Analysis: Why Circulation Keeps Heading South

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By: Jennifer Saba

So what happened? Why did newspaper circulation in the FAS-FAX released today take one of its worst tumbles ever?

In any event, as net paid circulation keeps spiraling down, it?s no accident that the industry is trying to distance itself from that metric and move towards the notion of “total audience.”

For the 770 newspapers that reported to the Audit Bureau of Circulations for the six-month period ending September 2006, daily circulation fell 2.8%. Even more troubling, on Sunday, circulation plummeted 3.4% for 619 newspapers. According to the Newspaper Association of America, which analyzes the data twice a year, this period represents one of the largest variances year over year, said John Murray, vice president of circulation and marketing at the NAA, during a conference call.

The chopping of other-paid circulation, which accounts for hotel, employee, Newspapers in Education, and third-party copies, is one reason the numbers look so bad. Advertisers, at least those in the larger metros, have said they find this kind of circulation less valuable.

?Newspapers companies and specific publishers are focused on providing advertisers value and making tough economic decisions,? Murray told E&P. ?The decision that many are coming to is that the investment it takes to achieve a bottom line circulation number for a FAS-FAX report is not necessarily the best dollars spent.?

Newspaper companies are also refocusing their efforts on tighter geographic targets. Many big metros, like The Dallas Morning News, cut circulation outside their core area.

It?s been a good 18 months, though, since publishers started preaching about pruning the other-paid category. By now, the numbers should have shown some improvement — especially given the easing comparisons.

The ?Do Not Call? register — a reason often cited for dropping circ numbers a good three years after the list was enacted — has been replaced with the whacking of ?non-core? circulation.

Neither factor can mask that more people are migrating away from print and to the Web. ?I don?t see plus circulation numbers coming out of a FAS-FAX report any time in the very near future,? Murray told E&P, adding that the declines should be less dramatic in the upcoming months. But that’s been said before.

The industry has metros to thank for the steep drops in circulation. The NAA broke out losses by circulation category. For papers with daily circ 500,000 and above, daily fell 2%. Of the nine papers that fit that category, two made gains.

In the 250,000 to 500,000 category, daily dropped 4.1%. Just two papers out of 21 experienced growth.

In the 100,000 to 250,000 category, daily circ decreased 3.4%. Circulation at 10 papers rose while 50 reported losses.

In the 50,000 to 100,000 category, circ slipped 2.7%. Out of 95 papers, 14 increased circulation.

In the 25,000 to 50,000 category, circ was down 2.3%. Thirty-eight out of 172 papers experienced gains.

And for the 419 papers with circulation 25,000 or less, circ fell 2.1%. One-fourth of 105 papers showed growth.

Some believe that total audience is a measurement the industry should have started pushing years ago. While the print product shows declines, online and niche products are actually growing the reach of newspapers. Among 25-to-34 year olds, at least 17 papers made a gain of 20% — when factoring in Web sites.

The NAA reported that September marked a milestone for newspaper Web sites: More than 58 million people or more than one in three active Internet users visited a newspaper Web site — a record.

There?s no question that newspapers are making great strides in driving online readership, especially as online revenue is growing like gangbusters. What remains to be seen is if they get the credit.

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