Detroit Papers Face Three Tests with Delivery Cuts, Digital Editions

On Monday, all eyes in the journalism world shift to Detroit, where the Free Press and The News will cut home delivery to just Thursdays, Fridays and Sundays. Free Press publisher Dave Hunke, who also heads the JOA with The News, says he’ll measure success three ways:

  • Replacing steep losses with positive cash flow
  • Converting customer disruption to customer satisfaction
  • Discovering a digital platform that that attracts the paid loyalty of a mass market

“If we do all of that stuff,” Hunke said in a telephone interview Wednesday, “then I am going to be a very happy person.”

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As radical as the cutbacks sounded when Hunke announced them Dec. 16, several more dramatic developments have hit the newspaper business in the three months since. They include the death of Denver’s Rocky Mountain News, the conversion of the Seattle Post-Intelligencer to online-only and this week’s announcement that The Ann Arbor News will dissolve its current operations in favor of a new AnnArbor.com this summer.

But the Detroit moves are still critical because they represent the sort of hybrid approach that more and more news organizations are considering. And no one has done it before.

“We’re doing some things in Detroit that are going to be stunning,” Hunke said, “and we know we’re going to be watched.”

I confess to more than professional interest in what happens. I worked for the Free Press for nearly 20 years until 1992, and a relative has spoken out about his dismay about the delivery cutbacks.

Key to the plan’s success, Hunke suggested on the Lehrer News Hour last week, will be shifting the Detroit story from cutbacks in print delivery to the exploration of new ways of putting journalism in front of readers.

“You can’t negatively market your way into anything,” he said. “But by mere fact of some scarcity and I guess you could call it deprivation, “We think there is a hybrid business solution to this.”
– Detroit Media Partnership CEO Dave Hunke
I think we’re going to find out a lot very quickly about the mass market’s adaptability to digital delivery of edited, written — meaning with a beginning and end — news content.

“And our goal is very much to stay in the newspaper business. We think there is a hybrid business solution to this. I think the public will begin giving us feedback about information they’re willing to pay for and how might we deliver it to them.”

Beginning March 30, the newspapers will print smaller editions on Monday, Tuesday, Wednesday and Saturday and will distribute only to 18,000 vendors and newspaper boxes — no home subscribers. The idea is to cut costs on those days and to maximize revenue on the days most popular with advertisers and readers: Thursday, Friday and Sunday.

On non-home-delivery days, the papers plan to print about 200,000 copies, down from the current press run of nearly 500,000. He said he’s not sure how The News and Free Press will divide the press run. Currently, the Free Press accounts for about 60 percent of daily sales, but he said the new arrangement will mean that “the best newspaper will win every day.”

Hunke said he has become such a believer in the hybrid delivery plan that he wishes he “would have done it a year ago.” He said the plan required extraordinary collaboration among the organization’s 2,000 employees: “Barriers in this place have never been down as much as they are now. And it’s paid off.”

As part of an arrangement with the Teamsters union, the papers have agreed they will no longer be involved in the business of distribution on those days. But Hunke added: “I’m not naive. I could easily see somebody buying 10 papers at a gas station — or more — and distributing them to their neighbors.”

Hunke has told colleagues that The News and the Free Press must achieve positive cash flow by the end of 2009.

“I’m going to begin to eliminate news print, gasoline, manufacturing and infrastructure costs, and we are going to preserve our news, our marketing, our finance functions.”
-Detroit Media Partnership CEO Dave Hunke
“If we are not a viable business, carrying our own weight, we will have proved nothing,” Hunke said Wednesday. “It might have been better to have risked nothing and hide behind Michigan’s economy.”

Hunke said advertising is sold out for the first two weeks of the scaled-back editions, which will include 32 pages in a single section for the Free Press. The News plans a two-section paper.

The papers have committed to a 50-50 split of news and advertising on the non-delivery days, compared to a share that now approaches 60 percent advertising. That, along with fewer pages and cheaper ad rates, may yield the kind of scarcity the papers hope will intensify demand among advertisers.

Sounding a bit like public official seeking sacrifice in hard times, he suggested that achieving customer satisfaction will require readers to accept a “shared burden” of getting the news delivered. He added: “We are going to disrupt one of the most traditional, good-morning parts of anybody’s life and I need readers to tell me, ‘You know, in the end, this works for me.’”

The public is beginning to understand, that “traditional newspapers may be in very serious trouble,” he said. “People are far more ready to talk about different and more flexible and exciting forms of delivery of our content.”

Since announcing the plans, the paper has heard from more than 30,000 readers, most of them by phone, according to Hunke.

“In the very beginning it was a mix of anger, sadness — then it began to move quickly to, ‘What about my bill?’” and other logistics questions, he said.

The most popular delivery option has been the $12-per-month combo that provides Thursday, Friday and Sunday delivery and access to a special digital edition (separate from the papers’ Web sites) all seven days.

Many staffers argued that the papers have an obligation to serve longtime readers who are not comfortable with digital delivery. As a result, 200 senior centers were added to the list of drop-off spots on non-delivery days.

He said he was surprised that about 6,000 people have opted for a $31.13-per-month deal that involves postal delivery four days a week. He doubts the long-term viability of such delivery, guessing that it might involve a lot of “adult children buying subscriptions for elderly parents.”

Hunke described the third test facing his plan as the “need to see some very concrete evidence that a mass market … begins to show tremendous appetite to transact news and information in some form of digital platform. And I mean different from our Web sites that are free.”

He acknowledged that the four-day switch from print to digital delivery is a long way from achieving wholesale acceptance, with about 20,000 subscribers opting out of getting the digital edition so far.

Hunke said he will make a major announcement Monday about the paper’s new e-reader, an 8 1/2-by-11-inch device produced by Plastic Logic. He estimated the papers have about 100 of the e-readers but added, “we haven’t decided how we’re going to roll this out.” A blog item posted Monday to a New Jersey newspaper’s site includes photos of the device and a YouTube video describing its use.

Readers who do manage to track down a print edition on Monday will discover a significantly redesigned newspaper. Among other things, the reduced news hole has prompted a “no-jumps” rule for the Free Press — not only on non-delivery days but throughout the week.

“The Free Press has viewed itself as a writers’ newspaper,” he said, “but if you sit in front of any group of readers you’re going to hear them say you’ve simply got to get me to the point as fast as you can.” He said he expects the newsroom will figure a way to “fudge” the rule one way or another as needed.

The Free Press has won several awards for its investigation of recently-released-from-jail former mayor Kwame Kilpatrick, and Hunke insisted investigative coverage would not suffer. “We will find a way to fit it into these formats.”

Acknowledging that no one knows how the Detroit experiment will turn out and that other newspapers are trying other approaches. “I see Atlanta today announced massive layoffs as a way of climbing that mountain. My speech has been I’m going to begin to eliminate newsprint, gasoline, manufacturing and infrastructure costs, and we are going to preserve our news, our marketing, our finance functions.

“We will sell our way out of this, but our principles of maintaining our journalism and our ability to produce intensely local content is going to be what we are fighting for. And I’ll see whether that becomes a good business model shortly.”

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