See Any Endgame for Newspapers?

Cocktails during Cinco de Mayo at the offices of Critical Mention above New York City’s 57th Street canyon

I haven’t been posting much because I’ve been traveling most of the past few months — half that time to develop the video news search business for my main client Critical Mention, work that I’m immensely enjoying, and half that time on speaking engagements about the newspaper business.

Four hundred years into its business cycle, that industry has entered its endgame phase. The three attributes upon which it was built — newsprint, journalism, and a business model that aggregates revenues from newsprint edition purchases, classified advertising, and display advertising &#151 have become obsolete or redundant.

Newsprint is obsolete. Although it is still far more portable than electronic media, requires no batteries or power source, and has graphics vastly superior graphics to the Web, newsprint isn’t interactive and requires printing and physical distribution. Although it had been the premier vehicle for breaking news until Marconi, radio and television overtook it for that purpose during the Twentieth Century.

(Many newspaper industry analysts think newspapers should simply accept the fact that broadcasters break most news and surrender any pretense about newspapers breaking news and that newspapers should become primarily news analyses and feature vehicles. I however think that the consumer electronics industry’s introduction of wireless e-paper during the next 10 years could do much to restore newspapers’ role as breakers of news, if the newspaper industry ably utilizes this new technology — a very big if.).

Journalism has gone awry in newspapers. Tim Porter of First Draft recently characterized contemporary newspaper journalism as “a cherished recipe for blandness and a form of stenographic story-telling that eschews passion in favor of the emptiness of he-said, she-said, one the one hand, on the other and yet on another constructions.” Newspaper journalism has certainly lost touch with its readership — judging from newspapers’ declines in readership and circulation.

(However, I’m skeptical that ‘citizen journalism’ will replace it outright, any more than ‘citizen pilots’ will replace the declining airline transportation industry. ‘Citizen journalism’ is a nice supplement but not a replacement.)

The business model of newspapers — aggregating revenues from newsprint edition purchases and from classified advertising and display advertising — is obsolete and awry. Its classified advertising sector is certainly obsolete. There is much discussion within the newspaper industry about how to compete against sites such as Craig’s List, but most of that talk is about preserving the newspaper industry’s traditional business model of paid classified ads against the free classifieds advertising of Craig’s and other sites. The newspaper industry need to open its eyes to the fact that its traditional business model of paid classified advertising is dead. It is a Nineteenth Century business model that’s no longer relevant.

Likewise, the newspaper industry’s display advertising business model is starting to crumble. Google and Yahoo! last year had combined advertising earnings of $4 billion in display advertising revenue — more than most U.S. media companies. Now that broadband permits targetted delivery of video and once sites like Google, Yahoo!, and Craig’s List begin local targeting of display advertising, this pilar of newspaper industry revenue will start to collapse. Give it five more years.

And newspaper editions are woefully overpriced. During the past 30 years, publishers have constantly raised newsstand and circulation prices — despite the fact that new technologies (cable TV, speciality magazines, the Internet, etc.) have given a hugely increased supply of such news to consumers. You don’t have to be an economics major to understand that you don’t increase prices of a commodity that is oversupplied. Much of the declines in newspaper circulations and readerships are attributable simply to this. Indeed, the sole category of newspapers that are increasing in circulation and readership are free newspapers. Free papers now account for 40 percent of all circulation in Spain, 29 percent in Italy, and 27 percent in Denmark.

So, what should newspapers do?

There is a belief within the newspaper industry that it can saved itself by simply publishing newspapers on the Web. It’s a nice belief, but it is based upon faith and superficial thinking. Newspaper executives believe that there will always be newspapers because people have relied upon newspapers for the past 400 years (just as livery stable owners a century ago wholeheartedly believed that people will always rely upon horses because people had for millennia.) And they believe that because young people use the Web, the Web is where the traditional business of newspapers should be transplanted.

Last year, I wrote at length about what newspapers should instead be doing to survive and thrive. Suffice now to say that simply transplanting the traditional business of newspapers into online will fail, and indeed is failing. A recent survey of the newspaper industry by Borrell Associates shows that newspaper websites earn no more than $15 (the average was about $6) annually per users, compared to a range of $600 to $1,000 annually per reader of a newsprint edition. Not that this is despite ten years experience in online publishing. It is obvious that the salvation of the newspaper industry isn’t in a new electronic that generates on average one or two magnitudes less revenues than newsprint editions do.

I’ll be in New Orleans the rest of this week, attending the Interactive Newspapers conference held annually by Editor & Publisher magazine. I hope to see the glimmer of some new thinking or real solutions within the newspaper industry there (excuse me, but podcasting, RSS, and other new ways to delivery traditional content in the traditional business models aren’t new thinking.. I’ll be posting more about those subjects this week.)

I’m not hopeful that I’ll see any new thinking or real solutions. Instead, I expect to see the newspaper new-media executives continue their obsession with new ways to do old things — when even old ways to do new things would be better. (If you wonder what I mean by that, click this link.) I’ll let you know.