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Last week 250,000 editions of The Baltimore Examiner were tossed to homes in and around the Baltimore area. That's right — The Baltimore Examiner not The Baltimore Sun. Interestingly, The Baltimore Sun — the 169-year-old incumbent newspaper — offers its advertisers a similar "paid" circulation count (247,193). Like many newspapers around the country, The Baltimore Sun is losing readers — 20,000 last year alone.

We’re sure at least a few advertisers in the market will remember the aggressive entry of Yellow Book, which used lower prices to compete with incumbent Yellow Pages publisher Verizon (Bell Atlantic in those days).

The new paper offers advertisers full-page rates that are over 80 percent less than those of The Baltimore Sun ($2,900 vs. $17,000). It can do this for now, since its editorial cost structure is considerably less: The Sun has 340 journalists, while The Examiner has perhaps 20 college graduates.

This scenario is already being played out by Clarity Media Group in San Francisco and Washington. We expect advertisers in other markets around the country will hang up on yet another set of advertising sales representatives — at least initially. If The Baltimore Examiner can get any traction, evidence from the Yellow Pages industry suggests those hang-ups will turn to "hang-ons" pretty soon. After all, The Kelsey Group's recent survey of consumers — User View III — indicates consumers continue to value the print newspaper as a source for local shopping information.

TKG’s ILM clients should read Part 1 of our two-part report on the state of newspapers and the challenges and opportunites they face. A summary of Newspapers 2.0: The Competitive Dynamics and Challenges Facing Newspapers in the Online Economy can be read by clicking here. ILM clients must log in to the Web site to view the full report.

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