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What newspapers can learn from Corn Flakes

Another day of mourning in this business.

On Tuesday, Crain’s Detroit Business ran a headline I have seen many, many times over my nearly 13 years as a journalist: The Detroit Free Press and Detroit News are offering buyouts to senior employees in anticipation of layoffs for the New Year (full story is available here: https://tinyurl.com/yb4obr59).

I can’t think of a single year in the last decade in which there weren’t layoffs, buyouts, furloughs, pay cuts or some combination of all four at some newspaper somewhere.

Data from the Michigan Department of Technology, Management and Budget shows there were fewer than 7,500 Michiganders working in the Newspaper, Book and Directory Publishers industry in 2017. That’s down from more than 16,000 in 2007 and more than 19,000 in 2000.

Those figures, of course, include many more types of workers than just newspaper reporters, but a 60-percent decline certainly rings true when I think of my many friends forced out of the industry.

The reasons for that decline are understandable. According to the Pew Research Center, advertising revenue for American newspapers peaked in 2005 at about $49.4 billion and in 2017 was only about $16.5 billion. It’s just not possible to live with the same largesse when two-thirds of your primary source of income disappears.

But ­­– but! — circulation revenue, the money newspapers make from readers, is the highest it’s ever been, at $11.2 billion, according to Pew. That’s up — up! — from $10.7 billion in 2005.

Circulation revenue is not climbing nearly as fast as advertising revenue is falling. And the increased circulation revenue is because newspapers are more expensive than they used to be, not because more people are reading (in fact, the Pew report shows newspapers have lost more than 20 million subscribers since 2005, a trend underway since 1990).

But what those numbers tell me is that people are still willing to pay for what newspapers can give them.

And our readers are more important to us, financially, than ever before: At our 2005 peak, advertisers accounted for 82 percent of our income, while readers accounted for only 18 percent. Today, the split is only roughly 60-40, and the trend shows us readers are likely to overtake advertisers as newspapers’ biggest benefactors (you can read Pew’s entire analysis here: https://tinyurl.com/yb8g77ht).

And, yet, just as readers are becoming ever-more important to our survival (and we’re charging readers more) newspapers as an industry are giving them a diminished product. I’ve talked in this space before about how shrinking newsrooms mean fewer things get covered, entire features are eliminated, and a smaller editing staff increases the likelihood of typos and mistakes.

(The Alpena News is not immune to those trends, though we still maintain many features eliminated from other papers, such as a daily Lifestyles page and weekly church directory, and our single-copy prices are comparatively very affordable).

Business is not my forte, and I would never want to sit in the corporate boardrooms where such decisions are made, but it has never made sense to me to think that charging people more while giving them less is good business sense.

Growing up, as I did, in the land where Corn Flakes were invented, you tend to learn a lot as a schoolchild about W.K. Kellogg. One of the more famous W.K. stories is how, during the Great Depression, when other companies were scaling back and sending their employees off to the bread lines, ol’ W.K. doubled down on making a quality product and spent big on advertising (his partnership with a Chicago ad firm helped create modern advertising themes still present today).

At one point, there were more than 200 cereal companies in Battle Creek and the surrounding area. By the end of the Great Depression, there were only a handful. And the biggest and strongest of those was the Kellogg Co.

Again, I’m no businessman — in fact, thinking about financials like this just depresses me — but it seems to me the trendlines are showing us newspapers can’t cut their way out of this hole. Advertisers are never coming back the way they were (the internet provides too many other, often more affordable options for businesses to tell their story), but our most loyal readers are willing to pay more to stick with us.

Maybe, instead of rewarding them with an inferior product, we ought to go the way of W.K. and double down on giving them a better example of what they pay for.

Maybe that’ll grow the readership that is very quickly becoming our bread and butter, and we’ll do a better job serving our communities while we’re at it.

Justin A. Hinkley can be reached at 989-358-5686 or jhinkley@thealpenanews.com. Follow him on Twitter @JustinHinkley.

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