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More than two months ago I entered here my ideas on “What’s Happening To Newspapers,” thinking that one explanation would do it. That was nine blogs ago – so the tenth version is what I can (almost) promise will be the last in this series.

This time, I’d like to summarize the background, hitting only the high points as briefly as possible (for me). Then I’ll conclude with what seems to me to be The Solution for “The Newspaper Dilemma.”

If you remember, we started with a description of what might be called the “Perfect Storm” that brought about the current precipitous free-fall in the health of hometown daily newspapers across the country. These are:

1. The unprecedented decline in our national economy.
2. An underlying attrition of newspaper advertisings base. (Witness the closing of many “big box” stores and a steady move to alternative choices for advertising, such as the Internet.)
3. An obsession of the newspaper industry (this is my opinion) on maintaining their monopoly status in each city in which they operate. This mind-set has led the industry to commit its most grievous tactical error (still being followed) of creating their own web sites and giving away all the news there free.

The results are now undeniable: One giant media empire after another has fallen, either resulting in bankruptcy or closing the paper – in Chicago, Philadelphia, Seattle, Minneapolis, and San Francisco. Please note that all of these are BIG cities, where the major media companies created their “self-inflicted wounds” prior to the current crisis by overloading on debt which they cannot support in the current downturn. Parallel to that, it is also important to realize that while the recent economic decline has hit all newspapers (as it has all business), the small and medium sized newspapers are less vulnerable and continue to operate profitably, even at much lower margins.

Now, for the Response of the newspaper industry: To put it bluntly: They’re doing it backwards. They are still insisting on giving away their product free. As mentioned here before, it’s simple common sense to realize that no business can give away free in one store what it is trying to sell in another.

Before listing what I think are the steps needed for recovery, I have to ask a prior question: Does the industry really want to save newspapers (print on paper)? I had a conversation not long ago with a newspaper executive and asked him that very question: “Do you really want to save the printed newspaper, or have you given up print for internet web sites?” And he quickly assured me: “Oh yes, we’re definitely committed to newspapers. We have meetings continually on ways to improve our position.” Well, if they really want to save the local hometown newspaper, they’d better change course. Otherwise, forget it.

Here are the steps the industry must take (in my opinion) to save themselves:

1. The first thing they must do, as soon as possible, is to stop giving away all their news on their free web site. (Newspapers in a town our size can spend up to $l million a year on all phases of news production – and anybody who knows anything will tell you that web site ads are not paying for all of it and never will – including the advice we learned from our friend from Little Rock, Ark., Walter Hussman, Jr., described here last week.) Can newspapers afford to sell a combined package? Yes. They already pay for printing the paper and are also paying for their expanded web site –but recovering only a minor revenue stream for it. So they would be adding no major expense in selling both as a package.
2. Set up at least two local web sites, one all free but limited to news headlines, with brief summaries, and promotions saying, in effect, “Read all the further details in the newspaper,” or “See more pictures in the newspaper.” The other site we will call Premium (or something).
3. Charge for access to the Premium site, which has everything (or almost everything) found in the newspaper. When they pay for access to the Premium site, they also receive the newspaper at no extra charge. One charge for both. Subscribers can read either one they prefer. Hussman found that the vast majority choose the newspaper.
4. Keep emphasizing the value of a hometown newspaper. Create a “Hometown Spirit” as we do with other institutions of which we are proud. A hometown newspaper is an important element in a healthy community and essential for a well-informed citizenry.

Making this conversion will take time. Converting anybody from getting something for free to asking them to pay for it takes time. It would be an easier transition with local ownership, but it can be done regardless of ownership – with determined and innovative management.

What of the future? Who knows what mechanical form the hometown news will take in the future? Right now, the only viable form is the printed paper. It is worth paying for. We need to save the hometown newspaper.

–Vic Jose

Vic Jose :: May.17.2009 :: Uncategorized ::

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