Good morning from Edmonton, Alberta.
I am Duff Jamison. I am the president and CEO of Great West Newspapers, which publishes 18 community newspapers here in this province.
Today, I'm here in my role as the government affairs chairman for the Alberta weeklies. That association represents 108 titles across the province, most of which are still independently owned and operated.
Community newspapers face an uncertain future, as advertisers, including the federal government, have begun to rely more heavily on digital platforms to communicate key messages. Print advertising remains the mainstay of our members' business models. Community newspapers rely primarily on local businesses, community organizations, schools, local governments, and national and classified advertising. National advertising includes automakers, financial institutions, the federal government, and other large players. It has experienced the greatest decline over the past four years.
Community newspapers generally serve market populations of fewer than 100,000 people and the majority would be well under that. We are the original hyper-local guys providing the primary source of local news for our residents and very cost-effective local advertising.
Our once or twice a week frequency distinguishes us from the dailies. Our news is rarely of the breaking news variety. Our readers seem comfortable with the fact that our newspapers are not available in print every morning. They need and want to know what's happening in their communities, but they don't demand it the minute that it happens.
When it is important to get the story out quickly, most community papers can quite capably do that on our digital platforms. We may lack the digital horsepower of The Globe and Mail, but we're not in the Dark Ages either. Free content, a reader's nirvana in the digital age, is actually old news in the community newspaper industry. Although many paid subscription weeklies remain in small markets, in the larger markets, we've long delivered community news free to our readers, which has been paid for by our advertisers who want to reach the total market.
The real secret sauce of a successful community newspaper is operating it like it is community-owned, so not at arm's-length, as is often the case at a daily, but in the trenches, by actively participating in our communities. I often tell our local politicians and community leaders that, like them, we are in the business of building stronger, healthier places for everyone. We are fully engaged with our communities, leaving no doubt with anyone that we have their best interests in mind. By doing so, we earn the newspaper credibility and respect with its readers, which earns us support when we criticize the leaders and institutions that we feel have let the community down. If you ever have any doubt about the relationship between residents and their community newspapers, visit us at civic election time, which it is right here in Alberta today, as the election is October 16. Battles are often won and lost on our pages. Emotions run high and letters to the editor are overflowing our inboxes.
Unfortunately, in spite of the continued loyalty of our readers, the current picture for community newspapers is not a pretty one. As I mentioned at the outset, print advertising revenues, by far the largest source of revenue for Canada's community newspapers, are in decline. Digital advertising revenues, which are tied to our news reporting, remain insignificant simply because community newspaper websites and social media feeds do not generate the traffic required to cover their reporting costs. It's not even close today, nor will it be in the foreseeable future. Although some publishers have launched digital agencies offering programmatic advertising—SEO, LSO, etc.—it's still to be proven whether a small market can generate significant digital profits to support local journalism.
Subscription and newsstand revenues are important sources of revenue for the declining number of paid circulation community newspapers. However, with circulations often fewer than 5,000 and annual subscription rates of about $50, these also fall well short of covering reporting costs. Paywalls help protect this revenue, but also reduce online traffic and digital advertising revenue with it. It's very difficult to see a point at which print advertising revenues will not be the major revenue contributor for even paid community papers.
There is no reader revenue in a free paper and most Canadian community newspapers are not paid newspapers, which leaves them to rely entirely on advertisers to pay the costs of reporting local news. These papers tend to be in larger communities near metro areas served by dailies and other media.
Not often mentioned in the discussion is that many local advertisers and organizations remain dependent on local media to reach local residents and consumers. In most communities with fewer than 100,000 people, print media delivers the largest audience by far. Although most businesses have websites, Facebook groups, and Twitter feeds, it has proven very difficult to build any real mass of followers. Without the market penetration of local media, therefore, most would find it extremely difficult, if not impossible, to reach the vast majority of residents.
A recent study bears out our contention that community newspapers deliver the largest audience by far, with 83% of Canadians being local community newspaper readers, according to a 2016 study by Totem Research. This study showed that time spent with the printed newspaper is virtually unchanged compared with two years ago.
Printed community newspapers readers are reading their local information as well as advertising, with 63% stating that they want to see advertising in their community newspaper. The 2,400 Canadians surveyed reported that community newspapers were the top medium for local information, followed by local television and local radio.
Does government have a role in helping to preserve this important source for local information? We think it does. The federal government could replenish its print advertising budget. While local governments remain solid advertisers, federal and provincial advertising has nearly dried up. A decade ago the federal government spent 47% of its ad budget in newspapers: 28% in dailies and 19% in community, ethnic, and aboriginal weeklies. In the 2014-15 fiscal year it spent 7% in total on newspapers: 1% in dailies and 6% in weeklies. In that same period, the spending with Internet companies rose from 6% to 28%. Most of that money went to U.S. firms like Google.
Section 5 of the government's policy on communications and federal identity sets out objectives and expected results. The objectives say government communications are to be responsive to and meet “the diverse information needs of the public”. Multiple surveys of the public show that their local community newspaper is by far the number one source of local information, a fact easily confirmed with a call to any mayor or municipal CAO.
Section 5 also states that communications are to be “cost-effective and achieve savings through standardization”. Our experience tells us that the emphasis is too often put on “cost” and too rarely on “effective”, when you would hope it would be the other way around. After all, the objective of the exercise is to be responsive and meet the diverse needs of Canadians.
Many Canadians, particularly those living outside major cities, continue to rely on their local community newspaper for important information. Members of Parliament do too, and they are in regular communication with the reporters, editors, and publishers of their local papers. They know where their constituents find out what's happening locally. Simply having the federal government make a serious commitment to include community newspapers in its advertising budgets would significantly improve the effectiveness of its communication with a diverse group of Canadians and go a long way toward supporting local journalism.
As the publisher of the Rainy River Recordsaid to a CBC reporter on the closure of his newspaper in September 2016, the government's decision to pull its advertising budget from newspapers and spend it on social media has made a big difference.
Thank you for your time today, and we welcome your questions.