Commentary
My Last Column On The Newspaper Industry
- by Dave Morgan , Featured Contributor, January 8, 2009
I am not going to write about newspapers anymore. Over the past three or four years, I have devoted quite a number of my columns to issues in the newspaper industry. No more. I no longer believe that the industry is very relevant to the future and things digital. Since I prefer to write about those topics, and am also becoming more interested lately in how the Internet will reshape the television and video industries, I plan to focus my attention there. However, since I am preparing for a talk I am giving next week to a number of newspaper industry executives, I will address the subject one last time.
Earlier this week, I read two great posts related to newspapers and their current problems. The first was a story by Jack Shafer on Slate chronicling the many bold and prescient online investments that the newspaper industry made in the 1980s and 1990s, and the industry's failure to ultimately find long-term success from those efforts. As Shafer pointed out, those who believe that newspapers came late to the Internet are wrong. In fact, they were very, very early. Rather, newspapers' abysmal failure to build great businesses online was a direct result of their incredibly narrow-minded focus to make online work within the same "locked-down" look, feel and content control paradigm of their existing print distribution model.
advertisement
advertisement
Newspaper executives chose to sacrifice the interests of their readers and their advertisers by their stubborn refusal to embrace the Web for what it could be -- a better and lower-cost platform for interactive delivery of local news, information and commercial communication (think Craigslist or Google) -- as compared to what they wanted it to be (a way to sell and deliver "locked-down" content products in "walled gardens") which neatly fit in their "trees to trucks" vertical monopoly mentalities. That was their death knell.
The second great post was by Mark Cuban, of Broadcast.com and Dallas Mavericks fame, on blogmaverick.com. Mark wrote about the symbiotic relationship between local print newspapers and local sports franchises and lamented that as newspapers shrunk or disappeared, local sports franchises were among those that would suffer greatly (as a sports franchise owner, he cares about this issue a lot). As Mark noted, most of the local sports coverage currently available online is not very good, and its readership pales in comparison to the sports readership of local print newspapers. To help sustain local print newspaper coverage of pro sports into the future, Mark suggests that newspapers and professional sports franchises create cooperative-like joint ventures, where the sports franchises substantially underwrite the cost of newspaper coverage of their sports and teams. Mark argues that the investment to keep newspapers' sports sections alive is much less than the cost to try to build entirely new media channels to recapture those audiences if the newspapers disappear. I think that Mark's idea is a great one.
Of course, as Mark recognizes, and as many of you are thinking as well, most in the newspaper industry would reject cooperative structures out-of-hand, arguing that they would threaten the wall between "church and state" and the historical impartiality of newspaper news.
I strongly disagree on both points. First, that is the way the "newshole" has always operated -- newspapers print as much news (and news of the type) as advertisers and subscribers have paid to support. The "newshole" both predates and is preeminent over the notion of church and state. The size and structure of a daily newspaper is almost never dictated by the amount of news that occurred the day before. Rather, it is largely a function of how much advertising was sold for that day. Auto sections exist because car dealers pay for them. It's that simple. The same holds true for food sections and grocers. Mark's idea is no different.
Second, the notion that the purity of newspaper journalism is the cornerstone upon which today's great metropolitan newspapers were built is revisionist history. Most of today's great newspapers were built through achieving dominant distribution in their markets, not through delivering better journalism. Most U.S. cities used to have two or more competitive newspapers. The eventual winner was almost always the one that won on the battle on distribution or advertising, almost never on journalism. Great journalism came later. For example, the Philadelphia Inquirer didn't become a Pulitzer Prize-winning machine until after it put the Philadelphia Bulletin out of business (and we won't even get into the role that some believe that organized crime may have played in that victory). Only after that the Bulletin was gone did the Inquirer have the ability to invest outsize, monopolistic profit margins into great journalism, which is exactly what it did. The same holds true for many of what we see today as great, "journalistic," metropolitan newspapers. Pulitzers don't make great newspapers. Local distribution monopolies make great newspapers.
Why do I make these points so harshly today? Because I believe and hope that only if and when newspaper companies and their executives truly understand why their franchises are where they are today, will they be able to actually build new digital businesses that can thrive in the future. What do you think?
Dave, totally agree with your comment "....more interested lately in how the Internet will reshape the television and video industries." Looking forward to hear more from you on this topic.
As usual, Mr. Morgan makes some good points. However, with regard to Mr. Cuban's suggestion that sports franchises underwrite coverage of themselves, does anyone not think this would taint the resulting reporting? Why don't the franchises simply launch their own newspapers?
"I am preparing for a talk I am giving next week to a number of newspaper industry executives.."
Dave, will you post the presentation on-line after delivery?
Newspapers will never disappear entirely... The name 'paper' might, but there will always be a need for strong local content that blogs, tv, radio, etc. simply cannot touch (as of yet). And while ownership and terminology will most likely shift, the new 'news organizations' that emerge will be strong and (hopefully) innovative.
What has slowed this process down is the timid but understandable idea of holding on to the substantial revenue streams (subscriptions, classifieds, retail advertising) for as long as possible, rather than make one clean jump to a less profitable online model. Would you dump 7 figure profits now for long-term survival at mediocre cash levels? Guess it depends on how close you are to retirement...
First, John Smith should get over it: McCain lost and you and the rest of people who think that the media caused him to lose should have your heads examined. Palin lost it for him, and lost it ONLINE and via word of mouth. Newspapers didn't need to help him lose and they are not committing suicide by publishing 'Socialist' news.
Second, Cuban's idea is interesting but why a joint venture? Doesn't advertising serve the same purpose? With the huge salaries that pro athletes are paid, the owners need to squeeze other costs and maximize revenues. Newspapers won't do that for them. If he thinks it's such a good idea, why doesn't he do it himself?
I love newspapers and hope they survive but I am concerned that the current ad climate, economic climate and move to the internet dooms their current business model to the dustbin next to the buggy whip, stable and ice house category.
Good points, but you forgot one: newspapers became so fixated on "investigative", sensationalist journalism that they lost their claim to journalistic integrity and special status of trust. The NY Times printed fabricated stories. Every major daily went rabid over the Duke lacrosse team, only to limp back later after forces with more integrity dug out the truth. and so on.
So why not look to the Internet for news. It is at least as trustworthy and a lot faster -- and smarter.
Gene
Dave - thanks for making this the last mention!
When are these guys going to realize that there is not an "online newspaper industry"? Yes, print will be around for years, and newspapers serve a vital need, but when it comes to online - they are an online publisher! They must attract and sustain an audience in the online world, not just try to port print readers to a web site.
To take the Cuban argument one step further, local newspapers are going to have to look at themselves as local brands that are part of engaging the souls of their community, rather than just reporting on the news.
For example, a ten-year old girl may not read the LA Times, but she is certainly familiar with it. If the LA Times shows up at her school and prints her classmates picture in the paper, this experience will stick with her and create loyalty.
For the most part i agree with your article. There is something to be said about picking up a newspaper on Sunday during breakfast. However, with that said, the distribution of a newspaper in a certain geography is OBVIOUSLY key for market penetration. With circulation deteriorating, and consumers choosing to get there news and information online. the future is in fact bleak, unless they really develop their online business with streaming audio, video, blogs, that really engage the reader. if you think about it, newspapers have been the only medium that were able to raise rates every year while circulation was going down! When ratings go down on other traditional media i.e. tv, radio,- rates go down. in short, less eyeballs, less ears, less $$ per spot -EXCEPT NEWSPAPERS! Its a new ball game out there-with a new landscape that is forever changing.
With all this said, good journalism can still be found,-ONLINE! and if newspapers online component is strong with CONTENT, they will in fact ENGAGE THEIR READER, and just maybe create a RAVING FAN IF NOT AN ADVOCATE!! With those advocates comes advertisiers, if your numbers are strong!
Being the pack rat that I am, I dug out an old article you wrote for the PNPA Press in Feb 1995 when you were The Director of PNPA's New Media Ventures Department.
You were right on the money with every point.
You outlined the very simple steps newspapers needed to take to not only have an online presence, but to be a leader in thier own local markets and serve communities.
If only they could get the Mr. Peabody's Way Back Machine and do it all over again.
As I head to the last NAA Newspaper conference in a few weeks, (the last one I will more than likley ever attend) I wonder if they will all still be drinking the koolaid.
Makes me sad. But them again I now spend 10 hours a day online. I never spent that much time reading a newspaper.
I couldn't agree more Dave. As we briefly discussed previously, a company I've invested in recently (TalkShoe) has a solution to significantly enhance newspapers revenue opportunities. But just getting thru to see them is like accessing Ft Knox.
I had the dubious distinction of working on what I believe was the world's first graphic-based online newspaper. It was a cumbersome thing that ran on a Unix server and required one modem for each viewer - much like the old BBS systems. The newspapers were so incredibly arrogant and smug that all I can do is smile when I hear about another newspaper closing down or firing half it's staff or "merging" with their competition. In 1989 I was in a meeting in the presentation room of a well-known Denver Daily - it was the first face-off between print and digital. We wanted access to the classifieds to run them in our online newspaper and "Vern" (a great rolling jellyfish of a man) informed us that we were never going to get our hands on HIS classifieds, it simply wasn't important. Then the "wacky professor" CEO of our company "Dwight" stood up and proclaimed "That's ok, if you don't want to do business with us, we'll just put you OUT OF BUSINESS!" Vern and his toady henchmen got up and stormed out of the meeting. A few months and several million dollars later our online paper was shut down, lack of subscribers was the cause. I was upset - not at the closure of the product, because at some level I felt as if Vern had won. Many years and digital battles later, some guy named Craig put a usb-powered stake right in Verns oversized chest and I get the pleasure of saying "Dwight was Right!" I have to wonder how many thousands of early adopting coders and designers have had the same experience?
I am not sure how much I agree with the idea that local sports franchises will suffer, in theory, due to the downturn in newspapers.
First, major sports teams (I am not dealing with minor league sports or secondary sports coverage here) are in markets large enough that some sort of daily newspaper will continue to exist. There will be daily sports coverage in Detroit even, as they plan to do, to limit home delivery to certain days of the week.
Given the rise of broadcast sports at the national, local and local cable level along with sports talk radio over the last twenty five years, there is no lack of discussion or insight. That is even before adding internet information sources to the mix.
This includes the .com version of a daily newspaper, other sports media related sites, national sites (ESPN, Sports Illustrated) and even sports team and league controlled content sites.
I am in the interactive world although my roots are in print media. I still read the daily newspaper, receive the Wall Street Journal at home and buy USA Today a day or two a week. I enjoy being able to read the column in the sports section by the beat reporter for the Angels or Lakers (I am in Orange County) and review the box score, but I am certainly not lacking information in general on the teams or players.
Please keep the newspaper prospect(s) debate going.
We need our news reportage sources. We need controversy
and debate --- and more employed and educated readers that can appreciate the events of the day.
We also need to help sustain our pulp industry.
There are very few upper-wage industries left in our country.
The rolling presses feed on agricultural pulp that can be
recycled and are operated by skilled trades people.
Our country needs to seriously value the merit of our
printed topical journals. What do we truly value--flash--
or substance?
2 issues NEVER addressed by Dave or anyone else, is ALL of the quality investigative news continues to be written by print journalists. This is why Mark Cuban feels it necessary to support them. Websites don't have teams of journalists getting the story - they just have digital wannabes like us "editorializing" on news gathered by print journalists which is why Cuban rightly says online reporting is so poor.
The second issue no one wants to talk about is the staggering debt loads newspaper companies face. Most individual newspapers at McClatchy, Lee and Tribune are running positive cash flow in their local markets, even in this advertising downturn; but the parent company debt is strangling these newspapers so they can't survive this severe advertising recession.
The Buffalo News owned by Warren Buffett is making money even in this severe advertising downturn, because it has no debt like every business he runs.
Dave,
Nice analysis. It's also important to factor in that one of the MAJOR (in some cases majority) drivers of local newspaper readers were the ads -- arguably, more important than the journalism. You did a great job dissecting the role of distribution in building great newspapers (versus journalism) but when you evaluate at the state of ads, newspapers have failed miserably. You alluded to this with your subtle mention of Craigslist, but it's more significant. Scott Karp said it well recently: "People ask why no one wants to pay for news anymore, referencing the decline in newspaper circulation, when in fact that misrepresents the value equation. People were paying for newsPAPERS, which contained a lot more than news, and they were also paying for newspaper delivery, which is a service." The most important thing local papers delivered to doorsteps was the flea market.
Newspapers cannot reinvent themselves for the digital age. Their structure is too tied in to economies of scale than no longer exist. A news organization no longer requires office real estate, sophisticated computer networks and large numbers of admin staff. As somebody who has spent decades working in the newspaper industry I find this sad, but there is hope.
It is no longer possible for a news organization to control an area, because the online costs of distribution are close to zero. Anybody can start a blog or a website. Yes, news gathering is expensive and skilled, but don't forget that the majority of a newspaper's costs are not accounted for by editorial.
In theory at least it should be possible for some redundant reporters to create an online presence covering the same beats as they did as journalists. They would have the potential to attract a variety of revenue streams from sponsorship from local sports franchises to Google AdSense. I agree that initially it would not be very profitable to run these sort of highly local blogs, websites or whatever the internet word du jour happens to be. However, they all have the advantage of being highly scalable. In other words our redundant reporters might be supporting themselves with other work or their redundancy checks, at least to begin with.
I think this sort of bottom up organization has much more chance of success than the various attempts to set up networks of local microsites which provide most of their content through targeted news feeds. It's getting close to the old newspaper model when the editor, reporter and proprietor were the same person. It also mirrors the way successful blogs tend to be run by people with a specialized knowledge and passion for a subject. There's no reason why this shouldn't apply to a district rather than, say, a sport, type of gadget or whatever.
Just a thought...
Dave,
You've given up too early. While it is true that the newspaper industry has fallen on very hard times -- mostly due to a perfect storm of economic crisis and its own short-sighted behavior -- it is not leaving the media stage. Newspapers will play a significant role in media for the foreseeable future, and beyond.
We look at the current crisis as the first to hit newspapers. In reality, there have been at least three during the last 100 years. The first was the rise of "yellow" journalism. Hearst and his competitors changed the face of print journalism, and in the process changed the whole economic equation the industry lived by.
Next came the rise of broadcast media -- first radio, then television. Grave pundits foresaw the death of newspapers from each of these new competitors. But newspapers re-oriented themselves, and survived.
Perhaps the most serious challenge came in 1962, when Bill Paley collected TV's "scatter market" into what's now known as "national spot." Newspapers saw their national advertising from packaged goods manufacturers (until then the majority of their ad revenue) drop by more than 90 percent between 1962 and 1970. Once again, newspapers re-invented themselves and regained the levels of ad revenue they had enjoyed in the past.
There are certainly plenty of errors in thought and action that all of us can point to which have contributed to the terrifying slump in newspapers -- in readership, circulation, and ad sales. However, I remain confident that the industry will rise from its downward plunge and regain a good portion of its stature. Here at Borrell, our own forecast shows that the loss of ad revenue for newspapers has almost reached its conclusion. Our numbers show some increase in local spending by year's end, and noticeable upward trend in 2010. Newspapers started their slump early, and they will start recovery early as well. TV, radio, and other "legacy" media have started their declines later, and still have some way to go.
Part of the reason for newspaper recovery lies in their share of the interactive media pie. Newspapers were into this game early, and by the early 21st century controlled about 40 percent of locally generated, locally directed online ad spending. This share has deteriorated , mostly due to newspapers' continued reliance on upsell of classified verticals and competition from other local players (broadcast TV, for the most part). Even so, one of every four local interactive ad dollars spent goes to newspapers right now.
Another reason is the decline of direct mail. Increased postal rates, the rapidly growing slump in personal mail. and personnel issues that would make GM blush are but some of the reasons behind this. Catalogers and mailers are already looking for alternatives. Some are turning to the Web, but others look to newspapers as a possible alternative.
There is life in the old gal yet, Dave.
KC
Great response to the Mark Cuban/newshole/impartiality issue; I had never thought about it quite that way before. In essence what has always occured up to now is the car dealers and movie theatres were paying for the sports section to appear, and local news subsidized by local teams who stand to lose from loss of coverage seems more palatable in that light. However true this is, though, there's still the appearance of complicity, especially if one's local teams happen to stink. Fairly apportioning costs among multiple franchises - and multiple newspapers - in cities large enough to sustain them would be a complexity as well.
I would like to see the effect jettisoning a real-world print version (PC Mag, Christian Science Monitor) has on online readership, however. The reality is there is an overlap, with the print versions driving people online. With no print versions at all I expect readership to dwindle readership significantly, to the point of unsustainability.
Really great and really true. I know, I was there in the early days. I sold The Online Movie Club to The Bee in 1996. (sounding like my beloved Terry now ;-)
Some of us did “get it’ but we were rarely let alone enough to succeed in the space because the old-school, publishing “experts” “knew better”.
Forcing old models and assumptions on those of us in the interactive space killed moral and revenue.
Demanding rates that were too high when compared with other options because of the ego the publishing caste had about “our readership and our brand value and influence.” Build it and they will come doesn’t work when there are more and better options. Monopolistic thinking fails when the distribution is no longer a controllable asset.
Fear that by innovating in a way that would allow us to do the smart or right thing for the advertiser’s ROI because the competition would “figure it out.” Not realizing of course that building a culture of innovation would always keep us 10 steps ahead of the competitors even if they did copy us. (and they did, most often doing what we had set out to do much better.)
The biggest killer was compensation models. Everyone was paid based on what their fiefdom produced, not how well the company did. Therefore, we in the interactive side were not helped in accessing print-side clients. Middle managers would talk a good game of introduction and openness but when it came right down to it, their bonus and annual review was based on how much print was sold. There was no financial motivation to succeed as a company, only as individual silos. Old guard print VPs scoffed, openly and in front of advertisers, that online was viable medium – hubris driven by fear, ignorance and compensation goals.
Finally, the issue of motivation. The print industry has enjoyed a dominance built on a century of portability, distribution control and resulting market penetration. The business development culture in the early and mid 90’s was still one of “don’t fix it if it ain’t broke.” I know, I was told that by my first sales manager there when selling outside, display advertising to the auto industry. The culture did not need to innovate or be aggressive. We REALLY were order takers. (As much as that still bugs me to admit).
Even in early 2000, 2001, there was this attitude of “it will come back.” Gary Pruitt of McClatchy was often quoted as saying “we’ll be the last Dinosaur standing.” This was a statement of pride and arrogance and one that was meant to inspire and calm us. It didn’t then, doesn’t now, and may have turned out to be prophetic in a way he did not intend.
A world without a daily newspaper would be lesser for it. I hope the turnaround happens. I will be curious to look back on the state of the might daily years from now.
I have always loved newspapers. During the time I worked -on the business side-for a group of J. Kilgore's community newspapers & then for The Editor & Publisher Co. (across the hall from you Dave) my experience evolved from print & event audiences to include internet audiences as well. The 'edit-ad ratio' in print, the size-sponsorship ratio' of an event and the overall quality of a website is often driven by the advertising. The 'integrity & professionalism' of journalists & content varies. "Timid holding on to substantial revenue streams" is exactly what has hampered the newspaper world. I have since worked with many respected & veritable b2b publications. They too stumbled terribly around the bold decisions required to test, experiment and manage new technology in their field. Like newspapers, they are long time, trusted community members in their own right. Their audience 'wants' them to succeed. The internet has certainly changed the business side of journalism & information access but the need for trusted information & content is greater than ever - especially in local markets. I'll miss your newspaper missives Dave - -but I'm right with you re: tv & video online.
Sharon, would you share the item from 1995?
Dave -
As usual, you're at the bleeding edge. With all respect to the other posters, Dave may be slightly ahead of the curve here, but his overall thrust is prescient. The notion of "online newspaper" and "newspaper industry" are less relevant by the day. (Several of us on another blog were accused the other day of being "triumphalists" on this point. The accuser apparently doesn't grasp the sentimentality one can have for the envelopes of one's first bylines, dating to the 1970s.)
Echoing too many other commenters above: Online news and information? A heady and worthy topic. Appending the six letters 'papers' to the conversation? Not so much.
-tgd
Nick Clayton's thoughts on how the newspaper industry has to reinvent itself for the digital age is right on, but I disagree with the notion that distributed blogging is the appropriate path for reinvention.
He was dead on though that the premise that scaling editorial and content is key, even if from a central entity. Scaling gives the media franchise the ability to reach their readership with more targeted content on the same subject matter cost-effectively. Larger reach and targeted content is a win/win.
It is painful to think of a world without newspapers, and as we have been working on a product for newspapers that both lowers their costs and increases their revenues, - www.varvee.com - and yet have encountered very slow thinking in the process, all I can, Dave, is that the future will be bright for those who adopt your thinking sooner rather than never. Thank you for your thinking
Dave...
Your article on fading newspapers rings true, but what really got me is that you used the Philadelphia papers, Inquire and Bulletin. My first job was a paperboy for the Philadelphia Bulletin. Every day after school when I was 12-13 I would pick up my papers and deliver my route. It was 7 days a week, rain or snow or shine. Now, I get most of my news from the web or my cell phone. So, gone with the papers, are the paperboys too.
Maybe a real mproblem is how many newspapers have been so busy trying to impress other journalists in the news sections that they completely forgot about covering their local communities like a blanket. Here in metro Detroit, the big two dailies barely cover the metro area -- as a fromer print reporter, I hate to say it, but TV news eats their lunch every day with better (although shallow) local coverage. I subscribe to one suburban paper and get a free community paper that with five issues a week cover the area ten times better than the two dailies.
One of my journalism professors back in the seventies said print would be dead the day you could read electronic newspapers in the bathroom. Was he predicting the wireless web?!
The loss of the daily newspaper is a very sad thing for America as it is truly one of our country’s finest industries. It is easy to sit back to take pot-shots from the cheap seats, but the good that newspapers have done in this world should never be forgotten.
I spend hours on the Internet each day. But the problem with the Internet is that much of the Internet's content comes from people or groups with an agenda and no editorial boards looking over their shoulders. Frankly, I don’t really know who to believe. As bad as we think newspapers slant the news, we haven’t seen anything yet... especially if we loose the independent perspective of today’s newspaper writers.
I believe that your article is a little too arrogant and dismisses an institution that helped make America a free, democratic society assisted in giving people like you and me the right to scream as loudly as we do, whether we are right or wrong and whether others like it or not.
One side note: One of my greatest pleasures is to sit with my wife, enjoy a cup of coffee and read the newspaper. I hope that you are wrong and newspapers, in one form or another ride through these tough economic times.
Dave --
Actually, the Philadelphia Inquirer began winning Pulitzers in 1975 and won one a year through 1980. The Bulletin didn't go out of business until 1982.
Knight-Ridder hired Gene Roberts from the New York Times in the '70s to make the Inquirer journalistically superior to the Bulletin.
No doubt advertising and distribution were part of the strategy as well, but quality journalism was part of the successful package.
More generally, it's a mistake to think that "quality" doesn't matter. That said, there's a question about how "purity" equates with "quality."
All humans and human institutions are subject to outside influences, so "purity" isn't possible.
It may not even be desirable. The Internet has shown that people like attitude and are willing to separate the wheat from the chaff for themselves.
For the sake of argument, let's define "quality" as what people want in their newspapers. Newspaper people clearly don't know, or newspapers wouldn't be declining.
And if newspaper people can't achieve that kind of "quality" in their print products, why would they be any more successful on the Web?
After all, print, radio, TV, the Internet are simply delivery vehicles.
IMO the only way newspapers will success is to build a reasonable digital subscription product (EMail, Iphone, digital readers, print out) and franchise and a more expensive paper delivered to subs, perhaps supplemented with an additional heavy advertising TMC. There is no way for newspapers to compete against a free site Craig's. That day is cooked for classified. Today No matter what papers do, they have fixed expensives with reporters, paper, delivery and manufacturing. But this new model can reduce office space requirements via smaller workforce, much of it at home, newsprint expenses and the expectation of an ever shrinking pool of advs and ad money.
As far as the Mr Cuban's suggestion, you need to look no further than Long Island NY. This is the place where the Dolan's own Cablevision, the Knicks and the Rangers and recently purchased Newsday. I still read and buy a lot of print newspapers, including Newsday. So far it looks like their writers are still independent. However the Knicks don't suck this year and we don't have Isiah Thomas to kick around anymore, so it would have been interesting and more tell tale if this kills editorial atonomy.