Recovering Journalist

More Hilarity

If you haven't seen Simon Dumenco's guide to the language of Web 2.0 in Ad Age, it's hilarious. Samples:

Kindle -- v. To burn your old business model. 
Micropayment -- n. 1. A media-industry salary.
Revenue -- n. A legendary mythical entity similar to the Loch Ness Monster or Sasquatch.

You May Also Have Noticed There are No Phone Booths Left for Clark Kent to Change Clothes In

Awesome cartoon here from David Horsey of SeattlePI.com

(which just adds delicious irony).

How Sick is The New York Times?

I really hesitate to bring this up, because it seems to be firmly in the realm of the unthinkable. But could we be looking at the near-term demise of The New York Times, at least as we know it?

This sort of speculation cropped up earlier this year, in a provocative article in the Atlantic, where Michael Hirschorn crunched the numbers and concluded that Times could be bankrupt by May. That seemed ridiculous, and his theory was debunked by many other analysts and strongly denied by the Times Co. itself.

But what if Hirschorn actually was on to something?

In the past few months, the Times Co. has taken several steps to shore up its financial position, including selling part of its New York headquarters building, taking in a $250 million investment from Mexican billionaire Carlos Slim, eliminating its dividend, putting its small stake in the Boston Red Sox up for sale (it would also like to sell the Boston Globe, I hear, but can't find any takers, even at a discount) and, today, laying off 100 workers and announcing "temporary" wage cuts for managers—and asking its unions to consider similar cuts.

Those are all prudent moves to conserve cash and raise funds. But they also seem to indicate a certain sense of financial panic in the Times' executive suite. In fact, some of these moves look a little desperate. Selling real estate at the bottom of the market? Not always a good idea. Temporary pay cuts? Wanna bet they're temporary? Eliminating the dividend? That might make some Sulzberger family members think twice about their longtime aversion to selling the company. Borrowing $250 million—at a whopping 14 percent interest? Hell, Visa offers better rates. Tony Soprano, too. 

At the same time, the Times' core businesses continue to struggle. The job and salary cuts today indicate the company is still trying to get its costs down. Advertising sales, in the current recession, are lousy. The company's regional papers, generally clustered in Florida and California, are in Ground Zero of the mortgage meltdown. About.com, once seen as a savvy diversification move, has the same ad revenue problems as all dot.coms, though it stands a better chance of improvement over time than the traditional publishing business. In short, cash flow—which the company needs to make its debt payments—is at a trickle, and will be for a while. Hence some of the more drastic moves we've seen.

I'm certainly not saying the Times Co. is about to go bankrupt. Certainly not in May—the building deal and the Slim investment specifically averted the financial problems Hirschorn predicted in the Atlantic, though the Slim deal set up nasty longer-term obligations that will eventually have to be dealt with. But you have to wonder what the outlook is for the Times over the next year or two, as these problems continue, more debts come due, and it runs out of things to cut or sell.

As the nation's greatest journalistic institution, the Times seems like it should be impervious to the newspaper industry's problems. But it's anything but, as we're seeing. To survive, it may require an endgame that would have been all but unthinkable just a couple of years ago: a sale to somebody with deep pockets like Rupert Murdoch, or the creation of some sort of tax-exempt, non-profit public trust—and that's problematic all by itself—to keep the paper going. Maybe somebody like Warren Buffett or Bill Gates would step in to buy the newspaper and preserve its legacy and standards, even if they have to run it at a loss. 

Who knows? But astonishingly, it's starting to look like something big has got to happen to save The New York Times. It's showing way too many financial distress signals for comfort.

PS: Vanity Fair has a long takeout on the state of the Times, and doesn't like what it finds.

You Still Have to Break Even

There's plenty of excellent commentary challenging Sen. Benjamin Cardin's proposal to give non-profit status for newspapers, and there's not a whole lot I can add. But I'll contribute this sardonic line from a publisher I talked to recently: "What's the point? We're already non-profit."

And that's the point. As I've pointed out before, even non-profits have to break even (just ask the non-profit-owned St. Petersburg Times). Losing money is eventually a dead-end game. And many papers are losing lots of money. What they need to do is fundamentally rethink their business—not look to the government for strings-attached handouts. 'Nuff said.

This Is Why You Have To Think Outside The Box

I'm hoping to stay within the Fair Use boundaries by just showing a clip of this great AP photo, available in full here on Boston.com, of a newsbox graveyard outside San Francisco. There isn't much else to be said about this one...

Point-Counterpoint on Newspapers. Rinse. Repeat. Endlessly

There seems to be no end these days to the bloviation about the past, present and future of the newspaper business (yes, I do my share). Three good examples today, of varying quality:

From the dinosaur dept., Mark Morford on SFGate rails against the dying of the (printed) light, gripes about post-newspaper visionaries like Clay Shirky and basically argues that only journalists—especially newspaper journalists—can be and should be allowed to commit journalism:

Maybe the revolution won't be so bad. Maybe in the next few years (or rather, months, at the current rate) we'll all come to realize the enormous value of having established editorial voices in the community and a semblance of cohesiveness to this madcap storyline, and maybe we'll come to appreciate the true value of pro journalism and journalists alike, in whatever medium they appear on.

Sigh. Fortunately, this brings a smart response from Fernsehtek:

The playing field changed and newspapers arrogantly stood on their laurels and reminded us all that they are in fact meaningful and that we really ought to remember to read them.  Don’t be mad at the geeks, be mad at the newspapers.

But trumping them both, in a much more constructive fashion,  is an even smarter look forward by Dan Conover in the Xark blog at what may come to be, replete with an excellent laundry list of predictions, and concluding:

"What's next?" is a decade of experimentation, opportunity and chaos. Some of the funding sources may appear exotic, but most of the “successful” business models (in this instance, "successful" means capable of sustaining a journalistic enterprise) from the coming decade will be little more than smart outfits that figure out how to accomplish their mission while keeping their costs down. Doing this will require a great deal of cooperation, plus a willingness to enter into relationships that our Old Media ancestors wouldn't consider.

Old Media executives don't recognize many of these alternatives as valid, but that's likely because they're looking at media business models from the perspective of “What can save my company?” But that's not the question we're asking.

And finally, I think we can safely expect that this diverse, open-source, networked-media future is going to be radically reorganized within the decade by the rise of information technologies that many news-media competitors will not be able to replicate. It is possible, if not likely, that many of the “successes” of 2012 will be swept away before 2020.

So when people ask me, “What should I do to prepare for the future?” I suggest they just wrap their brains around this idea: The current meltdown is just a warm-up act.

Maybe if we could harness all of the energy being spent arguing about whether professional journalists are still relevant (they are, but not in the ways we currently know them), whether newspapers are doomed (they are, at least the larger ones) and whether they can be replaced (yes, but the replacements will be much more complicated and sophisticated, as Conover hints), we could spend more time trying to bring the good ideas of Conover, Jeff Jarvis and others to life.

Newsday Throws Itself Off The Paywall Cliff

Newspapers have enough problems right now without trying to deliberately (as opposed to accidentally) cripple their Web businesses. But Newsday is going to try.

As you may have heard, Newsday is going to be the first big daily to try to hide its online content behind a pay wall. The paper is "transforming the site into a locally focused cable service," as Reuters put it, and that phrasing is scary all by itself, given the lack of business and marketing acumen typically shown by your average cable company.

Newsday, of course, is owned by a cable company, Cablevision, and that probably explains a lot about this foolhardy plan. Unlike other papers that are said to be contemplating a subscription model, Newsday has a unique situation: the majority of its local readers on Long Island access the site through their Cablevision internet accounts. So, through the twisted logic of cable executives, that should make Newsday just another channel on the system, kind of like HBO. "We plan to end the distribution of free Web content and make our news-gathering capabilities a service for our customers," Cablevision COO Tom Rutledge says.

Oh my. Good luck with that.

So far, they're not releasing any details. Will the newspaper's Web site be free to Cablevision subscribers but charge fees to anybody else? Will the Web site be an add-on to Cablevision's subscribers cable fees, like HBO or Cinemax? Will they find some way to bring The Sopranos back in print form? Will they send The Sopranos to readers' homes to try to force them to pay for the Web site? The mind boggles.

The problem, of course, is the same faced by most newspapers contemplating Web subscriptions: The resulting loss of mass quantities of Web traffic has the ugly side effect of killing the site's advertising business. (Expect Newsday.com to lose 90 percent of its traffic after it starts charging for access.) And it's pretty much impossible to charge enough for Web subscriptions to make up the difference, especially when most of what can be found on a newspaper's Web site is available elsewhere on the Web. No paper is that exclusive.

Newsday's always had a nice niche as the voice of Long Island, and that works fine in print (and would seem to at least inspire the Cablevision cable TV bundling concept). But online, the paper's Web site, like all other papers' sites, has a broad geographic audience. In fact, a huge amount of Newsday's traffic comes from visits to its popular Walt Handelsman animated cartoons. They're nice cartoons, but will all those visitors pay for them? I think not.

Cablevision, of course is desperate. Last year—geez, was it only last year?—it outbid Rupert Murdoch to buy Newsday from Tribune Co. for $650 million. A couple weeks ago, Cablevision wrote off $402 million of that purchase. Nice investment there, Cablevision. (That giggling sound you hear is Murdoch, the happy loser.) 

The plan to charge for subscriptions to Newsday.com—or whatever paywall scheme Cablevision is cooking up—is 

just as bad a business decision. Maybe Cablevision would have been better of trying to figure out how to improve the customer service for its cable system, rather than trying to drive customers away from its newspaper.

Paperless in Seattle

The bad news: The Seattle Post-Intelligencer publishes its last print edition tomorrow. The good news: Hearst, after needless dilly-dallying over what should have been a fairly obvious decision, has announced that it will continue SeattlePI.com as "the leading news and information portal in the region."

Hearst Newspapers President Steven Swartz says the post-newspaper site "isn't a newspaper online—it's an effort to craft a new type of digital business with a robust, community news and information Web site at its core."

Hopefully, that includes lots of aggregation, reader engagement, social tools, user-generated content and other Webby features that will distinguish it from a newspaper-on-a-screen. If Hearst can use this opportunity for some bold experimentation in what a local news-based online site can become—and find an ad-based business model to support it—this could be a watershed moment in new media, and a model for other publishers to follow as the presses begin to go silent. Godspeed.

How Low Can Newspaper Stocks Go?

If you bought a copy of the national edition of the Sunday New York Times this weekend, guess what? That $5 newspaper cost more than one share of New York Times Co. stock, which closed on Friday at $4.25. (The New York edition of the paper is $4.)

That's just one illustration of how dramatically newspaper stocks have dropped in the past few months, accelerating a steep and steady decline that began in 2007. Indeed, newspaper stocks have dropped by an average of 77 percent just since the overall economic decline began in earnest in mid-September. That's double the 38 percent drop in the broader S&P 500 stock indicator in that six-month period, striking proof that the newspaper industry is doing even worse than the overall faltering national economy. 

And those latest figures, all as of the close of business on Friday, actually represent an improvement from the record lows most newspaper stocks touched earlier last week, before the market's latest attempt to rally.

Wait, there's more (or less): The combined market value of the nation's publicly traded newspaper companies (not counting the industry's two diversified behemoths, News Corp. and The Washington Post Co.) is now just over $1.3 billion. 

That means that a package of big industry names like Gannett, McClatchy, Lee Enterprises, AH Belo and Gatehouse (and a few others), comprising dozens of daily and weekly newspapers, could be purchased today, in total, for just a bit more than the $1.1 billion the New York Times Co. paid for a single newspaper, the Boston Globe, in 1993. (Barclays Bank reportedly recently valued the Globe at just $20 million.) That same group of companies was worth $7.2 billion in September. Most of these newspaper stocks also cost much less per share than the papers the companies print.

There aren't really any surprises here—everybody in the newspaper business knows that things are bad, and that's why layoffs abound and several companies have moved into bankruptcy protection. Overall, most newspaper stocks are down more than 90 percent in the past couple of years. But the latest numbers illustrate just how bad things are—and how much worse newspaper shares are performing than the stock market overall.

Maybe that $5 Sunday Times will appreciate in value somehow as a collectible. In that case, it would be a much better buy than a Times stock certificate.

PS: The decline of the newspaper industry is not an American-only phenomenon. Here's a report from Britain that sounds eerily familiar. If anything, mid-sized newspapers are being hit harder there, but that partly reflects differences in how the two country's newspaper markets work.

Facing Up to Reality

This excellent post by Clay Shirky about the mess newspapers are in—and the compound leadership, vision and business failures that helped get them there—is all over the place today, but in case you haven't read it, it's really good.

Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven’t been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.

When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of its most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.

Absolutely essential reading.

PS: This, from Kathleen Parker in The Washington Post, is an example of the kind of fuzzily nostalgic printie nonsense that Shirky's piece is talking about.