Industry Insight: Legal Ad Revenue Will Disappear Soon Unless Newspapers Innovate

By: Matt DeRienzo

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An important battle over open government and the public’s right to know, or a debate that exposes the newspaper industry’s hypocrisy and failure to innovate?

One could argue that a recent battle over paid newspaper legal notices in New Jersey was both, and it has huge ramifications for the rest of the country.

Fresh off getting kicked around in the press during a failed presidential bid, snubs by the Trump administration, and a major scandal involving his role in blocking traffic to the George Washington Bridge, Gov. Chris Christie backed eliminating the requirement that municipalities place paid legal notices in local newspapers.

Newspapers suggested it was Christie seeking retribution for unfavorable coverage, which is probably true.

They said that trusting municipalities to post legal notices on their own local government websites instead would lack right-to-know safeguards and reach fewer people. No doubt, true.

But industry leaders also argued that the move would be a financial disaster for New Jersey newspapers, likely leading to the loss of further reporting jobs. This is also true, and very troubling to those who see a vibrant press as crucial to democracy. But it is also where their argument goes off the rails.

If it’s about the money, Christie argued, doesn’t this amount to a taxpayer subsidy of private business? Putting the legal notice matter aside, would publishers really stand up and say that the press in America should be funded by government?

And make no mistake, as much as the argument is framed in terms of right to know and government transparency, it really is about the money. In New Jersey alone, it’s $20 million a year, according to the industry, and $80 million, according to Christie.

When is the last time Gannett published a front page editorial in all of its New Jersey newspapers, as it did over the legal notice debate, to support a Freedom of Information Act or government transparency issue that didn’t also relate to a significant amount of advertising revenue?

And if it’s about the right to know, what are newspapers doing to make sure that these legal notices are seen by as many people as possible?

As legal notice revenue has been threatened by similar legislation in other states, newspapers have made a feeble push to make sure notices are online as well, but I’d challenge you to pick any random local newspaper and actually try to find them.

And over the years, even as print circulation and reach have shrunk dramatically, the newspaper industry has fought proposals to broaden the language for legal notice requirements to include online-only news organizations.

Arguing that legal notices must appear in a print publication is only about revenue for publishers (and not all publishers—only print publishers, and only the print publishers who have the legal notice business in a given community).

That being said, there are compelling and crucial-to-democracy arguments in favor of paid legal notices.

The average citizen doesn’t go to his or her town’s website to look for information they don’t know is even going to be there on any given day. The basic concept behind requiring that legal notices be published is that the public will, while thumbing through the sports section, see the notice that a fish-rendering plant has been proposed for their neighborhood, or that their tax dollars might be spent on a new truck for the public works director.

Politicians’ argument that legal notices are an undue burden on taxpayers is a straw man. A more transparent government almost always equals better government, and taxpayers save exponentially more in the corruption and waste that are avoided when people are watching and holding public officials accountable.

In Connecticut, former Gov. John Rowland went to prison for accepting gifts in exchange for steering government work to certain contractors. Many believe that he pushed through major, unnecessary public infrastructure projects, including a new youth prison, to create taxpayer-funded contracts for these businesses. A properly published $200 legal ad, in some cases, can save tens and hundreds of millions of dollars of taxpayer money from being wasted or stolen.

If it was about government transparency and the right to know, newspapers would be using all of the technology available to them to increase the public’s exposure to legal notices.

One could argue that local governments and newspaper publishers have been complicit in avoiding this. Politicians don’t want the extra scrutiny or public participation that more effective legal notices would bring. Newspapers don’t want to lose print ad revenue by supporting a system that would utilize better technology.

When I was director of news for the old Journal Register Co., it operated a group of weeklies in southern New Jersey that included a title or two with print circulation of less than 1,000 that generated more than half of their revenue from legal notices. My theory at the time was that local officials chose those particular weeklies so that as few people as possible would see the ads.

The argument against changes like the one proposed in New Jersey becomes increasingly difficult to make. That revenue is going to go away—if not this year, soon. And the only way to save it is for the newspaper industry to be proactive, to disrupt its own print legal ad system, and come up with a smart, online model that improves government transparency instead of simply protecting its own revenue.

Matt DeRienzoMatt DeRienzo is a newsroom consultant and a former editor and publisher with Digital First Media. He teaches journalism at Quinnipiac University and the University of New Haven in Connecticut, and is interim executive director of LION Publishers, a trade organization that represents local independent online news publishers.

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Published: February 20, 2017

7 thoughts on “Industry Insight: Legal Ad Revenue Will Disappear Soon Unless Newspapers Innovate

  • February 20, 2017 at 6:22 am
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    A municipal website does not put legal notices into the hands of stakeholders. Same goes for most online newspapers unless they can claim subscriptions to area stakeholders. Newspaper door to door does.

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  • February 20, 2017 at 6:45 am
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    Having been in this fight for over 30 years now I truly understand the issue better than most journalists wh tend to write about it. The first real problem with the government putting all of their legal notices on a government web site is it forces the public to search for information they don’t even know is out there. The people most likely to care are journalists and lawyers. The bulk of newspaper “public notice” or legal ad revenue does not come from the government. It comes from foreclosure notices, calls for bids, and court filing notices intended to make sure the public is aware of custody battles, estate sale notices, etc. The government portion of my legal notice business is less than 5% of all legal notices and generally accounts for less than 1 tenth of 1% of any local government budget I have reviewed. Local governments should be required to publish more local notices not less. This is clearly about transparency and publishing local newspapers. Despite what they want you to believe publishing their legal notices on the web is not free. In fact most government agencies have already spent a small fortune to build a public web site that has little or no readership. What newspapers need to do is recognize we live in a multi-media world and print is no longer the only way to reach our readers. They need a strong website – mine are getting 3-4 times the readership of my print products. The formula is simple – outsource your printing and as much of your production as possible. Hire good journalists and ad sales staff. Make your products locally indespensable. No one else can provide the information better.

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    • February 21, 2017 at 8:52 am
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      I agree with this assessment and would add that simple audience metrics would make the case for printed forclosure notices being more important than ever. The proliferation of millions of new “channels” to consume on the web and on tv has divided the large internet and tv audiences into millions of fragments. This leaves printed newspapers as the last mass media option for fulfilling the legal notice laws intent.

      Most local daily newspapers have a 30-50% reach, which, when compared to any other single media outlet is a massive audience. Newspaper people and legacy media execs see this as a huge failure of the industry (down from as high as 90%) but, if we were to launch a start up that had this level of penetration we would be seen as geniuses. Major web players like Facebook, Google, Instagram, SnapChat and many others all have better audience figures but none of them can be used as a messaging system that has a broad reach. By design, they are targeted (nano targeted???) media outlets.

      The base argument to keep this revenue stream is to continually point out that fragmentation of the audience channels simply reinforces the logic to print these in the local paper so as many as possible have equal,access to the information.

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      • February 21, 2017 at 11:13 am
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        Just putting it out there because it is bound to happen one day soon … Facebook has the reach AND the targeting capabilities that could greatly improve delivery of legal ads to the people they are relevant to. All they’d have to do is turn it on. If newspapers want to avoid this disruption, they need to start from scratch with the idea of using legal notices as a way to inform people in the best way possible and hold government accountable and make it transparent. Legal ads primarily in tiny type in print classified sections and in hard-to-find corners of websites wouldn’t be the solution if that truly was the mission.

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  • February 20, 2017 at 7:07 am
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    “Unless Newspapers Innovate” – I take issue with this. What haven’t newspapers done or tried? Website – Got it. Twitter – Got it. Mobile – Got it. Facebook – Got it. Instagram – Got it. And on and on and on. What that statement means is “Unless Newspapers Give Up” plain and simple.

    Sadly, now that “big money” has bought so much media, it’s going to be hard to do what needs to be done. There really is no argument that the internet has wreaked havoc on newspapers. If the internet was gone tomorrow, newspapers would thrive. But it isn’t going to be gone, it’s going to keep turning into Opinion Driven Propaganda “News” which is horrible for all citizens. It must be stopped.

    I feel that newspapers, true fact-driven journalistic newspapers, need to distance themselves from the joke that the internet has turned news into.

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  • February 20, 2017 at 7:36 am
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    In Illinois, the state press association oversees the posting of every legal notice printed in Illinois newspapers on a single, statewide website.

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  • February 20, 2017 at 12:52 pm
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    Big numbers in review.
    In New Jersey, if the ad revenue is $20 million –and the newspapers as a whole average a 15% profit margin –now it’s $ 3 million. It costs the newspapers money to do the actual start-to-finish work.

    Reply

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