SocraticGadfly: No, newspapers aren’t dead yet, and they probably aren’t that close

October 07, 2009

No, newspapers aren’t dead yet, and they probably aren’t that close

Which is why I get frustrated by people both well-meaning and intelligent who want to bury newspapers, especially the hardcopy versions thereof.

First, yes, newspaper readership has been stagnant since what, the early 1960s? But, if you throw out illegal immigration, and even a fair chunk of first-generation legal immigrants, as a percentage of the populace, readership didn’t decline that much until the age of the Internet.

Second, half of the revenue decline of the last 2-3 years is due to the recession, pure and simple. Much of the ad losses will bounce back, except for some car and some real estate dinero.

More proof that a fair part of what does ail newspapers is recession-related? The rumors of an impending CBS bankruptcy, whether true or not — sparked by CBS’s ad sales dropoff.

That said, it is also frustrating when someone talks more specifically about the pending death of *newspapers,* gets Tweeted the CBS link above, and claims that this is irrelevant to the question of newspaper demise or not.

Meanwhile, Eric Schmidt doesn’t know what he’s talking about. First of all, Herr Freeloader (albeit abetted by the clueless chairman of the AP, Dean Singleton), there’s a difference between “news” and “information.” And, except when Google links to AP, Reuters or AFP news stories, you provide information, not news.

(Also, side note to Schmidt: Stop lying about how much China censors the Internet and how much you self-censor Google there. That alone makes the rest of your claims less believable.

And, while you’re at it, tell us if Jeff Jarvis gets paid a retainer by you.)

And, none of this mentions Google becoming the new Microslob, a point I've blogged about before.

Now, back to why newspapers are still going to be around.

Especially in smaller markets, businesses need a vehicle for advertising. Radio usually doesn’t cut it, and TV is too expensive for too many local advertisers.

That leaves a conventional newspaper vs. a shopper.

Shoppers are all ads; the worse aren’t even fully disambiguated by type of product, etc.

Newspapers have style and design, and news, which people want to read about local and regional events, to set off ads.

More proof that newspapers aren’t so bad off? The New York Times has plans to start a Chicago regional issue and maybe others.

Online ads? Thanks to Herr Schmidt, the margin on them is sinking out of sight, and newspapers are finally wising up that advertising-only is NOT a profit angle for online newspapers. Add in the fact that between hosts files, ad blockers, etc., that those in the know can block most online ads, and that there’s also a fine, and usually violently crossed, border between “creative” and “annoying” with online ads, and they don’t work for most advertisers, either.

Now, what are newspapers doing WRONG?

Plenty. Details after the jump.

One, most still don’t have paywalls, though more are talking about them again. And, those that are going beyond talk are often pricing them high, to which I say GOOD! Casual readers can go away. Real ones will pay for online-only, or else will buy a hardcopy subscription with a free online one with that.

Two, it’s possible that, at all but the biggest dailies, a lot of ad salespeople still don’t know how to sell online ads. It’s wholly different. At the minimum, instead of taking a couple of pages of spec sheets, if you want to show something to a customer, you have to take a laptop computer. And, you have to be “Internet intuitive” in some way.

Three, though, is that many newspaper corporations/execs have been incompetent, mainly in running up massive debt. That debt came from buying other overvalued newspapers 7-10 years ago, buying back their own then-overvalued stock, etc. Per the lines of pre-deregulation utilities, they need to accept smaller profit margins, look for “steadiness,” stop trying to buy each other out, and go from there.

That said, even with some of these chains in Chapter 11, let’s note that almost all individual daily papers in the U.S. still have decent, or better, profit margins. And, with the Minneapolis Star-Tribune coming out of Chapter 11 pretty decently on its debt restructuring, if its new management (unfortunately, primarily from LBOs) remembers the points I just stressed, it should do OK in the future.

Four, tying points two and three immediately above together, many of those same CEOs are clueless, still, about how the Net likely never will be monetized for newspapers on an ads-only basis. In hardcopy, for pay newspapers, circulation traditionally paid one-quarter the freight. Why, instead of a TV model, didn’t newspapers take their own financial model to the Net in the start?

Five, is it too late today to install a paywall? No. First, see the AJR column I linked. Second, if Dean Singleton had more brains, he would implement mandatory paywalls for AP content as part of new AP content package contracts.

He would then, instead of haggling with Google about a few dinky ads, would quadruple or quintuple the rates AP charges it, and have an exclusivity sidebar in there which would force Google to treat AFP and Reuters the same to avoid the freeloader problem.

The price would be set so high that, even after negotiated downward, Google couldn’t afford to cover it with ads alone, unless it wanted to do so as a major loss leader. In other words, if Dean-o had brains, he would force Google, Yahoo and MSN to paywall also.

But, while he may have built MediaNews into an empire, I’ve never accused Dean Singleton of having brains while running the AP.

As for online-only newspapers, if they don’t paywall, they have to depend on donations from individuals, non-profit foundations, or both. The latter puts you at the whim of non-profit interests, or potentially so. The former has worked for a couple of blogs that have expanded into reporting, like Talking Points Memo, but only (so far) for narrow, focused political news. Ditto for online papers.

Will people donate for bonus local sports coverage? Hell, no, is my intuitive answer. Ditto for feature stories. Will they donate for something as mundane as community calendar listings?

So, online newspapers, without paywalls, will simply balkanize the situation further.

(Note: This paywall issue and related parts will be posted again, separately.)

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