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UK printed newspaper circulations declining steeply...

It’s not very often that you get to view data that clearly shows an entire industry in rapid decline.  But that’s exactly what the data in this month’s charts show so clearly.  The waning of the national printed newspaper industry in the UK has been well documented but not so much research has revealed just how rapidly that decline is proceeding.  I must disclose an interest here.  Between the years 2000 and 2004 I was consulted by two of the UK national newspapers on this chart to help them sort out a strategy for their digital future.  Perhaps I lacked the presentational skill and tact to put over the results of my research in a tolerable form for them, but I don’t think so.  At that time my clients simply couldn’t accept the information I gave them because they were unable to imagine their world without printed newspapers.  But it was clear to me that three distinct developments were converging to wreck their core businesses despite the fact that one newspaper had been established for 190 years and the other for 50.  But longevity is no protection against the tide of change.  Although the top management of both newspapers were used to observing and analysing what was happening about them, they couldn’t, or wouldn’t, see that the Internet was already having a substantial impact on their industry and they had to adapt or drown. The three trends I told them about were the start of broadband, significant price drops for laptops, and the introduction of home wireless networks.  My findings were based on quantitative research methods which were used to select a number of representative people (ABC1 groups), based in different areas throughout the country, who owned an online computer in their homes.  I used qualitative research methods to investigate how people looked for news, by conducting in-depth, unstructured interviews in their homes.  Using my proprietary software I videoed them, capturing their behaviour while they worked on my laptop.  I recorded all their keystrokes and research results as they showed me how they searched online while we talked about offline and online news gathering.  I have found that questionnaires rarely elicit truthful answers but an in-depth interview carried out while the interviewee is engaged on a practical task yields extraordinarily rich and honest data.  Being in people’s homes also enabled me to find out if they had home broadband, which wasn't pervasive then, and if they had more than one computer, which usually meant that they had, or were on the way to having, a wireless network. This was also rather unusual at the time.  My research showed that the move from a family sharing one computer, to each member of the family having their own computer, was remarkably fast.  Once a couple, or each member of a family had their own computers, it usually took around one to two years for the family to stop buying a printed newspaper altogether.  Each person found that they were acquiring all the news they could eat from television and online, usually for free.  When someone in the family did buy a printed newspaper it was usually left around unread, although a Sunday paper might fare better.  At that point there seemed no reason to buy a newspaper and purchasing any newspaper declined over a two to six month period.  I used my research results to build a simple model predicting the speed of decline of printed newspapers. I vividly remember how newspaper managements at that time counted the numbers of visitors to their websites as though they were printed circulation figures.  This confabulation helped to provide an optimistic view of the industry’s future - there is a massive difference in consumption between getting something for free and paying for it.  When I trawled through the web analytic data, (which was very poorly implemented) both newspapers had similar visitor profiles.  Two thirds of the total visitors were overseas and the infant Web advertising industry of the time was obviously not interested in them.  The UK advertising industry was only concerned with the national UK audience.  Both newspaper websites also had a similar distribution of visitors: a small number of intensive users (visiting almost every day) and a great bulk of users visiting once a month and spending less than three and half minutes on the site. Printed newspapers and media buyers have always colluded and fudged (to put it kindly) the size of any readership for their mutual benefit, and at the advertisers’ expense.  For over 300 years the industry has been able to sell advertising very profitably based on an aggregate of the number of newspapers sold plus a vague approximation of the number of possible extra readers who also looked at that copy.  So it’s the sum of the paid circulation of a newspaper and the presumed readership of that paper.  Why do I say a vague approximation of the number of extra readers?  The way the magic number of readers is estimated for the industry is done by using The National Readership Survey, or NRS for short.  For example, the News International broadsheet: The Times, has a paid-for circulation of only 397,549 but, using NRS figures, claims a readership of 1,314,000.  This readership figure is the foundation on which printed advertising is sold.  The advertising industry needed some way of quantifying the media, in order to base rates on which to buy advertising, and clearly decided that as long as the NRS was consistent, and the same for all the newspapers, it would do. Let's look at how the NRS actually arrives at the readership figures.  Over the course of one year a continuous survey of 36,000 people is used to represent the entire UK population.  This survey is based on one home visit by an interviewer.  Only London residents are paid for the interviews, each of which takes an average of 27 minutes. The rest of the people provide their responses for free.  You can find details about this by clicking this link.  These “interviews” take the form of a highly structured questionnaire in which the questions are coded to fit a database for simple interpretation.  In order to fit this format the questions are often binary – so a yes or no is the only valid answer.  The results of these surveys produce black and white data in a world made-up of infinite shades of ambiguous grey, but make for easy data processing.  You can look in detail at the questionnaire here.  Take section aNN112 for example: The interviewer has to tell the interviewee what defines the readership of printed newspapers and magazines: “It doesn’t matter how much or how little you have read.  Any part of a magazine or newspaper counts.  And it counts even if you have read or looked at only one of the separate parts, sections or magazines, which come with a newspaper.  It counts just so long as you’ve spent at least two minutes reading or looking at any printed copy in the last 12 months.”  Yes, that's right, readership is defined as two minutes or more in the last year.  Throughout the survey, the person being interviewed is repeatedly reminded of this definition of what constitutes readership.  I suggest that a little more honesty is necessary.  If the fairy-tale two minutes per year was redefined at a more realistic two minutes per month, newspaper advertising rates would be decimated but present a much fairer deal for advertisers.  Newspapers don’t really have a choice.  Online measurement of advertising has some fudged aspects but is far more accurate than a printed newspaper readership could ever be. Since the birth of the newspaper industry in the 1700s newspapers have been dependent on advertising for the majority of their income. Paid-for circulation has always made-up a minority share.  Since those early days, advertisers have bought advertising in printed newspapers and magazines on the understanding that the readership was typically three or more times bigger more than the actual sales.  As such they paid a premium for the advertising, and still do.  But when one realises the significance of this crucial readership being defined as ‘anything more than two minutes in a year’, one also realises that the likelihood of a specific advertisement being seen in a particular issue is, at the very least, highly improbable.  Yet this situation still prevails.  Advertising agencies have always spent other people's money, often making commission on that expenditure.  The more advertisers spend, the more profit advertising agencies make.  But now we are in an era where higher levels of accountability for the marketing spend are demanded, and for the newspaper industry the chickens are coming home to roost.  Not only are circulations falling steeply, the advertising rates are diving too. To judge this I've used cost per mille or CPM.  That is the cost for 1,000 people to view an advertisement and, yes, that includes those dubious readership metrics.  The second line on the graph on the right shows that since 2004 to 2010 (more recent figures are not yet available) the CPM for newspapers has almost halved.  So newspapers are caught in a trap: less money is being spent on advertising in newspapers, the papers get less for the advertising space they do manage to sell, and they get less money from their declining paid circulations.  Unfortunately it is a downward spiral into non-existence for many newspapers unless they can radically change their business models.  The situation has become so bad they are being forced to re-think what they do and how they go about it.  Some newspapers will adapt and survive but those that do will be significantly smaller enterprises than they are now and likely to be more honest.  Progress to-date doesn't make me optimistic about the fate of many in the newspaper industry but, like you, I’ll just have to wait to read all about it. May 2012
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Read all about it !

UK printed newspaper circulations

declining steeply...

It’s not very often that you get to view data that clearly shows an entire industry in rapid decline.  But that’s exactly what the data in this month’s charts show so clearly.  The waning of the national printed newspaper industry in the UK has been well documented but not so much research has revealed just how rapidly that decline is proceeding.  I must disclose an interest here.  Between the years 2000 and 2004 I was consulted by two of the UK national newspapers on this chart to help them sort out a strategy for their digital future.  Perhaps I lacked the presentational skill and tact to put over the results of my research in a tolerable form for them, but I don’t think so.  At that time my clients simply couldn’t accept the information I gave them because they were unable to imagine their world without printed newspapers.  But it was clear to me that three distinct developments were converging to wreck their core businesses despite the fact that one newspaper had been established for 190 years and the other for 50.  But longevity is no protection against the tide of change.  Although the top management of both newspapers were used to observing and analysing what was happening about them, they couldn’t, or wouldn’t, see that the Internet was already having a substantial impact on their industry and they had to adapt or drown. The three trends I told them about were the start of broadband, significant price drops for laptops, and the introduction of home wireless networks.  My findings were based on quantitative research methods which were used to select a number of representative people (ABC1 groups), based in different areas throughout the country, who owned an online computer in their homes.  I used qualitative research methods to investigate how people looked for news, by conducting in-depth, unstructured interviews in their homes.  Using my proprietary software I videoed them, capturing their behaviour while they worked on my laptop.  I recorded all their keystrokes and research results as they showed me how they searched online while we talked about offline and online news gathering.  I have found that questionnaires rarely elicit truthful answers but an in-depth interview carried out while the interviewee is engaged on a practical task yields extraordinarily rich and honest data.  Being in people’s homes also enabled me to find out if they had home broadband, which wasn't pervasive then, and if they had more than one computer, which usually meant that they had, or were on the way to having, a wireless network. This was also rather unusual at the time.  My research showed that the move from a family sharing one computer, to each member of the family having their own computer, was remarkably fast.  Once a couple, or each member of a family had their own computers, it usually took around one to two years for the family to stop buying a printed newspaper altogether.  Each person found that they were acquiring all the news they could eat from television and online, usually for free.  When someone in the family did buy a printed newspaper it was usually left around unread, although a Sunday paper might fare better.  At that point there seemed no reason to buy a newspaper and purchasing any newspaper declined over a two to six month period.  I used my research results to build a simple model predicting the speed of decline of printed newspapers. I vividly remember how newspaper managements at that time counted the numbers of visitors to their websites as though they were printed circulation figures.  This confabulation helped to provide an optimistic view of the industry’s future - there is a massive difference in consumption between getting something for free and paying for it.  When I trawled through the web analytic data, (which was very poorly implemented) both newspapers had similar visitor profiles.  Two thirds of the total visitors were overseas and the infant Web advertising industry of the time was obviously not interested in them.  The UK advertising industry was only concerned with the national UK audience.  Both newspaper websites also had a similar distribution of visitors: a small number of intensive users (visiting almost every day) and a great bulk of users visiting once a month and spending less than three and half minutes on the site. Printed newspapers and media buyers have always colluded and fudged (to put it kindly) the size of any readership for their mutual benefit, and at the advertisers’ expense.  For over 300 years the industry has been able to sell advertising very profitably based on an aggregate of the number of newspapers sold plus a vague approximation of the number of possible extra readers who also looked at that copy.  So it’s the sum of the paid circulation of a newspaper and the presumed readership of that paper.  Why do I say a vague approximation of the number of extra readers?  The way the magic number of readers is estimated for the industry is done by using The National Readership Survey, or NRS for short.  For example, the News International broadsheet: The Times, has a paid- for circulation of only 397,549 but, using NRS figures, claims a readership of 1,314,000.  This readership figure is the foundation on which printed advertising is sold.  The advertising industry needed some way of quantifying the media, in order to base rates on which to buy advertising, and clearly decided that as long as the NRS was consistent, and the same for all the newspapers, it would do. Let's look at how the NRS actually arrives at the readership figures.  Over the course of one year a continuous survey of 36,000 people is used to represent the entire UK population.  This survey is based on one home visit by an interviewer.  Only London residents are paid for the interviews, each of which takes an average of 27 minutes. The rest of the people provide their responses for free.  You can find details about this by clicking this link.  These “interviews” take the form of a highly structured questionnaire in which the questions are coded to fit a database for simple interpretation.  In order to fit this format the questions are often binary – so a yes or no is the only valid answer.  The results of these surveys produce black and white data in a world made-up of infinite shades of ambiguous grey, but make for easy data processing.  You can look in detail at the questionnaire here.  Take section aNN112 for example: The interviewer has to tell the interviewee what defines the readership of printed newspapers and magazines: “It doesn’t matter how much or how little you have read.  Any part of a magazine or newspaper counts.  And it counts even if you have read or looked at only one of the separate parts, sections or magazines, which come with a newspaper.  It counts just so long as you’ve spent at least two minutes reading or looking at any printed copy in the last 12 months.”  Yes, that's right, readership is defined as two minutes or more in the last year.  Throughout the survey, the person being interviewed is repeatedly reminded of this definition of what constitutes readership.  I suggest that a little more honesty is necessary.  If the fairy-tale two minutes per year was redefined at a more realistic two minutes per month, newspaper advertising rates would be decimated but present a much fairer deal for advertisers.  Newspapers don’t really have a choice.  Online measurement of advertising has some fudged aspects but is far more accurate than a printed newspaper readership could ever be. Since the birth of the newspaper industry in the 1700s newspapers have been dependent on advertising for the majority of their income. Paid-for circulation has always made-up a minority share.  Since those early days, advertisers have bought advertising in printed newspapers and magazines on the understanding that the readership was typically three or more times bigger more than the actual sales.  As such they paid a premium for the advertising, and still do.  But when one realises the significance of this crucial readership being defined as ‘anything more than two minutes in a year’, one also realises that the likelihood of a specific advertisement being seen in a particular issue is, at the very least, highly improbable.  Yet this situation still prevails.  Advertising agencies have always spent other people's money, often making commission on that expenditure.  The more advertisers spend, the more profit advertising agencies make.  But now we are in an era where higher levels of accountability for the marketing spend are demanded, and for the newspaper industry the chickens are coming home to roost.  Not only are circulations falling steeply, the advertising rates are diving too. To judge this I've used cost per mille or CPM.  That is the cost for 1,000 people to view an advertisement and, yes, that includes those dubious readership metrics.  The second line on the graph on the right shows that since 2004 to 2010 (more recent figures are not yet available) the CPM for newspapers has almost halved.  So newspapers are caught in a trap: less money is being spent on advertising in newspapers, the papers get less for the advertising space they do manage to sell, and they get less money from their declining paid circulations.  Unfortunately it is a downward spiral into non-existence for many newspapers unless they can radically change their business models.  The situation has become so bad they are being forced to re-think what they do and how they go about it.  Some newspapers will adapt and survive but those that do will be significantly smaller enterprises than they are now and likely to be more honest.  Progress to-date doesn't make me optimistic about the fate of many in the newspaper industry but, like you, I’ll just have to wait to read all about it. May 2012
Click here to download the PowerPoint chart: Click here to download the PowerPoint chart: