites in their community. But freely posting the same content that print subscribers or single-copy buyers are expected to pay for is contested wisdom.

Proponents of free local newspaper content believe that introducing young people to the publication's brand, and getting them to rely on it for their local news and information, is more important than trying to make money charging a few users for Web content. Proponents of the free Web content strategy appear to be winning the debate.