Thursday, September 4, 2008

Are Newspapers Doomed?

As a continuation of yesterday's post inaugurating this blog:

Are newspapers doomed? It looks that way. The evidence is being chronicled daily in Paul Gillin's blog NewspaperDeathWatch. It features a list of newspapers large and small that have already shut down operations (among them, just in recent days: the San Juan Star in Puerto Rico, the Noblesville, IN Daily Times, and the Burley, ID South Idaho Press). Every day there is news of layoffs and buyouts in newsrooms and other departments—thousands, cumulatively. Around the country the "news hole"—the amount of space earmarked for news and features—is shrinking dramatically. And newspaper firms are reporting double-digit revenue declines every month and every quarter.

Of course, there's a recession on; that's affecting ad revenue and operating profits; and many newspaper firms are beholden to owners or Wall Street investors that want, or need, profit margins that have historically been high. The current slashing is a last-ditch effort to preserve those margins and, in some cases, to comply with debt covenants. The problem is that many newspapers may be damaged so severely by these cuts that readers will abandon them in droves, followed by some of the remaining advertisers, setting up a death spiral from which they can not recover.

But this crisis doesn't stem purely from the current economic downturn—it has been decades in the making.

Back in the 1970s and early 1980s, newspapers noticed that younger people weren't reading newspapers as much as their elders. The industry responded with youth-oriented features and a Newspapers-in-Education program, hoping to inculcate the daily newspaper habit. And, the philosophers among us said, "Look, when these kids grow up, get married, buy houses, have kids in school, and pay taxes, they'll read newspapers because they need to know what's going on." And indeed, some of them did. But the experience since the 1970s is that each succeeding age cohort reads newspapers less than the prior cohort. (Links: 1970-1997 trend, Sunday newspapers (PDF), 1967-1997 trend, daily newspapers (PDF), 1999-2006 trend). Moreover, as each cohort ages, it tends to reduce its newspaper readership. This is true even of the oldest age groups. Nothing the industry has done has made the slightest dent in these inexorable trends.

The industry now tends to point to the internet and suggest that it is both the problem and the opportunity—younger people read newspapers less because they get their news online, and the industry is benefiting from rapid growth in online readership and revenue.

But, hold on: the age-cohort readership trends started in the 1960s, not in 1995 or so when the online readership started to make an impact. This problem has been a long time coming. As the readership figures linked above show, around 1970, the nation was still fairly monolithic in its readership habits—all age groups were heavy newspaper readers with rates ranging from 70 to 76 percent.

Here's my view of what happened to that solid franchise. Go back to the Great Depression of the 1930s. Everyone was in the same boat; the country was unified in its interests and concerns; everyone read newspapers and listened to radio to know what was going on. This continued through World War II, the Korean War, the early stages of the Cold War, and the Vietnam War. But the Baby Boom generation changed the game. With greater prosperity and less international turbulence to worry about, interests began to diversify enormously from the 1970s right through the current decade. It was a luxury we could afford—more cable channels, more movie screens, more books and magazines focused on more niche interests, more sports franchises, more highways to go to more malls, more resorts and more entertainment venues, more exotic foods on supermarket shelves, more diversity in every possible direction.

Daily newspapers can no longer reflect all this diversity in their pages. The idea of a single mass medium that everyone in a community or metropolis would want to read is no longer logical, any more than we are all likely to watch the same television programs or tune to the same website or radio station.

The World Wide Web, of course, has only accelerated this trend of diversification into niche interests. It was not the cause of the decline of newspaper readership, but it's not the solution, either.

So, why are newspapers doomed? Because, within a few years, the average newspaper reader will be of retirement age, and only the 65-and-up age cohort will still have a majority (but barely) that reads a daily newspaper. That's not a sustainable business model.

No newspaper or newspaper group has articulated a realistic strategy in response to this. Uniformly, they proclaim that while their online operations are growing and are important, print is still the foundation of their business. And that's a problem, because if newspapers didn't exist, no one in their right mind would launch a business that revolves around putting words and images on a pulp paper product every night and sending drivers in cars and kids on foot to deliver it door to door every morning. Can you imagine an angel investor or venture capitalist interested in that idea?

To have even a chance of survival, the mindset of the industry needs to become: We are in the business of publishing information content continuously on our web sites; every 24 hours (for now, and this may ultimately change to once or twice weekly) we gather some of that information into a printed product and distribute it, but our business is focused on and driven by our online operations. Right now, I don't see anyone in the industry articulating this direction unequivocally.

In the next posts, we'll start to explore: News after Newspapers—innovative business models, technologies and practices that will change how news is delivered and consumed.

1 comment:

Unknown said...

Newspaper penetration began to decline in 1965. Not coincidentally, this was the same year mainline church membership began to decline. Oh, and it's the same year club membership (Lions, Elk, Masons, bowling leagues) began to decline.

Newspaper people like to think this is all about newspapers. It's not. It's about a culture shift that brought about a new generation of people who had little interest in established institutions. Mass organizations (Methodists, the Optimists) shrank. Mass production businesses (i.e., newspapers) declined or went overseas as succeeding generations wanted their stuff and their lives designed just for them. Lots of literature on all this, but newspapers rarely look outside themselves for the answers...or even the explanations.
bill bishop
austin, tx