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The Decline and Fall of the Newspaper
THE DECLINE AND FALL OF THE NEWSPAPER....I was going to write a post about the subject du jour, namely whether or not newspapers could have done a better job of reacting to the rise of the internet, but via Matt, I see that Tim Lee has pretty much done it for me. Nickel version: Yes, it would have been great if railroads had converted into airline companies, if IBM had taken PCs more seriously, and if newspapers had embraced the web, but that kind of thing is really, really hard to do. That's why it so rarely happens. Cannibalizing your own business is almost impossible for both institutional and economic reasons, and knowing that you're in the generic transportation business, not the train business (or the generic computing business or the generic information business) isn't nearly as profound an insight as some people think. Anyone who thinks differently needs to run an actual business first and then report back on how they did converting its core business into something brand new.
In any case, I have my doubts that there was ever a long-term business model that could have successfully transitioned newspapers onto the web. Sure, the print news media could have done more — though simply asserting that newspapers could and should have been way more awesome isn't very helpful — but the advertising revenue just isn't there to support the kind of reporting infrastructure that the print version of newspapering supported. This isn't for lack of trying, either. Everyone and his brother has tried to figure out a more lucrative web-based advertising model for news, and so far no one has succeeded. Bright ideas are still welcome, of course, but most likely even the best newspapers will eventually die off and be replaced by something entirely different. I'm not as convinced as some that the replacement will be as good, but I suppose old fogies have said that before too more than a few times. We'll just have to wait and see what our brave new bloggy/twittery/decentralized news biz manages to deliver.
Same discussion going on over at Willis' joint. My 2 cents:
Any newspaper executive who thinks he or she is in the "newspaper business" needs to retire. Newspaper companies are in the news business and the advertising business. There's really not much point in trying to find ways to keep delivering the product on sheets of paper.
If I was working for a newspaper company, I'd be looking for a merger with a television station. (Of course, that raises all sorts of regulatory issues, but them's the breaks.) If you look five or ten years down the road, news in text form is going to be an adjunct to news in video form and both are going to be delivered over cable or HD digital over-the-air signals into a user-controlled interface.
TV stations and TV networks are going to resist?initially?the challenge to provide supplementary content. However, as Jeri Ryan has told us, resistance is futile. Cable and TIVO and whatever-comes-next will begin by allowing two open windows?one for video, one for internet. If TV news management is smart, they'll capitalize on giving viewers the capability to select content rather than have it pushed at them.
Once that happens, there's no separating TV, internet, and text.
How is the Wall Street Journal doing on line?
It seems to have a significant number of people willing to pay money for its content.
I have no clue how close they are to breaking even on line. Of course, we may never know since the Journal is going to lose so many advertisers and readers as the depression hits Wall Street.
I find it funny that the newspaper stuff is coming around right now, since I remember many stories, from years ago, about how newspapers had failed to leverage the internet. From sites like Wired, slashdot, Ars Technica, etc.
I also write this because the newspapers should have seen it coming because they already had a model of the problems involved with ignoring the internet. Let's just reword one of your opening sentences.
namely whether or not the recording industry could have done a better job of reacting to the rise of the internet and file sharing applications
Unfortunately the RIAA/MPAA has had the onerous DMCA and Congress behind them, and looked at the intenet/file sharing applications as something to be quashed and not co-opted.
The recording industry had been hemorrhaging sales for YEARS, and still basically thought of the internet/file sharing apps as the cause of their problems....so lets just litigate the competition away. Again, many of the online sites saw all of this as it was happening and there are plenty of posts suggesting how the music industry could leverage the internet to boost sales....but at Tim Lee says, that means shifting an entire business model.
I'm the sort that says that the newspapers as well as the music industry could see the writing on the wall but willfully ignored the choices that needed to be made to be viable in the future.
I agree mostly with Kevin, but think that there was one area that newspapers failed miserably: classified ads
It was clear from EBAY that people were going to go cyber for all sorts of (cheap) things. Letting craigslist grow was a major mistake. Newspapers could have offered free listings, but listings that had ads on the page.
Which brings up a point that I've not got a good answer for. It seems that there is a real problem with micro-sales - purchasing things (like a classified listing) for 10 cents to a dollar. The closest thing that facilitates that is PayPal, but that's kind of clunky. Various "digital wallets" have been proposed over the years, but none have caught on.
If micro-sales can be implemented, maybe newspapers could use that as a palliative, even if it's not a cure.
I don't know if the economies of scale are so strong that it'd make a difference, but perhaps a lot of the smaller regional newspapers could survive if they were combined into one company, where they could eliminate some positions while still covering all of the areas they once covered. How many movie critics and business reporters does an industry need? This isn't to say the majority of them aren't worthy, just that there doesn't need to be so many while a smaller number can accomplish the same goals. It makes a certain level of intuitive sense that things could stay the same--each paper could continue the same level of coverage--while changing owners and not remaining independently owned.
I stopped reading newspapers before the internet came along, so it wasn't their failure to adapt. I think it was, instead, that the American way of life changed and the newspapers were developed to serve a way of life that no longer exists.
The business writer for the New Yorker wrote about this a week or two ago. His point was people have gone to the internets to obtain free newspaper service without having to pay for a subscription. Surowieki was wrong because newspapers have always subsidized the cost of their papers so more people would read them and thus more people would see the advertisements that earn newspapers' incomes. Newspapers do not rely upon subscriptions for their profits and never have. In NYC a weekday newspaper costs $0.25, although the NYT may be more, as are Sunday editions. Local monopolistic newspapers in other cities probably dominate their local web traffic. The NYT must have millions of unique visitors a day on the internets. If they and other newspapers are unable to use their expertise in selling and making advertising copy for those eyeballs, they deserve to go out of business.
A popular weekly newspaper in my city, whose parent company now owns the Village Voice, is free. It makes its profits selling advertising. It has been so profitable it replicated its free weekly in cities all over the nation. It also has the best journalism of any newspaper in the state. It still cannot compete with the editorial monopoly power of the major city daily newspaper, though.
Kevin,
A thoughtful piece, and you are surely right about the difficulty of re-inventing a company.
However, you should note that IBM has successfully done that several times. It started out making, I don't even remember what, but they don't make them anymore. Then they went into typewriters and mainframe computers. Now IBM mostly makes money in providing IT services. So it can be done, it's just very hard.
another part of the problem is that newspaper people have been so dead set against any change at all. many of them still do not take the Web seriously as a way to convey information. over on the sportsjournalists.com forum, several of the diehards are currently arguing that print-only (no content at all on the Web) is a way to save newspapers.
Don't worry Mother Jones, you're dying as well. Or haven't you heard, magazines are just as screwed as papers?
As long as businesses are more willing to pay for an advertisement on a page I'll never read because it's hidden in a newspaper ad section than a banner atop an article I am reading...
...There will be no real transition.
But the model of getting something for a side-pay has always been the outlier not the mainstream. It never lasts, and we always end up paying to get the ads as well as paying to get the content.
TV is an example of a dying industry - sure it lasted fifty years - but the fact is that there are less TV stations now than ever, and less choice in the free market than the pay market.
The talk of the looming death of newspapers reminds me of a discussion I had online a couple years ago about the fragmenting of the TV audience. I suggested that the major networks could end up unable to get the ratings that would enable them to continue as major networks, and since the almost all the major cable channels rely primarily on running network repeats, the entire TV industry would be in trouble. He essentially responded that everything would work out okay.
Well, fast forward a couple years and NBC announces it will cut 5 hours of prime time programming to make way for Jay Leno. Those are 5 fewer hour long programs and 5 fewer chances at creating a hit that will end up supporting a cable network (like Law and Order for TNT).
Mike
They could have done a much better jobs of transitioning to the web, if the papers I read online are any indication. If revenue is to come from advertising, then open everything up to get "eyes." Papers still seem to want to hoard archives unless paid and limit content and require inconvenient and privacy-robbing nasties like registration, while the Drudge Report is just a click away. Some small papers seem to be doing OK as free giveaways.
Perhaps some sort of industry wide ad-sense to compete with Google.
Personally I like interactive stuff like commenting on columns (score one for Kevin) and forums. Newspapers that have forums seems too cheap to buy good forum software like vBulletin.
The "Steve Case" model of the internet might be detrimental to newspapers. Remember when Steve Case "heard" us and provided unlimited AOL for a monthly standard price? If people paid by bandwidth then serious stuff like online newspapers might be more of a priority, after porn, of course, but before movies or video content. Internet content isn't really free. I spend a lot more on internet than I ever did on newspapers. TV also had much to do with the decline of newspapers.
While online ads may not pay for online newspapers, the costs of distributing online are insignificant compared to printing papers and delivering them. One wonders if newspapers didn't try to stiff the regular advertisers for online ads, or didn't provide help in ad preparation for the web?
I thought some sort of foundation model might be good for supporting investigative reporters. Investigative reporting by professionals is probably the only really essential function of newspapers.
As far as cost, there is no way a print paper can compete with online distribution.
To expand on MBunge's thoughts, I think newspapers got hit by the Internet first, but broadcast television may actually be more vulnerable in the long run (especially if you include free circulation tabloids like the Village Voice under the heading "newspaper"). Given that 80 or 90 percent of TV content is national, is there a model that can sustain local TV stations - and, by implication, the networks behind them?
Also, in repsonse to BrianJ - papers have already combined those functions. Very few papers have local movie critics, for instance, while often companies share political reporters, design and copy editing and the like across many papers. It hasn't been nearly enough to stem the bleeding.
It would be hugely ironic, I think, for the invention that opened up a world of information to every user to end up curtailing the depth and breadth of that world.
One thing, Luther, I've never read an enlightening discussion on any newspaper story on its website. I mean, ever. The discussion always devoloves into two warring, idiotic groups, along with the normal accusations accusing the paper of being: too liberal, too biased, being in the pocket of big business, being apologists for the poor, etc., etc. It's horrible.
Same discussion going on over at Willis' joint. My 2 cents:
Any newspaper executive who thinks he or she is in the "newspaper business" needs to retire. Newspaper companies are in the news business and the advertising business. There's really not much point in trying to find ways to keep delivering the product on sheets of paper.
If I was working for a newspaper company, I'd be looking for a merger with a television station. (Of course, that raises all sorts of regulatory issues, but them's the breaks.) If you look five or ten years down the road, news in text form is going to be an adjunct to news in video form and both are going to be delivered over cable or HD digital over-the-air signals into a user-controlled interface.
TV stations and TV networks are going to resistinitiallythe challenge to provide supplementary content. However, as Jeri Ryan has told us, resistance is futile. Cable and TIVO and whatever-comes-next will begin by allowing two open windowsone for video, one for internet. If TV news management is smart, they'll capitalize on giving viewers the capability to select content rather than have it pushed at them.
Once that happens, there's no separating TV, internet, and text.
I think The Onion has been increasing in circulation.
Are there any other newspapers that are increasing circulation?
Freedom of speech and copyright laws are apples to oranges. Anyone can post "news" but rights to a song are exclusive, right?
Quaker, you're probably right and most definitely wrong.
I work (journalist) for the Danish media publishing company NORDJYSKE Medier, and we do the works. Regional daily paper (basically throwing money out'a the window), free weekly local papers (they pay the bills ...), a 24 hour round the clock local cable news station, local FM radio, local phone registries, regional internet news portal ... the works.
And as far as I can see you're spot on. Except HD delivery won't be through neither cable or the airwaves in 5-10 years - it'll be through the intertubes and increasingly already is at least here in Denmark.
Interactivity ... you ain't seen nothing yet. News monopoly and set top gatekeeper? Forget it.
Unless of course that little net neutrality thingy goes haywire.
I know from personal experience newspapers were ahead of the internet curve, trying out e-delivery strategies as early as the late 80s. It didn't work then, because consumers of newspapers liked the actual feel of a physical newspaper -- a major part of the experience for consumers was tactile. It's taken the better part of 10 years, since the internet really began taking off, for a reasonably large percentage of the population to get to the point where that "feeling" isn't important to them, or of minor importance compared to the advantages of the online dissemination of information. The newspaper industry made some mistakes, sure, but should they be sneered at for trying out a strategy, and then not relentlessly sticking with it when it had already failed, on the crystal-ball premise that one day it would be the future?
Realistically, the industry would have had to be able to perfectly see the shape the future was going to take, and perfectly time their transition into a post- hard copy world. That's a high standard.
Some of the comparisons made -- the entire newspaper industry to IBM, one company. One company can be screwed up by a few bad decisionmakers at the top. What are the odds an entire industry, headed by many decision makers, would all collectively make the same stupid decisions? Were they all a bunch of dumbasses, or were they all reacting to the same set of data telling them the same things -- things that turned out be wrong almost by random chance?
How many people, in 1995 even, saw Craigslist coming? Ebay? Amazon? And how many people in 1999 saw the internet becoming even bigger than it now is, only to lose their asses in the .com bust?
This predicting of the future stuff is not an easy thing to do, although it's quite easy to look back in time and say, "Why couldn't those dumbasses see what was going to happen?" I wonder how many people here are sitting in their McMansions living the easy life on their .com millions. Because if you, in 1990, saw the shape the future was going to take, you could have become a millionaire several times over on an investment of maybe 10 thousand dollars in the right companies. How many of you did that? Then why blame the newspapers for not, in effect, doing the same thing?
Except HD delivery won't be through neither cable or the airwaves in 5-10 years - it'll be through the intertubes
I don't think there'll be any separation among these platforms. Cable TV will be and Internet application. Or vice versa. Or maybe both. HD over the air? Maybe, maybe not. It depends on how big the Luddite market is.
Piggybacking on Quaker and Alan's comments, TV seems to be the more interesting issue (since I feel newspapers are going the way of the buggy whip no matter what.
Seems to me that Apple TV is the horizon that ye olde broadcast networks need to be thinking about. "We" are getting so used to interactivity, that the TV experience seems so limited and limiting.
Broadcast networks that can develop news, info- and enter- tainment programming to fit an interactive TV model may just be able to live longer and prosper.
MG - I did :-)
Seriously. Online classified ads, job advertisement, used cars, fast and furious news reporting and stuff like that. Of course newspapers where going to lose that battle.
Why spend time browsing Den Blå Avis (now free, previously paid, Craiglist kind of weekly paper here in Denmark recently bought for some $350-400 million by eBay) or my own Nordjyske Stiftstidende in print, when you can get the relevant search results online in a jiffy?
No one listened back then in 1996 of course. But it was basically a no brainer for a computer nerd M.Sc. in Computer Engineering turned journalist.
Really.
So why am I not rich? Didn't follow through, not enough entrepreneurial spirit, too big a wimp. Whatever. Love neing a journalist though.
QiB: Then we're completely on the same page :-)
Part of the problem is the demise of research. Newspapers could easily have studied how the internet might work for them, developed web content and tested it, then set up a parallel operation to evaluate how they'd react to internet advances. It seems none did. You mention about IBM not taking PCs seriously. Shouldn't this sort of response to the computer world have been an example for other businesses?
It is not usually recognized that newspaper profitability was a historical anomaly. Papers had a failure rate akin to that of restaurants before radio was invented, let alone the Internet.
The artificial monopoly of 1970-2000 with one paper per city was the only time it was a profitable business. And monopolies are always broken, especially a monopoly on free money, which is what classifieds used to be.
Larger point. All advertising revenue-based media are going down the tubes. Radio is worse off than newspapers, and TV ain't far behind. The next crisis will come when Internet users are told "hell yes you're going to pay for information." It's the only way the information business can survive, but I expect many people reading this site won't like it.
All advertising revenue-based media are going down the tubes
Hmmm...is that really true? Advertisers will continue to seek an audience; they have to reach people, after all. From the Sears catalog to blog ads, advertisers have always exploited the latest media advances to reach the people they want. If it is true, web journalism is in worse shape than anything else; most everyone using it has grown up with the notion that everything on the web is and should be free.
I have no clues about the future, but at some point, like JMG says, people will have to pay for information, whether that information in on paper or on a screen. And when that time comes, and new models are created, some people will wonder why we couldn't have seen it coming back in 2009.
My classroom example of the phenomenon discussed by Tim Lee is Polaroid, which for years was effectively a monopolist in the self-developing-film-and-camera business. Unfortunately, the business turned out to be the pictures-you-can-see-now business, so Polaroid completely missed digital. But, quite rightly, the question is "Could Polaoid have transitioned to digital?" Here, I suspect the transition would have been somewhat easier than for the railroads or for newspapers. The same institutional knowledge (and structures) could have supported producing digital cameras, and outsourcing the sensors and memory cards would have been not-that-difficult. So the capital write-off would have been arguably smaller. Still not an easy or straightforward transition, but possibly something that could have been accomplished.
> You mention about IBM not
> taking PCs seriously.
> Shouldn't this sort of
> response to the computer world
> have been an example for
> other businesses?
IBM held back from PCs until it saw how things were going and it had solid intelligence that DEC was about to bring out a major line of PCs (and was considering buying Apple). Then it hit the PC market hard, drove all its competitors off the field, and today 97% of the world's PCs are "IBM compatible". I am not sure how that constitutes missing the market.
Now, it _then_ suffered vision failure and lost control of the market to the compatible manufacturers. But those were "IBM compatibles", not Apple or DEC compatibles.
Cranky
"Anyone who thinks differently needs to run an actual business first and then report back on how they did converting its core business into something brand new"
Time to set the snark meter to a lower setting I think!
BTW, you should actually cite IBM as a successful example of doing just this, not as the opposite. Just look at how they have in fact "coverted their core business".
"Yes, it would have been great if railroads had converted into airline companies, if IBM had taken PCs more seriously...but that kind of thing is really, really hard to do. That's why it so rarely happens. Cannibalizing your own business is almost impossible for both institutional and economic reasons, and knowing that you're in the generic transportation business, not the train business (or the generic computing business or the generic information business) isn't nearly as profound an insight as some people think. Anyone who thinks differently needs to run an actual business first and then report back on how they did converting its core business into something brand new."
So, what is the newspapers' excuse /today/? Most newspapers - excuse me, reporting content providers' - web sites are the most gawdawful spots on the Internet. Look at the St. Louis Post-Dispatch's site for example: totally unusable unless you have a 9 Mb connection and utterly useless even if you have a connection fast enough to connect to it. It has been that way for 4 years. Handwriting on the wall not big and bold enough yet?
Cranky
Now, it _then_ suffered vision failure and lost control of the market to the compatible manufacturers. But those were "IBM compatibles", not Apple or DEC compatibles.
IBM never owned that business, Microsoft did. It turned out the profits were in software rather than hardware, and IBM missed out on most of them.
"Anyone who thinks differently needs to run an actual business first and then report back on how they did converting its core business into something brand new"
I'll see how that works out for the Winnebago Corporation...
> IBM never owned that business,
> Microsoft did. It turned out
> the profits were in software
> rather than hardware, and IBM
> missed out on most of them.
At that time (and still today IIRC), IBM was prohibited from locking in its customers to its own software by the anti-trust lawsuit consent decree with the Justice Dept. MS-DOS was only one of three operating systems originally offered by IBM on the PC, and all three of those were heavily documented and provided great flexibility to the customer - specifically to avoid charges of violating the decree in a new market.
Cranky
Back before George W Bush was elected, a lot of major newspaper and magazine publishers were working on integrated publishing platforms - the ability to submit and store columns, stories, photos, etc. in a single system, and publish them concurrently to presses, websites, and feeds. From contributors all over the world, simultaneously, including AP and Reuters.
To be sure, not all of the major publishers, and few of the smaller ones(they were very costly systems). But many of them "got it".
When the dotcom bubble popped, ad revenues started heading for the floor. When that happened, capital budgets were the first thing to get axed(and we're talking dozens of millions of $). And so those publishing systems either never got beyond the planning stage, or stagnated at the proof-of-concept point, because while licensing was kind of expensive, the hardware and implementation were very costly.
Kind of like driving a Model A, while the Willys Jeep was in testing and pre-production. 8 years later(today) it would have been a Land Rover, IF development had continued. But most of those Jeeps never got built.
Couple the inability to move forward on the projects due to capital constraints with a general distrust of relying on anything with a .com or .net(such as a website) because of the dotcom bust and they held off long enough that a majority of the software vendors they were working with went out of business - the tail end of the dotcom bust. Loss of the leading vendors led them to cobble stuff together, with mostly underwhelming results.
Over the next couple years(including 9/11) and declining circulation exacerbated their ad revenue woes, in part because they weren't making any ad money online either, further delaying efforts at integrating publishing systems. Bear in mind that after the dotcom bubble burst, it was only a short time after things started improving a little in the economy that we went into a minor recession.
As I said - many publishers "got it".
They just couldn't do anything about it during the timeframe in which it would have had a significant impact on their businesses, and changed them. And then the wave had passed them by.
"As I said - many publishers "got it".
They just couldn't do anything about it during the timeframe in which it would have had a significant impact on their businesses, and changed them. And then the wave had passed them by."
Or as Malcolm Gladwell might put it, back luck won out over talent and hard work.
Mike
The Achilles' heel of decentralized, Internet-based reporting by individuals or small staffs will prove to be legal.
How many indie-journos are in a position to stand up to news sources that restrict their content being quoted (e.g., The Associated Press' five-word maximum), or to do an investigative piece on a litigious company, fat cat or celebrity?
What journalism in the new age will miss most is having a libel lawyer on retainer.
I guess that means Hubby and I will need to buy a SECOND laptop so we can read the news at breakfast.
But although newspapers will become much more expensive, I still see some market for them from people who will never read a book on a Kindle, people with no broadband available (and there are plenty of those in this lamely served country), people who read on the can, and people with little time but good scanning skills.
I've used PCs (or to be more accurate "micro-computers") since before Bill Gates dreamed up MicroSoft, but it is still much quicker to get a sense of the days news from scanning printed paper than from trying to find it on the web.
Help me out here... eviscerating the revenue model for the advertising industry is a bad idea, why?
The advertising industry is a parasite on the information economies of the civilized world. Surgically removing it from the corpus is the cure. Our long nightmare of chronic intoxication on advertising is coming to an end, and we're supposed to be sad about that?
> As I said - many publishers
> "got it".
> They just couldn't do anything
> about it during the timeframe
> in which it would have had a
> significant impact on their
> businesses, and changed them.
> And then the wave had passed
> them by.
The other guy's job is always easier, and I am sure there are some specific requirements for high-volume publishing that are tricky to get right. But you are basically describing content management systems which were available from the open source world in 1998 for the cost of a download and 5 goatee'd Unix(tm) hackers to customize the chosen package. And still are available 10 years later, so tell me again why these newspapers that "got it" still haven't (for the most part) managed to integrate their content and web sites? And why they still don't understand blogs and open comments? I mean, the DC press corps gets 60% of its leads and even material from blogs yet continuously writes contemptuously about pajama-clad hippie bloggers. Are these the people who "get it"?
Cmdr Taco of Slashdot wrote a long essay around 2003 about his attempt to persuade his local paper to save itself in the 2000 time frame. At that point Slashdot had just finished a 3-year run as the world's most popular web site and had a daily readership of well over 400,000 (unique people, not hits). Yet the managing editors of his local paper refused to take a meeting with a "kid" who "didn't understand the business". Funny - his business ended up lasting longer than theirs. Were these the people who "got it"?
Cranky