Circulation Field Technology

Enabling a New Tomorrow

Chris Christian

VP Circulation – The Kansas City Star

“Remember that a kick in

the ass is a step forward.”John Chaucer

• Managing a Declining Model– Circulation

– Advertising

• Denial

• Insanity!!

Media Trends

• Overwhelming choices for media consumption and communication– Initially just NBC, ABC, CBS– Then cable and I want my MTV– Internet explosion– I want my MP3– Commercial free Satellite Radio– I want my custom ring tone

Media Trends

• Customers want Control and Choice– DVR generation– Explosion in Magazine and Video

narrowcasting• Niche title growth• A channel for any interest, hobby• Facebook; MySpace• Blog-blog-blog• YouTube

How Has Our Industry Responded?

• Offered multiple frequencies of delivery

• Repurposed content on Web at no cost

• Minor tuning of the ‘Sectional Revolution’ that originated in the 70’s

• Informational graphics

• Shorter stories and summaries

• Isolated free niche startups

• Largely still a one size fits all print model...

Net Paid is our Health Barometer

• The patient is on life support

• Declining circulation since Post WW II

• Exacerbated declines since late 90’s

• Declines masked by ‘Other’ circ.

• Circ revenues declining at 2%+ per yr

• Acquisition costs are increasing

• Our franchise is under attack…

Newspaper Circulation Trends

Year

Total M&E Daily

Third Party Daily

Core Daily   Total SundayThird Party

SundayCore Sunday

1995 58,193,397       61,229,296    

1996 56,983,290       60,797,814    

1997 56,727,902       60,486,463    

1998 56,182,092       60,065,892    

1999 55,979,332       59,894,381    

2000 55,772,847     59,420,999  

2001 55,578,046     59,090,364  

2002 55,186,157 916,232 54,269,925   58,780,299 236,709 58,543,590

2003 55,185,351 1,282,365 53,902,986   58,494,695 569,507 57,925,188

2004 54,626,424 1,545,927 53,363,497   57,753,242 822,207 57,146,035

2005 53,345,428   55,270,239

Source: Editor & Publisher; ABC

How Magazines are PerformingNumber of Magazines, 1996-2006

Year NDM SRDS ABC

1996 17,195 2,470 711

1997 18,047 2,513 751

1998 18,606 2,522 758

1999 17,970 2,520 750

2000 17,815 2,567 836

2001 17,694 2,600 817

2002 17,321 2,431 764

2003 17,254 2,509 703

2004 18,821 2,570 708

2005 18,267 2,640 718

2006 19,419 2,790 741NDM: National Directory of Magazines; SRDS: Standard Rate & Data Services

How Magazines are Performing

Year Subscription Single Copy Total

1996 299,532,710 65,984,883 365,517,5931997 301,244,640 66,133,817 367,378,4571998 303,348,603 63,724,643 367,073,2461999 310,074,081 62,041,749 372,115,8302000 318,678,718 60,240,260 378,918,9782001 305,259,583 56,096,430 361,356,0132002 305,438,345 52,932,601 358,370,9462003 301,800,237 50,800,854 352,601,0912004 311,818,667 51,317,183 363,135,8502005 313,992,423 48,289,137 362,281,5592006 321,644,445 47,975,657 369,620,102

AVERAGE CIRCULATION PER ISSUE, 1996 - 2006

Averages calculated by the MPA from ABC statements for the first and second six months of each year. Domestic titles audited by ABC; annuals, international editions and comics have been excluded. Totals may not add up due to rounding.

Book Readership in Decline

• “You may have heard about the recent, mind blowing study by the National Endowment for the Arts in which it found that book reading has decreased 10% since 1982. Fewer than 47% read any form of literature in the previous 12 months.”

Meg Weaver, president of Wooden Horse Publishing, 12/30/2004

Time to Change…

“Only dead fish swim with the current.”

Oren Harari

The Cable/Satellite Model

• The Cable/Satellite Model• Basic Service• Optional Choices at Premium Pricing• Quantity - Quality

– MLB package; ESPN Plus; NFL package; etc– Expanded Movie Choices– Additional Shopping, Music, Niche Sports (Speed

Channel, Outdoor, etc)

Unbundling The Star

• Unbundled newspaper/tailored content – Weekly stock recaps delivered on request – TV Book by Subscription– Create targeted value-added-sections– Expanded sports, entertainment, etc

• Implications of ABC day of week reporting• Any day subscription offers – premium priced

– Will we allow subscribers to omit certain sections in the future?

Additional Considerationsfor an Unbundled Model

• ABC Issues• Content Development

– What and How– Core vs. Premium, and at what Price?

• Infrastructure considerations– P & D– Route Sizing– Press– Distribution Center Design

Unbundling The Star

• Improve Customer Loyalty

• Provide Price Elasticity

• Improve Audience Growth

• Increased Advertising Revenue

• Okay, but how can we deliver

such a variety of products?

Current Star Throw Book

• Backlit Display on Portable Unit

• Updated Manifest Information

• Automated Downloads

• Internal Modem or USB

• Updated Bundle Mail Information

• Directions from DC to First Throw

Electronic Route List at K C Star:

Electronic RouteList:

Updated each day in sequenced delivery order with:

House Counts

Left & Right Throws

Delivery Instructions

Product Code

Driving Instructions

What ERL will Provide The Star

• New revenue opportunities for Circulation.

• Enhanced capabilities to support new revenue opportunities for Advertising.

• Provides for tailored content/unbundling the daily newspaper.

• Delivery Time Stamp

Enhanced Capabilities to Support New Revenue Opportunities for Advertising

• Address-specific delivery to subscribers and non-subscribers

• Inserts

• Niche publications

• Samples

• Others……

Additional ERL Applications

• Single Copy Management– daily drop/count information– automation of returns– delivery time stamp– ability to handle alternate products

• Door Crewing– sub/non sub list– previous sub history– collections

Improvements in Circulation Performance

• Reduced delivery errors– No more reliance on memory– New carrier/substitutes/down routes– Starts/stops/vacation– Placement– Multiple frequency complexity– Alternate product delivery

We Can Determine our Future

• Bold

• Calculated Risk Taking

• Embrace Change

• Anticipate and Lead Trends

The Future?

Electronic Paper Devices Now Available

The FutureFlexible Electronic Paper?

Phillips and E Ink Partnership:

Flexible as Construction Paper

Like Paper, Rollable

Not Breakable, Like Glass

Low Power Requirements

Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. EXPLORE. DREAM. DISCOVER.

MARK TWAIN