Readership of AA.com Plummets 75% According to Execs—Site Loses Another Key Staffer to the Freep

by P.D. Lesko

If the down-sizing and attrition continue apace at AnnArbor.com, Laurel Champion, former publisher of the Ann Arbor News, will be left to head the organization as Executive Vice President in Charge of, Well, Everything. Steve Pepple (pictured below, right), former Print Director for AnnArbor.com, has decamped to the Detroit Free Press. You didn’t hear? That’s because unlike the fanfare that accompanied Pepple’s AnnArbor.com hiring, and unlike the departures of AnnArbor.com President Matt Kraner and then Kontent King Tony Dearing to NJ.com, Pepple’s departure went unreported—despite the fact that he gave the Ann Arbor community over 15 years of his life as a news editor. Since July 2009, when New York-based media company Advance Publications shuttered the money-losing Ann Arbor News and launched its self-proclaimed “successful experiment” in digital journalism, the news blog has slowly wasted away. The AnnArbor.com masthead now lists two editors, 12 reporters, three “news directors,” along with 10 advertising sales staff, and half a dozen other support staff (VP Champion has not one but two assistants). This head count is down from the approximately 272 staffers who produced the Ann Arbor News prior to the paper’s demise. The count is also significantly down from the 35 reporters and dozens of “community contributors” who produced content for AnnArbor.com when the site launched in 2009.

The question asked by news outlets from Michigan Radio to the Columbia Journalism Review is this: Is AnnArbor.com profitable after 40 months in business, or are Advance and MLive executives propping up the news blog, desperately hoping that revenue from digital advertising will grow enough to make the “experiment” successful? Advance Publications, the parent company that owns MLive which, in turn, oversees AnnArbor.com, has refused to provide information about whether AnnArbor.com is making money. Instead, MLive and Advance executives point to AnnArbor.com’s “market penetration” as evidence that their digital model is a smash hit, a better gauge of a newspaper’s success than audited circulation numbers. Sleuthing by A2Politico recently revealed, however, that the “market penetration” aka name recognition of AnnArbor.com fell slightly last year. Circulation of the company’s AnnArbor.com newspaper has fallen 40 percent since 2009.

In addition, A2Politico discovered statements made to various publications by AnnArbor.com, MLive and Advance executives between March 2011 and June 2012 revealed that unique visits to AnnArbor.com have plummeted by 75 percent. In short, the site went from hosting 2 million unique visitors per month in January 2011 to hosting just 557,000 unique visitors per month in June 2012—a shocker confirmed by MLive’s Dan Gaydou. In March 2011 Matt Kraner emailed Crain’s Detroit that he was: “quite pleased with our (year over year) traffic growth. Kraner claimed that average daily unique users had improved from 42,613 in January 2010 to 68,045 in January 2011, or that AnnArbor.com hosted over 2 million unique users each month. If Kraner was telling the truth, between March 2011 to June 2012—in the space of 15 months—AnnArbor.com lost a whopping 72 percent of its daily unique readers, down from 68,045 in March 2011 (Kraner’s claim) to 18,566 in June 2012 (Gaydou’s confession).

The debate over the quality of the journalism produced by AnnArbor.com has been decided—the reporting was most recently referred to in the pages of the American Journalism Review as “anemic.”

Two rounds of staff cuts, the loss of many key, experienced reporters to the Detroit Free Press, and now the departure of Steve Pepple, have given rise to a different theory about why Advance is exporting the AnnArbor.com model to its other newspapers. It has been suggested that by implementing the AnnArbor.com low-budget journalism model across the company’s newspaper division, Advance can stave off financial disaster at the two dozen or so newspapers it owns. Under the AnnArbor.com “model,” staff has been cut by 90 percent, pay rates by 30-40 percent, and frequency of printed papers was cut by 71 percent. In short, the “experiment in digital journalism” is little more than a draconian scheme to cut overhead dressed up as a new business model. The cuts are coupled with selling online advertising using over-stated (perhaps) and misunderstood (definitely) “market penetration” gobbledygook to unsophisticated, small town business advertisers. In other words, now the debate rages as to whether the expected export of the digital journalism model as practiced at AnnArbor.com is a last-ditch attempt to keep the privately held Advance Media’s newspaper division from going under.

Selling advertising to pay for “anemic reporting” is, obviously, what’s best for the family that owns Advance Publications. Anemic reporting offered up by AnnArbor.com, however, is detrimental to the Ann Arbor community. However, the Ann Arbor marketplace is a lucrative one, and it has been suggested that Advance will not give up on it, nor will Advance Publications executives allow their “experiment” in digital journalism to fail. If AnnArbor.com were allowed to go under, where would that leave the company’s digital journalism sites in other marketplaces? Such a failure would leave Advance vulnerable in every marketplace in which the AnnArbor.com “digital journalism” model had been exported, including in much larger cities such as New Orleans and Cleveland (where Advance recently announced it was moving the Cleveland Plain Dealer to a digital model, much to the horror of Cleveland residents).

A 1987 profile of the Newhouse family in Forbes makes for some juicy reading. At one point, the IRS accused the family of tax fraud and imposed a $305 million dollar penalty on a $658 million dollar tax bill. The profile ends, almost too perfectly:

“By all accounts, Steve (Newhouse) is quiet and introverted. Single, he has an apartment in Hoboken, New Jersey, and another in Manhattan, where he spends most nights. A true son of his father, he takes the subway to work early in the morning. When he goes to Newark airport, he sometimes hits the subway again and then a bus. The dynastic drama in which these young men have prominent roles may not play out for a while. Their fathers are still relatively young and unlikely to step down soon. It may not even matter that much which members of the Newhouse family next rise to run the empire. When the business is itself the stronghold, the question of who heads it recedes somewhat in importance. Most other enterprises have a character that tends to thwart dynastic ambitions. In these, the founder can deed the enterprise to his heirs but cannot will them the companion essential: management ability. Retailing provides an apt illustration. As the world knows, you can derail a Montgomery Ward or a Sears or a Woolworth’s. Maybe you can even over time derail a Wal-Mart. But it is almost impossible to wreck big monopoly newspapers. About all they will let you do is get richer and richer.”

It’s Steve Newhouse who now oversees the company’s “transition” to digital. In an August 2012 piece posted by Poynter.org, Newhouse writes: “The reason for AnnArbor.com’s strong readership is the high quality of its journalism…..The changes we have made in Michigan have strengthened our confidence that we can secure a vital future for our local journalism elsewhere. While we believe that our print revenue will decline further, we are hopeful that our increased focus on digital will allow digital revenue to become an even greater revenue growth engine, and, eventually, turn our local companies into growth businesses once more.”

Newhouse makes these claims about AnnArbor.com just two months after MLive’s President Dan Gaydou told the American Journalism Review that the news blog’s unique visitor count had plummeted to 557,000 from the 2 million unique readers per month claimed by AnnArbor.com President Matt Kraner in 2011 in his interview with Crain’s. One comment in response to Newhouse’s Poynter.org essay provides a more realistic interpretation: “You speak at great length of the maintaining a high quality of journalism throughout Michigan at the new sites. Every reader, every reporter and every former staff member, as noted above, knows this has not happened. The Michigan outlets are shells of their former selves. The communities they purport to serve hate them. And they serve up sensationalized, mostly-aggregated (stolen) content from other news sources. You’ve traded journalism for garbage content, but pretend to move forward as if nothing has changed. Shame on you.”

Meanwhile, at AnnArbor.com Print Director Steve Pepple is out of the Newhouse’s digital journalism petri dish and on to a job as the Assistant Metro Editor at the Freep.