Recovering Journalist

It's the Future, Stupid

In an interview in the new issue of Portfolio, Netscape founder and Silicon Valley smart guy Marc Andreesen has some radical advice for The New York Times (and all newspapers):

If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business—shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing. 

The financial markets have discounted forward to the terminal conclusion for newspapers, which is basically bankruptcy. So at this point, if you’re one of these major newspapers and you shut off the printing press, your stock price would probably go up, despite the fact that you would lose 90 percent of your revenue. Then you play offense. And guess what? You’re an internet company.

Sounds crazy (well, maybe not to the Christian Science Monitor), but he's right. Yeah, I know the argument–there's not nearly enough internet advertising revenue to support a paperless operation. True that, but how quickly will that change if the entire organization is focused on the online product and internet-derived revenue? Newspapers haven't even scratched the surface on potential online advertising revenue, and that's partly because they're still focused on print. (I'll write more about that in a few days.)

This is the kind of really bold, out-of-the-box thinking that newspapers need desperately. With print circulation and advertising (and stock prices) tumbling, playing defense just isn't working.

PS: The last time newspaper companies listened to Andreesen, a couple of forward-thinking ones made a lot of money as early investors in Netscape in the mid-1990s. On the other hand, I know of at least one newspaper company that all but threw him out of the building when Netscape made its pitch. Oops!

Circulation: The Slippery Slope

The latest newspaper circulation numbers are bad enough. But they get even worse if you take a step back and look at what's happening to circulation over an extended period of time.

That analysis shows that newspapers–especially most large metros–are losing circulation in ever-larger chunks. Alan Mutter has a good historical perspective on this, pointing out that cumulative U.S. daily newspaper circulation has dropped 23.6 percent over the past 24 years, even as population is growing. As Alan points out, the overall decline has gotten worse over the past five years.

That's the good news, believe it or not. Here's the bad: If you look at large papers individually, you see that many of the declines have been even steeper, especially in the past couple of years. I charted this a couple of years ago, and I've updated that table with the latest circulation numbers:

For some of these papers, a 23.6 percent drop would be good news. Look at the Atlanta Constitution, Boston Globe and Newsday over the past seven years–they're all down by more than 30 percent, and the San Francisco Chronicle is right behind them. Every paper on the list–except the national papers, The New York Times, Wall Street Journal and USA Today–has seen double-digit circulation declines since 2001; most have double-digit declines, or close to it, just in the past two years. 

Longer term–back to 1996–the news is similarly bleak. For the most part, aside from the big national papers, these large metros have seen huge dropoffs in circulation; the exceptions, such as they are, are the Arizona Republic, which was still growing rapidly in the early 1990s but has since peaked and begun declining; and the New York Post, which was still growing circulation until a couple of years ago, and is now sliding along with the others.

Otherwise, the 1996-2008 numbers are pretty ugly, and they echo–if not amplify–the broader trends that Mutter describes. The Boston Globe, Los Angeles Times, Newsday, Philadelphia Inquirer and San Francisco Chronicle are the big losers, but papers like the Chicago Tribune, Cleveland Plain Dealer, Newark Star-Ledger and Washington Post all have posted hefty circulation declines in the past 12 years.

As the chart shows, the declines over the past two years are disproportionately large compared to the seven- and 12-year spans–again, despite growing population and, until recently, a healthy economy. In other words, the circulation slide is worsening. It's hard to see, especially with the economy in the tank, any sort of moderation of the downward trend. And that, in turn, chases off advertisers and leads to even more budget-cutting pain.

A couple years ago, a sunny-side-up newspaper editor said to me, "Well, we hope that circulation just declines to its natural level, and then plateaus." There's no sign whatsover that it's doing that. If anything, the decline is accelerating. What if the natural circulation level hypothesized by that editor is, shudder, something like zero? At the rate things are going, we may find out soon.

Stop the Madness!

At a time when every day seems to bring news of another newspaper or chain making significant cutbacks, it's preposterous that some editors aren't taking a hard look at coverage and throttling back when it makes no sense to send reporters and photographers to cover a story that's available in many other places. But it's still happening. Three recent examples:

• The Washington Post sent 10 staffers–eight reporters and two photogs–to Detroit Sunday to cover the Redskins game against the Detroit Lions. The winless Detroit Lions. Not exactly the Super Bowl (and I dare say that level of staffing would have been excessive for a home team in the Super Bowl). 

• There are five papers covering the Obama campaign fulltime: The New York Times, The Washington Post, The Wall Street Journal, the Chicago Tribune and The Los Angeles Times. Three of these are national papers that probably can justify fulltime campaign coverage. The Tribune is Obama's hometown paper. That's understandable. But The Los Angeles Times? Huh? Pssst–your corporate sibling, the Tribune, is on the story. Use their copy. It doesn't cost you a cent, and readers don't care. You really aren't adding anything by covering the Obama campaign yourself. Especially when the LA Times newsroom was just hit with yet another round of job cuts.

• One more: I heard today that the Newark Star-Ledger had five people at the Olympics–at the same time that owner Advance Publications was threatening to close the paper because of massive losses, the closing averted only when 40 percent of the newsroom (among others) took buyouts. So why was anybody from the Star-Ledger in Beijing? For a victory lap?

I wrote about this silly tendency when there were a whopping 15,000 journalists covering the political conventions. This sort of "flood the zone" massive journalistic overkill on events for which there is plenty of other coverage available is just egotistical and wasteful. At a time when people are losing jobs in newsrooms, it's sinful. 

Monitoring the Future

The Christian Science Monitor will become the first significant newspaper to shut off its printing press when it goes all-Web (plus a weekly magazine) in April. 

This is a landmark event: We'll see many more like it in the not-so-distant future. As Monitor Editor John Yemma says, "We have the luxury–the opportunity–of making a leap that most newspapers will have to make in the next five years." He's probably optimistic.

Ken Doctor has some good analysis of the decision.

"Another Nail in the Coffin"

Just in case you haven't seen the latest bad news about newspaper circulation:

USA Today -- 2,293,310 +0.01%

The Wall Street Journal -- 2,011,999 +0.01%

The New York Times -- 1,000,665 -3.58%

Los Angeles Times -- 739,147 -5.20%

Daily News, New York -- 632,595 -7.16%

New York Post -- 625,421 -6.25%

The Washington Post -- 622,714 -1.94%

Chicago Tribune -- 516,032 -7.75%

Houston Chronicle -- 448,271 -11.66%

Newsday -- 377,517 -2.58%

The Arizona Republic -- 361,333 -5.51%

San Francisco Chronicle -- 339,430 -7.07%

The Dallas Morning News -- 338,933 -9.28%

Boston Globe -- 323,983 -10.18%

Minneapolis Star Tribune -- 322,360 -4.26%

Newark Star-Ledger -- 316,280 -10.40%

Chicago Sun-Times -- 313,176 -3.94%

Cleveland Plain Dealer -- 305,529 -8.58%

Philadelphia Inquirer -- 300,674 -11.06%

Detroit Free Press -- 298,243 - 6.84%

The Oregonian -- 283,321 -8.45%

Atlanta Journal-Constitution -- 274,999 -13.62%

San Diego Union-Tribune -- 269,819 -3.00%

St. Petersburg Times -- 268,935 -6.88%

Sacramento Bee -- 253,249 -4.22%

Industry totals, courtesy of Editor & Publisher: down nearly 5 percent, April-September. Good comments here from analyst Lauren Rich Fine (who's the source of my headline) and here from Ken Doctor. There's not much else to be said, except to note that these numbers essentially predate the stock market crash and economic downturn. The next set of numbers is likely to be even more devastating.

Time to Rethink the Times Co.?

These are very tough times in the news business, and they require some very tough thinking. Notorious Wall Street analyst Henry Blodget offers some tough prescriptions for The New York Times Co., including:

• Sell the glitzy Times building
• Sell the Boston Globe and stake in the Red Sox
• Eliminate the dividend
• Shrink, sell or shut the Times Regional papers
• Reduce the size of the Times newsroom by 30 percent
• Significantly reduce debt (duh)
• Put into place a long-term print-to-online transition plan

I'm not sure I agree with the suggestion of deep newsroom cuts, but the other ideas all make a lot of sense. And the last one is long overdue–and not just for the Times. This is an interesting read, and it speaks volumes about the state of the entire industry that the company that should be its gold standard is now rated as junk-bond debt.

What's Free Is Free

I've posted before about The Washington Post's occasional attempts to convert me, as a Sunday-only subscriber, to a daily customer by offering me the Monday-Saturday paper for free. I've always turned down the offer, because I read the Post online and my wife didn't have time to deal with the print edition.

But Jane retired recently, and the election and holiday sales are coming up, so when The Post called last night with its latest free daily offer, I finally bit. Good for the paper–it's added a subscriber to claim for advertisers (and the ABC) for the next reporting period, even though The Post won't collect any more money from me for the additional papers being delivered.

However. The free subscription ends in January. And I don't have to do anything to end it. The paper will just stop coming. That's fine--what's free is free, and I don't have to worry about cutting it off as the papers start to pile up again. But what's in that deal for The Post? Why on earth wouldn't it make an offer that says, "We'll give you the paper for free for three months, and then switch you to a paid daily subscription unless you tell us otherwise?" That would benefit the paper, while putting a bit of an onus on me. 

What the paper is doing, in a sense, is a noble "opt-in" strategy, not forcing something on me I don't want, I suppose. But it strikes me as a lost chance to lock me in as a longer-term paid daily subscriber. (I'm sure I'll be solicited in January, but why not seal that deal now?)

I don't get it. I understand padding the circulation numbers a bit for holiday advertisers. But I don't understand why The Post wouldn't want to try to extend that subscriber relationship–and get me to pay for it.

Redesign Reax

Great post here from Andy Bechtel on common reader reactions to newspaper redesigns. A recurring theme: It looks too much like USA Today. Very funny.

Redesigns are hardly a panacea for newspaper problems--especially not if the underlying content isn't significantly rethought as well--but editors tend to overreact to criticism from a handful of readers. The heck with USA Today--if anything, most redesigns simply don't go far enough. And that goes double for online site redesigns, where most newspapers are still stuck way back in the last decade.

R.I.P. IHT.com

Here's a twist: A newspaper killing its Web site but keeping its print edition. At least for now.

That's what's happening at The New York Times-owned International Herald Tribune, where the Times Co. is closing the paper's IHT.com site, according to Forbes, and redirecting the traffic to NewYorkTimes.com.

Normally, killing a newspaper Web site would make no sense–but in this case, it does. The entire IHT operation–print and online–is an anachronism. It made sense maybe 20 years ago to have an English-language publication available overseas, where travelers and expatriates had little choice. The IHT had a near-monopoly then. But print competition from overseas editions of The Wall Street Journal, USA Today and the Financial Times undercut the IHT's print operation, and the Web rendered it essentially moot, by providing up-to-the-minute access to any publication around the world. 

I never did understand why The New York Times didn't rebrand the IHT as a European edition of the Times when it wrested the paper away from co-owner The Washington Post Co. a few years ago, but this step seems to indicate that the Times finally is heading in that direction. IHT.com, as a separate brand that mostly carried New York Times content, didn't really make much sense as a standalone site. It seems likely the company will come to the same conclusion about the print edition as well. But in the meantime, it's the Web site that gets shuttered first.

I have friends at the IHT and did some consulting for the Web site a few years ago, so it's very sad to see IHT.com go. But in the current environment, newspaper companies need to take a coldhearted look at everything and decide what makes business sense. IHT.com didn't.

PS: Ken Doctor and Steve Yelvington have good takes on this news, as well.

The End of Dailies

Hastened by the economic and credit crisis, we are moving ever closer to a moment of catastrophe for one or more major daily newspapers. Sometime in the next few months, we're going to lose one–or it's going to be changed so radically as to be barely recognizable under the current definition of daily newspaper. And given the lemming-like tendencies of the newspaper industry, once one newspaper goes, others will quickly follow.

Call it the End of Days–or of Dailies.

This calamity could take one of several forms, ranging from a significant change in presentation of a paper to outright extinction. Critics of recent newsroom cutbacks would argue that staff reductions already have significantly changed the quality and personality of many papers. But we ain't seen nothing yet. Here are some scenarios, in ascending order of severity:

Shrinkage I–We've already seen newspapers beginning to cut back on the number of sections they publish–the New York Times recently shrank to four from six sections, and the new Chicago Tribune redesign is down to three sections. And the Tampa Tribune just switched to a single-section design. The section-shrinkage strategy is well underway. Taken to it logical end, this could mean that the printed newspaper eventually becomes a brief overview of the day's news, for readers who still want a print edition, with the bulk of the news report (and hopefully advertising) shifting online.

Shrinkage II–Most major daily papers are broadsheets. But tabloids are cheaper to print. In Europe, many papers have switched from broadsheet to tabloid size ("format" may not be the right word!). Look for it happen here, to save production and distribution costs. Indeed, the Lafayette, Ind., Journal & Courier switched to the tabloid-like Berliner format two years ago. This is the logical extension of the inch-here, inch-there page trims that many papers have implemented in the past couple of years to cut costs.

Shrinkage III–When is a daily newspaper not a daily newspaper? When it only publishes a handful of days a week. Don't laugh; I hear it's being serious discussed at at least one big paper. Imagine cutting back to, say, Sunday, Friday and Wednesday circulation, to capture the biggest advertising days while eschewing the others. We've seen the first vestiges of this–papers killing their Saturday or even Monday editions. But some paper may decide that the cost-cutting numbers work to switch to three or four days a week. Or even Sunday-only. The paper's Web site would handle the daily news. (What a concept!)

Bankruptcy–Unable to cut costs as quickly as revenues are falling, facing the same economic and credit challenges that are roiling the rest of American businesses (and particularly vulnerable because of concurrent cutbacks by strapped advertisers) and trapped, in many cases, in overleveraged loans taken out to buy newspapers back when things looked better, many newspaper companies have hit a sort of perfect storm of financial peril. Owners in Minneapolis and Philadelphia already are behind on loan payments. Papers in San Francisco and Newark are bleeding tens of millions of dollars a year (and those are just the ones we know about). McClatchy, still suffering from massive indigestion from its acquisition of Knight Ridder, just restructured its debt. Newspaper company corporate debt is facing downgrades in an already tough credit market. Stocks in most publicly owned chains are plumbing all-time lows–or worse, being delisted by stock markets. These are not good signs. Some–though not all–of these publishers are on the razor's edge, and we're likely to see bankruptcy filings by one or more in the next few months. It may be all but inevitable for those carrying massive amounts of debt. That, in turn, could set off whole new rounds of cutbacks. Best case, maybe: Vulture investors move in to grab newspaper assets for pennies on the dollar. Trust me, they'll run them as cheaply as they can, and today's reduced budgets may look generous.

Shutdown–Some publishers may choose to just turn out the lights, shut down the presses and lock the door. That's exactly what Advance is threatening in Newark. Not a lot of people think Hearst will continue to tolerate $1 million weekly losses in San Francisco. There are doubtless other bleeders we don't even know about. It's tough to hear, but make no mistake: Some papers will go out of business.

Yes, this is scary stuff. It's not getting better, and contrary to William Dean Singleton's cockeyed optimism, an improvement in the economy–whenever it comes–won't rescue many newspapers. The fundamental structural shifts in the industry's business model are too profound. Newspapers that emerge from this crucible will be leaner, less frequent and Web-centric–and they may not even be available in print. Some will survive, but some won't. That sounds pessimistic–but I haven't talked to anyone recently who follows the industry closely and sees it any different. Everybody agrees: The next few months will be bloody–bloodier than anyone could have predicted even a few months ago. We're facing the beginning of the End of Dailies.

PS: Philip Meyer, who wrote "The Vanishing Newspaper: Saving Journalism in the Information Age," comes to similar conclusions.