FT on the Future of Newspapers: Nyah, Nyah

Almost every day, I find another newspaper publishing another editorial or letter claiming that everything’s OK with papers or that society is not OK without them.

Now The Financial Times offers an editorial on the future of newspapers that starts off sensibly and unemotionally. But then it ends up, as I read it, nya-nyaing other papers essentially saying that we can charge and if you were any good you could, too.

….One potential suitor has decided against entering the print fray – Google, whose Google News aggregation service is sometimes unfairly blamed for causing papers’ problems. Eric Schmidt, Google’s chief executive, told the FT that Google will help papers to adapt to the internet rather than buy them.

The degree to which the travails of papers are a threat to an informed democracy can be exaggerated, particularly by journalists. The internet has made print less profitable but has also made new forms of information-gathering and commentary possible. Bloggers get a bad press but low-cost publishing helps new sources to emerge.

The profitability of papers in the late 20th century, when they had a monopoly of classified advertising, was an anomaly. Before that, newspaper barons owned them more to wield power than nurture democracy, while the 18th-century press was as partisan and rambunctious as any bunch of bloggers.

That’s great: sensible talk at last from a newspaper about the newspaper business. You’d expect that from a financial paper. But then things shift as the FT acknowledges that “Business papers, including the FT, have had more success in charging online readers than general-interest publications. … Perhaps some of the reporting done up to now by for-profit papers will in future be funded by foundations or trusts. But the industry should not lose faith in the free market.”

Still, bravo. But then the kicker:

When people really want or need something, they will pay for it, one way or another. If today’s publishers cannot convince their readers to do so, they will be overtaken by others that can.

Sigh. You’d think that the FT of all papers would see that there are many models for supporting journalism, not just payment from readers or foundations. The FT itself also makes money from advertising, of course, and from merchandise sales and from holding events. Rather than sticking a twig in the eye of papers that aren’t as lucky as the FT to be able to charge, it would have been more helpful if it had called for more innovation in more business and revenue models.

Comments

[Sam Stew:]

Dear Sirs:

I am wondering why somebody does not
start a 'paid content', USB smart card
standard for newspaper and magazines,
which will operate sort of like Apple's
I-Tunes (R) brand of e-music distribu-
tion on-line Web store. Instead of
e-music, this on-line store will offer
e-newspapers and e-magazines, or,
any type of 'paid content',
family key encrypted cipher-text,
encrypted downloads of mostly
e-newspapers and e-magazines.

Pls. see my blog above for more details.

Txs,

Sam Stew

May 28 02:50 AM

[NP Refugee:]

Until there is a true introspective approach for the companies that own newspapers and produce/distribute content, I really doubt there will be a solution for them. And a solution may not exist--except to usher the old out the door in exchange for the new. Town criers really aren't in great demand anymore either, come to think of it (a wink to the Newspaper Nexters who run around talking about how no medium has ever fully replaced another medium--I beg to differ).

The real issue here is that there are readily available substitutes in a fast-paced information age that have quickly come into the market, at a pace no other medium has ever experienced. Newspapers are not only having to deal with better mousetraps, they aren't really used to even having to contend with another mousetrap at all.

But to lay it all at the feet of content points to just one problem. A true examination would find that the assault on the traditional newspaper model is coming from several directions. Delivery--the speed of news to a desktop is superior to someone driving by a house at 5:30 AM and dropping what's already stale in the yard (and entrusting the most critical customer relationship link to the weakest in the chain--another topic altogether); News--so many sources for what the newspaper used to claim as a local franchise are available in so many places. We're talking the exact editorial content--wire stories, comics, syndicated editorial. The newspapers have lost their exclusivity in the local market. Perhaps the FT can charge because a large volume of what they have as their franchise is exclusive. Exclusivity is a conversation that has to take place within every newspaper in the country, because that which isn't exclusive has far less value in the current environment. I've never heard a newspaper talk about their exclusive content, because to them, they've considered all of it exclusive to date. No longer the case.

And then, there's the substitution of their lifeblood: classified advertising. Craig Newmark may have done a lot more to damage newspapers than Google ever thought about in their news aggregation. Even in the mid nineties, we used to calculate and project the cost in operating profits from just a 15% loss in classified ad volume, were it to occur. As I recall, the loss in overall newspaper profits was calculated to be around 35%, since classified advertising was such a high profit margin sector of the business. Even then, we were contemplating the peril and knew trouble was brewing. Remember a little thing called "Classifieds 2000?" And what about Microsoft's Sidewalk project? They were just slightly ahead of their time but they got our attention. Craig Newmark, however, was right on time.

So the problems are, and have been coming from all sides, not just one, creating a perfect storm for newspapers. Jeff, while your primary focus is on the news/journalism/content side of the equation in your piece, the issues are far broader and more complex. Thus, any solution will likely be the same. But it really starts as a discussion in market microeconomics, readily available substitution, and exclusivity.

Dealing with those as fundamental problems are where the solution, if one exists, lies.

May 28 10:19 AM