The Decline and Possible Death of the Canadian Newspaper

In November Postmedia and Torstar swapped over 40 small newspapers and shut down most of them. This week is also the last for the Moose Jaw Times-Herald, which is 128 years-old. Meantime, the Globe and Mail reduced the size of its print edition to save costs.

In all cases, the reason for the closures is falling revenues, from circulation and advertising. Their demise is a sad backdrop for my friend Ken Goldstein's latest analysis of the future of print newspapers in Canada. 

Requiem for the print edition. That’s what Ken Goldstein of Communic@tions Management Inc. calls his most recent report on the future of newspapers in Canada.

In the report Goldstein, a leading authority on media economics and trends, notes that for much of the 20^th century the printed daily newspaper was a tangible expression of “continuity and familiarity.”

Today that “tangible form” is under serious threat from technology—the digital world.

As a result, he writes, “most of our general interest daily newspapers [have been put] into a downward spiral towards an unsustainable future.”

It wasn’t always this way, of course.

Historical data collected by Goldstein shows that daily newspaper circulation grew slowly in Canada immediately after Confederation, when 16.7% of households received a newspaper.

Paid circulation as % of Canadian households, 1867-2017

A period of more rapid growth began after 1880, in tandem with increased urbanization, the spread of railways and the telegraph, and the changes in technology and scale in the production of the newspapers themselves.

As a percentage of households, the peak occurred around World War I, with another slightly lower peak after World War II.

The early 1950s was the start of a period of about 40 years in which circulations grew, but not as fast as households.

Since the 1990s, actual circulation, and the relationship to households, have both declined.

“So we find ourselves in a very interesting place,” he writes. “Daily newspaper paid circulation in 2017 is equivalent to 14.8 per cent of households, which is lower than the percentage was in 1867.”

Paid circulation trend line to 2025

If this trend continues, he says, the percentage of households paying for a daily newspaper could fall to 10% by 2020, and to 5% by 2025.

In his 2015 discussion paper, which I wrote about on this blog, he noted that he “did not believe that a viable print business model exists for most general interest daily newspapers once paid circulation drops below 10% of Canadian households.”

At that time, he wrote, “Canada’s daily newspapers now are engaged in a 10-year race against time and technology to develop an online business model that will enable them to preserve their brands without print editions.”

Even more difficult, he says, is for them “to try to enable their online presence to maintain their current journalistic scope.”

Since then, the downward trend has accelerated, he says.

“The race against time and technology is no longer 10 years; it is closer to five.”

That urgency has become more evident in 2017, as more newspapers have closed.

Industry groups and others have put forward a number of suggestions, often involving government assistance, to deal with the problem.

Loss of Advertising & Death of the Classifieds

It's not just dropping circulation that is killing daily newspapers; so is the drastic decline in advertising.

Nothing illustrates this better than the death of the classifieds.

From a peak of $875 million in 2005, by 2016 newspapers only received $105 million from classifieds, Goldstein notes.

“The collapse of classified advertising in daily newspapers is a classic example of the ‘unbundling’ effect of technology,” he writes.

Through this unbundling, competitors like Craigslist and eBay were able to steal this lucrative part of the newspaper business.

Loss of this revenue is devastating for newspapers; as often has been said, circulation pays for the paper and the ink, but advertising pays for the journalism.

Back in 1964 media guru Marshall McLuhan recognized this: “The classified ads (and stock-market quotations) are the bedrock of the press. Should an alternative source of easy access to such diverse daily information be found, the press will fold.”

Sadly, his prediction seems to be coming true.

Near the end of the report, Goldstein wonders: Is it possible for newspapers to make the print-to-digital transition?

“Given the trends in circulation and advertising revenues, it seems unlikely that most general interest daily newspapers will be able to make the print-to-digital transition,” he writes.

There may be a small number of unique cases, he says, involving national or special interest daily newspapers.

“But for the classic mid-size local general interest daily newspaper, the prospects are not good.”

What’s the Solution?

So: What’s the solution?

For Goldstein, it means planning now for the paperless newspaper world.

“Both public and private policymakers should be spending the next few months modelling possible futures,” he says.

Things they need to discuss include the best ways to serve the public and public policy goals, best ways to intervene to help newspapers survive, and what to do if they completely fail—how will Canadians be informed?

Goldstein concludes by noting that the trends he has observed “are more than just some interesting history about newspaper circulation in Canada. They tell us where daily newspapers have been, but they also may be telling us where daily newspapers are going.

“Planning for the transition before we get there is not a luxury; it’s a necessity.”

What does this mean for non-profits? 

I'll do a longer post later, but for now let me put it this way: Three of the papers shut down by the Postmedia-Torstar swap (noted above) carried a lot of information about my organization. 

Their loss will make it more difficult for us to communicate with our supporters in those communities, and then to raise funds.

It may not be a requiem only for newspapers, in other words.

Read Ken’s complete analysis here.