Over a year ago in early 2018, I realized the Arkansas Democrat-Gazette was at a crossroad. For the first time in over 20 years, the newspaper would lose money in 2018. Our profit had declined every year for a decade, but we were now unprofitable and losses would be mounting.
Why had the Arkansas Democrat-Gazette become unprofitable in 2018? It related to a complete disruption of the newspaper business model for all newspapers in the United States. Total advertising revenues for all newspapers in the country, from The New York Times to the smallest weekly, were a combined total of $46.6 billion annually in 2000. But ad revenues declined to $11.8 billion in 2017, down 75%. Newspapers typically got 80% of the revenue from advertising and 20% of their revenue from readers. Most family-owned newspapers had been sold by the end of 2017, while there were still buyers. many newspapers had become unprofitable with hundreds of newspapers closing. Back in 2000, newspapers still got 22% of all the ad revenue spent in the United States. But by 2017, it was down to under 5%.
Although newspaper advertising still works, drawing shoppers into stores, many advertisers turned more of their spending to targeted advertising offered by companies like Google and Facebook, who had successfully convinced many Americans to sacrifice and give up their privacy. Also, Amazon was changing the way many Americans shop, causing a number of retailers such as Sears and others to declare bankruptcy. Many had been great advertisers in newspapers, but many were no longer in business.
Confronted with this reality, one logical option was to cut back on unprofitable circulation in remote areas of the state, something most newspapers had done years earlier. But realizing that newspapers are not just a business, but a public trust vital to our democracy, we tried to determine some way we could continue to be a statewide newspaper delivered to all 75 counties. We knew that thousands of our subscribers had started reading the exact replica of the newspaper on their own iPad. Most told us they liked it so much they had continued their subscription but had stopped reading the print copy.
So we decided to try and experiment in Blytheville, Arkansas, 186 miles from Little Rock, in March 2018. It was very expensive and unprofitable to deliver to 200 subscribers in an area with about 5,000 households. We realized we could deliver the exact same newspaper in the exact same format but on an iPad rather than on paper. We also realized that many of our subscribers did not own an iPad. So we included an iPad with the subscription, allowing them to read an even better version of their paper. But we knew many would not know how to use it. So we decided to offer one-on-one customer service. We sat down with each of our subscribers and gave them their iPad, showed them how to use it, and showed them how they could read the newspaper on it. We did this in a local Holiday Inn, one on one, and with some subscribers unable to come to the Holiday Inn, we went to their homes and delivered the iPad and explained how to use it.
The Blytheville experiment was successful with over 70% of our subscribers converting to the iPad. We did a survey later, and we found most subscribers were reading it as frequently as the print edition. Most said they found it hard to believe, but they actually liked the newspaper better on an iPad.
We determined that if 70% or more of our subscribers converted from the print edition to the iPad, we could eliminate considerable costs in production, newsprint and delivery expenses. We found that if subscribers paid the existing full subscription price, we could turn an unprofitable newspaper into a profitable one again. And we could do this without reducing any cost in our newsroom, allowing us to continue to offer complete coverage and deliver it throughout the state of Arkansas. Today, we have over 100 staffers in our newsroom compared to, for example, The Denver Post with 60.
Over the past year, we have now converted subscribers from newsprint to an iPad in most of the counties in the state. And they have told us the same thing: they read the iPad version just as regularly, and surprisingly to them, they like it even better.
Why do they like the iPad version better?
- The most popular feature is the ability to enlarge the type, simply by touching the article and spreading two fingers apart on the screen. This makes the type larger, and it is much easier to read the newspaper.
- The clarity of the type and photos on the iPad are much sharper than in print. And on the iPad, every photo in the replica is in color.
- Articles can be shared with friends or family. You can do this simply by pressing a few buttons and sending by email, or on social media such as Facebook or Twitter.
- News items can be read aloud to you from your iPad. This is convenient when you are in a car or somewhere else where you can't devote your visual attention to reading the paper.
- The paper is delivered in your house, not outdoors, so no more going out in the cold or on a rainy morning to get the paper. The iPad edition also has later news, with everyone in the state getting the city edition, and it's delivered earlier, almost always before 4 a.m.
- The newspaper can also be delivered and downloaded to your iPad anywhere, even if you are in another state. It is also portable, and once you download the newspaper, you can carry it with you anywhere.
- You can store the past 60 days of editions on your iPad. So if someone asks you, "Did you see that article in the paper the other day?" you don't worry that the paper has already been discarded.
- With an iPad and our subscription, you can now access free of charge all of the archives of the newspaper.
In addition to reading the newspaper, you can use your iPad for multiple purposes, like sending and delivering emails, exploring the internet, watching movies, reading books, listening to music, taking photos and compiling your own photo library.
We also learned that many of our subscribers prefer reading the Sunday paper in print rather than the iPad. The Sunday paper has far more sections, including lots of advertising circulars. So subscribers converting to the iPad subscription will get both the digital replica and the Sunday print edition.
Many newspapers in America still confront enormous challenges. There has been a hostile takeover attempt for Gannett, the largest newspaper company in the country. Some investors are buying newspapers for short-term profits before they liquidate and close them. Other newspapers in some large markets, like the Philadelphia Inquirer and The Salt Lake Tribune, have been donated to 501(c)(3) charities, hoping to remain alive with philanthropy.
We believe the most sustainable business model ever created was to have a company that is profitable. As long as a business is profitable, someone will continue to operate and sustain it.
Although newspapers will never be as profitable as they once were, we believe we have found a way to return the Arkansas Democrat-Gazette to profitability and provide a better and more robust reading experience for our subscribers. To do that, we need all of our subscribers to embrace the iPad replica newspaper experience. If we have not yet contacted you, we will be sending you a letter sometime later this year inviting you to sit down with one of our representatives to show you how to enhance your reading experience with the newspaper seven days a week and still receive the Sunday print edition. By continuing your subscription, you will help support journalism and the quality of our news and reporting for years to come.
Walter E. Hussman, Jr.