Alternative Media Economics and Ownership

As 2005 was ending, the alternative news business was marked by a merger and some signs of economic difficulty.

While the final economic data from 2005 were not yet available at the time our 2006 annual report was published, national ads in the alternative weeklies were falling, after several years of holding steady.

National ads have declined over all since 2001, when they brought in about $50 million. But for a while the national ad dollars held fairly steady in the range of $30 million to $40 million, according to Mark Hanzlik of the Alternative Weekly Network, which sells national ads for 110 weeklies. In 2005, AWN was estimating, the total dropped below $30 million.6

AWN splits the national ad sales market with the Ruxton Group, a company owned by the alternative weekly publisher New Times. The two sell more or less the same amount of national ads for their clients, with a small amount of national ads being negotiated by some weeklies themselves. In 2004, AWN and Ruxton sold about $13 million in national ads each, with another $5 million being contracted by a few weeklies directly. The 2005 numbers for AWN were down to about $10.5 million. If the rest of the national ad math holds, it would put the final national ad figure around $25 million to $26 million.7

But using those numbers as a way to understand future ad sales might be difficult. In October New Times, owner of Ruxton, and the Village Voice announced that they would merge. That step will probably change the dollar split between the two major ad companies, since AWN used to sell ads for the Village Voice. But it may also change the amount of ads sold and how much they are sold for.

The merger, subject to government approval, would give the new company leverage in the marketplace. If advertisers want to reach the biggest alternative papers in New York City, Los Angeles, Dallas, Denver, Miami or Houston they have to go through it. On top of that, Ruxton also manages the ads for papers in Chicago, Washington and San Diego, giving the company leverage in most of the biggest markets.

And the alternative weekly reader is a desirable target for an advertiser. According to AWN research, weekly readers are 20% more likely to stay in a hotel than the market as a whole, 35% more likely to rent a car, 36% more likely to ski — as well as 67% more likely to attend a rock/pop concert and 48% more likely to frequent a bar.8

There do seem to be different economic situations for small-market and larger-market weeklies. With no final ad figures in for 2005, Richard Karpel of the Association of Alternative Newsweeklies said the smaller-market publications were not yet facing the same kind of competition as their big-market brethren. The local dailies in those markets have not yet created commuter dailies or their own weekly publications. And some smaller AAN member publications, like those in Athens, Ga.; Norwalk, Conn.; Portland, Maine ; and Wausau, Wis., don’t yet have a Craigslist.com site for their towns to take away classified ads. Even in the secondary markets where Craigslist.com does have a site — Memphis, Indianapolis, Birmingham, etc. — it hasn’t had the same traction it has in the bigger markets.9

Weeklies in larger markets have had to adjust to that competition, particularly to Craigslist.com, which has large sites in big cities. Some have improved their Web classifieds to make them easier to use. Some have included new free classifieds. And some have done both.

But the fact is that numerous factors are eating into growth for large-market weeklies. The publications in larger cities are older and more mature, their growth phase largely behind them. Distribution for is tougher for them; competition for space in the street boxes and in stores is hard, and news-rack ordinances can limit space. And consider the sub-niches that have developed in large cities: often more than one daily, maybe a commuter daily, free auto advertising circulars, free real estate circulars, neighborhood publications and local Web sites designed to target specific ad areas, real estate or employment listings. Many of those competitors are less than a decade old. The large-market alternative weeklies are bleeding from dozens of little cuts.

In January 2005 the Village Voice announced a major overhaul of its online classifieds, focusing on real estate ads — the Voice’s real estate classifieds have long been the choice of renters in the city — that offered virtual tours, photos and floor plans, and comprehensive neighborhood information. “Unlike other sites, villagevoice.com users won’t sift through clutter, unwieldy navigation or outdated listings,” the weekly boasted in a press release. The site also made “for sale by owner” ads free. And beyond real estate, the online classifieds for the Voice added an area for free ads in “selected popular categories.”

And last year the other member of the Voice/New Times merger pushed forward with its free online listing, Backpage.com. Backpage is linked not only to alternative weeklies but to other outlets as (including the Columbus Dispatch in Ohio ) and is meant as competition for Craigslist. Backpage starts by offering a free listing, but then offers the advertiser a chance to spend cash to get a higher spot on the site or, for more money, to place an ad in a print outlet. So far Backpage is available in 40 markets10 with plans for more on the way, and clearly the merger with the Village Voice would expand its reach. The service also powers Univision’s classified sites in nine markets.11

New Times maintains that the service has “stopped the bleeding” at the company’s papers, but Backpage has a long way to go. In December 2005, the service received 3.3 million total visits. Craigslist has more than 10 million unique visitors a month.

The Association of Alternative Newsweeklies announced in December that 20 of its papers were starting to use a classified advertising software called Avenews Remote to create free classified listings for their sites. By the end of 2006, the great majority of AAN members will have free online classifieds, the association said.