Hussman discusses news industry with Rotary club

The Bella Vista Sunrise Rotary met virtually with Walter Hussman Jr., publisher of the Arkansas

Democrat-Gazette, to hear about the news industry, why it’s struggled in the 21st century and changes the paper is implementing to try to stay afloat.

Hussman explained that while newspapers have been around for most of the nation’s history, over the past century new forms of media have emerged — though as recently as 1980, papers still had the largest share of advertising income, bringing in just under a third of it.

But new forms of media were growing.

In 1990, papers received 28% of ad revenue, and by 2000 that dropped to 22%, he said.

“Their share of advertising in the United States was declining,” Hussman explained.

There was plenty of money to keep reporters active, he said, but things started to change in the early 2000s as the internet exploded.

The Associated Press began selling news articles, with major companies like Google and Yahoo purchasing the news to put on websites supported by advertisements, he said.

By contrast, most papers put their news on websites for free, expecting to reap significant rewards through online advertising.

“That Bonanza never materialized,” he added.

Further, people became accustomed to getting their news for free online, an effect that grew as internet connections became faster and news became easier to use, he explained.

Despite this, newspaper revenue was on the rise until it peaked in 2006, and in 2007 smartphones became widely available, he said.

“They could now get all the news right here with them anywhere they went,” Hussman explained.

Advertisers found that by tracking consumers, they could get far more effective advertising with targeted ads — something companies like Google and Facebook have been more than eager to capitalize on — compared to the older approach of maximizing reach, he said.

The net effect has been that newspapers now receive approximately 5% of all advertising revenue; and news, which peaked at $47 billion in 2006, is now a $12 billion per year industry, Hussman said.

“That’s a 75% decline,” he said. Personnel numbers have been reduced and more than 4,000 papers — mostly weeklies — have shut down since 2004, he said.

On trips over the past few years, Hussman said he looked at papers from other areas and found they were typically smaller, with fewer sections and more advertising per page, often while charging more for subscriptions.

“They cut their staff, they cut the amount of space for news,” he said. “We were just cutting our profits.”

But in 2018, he said, the Arkansas Democrat-Gazette started to actually lose money and something had to shift.

The thought was to reduce expenses on the production side rather than the journalism side, he said, particularly because some of the paper’s 100,000 home delivery subscribers live in rural areas that are seeing a lot of delivery miles for a handful of papers.

A digital delivery eliminates that cost, he explained, but it also means customers need a device.

If subscriptions are widespread and priced high enough — a target set at $34 per month — the company can provide iPads for readers to read a digital copy of the paper, he explained.

Trial runs starting in smaller communities have seen residents taking the newspaper digitally via a provided iPad and receiving a printed Sunday copy with a great deal of success, he said.

The new format also allows for additional pages and updates in different parts of the day, it’s available anywhere and users can store back issues without taking up physical space, he said.

Trial runs have been successful in Harrison and Fort Smith, he said, and started in Fayetteville — though social distancing has slowed the rollout in the rest of Northwest Arkansas.

“We have an opportunity to continue to provide a complete, comprehensive newspaper that does a lot of reporting,” he said.

Rotary president Dick Schrad said he was very impressed by the presentation.

“I would really like to thank you for spending so much time with us today,” he said. “I think what you’re doing is remarkable.”

Full disclosure: Walter Hussman Jr. is the publisher of the Arkansas Democrat-Gazette and other newspapers, including the Weekly Vista.