Newspapers

INDUSTRIAL CODES

NAICS: 51-1110 Newspaper Publishers, 51-6110 Internet Publishing and Broadcasting

SIC: 2711 Newspapers: Publishing, or Publishing and Printing

NAICS-Based Product Codes: 51-111031000 through 51-111039522

PRODUCT OVERVIEW

Newspapers were so important to the U.S. founding fathers that the first amendment to the Constitution forbade Congress from making any law "abridging the freedom of speech or of the press." Thomas Jefferson's well-known quotation expressed this belief: "Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter."

Yet, in the first decade of the twenty-first century, many Americans apparently do not believe that newspapers are essential. Circulation is dropping despite the country's growing population, and Americans, according to polls, have come to view the news media as less professional, less accurate, less caring, and less moral.

Newspapers in the twenty-first century appear to be out of favor with Wall Street as well. Despite the continued profitability of newspaper companies, stock values began a downward slide in 2004 and lost 20 percent in 2005. Market analyst Bear-Stearns followed a group of leading newspaper corporations and reported in February 2007 that for the group, stock prices were down an average of 7.7 percent in 2006 and an average of 1.3 percent in 2007 to date. The companies followed in the Bear-Stearns report were Dow Jones & Co., Gannett Co. Inc., Journal Register Co., GateHouse Media, Inc., The New York Times Co., the E.W. Scripps Co., and the Tribune Co.

Interpretations of the figures vary, with some saying that newspapers have begun an inevitable downward slide, while others argue that publishers are merely diversifying, following their readers online to add to the value and reach of their core product. The Newspaper Association of America (NAA), a nonprofit industry group, argued on its Web site that "The key to the future of newspapers is the effort to build a broad portfolio of products around the core product, the traditional newspaper, and to connect with both general and targeted audiences."

For more than 300 years, Americans have looked to newspapers for their information about a growing list of topics including war and peace, national and local elections, sports scores, stock prices, obituaries, movie schedules, government business, school lunch menus, celebrity scandals, weather forecasts, and featured sales at the local supermarket. In the early twenty-first century, however, it appears that they have begun getting at least some of this information from other avenues.

Newspaper history can be traced back to handwritten newsletters circulated by merchants in Renaissance Europe, followed by small news pamphlets and one-page broadsheets made possible by the invention of the printing press in the 1450s. In 1666 the London Gazette was founded. It served as the only sanctioned newspaper in England for a generation, and copies made their way to the United States.

Publick Occurrences, Both Foreign and Domestick, was the first newspaper to be printed in the colonies, making its only appearance in Boston on Sept. 25, 1690. Published without license from the colonial government, the newspaper was suppressed, almost all copies destroyed, and its publisher arrested.

It was 14 years before the next newspaper, The Boston News-Letter, made its appearance, approved and heavily subsidized by the government. Newspapers in Philadelphia and Boston followed, and by the eve of the American Revolution, there were two dozen papers in the colonies, many spreading anti-British propaganda. There were 43 newspapers by the end of the war in 1783. The ratification of the Bill of Rights in 1791 gave papers the freedom to grow and prosper, although the 1798 Alien and Sedition Acts briefly threatened political publications.

Newspapers at this time were still expensive to publish and circulated mainly among the rich and literate. With technological advances, including continuous rolls of newsprint and steam-powered presses, costs came down, leading in the 1830s to the growth of the Penny Press, papers sold for a single cent. Spreading literacy and the demand for news during the Civil War further spurred the growth of the newspaper industry, and by the 1880 census, 11,314 papers were recorded.

The invention of the linotype, making it far more efficient to set type, sparked another revolution beginning in the 1880s. Much larger newspapers became practical, and banner headlines, extensive use of illustrations, and funny pages appeared. This era also saw the beginnings of newspaper consolidation, with independent papers being swallowed up by chains. This was also a period of sensationalist or yellow journalism, with the newspaper chains of Joseph Pulitzer and William Randolph Hearst, for example, stirring up outrage against Spain to set off the Spanish-American War.

The golden days of the 1960s, 1970s, and 1980s turned newspapers into economic powerhouses. Adoption of computer technology brought major cost savings, while the disappearance of afternoon papers allowed most newspapers to become monopolies in their communities. Papers remained economically strong in the 1990s and the early 2000s, with the newspaper divisions of major media companies reaping profits of approximately 20 percent in 2005. Circulation, however, continued to decline and news staffs were cut, causing some to wonder if newspapers would continue to play a major role in American life in the coming decades.

MARKET

Newspaper markets can be thought of in two ways. In 2005 circulation brought in approximately 20 percent of newspaper revenues, while advertising accounted for most of the rest. Newspaper publishers, therefore, market their product primarily to two groups: the readers who buy the papers and the businesses that advertise. Although it may appear as if advertising should be the major concern, circulation is a more important proposition than it would at first appear because advertising depends on circulation. If there are no readers, no one is going to pay to put ads in the publication.

Circulation

Newspaper circulation is made up primarily of single-copy sales and subscription sales, with large Metro papers tending to have more single-copy sales. These are the primary components of paid circulation, in which the purchase price is at least half of the single-copy price. In other paid circulation, the price is less than half the cover cost. Examples include discounted copies for employees, Newspapers in Education (NIE) programs, and bulk sales. USA Today, for example, distributes large numbers of highly discounted papers in airports and hotels, defending this practice by arguing that these papers reach business travelers, a group valued by advertisers. In 2005 one report said daily U.S. newspaper circulation was 48.3 million, making the United States the fourth largest market in the world. China had 93.5 million; India, 78.8 million; Japan, 70.4 million, and Germany, 22.1 million.

U.S. circulation peaked in the 1980s, and then a pattern of modest declines was seen for the next 20 years. These losses accumulated, however, and between 1980 and 2000, circulation dropped approximately 12 percent.

The circulation loss over this period was largely from the closing of evening newspapers. From World War II until 1980 the number of newspapers in the United States dropped by only four, with 1,749 in 1945 and 1,745 in 1980. Some big-city papers disappeared, but they were replaced by suburban and small community dailies. After that, more newspapers began to close, and by 2002, there were only 1,457, a 17 percent decline in 22 years.

The number of newspaper titles worldwide grew from 9,000 in 2001 to more than 10,000 in 2005, according to the World Association of Newspapers, but that was largely due to increases in the developing world that offset flat or declining circulation in developed countries.

In 2004 more serious circulation declines began in the United States, and they accelerated in 2005 and 2006. In those two years, daily circulation fell 3.5 percent and Sunday circulation fell 4.6 percent.

Part of the problem of declining circulation statistics can be explained as a consequence of a one-time accounting adjustment. A series of circulation scandals in 2004 forced newspapers to change the way they were counting readers and circulation figures. It was learned that in addition to providing large numbers of samples and heavily discounted papers for special programs, some publishers were padding their numbers by assigning lucrative quotas to third-party distributors, a practice that encouraged the distributors to order too many papers and then dump them when they were not sold. Outraged advertisers and Wall Street investors forced newspapers to eliminate the padded numbers, which resulted in a substantial decrease in overall reported circulation.

Other causes of circulation decline were more troubling to print journalists, including the shift to cable television and the Internet; a more mobile, multitasking population; an aging readership base; and do-not-call-legislation that put an end to circulation telemarketing campaigns, which had been the top source of new subscriptions.

A number of customers were also moving away from daily readership, buying the paper on weekends and on days when there was a feature of particular interest such as the weekly television guide or retail sales ads. Newspapers crafted special subscription packages to meet these needs, adding Monday to the weekend package, for example, for sports fans who wanted to read about Sunday games.

The circulation losses were not spread evenly over the industry. Big-city metropolitan newspapers were the biggest losers. A Merrill Lynch analysis of the figures published in the Audit Bureau of Circulations (ABC) 2006 showed that papers with circulations between 100,000 and 500,000 fell 3.6 percent on weekdays and 4.2 percent on Sunday. Papers over 500,000 lost 3.1 percent daily and 4.5 percent Sundays.

In the two years ending September 2004 and September 2005 the Los Angeles Times lost 9.23 percent daily and 9.8 percent Sundays, while the Washington Post lost 7 percent daily and 5.8 percent Sundays, according to the 2006 State of the News Media report, an annual report prepared by the Project for Excellence in Journalism, which is affiliated with the Columbia University Graduate School of Journalism. The project is funded by the Pew Charitable Trusts and is conducted in partnership with a number of leading journalism institutions.

National papers, defined in the report as USA Today, the Wall Street Journal, and the New York Times, held their own, while mid-sized suburban and small papers faired best of all.

Publishers responded to the circulation losses in several ways. One was to try to talk about newspaper readership and total audience reach instead of circulation. Readership is a term that takes into account the fact that most papers are read by more than one person. In 2004 Newspaper Association of America (NAA) figures set national circulation at 54 million and readership at 124 million on an average weekday. Sunday rates of readership were reported at 58 million in circulation and 139 million readership. Publishers also argued that advertisers should consider the number of additional readers who see the paper online and on mobile devices.

Newspapers had one advantage in competition with immediate, free media such as television and the Internet: their next-day product was giving a larger variety and more in-depth information than was available elsewhere. The State of the News Media report studied a typical day of news coverage, May 11, 2005, and found that the May 12 newspaper reports covered the widest range of topics of all media, with the deepest sourcing and the most angles. Information on Internet news sites was almost as extensive, although for the most part, it relied heavily on the newspapers' reporting to achieve that depth.

Publishers also continued to argue that newspapers are the best way to reach a broad audience and deliver results for advertisers. In 2006 the NAA launched a trade campaign to convince advertisers of the value of an "engaged audience delivered by a medium with the brand power, content, and credibility to effectively serve print and online advertisers better than any other medium." The association said that newspapers reach 64 percent of all adults on weekdays and 77 percent of adults at least once a week.

Ad Revenue

The second, and most remunerative, market for newspapers is advertising. In this market, the outlook for newspapers is healthier. Bear-Stearns reported that newspapers received $39.5 billion in U.S. ad dollars in 2006, or 16.9 percent of all U.S. media advertising. Yet the papers covered in this report were feeling the pressure from newer, more interactive media, with newspapers experiencing only 1.8 percent ad growth in 2005 and a 1.0 percent decline during 2006, well below the industry's former mid-single-digit annual growth.

Print newspaper advertising can be broken down into several categories. National advertising, a small category for all but the largest papers, has been declining, but publishers have attempted to lure back advertisers with such improvements as expanded use of color.

Retail advertising comes from establishments such as department stores, grocery stores, drug stores, and restaurants at the local level. Retail advertising can either be printed within the newspaper or contained in inserts. Retail is the biggest source of ad revenues, accounting for 45 percent in 2005.

The second largest category is classified, which can be cyclical. This form of advertising has faced heavy competition from Web sites such as AutoTrader and eBay.

To maintain market share and revenues, newspapers are aggressively moving online, both with their own Web sites and with investments in such properties as CareerBuilder (jointly owned by Tribune, Gannett, and McClatchy), Shopzilla and uSwitch (Scripps), and About.com (New York Times). In one example, Monster.com has developed alliances with nearly 60 dailies for help-wanted classifieds. In another, the Sun-Times News Group launched a Web site for auto sales. The free, searchable site was said to have an inventory of more than 110,000 new and used automobiles from 540 dealers and other listings.

The NAA reported that in 2004 more than 1,500 daily newspapers in North America had Web sites that boosted total newspaper readership among 25- to 34-year-olds by 15 percent, and that newspaper Web site readers are more educated, affluent, and ready-to-spend than other Internet users.

In 2006 online newspaper ad revenues increased approximately 30 percent, and most experts predicted continued growth. Many newspaper companies were relying on rapid growth in online revenues to make up for slow growth in print ad sales. At the New York Times, for example, online ad sales grew 30 percent in 2005, while overall advertising grew only 0.9 percent. Publishers had to charge less for online ads, however, and advertisers and ad agencies were skeptical about online circulation figures despite development of a number of sophisticated programs to analyze site visits.

It must be remembered, however, that online ads are still a small percentage (1%-7%) of overall advertising revenues. Newspapers earn approximately $2 billion annually in the United States through online advertising, according to the NAA, and 25 times that amount from print advertising. Online advertising is growing but it will be years before the growth in online revenues can compensate for the slow growth in print ads.

KEY PRODUCERS/MANUFACTURERS

Despite a wave of consolidations in the late 1990s and the first years of the 2000s, there are still hundreds of independent newspapers in the United States, many family-owned. If circulation is considered, however, the major chains dominate the industry. The 2004 State of the News Media report stated that approximately two dozen of the largest groups owned only 39 percent of the country's 1,457 newspapers, but that the papers owned by those groups accounted for 69 percent of U.S. circulation.

Gannett

This company is the largest newspaper company in the United States, with 90 daily papers and nearly 1,000 non-daily publications. In addition to USA Today and USA Weekend, Gannett's papers include the Arizona Republic, the Detroit Free Press, the Indianapolis Star, and the Courier Journal in Louisville, Kentucky. Newsquest Media Group, Gannett's United Kingdom division, publishes nearly 300 titles, including 17 newspapers.

Gannett also owns 22 television stations and 42.5 percent of the online company, CareerBuilder. Gannett is also an Internet leader, with sites sponsored by its television stations and newspapers reporting 23,245,000 unique visitors per month, or 14.8 percent of the Internet audience. Revenues in 2006 were $8 billion.

Tribune Company

Headquartered in Chicago, Illinois, Tribune Company owns 11 major newspapers including the Chicago Tribune, the Los Angeles Times, Newsday (Long Island, New York), the Baltimore Sun, the South Florida Sun-Sentinel, and the Orlando Sentinel. It also publishes a Spanish-language daily, Hoy, in both Chicago and Los Angeles. The company owns 23 television stations and the cable superstation WGN, as well as the Chicago Cubs and Wrigley Field, and percentages of a diverse group of Internet and cable companies that includes CareerBuilder.com, ShopLocal.com, and the Food Network. With these holdings, the company claims to reach 80 percent of U.S. households. Reported revenues for 2006 were $5.55 billion.

The McClatchy Company

Headquartered in Sacramento, California, this company was founded during the California Gold Rush. With the acquisition of Knight Ridder in 2006, McClatchy became the second largest newspaper publisher in the United States, dropping to third after the sale of the Minneapolis Star Tribune. The company has 31 daily newspapers and approximately 50 non-dailies, including the Miami Herald, the Sacramento Bee, the Kansas City Star, the Star-Telegram (Fort Worth, Texas), the Charlotte Observer, and the News & Observer (Raleigh, North Carolina). In addition, McClatchy's network of Internet assets includes local Web sites in each of its daily newspaper markets.

The company owns and operates McClatchy Interactive, an interactive operation that provides Web sites with content, publishing tools, and software development tools; Real Cities, the largest national advertising network of local news Web sites; 15.0 percent of CareerBuilder; and 25.6 percent of Classified Ventures. McClatchy reported revenues of $2.28 billion in 2006.

The New York Times Company

This influential publishing company owns 19 daily newspapers, including the New York Times and the Boston Globe, and the Web site About.com. In 2007 it announced divestiture of its broadcast division. Reported revenues in 2006 were $3.3 billion, with $273.9 million coming from its digital businesses, including NYTimes.com and Boston.com.

Advance Publications, Inc.

This communication company is privately held under the control of the Newhouse family. It owns Condé Nast Publications, Parade Publications, Fairchild Publications, American City Business Journals, the Golf Digest Companies, and newspapers in more than 20 American cities. Advance Publications also has extensive interests in cable television, as well as Internet sites that are related to its print publications.

Its newspapers include the Birmingham News, the Huntsville Times and the Mobile Register in Alabama, the Jersey Journal and Newark Star-Ledger in New Jersey, the Oregonian (Portland), the Cleveland Plain Dealer, and the New Orleans Times-Picayune. Advance Internet is a leading creator of local news and information Web sites, which operate in alliance with over 30 of its newspapers. The company also has cable operations, the Religion News Service, Newhouse News Service, CondéNet, and partial ownership of the Discovery Channel.

Hearst Corporation

Hearst is a diversified media company that owns 12 daily and 30 weekly newspapers, including the Seattle Post-Intelligencer, the Houston Chronicle, the San Francisco Chronicle, the San Antonio Express-News, and the Albany Times Union. It has nearly 200 magazines around the world, including Cosmopolitan, Good Housekeeping, and O, The Oprah Magazine. Other Hearst properties include 29 television stations, which reach a combined 18 percent of U.S. viewers; joint venture interests in leading cable networks, including Lifetime, A&E, The History Channel, and ESPN; business publishing; Internet businesses; television production; newspaper features distribution; and real estate.

Dow Jones

This news and financial information provider owns the Wall Street Journal and Barron's. The company's eight daily and 15 weekly newspapers also include the Times Herald Record in Middletown, New York, the Record in Stockton, California, the Cape Cod Times in Cape Cod, Massachusetts, the Mail Tribune in Medford, Oregon, and the Pocono Record in Pocono, Pennsylvania. Reported revenues in 2006 totaled $1.86 billion.

Lee Enterprises

This company, located in Davenport, Iowa, has 51 daily newspapers and a joint interest in five others, primarily in midsize markets. The company also has rapidly growing online sites and more than 300 weekly newspapers and specialty publications in 23 states. Lee newspapers have circulation of 1.7 million daily and 1.9 million Sunday.

With the acquisition of Pulitzer Inc. in June 2005, Lee became the fourth largest newspaper company in the country in terms of dailies owned, and it moved from twelfth to seventh in daily circulation. Lee gained 14 daily papers, including the St. Louis Post-Dispatch, and more than 100 non-daily publications in the $1.46 billion deal. Other Lee newspaper markets are Madison, Wisconsin; Lincoln, Nebraska; Davenport, Iowa; St. Louis, Missouri; Billings, Montana; Bloomington, Illinois; Tucson, Arizona; and Napa, California.

MATERIALS & SUPPLY CHAIN LOGISTICS

In the physical sense, the major material used by newspapers is newsprint. In financial reports, the term often includes both paper and ink, as well as a few related costs. However, these materials represent only 10 to 20 percent of news companies' costs. Whether on paper or online, the major product sold by newspapers can be thought of as information. Gathering information requires a great deal of labor, which represents approximately 75 percent of costs.

Abitibi-Consolidated and Bowater provide an estimated 50 percent of U.S. newsprint capacity, and the top five producers account for nearly 70 percent. Canada provides much of the newsprint used in the United States, and publishers, therefore, are negatively affected when the U.S. dollar falls in value compared to the Canadian dollar.

Newsprint costs vary, with a 22 percent decline in prices in 2002 followed by increasing costs the following years. Despite a 6 percent decrease in newsprint consumption by U.S. dailies in 2006, newsprint prices increased an estimated 9.2 percent during the year. These price increases were driven in large part by a reduction in capacity by major newsprint producers. Newsprint production was cut by a reported 5.5 percent in 2005 and was down an additional 6.3 percent in 2006. Pricing peaked at $675 per metric ton in third-quarter 2006, and declined $15-$20 per ton in fourth-quarter 2006.

Newspapers sought to contain these costs by reducing paper weight, cutting the space dedicated to news, referred to in the industry as the newshole, and decreasing page width. The Wall Street Journal, for example, announced that it would cut its broadsheet from 60 inches to 48 inches in 2007. To reduce the newshole, papers began eliminating such space-eating features as stock prices and television and movie listings, directing their readers online for the information.

As for labor costs, Bear-Stearns reported that the industry had responded to declining circulation and slow ad growth by cutting 2,500 jobs in 2005 and an additional 1,500 in 2006. Publishers, however, still faced rising health care and benefits costs.

A large share of the cuts came in newsrooms, cuts that were viewed with discomfort by many in journalism, who worried that decreasing news coverage would only worsen circulation problems. A number of academic studies warned of the danger of these cuts. In one such study, professors at the University of Missouri-Columbia concluded after looking at 10 years of financial data that newspapers that spent more money on their newsrooms were more profitable because they were offering a better product. Other studies, however, failed to find a direct correlation.

The NAA said in 2006 that in the previous five years, paid circulation newspapers had lost nearly 2,800 journalists.

The State of the News Media report estimated that daily newspaper newsroom losses in 2005 were approximately 600, leaving a little more than 52,000 full-time professionals gathering, writing, and editing the news. These job losses came on top of earlier cuts. There were 300 new hires in 2002, but newsrooms were down 500 jobs in 2003 and 100 in 2004, the report noted.

The staffs of large metro newspapers suffered the most. Newsroom job cuts included 75 at the Philadelphia Inquirer, 85 at the Los Angeles Times, 45 at Long Island's Newsday, 45 at the New York Times, 65 at the Dallas Morning News, and 41 at the St. Louis Post Dispatch. The report noted that the number of newspaper reporters covering metropolitan Philadelphia had dropped from 500 in 1980 to 220 in 1996, and most local television and radio stations had also eliminated news staff.

Many of the job cuts were achieved by buyouts. In February 2007, for example, the Atlanta Journal-Constitution announced that it was offering buyouts to up to 80 newsroom employees, cutting its circulation area, and focusing more on online news.

DISTRIBUTION CHANNEL

Newspapers must be distributed quickly while news is still fresh. Once the presses begin to roll, fleets of vehicles begin pouring out of the building, delivering papers to wholesale distributors, single-sale locations, or news carriers for home delivery. Some copies go directly to the Post Office for mail subscribers.

Larger papers often print different editions with local news and ads for different circulation areas. This process is known as microzoning. Microzoning lets newspapers provide segmentation, targeting, and zoning of circulation to improve insert distribution and more effectively compete against direct mail.

While carriers at a few papers might be employees, approximately 90 percent of the publications in the United States consider them independent contractors, not entitled to health benefits nor workman's compensation benefits, and almost all of the remaining papers are moving in this direction. In 2002, for example, the St. Petersburg Times, one of the few papers in the country to give its carriers part-time employee status, converted all of its 1,000 carriers to independent contractors.

Many papers contract delivery to wholesale firms, but this arrangement helped lead to the circulation reporting scandals of 2004. Some newspapers padded circulation figures by setting up payment arrangements that encouraged independent distributors to buy more papers than they needed and then dispose of rather than return them when they do not sell. In response, the Dallas Morning News, for one, took distribution back into the company to tighten controls.

Other conflicts have developed over design and placement of vending machines and newspaper boxes for free papers, with local governments enacting regulations to reduce clutter and improve the appearance of downtown street corners. A New York City bill restricts where boxes can be placed and requires them to be graffiti-free, and in 1998, Chicago angered both daily and free newspapers with an ordinance that replaced individual racks with multiple-title boxes.

As in almost every other aspect of the journalism business, technology is rapidly changing newspaper distribution in fundamental ways. In one example, it allowed USA Today to become a successful national newspaper. This publication, launched in the early 1980s, uses satellite transmissions to send the final edition to locations around the country for printing and distribution in regional markets. In this way, the paper can include the latest news and sports scores in all of its regional editions. With a total average daily circulation of 2.3 million, USA Today is published via satellite at 36 locations in the U.S. and four sites abroad.

The same technology allows Americans to read same-day editions of the Miami Herald when traveling in Latin America and the Caribbean. This paper, once expensively delivered to foreign locations by airplane, is now beamed to partner papers in Latin America where it is printed. Similarly, the Wall Street Journal announced in early 2007 that it would begin printing its weekend edition at the Maui News printing facility, although Monday through Friday editions would still be printed at the Journal's plant in California and flown to Hawaii.

In many cases, technology is now eliminating the paper from newspaper. Direct Internet delivery options such as email newsletters or delivery to mobile phones and other hand-held devices eliminate the need for costly newsprint and let individual customers select what news they want.

In one such arrangement, Wall Street Journal news summaries and stock quotes are available on America Online instant messenger services. If they wish, AOL users who subscribe to the online Wall Street Journal can then link to full stories on that Web site. In another example, users who register with USAToday.com can receive text message alert service for sports scores and player statistics through a USA Today partnership with 4INFO.

The Hearst Corporation has signed an agreement with Microsoft for News Reader technology, with the beta version launched in February 2007 at the Seattle Post-Intelligencer. The downloadable application helps computer users navigate easily through an on-screen version of the paper.

Through services such as Newspaper Direct, individual subscribers, retail outlets, hotels, cruise ships, airlines, corporate offices, libraries, and schools can get online copies of same-day newspapers from around the world. Services are also available in some localities to print out the desired newspapers and deliver them to homes, hotels, and retail outlets.

KEY USERS

The NAA reports that the majority of U.S. adults read newspapers. On an average day, 53 percent of adults read a newspaper, and over five weekdays, 72 percent pick up at least one paper. On an average Sunday, 61 percent read a paper, and over four Sundays, 75 percent peruse at least one edition. This breaks down to 56 percent of men and 50 percent of women reading a paper daily, and 60 percent of men and 62 percent of women reading one on Sunday.

Newspaper readership increases with age, as can be seen in Figure 155. Thirty-nine percent of those 18-24 reading daily (47%, Sunday); 39 percent of those 25-34 (50% on Sunday); 49 percent of those 35-44 (59% on Sunday); 58 percent of those 45-54 (66% on Sunday); 64 percent of those 55-64 (70% on Sunday); and 70 percent of those 65 and older (74% on Sunday).

The NAA argument to advertisers is that more affluent, better educated citizens—the citizens advertisers most want to reach—make up a disproportionate share of the newspaper audience. The median household income of daily newspaper readers is given as $57,824, and the average as $75,066. The NAA says that 61 percent of those making $75,000 a year or more read papers, while only 45 percent of those making less than $40,000 do.

In addition, 67 percent of those with postgraduate education and 59 percent of college graduates read newspapers daily, while only 33 percent with less than a high school education do. A total of 59 percent of people in management positions read daily papers, 52 percent of those in sales, and 46 percent of those in production.

To look at it another way, 66 percent of those with homes worth $300,000 or more read papers daily, while only 52 percent of those whose homes are valued at less than $150,000 do; 63 percent of those who have lived in their homes for 10 years or more are daily readers, compared to 38 percent who have been in their current residences for less than a year.

Citing a study from Scarborough Research, a consumer market company, NAA also argues that newspaper readers are more engaged, spending substantial time with their papers, usually without multitasking, and that they look for ads and believe they offer good information. It says, for example, that in one study, 51 percent of newspaper readers said ads were useful. Only 19 percent of those polled said newspaper ads were too intrusive; for magazines, the figure was 21 percent; for radio, 25 percent; for television, 38 percent; and for the Internet, 41 percent thought ads were too intrusive.

ADJACENT MARKETS

The main competition to newspapers, in terms of both circulation and advertising dollars, is other media, including magazines, broadcast and cable television, radio, and the Internet.

Other traditional media such as magazines and broadcast television have faced many of the same problems as newspapers, watching their audiences decrease and finding an increasingly tough market for ad sales. Time, the largest news magazine, cut 205 employees in 2005 in reaction to losses in circulation and ad sales. Most local television stations have cut newsroom employees, concentrating increasingly on crime and accidents, weather, traffic, and sports. Most local radio stations no longer have any news reporters in the field.

Groups of large-market newspapers that own other media such as television stations often have an advantage in competing for ad sales because they can provide package deals. The national ad category of sales has been particularly difficult for newspapers, with television taking over much of the market, beginning in the 1950s. There was a reversal as television ratings begin to drop, with national ad sales increasing from 1990 to 2004, but after 2004 the category came under severe pressure again, this time from growing media fragmentation and online sites.

Newspapers also are losing classified sales in the face of such Web sites as Monster.com, Craigslist.com, and eBay.com. Newspapers are responding with their own Web sites as well as with partial ownership of such sites as CareeBuilding.com, Cars.com, and Apartments.com. These newspaper-Web site alliances challenged major Internet-only providers. Faced with the strength of rival CareerBuilder, Yahoo! announced in November 2006 a new partnership between its online recruitment site, HotJobs, and eight newspaper groups that own 176 newspapers in 38 states. In 2006 Monster also built new ties with print media, launching co-branded recruitment sites that partnered with a number of midsize dailies.

RESEARCH & DEVELOPMENT

Research and development is not central to the mission of most newspapers and newspaper groups, but deciding how to take the best advantage of rapidly changing technology is getting serious study in publishers' offices across the country. Newspapers around the world invest approximately $1.5 to $2 billion per year on new presses alone, according to Bob Brown, CEO of Goss International. Newspapers also are investing in new digital editing and page layout technology and computer to plate (CTP) imaging systems, among other technological improvements.

To navigate the rapidly changing technology, the New York Times brought Michael Rogers, former head of the Washington Post Company's new media efforts, on board in 2006 as a "futurist in residence." The paper also asked Michael Zimbalist, the former head of the Online Publishers Association, to establish the paper's first research and development group. He hired seven experts—a mathematician, a linguist, a newspaper designer, and others—from such places as the Media Lab at Massachusetts Institute of Technology to find the best ways for the New York Times to move into the digital future.

One such innovation is the paper's new Times Reader software application, developed with Microsoft's Vista software, to reformat the paper automatically to fit a variety of screens, everything from traditional desktop computers to mobile phones. Editors can now publish a single electronic version of the paper for multiple screen formats. In a similar effort to jumpstart innovation, the Los Angeles Times, formed its own Manhattan Project from a group of its own investigative reporters and editors.

Meanwhile, the Tribune Co. began installing a 3,100-seat CCI NewsDeskSystem that will centralize computer operations at one server in Chicago and another in Los Angeles. One server at a time will be used, with the other held ready as a disaster recovery safety net. The CCI NewsDesk System was to start live production in early 2007, with each newspaper installed as a virtual newsroom on the system. The plan was to gradually extend the CCI system across each of the Tribune's newspaper sites, including the Chicago Tribune, Los Angeles Times, The Sun-Sentinel, Daily Press, Orlando Sentinel, Hartford Courant, Allentown Morning Call, Baltimore Sun, and Newsday, with the last site expected to go live in the last quarter of 2008.

Throughout the industry, CTP technology is advancing rapidly. Newspaper workflow systems, as part of this technology, could include software that allowed for unlimited zones and multiple editions. Such innovations as high-quality plates created with violet lasers, available through Agfa, Fuji, Kodak, and ECRM Imaging Systems, are helping the industry move toward chemistry-free processing. In addition to its environmental advantages, chemistry-free processing offers such benefits as a more predictable process; elimination of chemical purchasing, cleanup, and disposal; reduced labor costs; and reduced maintenance.

At the printing end of the process, Goss introduced its Flexible Printing System (FPS), with the first in the United States purchased in 2007 for 2008 installation at the Free Lance-Star in Fredericksburg, Virginia. The four-tower configuration chosen by the paper is designed to produce up to 96-page broadsheet products.

A number of organizations and graduate journalism schools conduct research on nontechnical issues such as content and the effect of certain stories on the audience.

The State of the News Media report is compiled annually by the Project for Excellence in Journalism, with cooperation of such organizations as the Poynter Institute. Poynter is a non-profit organization that conducts seminars to educate journalists, future journalists, and teachers of journalists. It publishes Poynter Report, a quarterly publication about journalism. It also posts articles online, and hosts online discussions about current issues in journalism and journalism ethics.

Research at journalism schools covers a wide variety of topics. In November 2006, for example, the University of Missouri-Columbia released a study that looked at Web site characteristics that make people more likely to contribute to online communities. Lowell Bergman, a professor at the University of California at Berkeley Graduate School of Journalism, reported a four-hour PBS Frontline program in early 2007 that examined the political, cultural, legal, and economic forces facing the news media. In another example, Jane D. Brown, the James L. Knight Professor at the School of Journalism and Mass Communication at the University of North Carolina at Chapel Hill, conducts research on how adolescents' health is affected by the mass media and how the media can help.

CURRENT TRENDS

Increasing availability of low-cost broadband, the emergence of user-generated content, and a proliferation of mobile phones and other handheld devices are changing the role of traditional newspapers, according to Michael Rogers, futurist-in-residence at the New York Times. He does not expect to see print newspapers disappear; instead, he believes they will serve as roadmaps that help readers navigate the rich variety of online features. He also sees newspapers churning out content that will appear on a variety of devices and platforms.

The changing shape of the business is an international trend. In 2005, for example, the Guangdong Mobile Communications Co., China's biggest mobile phone company, announced a new partnership with the Xinhua News Agency and several newspapers in Guangdong Province to offer a mobile phone newspaper service.

At the technical end of the business, continuing advancements in automation and information exchange can be expected to help the newspaper world adapt to the possibilities of the digital revolution.

A new financial model is also likely to develop for online publications. Papers like the New York Times and the Wall Street Journal, as well as many smaller publications, have begun to charge for access. There are also questions as to how long traditional newspapers will allow aggregators such as Google and Yahoo to gather and distribute their content free of charge.

As for content, it is probable that there will be more outlets putting fewer reporters on the street to cover a narrower news budget of stories. As audiences shrink, so do the resources to invest in the news product. Idealism also seems to be disappearing from newspaper management, with bottom-line management taking charge.

National papers such as USA Today seem able to hold their own in terms of circulation and revenues. The papers that are most threatened are the big-city metros, which have the news organizations to cover state, regional, and city business. They are being supplanted by suburban dailies or weeklies as well as by a range of smaller niche publications, which might not serve the same watchdog function over local, state, and national government and other major institutions.

TARGET MARKETS & SEGMENTATION

Publishers began talking about the demographics of their readership when circulation numbers dropped, stressing to advertisers that they attracted a desirable group of potential spenders.

Some advertisers are especially interested in the target audience of the publication. It is no secret that Tiffany prefers to advertise in the New York Times or the Wall Street Journal rather than in the working-class Daily News. USA Today, a successful national newspaper, publishes demographic figures on its Web site showing that 66 percent of its readers are men, that 63 percent are between the ages of 25 to 54, that 72 percent attended college, that 35 percent are professional/managerial, with 81 percent employed, and that 70 percent make $50,000 a year or more, with 34 percent making more than $100,000 a year.

Newspapers have also tried to reach out to targeted groups with zoned editions, specialized coverage, and niche publications such as youth publications and the ethnic press.

Some efforts are even more specific. When the Boston Red Sox signed Japanese star pitcher Daisuke Matsuzaka, the Boston Globe and the Boston Herald launched efforts to reach Japanese readers on the Web.

Newspaper companies have been particularly concerned about the lower readership of newspapers among the young, worried that those not developing a newspaper habit would not pick it up in later years as they began careers and families. In Newspaper in Education programs, which seek to build readership among the young, newspapers are delivered to classrooms, often paid for by third parties.

In an effort to appeal to readers between 18 and 34 years old, the Associated Press launched asap in 2005, a service for younger audiences that offer information both as print articles and as audio, video, blogs, and wireless text. More than 100 newspapers signed up, with each deciding on its own whether to make the service available in the print paper, online, or in some combination.

Youth-oriented free newspapers also appeared in a number of cities.

In 2005 Bendixen & Associates conducted a comprehensive survey of ethnic Americans on their media usage. African American, Hispanic, Asian American, Arab American, and Native American adults in the United States were surveyed, representing a total of 64 million people. The interviews were conducted in 10 languages.

The report concluded that 29 million adults, or 13 percent of the entire adult population of the United States, prefer ethnic media to mainstream television, radio, or newspapers, and that ethnic media reach an additional 22 million adults regularly. Hispanics are the group most likely to choose ethnic media, with 87 percent of all Hispanic adults regularly accessing Spanish-language television, radio, or newspapers. A substantial majority of African Americans listen regularly to radio stations that focus on black interests, while a quarter of African Americans read African American newspapers, which are mostly weeklies.

RELATED ASSOCIATIONS & ORGANIZATIONS

The Interactive Advertising Bureau, http://www.iab.net

The National Newspaper Publishers Association, also known as the Black Press of America, http://www.nnpa.org/news/default.asp

The Newspaper Association of America (NAA), http://www.naa.org

The Poynter Institute, http://www.poynter.org

The World Association of Newspapers, http://www.wan-press.org

BIBLIOGRAPHY

"ABC Study: Advertisers Don't Believe Online Ads Are Measured Accurately." Editor and Publisher. 8 February 2007.

Brown, Bob (CEO, Goss International). "Metro Users Group Keynote Speech," Goss International. 19 February 2007. Available from ?http://www.gossinternational.com/?.

Chaffin, Joshua. "'Futurist-in-residence' a Sign of the NY Times Amid a Climate of Digital Distribution." The Financial Times. 23 February 2007, 25.

Fitzgerald, Mark. "The New Math." Editor & Publisher. 1 December 2006.

"Largest Newspaper Markets Worldwide." International Herald Tribune. 30 May 2005, 10.

"NAA Introduces 2007 Newspaper Value Campaign." Newspaper Association of America. 30 January 2007. Available from ?http://www.naa.org/AboutNAA/PressCenter.aspx?.

"Newspaper Audience Data Base." Newspaper Association of America. Available from ?http://www.naa.org/nadbase/index.html?.

Newspapers 101: A Primer for the Newspaper Industry with an Outlook for 2007. Bear-Stearns Equity Research. Bear-Stearns & Company Inc. February 2007.

State of the News Media, 2004–2006. Project for Excellence in Journalism. Available from ?http://www.stateofthenewsmedia.org/?.

Saba, Jennifer. "Analysts Positive on NYT/Monster Deal." Editor & Publisher. 15 February 2007.

??????. "The Daily Show." Editor & Publisher. 1 July 2006.

"The Source: Newspapers by the Numbers." Newspaper Association of America. Available from ?http://www.naa.org/thesource/?.

"Tribune Centralizes CCI NewsDesk System, with Chicago, L.A. Data Centers." Editor & Publisher. 13 February 2007. Available from ?http://www.editorandpublisher.com/eandp/departments/technology?.

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