

Newspaper Industry Is Running Out of Time to Adapt to Digital Future - daegloe
http://www.nytimes.com/2012/07/09/business/media/newspapers-are-running-out-of-time-to-adapt-to-digital-future.html?pagewanted=all

======
ethank
Newspapers are finally accounting for their assumptions of necessity
throughout the last 15 years. My family was involved in what at one time was
the second largest paper in CA (the OC Register). My mom was the CFO and I
started there at 15 as their first webmaster.

My mom would always bring home things for me to test as "threats" to the paper
rather than opportunities. Delphi, Prodigy, Aol, compuserve, eworld, Microsoft
blackbird, cd-I and finally a BRI ISDN PPP account.

Threats. Not opportunities. When they finally put the entire newspaper online
it was in PDF. I left in 2001.

And then went into the music business in 2005. Hah.

~~~
ethank
To be clear my mom was on the right side. The publisher was on the "threat"
side.

~~~
natrius
The publisher was right. It's 2012 and we still don't know how to make
newsgathering profitable online. It's easy to say that news organizations
should have been on the forefront of adopting new technologies, but even today
in the internet's adolescence, print journalism is significantly more
profitable. Convincing people to stick with print as long as possible while
staving off "threats" was the right strategy as far as I can tell.

~~~
ethank
Right? I don't think so. I didn't mention the Craigslist "We will never sell
classified space online!" diatribe either.

The point was: THEY WERE on the forefront of new technologies. OCR was the 5th
newspaper online (after Mercury News, SF Chronicle, NY Times, Detroit Free
Press).

And I don't think you understand the cost of print journalism. Print
journalism might be more profitable if you have an economy of scale to support
is infrastructure, but even in 1999 the display ad and classified business was
waning to the point where it didn't break even on a single property. Only in
aggregate for OCR's parent (Freedom Communications).

And lets not even talk daily subscription numbers, which were on the decline
starting around the same time.

Newspapers followed a similar, albeit slower arc that the music business has,
especially the recorded music business. A lot of the same hubris included.

~~~
natrius
Classifieds were a huge oversight that the industry deserves to be excoriated
for.

The print newspaper I worked for is still limping along on its print revenues.
If the OCR wasn't making money on print ads, how did it stay in business?

~~~
ethank
Freedom Communications was making money in aggregate.

------
mjfern
To survive, newspapers need to create significantly more value for readers and
advertisers to drive demand and revenue, and lower their cost structures to
about 10% of their historical levels. Any incremental steps, from pay walls to
moderate layoffs, are totally inadequate to turn their fortunes around.

Let me explain.

The value proposition of most newspapers for both readers and advertisers
pales in comparison to many new media options. For instance, who here gets
their technology or sports news from a national or local newspaper? Who looks
to newspapers for the latest stock market performance, restaurant reviews, or
movie showtimes?

Since their value proposition is depressed, newspapers are attracting fewer
readers (and subscription dollars) and, in turn, fewer advertising dollars.

And then you have typical newspapers' unwieldy cost structures. Many
newspapers are still operating with staff levels that are multiples greater
than their new media counterparts. I don't have any current examples, but
during the 2008 elections the Huffington Post was driving as much online
traffic as the Washington Post, with a headcount of about 6.25% (50 employees
versus 800).

In short, lower value begets lower revenue, and if we assume a high cost
structure, it's a downward spiral to oblivion.

~~~
WiseWeasel
The Washington Post also does actual reporting, unlike the Huffington Post;
they actually produce something of value, even if they don't monetize it as
successfully.

~~~
mjfern
> The Washington Post also does actual reporting...

So does the Huffington Post, but many of the writers are unpaid contributors.

> they actually produce something of value...

Tell this to readers and advertisers, who are voting with their time and $.

~~~
brandnewlow
Nate Silver made a pretty good case that HuffPo bloggers don't contribute much
to site traffic.

[http://fivethirtyeight.blogs.nytimes.com/2011/02/12/the-
econ...](http://fivethirtyeight.blogs.nytimes.com/2011/02/12/the-economics-of-
blogging-and-the-huffington-post/)

The implication is that the aggregated content lifted from other sites and the
original content created by HuffPo writers gets 100x the traffic and eyeballs.

------
look_lookatme
I've known a few old newspapermen in my various jobs, and they have all been
fascinated by the speed of information in this new order. They see the
opportunity and the power.

But they also like to wax about the old times... and make no mistake, the old
times was just a big boys club. Alcoholism was rampant, misogyny was par. A
big story or scoop would take weeks if not months to develop and it might get
buried on some fucked up principle (see Caro's excerpt in the New Yorker this
year on LBJ's impending downfall until JFK and Dallas... a scoop, if not
buried, alters the history of a million young American men and American
foreign policy in profound ways), and then, once ready for the presses, after
the editor trimmed it down, they'd all go celebrate their Pulitzer chances at
a pub. It was a culture of exclusion and entitlement; your entree was
"J-School" pedigree, or worse, your ability to kowtow to as a junior to an
established writer until you got your chance, because that was your only path
to being heard.

It was a time where accountability was proportional to distribution, which is
to say, tightly controlled at all levels and, for better or for worse, self
regulated. It was also a culture of self-congratulation. The only redeeming
quality of the old school is that self-control over distribution gave them
stupendous levels of access and leverage, something that doesn't seemingly
exist anymore.

~~~
brandnewlow
Every profession out there has had periods that could be described this way
from the last century.

~~~
look_lookatme
This is fundamentally not true. The massive disruption of this industry isn't
from Japan/Germany or banana republics or China, this is pure change in
distribution. It's analogous to music or movies or tv, only none of those
industries fancied themselves as the "fourth estate" while the getting was
good.

The ground moved beneath the feet of this industry and as much as they like to
sit around and acknowledge that with self-loathing NYT pieces, I'm not sure
they've accepted it. Seems like there's still a lot of sitting about and
grumbling about how bad it is and how much better it was when back when. Or
worse, how relevant they really, really, really still are _cough_ David Carr
_cough_.

See The Newsroom on HBO for example of this version of onanistic self
flagellation.

~~~
brandnewlow
What does an HBO-produced show about TV news, written by someone who majored
in musical theater and never practiced journalism, have to do with the
newspaper industry's self-image?

My point was that every profession has times when it's full of elitists that
think they've got some special dispensation to carry out their work. That
comes with the mindset of being a professional. And eventually walls come down
as the output of a profession becomes commoditized.

~~~
look_lookatme
Why does the elitism inherent to "every profession" of the "last century" have
more relevance than a piece of socially critical art by a writer who has made
a career of cultural criticism (however flawed). Is the critique of news in
The Newsroom irrelevant to this conversation because of the platform or
because the guy had a theatre degree? Both?

Regardless, I don't get your point. All things fail? Everything comes to an
end? Great. Write an existential letter to NYT.

My point is there is a generational myopia that is pervasive in journalism
still. There is an unwillingness to acknowledge, fully, that it's over.
Donezo. It's never coming back. You can call out NYT in an NYT column and you
can call out Newhouse and you can point out how fucked AOL Patch is and yet
you are just writing for all the readers and writers who are terrified that
things are changing.

It's probably the same point you are making, but I find your approach
annoyingly pithy.

------
wallflower
"The unthinkable scenario unfolded something like this: The ability to share
content wouldn’t shrink, it would grow. Walled gardens would prove unpopular.
Digital advertising would reduce inefficiencies, and therefore profits.
Dislike of micropayments would prevent widespread use. People would resist
being educated to act against their own desires. Old habits of advertisers and
readers would not transfer online. Even ferocious litigation would be
inadequate to constrain massive, sustained law-breaking...

Journalism has always been subsidized."

From Clay Shirky's essay, "Newspapers and Thinking the Unthinkable"

[http://www.shirky.com/weblog/2009/03/newspapers-and-
thinking...](http://www.shirky.com/weblog/2009/03/newspapers-and-thinking-the-
unthinkable/)

------
jbarham
> ...newspapers are being clobbered by paltry returns on underfunded pension
> plans.

So that would be "defined benefit" pension plans then. The markets have no
obligation to meet absurdly optimistic forecasts of returns on investment.

If you're looking for someone to blame, consider that 10-year Treasury yields
are under 2%, of which the single biggest buyer is the Federal Reserve.

> The bread and butter for most of the [newspaper] industry is local
> information.

No, the bread and butter of the newspaper industry is celebrity gossip, which
is the very opposite of local information, and is a commodity product, which
is why people are unwilling to pay for local newspapers.

~~~
derleth
> the bread and butter of the newspaper industry is celebrity gossip, which is
> the very opposite of local information, and is a commodity product, which is
> why people are unwilling to pay for local newspapers.

This directly contradicts itself, which is probably your point.

Focusing on local news is a _necessary_ but perhaps not a _sufficient_
condition for local newspapers to survive: They don't have a monopoly on any
_other_ product, but there's no guarantee they'll be able to survive on that
one.

Or maybe they can create local celebrities to follow around and gossip about.
(They might run up against tougher defamation laws that way, though.)

~~~
jeffool
>Focusing on local news is a necessary but perhaps not a sufficient condition
for local newspapers to survive: They don't have a monopoly on any other
product, but there's no guarantee they'll be able to survive on that one.

I disagree. I think we'll still have local coverage. I just don't think it'll
be very in depth for a long time, and it will be very understaffed. (And in
case there's any doubt, I mean these statements from a personal, moral
standpoint, not an economics one.)

My city (Albany, Georgia,)has one supremely dominating TV station, one tiny
one, one dominating newspaper, and one that puts out 50 issues a year. The
neighboring, largely rural, Worth County, has a news site called WorthIt2U.net

Sure, that's an infuriatingly bad name to me, but to the people of the
community there, who kinda new AOL, and got faster Internet when it came
bundled with their TV and came with their phones? It's where they go. And
often times, they beat the larger places to stories that get hits (wrecks,
arrests,) because they're local. People have responded.

People that stereotypically would be considered as "not online" have a new
primary source of local information, it's just ran by a much smaller crowd.
What's not able to survive is an old model, and I don't think anyone on HN has
a problem leaving behind old models. The only thing missing is this same thing
targeting the prime demographic.

~~~
digisth
Local news seems more and more that it's being served by ad-supported
local/hyper local blogs and blog aggregators. What used to be the province of
ultra thin printed dailies (when I was a kid, many neighborhoods seemed to
have one in Brooklyn) is now handled by one and two person operations. Take a
look at the blogroll covering neighborhoods in Brooklyn:

<http://www.brooklynpaper.com/>

You've also got aggregatorish/news sites like Nearsay and regionals like
Gothamist. They may need local, but it remains to be seen how much local needs
them anymore.

Certainly, in-depth local reporting is in trouble in this new world, but it's
hard to see right now how we'd fund such things. So far, that seems like it'll
be covered by large regionals (or bigger), and only when it crosses over with
bigger national/regional issues or is sufficiently dramatic/quirky.

~~~
brandnewlow
And all those sites are struggling and barely making money. It's a tough,
tough scene. That's why Gawker pivoted into national news and celeb gossip a
few years back. The only way to make lots of money from blog advertising (i.e.
enough to support a full-time staff) is to snag national brand dollars. Indi
hyperlocals are beloved and do great stuff, but they're replacing companies
that used to make millions providing similar services.

~~~
digisth
Agree completely. The hyperlocals seem like they'll be cost-covering only
operations run by what amount to dedicated, self-motivated volunteers. Big
wads of cash do not seem to be in their futures anytime soon.

~~~
jeffool
I agree the money isn't flowing in yet, but I have no doubt it will. That's
where my last line about demographics comes into play. It's
hilarious/depressing that a generation with the demand for more information
than ever before, and the technology to make it happen, is written off.

"That group doesn't read news." Sure they do. Just on Twitter or Facebook, or
in texts.

Also, I wonder if a tv station will ever attempt to contract these sites
directly as bureaus. Pay them as a reporter, but let them work for themselves
as well. Just demand copyright save a non-transferable license to the
reporter. That would give more money, and thus more resources, to a reporter.

------
damian2000
I often see an article appear in a newspaper a good 2 or 3 days after I first
found out about it on HN or twitter. For me, that's the main reason they are
losing customers - they are not doing the job they used to be good at, i.e.
coming up with news or in-depth reporting you can't find anywhere else.

~~~
minikomi
On the other hand, good storytelling and in depth radio journalism in the form
of podcasts seems to be going from strength to strength.

~~~
draggnar
Exactly. I'd like to see this issue from the perspective of Vice Magazine or
The Atlantic, who seem to be finding a way.

------
prawn
Seems to me that too often news sources make the decision to consolidate when
general offerings mean they'll face more competition and leave them with a
very broad, poorly-defined userbase.

Target a specific area, get local readers and you're an advertising option for
local businesses.

My local paper (in Australia) has cut back its basketball reporting (for
example) over the years and instead covered some pretty generic stories. e.g.,
instead of covering a domestic league, the writer has instead covered the US
college Final Four. A few points:

    
    
      - their contacts and history are in covering local sport
      - why would I read this generic coverage over ESPN and American sources who have writers in the thick of the action?
      - in covering domestic basketball, the audience might be smaller, but the paper would have virtually no competition in covering it
      - cover local teams and you at least have a shot of building suburb-level audiences and hit up small businesses as a result
    

In print, I understand that newspapers will generally include content such
that its level meets a ratio with the advertising at hand. e.g., they might
not print an extra four pages because they don't have the ads for it.

But online is a different case. If your writer is getting paid a fixed rate,
why wouldn't you have them at capacity whenever possible, generating unique,
local content for your online version? They could be creating the Final Four
fluff-piece for the print version, plus writing up online-only previews and
quick opinion pieces on the domestic league. Categorise them by area (North,
South, etc) and then find sponsors and advertisers for each. Small-fry ads
maybe, but it wouldn't be shotgun advertising.

~~~
brandnewlow
Shotgun advertising paid the bills for 60 years. Small-fry ads never have and
it's very hard to make money from them. Newspaper sales reps that came into
the industry more than 10 years ago came into it when they basically just
processed incoming orders from chains, franchises, and ad agencies. That money
is largely gone.

"Small-fry ads" means asking those same people to now go out and hunt down
money from local businesses being courted by performance-based ad companies
like Google, Groupon, Living Social, Twitter, Facebook, Constant Contact,
Yelp...you name it.

That's a hard job. You need a superb sales staff to take business from those
people.

If you were a superb sales person, you'd want to make a lot of money and sell
a great product everyone wants to buy.

Would newspaper sales be your first choice?

~~~
prawn
Besides their own blindness/fear, what's stopped newspapers from creating
those new ventures themselves? Becoming the performance-based ad spin-off,
recruiting the superb sales people? In the same way that a web celeb can bring
a huge boost to anything they start, so can a newspaper drive instant
publicity to a new venture of their own. Took the major networks here years
before they started buying up each of a site re: cars, dating, travel,
parenting, etc.

Is it a concern of driving away potential advertisers in those fields? Anti-
competitive behaviour?

In Australia, fantasy comps (based around Australian Rules Football) are very
popular and a huge boost to the big newspapers. I've been told that recent
newspaper strategy meetings often boil down to "Wish we could come up with
another thing like (insert fantasy comp name here)." Give me a meeting and
eventual minimal shareholding and I'll give you five ideas straight up.

\---

One example of the newspaper approach is in restaurant reviews. Before and
after the success of sites like Yelp, newspapers here have continued with
their review-a-restaurant-a-week approach. No categorised index of local
restaurants. No repository of reviews beyond those that hit print. No
crowdsourcing.

For a long time online, I turned repeatedly to a restaurant index (Miettas)
with a crappy design, weak search and dated content just because it had
remotely reliable and professional reviews that a Yelp-type site didn't have.
Newspapers could have seen, and could still see, success in this space, IMO.

~~~
brandnewlow
It comes down to people, like I said before. What you're suggesting is that
newspapers have all these great people who should be able to cook up product
ideas that generate great revenue for them.

If you were one of those people, would you do that for your newspaper, or
would you apply to YCombinator?

Let's take Jack Dorsey as a recent example. He came up with Twitter while
working at Odeo. He shared the idea with the rest of Odeo and eventually Odeo
was shuttered and all resources were put into growing Twitter.

Now, let's imagine Jack Dorsey working at a beleaguered newspaper in Oregon,
for example. First of all, it's hard to imagine, isn't it? Why would Jack
Dorsey be at a newspaper instead of an SF startup? But assuming he was there
and came up with Twitter the following things would likely happen:

1\. Company would spend too much time evaluating the idea before deciding
whether to put resources into it. 2\. Company would assign a team to work on
it, led by Jack. Abilities of team would vary wildly. 3\. Jack's team would
have to run everything through company I.T. which means hosted servers and
more paperwork. 4\. Jack's project would be expected to show results
immediately and be commercialized swiftly, not 5 years after launch like with
Twitter. 5\. Newspaper company would eventually lose patience with project and
pull the plug.

This happens at any big company. Newspapers are no different. No sense of
ownership means its hard to focus and get great things done.

~~~
prawn
Hard to find sympathy when the options have been there.

Sadly, your 5 steps sound awfully realistic.

------
kaolinite
I work for a digital agency that is owned by a very large newspaper company
having been bought to help them adapt to a "digital future". The newspaper
company is becoming increasingly desperate - the latest product they've
launched is a Groupon clone, which they are pushing pretty hard.

Whilst digging around on one of their servers, I've found a few sites which
are "virtual shopping malls" with multiple levels and numerous "shops" that
you can "buy" (i.e. advertise your site on). I think that they're not too sure
what to make of this "Internet thing" so are just trying to port concepts from
offline to online and it's not working too well.

~~~
andyking
I worked for a small local radio station and was asked to implement something
similar to the "virtual mall" last year on the station website. I was only
asked to do it as a neighbouring station had one.

It was laid out like a simple street map, in a grid formation, and companies
could "rent" a "shop," or more accurately, place their logo in one of the
spaces in the grid.

I did it, then left the station, and it still sits there online, the "streets"
filled with For Rent signs. It's like a failed SimCity, or a 2D version of
Second Life...

------
rmason
The time is fast approaching where there will be few local newspapers, just
regional ones. For quite some time the newspaper business has been a game of
musical chairs for employees and the music just sped up.

~~~
brandnewlow
Things may shift in the future, but at the moment, it's the regional guys who
are going under. The local guys are getting bought by Warren Buffet. This is
because the local guys still have their "effective monopoly" over local
advertising in their communities.

[http://www.fool.co.uk/news/investing/2012/05/28/why-
buffett-...](http://www.fool.co.uk/news/investing/2012/05/28/why-buffett-is-
buying-newspapers.aspx)

The regional guys and the guys covering large cities are the ones getting
hammered hardest right now because they're being exposed as not being
"essential reading" for any one thing.

In Chicago, for instance, the Chicago Tribune covers Illinois state politics,
but the real wonks turn to insider blogs like Capitol Fax for that news. So
Tribune's not needed for that.

Sports? ESPNChicago.com and all the Chicago-focused sports blogs have them
beat there for resources and depth.

City Hall news? They're untouchable there...but who wants to buy ads against
that content? And who really wants to read it other than local wonks and older
people who own homes.

Entertainment? People find out what's going on from massive sites like FB,
Twitter, Yelp, you name it.

And on and on. So a paper like the Tribune is left with a great brand, lots of
exclusive content, and the ability to out-execute just about any of their
competitors at anything it wants in terms of quality. But none of that matters
so much to consumers who have tons of more convenient options.

Meanwhile, the internet hasn't really figured out hyper local yet, with the
exception of Topix.com, which is huge in small towns. Everyblock might get
there, and even Reddit eventually as geographic subreddits continue to grow.

------
danso
I used to work at a medium sized regional paper...by the time I started,
around '05, veterans were already complaining about how the good times had
passed. In the 90s, a senior writer could get a project approved that involved
going to Russia over the course of the year, ostensibly to write something
relevant for our somewhat large Russian immigrant population. When I started,
things still seemed good in that I could spend a week on a local story, even
driving out to a city several hours away just to talk to people. Today, they
don't even have the resources to cover huge events, like earthquakes that hit
nearby, and instead rely on AP copy.

Last time I visited, nearly everyone I knew was gone, usually for a job
working in PR. And even the young idealistic reporters who were my age were
all secretly interviewing for PR jobs. There really is little hope of turning
things around. It's not just the lack of technical innovation...it's the
constant downhill slide...it's hard enough to do good work on an average
reporters pay...but to do it as your pay gets constantly cut and your hours
constantly extended because other colleagues are let go is psychologically
draining.

And newspapers need more than just good work, or even Pulitzer level
work...they need groundbreaking innovation that changes/streamlines the very
core of what they do...from the reporters to the editors to the ad people. But
there's no capacity or motivation for such entrepreneurship

------
wsetchell
Idea : make newspapers more like collaborative blogs with some extra payment
options.

<http://wsetchell.blogspot.com/2012/07/local-newspapers.html>

~~~
brandnewlow
Hey, Will,

Good post.

I think consumers have this already in Facebook and Twitter. The news guys
already post all their news there, for free, to try to generate ad revenues.
People don't click through because often the entire story is there in the
headlines and that's all they really cared about anyways.

------
ThomPete
Adapting means firing 95% of your staff it's really that simple.

------
joering2
But isn't it more like a medium that has changed? What stops those newspapers
from running online versions? In fact, most or all already have an online
presence. Wouldn't it be cheaper to run a website, versus running a printing
press? In addition, the $ spent on ads in newspapers will surely shrink, but $
spent on online advertise continue to rise without signs of stopping.

To me this whole rant about running out of newspaper business is like a rant
of messenger going out of business. No, you don't have to ride your bicycle
through entire city to deliver message from Mr. X to Mr. Y; we have email and
internet now. At the end of the day, the consumption of news will not change
-- people will still want to know whats going on in the wild world, whether it
is economy, politics, science or celeb gossips. Sure the medium will change,
but lets stop crying over the fact that 99.999% of population is not using an
electrical telegraph anymore (if most never did).

~~~
nhebb
Ken Auletta of _The New Yorker_ spoke about this on Charlie Rose a few years
ago. He explained that while the operating costs for online news is lower than
printing press / hard copy distribution, the advertising revenues are even
lower still. If a newspaper went to an all online format, the differential
would be negative.

~~~
prawn
Did any newspaper try maintaining budgets across the transition? e.g.,
advertiser goes from paying $500 for their print advertising, to paying $500
for their print and web advertising, to (in the future) paying $500 for their
web advertising?

The first stage was already active with every publication. The second stage
could've been a reasonable upsell (same price, but get online coverage too!).
By the third you're pushing better tracking/metrics, interactive ads, colour-
by-default, animation, etc.

I get the impression that many papers treated it all very separately. In fact,
for some time, one of the biggest entities in Australia maintained separate
print and digital writing units (which strikes me as bizarre).

~~~
brandnewlow
Once a newspaper sales rep starts talking "web ads" with an advertiser, the
client has a host of other options. These options have more reach, are closer
to people with purchasing intent, are performance based, self-service, and
generate much higher ROI than banner ads on a newspaper site.

So the newspaper guys had to offer competitive pricing, or at least pricing in
the same galaxy as the other web guys. So instead of a $50 or $100 CPM for
inclusion in the print paper, they're getting a $5-10 CPM for includion on the
web site.

~~~
prawn
See my mention of stage two - they're essentially getting web ads for free as
an effort to maintain budget during a transition. How would the marketplace
apply in that case?

~~~
brandnewlow
Newspapers gave the web ads for free for a long time. Then when they tried
selling them by themselves, the clients refused to pay for them because they'd
received them for free for so long....and seen no real benefits or results
from them during that time.

