In 2006 at around 4 am, a man appears at the door of a security booth in Downtown Los Angeles. He slowly opens the door, being careful not to be noticed. He grabs the key attached to a small crowbar hanging by the door, then slowly heads back to his truck. 45 minutes later, he comes back the same way and drops the key off then leaves the premises.

I say around 4am because I'm afraid I usually dose off at that time. I used to work as a security guard at the Bunker Hills twin towers in Downtown. The only reason I know that the man had come by, is because he drops a warm copy of the Los Angeles Times in a blue plastic wrapping on my lap before he leaves.

Sometimes I am awake when he comes by and I give him the key myself. Other times, he stays in the truck and his son, an 8 year old boy, comes in to get the key. Other times, I wake up in shock when I see a short woman, his wife, trying the unhinge the key from the artisanal hook it is hanging from. They have a younger daughter but she is usually asleep in the back seat when the little family comes to my apartment building.

Once they have the key to the gate, they get into the building and drop a copy of the LA Times at the doorstep of each subscriber. It's tedious work to deliver paper all over two 18 story buildings. I always wondered, but never dared to ask, how much they got paid for the job. In 2006, a newspaper cost 50 cents.

Today, I'm sitting in a Starbucks writing this article less than a mile away from the Los Angeles Times headquarter. I'm here because I remembered the small stand by the wall, between the power outlet that fed the wireless chargers and the community board. On the stand, you could grab a copy of the LA times. I wanted to know how much it cost. But, the stand is gone. Not replaced by anything else. It simply vanished. The printed newspaper industry is close to dead.

But there is a question I'm having a hard time answering: was 50 cents enough to sustain the LA times? The LA times peak circulation was in 1990 when they delivered 1,225,189 papers daily. In 2006, when I received my free paper from the delivery man, the LA times circulated 851,532 copies daily. It declined steadily to the point that the news stand has vanished.

2006 wasn't the worst year by any means. The Tribune Company, then owner of the LA Times, reports 262,704,000 copy sold that same year. That's the daily paper (mon-fri) at 50 cents, and the Sunday edition at $1.50 for an operating revenue of $192,296,000. Advertising brought in $3,260,060,000. This number represent all advertising including the Chicago Tribune, Newsdays, and other sources. However, the LA Times represent 27.29% of the operating revenue, so I'll assume that advertising receives roughly the same portion of the pie.

27.29% of the Advertising revenue gives us $889,668,650 of LA times Ad revenue. In other words, the sale of physical newspapers represents only 17.77% of all LA times revenue.

I was getting a free copy of the newspaper, parting them from a fifty cents gain. But they were still making money off of me. They weren't tracking my reading habits and selling my interest to advertisers. Instead, they filled most of the paper with advertisements. Based on our math, that accounted for close to 80% of their revenue.

I may not have been paying for a copy, but I always looked forward to the electronic page where they advertised products from Frys. Before the age of smartphones, this was a neat way to see new arrivals in the store and I could spend hours on the adverts. Then make small cut outs of what I liked and take a trip to the physical store.

Where I failed to pay for the paper, the advertisers paid for my eyeballs devouring the electronics pages.

In 2018, the newspaper industry had declined even more. We often hear the argument that people don't want to pay for news anymore. But a better explanation of the decline is that advertisers don't see a good return on investment. The Tribune Company, re-branded to Tronc, cut its losses by selling the paper to a Billionaire investor. The latimes.com is now the main source of eyeballs, although they offer a plan for daily delivery for $20 a month. Their daily printed circulation is published no where I could find. However, they report 170,000 digital subscribers.

They also offer a $1 a week plan to have full access to their online content. If all their customers subscribe to that service, that's a $680,000 monthly revenue. A fraction of the revenue in their heydays.

4.00 x 170,000 = $680,000.00

The latimes.com also show ads on their website and they boast about their 1.3 million daily readership, which can amount to a significant income, yet nothing compared to their print ads. In the days of print, whether I paid for the paper or not, the advertiser paid for it. Today, the advertisers see's exactly how many times their ads have been viewed, and pay accordingly. The rise of Ad blockers did not improve the situation.

At the end of the day, the price that you and I pay, whether it is for the print copy or digital, it is only a very small part of the revenue. The price paid for the printed copy was by no means sustaining the newspaper business. It was advertisers all along. And they paid the price for the privilege of having as many eyeballs the newspaper could expose their ads to.

References.