Ask most people for a quick take on the future of newspapers, and you’re likely to hear two words: “declining circulation.” But there is growing evidence that traditional measures of newspaper market penetration are as outmoded as hot type. Now it’s not the circulation; it’s the footprint.

“We’ve been measuring newspaper penetration the same way since the 1830s, when The New York Sun started to tie advertising rates to circulation,” said George Irish, president of Hearst Newspapers. “The one- paper, one-reader model worked fine as long as we put out one product. But today, to define our strength and future by a single circulation number is to ignore the fact that this industry is transforming itself faster—and more broadly—than even those of us who have spent our lives in it thought was possible.”

That transformation, he said, centers on one advantage that no competitor— print or digital—can duplicate at any price: the fact that the newspaper doesn’t just serve the community; it is part of it. “Think about it,” Irish said. “Name a city, and chances are you can also name the paper—San Francisco Chronicle, Houston Chronicle, The Washington Post, The New York Times. Every paper is the gateway to the local market. We own that connection. And we are building on it.”

One measure of how quickly this change is progressing is the fact that newspapers have the No. 1 local Web site in virtually every major market. Another is the growth of ethnic, shopping and other special-interest publications that are now spinning out from core papers across the country.

Newspapers are also starting to leverage their Web presence by creating networks. Hearst Newspapers—including the San Francisco Chronicle and the Houston Chronicle—recently joined a consortium of more than 200 daily newspapers across the U.S. to create a strategic partnership with Yahoo!. The Group will combine Yahoo!’s broad reach, search capability and online advertising experience with the newspapers’ content, local sales teams and print promotions. While the initial focus will be employment advertising, the consortium will also take a range of other newspaper content across multiple channels to the massive Yahoo! online community. The papers will have use of Yahoo! search tools on their Web sites.

For Hearst, that wide-open approach to local market opportunity is helping drive some impressive results. In 2006, Hearst’s newspapers in Houston; San Antonio; Beaumont, Texas; Laredo, Texas; Midland, Mich.; and Midland, Texas, as well as its weekly papers in the Albany, N.Y., area, all posted profit gains.

Describing the math behind the opportunity for expanding community penetration, Irish said, “The Houston Chronicle newspaper reaches over 750,000 households each week. But with the Web site, shared mail products, ethnic and special-interest publications, it reaches more than 90 percent of the more than 1.9 million households in the Houston metropolitan area—more than 2.6 million adults 18+. You see the same thing in every market where we publish: the paper at the center, creating the platform for a whole range of products tailored to the needs and interests of different parts of the community.”

The San Antonio Express-News' bilingual weekly magazine, Conexión, reaches 72,400 readers, with 2006 revenues of $2.1 million. This year, the paper launched Cancha, a twice-weekly Spanish-language sports and entertainment publication produced in partnership with Mexican publisher Groupo Reforma. Also new is a monthly fashion magazine called Spice; a quarterly high-end lifestyle magazine, Trends; and a weekly product focused on new and used cars, motorcycles, RVs and boats, called Drive Weekly. The Express-News' Web site grew its unique users to 1.3 million per month, from 1 million in 2005.

The Albany Times Union extended its reach by growing paid circulation on Friday, Saturday and Sunday—the three most important days of the week for advertisers. The Times Union also raised its profile by winning naming rights to Albany’s premier sports and entertainment venue. Previously called the Pepsi Arena, it will now be known as the Times Union Center. All online ticket sales for the center will be handled through TimesUnion.com, providing a big boost in traffic and visibility. The newspaper also launched Times Union Local Values, a direct-mail product that now reaches 130,000 non-subscriber households.

On the West Coast, the San Francisco Chronicle launched a Friday- through-Sunday product called SF Cars, which helped trigger a gain in monthly revenues in the tough auto category for the first time since 2002. 96 Hours, a new entertainment tab in Thursday’s Chronicle, was an immediate hit with advertisers and readers and is projected to bring in $2.7 million in year-one revenue. SFGate.com, the nation’s fifth largest newspaper Web site, grew its unique visitors to an average of 6.7 million monthly, from 6 million in 2005.

The Seattle Post-Intelligencer showed what newspapers do best— hard-hitting investigative journalism. A yearlong series of stories called “Conduct Unbecoming” produced a broad and unflattering view of the King County sheriff’s office that led to three separate FBI investigations and reform proposals from county and state government officials. The series won widespread attention for the paper’s public service.

While smaller in circulation, Hearst’s community newspapers are also finding product development the key to growth. The Laredo Morning Times launched Divino, an upscale monthly local lifestyle magazine; the Midland Daily News launched twice-monthly entertainment magazine Verge; and the Midland Reporter-Telegram launched MyWestTexasJobs.com. The Plainview Daily Herald launched a new version of MyPlainview.com and increased traffic by more than 48 percent.

Also in the community newspapers arena, Hearst expanded its portfolio in late 2006 by acquiring Prime Time, Inc., a publisher of 18 titles in the San Antonio area.

Irish said that being a community-centered business gives newspapers the chance to expand into other products tied directly to local markets. For example, the company’s yellow pages operations, White Directory Publishers and Associated Publishing Company, grew to 89 directories in 12 states by launching seven directories in such cities as Albany, N.Y.; Bath, Maine; and Savannah, Ga., and by acquiring five directories in northwestern Pennsylvania.

“It’s very important to remember,” said Irish, “that new technologies and new products expand the ways we can intersect with the lives and expectations of our audiences. And that is critical. But the heart of our connection to a community is the trust we have earned and the quality of the journalism we produce. It doesn’t matter how we reach audiences—Web sites, special publications, wireless. In everything we do, excellence, trust, innovation and benefit to the community are how we should be judged."

A study by New York University named the Houston Chronicle’s Web site, Chron.com, the best newspaper site for blogging “by a mile.” The Express-News’ MySanAntonio.com finished fifth. Editor & Publisher magazine named the Houston Chronicle one of the “10 That Do It Right” in the newspaper industry, citing the Chronicle and its Web site’s aggressive coverage of Hurricanes Rita and Katrina and of the Enron trial; the redesigns of Chron.com and La Voz; and the hiring of Pulitzer Prize–winning cartoonist Nick Anderson, who is doing innovative online cartooning for the Web site. In addition, the Chronicle’s features section got top-10 recognition for the second year in a row from the American Association of Sunday and Feature Editors, and the Associated Press Managing Editors named the Chronicle’s sports section to its top-10 list, also for the second consecutive year.

“Competition for revenue is a fact of life today,” said Irish. “On the marketing and sales side, we’ve made some adjustments to be more aggressive and effective in going to market.” One example, he explained, is that many newspapers have gone to a team-selling concept, bringing together the sales reps who make the customer calls and win new business with outbound telemarketers, who set appointments, handle contract follow-up and make future telemarketing calls on the customer. The result, he said, is wider customer ownership and better service.

The Company is also intensifying marketing in some of its most important— and increasingly competitive—categories. Employees at a new telemarketing center in Houston are currently making outbound sales calls into Hearst’s major markets, with an initial focus on employment and real estate advertising, where online companies are making serious inroads. A new national sales initiative will work such key customer groups as automotive dealer associations, financial services companies and movie studios.

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