Freedom of the Press

After years of giving away their products online, Motown’s once mighty newspapers are still reeling from the aftershocks. With circulation and ad revenue continuing to drop — and most of the papers still available free on the Web — The Detroit News and Free Press have drastically cut back on home delivery — and on staff. So can their groundbreaking new Internet strategy keep Detroit’s newspapers aloft?
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Illustration by Poul Hans Lange

When asked how Detroit’s newspaper experiment is going, Rich Harshbarger, the papers’ vice president for consumer marketing, likes to talk about Fred Roperti, a 77-year-old retiree in Salem Township.

Roperti was initially angry when the news came that the Detroit newspapers would no longer offer home delivery seven days a week. But when the papers moved largely online at the end of March, he found he liked the idea. In fact, he wrote the editors a laudatory letter, which they swiftly published.

“This is my second day with the new system and surprise, it’s much better than I imagined,” the elderly widower said. Now, he gets up in the morning, makes coffee, and then ambles “upstairs to my bedroom where my computer and desk are located. One benefit so far — I don’t have to jump into a cold car in my pajamas and drive to the end of my driveway to get the newspaper.

“And if I want to go out for breakfast on those non-delivered days, I can just stop at the gas station and get a paper. What more can a guy ask for?”

However, not every subscriber shares his enthusiasm. Elizabeth Zerwekh is at least as computer-literate as Roperti and, at 55, is young enough to be his daughter. A rare books librarian in training, she recently completed a mind-numbing grad-school computer course at Wayne State University. A Free Press reader for most of her life, she prefers reading a newspaper on paper and doing the crossword puzzle in ink in her West Bloomfield Township home. “I don’t want to read the paper online,” she says. So she doesn’t download the crossword puzzle and print it out. Instead, she’s switched to The New York Times.

For the Detroit Media Partnership (DMP), survival depends on converting readers to the brave new world of online publishing. “We absolutely believe in rich, robust printed newspapers seven days a week,” says Harshbarger, a Gannett executive now serving his second stint in Detroit. “We simply can no longer afford to [home]-deliver them every day.”

Nobody doubts that Detroit’s newspapers have been losing buckets full of cash. An internal Gannett memo leaked last year revealed that they were losing money in 2007, when the national economy was booming and virtually every other Gannett paper was turning double-digit profits. (The company does not publish profit-and-loss statements for individual papers.)

But those margins were ebbing more and more every year. By 2007, the situation had become especially acute in Detroit. Nobody then foresaw the stock-market collapse or the downfall of the housing and auto industries, among others.

It was clear, however, that the more people came to understand the local economy, the harder it was to envision a scenario where the Detroit papers would again be rolling in dough. So, led by Free Press publisher David Hunke, Detroit newspaper executives began formulating a secret plan called “Project Griffon.”

Finally, on Dec. 16, 2008, after other media outlets began reporting details of the online experiment, the DMP made the announcement. Beginning March 30, the newspapers would be delivered only on Thursdays, Fridays, and Sundays. However, subscribers would be able to read a “virtual newspaper” online seven days a week. Alternatively, they could go to the store and buy a paper or, for a substantial extra fee, have one delivered that day in the mail.

Clearly, the hope is to convert readers to the Internet as completely and quickly as possible. “There’s no going back,” Hunke said at the time. If the experiment works, it could mean that Detroit has invented the platform for the newspaper of the next century. If readers migrate en masse to the World Wide Web, it could prove the newspaper industry’s salvation. Freed of much of the cost of delivery and paper, newspapers would be able to operate with drastically reduced overhead.

That is, if it works.

The history of Detroit’s newspapers over the last quarter-century is largely a history of shortsightedness and disappointment. To understand what’s happening today, you have to follow a trail back to the infamous Joint Operating Agreement, a 1986 merger of the business functions of The Detroit News and Detroit Free Press.

On April 14 of that year, after ages of all-out, exciting, and expensive head-to-head competition for readers and advertisers, the News and Free Press announced they were applying for a JOA. The News, which had been acquired by Gannett just weeks before, and the Free Press, owned by the Knight Ridder chain since 1940, would ask the federal government for permission to merge their business operations while still publishing separate papers and maintaining competitive newsrooms.

That was something allowed by the Newspaper Preservation Act of 1970 — but supposedly only when one of the papers was in danger of going out of business. The Detroit JOA was a bitterly controversial move opposed by suburban publishers and media watchdogs for a plethora of reasons.

One of those was that when it was announced, it was seen by all parties as a license to print money. Newspaper execs talked of $100-million-a-year profits as far as the eye could see and as long as the agreement lasted, which was to be for 100 years. After many bitter courtroom wars, in November of 1989, a divided U.S. Supreme Court allowed the JOA to go forward. The corporations celebrated, but the JOA never worked as well as it was supposed to. There were horrendous coordination, delivery, and morale issues; readers and advertisers griped they were being asked to pay more for less; and many subscribers canceled one or both newspapers.

 

Not until 1994 did the JOA show signs of making serious money (a reported $46 million). But by that time, circulation had plummeted considerably. The Detroit Free Press had about 630,000 daily subscribers in 1985; nine years later, that was down to around 530,000.

The Detroit News, always the circulation leader before the merger, was now a distant second, largely because it had to abandon its morning edition and publish only in the afternoon. But with money now finally coming in, the employees — some of whom hadn’t had a raise for years — anticipated a fatter contract.

But that wasn’t what management had in mind. What was then called the Detroit Newspaper Agency was, in fact, controlled by Gannett, which had a 3-2 majority on the joint board. They intended to impose a series of changes and efficiencies, as well as a “merit pay” system that was anathema to the unions. The result was a dramatic strike that began on July 13, 1995.

When it ended more than a year and a half later, the unions were the big losers. The newspapers had kept publishing throughout, though sometimes as a combined edition. They had, however, lost a boatload of ad revenue (one estimate was $200 million), as well as sizable circulation. By the time the unions threw in the towel in February 1997, much of the advertising had come back. But few of the many lost subscribers ever did. “Newspaper reading is a habit,” says Ben Burns, now a professor and head of the journalism program at Wayne State University, and a pre-Gannett executive editor of The Detroit News. “When people lose it, they often never return.” Neither did many of the area’s better journalists.

While the strike was on, many of them left town or simply ventured into other careers. Morale within the papers turned sour, as returning strikers had to mingle with strikebreaking “replacement workers” and other longtime employees who crossed the picket line to return to work.

The newspapers were also less and less beloved by the public. A number of their most popular columnists had retired (Jim Fitzgerald) or were fired in connection with the strike (Susan Watson). Soon after the strike ended, Bob Talbert died and the Free Press never found a replacement.

But the real threat to the newspapers’ future was something that no one saw coming — something that had been invented in 1989, the same year the JOA was approved. Nobody took notice when it happened, or devoted a word of newsprint to it at the time. In fact, most people today have still never heard of its inventor — a Brit by the name of Timothy Berners-Lee, who’d been toiling away anonymously in a Swiss laboratory.

Everyone now, however, knows his creation: the World Wide Web.

The World Wide Web made the Internet, until then a clunky virtual apparatus requiring reams of codes, easy for everyone to use. (Berners-Lee, then a 34-year-old “techie” who drove a 13-year-old Volkswagen, refused to patent the Web and never made a penny from one of the world’s most influential inventions.)

Newspapers were intrigued by the idea. Soon they began assembling teams to figure out how to put their stories on the Web. Apparently, they never thought they might be sowing the seeds of their own demise. When the Detroit newspaper strike began, the newspapers launched their Web sites. This was seen as a brilliant way to allow customers to read the paper during the strike without risking disapproval by buying one.

But the papers kept the Internet sites up, running, and serviced even after the strike ended — and access to the papers online remained entirely free. The problem they were creating for themselves was neatly summed up by the comic strip Pearls Before Swine, carried, ironically, in the Detroit Free Press:

Panel 1: The newspaperman says, “Would you like a newspaper? Me and my business development manager sell all the news of the neighborhood for just one dollar. Or, if you like you can read it all online for free.”

Panel 2: “Why would I buy it if you’re giving it away for free?”

Panel 3: (Silence.)

Panel 4: The newspaperman, who, in the strip, happens to be a rat, says, “If you’ll excuse me, I need to kick my business development manager in the oompa loompas.”

With the newspaper available free, and more and more Americans doing their reading online, demand for the print product shrank. The JOA, written to last for a century, was drastically reorganized after fewer than 16 years. In August 2005, Knight Ridder capitulated and sold the Free Press to Gannett, which in turn sold the afternoon News to Dean Singleton’s MediaNews Group. (Knight Ridder, once one of the nation’s great newspaper groups, soon fell apart entirely and was dissolved.)

The JOA was then rewritten under vastly different terms, apparently without any approval needed by the government. Gannett is now entirely in control and, according to required filings with the U.S. Securities and Exchange Commission, gets 95 percent of any profits.

The Detroit News, an afternoon paper since its creation in 1873, moved to morning circulation, something all sides hoped would stem the circulation decline. It didn’t. News circulation, which was 218,841 when it last was an afternoon paper, had, by March 2009, fallen to 169,748.

 

The Free Press didn’t fare any better; according to Harshbarger’s figures, it declined from 347,447 to 290,732. Combined, these papers were selling one-third the number of papers they did in 1985. And back then, they also sold 1.6 million papers on any given Sunday. In March, that had plummeted to 585,072.

That’s when the newspapers pulled the trigger and launched their great experiment. “We think it’s time to quit sticking our heads in the sand, taking incremental steps and, frankly, relentless across-the-board expense cuts in our business in the name of hoping it comes back to the way it used to be,” said Free Press publisher David Hunke last December. Almost nobody would quarrel with that logic.

But what are this new model’s chances of success?

In late May, Rich Harshbarger was optimistic. “There’ve been a lot of bright spots,” he says. On “express days,” when the newspaper is not home-delivered, single-copy sales are up 27 percent over a year ago, or 39,000 copies.

What he doesn’t mention is that that may not be surprising, since the papers aren’t delivering several hundred thousand copies they used to. Editor Paul Anger said in May that in the weeks after March 30, about 3.5 percent of Free Press subscribers had canceled their subscriptions.

Another 6,100 customers have opted to get same-day mail delivery of an early edition of the paper. (The drawbacks of this were apparent the very first day, when the mail subscription lacked the big story of President Obama’s “right-size or declare bankruptcy” ultimatum to Chrysler and General Motors.)

Customers who subscribe to the Internet version or the three-day delivery version also get access to a “virtual newspaper” online that they can zoom in to or turn the pages of on their monitor. “We now have 30,000 people a day using our electronic edition,” which is open to subscribers only, Harshbarger says. What might be most encouraging is that those people are spending an average of 18 to 21 minutes a day with the PDF versions.

However, one can still read the old online versions of the News and Free Press at no cost, whether they’re subscribers or not. And how many people do that every day? “On average, 3.5 to 4 million,” Harshbarger admits. But Project Griffon also faces two major hurdles that the Detroit Media Partnership may be powerless to do anything about.

Newspaper readership is something that increases with age. National surveys show the average newspaper reader is about 55, the same age as Elizabeth Zerwekh, who switched to the print version of The New York Times because she doesn’t like her news on the Net. The older readers are, the less they like the World Wide Web.

Fred Roperti might like it fine, but he’s far from typical. A Gallup poll published in January found that 52 percent of people over 65 never go on the Internet. (Roperti, a retired Ford engineer and local politician, has spent his life learning new technology.)

Twenty years from now, this might not be an issue. But the papers don’t have years to wait to show a profit. They aren’t showing one now, in no small part because of the dramatic crash of the auto industry. For years, newspapers across the nation have struggled to try to make money from online advertising. Efforts were starting to pay off, although more slowly than the industry had hoped. Then came the current “recession.”

The Detroit Media Partnership’s Harshbarger admits the newspapers are still losing money. Michigan has the worst jobless rate in the nation and an economy likely to worsen as the auto industry further contracts. One indication of how bad things are: Online advertising actually declined in the first months of this year, Harshbarger admits. Project Griffon, David Hunke had said in December, was designed to avoid further rounds of “cuts in our business.”

But on May 21, Paul Anger, by now both Free Press editor and publisher, announced that about 10 percent of the editorial staff would be laid off before the end of June, including four managers. He also closed the newspaper’s library, which conducted research for reporters.

Morale at the newspapers was reported to be worse than it’s ever been. Joel Thurtell, a longtime Free Press reporter who took a buyout in 2007, places the blame squarely on Gannett. “Through their corporate greed,” he says, “they’re destroying news organizations that served metro Detroiters well for generations.”

Hunke, by that time, was gone, having left to become president and publisher of Gannett’s flagship, USA Today. Earlier that week, Harshbarger said that as the new multimedia nature of the DMP becomes more firmly established, he hoped advertisers would stop thinking of the Detroit Free Press and The Detroit News as “newspapers.” Instead, “they should see us as a marketing partner for all their business needs.”

What isn’t clear is whether that will happen soon enough, or how appealing the product will be, stripped of much of its talent. Another longtime staffer, who called the night before “Project Griffon” was announced, made an interesting observation:

“Do you know why they’re calling it that?” she asked. “Someone in top management thought that was the name of the ship Cadillac arrived [on] when he discovered Detroit.”

Indeed, Antoine de la Mothe Cadillac arrived on July 24, 1701, but in a canoe. Le Griffon was, in fact, the Great Lakes’ first full-sized sailing ship. Three-hundred thirty years before the Detroit newspaper project named for it was launched, that first Griffon set sail from what is now Green Bay, Wis. The vessel, however, vanished without a trace.

That’s not a good omen. But Steven Lacy, a professor in the school of journalism at Michigan State University and an expert on media economics, is a little more optimistic. His studies indicate that people who value news will pay. “Just how many people will pay and how much,” he says, “are issues each market must decide through trial and error.”

How long that will take, or what the outcome will be, is anyone’s guess.

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