The evidence of newspapers’ decline as a primary source of information in America is everywhere. My local paper narrowed to a tabloid size yesterday, following USA Today, Arizona Republic, and many, many other papers.
Essentially all newspapers have laid off significant portions of their staff. Some (like East Valley Tribune in suburban Phoenix) are printing three or four days per week, with Web coverage otherwise. Christian Science Monitor has gone digital-only.
Revenue for newspapers in Q1 2007 dropped 14% versus Q1 2006. That’s a huge decline in one year for a 100+ year old industry.
The First Cut is the Deepest
It’s game over for newspapers because nearly everything they offer can be had faster and for free online. This trend has been inexorable for many years. I managed a local Web site (www.azfamily.com – owned by KTVK-3TV in Phoenix) when the Dallas Morning News became the first newspaper to post breaking news online, before running it in print (Lewinsky, 1998). I’ll argue that the first shot in the eventual war of attrition on newspapers was fired that day.
Who’s Fault Is It?
The issue isn’t whether newspapers saw it coming. Or even whether they did anything about it. In fact, I’d argue that since that first online scoop, newspapers have done an amazing job in getting digital and doing it right. They’ve certainly done a much better job than their broadcast brethren (until perhaps very recently).
The core issue is that advertising revenue online is not commensurate with usage, which prevented newspapers from making the digital transformation profitably. Online is extraordinarily under-monetized when you look at $$$ per hour of media consumed and compare it to radio, print, TV, etc. eMarketer says online accounts for 20%+ of media consumption, but just 8%+ of ad dollars.
Additionally, the low (nearly non-existent) barrier to entry for online content has created insane downward pressure on Internet ad rates. There are 500 TV channels or so. There are hundreds of thousands of Web sites that take ads.
Plus, there isn’t much local “spot” market online, because with geo-targeting you’re often better off buying ads on a “national” Web site and targeting them back to the city/state you need, rather than buying ads from a more expensive “local” site.
No Better Ideas Exist?
Other than dramatically reducing the cost of content creation (which is what’s happening now), I’m not sure what else newspapers could have done. Much of their present problems regarding the inability of Web versions to replace ad revenue lost from paper versions is not really their fault.
To me, it’s poisoning, not suicide. For more on the future of newspapers, see this outstanding interview with Bill Keller, Executive Editor of the New York Times.
What do you think?
(photo by rumpleteaser)
