Recent Items

Guest Post: The Real Reason Newspapers Are Losing Money, And Why Bailing Out Failing Newspapers Would Create Moral Hazard in the Media

Posted on by

By Washington’s Blog.

Conventional wisdom is that the Internet is responsible for destroying the profits of traditional print media like newspapers.

But Michael Moore and Sean Paul Kelley are blaming the demise of newspapers on simple greed.

Michael Moore said in September:

It’s not the Internet that has killed newspapers …

Instead, he said, it’s corporate greed. “These newspapers have slit their own throats,” he said. “Good riddance.”

Moore said that newspapers, bought up by corporations in the last generation, have pursued profits at the expense of news gathering. By basing their businesses on advertising over circulation, newspaper owners have neglected their true economic base and core constituency, he said…

And Moore cited newspapers like those in Baltimore or Detroit, his home town, with firing reporters that cover subjects that affect the community.

Ultimately, he said, this was self-defeating. It would be like GM deciding to discourage people from learning how to drive, he said.

“It’s their own greed, their own stupidity,” he said…

Similarly, Sean Paul Kelley writes:

I don’t buy all the hype that the internet is even the primary culprit of the demise of journalism. The primary culprit is the same as it is all over the country, in every industry and in government: equity extraction.

Let me explain, in short: when executives expect unrealistic profits of 20% and higher per annum on businesses something has got to give. It’s an unnatural and unsustainable growth rate. For the first ten or so years of a small to medium size company’s life? Sure. But when you are 3M, or GE? Unrealistic and ultimately impossible.

So, when such rates cannot be achieved by organic growth in the business, executives start shaving off perceived fat and before they know it they’re cutting off the muscle and then shaving off bone chips. And when they’ve gotten to the bone chips they borrow other people’s money to buy new companies, load up those companies with debt and extract equity form them and then because it looks like the parent is still growing award themselves huge bonuses. It’s a shell game.

That is what has happened to the news industry in America. The excessive obsession with unnaturally high profits has led to a vicious circle of cutting budgets, providing less services, which is then followed by even more drastic cuts. The local San Antonio paper is a great example of this. Twenty years ago there were two large dailies in my hometown. Both competed with each other for real scoops. Both had book reviews by local writers, providing local jobs. Both covered the local arts and sports scene. Both covered local politics in depth and local and state news in depth. Both had vigorous investigative teams. Both had bureaus in Mexico and both had offices and reporters on the ground in DC.

And then corner offices of Gannet and Harte-Hanks were populated with Kinsey-esque managers and the rout was on … So, today, San Antonio has one daily that is as flimsy and tiny as the local alternative … And 80% of this happened before … the internet. All in the name of higher industry profits–not some overwhelming fear of the world wide inter-tubes. So, who’s profiting? Certainly not the intellectual vigor of the locals? And certainly not the writers who are all now ‘journalism entreprenuers.’ The only people who profited are the executives who obsessed over profits, to lard up their own bonus pool …

You can provide a public service with small profits for a long, long time, but if you demand large ones you will destroy it. Just ask the big banks.

Moral Hazard for Newspapers

There has been talk of bailing out newspapers for months.

But the newspapers have largely driven themselves into the ground with their never-ending drive for higher profits, which led to a reduction in news bureaus, investigation and real reporting, and an increase in reliance on government and corporate press releases.

The newspapers made a speculative gamble that reducing real reporting and replacing it with puff pieces would increase its profits, just as the giant banks made speculative gambles on subprime mortgages, derivatives, and other junk, and largely abandoned the boring, traditional business of depository banking.

Bailing out these newspapers would be a form of moral hazard equivalent to bailing out the giant banks. Instead, we should let the bad gamblers lose, and make room for companies that will actually serve a public need.

The banking industry has become more and more consolidated, which has decreased financial stability.

Likewise, Dan Rather points out that “roughly 80 percent” of the media is controlled by no more than six, and possibly as few as four, corporations. As I wrote in July:

This fact has been documented for years, as shown by the following must-see charts prepared by:

***

This image gives a sense of the decline in diversity in media ownership over the last couple of decades:

If traditional newspaper companies are bailed out, they will be encouraged to continue their business-as-usual, and new, fresh media voices will face a handicap to competition (just as the small banks are now unable to compete fairly against the too big to fails).

We need more real reporting in this country, not less. Bailing out the traditional media will create more consolidation, just as it has in the banking industry.

The last thing we need is moral hazard in media.

What Do Readers Want?

As I wrote in September:

President Obama said yesterday:

I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding.

But as Dan Rather pointed out in July, the quality of journalism in the mainstream media has eroded considerably, and news has been corporatized, politicized, and trivialized…

No wonder trust in the news media is crumbling.

Indeed, people want change – that’s why we voted for Obama – but as Newseek’s Evan Thomas admitted :

By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring….

“If you are of the establishment persuasion (and I am). . . .”

So traditional newspapers are also losing readers to the extent they are writing puff pieces instead of writing the kinds of things people want to read: hard-hitting stories about what is going on in the country and the world.

Finally, as I wrote in March, the whole Internet-versus-traditional-media discussion misses the deeper truth:

The whole debate about blogs versus mainstream media is nonsense.

In fact, many of the world’s top PhD economics professors and financial advisors have their own blogs…

The same is true in every other field: politics, science, history, international relations, etc.

So what is “news”? What the largest newspapers choose to cover? Or what various leading experts are saying – and oftentimes heatedly debating one against the other?

The popularity of some reliable internet news sources are growing by leaps and bounds. For example, web news sources which run hard-hitting investigative news stories on the economy – and do not simply defer to Bernanke, Geithner, Summers and other people “of the establishment persuasion” – are gaining more and more readers.

It is not because it is some new, flashy media. It’s because people want to know what is going on … and some of the best reporting can now be found on the web.

Subtle, Unintentional Propaganda?

If there are bailouts of the newspaper industry, will the government take ownership of the media corporations, as it has in AIG and some of the giant banks?

Will that – in turn – lead to a situation in which the government representatives subtly and innocently censors anti-government stories? After all, the object of criticism might be the employer or friend of the government representatives on the newspaper board.

Indeed, the most cynical view is that this could eventually open the door to Pravda-style government control of media.

Print Friendly
Twitter0DiggReddit0StumbleUpon0Facebook23LinkedIn0Google+0bufferEmail

45 comments

  1. giggity

    I’ve been saying it for years. Old media is dead, and good riddance. The Internet provides more and better information than any elitist, corporatist dead-tree rag could ever provide.

    So often in a heated argument, someone will cry for SOURCES! And so often I have to roll my eyes at the disparagement of Internet-based sources in favor of “real” sources like NYT, WaPo, or WSJ.

    LOL

    Yeah, the “real” news brought to you by the same people make your cigarettes, patent organisms and food, and dump millions of tons of toxic waste into your water sources.

    Sheep to the slaughter.

  2. kevin de bruxelles

    Considering the purpose of newspapers is to crystallize public opinion in a pro-corporate way, combined with the US government openly merging with major industries such as investment banking, health insurance, and automotive manufacturing, to name but a few; it makes perfect sense that the new US/corporate entities would expect the taxpayer to foot the bill for the tsunami of propaganda that will be needed to keep Americans from resisting this increasing corporatist order.

  3. giggity

    Senator John Kerry was quite excited to hand over a few billion to the news media earlier this year, I’m sure it will happen for sure in 2010. Elections are ramping up, the government needs to the media to delegitimize and slander the 3rd parties especially well this year, since even the most naive of voters should have realized that both parties are essentially the same after 2008.

  4. eric anderson

    Well, Dan Rather knows all about the degradation of journalistic standards. Ho, ho, ho.

    I sure as heck get more data, which I can view an analyze myself, on individual websites like this one, Mish, Zero Hedge, Vox Popoli, and discussion boards, than I find in the mainstream media. I’ve come to the conclusion that many journalists are not even capable of analyzing the subjects they are meant to be covering. And if they are, they will not be allowed to present their analysis if it conflicts with the agenda of their overlords.

    More and more the MSM is something we are reading/viewing like Pravda — hear what the official line is, and then have a good laugh.

    And, dare I say it, you will find more climate data on wattsupwiththat.com than in any mainstream Copenhagen coverage. You don’t have to agree with their analysis. Look at the official sources yourself. Be your own journalist. Yamal pine trees don’t lie, unless you cherry pick them. LOL

  5. Vangel

    A perfect illustration of what ails media is the AGW story. The mainstream newspapers and television news ignored or made excuses the very damaging revelations that showed that the whole issue was a big scam and that the IPCC’s temperature profiles could not be independently reproduced because the raw data showed no material warming since the 1930s. As such, most of the newspapers and television news programs lost readers and viewers to bloggers and media that dared cover the issue. The same is true of the coverage of the Tea Pary protests, in which the media pretends that ordinary hard working Americans that are frustrated with the collusion between the mainstream political parties are some Neanderthals or religious extremists. Add to that how the MSM is handling the healthcare debate, the financial system handouts and you have a lot of people desperate for truth and honest debate.

    The MSM can recover if management comes to its senses and fires editors who are blind to the truth and care more about their ideological bias than the news that they are supposed to be covering. But don’t hold your breath on that happening because human nature being what it is, ideology influences action far more than logic and reason.

    1. Richard Kline

      Buddy, look . . . There are entire websites devoted to your particular madness. I heartily encourage you to go spin the propellor on your beanie there under your personal bubble of cooling down draught. You literally don’t even know what you’re talking about, not that it’s worth my time to wrangle the relevant issues with you. Your inserting your special rubber ducky which only says “Quack” into a thread where it has no place whatsoever is, what’s a word?, vexatious, that’ll do. If it were my site, your comment would be vaporized. I’m just sayin’.

      1. weinerdog43

        Thank you Richard. It is beyond tiresome listening to teabaggers complain about everything under the sun with zero evidence other that what Rush and Glenn breathlessly vomit forth.

        Yo. Vangel, teabaggers ARE wingnuts.

  6. Been there

    “But the newspapers have largely driven themselves into the ground with their never-ending drive for higher profits, which led to a reduction in news bureaus, investigation and real reporting, and an increase in reliance on government and corporate press releases.”

    AMEN!!! Was getting tired of reading quotes(Spin) in the WSJ Online issued by egotistical blowhards (e.g. Ken Lewis, Geithner, Summers, etc.) that was continuosly being passed off as news. So when I got my renewal notice for $197 (huge % increase) I said thanks but no thanks.

    That was two weeks ago. Got my WSJ “special offer” on Monday for a $79 renewal with a $20 Amazon giftcard thrown in- Still not interested. They should pay me to have to read that drivel.

    PS- I had been a WSJ Online customer from its inception. I don’t miss it at all.

    1. Steve

      But it’s not about greed. It’s about CPMs. The NYT and WSJ can charge an advertiser as much as 40 dollars per CPM on the print version. On the Web version, as little as 50 cents per CPM. For every print reader they lose, they need 80 web readers to offset the revenue loss.

  7. Peripheral Visionary

    @George Washington: “Will that – in turn – lead to a situation in which the government representatives subtly and innocently censors anti-government stories?”

    Yes. That’s the simple answer, and it’s why the media industry needs to work through its transformation on its own, as painful as it may be.

    I am perfectly aware that there are a very small number of government-sponsored media outlets that are considered standards of objectivity, like the BBC, but for every one of those there are dozens of state-run media institutions that are mouthpieces for corrupt governments. It’s a risk that’s not worth taking.

  8. kievite

    Information overload is another fact not mentioned. It works against newspapers in comparison with blogs. Another interesting but somewhat related development is that satiric sites such as Jon Stuart The Daily Show became pretty worthwhile competitors for “News entertainment” sites like Fox, especially for educated audiences.

    Still we should not forget the cost issue: internet-based distribution of news (whatever that means) is definitely cheaper that on paper, is more dynamic (especially for financial news) and more customizable while it can use similar advertizing model. So self-destruction due to greed and Pradva-like propoganda that is well documented in post are just factors along with cost/flexibility factor.

    Similar situation exists for professional “paper” journals which do not engage in propoganda or dumping down of the audience.

    It is interesting to note that distribution speed has another nagaive affect on mainstream paper publications and/or media portals. They are often used as a source for Internet reporting so there is “one way street” effect when NYT, FT or WSJ stories are commented on aggregator sites and blogs instead of original. In the old “paper-based” world of information distribution speed was much less, audiences were limited to subscribers and the effect was less negative.

    In this sense role that Google and blogs are playing is controversial and that’s why some large sites like think about discriminating against Google. So the role of Internet sites as cheaper and more dynamic news aggregators is really hurting major newspapers on several levels.

  9. sgt_doom

    Fact checking??? WTF??? Next he’ll be saying American didn’t go bankrupt (technically speaking) in 2004, but WILL go bankrupt if we don’t pass that phony bailout to the insurance industry he keeps lying about and calling some kind of “health reform” bill?????

    Oh? He’s already said that? And none of the newsies slewsies have called him on it??

    Figures……

  10. Eric Cho

    Hi

    I couldn’t find a contact email so I’ll leave a comment. Do you accept guest post from other publications? I would like to submit guests posts to your site. Let me know if this is possible and I’ll arrange articles for you next year.

    Thanks
    Eric

  11. Doug Terpstra

    What a hilarious farcical comedy it would be to watch congress debate welfare for the Washington Moonie Times, launching a massive speculative bubble in pitchforks, torches, and guillotines. Imagine Jon Stewart’s stupefied expression as his show is eclipsed by C-Spam.

    “Good riddance” indeed. Corporate news is consumed by rigged market cannibalism.

  12. craazyman

    ha ha, I’m just waiting for the day you big time bloggers start to get the Big $$$ Offer from the MSM MBAs.

    “Come to the Dark Side . . . Luke . . . arhhhh . . . arhhhh . . . arrhhh . . . I am your father, Luke . . . arhhh . . . arhhh . . . ” (How’s that for rasping in ASCII, LOL).

    And then we’ll see, we’ll see.

    “What is truth?”
    -Pontius Pilate, 33 AD

    1. attempter

      It’s already happened with many of the “progressive” bloggers, which is why so many of them have been nothing but worthless shills for Obama corporatism, and have joined the MSM in suppressing public interest ideas like single-payer or withdrawal from Afghanistan.

      The sarcastic term for them is “access bloggers”.

      (Look at an example like Ezra Klein, allegedly so brilliant on health care policy, though that seems more asserted than proven.

      As an independent blogger he said the basic measure of whether or not an alleged reform bill was a real reform bill was whether or not it included a real Jacob Hacker-style public plan.

      When he was then hired as a corporate blogger at the WaPo, literally within days he was saying the public option was an unimportant detail.

      That’s just the most stark example.)

      So is that going to happen with economic bloggers as well? I guess the system will try to co-opt them.

      We’ll have to be vigilant, unlike the sheeplike Obama cultists.

  13. Cynthia

    I’m just waiting for our banksters to use their ill-gotten gains from their taxpayer-funded bailouts to bail out our newspaper industry. Then when print journalists put loads of pro- Wall Street spin on their news reports, we’ll know for sure that they’ve been reduced to nothing more than lap dogs for corporate elites.

    1. Ina Pickle

      You are wrong, I’m afraid. I object to reading things grossly tilted against my viewpoint – but I do it anyway a lot of the time. No, I want objective news, I just despair of getting it.

      Back in the 1980s and 90s I used to read several papers (and the Economist) front to back. Remember when the WSJ used to be full of useful reporting? Remember when the WaPo used to contain political analysis and inside information about legislation? The Economist I still read and enjoy, but even they aren’t trying as hard. I used to find the Economist not only informative but very funny. Perhaps I’ve lost my sense of humor.

      No, I think that there is a deep thirst for real reporting. I think that the populace is not so stupid that they demand to be fed their own narrow viewpoint (well, most of them). We just want information, and we’d like it to not be so slanted as to be worthless. It used to be so easy to pick up a paper and get a lot of quality information sorted and accumulated FOR one: now I have to work hard to pull together the information from a bunch of different sources for myself. That might have benefits – but it means this is just another area where the haves are going to have the education, money and time to be informed and the have-nots won’t be able to. It used to be there for 25 cents for the local and $1 for the WSJ. No more.

  14. molecule

    I don’t think this theory makes any sense. There is an ongoing segmentation of readership based on interests, political agenda, age, race etc. which was not possible in the past. Nobody wants to read a neutral piece of reporting written to appease a majority of readers. Readers like to take sides.

    In addition, real experts in niche areas choose to provide their knowledge online for free. Journalism graduates can’t possibly compete on most topics. A more fragmented media is a good thing. The distribution of propaganda becomes costlier.

    1. Ina Pickle

      ACK. I replied to the wrong person – please see my response to this above, Molecule.

      Too many kids. Too much yelling. Too few brain cells left.

  15. OSR

    Will that – in turn – lead to a situation in which the government representatives subtly and innocently censors anti-government stories? After all, the object of criticism might be the employer or friend of the government representatives on the newspaper board.

    We’ve been there for quite awhile, I’m afraid.

  16. Independent Accountant

    One thing ignored here is demographic change in the US. San Antonio, Los Angeles and other cities are now largely Hispanic. Do you doubt this change reduced newspapers daily circulation in these towns? Laredo will soon see its only bookstore close. Think about that.

  17. Marc Andelman

    I had been an avid Newspaper reader for 35 years, from the LA times, the WSJ, to the New York Times. I recently cancelled all my subscriptions. The reporting too often reads like it has been written by low paid twenty somethings. If newspapers wanted to stay in business, they would fund more of the sort of prize winning, investigative reporting that seems to have become a thing of the past. In too many large corporations, one can only conclude that making products that people want to buy is incompatible with whatever else is really going on.

  18. Jojo

    Eric Schmidt’s (Google Chairman/CEO) take on how Google can help newspapers from a few weeks back.
    ==============
    WSJ
    DECEMBER 1, 2009

    How Google Can Help Newspapers

    Video didn’t kill the radio star, and the Internet won’t destroy news organizations. It will foster a new, digital business model.

    By ERIC SCHMIDT

    It’s the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.

    Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in The Wall Street Journal and a piece about Iraq from Egypt’s Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.

    http://online.wsj.com/article/SB10001424052748704107104574569570797550520.html
    =================

  19. Skippy

    The MSM bosses shot their wad at casinos during the good times and now have to lay off staff and bitch about the net stealing THEIR PROFIT…go figure.

    Skippy…reliatve through marriage was a arm girl over weekend for one of these bosses + mates, golf and casino action. First night at the casino he asked the girls how much money they needed to change their lives by secret ballot, after first go, he declared greed (lol) and after second go issued 20K in chips to them (mental lube if ya ask me). So on the last day a hand shake/pat on the ass/envelope with 50K the girls hit the road. Don’t know about the other girls, but this one, I know changed her life with a convertible BMW, late nights w/lines, high fashion that lasted almost a year.

    That was 6 or more years ago, recently seen in long neck part of the city disrobed and shouting obscenity’s at coffee drinkers sitting a posh café in the day light hours. Born with the right name to the right school with right friends laty da da…people with to much cash sure like whoring other humans and calling it help…eh!

    Ohh BTW the BBC had a nice undercover doco on the fashion industy…teen model search world wide, coke sold at agency’s by staff, 30s male house bosses for up to 6 girls (late teens early 20s in Milan) forced attendance to night clubs to stock private areas, cajoled into having sex with rich business men from around the world to stay on the agency’s books etc etc etc.

  20. Claire

    “Will that – in turn – lead to a situation in which the government representatives subtly and innocently censors anti-government stories? [...]Indeed, the most cynical view is that this could eventually open the door to Pravda-style government control of media.”

    ♦Well, this is already happening, and it is, quite frankly, irrelevant. Pravda worked to the degree it did because there were no alternatives. That’s no longer the case. So every time the msm decides to trumpet garbage stories (WMD in Iraq, healthy economy in the US, etc) and do it virtually en masse with little serious discussion, they just pound more nails into their own coffins as people go online to get better information. So let the government (or Mr. Carlos Slim) takes over a newspaper, for example, and then demand that only positive stories be published. So what? People are not nearly as stupid as they are made out to be, and they’ll simply go elsewhere. And the msm will simply try to dump ever increasing resources to produce ever dwindling marginally useful or effective stories or spin.

    As a side note, even The Economist–which used to be far and away (imo) the best weekly for world issues, has degraded in quality to the point of being worthless. And the NYTimes got itself into trouble partially for stupidly taking on obscene levels of debt that they couldn’t ever hope to pay off. The internet had nothing to do with it–idiot management decisions did.

    So good riddance to the “old” media. Let them cry and sob about their plights and misfortunes. I, for one, doubt I’ll ever notice.

  21. EmilianoZ

    When you think about it, the fact that the news have become virtually free is in fact extremely logical, even necessary:

    Why would anyone pay to read propaganda? Propaganda is free by nature.

    We have no interest in reading or watching propaganda. Big corporation want us to be immersed in propaganda. They want us to believe that Larry Summers and Bob Rubin are natural born geniuses. They will always support the mainstream media even if they lose money.

    I will NEVER pay to read crap from Wapo, NYT, the Economist…

  22. Days of Broken Arrows

    Very well-written post,

    Radio host Tom Leykis spoke on the same topic about a year ago and I think he called this one as well. He also noted that as far back as 1994-95 newspapers were gutting columnists and local coverage in favor of using AP to save money on writers. His thought was that when the Internet hit, they’d already cut they very thing that made them essential — the local coverage and personalities you can’t get anywhere else.

    I’ve worked in this industry since 1986 and I agree with both of you. The problems came before the Internet and they came about because the companies wanted profits beyond a reasonable rate.

  23. superduperdave

    Duh. The whole argument shows an embarrassing ignorance of newspaper industry economics.

    Yes, greedy corporations and bad management have made the problem worse, but folks, the problem is that the bread-and-butter revenue stream — print advertising — is migrating to the Web.

    Unpleasant fact: Newspaper subscriptions and newstand purchases DON’T EVEN COVER THE COST OF THE NEWSPRINT. If the advertising migrates elsewhere (look at the car or real estate ads in your paper lately?) a business model more than a century old collapses.

    This other stuff is just more anti-MSM ranting. I’d frankly have expected a little deeper understanding of how business works from Naked Cap readers.

    1. Richard Kline

      Your argument, my unterduper friend, is fallacious. Advertising goes where the eyeballs are. The newspapers lost eyeballs because they let their product become crap. The reasons for that decline may be various, and that does not employ that either all their employees or all of their product was (or yet is) crap. Folks stopped reading papers. Advertisers had no other firehose method for reaching eyeballs except the far more expensive TV advertising, so they clung to the ragsheets until long after the outcome was clear, but now advertisers are bailing because the public response to newspapers has become really awful, so it’s heading on to a waste of money.

      Advertisers are dying, just dying, to find a way to get live streams onto mobile phones. I sincerely hope to be able to skip that outcome, but don’t be surprised if in 10 years you can’t turn your phone on without a fade-in advert on the screen at 30 second intervals. *yech*

      But the point is that newspapers failed themselves. Part of that _wasn’t_ greed but the fact that the cost structure of newspapers by mid-20th century just wasn’t good. And the larger issue is that while newspapers were once indispensable parts of small communities when there was no competition (i.e. before broadcast media), they never really found a way to condense what they did well once they had real competition. It wasn’t, and isn’t, possible for newspapers to be all things to all parts of their community now that there is real competition. I think that much smaller papers can succeed, focused on local issues and just enough investigative work, plus a high standard of writing, and a pro-community advocacy position. Does that sound IN ANY WAY like most of the newspapers we presently know? Of course not, they’re garbage disposal outflow conduits for corporatist-nationalist (or vice verse) propaganda matrices, linked to the very worst kind of over-consumptive consumerism. *blechh*

      Blogs are a weak imitation of what a good newspaper would be, but said good newspaper does require *cough* a degree of cashflow that isn’t in evidence just at this time. So we are witnessing the Fall of the Times Roman Empire, or some such. Life will go on, and there will assuredly be news in these latter days.

      1. Dan Duncan

        Empty Rhetorical Flourish, thy name is Richard Kline.

        First off, you write: “Part of that _wasn’t_ greed but the fact that the cost structure of newspapers by mid-20th century just wasn’t good.”

        What are you talking about? Buffett bought the Buffalo News in 1977, saying at the time that newspaper ownership was best investment one could make. And the reason for his belief was that newspaper economics–at that time–were incredible.

        Then you write: “And the larger issue is that while newspapers were once indispensable parts of small communities when there was no competition (i.e. before broadcast media), they never really found a way to condense what they did well once they had real competition.”

        Newspapers, for the most part, are doing quite well in small communities. And the reason? Captive Advertising. [The kind of advertising that doesn't just "go where the eyeballs are". Rather, it's Legal Advertising for all the foreclosures and bankruptcies...that must be advertised in the mandated paper of the county.]

        The reasons for the decline of a centuries old institution probably involve more than the “newspapers failed themselves” argument. Yes, to deny the degradation of corporate influence certainly is fallacious. But so is the denial of the technological impact.

        But attributing anything to the changes in technology is boring…because then we don’t get to write: “…outflow conduits for corporatist-nationalist (or vice verse) propaganda matrices, linked to the very worst kind of over-consumptive consumerism.”

  24. claire

    “Unpleasant fact: Newspaper subscriptions and newstand purchases DON’T EVEN COVER THE COST OF THE NEWSPRINT. If the advertising migrates elsewhere (look at the car or real estate ads in your paper lately?) a business model more than a century old collapses.”

    Et alors?

    Why is the NY Times unable to change their business model and make a fortune online, where there are more potential readers? Electrons are still cheap. Bandwidth is still cheap.

    1. Jojo

      There might be more “potential” online readers but you would be mistaken if you thought the majority of net eyeballs were looking for real news or financial info.

      Most people are more interested in entertainment and sports. Take a look at the hot subjects for 2009 from Google searches:

      http://www.google.com/intl/en/press/zeitgeist2009/overview.html

      Most people access information on the net through some sort of home page portal, like MSN or Yahoo. Relatively few have a list of sites that they visit regularly and even fewer know of or how to use RSS, which is really the key to access blogs and web information effectively.

  25. superduperdave

    Claire wrote:

    “Why is the NY Times unable to change their business model and make a fortune online, where there are more potential readers? Electrons are still cheap. Bandwidth is still cheap.”

    Ma chère amie, I promise you that if you find it so easy to monetize Web readership, you will be handsomely rewarded by any newspaper to which you choose to sell your strategy.

    1. Claire

      ” I promise you that if you find it so easy to monetize Web readership, you will be handsomely rewarded by any newspaper to which you choose to sell your strategy.”

      Perhaps, but I don’t claim to have a strategy, nor do I care to exert any effort into uncovering one. It’s not my job to come up with a business plan to save print media or broadcast television. In fact, I’d rather become a whore and at least provide something of more utility (and hopefully more satisfaction) to others than ever enter the news business.

      Part of your original point was that the cost structures in the print industry are too high. I am arguing that by going online, the cost structures are much lower; indeed, that is part of the argument the papers themselves are making–costs have come down to the point that there are no barriers to entry.

      The part the industry is ignoring is that what they print is by in large such complete and utter crap that nobody wants to bother paying for it. Their surprise at this suggests a pretty large degree of insularity among them. It’s very similar, in fact, to the record companies’ complaints before iTunes that nobody could ever possibly charge for music in the event of file-sharing, especially given the enormous structural costs in the industry.

      Well, music (if you can consider Britney Spears to be music)still exists, and will likely continue to exist in the future. Likewise, I predict that people will still pay for content in the future, and that a decade from now, there will be still be a news industry.

      As a side note, if you haven’t already read some of Clay Shirky’s (very old) musings on some of these things, you may find them thought-provoking:

      http://www.shirky.com/

  26. ds

    I think you really underestimate the impact of the internet here. Craigslist and Monster absolutely obliterated the newspaper classified market, which was once the bedrock revenue source of the local dailies. This change took place literally overnight, leaving the newspapers with no time to adjust what had been a 75+ year old business model. And the money these major internet outlets make is peanuts compared to the classified revenue of yore.

    Ad revenue from the main pages was killed not as much by falling circulation due to poor content, but rather due to the fact that Google charges mere pennies per click-through and is targeted to boot. And what good content the newspapers do produce is instantaneously pilfered by the blogs and news aggregators, rendering it obsolete by the time it makes the paper in the morning.

    There is a lot of talk in the post about the supposed “puff-piece” journalism, but that ignores the fact that the “serious” journalism of the past never made money. It was the puff that got people to read the paper every day in the first place. Sure, elections or Watergates led to spikes in circulation, but the average person bought the paper to check their stocks, weather and sports, and to read Dear Abbey. Why would any one buy the paper nowadays when you can just go to weather.com, perez-hilton and espn for all your puff content? Serious journalism has and will never make money because nobody cares about it on a consistent basis — and the people that do really only care insomuch as the slant of the piece supports their world-view.

    Did the newspaper industry make some mistakes along the way? Sure. I’m sure the horse and buggy industry made some mistakes too. But you can take away all the fat-cat bonuses, M&A’s, etc., and none of it would make a significant difference.

    I miss the idea of multiple-newspaper towns, 5 star sports finals and all that, but the reality is that the business model which supports serious journalism with bureaus all over the world is dead. With few exceptions, papers have no choice but to abandon it. The internet gave us far cheaper outlets for our daily “puff” and this is the price we all have to pay.

  27. nl

    The future for big newspapers is national consolidation. The New York Times should be a 5m+ national newspaper, not a 1m regional. Most of the big nationals’ ad revenue is big corporation display ads, not classifieds. The total newspaper market will shrink but a few players should be able to expand. Just like any shrinking industry, the answer is consolidation. I’m sure Carlos Slim understands this. If all goes well, we’ll have a half-dozen national papers including the New York Times, Wall Street Journal, Los Angeles Times, Washington Post, and maybe two more. Second-rate city papers like the Chicago Sun-Times, San Francisco Chronicle, and Miami Herald will be taken over and merged out of existence.

    I don’t think the quality of journalism has declined all that much. The difference is that everyone has become accustomed to getting uncensored views from experts on the internet. Our standards are much higher now.

  28. Mark

    Quote: “Will that – in turn – LEAD to a situation in which the government representatives subtly and innocently censors anti-government stories?

    Will that … LEAD to….”

    You’re kidding – right? If not, where the f*ck have you been living for the last 20 years that you still believe that the press has been free and uncensored in the U.S.?

  29. foxmarks

    “I think that much smaller papers can succeed, focused on local issues and just enough investigative work, plus a high standard of writing, and a pro-community advocacy position.”

    I have been reading this claim for at least five years. In that time, nobody has put their money where their mouth is an created such a local print newspaper. Or, if someone has, the venture died in the crib. Because if this business concept had merit, y’all would be citing the successes by name. You don’t; there aren’t any. The claim, like the original post, is blind (willfully?) to how technology changed both cost and revenue of the news business.

    In my hamlet, some laid-off newsies formed just such a venture. Online only, and structured as a non-profit. Even then it limps along begging for donations to stay in operation.

    Which then suggests that beyond the technology/finance changes, the kind of stuff laid-off newsies want to “report” has trouble finding an audience even for free on the web.

    Journalists have become storytellers instead of reporters. Nobody seems to care about putting the 5 “W”s in the first graph anymore. Storytelling is too easy and people can get story and spin (propaganda) for nothing.

    Weak journalism or technology changes happening independently would have killed dead-tree news. Both happened at the same time, killing print news even faster and making it even more dead.

    And let’s not forget the “dead tree” factor. We are being constantly goaded to avoid using material resources. And recycling stacks of newsprint is a p-i-t-a. Another disease peculiar to print media, brought on by it’s own political slant…

  30. EmilianoZ

    If corporate America wants to bail out the mainstream media, that’s only fair. They’re paying for the propaganda services rendered to them.

    But if it’s the US government that does the bailing out, then it’s completely outrageous. Why on earth should we pay the media so that they can dump their shameless propaganda on us?

Comments are closed.