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February 20, 2008

Who Put These Guys In Charge? (Why Newspapers Are Failing)

Is there anyone not talking about a crisis in the news industry? The New York Times is dumping 100 jobs. The troubled Tribune Company is offloading 400-500 people. And across the country there are reports of slumping advertising and impending layoffs. Now this report in AdAge:

U.S. media employment in December fell to a 15-year low (886,900), slammed by the slumping newspaper industry. But employment in advertising/marketing-services -- agencies and other firms that provide marketing and communications services to marketers -- broke a record in November (769,000). Marketing consulting powered that growth.

So things are pretty bad, and we're working in a dying industry. Nobody's reading newspapers anymore. 

And yet they are. And in record numbers. Look at this report in Editor & Publisher. The online audience is soaring, and here's the growth rate and numbers of unique readers for newspaper websites in January 2008 (with 000's at the end):  

NYTimes.com -- 20,461 -- 45.1%
USATODAY.com -- 12,314 -- 19.4%
washingtonpost.com -- 9,902 -- 14.6%
Wall Street Journal Online -- 6,962 -- 81.4%
LA Times -- 5,715 -- 4.7%

Not only are these huge audiences, but the growth rates continue to be spectacular. By far, more people are reading newspapers than ever before. As just one example, scroll down the list to No. 16, the Seattle Post-Intelligencer, which has a unique web audience of 2.2 million. The P-I's print circulation, when it was considered healthy in the last century, was somewhere in the low 200,000's.

This is spectacular growth in audience. And yet, as the P-I's print circulation has declined to the mid-100,000s, its newsprint ad revenue has slumped, the paper is losing money, it's not replacing staff, and the owners are riding down its content, managing losses. As the paper's content has degraded, the perception of it in the community is one of declining influence and quality.

The problem, say newspaper industry execs, is that...

lucrative print ad sales have been melting away, and online ad revenues don't come close to making up for the losses. Classified ad revenue has died, and job ads have fled. If we're really in a recession, ad revenue figures to get even worse this year. Newspaper after newspaper is reporting tough times, and many are beginning to make fundamental changes in their operations. 

Just his morning the publisher of the Orange County Register wrote that his print paper will shrink, and the future is in free community papers and digital content. Conventional wisdom says that newspapers are caught in a business model which doesn't support the changes to digital media, and despite huge efforts, the newspaper industry is in decline. Maybe there's no longer a place for traditional newspapers. That's what the Register's publisher seems to be saying. 

The conventional wisdom is crap.

It's hard to take claims that newspapers are taking the Digital Age seriously when they have so under-invested to compete in it.

  1.  Most digital operations are seriously under-staffed and under-resourced. They don't employ even the basic traffic-building strategies that independents are using with great success. 
  2. Newspapers have declined to innovate as eBay, Craigslist, Monster.com, Google and myriad ad networks have sprouted, thrived and stolen away customers.
  3. Digg, Reddit, Newsvine and others are experimenting with community selection of news, while newspapers pay little more than lip service to reader involvement.
  4. Hundreds of small web operations have sprung up to compete with traditional newspapers, while news organizations remain mired in old conventions.
  5. Social networking has changed the way young people interact, yet newspapers have failed to meaningfully take the plunge.

Pretty much every online initiative in the traditional news industry has been me-too-ism rather than bold invention. 

  1. The back end digital news production structure at most newspapers is a mess. 
  2. Many papers still bizarrely consider their online and paper versions separate operations.
  3. High-paid editors who ought to be spending their time on content spend their days snarled up in uploading jpegs and other technical mazes.
  4. Reporters and editors are pressed to add digital duties - blogs, podcasts etc - as add-ons to their "regular" jobs instead of incorporating the digital world as essential tools that should make their ability to gather and tell stories and interact with their communities easier. This shouldn't add to the work load (but always seems to). Instead, these things ought to make reporting easier.
  5. Most web operations are seriously understaffed and technically deficient, making what should be even basic tasks difficult to impossible.

And all that lip service about how newspapers want to listen to their readers? Not really true. Sure, comments sections have given readers places to vent, but what newspapers are actually treating their readers as communities to be interacted with rather than loud voices demanding to be heard? What's interesting about that?

The combination of these things (and many more) have combined to poison the business. Meanwhile social networks have amassed millions of users, prominent bloggers have begun making so much money they're madly hiring editors and reporters, and winning awards. Some "small" editorial operations now have more daily readers than the New York Times.

Over the next few weeks I'll go into some of these things in more detail.

But to take just one small thing: ads. So I want to advertise on the website of my local paper. How about those 2.2 million P-I readers? I go to the website. Look for how to do it. Not easy. I have to call someone, negotiate a deal. Can I advertise on the newspaper's blog that I know all my customers are reading? No. No one's advertising there, so how much will it cost? Not worth it to me.

Now go to any large blog. Next to every ad there's a link that says "advertise here". Click the link, you get rates, you can specify where it runs, and for how long. You can upload your ad online. If there's space, your ad can be up an hour from now. And the price drops if the space is under-utilized. Easy peasy.

At a time when internet advertising can get ads to readers with incredible accuracy, why aren't newspapers on board? Last week, several newspaper companies announced a new ad network. This is only eight years late in happening, and it's not at all clear how this new network is going to make things better.

A local example: Here in Seattle, art galleries don't advertise in the local papers. Why? It's way too expensive, and it's probably not hitting the art-buying audience. Yet the popular online visual art blog of the P-I's art critic Regina Hackett is a place where the city's visual arts community increasingly logs in every day. Make the ads cheap enough, and galleries would be clamoring to buy space. The paper's Microsoft blog and venture capital blog have substantial highly-sought-after audiences, yet the paper doesn't look to be even interested in attracting new advertisers for it. You don't think startups looking for funding wouldn't flock to the place where the VC's check in every day? 

There are plenty of small businesses who would be micro-advertisers if the rates were right. And who has a bigger local audience online than the local newspaper? Traditional advertisers are falling away? Then start exploiting non-traditional advertisers. Hard to take newspaper execs seriously when they say they're trying everything they can to keep up their revenue. Meanwhile, they're not doing even what any savvy blogger can.

More later.

February 20, 2008 2:04 PM | | Comments (29)

29 Comments

This article is outstanding and one of the best cases for change in newspapers I have ever read. We are in the midst to this here. This article should be our manifesto.

Excellent piece, Doug. We have posted this on our internal reporters' bulletin board and forwarded it to editors here at the Register. At the Register, though, it's low-paid reporters spending hours getting and posting jpgs, not the editors. Sigh.

In 2006, the Washington Post had a couple private "blogger" summits, where they invited people like me, in part to talk with, in part to get ideas.

I suggested one thing they did do, which was a more traditional thing copied from the Seattle Times.

They were one of the first papers to provide blogger links (via technorati) in stories.

But there are a couple ways to think about this, one is in terms of e-unleashed capabilities, the other is in terms of hyper-local capabilities, regardless of medium.

The Post has regional weekly editions (in high growth areas they publish these sections 2/week), but the papers could be vastly improved-expsnded with local content increases, i.e., local editorial and op-ed pieces and a whole lot more stuff, and the local sections could be free dropped just like the Washington City Paper (you mention Seattle, so say, "The Stranger") but these ideas don't seem to be taken up.

I have written about this for years and years (I have been into newspapers my whole life) especially because of the link between engagement in local civic life and newspaper reading...

The e-/digital dimension is just another dimension. More can be done.

But we can't appreciate the level of retail and banking consolidation and the impact on local newspaper advertising. The DC region once had many department stores, now just has one, for the most part, Macy's. And a couple banks. And massive store chains like Walmart don't even advertise (except Sunday inserts).

The point you made about local advertisers I extended in my conversation with the Post to the weeklies, and digital versions...

But I haven't heard from them in over a year.

Why are newspapers failing?

IMO, the "dead tree press" is rightfully viewed as "The commercial media"; guilty of "gatekeeper" sins against "the people" (on all sides of the isle). The "new media" masses are stripping the 'old media' empire bare. The redress that makes sense to me is to put news/papers back in the hands of the people, the towncriers, mega-wiki style blogs. To start over; to re-earn the respect of the people / the market... which is now a more complexed mega-region.

I could go on... but I am glad to see the American Press Institute effort to address the 'survival' issues facing newspapers:

Newspaper Next: "The Transformation Project"
http://www.newspapernext.org/

"Making the Leap Beyond 'Newspaper Companies"

Really an excellent and well-reasoned piece. It all seems so obvious. And that is a compliment. Well a compliment to you - not so sure it is to current newspaper thinking.

Bill

You analysis of the sins of digital journalism is spot on. Buying an ad is 20th century (sometimes, mid-20th century). The new digital tools for newspaper journalists more often than not make writing, editing and posting content harder rather than easier. Hopefully it is like one of those early automobiles that seized up every mile or so, the driver climbing out, banging and clanking under the hood, then cranking it up, smoke billowing, to go another mile before it seized up again. Today's version is the five, six or seven times a day than an IM tells you the system is down. Someday these tools will be come more automatic and truly aid the creation of "unique content" - the grail of any media company. Hopefully before it is too late.

One caveat on your story: While the move to digital is vital, let's stop disrespecting the print audience and advertiser. No more loudly announcing they are old and out of step, their medium of choice to be shrunk, cut, and dumbed-down. The readers and ads on the "dead tree" side of the ledger are falling away. But not overnight. They still pay for 90 percent of the bills for print and digital (digital advertising for newspaper websites is also often in decline or flatlining - for now). We're going to need paper and paper people (and advertisers) to fund the future.

I currently work in the industry, as a online programmer not a journalist. I'm not all that worried though. Newspapers are giant, resource eating machines.

What's going to emerge out of this mess are agile online only news orgazations. The time is coming soon when there won't be overpriced print ads to support the presses and everything will have to go virtual.

E.

I tried to get prices for the local newspaper's website and the reps don't have any idea about traffic prices or what we can get for the money. They also don't offer any pay per click models, but they do have a Cost per thousand rate for banner ads.

with salespeople like this no wonder newspapers are failing!

I don't disagree with you, however, if you could give some examples for points 1 and 5 in your first list, and points 3 and 5 in your second list, it would bolster your argument among those who might disagree, or not understand where you're coming from.

Good points on the heinous state of the online newspaper ad system -- for all the opportunities the internet provides for small ad buys (for the folk that can't afford space in print or television), papers are still stuck, stuck stuck on the idea, people, and framework around the big media buys.

Newspapers are dying because subscribers do not want to pay for newspapers anymore. I like my local paper, but they keep changing it for the worse. They made pages smaller with wider margins, which equals less content. Then they charged more to renew my subscription! Some of the best columnists have moved on. The Op/Eds, my favorite section, has had most of the interesting stuff cut out.

I have to pay more for less content. The time may come soon that I cancel. Yes, I could get all the same news online for free at the newspaper's site, but the site mirrors the hard copy. The hard copy is getting worse and worse; therefore, I eventually will ignore the site, too.

This article is well researched, summarized and presented and should be circulated further.

The challenges globally distributed newspapers now face are shared by corporations across America. These issues highlight the need for closer integration of information technology professionals in the professional workplace.
When the "Tech Bubble" burst on Wall Street, the role of technology in the workplace was impacted. It was de-emphasized, outsourced and effectively divided from other crucial business operations. Information Technology personnel, their writers, marketing reps and technologists were again delegated "back office" status in the workplace. Many corporations choose to farm the 'backoffice work' overseas. They are now faced with unique challenges; communication and project management failures which directly impact the bottom line.

Business Process Reengineers are increasingly seeing the negative impacts of this division between business leadership and IT Sourcing. This division does not allow firms to successfully compete in the global economy.

Successful firms like Google headquartered in the US pride the synthesis between professional staff, technology innovators and engineers. They realize a long term strategy which does not compromise on the upfront investments needed.

This is a really interesting piece. And I really agree with a lot of the things you are saying. One thing I have to comment on though is your talk about newspapers online. The online edition of a newspaper is not a newspaper in my world. It's a provider of content and services! And as long as newspapers treat the online 'newspaper' as the traditional one, they will be in trouble. They need to understand the platform and treat it as a separate business, not as a spin-off.

This is an excellent article which I wish newspaper editors and publishers would read and really ponder. But having worked in that world myself and having a close relative who still does, I'm afraid there is little chance of that: big-city newspapers are amazingly poorly-managed businesses. Were when I was a reporter at a daily in the 1980s and still are today.

For decades, meaning more than one professional generation, newspaper journalists have considered themselves to be part of a civic institution having an inalienable right to exist. They have convinced themselves that a society without newspapers would be the same as a society without "real" journalism. That arrogance has served this industry exactly as well as when Detroit automakers convinced themselves that their particular types of cars were the only "real" cars. Consumers begged to differ and Toyota et al believed them.

Michael put it well: "Newspapers are dying because subscribers do not want to pay for newspapers anymore." I would add that the core reason for that collective change in attitude is simply that newspapers have lost the journalistic oligopoly which was actually created simply by a particular stage in communications technology. The daily newspaper operation is no more an inherently-ideal way to organize and report on the world than were canalboats an inherently-ideal way to move goods across the nation.

What's demonstrably not true is that Americans are no longer interested in consuming journalism or have shorter attention spans or any of the other nonsense that newspaper editors tell each other. Rather it is that newspapers are offering 1970s-caliber content (being charitable) in 2008, and offering it via 1980s-caliber delivery methods to boot. If there was no market for intelligent, rich reporting and analysis of the world around us would The Economist's U.S. circulation have surged so amazingly? Would NPR be so fat and prosperous running wall-to-wall journalism while PBS has destroyed its national ratings and relevance by running Yanni concerts? A dozen other examples come to mind via a little actual real-world observation rather than the self-pity which passes for business analysis in today's newspaper industry.

"Meanwhile social networks have amassed millions of users, prominent bloggers have begun making so much money they're madly hiring editors and reporters, and winning awards. Some "small" editorial operations now have more daily readers than the New York Times."

More readers than the NY Times? Who? And with what kind of content?

It is shameful that newspapers have responded so slowly to the challenges and opportunities of the Internet. But I don't see the problem as primarily journalistic. Reporters and editors are answering with their jobs for the dereliction of business-side executives who protected 25%-plus monopoly profits for as long as they could, rather than reinvesting enough of the loot to retool the business on the fly for the Internet age. In whatever medium, newsgathering is newsgathering, and except for superficial rehashes of official statements, it is extremley labor-intensive, and not much of substance will get done if readers think they're entitled to have it for free. Douglas McLennan has a way to go to persuade me that a thousand-points-of-revenue solution, courtesy of micro-advertisers, can support strong news organizations, including such amenities as the legal backup needed for journalism to have a fighting chance of speaking truth to moneyed power. It's one thing for bloggers to fling constitutionally protected opinions based on facts that our embattled news organizations dig up about public figures and public issues. It's quite another to do original reporting on the sports star suspected of using performance enhancing drugs, the corporation that sends diseased beef or lead-filled toddler toys to market, or any other controversy in which a single lawsuit could sideline, handcuff or silence the journalistic watchdog/messenger. Assuming those art gallery ads can pay for good reporting, will they also stretch to include a retainer and fees for a good first amendment lawyer?

This is a fantastic solution to the problem you outline: http://ted.aol.com/index.php?ID=2031; from Ted Leonsis.

Newspapers, have you handled one? Its nasty with carcinogenic ink that comes off on your hands. And the size is exactly wrong in both the regular and tabloid layouts.

Back when I was a regular Washington Post reader, I built a special table so I could ready the thing comfortably.

And if you found something interesting, cut out the article and store its yellowing self in a folder.

And then you have all that awful paper piling up! What the heck, why can't they pick it up after you are finished with it?

And the drawback to my nice electronic edition is what?

And when I want to safe something, I copy it and file it away where I can instantly locate it.

Nicely stated.

One notable issue with online audiences for newspapers are how many are from outside of the area. Since the sales team, and most advertisers, are interested in the local dollars, the audience from outside of the area is worth far less than locals. In most cases far more than half, and often more than 75%, of the audience is from outside the immediate area.

Newspaper sites have become sites about their local area, rather than resources for people in the area. The content covers the first, but sales focues on the second. Thats a pretty signifigant disconnect which makes the online transition even harder.

I've been exploring this and other things on my blog (www.newspaperbiz.com) and invite comment there as well.

Newspapers still serve a purpose in our society. Without seasoned and deeply informed print journalists, news information might be reduced to single perspectives, or worse, special interest "news organizations" such as Fox. I agree that the industry has been slow to respond, and it's clear that the model must be changed dramatically to survive. That's hard to do, especially since they used to make 20% profits annually with classifieds and huge department store ads.

Blogs and online publications serve important functions in our evolving dialogue society. But the balance of a well-researched news article in a publication such as the New York Times has value that needs to be supported. I fear for a society that deserts career journalists with a proscribed code of ethics.

I think online publishing only can raise these shrinking circulation numbers. In these days, most of the people using web and they are looking for online editions of all print editions. There are new technologies came in circulation and these new mediums will definitely thrive the readership rate. Companies like Pressmart Media helping the print publishers to distribute over the new technology mediums. I think these kinds of services will really increase the revenues.

hey jeff. i agree this article outstanding of thebest cases forn change in newspapers i also read it before. the paper is losing money but im safe and not westing my money.

Great article... nice that you brought up Regina's blog for the PI. It's all about connecting with a highly targeted audience but newspaper blogs often don't follow through on the advertising and visual design front.

We have done it on PORT.

Also the graphic design of most newspaper's online content is sub par.

Right now many newspapers are cutting rather than reinvesting in new directions and it's their inability to act upon new priorities (like taking oneline publication seriously) that is putting them in jeopardy.

Print the news as it is and stop all of the editorials. Reading the newspaper is like listening to Sting singing and preaching his latest tune.
People do not need to be told how to think.
Have you ever noticed that every newspaper and msm brodcast sound the same?

Micro advertising with accountable results is the wave of the future. With only so many hours in the day the concept of "general news" is dead. People seek out what interests them online and just ignore the rest.

Well, here we are, a year later, and today we hear that newspapers like the San Francisco Chronicle, and other national print dailies are about to go out of business. We are seeing a major trend when many American cities will be left with one daily newspaper, and some, perhaps, with none, by the year 2011.

On this day, February 27, 2009, the 149-year old Rocky Mountain News published its last edition, after the owner-company, E.W. Scripps, could not find a buyer, and decided to leave Colorado for good.

Think of it. The Rocky Mountain News survived the Civil War, The Spanish-American War, The First World War, The Great Depression, The Second World War, The Korean War, The Cold War, The Vietnam War, Watergate, etc., having been witness to many of the seminal events of the 19th & 20th centuries ~ yet this newspaper (and others) could not survive the blood-sucking "me-isms" and draining of resources by the Baby Boomer generation (1940-1955.)

Soon, other dailies will be joining the ranks.

We are also hearing that the Seattle PI may be about to close this year, and, the owner of the Philadelphia Inquirer, and Daily News (which I think may be next on the chopping block) filed for Chapter 11 protection on a Sunday (Feb. 22) in the middle of negotiations to finance his $500+ million debt.

My view of this as a former Knight-Ridder reporter comes from the late 1980s, and early 1990s. I saw the writing on the wall when the Ridder half of the Knight-Ridder corporation, which, at one time owned 35 dailies across the country, began what I saw as a nefarious attempt to neuter news content to fit advertising demands.

What is odd about this is that while they spoke highly of the new technologies in the late 1980s, when the INTERNET was spelled in all caps, there really was not a true connect with the changing face of news delivery.

There is also a lot of generational issues that is going on here. For nearly two decades, the Baby Boomers protected their positions (and high-paying salaries & benefits) while acting to block innovations in newsgathering and reporting.

This has been going on for years. For instance, I remember all too well how immediately prior to, and following the first Gulf War of 1990-91, how the recession of that era forced Generation X reporters out of media jobs, while Boomers held on to their positions.

This was a critical time in the 1990s, because technology was becoming available and was being used widely by Generation X reporters, adding zest to journalism, and showing the wave of the future.

Many Boomer editors and managers gave lip-service to the new technologies, including the Internet, but they really did not see the value, and treated this new wave as a threat to their preferred legacy journalism, all the while, keeping their jobs during the recession years of the early to mid-1990s.

Generation X reporters were seen as a threat, and let go en masse to protect the positions of Baby Boomer managers, and editors (who also protected their own same-age collegues by the way) to cut costs while at the same time taking salary hikes for themselves.

The data speaks volumes. If you take a look sometime at those who lost their jobs as journalists in the 1990-91 period, you will see that the average age was 29-30 years of age.

Meanwhile, I was shocked to witness the gradual decline in hard news & investigative reporting, which gave way to more "gossip pieces" and "celebrity worship" articles on no-jump pages featuring less hard news, and more "light" news.

Newspapers across the country began to "read" more like television news stations, in that our print style of maintaining a minimum eight-grade vocabulary was falling dramatically to the level of the third-grade vocabulary still used in television news reports.

When the economic boom years of the mid-to-late 1990s began, there were tentative efforts to enter the rich new medium of the INTERNET and to apply print reporting standards, but the Baby Boomers now in control of newsrooms continued to resist and block innovations; often using the word "cost cutting" while at the same time Boomer salaries (and limited & very gracious buyouts continued among some older Boomers who chose to retire.)

Increasingly, Generation X reporters were let go in favor of hiring cheaper cub reporters fresh out of J-school, as salaries of Boomers continued to rise, along with the benefits, and, the continued resistance to adapting to the new world of technology.

This lasted to the dot.com fallout of 2000-03, which many Boomer executives, managing editors and city editors falsely believed proved them correct about how online media innovations were not viable business models.

How wrong they were.

Yet, the financial bloodsucking of the Boomers on newspapers continued.

Still, due to age, many of the front-end Boomer executives, editors gradually accepted these very decent buyout packages in the late 1990s, and this continued into the mid-2000s, while many other Boomer reporters & editors and executives stayed on staffs of many major dailies.

However, many still refused to take note of the huge explosion in outlets using the Internet to reach their readers and to expand through technology and journalistic innovations, to meet their readers' demands.

They came to the party eight years late?

I say they came to the party 18 years much TOO late.

Now, newspapers that have 100+ years of history are shutting down. Why? Not just because of high newsprint costs, or, of falling advertising sales, or even the loss of print readership. Actually, as the article above proved, readership is very high and climbing.

What played a huge role in all of this mess has been the failure of the Baby Boomer generation to innovate. They looked upon Generation X as the competition and treated newsrooms (and executive offices) as their own personal fiefdoms and made sure that when the chopping block was pulled out, that they would not be the ones on it.

Time after time, many Baby Boomers avoided being let go, but failed to realize that what they were truly doing was setting the stage for the demise not only of their own jobs, but of the very newspapers they served.

The reasons are also due to a horrid lack of vision, a refusal to change, and an inability to adapt to changing times while protecting their own self-interests ~ me, me, and more me ~ this is the legacy of the Baby Boomer generation.

News organizations, great papers, that survived world wars, and The Great Depression could not survive the greed, ignorance, and selfishness of the Baby Boomer generation.

We see these failures of this generation mirrored not only in the print industry, but in the financial sector, the educational institutions, the healthcare industry, we see it in their ruinous control of government, and in nearly all private sectors.

When all is said and done, and when the history of this time is written, we will see just how selfish, blind, and arrogant this particular generation has been.

These are among the prime reasons why great heralded newspapers with deep and rich traditions, were bled to death by a generation that once maintained not to "trust anyone over 30" and stated they were going to change the world and not cop out like the 1960's Establishment of their youthful era.

The Baby Boomers certainly have changed the world alright ~ but you'll be damned to be able to read anything about it in your now-defunct hometown newspaper.

See you on the Web.

Great article. I have been writing about this on my blog as well : http://tinyurl.com/cqe7eq

Traditional newspapers are as dead as the horse and cart. Get over it, get out of the way and let the the new media grow.

I wonder what proportion of Gen Y actually read printed newspapers? I suspect it's pretty low.

Maybe newspapers will become printed catalogs of all the best online news sites including reviews of the online news sites and example stories?

That's so crazy it might work :)

Newspapers wonder why subscriptions are down. They wonder why they can’t make any money and why more and more are going bankrupt. They’re using a flawed business model. Unfortunately, they’re not the only ones using that model.

My local newspaper subscription ended today. I only received the Sunday paper for the ads and coupons. The Sunday paper itself was always a bit on the thin side with ads and coupons varying at times, sometimes with hardly any. It only includes a few sections: Front Page / World News, Local, Sports, Money, Real Estate, Entertainment, Automotive, and Classifieds. Of those sections I only read a few and sometimes, only an article or two of those sections.

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