The Presses Will Be Outsourced Before Stopped

Dorian Benkoil last month e-mailed me asking what I thought about Business Week columnist Jon Fine‘s recent article, When Do You Stop The Presses?.

In the column, Fine ponders which major American newspaper will be the first to stop publishing a print edition and publish online only. He speculates that it will be the San Francisco Chronicle, which has reportedly lost $330 million this decade, approximately $1 million per week. Fine wonders if how the Chronicle should consider stopping its presses and start delivering news only online.

On the surface, that sounds like a good idea. The Chronicle‘s print edition is losing money. It has a large potential online-only audience in San Francisco. And if the Chronicle stops using its presses, it will no longer have to bear the costs of purchasing, printing, and distributing paper edition, costs that probably total 50 to 60 percent of the Chronicle‘s expenses.

But before roaring off with this idea, check under its hood to make sure it has an engine. I don’t know what percentage of the Chronicle‘s revenues its website produces, but my guess is 5 to 10 percent. The printed product generates the rest. So, if the Chronicle were to stop printing paper, it would reduce its expenses to only 40 to 50 percent of their prior level, but the will have also removed 90 to 95 percent of its em>Chronicle‘s revenues. So, it’s rather obvious that the Chronicle would be in a much, much worse predicament than it is now if it were to stop its presses permanently and publish online only. A not-so-fine idea.

But what really troubles me about Fine’s speculation—and for that matter most newspapers’ attempts to shovel their printed content onto their websites— are two two unconscious and linked presumptions that I think underlie such ideas: (1) That there is nothing inherently wrong with the Chronicle‘s product (i.e., its package of journalism and advertisements) except (2) that it should be delivered online rather than on paper because more and more people are getting their information online.

A lot of publishers suffer from these presumptions. They see less and less people reading printed publications, more and more of those people reading things online, and believe that all they need to do is shovel their printed editions over to online (and add video and audio) to reverse their newspapers’ declines in readership.

These presumptions ignore the fact that newspaper readerships have been declining for more than 30 years and that approximately half of those declines occured before the Internet was opened to the public or the public had any online access. Shouldn’t that give publishers a hint that the major cause of their readerships’ declines isn’t the Internet or their content not being online?

And is adding video and audio to that content (so-called ‘multimedia’) going to reverse those declines? Consider that television station’s news viewerships have been declining for more than 20 years and that radio station’s news listenerships have been declining for even longer. Do you think that if radio or television stations add newspaper-like texts to their own websites that this will reverse the declines in their viewerships or listenerships? So, why do publishers think that newspapers adding video and audio to their own texts online will reverse newspapers’ declines in readerships? Adding together two or more declining media do not an ascending new-media make.

The real problem, Mr. Newspaperman, isn’t that your content isn’t online or isn’t online with multimedia. It’s your content. Specifically, it’s what you report, which stories you publish, and how you publish them to people, who, by the way, have very different individual interests. The problem is the content you’re giving them, stupid; not the platform its on. But I digress.

Back to Fine’s column. If the San Francisco Chronicle, despite losing money, cannot afford to stop its presses and go online only, what it is likely to do?. I think that daily newspaper presses will be outsourced before being stopped.

I think the Chronicle will try to do what another troubled newspaper is considering. Boston Herald owner and Publisher Patrick Purcell has been talking about outsourcing his newspaper’s printing. Dow Jones & Company has a printing plant with spare capacity 80 miles outside of Boston, a plant that prints the regional edition of The Wall Street Journal. This plant in.Chicopee, Massachusetts, is far more efficient than the Herald‘s antiquated presses. Purcell is calculating whether eliminating his own presses, pressmen, ink, and paper costs would save him money against whatever markup on those costs that Dow Jones would charge him.

A footnote: We frequently see much larger dollar amounts printed in the business sections of newspapers (‘Murdoch Buys Dow Jones for $5 billion’, etc.), making us somewhat inured to smaller financial figures such as $330 million or $1 million per week. However, the San Francisco Chronicle‘s latest weekday circulation figure is 386,564, so if that newspaper has lost $330 million during the past six years, it’s lost approximately $853.67 per reader during that time or $14.23 per reader per year! Now does its amount of loss impress you? It does me. Though it might sound ridiculous, the Chronicle would lose less money if it delivered two pennies, rather than a newspaper edition, to each reader each day. Think that would be a good business? Well, it makes more financial sense than what the Chronicle has been doing for the past six years.

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