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The Fate of Newspapers: Farm It, Milk It, Or Feed It
Hugh Pickens writes "According to Alan D. Mutter, after a 50% drop in newspaper advertising since 2005, the old ways of running a newspaper can no longer succeed, so most publishers are faced with choosing the best possible strategy going-forward for their mature but declining businesses: farm it, feed it, or milk it. Warren Buffett is farming it, and recently bucked the widespread pessimism about the future of newspapers by buying 63 titles from Media General. He is concentrating on small and medium papers in defensible markets, while steering clear of metro markets, where costs are high and competition is fierce. 'I do not have any secret sauce,' says Buffett. 'There are still 1,400 daily papers in the United States. The nice thing about it is that somebody can think about the best answer and we can copy him. Two or three years from now, you'll see a much better-defined pattern of operations online and in print by papers.' Advance Publications is milking it by cutting staff and reducing print publication to three days a week at the New Orleans Times-Picayune, thus making the Crescent City the largest American metropolis to be deprived of a daily dose of wood fiber in its news diet. Once dismantled, the local reporting infrastructure in communities like New Orleans will almost certainly never be rebuilt. 'By cutting staff to a bare minimum and printing only on the days it is profitable to do so, publishers can milk considerable sums from their franchises until the day these once-indomitable cash cows go dry.' Rupert Murdoch is feeding it as he spins his newspapers out of News Corp. and into a separate company empowered to innovate the traditional publishing businesses into the future. In various interviews after announcing the planned spinoff, Murdoch promised to launch the new company with no debt and ample cash to aggressively pursue digital publishing opportunities across a variety of platforms. 'If the spinoff materializes in anywhere near the way Murdoch is spinning it, however, it could turn out to be a model for iterating the way forward for newspapers.'"
People still read newspapers. E-ink or LCD newspapers. If the newspaper can't find a way to convert from wood to electronic, then it probably deserves to die since it's being inefficient.
That's how the market operates... give the customer what he/she wants or else don't get purchased & go out of business. BTW my two local papers were owned by the same company. They cut costs by merging the two papers since they were basically redundant.
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
A local newspaper owner told me last week that 80% of a newspaper's income is from legal notifications. Cities have legal obligations to publish notifications regarding meetings, sales, and such. State law says they much use a local paper that's existed for more than 3 years and has a subscriber base of a certain number. Of course, these same notifications could easily be included in utility bills or other, much less expensive alternatives. Basically taxpayer money is being used to keep newspapers alive.
You want to see an incumbent business model act like a pack of pissed-off wolverines? Watch the small-paper lobby go to town when a state legislature suggests that putting legal notices online might -- might! -- be more efficient.
That just happened in Texas. The newspapers won, this time.
In Illinois, there's a real battle. The newspapers have their own lobbying site. Several bills are pending in Virginia and the newspapers there are frantically lobbying.