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Well, here we are again – one more time – trying to understand what happened to the “Newspaper Dilemma.”

Few of the public have access to the trade press which has suddenly – and I do mean suddenly, like in the last two months – been full of mea culpas finally admitting that the newspaper industry is suffering from self-inflicted wounds. Not all of the “wounds” are fully recognized by the public as they read of bankruptcies in places like Chicago, Minneapolis and Philadelphia. These are all due, primarily, to crushing debt taken on by the national chains (as I mentioned in a previous blog) in an attempt to buy-up more and more papers, with the “irrational exuberance” of believing that profits will keep going skyward. For these, the bubble has burst, as it did for the dot coms. However, the reality is that the overwhelming number of newspapers are still operationally profitable, albeit at much lower margins.

The other self-inflicted wound (as mentioned on this blog from the beginning) is something I’ve been heckling my former colleagues about for going-on two years, with naïve questions like: “How can you expect your ink-on-paper newspaper to prosper when you’re giving it all away free on your web site?” Of course, nobody listened. Why should they? What do I know – when the Really Big Brains were taking the industry the other way? They’re still not listening, but shall we say, The Day of Awaking has arrived. The tsunami of atonement is overtaking them.

Has the Great Awakening really arrived — finally? Consider this: Few people see Editor & Publisher magazine. In the trade it is known as the “Bible” of the industry. Its cover story in the April, 2009 issue (yes, that is this month) is titled: “No More Free Ride?” Over at the American Journalism Review, issue of April/May 2009, a similar article quotes Tom Curley, who is president of the Associated Press, the gigantic news-gathering cooperative owned by newspapers. Until he took the AP title, Tom was a longtime Gannett loyalist, previously serving as president & publisher of USA Today. I don’t know how awakened he is, but he must be seeing the light. On the issue of free news on web sites, he declares: “The readers and viewers are going to have to pay more…If I had tried to suggest this a couple of years go, I’d be hollered out of the room (but) the conversation has now turned from a whisper to a roar. Media CEOs are saying, ‘I’ve got to charge.’”

Curley follows up with a related comment: “Advertising is not there (on web sites). Advertising will likely be contracting…It was a dumb idea to think that you could pay the rent on the Internet with advertising alone.” Remember when I pointed out a couple of blogs ago that the industry’s starry-eyed goal of “paying the rent” with internet ads had turned to dust, bringing in only 8% of needed revenue, compared with 80% that is typical for newspaper advertising? (Isn’t it nice to be right every once in awhile, even if people ignore you?)

Now, on to the Solutions. This will be brief, but before closing shop, I want to leave with you some of the remedies that are boiling up in the fertile minds of the Really Big Brains, such as:

1. Micropayments. A small fee would be charged to readers to access specific content. Kind of like iTunes.

2. Subscriptions for Specialized Content. Charge for special coverage of subjects such as pro or high school sports teams.

3. Subscription Model. Charge readers for content on their monthly internet access bill, similar to the way in which cable charges for certain channels.

4. Donations. Enable readers to give financial gifts to a particular web site, through new models such as Kachingle.

5. Antitrust Exemption. Like the baseball exemption. So newspaper owners can get together and set common rates for their web news.

6. Federal or State Aid. This is the worst idea; don’t even consider it.

7. Low Profit Limited Liability Company. A corporation that qualifies as a charity under IRS rules but runs as a for-profit business. Recognize the newspaper as having a “Social benefit – to serve readers and fulfill its role in democracy.” Interesting, but don’t hold your breath.

Now you know what the Really Big Brains are up to. Next week’s blog might be able to finish all this, with a Final Solution (maybe) from a Less Than Big Brain.

–Vic Jose

Vic Jose :: Apr.26.2009 :: Uncategorized ::

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