Woe Is the Industry? Circulation Scandals, Sluggish Ad Revenue and Internet Competitors Have Certainly Had an Effect on Newspapers. but There's No Need to Wallow Just Yet

By Morton, John | American Journalism Review, October-November 2004 | Go to article overview

Woe Is the Industry? Circulation Scandals, Sluggish Ad Revenue and Internet Competitors Have Certainly Had an Effect on Newspapers. but There's No Need to Wallow Just Yet


Morton, John, American Journalism Review


The newspaper business seems beset by problems on all sides. No sooner had newspapers largely recovered from plagiarism and phony-story eruptions at the New York Times and USA Today than the circulation-inflation scandals surfaced at three major dailies, followed by a fourth, the Dallas Morning News.

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On the business side, newspapers have been plagued by relatively slow revenue growth compared with previous recoveries from economic recessions. Indeed, the New York Times, in a story about comic strips, referred matter of factly to "a bleak economic backdrop" for newspapers. The story cited rising newsprint prices and the cost of war. Olympics and election coverage as part of the cause, and it said newspapers in general have not "partaken of the advertising rebound some other media, like television, have enjoyed."

Lastly, it has become an article of faith that newspapers have lost forever huge amounts of highly lucrative employment advertising to Monster.com and other Internet competitors.

It is useful to examine these issues to help determine the state of the newspaper business and its prospects. First, just as the Times and USA Today defused the controversies over purloined and phony journalism by being forthright, so have the papers involved in circulation inflation. The charges surely are damaging, but honesty in acknowledging the problem and promptness in redressing harm to advertisers just as surely reassures readers and advertisers alike.

As for the bleak economic backdrop, the newspaper industry this year is trailing broadcast television in advertising-revenue growth, but that happens in every even-numbered year because of the Olympics and elections. While newspapers do get some advertising from these events, it's a smidgen compared with what television takes in. Last year, without the Olympics and elections, broadcast television's advertising revenue actually declined slightly, while newspapers' rose nearly 2 percent.

Moreover, the increased cost of election, Olympics and war coverage applies only to the largest dailies. The vast majority of American newspapers do not send reporting teams to the campaign trail, to Greece or to foreign wars.

And while newsprint prices have been rising, they have not gone up nearly as much as newsprint producers had hoped. The last four increases, each announced at $50 per metric ton, ultimately were reduced to about $30 because of publisher resistance, and the same is likely to happen with this fall's $50 announcement. …

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Woe Is the Industry? Circulation Scandals, Sluggish Ad Revenue and Internet Competitors Have Certainly Had an Effect on Newspapers. but There's No Need to Wallow Just Yet
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