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The Atlantic got a lot of attention in 2010 for having become profitable (“a tidy profit of $1.8 million”) for the first time in decades. But the numbers disclosed were for the company as a whole, including print, digital, and events. Still, Smith insists that the company’s move to profitability depended on containing costs on the print side. “We were brutal about shifting resources away from print,” he says. The company made layoffs in both the editorial and ad sales departments.
Does this mean The Atlantic makes money online? The company reported that digital advertising revenue rose 70 percent, and print advertising revenue 25 percent. But in trying to isolate the digital business profit, Smith said, “We do an allocation [based on staff time spent] to do profit analysis of various platforms. We lay this in as editorial cost in a line item. The digital version of The Atlantic is definitely profitable. And it is a source of growing profit.” Smith says this is the case even as the company continues to increase staff and resources on the digital side. The New York Times’s report on The Atlantic had the magazine’s overall revenue doubling, to $32.2 million in 2010, with advertising revenue accounting for about half of that. Digital ads supplied 40 percent of ad revenue.
For a large metro newspaper, the calculus of cost-cutting is tougher. Even in the face of declining readership and ad revenue, executives often fear that major cuts will only accelerate their slide in circulation.
Detroit is an exception. Newspaper executives there met early in 2008 to consider their options, none of which was very attractive. The Detroit area was on its way to a dead-last rating in a survey of 363 cities’s job growth for the first decade of the twenty-first century. While most U.S. cities had one newspaper, Detroit had two—the Free Press and the News—bound in a joint operating agreement and dividing diminished circulation and ad revenue. (The agreement means that the two newsrooms compete, but their partnership handles both papers’ ads, circulation and printing. The Free Press is owned by Gannett and the News by MediaNews Group; as part of a revised agreement, Gannett must pay MediaNews around $45 million over a twenty-year period, according to Crain’s.)
Then-publisher Dave Hunke assembled his team, and they kicked around ideas on how to cut costs.The ideas ranged from publishing a pocket-sized newspaper, to arming 200 citizen journalists with cameras, to a “dinner in a bag” promotion that would give special consideration to readers when they pick up meals at a local grocery store. The newspaper executives also considered deep reductions in staff or space devoted to news.
In the end, they came up with a radical idea: eliminating home delivery of both papers on Monday, Tuesday, Wednesday, and Saturday. The reasoning was that those four days were responsible for only 23 percent of the papers’ print ad revenue. The cutbacks went into effect in March 2009.
The four non-home-delivery days are now responsible for only 7 percent of the papers’ print ad revenue. Those days’ papers are smaller and are still sold as single copies in the city; several thousand are picked up by independent contractors who deliver them to houses, generally in Detroit’s wealthier suburbs. The papers also have a same-day edition available by U.S. mail that reaches about 4,000 subscribers.
In October 2009, the dailies doubled their newsstand weekday price from fifty cents to $1. The cost of home delivery for Thursday, Friday, and Sunday is now $13 a month, slightly less than what subscribers used to pay for seven days a week.
As part of the change, the companies launched an electronic edition for subscribers—basically a replica of that day’s papers, available online. It loads slowly, though that has been improved since the early going. Access to the papers’ websites remains free.