Newspapers beaten to a pulp
Posted
Oct 02 2008, 12:27 PM
by
Minyanville
Rating:
On the wall of the lobby of the Baltimore Sun is a quote, reprinted in large type, from its great columnist H.L. Mencken. It reads:
"As I look back over a misspent life, I find myself more and more convinced that I had more fun doing news reporting than in any other enterprise. It is really the life of kings."
The quote is nostalgic and romantic, and I’m reminded of it every time I read another death notice for newspapers: Indeed, they're in bad shape, knocked flat on the canvas and in danger of staying down for the count.
While Mencken and the reporters of past generations dreamed of being newspapemen, the idea is anathema to younger generations -- they either read the news online, or not at all. The shift has been calamitous: Newspapers have as yet been unable to monetize their online operations.
In mid-September, the major newspaper companies all reported a drop in advertising revenue: The New York Times Company was down 14%, McClatchy was down 16%, Gannett was down 17% and Media General was down 4.4%. The stock prices of the New York Times Company and Media General, however, went up on online ad revenue increases within the overall drop.
Tom Corbett, who follows media companies for Morningstar, a Chicago-based independent research firm, told MarketWatch: “For every dollar they lose in print ad revenue, [newspapers'] online operations, industrywide, are recapturing maybe $0.14. These are companies trying to keep their heads above water.”
Newspapers continue to cut staff, and in some extreme cases, shutter their newsrooms to save money. The Bergen Record, the second largest newspaper in New Jersey, recently closed its Hackensack offices. Bergen County’s demographics are choice for advertisers: Affluent, educated, and older. It’s just not enough; newspapers can no longer rely on print advertisements for survival.
Meanwhile, the new world order for the whole industry seems to be arriving sooner than previously expected. Earlier this month, McClatchy announced its second major staff reduction in 3 months, which will shave off 10% of its work force. And the Newark Star-Ledger, the largest newspaper in New Jersey, is teetering on the brink of collapse - despite its tight grip on an affluent market. If the Ledger can’t meet a certain level of buyouts by October 1st, it will be put up for sale.
One obvious culprit for the newspaper's demise is often overlooked: Craigslist. Newspapers never made their money on selling the news - they made it by selling classified ads. Those small-print pages right behind the comic strips were their bread and butter.
Craigslist, however, which was founded in 1995, took the wanted ads online and offered them for free. As of September 2007, Craigslist had established itself in approximately 450 cities in 50 countries. In turn, newspapers lost their primary source of revenue.
It's worth noting that most newspaper companies are in fact profitable - or were until recently. They just aren’t profitable enough.
To me, this is a sorry state of affairs: Newspapers are an essential part of the public trust. But as papers cut costs to buoy stock prices, they become less equipped to cover the news. As responsible, in-depth journalism falls by the wayside, newspapers can no longer offer their readers a unique perspective on the city in which they live.
So what will happen next? Rob Curley, the vice president for product development at the Washington Post, said, “I think newspapers lost their way and started focusing on big investigative stuff and forgot to cover the prom or 10-year-olds playing baseball.”
To survive the rise of the Internet, newspapers should center on local news; their online editions should also offer video, photos, and extra content to supplement the print version. This is the seismic shift happening in newspapers today.
I think once newspapers start covering the prom and PTA meetings again, the papers in the middle -- not quite the upper echelon, but not the small dailies, either -- should suffer the most pain. Grand gray ladies like the Baltimore Sun, the Los Angeles Times, and the Chicago Tribune have all scaled back their foreign and national coverage, leaving that to the few papers of record that remain truly global: the New York Times, the Washington Post and the Wall Street Journal.
The rest will become “hyperlocal” - which isn’t necessarily a bad thing. As it turns out, people want to read about what’s going on in their own communities. The web -- though it can tell you what’s going on in the war in Iraq, the presidential campaign and what 4,173 bloggers think about it -- can’t usually provide that.
In the end, newspapers haven't yet found a way to survive in an online world. Newspapers must consider themselves as whole journalistic entities, not merely a collection of ink-stained pages. Although some companies, such as the New York Times, have posted double-digit increases in online ad revenue this year, all the news that’s fit to print must now fight with all the rest of it for survival.
Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Ryan Goldberg.
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