By Mike Gold, A retired entrepreneur living the dream in the Pacific Northwest.
We’ve all heard about the terrible shape newspapers are in. I thought it would be interesting to look at the reasons why.
In fact, it all starts and ends with that great disruptive force, the Internet. Like almost everything in life, economic forces are at the root cause of much of what happens.
Let’s go back, say 50 years and see. Many large cities had several (or more than several) newspapers. New York City, where I grew up had these:
- New York Times,
- New York Daily News,
- New York Post,
- NY World Telegram,
- Brooklyn Daily,
- Brooklyn Citizen,
- Brooklyn Eagle,
- Long Island Press,
- New York Herald Tribune, and others.
Some of these were afternoon papers, some morning. The idea was that in the early afternoon, you could go down to the corner store and buy the afternoon paper, which had news items that had occurred that morning.
The typical morning paper had stories that had happened, at the latest, the evening before. (A typical morning paper “closes” its last stories somewhere around 11:00 pm the night before.) Your morning paper is printed somewhere relatively close to you at 1:00 to 3:00 in the morning, picked up by drivers who deliver bundles to drop points from which individual drivers deliver it to your driveway or mailbox.
So this tradition started before television, on which you could see the “latest” news of that day each evening at 5:00 pm or so. My father would purchase the afternoon paper and read it before dinner.
Now what did these newspapers have that created the demand for them? Simple, look at what they are called: Newspapers. They brought you the latest information that the owners and editors of those papers thought you wanted to read about: Local city news, state news, national and international news. Very important as well was sports.
To pay over half the cost, they sold advertising. Both retail (called display ads) and classified. Display ads are the large ones for department stores and the like. The three most profitable advertising revenue sources for a daily paper were classified ads in these three areas: Help Wanted, Real Estate, and Autos (and other items) for sale. See those small “liner” ads generated a much greater revenue source than those large display ads.
Well what has happened in the past 20 years? The Internet! If you’re looking for a job, a used car, or a home for sale, where do you look today? Answer, on-line. As importantly, where do you get your “news.” For the younger demographic, the same answer: On-Line. With on-line web sites, you can see news that is up to the second. So over a single generation, newspapers have lost their raison d'etre.
Two things that have happened in the last decade or two, which have forecasted the fall off in circulation are:
1. Reduction in Web Width. This is making the width of pages narrower. Newsprint can be as much as 1/3 of the cost of producing a paper. Reduce the width of the page, reduce your paper cost. (If you have a sense of technical humor – which I do as an engineer – you can “project” that the way to really reduce your newsprint cost is to reduce the page width to zero.) Funny, that is actually what is happening now.
2: Next, I remember selling a computer system to the Dallas Times News (no longer published). I met with the senior editors of the paper. This was in the early 1980’s. They already had a web site. I recall a discussion amongst the editors as I sat there. A news story had just broken (early afternoon). They were discussing whether to put the story on their web site, or to “save” the news story for the next morning’s paper. I sat there incredulous, thinking: “What business do they think they are in?”
Another trend happening quickly over the past five years or so, is many daily newspapers have given up their printing plant. Instead, they contract with a large printing company nearby, or if the newspaper is in a group, they create a central printing plant (typically using an existing paper’s print plant). Then they truck the printed papers to each paper’s location.
Just the other day, Time Magazine was sold to another company. This was an “ego” sale. Just like Jeff Bezos buying the Washington Post. In these cases, a very rich individual buys a distressed property in order to get “credit” for saving an important part of the community.
Last example. Our family subscribed to Newsweek for 30 years. About 10 years ago, Newsweek came up with the “Brilliant Idea” to only publish an on-line version and save all the printing and physical distribution costs. So many people cancelled their subscriptions, that within two years or so, Newsweek announced they were “resuming” their printed product. Too late, by then many (including us) had moved over to Time.
You simply can’t “shovel sand against the tide” when economic forces are against you. Many have tried and gone broke doing exactly this.