Friday, February 8, 2008

Black and white and in the red all over

More bad news for the newspaper industry, as reported in yesterday’s New York Times:

[W]hat is happening now is something new, something more serious than anyone has experienced in generations. Last year started badly and ended worse, with shrinking profits and tumbling stock prices, and 2008 is shaping up as more of the same, prompting louder talk about a dark turning point.

“I’m an optimist, but it is very hard to be positive about what’s going on,” said Brian P. Tierney, publisher of The Philadelphia Inquirer and The Philadelphia Daily News. “The next few years are transitional, and I think some papers aren’t going to make it.”

Advertising, the source of more than 80 percent of newspaper revenue, traditionally rose and fell with the overall economy. But in the last 12 to 18 months, that link has been broken, and executives do not expect to be able to repair it completely anytime soon.

What’s causing the advertiser exodus? First and foremost, of course, is the Internet: newspapers used to be the best source of in-depth information about current events, but now they’re just a source—and by the time a story runs in the paper, it already has been covered by the online news sources and blogs. The same story has already run on the cable news networks, too, so the rise of the 24-hour news cycle also has contributed. In addition, our soundbite culture (hence the name of this blog) favors immediacy and brevity over the depth and breadth the papers offer. Another related problem is an aging readership: a 2005 study by the Carnegie Corporation determined that the average newspaper subscriber is 55 years old. Then factor in the classified pages lost to Craigslist and eBay and a decline in real estate ads due to a rapidly contracting housing market, and it’s a wonder that more papers aren’t shutting down their presses.

So what can newspapers do about these changes? The Times article includes a potentially very positive trend:

The paradox is that more people than ever read newspapers, now that some major papers have several times as many readers online as in print. And papers sell more ads than ever, when online ads are included.

When you consider that most metro newspaper websites ( included) get more traffic than other local sites, publishers still have the potential to be as relevant as they’ve ever been. The future will depend upon their ability to move the medium online and provide advertisers with more valuable strategies for reaching readers and quantifying ROI. One idea: papers should drop everything but local content and information that’s unavailable anywhere else, and make new and updated content available continuously, as it happens. No national sports (that’s why we have No national news (that’s why we have and Google News). No stock listings or weather, both of which demand resources beyond the means of local news outlets. But no one else is better positioned to provide in-depth coverage of news, sports, and entertainment, 24 hours a day, 7 days a week. And the good news is that they probably can do this with little investment in new staff or technology, as long they as they focus existing resources on their core competencies.

If they have the courage to stop trying to be all things to all people, newspapers can carve out a profitable niche with local news and information. They’ll never see the same profits they realized when newspapers were the only game in town, but nor will they see the rate of decline they’re experiencing today.

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