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21 July 2009

My Take on Newspapers in America

I have read numerous articles and blog posts over the last 12 months about the decline of the newspaper industry.  Having spent a few years in the trenches myself, and having opinions on the matter, I thought I could add something to the discussion. 

A few things about me:  From 2000 to 2007 I worked as a programmer for Dgital Technology International (DTI), one of the leading newspaper software vendors (editorial and advertising) in North America and Europe.  I worked primarily on editorial products.  I have made roughly 25 visits to customer sites to perform troubleshooting or assist with software installations or upgrades.  So I have an insiders look about how newspapers operate, albeit with a technical slant.  I never learned much about how newspapers are run though.  That kind of knowledge would have made writing this easier.  If there are any inaccuracies (and there probably are), feel free to call me out on them, either in the comments or by way of email.

What is happening to newspapers?
To sum it up, the business is drying up.  Circulation numbers are in decline.  Whenever this happens, advertisers tend to pull back.  The result is a net loss of revenue. 

But why is this happening now?  Can it be blamed on the recession?  I was around during the last recession.  There was a lot of talk in 2001 and 2002 about newspapers going extinct then, since advertising rates had fallen and circulation was in decline, much like it is now.  In fact, the biggest difference between now and then is the severity of the problem.  For me, watching the Rocky Mountain News shut down operations really opened my eyes to the magnitude of the problem being faced by print journalists.

So if the slump can be blamed on the economy that would mean that circulation would probably not have declined during the good times.  Right?  Let's check the numbers.  I'll use the New York Times as a metric, even though it's not a good metric for the entire industry.  Here are the ups and downs of circulation starting in 1998.  I got these numbers from the NYTimes corporate site

1999: +2.2%,
2000: +1.3%,
2001: +0.1%,
2002: +3.8%,
2003: -5.3 %,
2004: +0.3%,
2005: +0.2%,
2006: +0.5%,
2007: -1.9 %,
2008: -3.9%,
2009: -3.5%

What I see here is one good year, a few years of stagnation, and a several years (the most recent ones) of significant decline.  I don't think the decline of readership can be based on economic factors; there must be something else.

Cultural shift?
Maybe we're changing as a people.  Unscientific guessing tells me that we're working more and doing more things (after all, we're multi-taskers).  We don't have time to read the paper in the morning or when we come home at night.  Further, when we do make it home, there are so many other things available to occupy us.  100+ channels on the tube, a backlog of events on the TiVo and this miraculous internet invention all await us.  There may be studies to support this, but I don't care.  This is my hypothesis and I'm running with it: less people read newspapers because they have too many other things to do, and those things are far more interactive.

What can newspapers do?
There are two obvious solutions.  The first is to cut costs.  The second is to get more readers.  Let's take a look at each one individually. 

First, cutting costs...  Running a newspaper isn't cheap.  There are reporters, editors, more editors, press operators, delivery people, circulation people and advertising people.  Some papers have gone web-only.  That eliminates the press operators and delivery people, and with the right software-a good chunk of the circulation department too.  Give a few good salespeople the right software and analytics and I think advertising and sales would be covered.  Could they skimp on reporters and editors--the real content producers?  I think so, to a degree.  See, if newspapers focused on local news and stopped trying to compete with and USA Today for national and world coverage, I think they would be able to own that niche for some time.  Radio took a similar path on the advent of the television age when home listeners declined.  They found a niche to occupy (the car) and did well there for years.

Since I am in the software business, I'll go ahead and say that the software could be better.  I'm not referring to the quality of the software, but rather what it does and how it used.  For instance, at DTI we had release cycles of around 6 months.  Imagine waiting 6 months to see something like Twitter or Facebook integration, or integrating the latest Adobe CS suite.  Shortening that cycle would have been difficult from quality and cost perspectives.  By "better" I mean more nimble.  Smaller pieces working together instead of a monolithic suite.  It would be hard to do, but I think it could be done.

Next is readers: how do they get more readers?  My first suggestion is to reach out to them wherever they are--not just on their front lawns.  Smart phone adoption is on the rise.  I get a good chunk of news through my T-Mobile G1.  It is easy to scan my syndication feeds when I'm in line for something.  But I don't pay for it, which means nothing is going back to the paper, or whoever generated the content in the first place.  So increasing readership alone isn't going to keep the papers afloat.

I just don't see myself paying for news.  The Internet has made me used to having things free and my way, and I think a lot of people are with me on this one.

But this content has value, right?  Surely, someone is willing to pay for it.  I mean, if the switch were turned off today and all news went away, there would be a hole in my life.  Americans need and crave news coverage.

As in the past, I think the advertisers will step up.  But they're probably going to want to know a little bit about you, to, you know, make sure you get the right ad.  Consumers benefit from this.  Even if you routinely ignore all adversing, under this scenario, you're ignoring advertising targeted to you for stuff that might actually fit your interests.  I have found myself, on occasion, clicking on Google ads, even though it rarely results in me buying something.  The process works.

My predictions

In ten years, there will still be newspapers.  But they'll be owned by local television stations, who will have taken over as the main supplier of news content.  This suits me: their stories are shorter and I think that fits the lifestyles of more people nowadays.  These newspapers will be free and contain copy taken from the newscasts and modified slightly for print.  The ads in the papers will be the result of TV spot upsells.  There won't be classifieds since you can't execute a full-text search on a newspaper.

This model cannot currently exist in the United States because laws prevent interests that own one type of media outlet from controlling another type.  But that will change soon, if it hasn't already started.  (Tracking the status of this without becoming an expert is well nigh impossible.)

I don't know much about what kind of software TV stations use to handle their content (I know a bit about the advertising side), but I seriously doubt it would integrate well with print content at this point.  The disciplines haven't converged enough yet.

It will be fun to follow this story for a few years to see how things pan out.


Steve said...

"""In ten years, there will still be newspapers. But they'll be owned by local television stations, who will have taken over as the main supplier of news content."""

You may be right, but I hope not. One of the more depressing features of local television news programs is that they tell you on Monday what's going to be in Tuesday's news. By definition that isn't "news", though it might possibly be commentary.

Today's standards of journalism on television are incredibly low. Most of the material put out by the networks is infotainment, not news, and the local stations are going the same way. Corporate America has bought the news media, so it's no longer sensible to expect to learn anything very useful from them.

Newspaper standards have also declined, meaning that governments and corporations can get away with any corrupt practices they want (vide the castrated and anodyne coverage from "embedded" reporters in Iraq and Afghanistan).

There aren't any Cronkites around any more.