As the World Churns   

Newspapers must invest more heavily in their product if they are to survive.

The news biz coins language as colorful as its characters. One such phrase is "churn," which in newsroom parlance refers to the turnover in editorial personnel. In an organization of any size, the theory goes, there is always some predictable percentage of jobs open--say in a newsroom of 300, maybe 10 to 15 vacancies--and "managing the churn" has been one way an editor kept his or her budget in check.

(Of course, a decade of Beancounter Bingo has churned most of those positions right out of existence, but that's another column.)

Elsewhere in the building, though, there is another kind of churn. That would be in the circulation department, where churn refers to the constant turning over of subscriptions. To keep its circulation steady, a paper must sell a new subscription for every one that drops off. If a newspaper has a particularly high churn rate--and many do--the great majority of its readership will turn over in any given year.

That's a lot of churn. No wonder circulation directors are often the most haggard-looking people at the paper. And no wonder, frankly, that desperation to make their numbers has prompted some of them to lean too heavily on near-giveaway programs or to cook the books outright.

But even if we discount the most egregious behavior, there is a lot of circ trouble out there.

The Audit Bureau of Circulations recently released its semiannual report of newspaper performance. Daily circulation was down nationally almost 2 percent year over year, and the numbers were even more dire in big cities all over (Washington Post daily circ down 2.7 percent, Chicago Tribune down 6.6 percent, Baltimore Sun down 11.3 percent). That's a lot of unscathed trees.

Having said that, any reformed addict knows you have to confront terrible reality before you get better, and the benefit of a report this dismal is that it might, once and for all, stop the industry's narcotic delusion and complacency. Niagara-like trend lines like those in the ABC report mean newspapers have little choice but to invest, to be more creative, to accept the realities of 21st-century communications and do something if they don't want to be kicked off the island. Some potentially positive implications:

• Perhaps even Wall Street will have to acknowledge that 28 percent profit margins are no longer sustainable, or even wise. The newspaper industry has done a good bit more research lately into reader habits and wishes, but cowed by the Street it continues to do a lousy job of implementing those findings, because they all cost money. It's long past time to invest more in both innovation and product, as analysts expect of every other industry confronting competition. Take a smaller margin today in exchange for a tomorrow.

• Newspapers may have to start practicing what they preach. Newspaper profit comes primarily from advertising, but papers are notoriously reluctant and cheap advertisers themselves. As James Carville might say, it's the marketing, stupid. In a world where companies as ubiquitous as McDonald's and Nike spend billions annually on advertising to keep their customers, newspapers are arrogant enough to think people will continue to subscribe out of inertia or loyalty or because Dad Did. Telemarketing was the lazy solution to churn, but the federal "do not call" legislation pretty much put an end to that. The other day I saw a commercial for my local metro, and it jolted me--not because it was a great ad, but because it made me realize it'd been years since I'd seen the paper advertising on TV.

• Papers will have to start thinking about who their customers really are. Here's a fascinating factoid: Only 13 percent of U.S. households today are the nuclear-family variety, with a mom, dad and 2.1 school-age kids. We have evolved into a nation of households comprising young singles, retirees, single parents, gay couples, empty nesters and other types of families that don't look like Ozzie and Harriet. Yet the American newspaper--national, local, sports, biz, comics, Dear Abby--has fundamentally changed little since the Nelsons ruled the airwaves. For whom are you editing your newspaper?

• Papers will have to get serious about the Web--and not just in terms of content but in new business models. It's true that the young generation believes the Web is all about freeware, and if you're not Yahoo! or Google, that's a chilling thought. But it is likewise true that young people have demonstrated they are willing to pay small increments for products they care about, from iPod tunes to ring tones to text messages. Might there be an opening here for newspapers on the Web? Maybe so, but someone is going to have to summon the courage, and the capital, to walk through it.

A final thought: Water churns too, and if you're not careful it can pull you under.