Why your newspaper, and local Web site, are struggling

Newspapers have been making bad news for a year or so now.

Declining circulation and declining advertising revenue have caused newspaper people to lose jobs. At paper after paper, chain after chain, financial reports show negligible profits or losses. It's time to share a not very guarded secret: This newspaper company is not immune to the industry's illness.

We're fighting two wars: the economy and the Internet.

The economy is the more immediate concern.

The economy of Lodi, like everywhere else, is in a slump caused by careless home lending and high oil prices. Many families have lost their homes and/or their jobs. They aren't buying cars and they're buying only necessities at local stores. Real estate companies are selling foreclosed homes at bargain prices and employers, like us, are laying off workers.

All this has caused the worst slump in advertising — not that I've ever seen — the worst my father has seen. And Dad's been in this business since 1949.

But the economy will recover. In the long-run, our challenge is the Internet. The real struggle is to figure out how to produce a news report in the 21st Century.

Why do we give away news on Lodinews.com?

Dad and I have a fight about that three or four times a year. Those who work in family businesses may chuckle now, but it's a serious question.

My answer — the conventional wisdom in the industry — has two parts: 1) People don't pay for news online; 2) Advertising ought to pay the bills for online news just as it does in the newspaper. For the time being, this answer is wrong.

If it were correct, we wouldn't be in this mess.

So what's wrong? If you're still with me, I'll launch into a little Newspaper Economics 101.

From a publisher's point of view, it starts with circulation. If circulation were holding up, newspapers would just do what they always did and keep taking profits to the bank.

There were a couple times back in the late '80s and early '90s when the paid circulation of the Lodi News-Sentinel hit 18,000. ("Paid circulation" is a count of the average number of papers sold of each edition.) We had 15,170 circulation this past June.

Since 1990, Lodi has grown 11,484 in population; Galt has grown 15,024. Obviously, the News-Sentinel is less read by the people in this area than we used to be. But that's just the newspaper. In July, 8,544 people a day visited Lodinews.com. If you believe surveys, there are about two readers per newspaper; multiply the circulation, add it to the online readership and you get about 39,000 readers a day. Our combined publications are as popular as ever.

But back to Dad's question: Why give away news on the 'Net?

Some papers have tried charging for content and they have a fraction of the audience free sites have. Recently, the New York Times gave up $10 million a year in online subscription revenue and began giving away access to its top columnists. The ad revenue surpassed the circulation revenue in a few months.

But is free online news fair to newspaper readers?

I know a newspaper subscription is not cheap, but when you pay your bill of $8.75 per month ($9.25 in the country), it just about covers the cost of delivery and the paper we print on. Advertising pays for the rest — the news department, the health insurance, the rent, the electricity, the paychecks of the people who print, compose and electronically publish the content and, of course, the advertising department itself.

So there are ads in the paper and ads on the 'Net. What's the problem?

It's all about price and volume.

To simplify it, every issue of the Lodi News-Sentinel has 37 to 40 cents of advertising per reader. Every day, Lodinews.com publishes about 7 to 9 cents of advertising per reader. I'd love to push the price of Internet advertising, but there's a ton of online competition that stands in the way.

Can we make it up on volume? Maybe, maybe not.

Lots of advertising that used to be in newspapers isn't there now and won't make an impact on our Web site anytime soon. Costco doesn't advertise; Wal-Mart rarely advertises in newspapers and doesn't in this one. (Note to Wal-Mart headquarters in Bentonville, Ark.: We'd love to have the insert. Thank you.)

If we can build up Web advertising, this business can transition gracefully from being a newspaper to being a news medium with a print publication, a Web site and who knows what.

Right now, we're losing a little money. Not so much that we can't hang on through the foreclosure mess, but …

When you see 16-page papers with a tiny hole left for world and national news, it's a sign of the struggle. When you miss your favorite comic (we cut Beetle Bailey and Marvin this week) or incomplete baseball stats, it's because I'm trying to save a job, a person to serve you in other ways.

We've left some positions unfilled as people have left, and we've even had a couple of lay-offs. We're not in as bad shape as the big chains in our area who all seemed to buy out competitors using wheelbarrows of borrowed money just before the mortgage crisis hit. Sometimes modest ambition works in your favor.

I'll try not to be too self-important here. It is up to each of you to judge what the newspaper industry's trouble means to America, and what our struggle means to the citizens of Lodi and the surrounding area.

I'll just tell you, saving this paper and its sister publication, Lodinews.com, is the most important thing I've ever tried to do.

And if I have any success at all, it will be because that belief is shared by those who threw your paper, set ink and posted to the Internet early this morning. Those who wrote the stories, gathered information for the ads and sent the bills out yesterday did it for a great deal more than a mere paycheck.

We appreciate your readership and your business. So do our advertisers.

Marty Weybret is the publisher of the Lodi News-Sentinel and Lodinews.com.