Polishing the Brass on the Titanic (Continued)

On Thursday, I wrote about the downward plunge of newspaper circulation in the U.S. based on the recent numbers released by the Audit Bureau of Circulations. The average decline in circulation for daily weekday papers was 10.6 percent (or about 30 million copies), based on numbers from the past six months compared to the same six months in 2008.

But, before we freak out any more about the end of American newspapers as a whole, Daniel Gross of Slate has a word of advice: Chillax. (Really, that's exactly what he says in the article.)

Here's why he thinks things aren't as bad as they might seem:

"First of all, there's nothing ipso facto shocking about a decline in patronage of 10 percent in six months. Many political blogs and cable news shows have seen their audiences fall by much more than 10 percent since the feverish fall of 2008. And advertising at plenty of online publications has fallen by a similar amount. In case anybody has forgotten, we've had a deep, long recession, a huge spike in unemployment, and a credit crunch. Consumers have cut back sharply on all sorts of expenditures....

...Many other components of consumer discretionary spending—hotels, restaurants, air travel—have fallen off significantly. Do we draw a line from trends over the last few years and declare that in 15 years there will be only a handful of hotels?"

Certainly the election last fall drove circulation numbers higher than they would have been, resulting in a more dramatic falloff in the time since, but that doesn't change the fact that the decline exists. And if it continues to slide, even at a slower pace, that's bad news, right?

Wrong, says Gross, because falling circulation does not necessarily mean falling revenue. Many papers have increased prices at the newsstand and for home delivery. So, while the New York Times has seen a 7.3 percent drop in circulation, they have also announced that revenues are actually UP 6.7 percent in the third quarter. At the same time, income from circulation surpassed income from advertisements for the first time, ever.

Of course the question is whether the higher costs can balance out the losses that are being felt in advertising (traditionally the way newspapers made their money), while at the same time not driving away so many customers that even higher prices are forced upon those that remain. It does not sound like a good long-term plan, but at least there might be hope.

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