News You Can Lose: "Soon enough, we’re going to start getting what we pay for...."

[DeepModem Mom]

The New Yorker: News You Can Lose
by James Surowiecki
December 22, 2008



When the Tribune Company announced that it was filing for bankruptcy, last Monday, Sam Zell, the man who bought the company a year ago, for $8.2 billion, said that its problems were the result of a “perfect storm.” You take readers and advertisers who were already migrating away from print, and add a steep recession, and you’ve got serious trouble. What Zell failed to mention was that his acquisition of the company had buried it beneath such a heavy pile of debt that any storm at all would likely have sunk it. But although Zell was making excuses for his own mismanagement, the perfect storm is real enough, and it is threatening to destroy newspapers as we know them. Layoffs and buyouts have become routine. The Miami Herald and the San Diego Union-Tribune are reportedly on the selling block, while lawmakers in Connecticut are trying to keep two newspapers there afloat. Even the New York Times Company has slashed its dividend and announced that it would borrow against its headquarters to avoid cash-flow problems.

There’s no mystery as to the source of all the trouble: advertising revenue has dried up....

Papers’ attempts to deal with the new environment by cutting costs haven’t helped: trimming staff and reducing coverage make newspapers less appealing to readers and advertisers. It may be no coincidence that papers that have avoided the steepest cutbacks, like the Wall Street Journal and USA Today, have done a better job of holding onto readers.

Newspaper readership has been slowly dropping for decades — as a percentage of the population, newspapers have about half as many subscribers as they did four decades ago — but the Internet helped turn that slow puncture into a blowout. Papers now seem to be the equivalent of the railroads at the start of the twentieth century—a once-great business eclipsed by a new technology. In a famous 1960 article called “Marketing Myopia,” Theodore Levitt held up the railroads as a quintessential example of companies’ inability to adapt to changing circumstances. Levitt argued that a focus on products rather than on customers led the companies to misunderstand their core business. Had the bosses realized that they were in the transportation business, rather than the railroad business, they could have moved into trucking and air transport, rather than letting other companies dominate. By extension, many argue that if newspapers had understood they were in the information business, rather than the print business, they would have adapted more quickly and more successfully to the Net....

The peculiar fact about the current crisis is that even as big papers have become less profitable they’ve arguably become more popular. The blogosphere, much of which piggybacks on traditional journalism’s content, has magnified the reach of newspapers, and although papers now face far more scrutiny, this is a kind of backhanded compliment to their continued relevance. Usually, when an industry runs into the kind of trouble that Levitt was talking about, it’s because people are abandoning its products. But people don’t use the Times less than they did a decade ago. They use it more. The difference is that today they don’t have to pay for it. The real problem for newspapers, in other words, isn’t the Internet; it’s us. We want access to everything, we want it now, and we want it for free. That’s a consumer’s dream, but eventually it’s going to collide with reality: if newspapers’ profits vanish, so will their product.

Does that mean newspapers are doomed? Not necessarily....But it would not be shocking if, sometime soon, there were big American cities that had no local newspaper; more important, we’re almost sure to see a sharp decline in the volume and variety of content that newspapers collectively produce. For a while now, readers have had the best of both worlds: all the benefits of the old, high-profit regime — intensive reporting, experienced editors, and so on — and the low costs of the new one. But that situation can’t last. Soon enough, we’re going to start getting what we pay for, and we may find out just how little that is.

http://www.newyorker.com/talk/financial/2008/12/22/081222ta_talk_surowiecki

[DCKit]

1. Before the NYT and WaPo began shilling for the malAdministration, they were must read papers.

Now I'm not sure I'd use them to pack dishes.

Our newspapers have lost their credibility.

[mrreowwr_kittty]

2. Interesting. K an R.