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.'"

Comments

subscriptions - shooting themselves in foot

[kevinroyalty]

my local paper i only want on sunday. in attempting to subscribe for sunday only, they say "no, you have to take it friday/saturday/sunday". i say "sunday only, or i don't subscribe". they wouldn't budge. guess what i decided :) on the occasion i want a sunday paper, i go to the local gas station which is not far from my place and pick up a paper. i won't be shedding any tears when they fold (ha!)

Re:subscriptions - shooting themselves in foot

[Anonymous Coward]

My pet peeve is how they keep treating loyal subscribers worse than new subscribers. I don't understand why either: They practically incentivize canceling your subscription. It's the same with mobile phones.

Re:subscriptions - shooting themselves in foot

[kevinroyalty]

I think you viewed my comment with too wide a brush. let me try to explain. i used to be a newspaper carrier back in jr/sr high school (5.5 years). my customers asked me for newspaper subscriptions like "i want sunday only" and "i want wed and sun only". this was fairly common. when i'd call the newspaper and tell them the amount of papers to deliver each day, they didn't care how many per day, and complied with no issue. the end result: customer happy, me (carrier) happy. i made good money for the short amount of time i worked each day to do that job. so with that knowledge and that now we are 25+ years in the future, i don't see why i can't have the subscription option i want. as a customer, if you want my business, you need to 1) listen and 2) deliver what the customer wants, or they move on and you don't have them as a customer. you get enough of that and you go out of business. the whole point to this, is that the newspaper wants me to subscribe based on THEIR schedule and for me to pay for 3 newspapers a week, when i WANT only 1. Here Mr Newspaper, take my money. No, we want 3x the money and you get 2 more items you don't want. no thanks. no wonder newspapers are dying. Kevin

I guess they are milking it here

[Anonymous Coward]

Where I live (Vancouver, Canada) both dailies are run by the same company. They print the same stories and have the same pro-corporation slant. One of them uses smaller words and dumbs things down a bit, but they are basically exactly the same. As a cost saving measure and as an ultimate sign of cheapness and laziness, these papers reprint, annually, the exact same stories word for word. The editors are told what their opinions are and quietly promotes whatever rubbish the owner tells them to. There are so many "special information supplements", info-marketing inserts, infomercials, and advertisements disguised as news articles that it just has to be illegal.

Tell me why I should care if these papers die. As far as I'm concerned it can't happen soon enough.

billionaire Phil Ansultz bought lots of newspapers

[peter303]

Most notable the San Francisco Examiner. Several of his papers are distributed as free dailies in major cities.
Anshultz media group also owns about a third of US movie theaters (Regal) and show production company that was putting on Michael Jacksons final tour.
He has not publicly stated what his goals are. His earlier investments were oil and gas, railroads, and fiber cable.

Quality

[girlintraining]

The problem with news is that the quality is crap. It's biased, the headlines are misleading, and there's often no research done ahead of time. Nothing of value will be lost there. But good journalism, research, unbiased headlines... they're getting screwed too. And that makes me sad, because the news is essential for the proper functioning of a democratic society. If we don't know what's going on, if we don't have people willing to get in there to get the full story, not just the press releases... we're screwed.

Re:So?

[gbjbaanb]

so you end up with a single source for your news... that tells you all the truth about exactly what is going on in the world/your area.

and if you believe that, you already know the Republicans are the only party that it makes sense to vote for.

I agree that free market economics are the way to run these things, but there is a market for printed news. Hopefully these places can streamline their operations (by merging various functions like printing and certain non-news parts) and continue to provide a product.

it's evolution: adapt or die

[Gravis Zero]

if you become comfortable in a certain business model you will die. you have to follow where technology is going and possibly steer it to your advantage. newspapers ignored technology and now that it's hurting them, they trying to catch up. they should have been the leaders in the internet realm as it's purely a communications medium. hell, they should have been driving the internet to new places but instead they are reactionary and slow at that. blogs have shown up far too late and they strait up shot themselves in the foot with paywalls which were put in AFTER so many other site with free content thrived by using advertising systems that didnt suck.

you need to try a lot of different things. diversify your strategy or your one basket may be in trouble.

Re:it's evolution: adapt or die

[StopKoolaidPoliticsT]

My local (Gannett owned) paper has always had its biases and whatnot... we can argue about content all day long, BUT they used to have a pretty decent phpbb forum to comment on stories (or whatever people wanted to talk about). The forums were relatively unmoderated unless people became abusive, which allowed a wide range of opinions, for better or worse, to be subjected to debate. About once a year, the forums would get reset and we'd start from scratch.

Well, at one point back in 2007 or 2008, Gannett made the decision to force all of their papers onto Pluck. It was infuriatingly slow, it could be hard to find stories, but obviously, it was meant to give the papers more editorial control over all of their content (it's nice when you can make stories suddenly disappear from memory) but also encouraged them to do it with reader comments. Opinions which differed from the paper's staff, reasonable and polite or not, were deleted. The paper would start "ghosting" users, so that their posts appeared when they were logged in, but nobody else could see them. Readers that agreed with the paper's biases could get away with any amount of abuse of other readers. The editorial staff and executive staff of the paper didn't care, they just let things fester.

Then Gannett made the decision that there was just too much abuse going on in the comments and that it was too much work to keep up with, so they switched to facebook commenting (the reality, based on reading a Gannett insider blog, I get the distinct impression that may be that an exeucitve had pre-IPO stock in facebook, so this could be quite a personal boon as well).

Next thing you know, they were instituting a paywall, requiring a large mandatory subscription increase for paper-only subscribers that have no interest in digital, while simultaneously letting more than two dozen staff members "retire early" and shrinking the paper to a size that you couldn't start a fire with. About the same time, they printed a story on local tax delinquints, only they forgot to disclose that an editor at the paper was himself a delinquint, tried to scrub the posts when a reader posted it and then threatened legal action (ok, "consulting a lawyer about legal action") for libel when the story, along with the link to the state database, spread. A senior editor doesn't know that truth is an absolute defense in a libel/defamation case! And rather than simply admit it, the editor and one of the executives waged an online campaign against the readers before ultimatley hiding the comments.

They just seem determined to shoot themselves in the foot at every opportunity. And Gannett's executives just seem to be milking the company for every little drop they can get out of it along the way.

Investigative reporting

[T Murphy]

Two of the big Chicago papers- Chicago Tribune and Daily Herald- each make a point to do investigative reporting, finding information on mismanaged government funds, questionable hiring practices, and other political negligence or misconduct (which we have plenty of). We'll always have some form of news source covering events that are geared towards the media, like the presidential elections, sporting events and press releases, but it takes an established newspaper run by people willing to invest in time-consuming research to generate quality investigative reporting. With politicians who have more clout than an average citizen can handle, it takes a newspaper with a weight of its own to fight back. I realize newspapers are going to have to make significant changes to stay in business, and that many won't make it, but I am worried that in the process we may lose one of our best means of keeping the government in check.

Re:Investigative reporting

[T Murphy]

It's much harder to do investigative reporting on private companies, as you basically need a whistleblower on the inside in order to get hard facts*. The papers do have "What's your problem" columns where the newspaper steps in to help a consumer being held at the mercy of a company. Of course, if you want an expose on advertisers, that would require funding newspapers entirely on subscriptions in order to remove any appearance of bias.

Also, your Party A/Party B comment shows you don't pay attention. When the newspapers dig up enough dirt on a politician, they become a pariah, and other politicians will want nothing to do with them. Your comment is like saying that because athletes get away with some calls when the ref isn't looking that sports are better off without referees. No, the newspapers aren't going to straighten out politics, but they force politicians to maintain some level of honesty. There have been cases where newspaper investigations have triggered criminal investigations. I agree we're never going to get a clean government, but it's thanks to idiots like you that it is possible to get disasters with names like "Blagojevich" in office. They are not all the same, and they are not all crooks (especially the more local you get).

*Private companies can blow you off a lot easier if you start asking questions, and also will readily sue (retaining lawyers will strain the newspaper's budget). Digging up dirt on the government generally involves public documents and FOIA requests, which makes it easier to build a case and harder for the government to brush it aside.

It's the tragedy of the commons

[Anonymous Coward]

Everyone thinks the news is free since it's all just a click away. There are lots of great aggregators like Google News, Yahoo, Bing, as well as specialty aggregators like Slashdot.

SOME news is free. Flikr and tweets by passers by are free, but a worldwide professional staff of reporters, editors and publishing infrastructure (either print or online) is expensive to maintain and will not survive years of wholesale freeloading.

Longtime newspaper readers have already noticed a substantial drop in the quality of almost every big major newspaper in the country (except for maybe USA Today, which is the exception that proves the rule) over the past ten years or so. They've all had to let go a large part of their staffs.

So just as people are whining that they don't make pop music the way they used to, so we're starting to see that with the reporting of the news. Yes, there will be plenty of news to read, more than you'll have time to read, but the quality has gone down and will go down further.

Not the paragons of virtue they claim

[EmperorOfCanada]

A good newspaper that spends time investigating, digging, and has the balls to take on critical issues have been a huge pillar of our civilization. But take my local newspaper in Nova Scotia. Technically it is independent which is great but it is run by one rich family so do you think that it will run exposes on their friends? I can't remember the last time, if ever, they have nailed a slimy car dealership or real-estate agent to the wall as these are some of their biggest remaining advertisers. They did wail away at our current mayor but it was more schoolyard than Watergate. It was a local arts paper that did the gumshoe work that blew him out of office. The Mayor in waiting looks like a putz and I haven't seen them take a single shot at him.

Move one province over and the major newspapers are owned by the richest family there.

But the internet is made up of a bunch of little twerps with nothing to loose and everything to gain(becoming the next Drudge) by blowing up an old boys club or two by exposing truths that our local newspapers are too incestuously invested in.... I Love It!!!

Re:Obama and campaign offer no apology to Romney

[Anonymous Coward]

He should apologize: "I'm sorry Mitt Romney outsourced jobs."

80% of newspaper income from legal notifications

[Bhrian]

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.

Re:80% of newspaper income from legal notification

[gregwbrooks]

He's right -- for community weeklies and even some very small dailies, legal ads are lifeblood.

Much less so for mid-sized-and-larger dailies.

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.

Re:So?

[benhattman]

That doesn't make any sense. Digital distribution is cheaper, which means you can have more competitors than you could with print distribution.

What's killing news is that digital means there are essentially no more scoops. When a story comes out, it is on every cable news channel well within the hour, and posted on every digital newspaper within minutes, and news aggregators like HuffPo within seconds. Before, a true scoop meant your had the only paper publishing a story that day. Not only did that garner eyeballs, but it brought prestige too. Now it mostly means increased news consumption overall with a lot of that consumption going to your competitors with no compensation for your own paper's work.

Which is why news agencies have been cutting their staff for years. It's cheaper for everyone to ride the coattails of someone else. It's even cheaper to have interns watching twitter for trending stories. The bottom line is news is both a product but also a public good, and like many public goods capitalism may not be the optimal structure for maximizing it's non-monetary benefit to society.

The issue is journalism

[InterGuru]

Whether we read it on paper on on the screen does not matter. What does matter: "How are we going to support journalism?" . Especially local journalism. Who will cover the zoning board. Who will ferret out corruption? The meetings of the Virginia legislature used to be covered by eight reporters, now it is covered by one. ( From memory, I cannot find the story ).

New Orleans may give us a preview, since there is no shortage of corruption. While the cat's away.....

Re:Give them purpose again.

[DoofusOfDeath]

My brother has worked for some major metro dailies in the Northeast, including as managing editor. He's recently decided to leave the industry at perhaps the peak of his career because he's convinced it's dying.

We discussed it and came to the same conclusion as you. The fundamental problem isn't the business model, it's an apathetic citizenry. If Americans cared deeply about civic issues and governance, rather than American Idol, they would find a way to fund good journalism. But if they don't, there's no business model that can keep good journalism going.

I only hope it takes something less than a national tragedy to re-invigorate the American people's concern for good governance.

Re:80% of newspaper income from legal notification

[Animats]

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.

I stopped carring about newspapers

[rsilvergun]

when they stopped caring about me. When was the last time a story like Watergate broke? When was the last time the papers challenged the powers that be? Sorta hard to do that when the powers that be own you lock stock & barrel. Why would I pay 50 cents/day to read the same corporate drek and propaganda I can get for free in their advertisements?