There are certain basic functions that must be carried out in the operation of all newspapers, regardless of their size or frequency. These functions include editorial, advertising, circulation, photography and graphics, business, and production activities. While in the smallest weekly newspapers all of these functions may be handled by a single individual, as the size of the newspaper increases, the number of employees rises as does specialization in and division of labor. As the size of the organization increases, the time requirements of the different positions reduce the ability of employees to carry out multiple functions and a more complex organizational structure emerges.

Larger newspapers typically divide their operations into distinct departments or operating entities. The most common division of operations is into departments. Many companies also carry on subsidiary operations that may be centralized in a separate department or spread through existing departments.

A typical mid-sized daily newspaper, for example, would divide its operations into components as shown in the organizational chart below. (While the Daily Planet is a large daily newspaper, the same principles apply.)

In terms of employment, about half of all employees are engaged in prepress activities and the rest in production and maintenance. Advertising and promotional employees typically represent about 10 percent of the workforce in a newspaper, circulation about 12 percent, executives and administration about 15 percent, editorial about 8-15 percent, and production and maintenance about 48 percent. Even with computerization and technological improvements in production, newspapers remain labor intensive enterprises and labor costs account for about forty cents of each revenue dollar

Given that the Daily Planet has 670 employees, this breaks down as:
Administration: 101
Advertising and Promotion: 67
Circulation: 80
Editorial: 100
Production: 322

Editorial Operations

The editorial operations of the newspaper include creating, acquiring, and preparing the non-advertising content of the newspaper, which includes the news, sports, business, features, editorials, opinion pages, and comics portions. Newspapers carry out the editorial function by creating original content and by purchasing material from individuals and various editorial services and syndicates. Managers of each newspaper make their own decisions about the amount of material created or purchased but generally the larger the newspaper, the larger the amount of material original to the staff of that newspaper, particularly features and non-news items. In organizing editorial operations, daily newspaper managers typically divide the functions according to the various sections their newspaper publishes.

Separate working groups of journalists are created for news coverage, sports coverage, business coverage, and special feature sections such as lifestyle, food, and health. Photographers may operate out of a separate department or from within these groups. Within these groups reporters may be assigned to specific beats, such as education or consumer affairs. Others are assigned as editorial writers and columnists and these may be assigned to separate working groups. Each group is typically headed by an editor and sometimes sub-editors, depending on the size of the staffs involved. In recent years papers have begun creating teams of reporters, photographers, and design specialists to tackle specific projects.

Coordination of the various groups is overseen by the editor - or a managing editor, if the editor designates the job to another - whose job it is to bring together the editorial functions of the entire paper into a cohesive product. Part of this task is accomplished by daily editorial meetings with editors and sub-editors in which the placement and emphasis to be given stories, graphics and artwork to be employed, and work assignments and coordinating decisions are made.

Once material is created and acquired for use, it is reviewed by the appropriate editor and sent to copy editors who ensure that the material contains proper spelling and grammar, and conforms to the style and form established for the publication. The design and layout of the pages on which material is to be printed is done by section editors and the copy desk. When questions of whether items should be in one section or another arises these are typically decided in daily editorial conferences.

Notes on the Daily Planet: The sign on Perry White's office says Managing Editor. This means there is an editor above him who has delegated the running of the editorial department to the managing editor. This puts White as being in charge of the entire 100 employee editorial staff. Based on what we see in his interactions with employees, he also functions as city editor, taking personal charge of the general assignment reporters and beat reporters.

News Services and Syndicates

The majority of editorial content in most newspapers is not created by newspaper staffs themselves, but purchased from news services and syndicates that offer editorial materials designed to serve every editorial need. As of 1996, approximately 500 services were syndicating the work of thousands of artists, photographers, and writers for daily and weekly newspapers.

Syndicates developed through efforts of newspaper groups to cut their costs by sharing the expense of materials among members of the group. Soon these groups began offering materials to non-competing papers in other markets. The first syndicates began more than 100 years ago and were small operations. For the most part, materials produced and syndicated tend to have non-local interest, thus making them more marketable. Distribution of syndicated materials is increasingly done via satellite and Internet feeds.

Syndicates vary widely in size and scope. Some distribute hundreds of features, while most distribute only a few. Some syndicates provide general services with materials for all sections of newspapers. Others concentrate on specialty topics such as agriculture, soap operas, home decorating, auto repairs, or weather. Most syndicates provide materials without geographical limitations, but others are willing to produce or localize materials to serve the needs of specific newspapers or readers within geographical regions of the nation or states. Some syndicates distribute only material that they originate, whereas others distribute for a variety of services that produce editorial matter.

Although there is a great deal of competition among the hundreds of existing news services and syndicates, the markets of each are dominated by a few major firms. In the news service area, the primary provider of daily news and information is the Associated Press, with significant material also coming from Reuters and Agence France-Presse. United Press International, which has been a major provider for decades, has declined markedly in its size and scope in recent years but still provides some materials for many subscribers. These news agencies are also major suppliers of news photos for newspaper use, and their resources are supplemented by major international photo services such as Gamma-Liaison and Magnum Photos.

Most newspaper groups continue to share news and other features with other papers in their groups and non-competing papers through services such as the Hearst News Service, Newhouse News Service, New York Times News Service, and Los Angeles Times-Washington Post News Service.

Specialized news agencies such as Jewish Telegraphic Agency, Catholic News Services, Black Press Service, and Maturity News Services provide news and features that focus on issues affecting the focus of their specialization. State or local orientations are served by agencies such as Capitol News Service in California, which provides extensive coverage of state government for local newspapers, or City News Service in Chicago, which provides extensive local coverage not provided by traditional news agencies.

In the syndication area, the primary providers include companies such as Copley News Service, Creators Syndicate, King Features, Los Angeles Times Syndicate, Tribune Media Services, United Media, Universal Press Syndicate, and Washington Post Writer's Group.

Major News and Feature Services

Top Four News Providers

Two firms - Associated Press and United Press International - have long been the dominant sources of news in the United States. In the past two decades, however, Agence France-Presse and Reuters have gained significant numbers of newspaper subscribers. The firms primarily provide their services through telecommunication-based news and photo distribution networks, but are increasingly providing supplementary information and materials via on-line services.

Associated Press

The Associated Press is the major source for national and international news carried in U.S. newspapers. It was formed in 1848 by New York City newspapers to reduce the costs of news gathering and distribution by telegraph, and now serves more than 1,500 daily and 200 non-daily newspapers in the U.S., as well as about 8,500 subscribers outside of the United States. It employs approximately 3,300 individuals in 143 news bureaus in the United States and in more than 90 bureaus in more than 70 other countries.

The Associated Press is tied very closely to newspapers because it is a not-for-profit cooperative owned by the papers themselves. In addition to material from AP staff, the service also carries stories submitted by its members, which allows the service to provide access to even more news and feature stories. The service offers a variety of services including regional wires that provide greater amounts of news from specific states so subscribing papers in the region can emphasize coverage from their state and region.

United Press International

Created by the merger of Scripps's United Press and Hearst's International News Service in 1958, United Press International today has about 1,000 employees in ninety bureaus in seventy countries. Although it once was a strong rival to Associated Press, it was plagued by financial difficulties in the 1980s and 1990s and lost much of its strength as a competitor and - in some ways - made it possible for Agence France-Presse and Reuters to make inroads in the U.S. market. Today, new owners are attempting to update the firm's telecommunications network and have reoriented its services and marketing to small dailies in the United States.

Agence France-Presse

Begun in 1835 as Havas agency and reestablished as Agence France-Presse after World War II, this highly regarded agency employs 1,100 individuals world-wide. It serves about 8,000 newspapers throughout the world, including about 100 in the United States. AFP became an important news photo source in the 1980s when it established the first fully digitized photo distribution system.

Reuters

Begun as a financial reporting service in 1851, Reuters is now a worldwide information gathering agency that operates 138 bureaus in eighty-six countries with a staff of more than 14,000 employees, most of whom are engaged in its financial information operation, which remains the core of its operations. The news operations of this British firm are well regarded worldwide and have made the agency the most important foreign source for news in U.S. newspapers.

Major Providers of News Features and Other Materials

The bulk of editorial material is news features and non-news materials that are provided by a variety of feature services. The materials originally were dispatched to newspapers by postal and other package distribution systems, and materials not bound by time are still provided this way by many services. For materials with time value, feature providers use telecommunication-based distribution - like the news agencies - but they are also turning to on-line services as an additional means of distribution.

Copley News Service

Originally established to serve the needs of the newspapers owned by Copley Press, the products of their service are now used by more than 1,000 newspapers. The syndicate provides an outlet for editorial writers and cartoonists at Copley newspapers but is especially well known for its features on decorating, food, gardening, health, travel, and editorial material for packaged special advertising sections.

Creators Syndicate

This syndicate offers commentary from writers such as Mark Shields, Paul Harvey, Robert Novack, and Alexander Cockburn, as well as columns by Ann Landers. Molly Ivins, and David Horowitz. It carries the editorial cartoons of Herb Block and Mike Luckovich and comics such as B.C., Wizard of Id, Momma, and Archie.

King Features

A division of the Hearst Corporation, this syndicate provides cartoons, comics, and editorial materials to nearly 2,000 newspapers worldwide. The company distributes comics such as Sally Forth, Dennis the Menace, Beetle Bailey, and Blondie. It distributes commentary by columnists such as Julianne Malveaux, Carl Rowan, and Jeffrey Hart and advice columns such as "Hints from Heloise," "A Question of Ethics," and "Ask Dr. Ruth."

Las Angeles Times Syndicate

The syndicate distributes the work of cartoonists Paul Conrad and Dan Wasserman, columnists such as Henry Kissinger, Jesse Jackson, Cal Thomas, and Jeane Kirkpatrick, and sports writers such as Jim Murray and Mike Downey.

In addition to material produced by staff at the Los Angeles Times and in other Times Mirror papers, the syndicate distributes materials from the Christian Science Monitor News Service, Gannett News Service, El País News Service, and the Gallup Poll.

It provides a wealth of editorial columns and materials covering topics ranging from real estate to health and fitness and astrology to crossword puzzles.

Tribune Media Services

A division of Tribune Publishing this full-service syndicate distributes comics such as Mother Goose & Grimm and Shoe. Its distributes the work of editorial cartoonists, such as Mike Peters and Jeff MacNelly, and columns by writers such as Dave Barry, Jack Germond and Jules Witcover, Bob Green, Pat Buchanan and Mike Royko. It distributes topical columns ranging from travel to religion and medicine to children, as well as television and stock listings.

The syndicate also distributes materials from Knight-Ridder/Tribune Information Services, McClatchy News Service, and News Wire.

United Media

United Media is a Scripps Howard Company and operates syndication services including United Feature Syndicate, Newspaper Enterprise Association and Scripps Howard News Service, which carries articles from their papers.

Its comics include Peanuts, Marmaduke, and Dilbert. Commentary comes from Michael Kinsey, Alan Dershowitz, William Rusher, and Ben Wattenberg. The syndicate's columns cover entertainment, food, health, lifestyles, and family finance. It also provides games and informational graphics, as well as articles from specialty magazines.

Universal Press Syndicate

This firm distributes comic strips such as Garfield, Cathy, and Tank McNamara, and the work of editorial cartoonists such as Jules Feiffer, Pat Oliphant, and Tony Auth. It provides commentary from writers, including Georgie Anne Geyer, William F. Buckley, Mary McGrory, and Keith Owens. Among its columns are "Dear Abby," "Your Horoscope" by Jeane Dixon, Erma Bombeck, and Roger Ebert.

Washington Post Writers Group

Originally a syndicate for writers at the Washington Post, the service primarily distributed social and political commentary. In recent years, it has broadened its services to include general features and comics.

Among its well-known commentators are William Raspberry, George F. Will, Ellen Goodman, Charles Krauthammer, and Donna Britt. The service also syndicates comics such as Non Sequitur.

Photography And Graphics Operations

Photography and graphics are important functions needed for the production of all parts of the newspaper, in the editorial as well as advertising sections.

In most papers photography functions are served by a photography division of the editorial department. This office serves news and feature needs through photojournalism and provides photo services needed for ads by the advertising department. In larger papers, advertising departments may have a permanent photographer or photo staff, and some feature sections may have photographers permanently assigned to their operations, who may or may not work under the supervision of a newsroom photo division. In larger papers some graphic artists are increasingly being located in major feature section offices as well.

Photographers are daily given assignments of planned events for which they are to provide photo coverage or other photo assignments needed by the various departments. Although the photo editor will hold some staff time in reserve for unexpected breaking stories, all photographers regularly have their assignments adjusted and altered to meet the constantly changing needs and priorities of the news operation. As a result, photographers have traditionally had and continue to use the most advanced communication systems available to link them to the newsroom from the field.

Although (as of 1996) traditional chemical-based photography remains the mainstay of newspaper operations, the development of digital electronic cameras is now allowing photographers to send photos directly from the field via satellite or digital networks, reducing their need to constantly return to the darkroom to process film. Even though most newspapers still use traditional photography to capture images, fewer and fewer are actually making prints from the negatives. Most now use digital equipment to scan the negatives and produce computerized images that can be selected and edited directly in the computer as part of the pagination process.

The visual appearance of newspapers has received significant attention during the past two decades and newspapers spend a great deal of staff time creating a visual style for their publications. Some pursue this style as part of the layout process done by editors and copy desks, but many are now setting up separate graphics divisions associated with copy desks. In addition to providing page design services, these graphics divisions are called on to create informational graphics, including charts, graphs, maps, and illustrations that help illustrate various elements of stories.

Advertising Operations

The advertising operations of newspapers involve the selling and creating of display, insert, and classified advertising. Display ads are those ads found throughout the paper that include information and, often, illustrations and photographs for various goods and services. Insert advertisements, sometimes called pre-print advertisements, are those not printed as part of the paper itself but added to the paper in bundles after the printing process. Classified advertising is that advertising usually found at the back of the paper in which products and services are listed in categories such as "Automobiles," "Help Wanted," "Livestock," "Computers," and "Real Estate." Advertising departments of newspapers divide responsibilities for the different types of advertising among managers to provide for better service and attention to their specific needs

Although newspapers carry advertisements for nearly every type of product and service available, they are dependent on a few categories for the bulk of their income: automobile and truck dealers, computer and electronics retailers, home furnishing and appliance retailers, clothing retailers, real estate brokers and developers, food and liquor retailers, and financial institutions. Although newspapers typically have hundreds of retail advertisers, most depend on about two dozen advertisers for most of their display advertising revenue - sometimes for as much as 80 to 90 percent of that total.

Ad Sales and Production

When advertising comes from national or regional sources, newspapers typically work with the advertising agencies representing firms that wish to advertise in a paper's geographic market. These agencies prepare the advertisement and ship it to the paper, which then only has to process the advertisement for printing. With local advertising, however, two-thirds or more of the advertising clients typically do not employ advertising agencies, so newspaper sales personnel work directly with the retailer in selling and then creating advertisements. Advertising sales personnel typically work on a commission basis, but usually have a small base salary or "draw."

When ads are sold and designed by sales personnel, they are then produced by an ad production staff that acquires and creates appropriate artwork and photographs and combines them with type to create a display advertisement. These ads are then reviewed and approved by the sales personnel and customers before they are published. (The sales personnel are also responsible for making sure that any questionable advertising - such as for gambling, or lotteries - is run past the legal department.) For classified advertisements, sales personnel type ads directly into computers after talking with customers in sales offices or by telephone. The computers automatically typeset the material for use in the paper, as well as provide accounting and other records of the transaction.

About 100 newspaper representatives ("reps") nationwide help newspapers sell advertising to national and regional advertisers. The companies include independent firms with whom newspapers contract for services, firms operated by newspaper groups to serve the papers they own, and firms operated by state and regional newspaper associations. Because newspapers want as much advertising as possible, it is not unusual for a newspaper to be represented by more than one firm at a time.

Because of the great differences in newspaper formats, national and regional advertisers have been faced with difficulties in preparing ads for simultaneous publication in multiple newspapers. To help alleviate the problem, more than a dozen newspapers and advertising associations and organizations cooperated in creating the Standard Advertising Unit System. The system, introduced in the 1980s, creates standard advertising widths and lengths applicable to newspapers of different column formats, and papers set rates based on those standard sizes. The system has been used to make it easier for advertisers to prepare advertising, plan budgets, and order space from newspapers nationwide.

Advertising, Circulation, and the Desirability of Newspapers

Because of the dual product nature of newspapers (advertising and news), the willingness of advertisers to advertise and the prices they are willing to pay are related to the success of newspapers in gaining circulation. Because advertisers make choices based on the number of readers newspapers have in a specific geographic market and their demographics, figures on newspaper circulation are critical. To make comparisons between newspapers possible and to ensure the accuracy of circulation data, advertisers and newspapers have created organizations that verify circulation according to accepted standards. The largest and most highly regarded of these firms is the Audit Bureau of Circulations (ABC), which is used by most daily newspapers. ABC audits the circulation of newspapers to achieve a comparable net paid circulation figure, accounting for returns and discounts.

Classified ads are the prevalent way that readers seek information about automobile sales and many other desired items. A recent study shows that classifieds remain the most popular method for seeking jobs, with five out of six individuals looking for employment reading the Sunday classifieds. The Newspaper Association of America study also found that on-line job-hunting is increasing. Because newspapers are so strongly tied to employment searches and many already have, or are developing, on-line abilities, they should be able to maintain their hold on that submarket of advertising if they begin using on-line employment listings as a subsidiary operation.

The potential for competition from other providers of on-line classified employment and real estate listings has recently led some newspapers to begin rejecting advertisements from services providing competing listings.

Getting Ads to Newspapers

Because newspapers are widely dispersed throughout the nation, the actual process of getting an advertisement from a national or regional advertiser to one or to all newspapers is important. The time and money required for distribution are important factors. Because timeliness is a factor in much advertising, advertisers as well as newspapers wish to reduce the time between an ad leaving the advertiser's office and when it appears in the paper. Newspapers and advertisers also wish to reduce the costs for preparing the ad for printing.

To help achieve these goals, newspapers are moving rapidly to have advertising agencies deliver advertisements in digital form rather than in hard copy. Digital advertisements improve the reproduction quality of ads and reduce the work required at newspapers because they can be downloaded directly into the newspaper's pagination system.

Methods to improve delivery have already appeared. AD/SAT, a private firm, is now sending material directly to newspapers via satellite, and the Associated Press has developed and begun operating a satellite distribution service called AdSend that uses digital technology. Some other advertisers and ad agencies are experimenting with the development of web sites that newspapers can access to get completed advertisements and artwork.

With the development of digital standards and an integrated services digital network (ISDN) most ads will ultimately be delivered to the newspaper by telephone or satellite, decreasing the lead time needed for an ad to reach newspapers nationwide. This change will have significant implications regarding employment, because it will allow reduction in the size of advertising composing staffs.

To help speed this process, the Newspaper Association of America formed a task force on the topic of digital advertising in 1994 to try to establish standards that newspapers, advertisers, and technology providers can agree upon. The group is concerned not merely with issues of how advertisements should be formatted and transmitted, but how improvements can be made in an entire range of operations from the creation to reproduction of ads.

Circulation Operations

Circulation departments are responsible for selling and delivering the newspaper product to readers. Although seemingly simple, this is one of the most complex operations of the newspaper and is heavily labor intensive. The duties of circulation departments include a wide variety of marketing activities, including advertising, sales promotion, and telemarketing, designed to sell subscriptions and boost single-copy sales. In addition, circulation departments must organize and operate distribution systems that provide timely and proper delivery to homes and businesses. Finally, circulation departments have the duty of collecting payments from readers. The structure of circulation departments reflects the complexity of their operations.

Distribution Systems

Three major types of distribution systems are used by newspapers. The primary system used for delivery of daily newspapers is independent distributorships. This type of distribution arrangement was found in about three-fourths of papers. Under this system, independent distributors purchase copies from the newspapers at wholesale prices and sell to subscribers or single-copy buyers at retail prices on assigned subscription routes or in assigned single-copy sales locations.

The stereotype of kids delivering newspapers is generally inaccurate for a newspaper the size of the Daily Planet, especially in a major urban area or in a wide-area rural or semi-rural one. In some areas - but not all - adults purchase the rights to become independent distributors - similar to buying a franchise. These are usually independent contractors who then hire more independent contractors to run each route. Delivery routes change daily as subscriptions are added and dropped. Newspapers are generally delivered by motorized vehicle and each driver keeps his own log book keeping track of who does or does not get a paper. These log books are extremely personalized, depending on how each paper carrier identifies the delivery sites he or she is responsible for.

Contract distributors or agents, who are paid a set fee for delivering each subscription or servicing retail outlets, are used in about 15 percent of papers. About 10 percent of papers use employees who receive hourly wages or salaries for distribution. The use of employees for servicing subscribers has been declining in daily newspapers because there is rarely sufficient work to keep them busy for a full workday and the costs of salaries and benefits are very high.

Circulation Pricing

Circulation policies and pricing have traditionally not been a great concern of publishers, most of whom have maintained distribution and collection systems established long before their employment and most of whom have set circulation prices based on industry averages rather than economic factors. Because of the lack of attention to pricing, the amount that circulation contributes to revenues has declined over time and now accounts for only about 15 percent of income in some papers. Rising production, labor, and circulation costs, and changes in advertisers' purchasing habits in recent years are leading some publishers to reconsider their practices and prices.

In markets in which two or more daily newspapers compete, the newspaper with the largest circulation and highest market penetration receives a disproportionate amount of advertising revenue, even when the circulation differences are small. Thus, competitive papers must continually seek to increase circulation lest they fall prey to the circulation spiral phenomenon, caused by the newspaper with the largest circulation share getting a disproportionate share of the advertising. Because secondary paper(s) have fewer financial resources, they then cannot provide content that is as attractive to readers, resulting in a decline in circulation, which in turn causes a decline in advertising, putting the paper into a downward spiral of circulation and advertising losses until it ceases publishing. Because of the impact of circulation on advertising, many of the second newspapers competing in multi-newspaper markets such as Boston, Chicago, Denver, Los Angeles, and New York (and Metropolis) are experiencing difficulties.

The average industry retail price for daily newspapers is 25 cents and the average Sunday retail price is 50 cents. These prices have been moved upward in recent years, with about 10 percent of all papers now charging 35 cents daily and 16 percent charging one dollar for Sunday papers. Over time, the prices for Sunday newspapers have risen more quickly than the prices for daily newspaper.

One difficulty with setting circulation prices comes from the fact that the most common delivery system relies on independent distributors. Because these are independent businessmen and women who purchase papers for resale, newspapers do not set the sales price but can print a suggested retail price for subscriptions. Some newspapers have encountered difficulties by discouraging distributors from setting prices different from the suggested retail price, because some of their actions, designed to maintain the suggested price, have violated provisions of antitrust laws involving price-fixing, leaving them vulnerable to prosecution and litigation.

The price markup from variable costs - the actual costs to produce each additional copy - to average retail price for a single copy of a newspaper is about 100 to 130 percent. The average price markup from wholesale to retail price for single copies and subscriptions is about 40 percent.

Collection Types

Collection is the term used for getting payment from subscribers. The primary means used by papers has been for their independent distributors or agents to collect payments from subscribers and then forward payment to the paper after taking their percentage or fee from the amount collected.

In greater numbers of papers, however, pay-by-mail collection is now being used. Today, about one-third of papers have bills delivered or mailed to subscribers, and payments are then mailed back directly to the paper. The paper then calculates and makes the payments that are owed to distribution personnel. Newspaper managers prefer this system because it reduces the number of individuals that must handle and record payments and does not require that delivery personnel find a time when subscribers are at home in order to collect.

In order to avoid collection issues, some newspaper managers have been promoting paid-in-advance subscriptions or credit card payments for subscriptions, but those practices have not been significantly embraced by subscribers.

The Problem of "Churn"

Although newspaper circulation has been relatively stable in broad terms, individual newspapers daily face the problem of turnover in newspaper readers. This turnover, or churn, is caused by different subscribers simultaneously placing orders to start or stop subscriptions. Circulation departments thus devote a significant amount of their marketing efforts to reduce circulation churn and increase circulation.

Churn is a measure of the percentage of subscribers that are replaced each year to maintain the same level of subscribed circulation. The churn rate increases as the circulation size of the newspaper increases. (In newspapers with large circulations, this number can be more that 68%.) This occurs because newspapers with less circulation tend to be the most significant source of local information and advertising in smaller markets and thus cannot be easily replaced by other media. Also, smaller publications tend to reflect their readers more closely and thus generate greater loyalty from them.

The greatest amount of churn occurs among new subscribers rather than long-term subscribers. This is especially true among subscribers gained through special marketing campaigns in fringe areas or those who probably would not have purchased a trial subscription if they were not offered very large discounts. When the discount is no longer available, many of these subscribers are not likely to renew. The problem has been growing in recent years as newspapers have more aggressively moved into marketing to potential subscribers, a move necessary to maintain and increase circulation levels. By the early 1990s the growth of churn led the industry to study the problem of how to overcome it and retain existing subscribers. It issued a report showing that the elements most likely to help reduce churn are developing a complaint resolution system to deal with customer problems rapidly and reducing available discounts because they produce unstable circulation.

Business Operations

Business operations include those administrative and general business operations not delegated to specific departments. In most newspapers, the business offices handle accounting, billing, insurance for the company and its employees, payroll, personnel matters, and general promotional activities. As the size of the newspaper increases, however, these duties may be broken out into separate departments, especially human relations departments and promotion departments. It is also more likely that, as the size of a paper increases, its advertising and circulation departments will handle their own billing and collection activities.

When newspapers are parts of groups, some business activities may be centralized into the group headquarters or into regional or division headquarters for cost savings purposes.

Production Operations

Production operations of the newspaper include all those activities occurring after content materials have left the editorial and advertising departments, including composition, camera work and platemaking, printing, and inserting and bundling. Production departments are also often responsible for building and grounds maintenance. Depending on the type of production technology used in a paper, it may begin with taking material set by editorial and advertising departments and laying it out on paste-up boards as pages. In papers where pagination systems are in place, this part of the production process is done electronically by graphics and layout persons in the editorial department.

Once this initial step has been taken, images of the pages must be made and transferred onto the presses for use in printing. A variety of methods are used. Among the most common is chemical engraving of a metal plate that is then placed on the press. Although this process is an improvement over previous methods, it remains time consuming and costly. Because of advances in laser and ink-jet printing, there is hope that those or related technologies can be adapted for cost-efficient newspaper application to create a method that skips the intermediate step and allows images to go directly to printers in the future.

Newspapers are increasingly using flexible and integrated press systems that allow them to print color on any page in the paper and to print not only in folios of four pages but to include two-page sheets where needed. Much of the impetus for these improvements has come from advertiser requests for improved color capabilities and the desire to be able to incrementally increase the number of pages in various sections.

After papers are printed they are combined with previously printed materials, including insert advertising and sections not subject to the immediacy deadlines of news sections, and bundled for delivery. In years past, these post-press activities were labor-intensive, using large numbers of unskilled employees, and were quite time-consuming. As costs of labor have risen, newspapers have increasingly adopted a wide variety of mechanized and computer-controlled inserting, sorting, and bundling equipment to perform these tasks. The types of equipment found in particular papers vary widely, but because mechanization offers not only cost savings but increased speed in the production process, the amount and capabilities of the equipment increase with the circulation size of papers.

A continuing issue in the production of newspapers is the use of newsprint. The costliest item for newspapers, newsprint accounts for as much as one-third of all operating costs for many papers. For many years newspapers have worked to reduce the waste of newsprint in the production process, but the consumption of newsprint has continued to rise as newspapers have increased their pages to provide more and more features and sections designed to appeal to readers. Between 1970 and 1994, newsprint consumption in the United States increased 30 percent, while the number of newspapers decreased about 12 percent and total circulation decreased 5 percent.

Beginning in 1995 the issue of newsprint prices became particularly important because the price of newsprint increased tremendously, immediately putting a lot of pressure on the 1995 budgets of publishers. The problem was particularly distressing to them because they had been enjoying declining prices (in real terms) for nearly two decades. In 1980, for example, newsprint was available at an average price of $440 per metric ton. By 1994, the price (adjusted for inflation) was only $241. The sudden price rise in 1995, a 30 percent jump by midyear, came as the recession that affected advertising demand in the first half of the 1990s ended, creating an immediate demand for larger newspapers. Newsprint producers, meanwhile, had been reducing production throughout the time because of lack of demand. The intersecting of those forces as well environmental requirements for recycled newsprint resulted in the price increase.

Subsidiary Operations

Although the primary business of newspapers is producing newspapers, many operate subsidiary operations that including total market coverage free circulation papers, specialized advertising publications for homes and autos, audio-text services, on-line services, general advertising services, and public printing services.

The amount and extent of these operations are usually dictated by the time available to use existing printing equipment, other types of media already present in a market, and the size of the community. In smaller communities, the newspaper may use the printing press only a few hours daily and have the only available printing press, so it may be able to do a significant amount of work from job printing. In a large metropolitan area, the newspaper will typically need to use its presses for a much larger portion of every day, and its press capabilities may make it unable or undesirable for it to undertake a significant amount of small job printing. Weekly newspapers nationwide that own presses, especially those in smaller communities, count on job printing for a significant amount of their revenue. In some cases, it is the job printing that makes it possible to keep the newspaper publishing.

Subsidiary operations using electronic media, such as fax newspapers, telephone audio services, and on-line information services, have developed rapidly in the past two decades as newspapers prepare for changes in media use that are occurring and will have greater effect in the twenty-first century.

Material above taken or adapted from: The Newspaper Publishing Industry by Robert G. Picard and Jeffy H. Brody ©1997 by Allen & Bacon

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