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From AJR,   October/November 2008  issue

Don’t Blame the Journalism   

The economic and technological forces behind the collapse of newspapers


By Paul Farhi
Senior contributing writer Paul Farhi (farhip@washpost.com) is a reporter for the Washington Post.     

When the obituaries are written for America's newspapers, count on journalists to indict themselves in their own demise. You've heard it before, from a thousand bloggers and roundtable know-it-alls: We were too slow to adapt, too complacent, too yoked to our tried-and-true editorial traditions and formulas. We could have saved ourselves, goes the refrain, if only we had been more creative and aggressive and less risk averse.

To which I can only reply: Oh, please.

As newspapers shuffle toward the twilight, I'm increasingly convinced that the news has been the least of the newspaper industry's problems. Newspapers are in trouble for reasons that have almost nothing to do with newspaper journalism, and everything to do with the newspaper business. Even a paper stocked with the world's finest editorial minds wouldn't have a fighting chance against the economic and technological forces arrayed against the business. The critics have it exactly backward: Journalists and journalism are the victims, not the cause, of the industry's shaken state.

We've lost readers, to be sure. But that's been happening for decades, and not necessarily because of editorial quality. Disagree? Then try answering this: Did editorial quality kill afternoon newspapers?

Contemporary newspapers have their own problems, but the usual analysis about what ails us misses the point. Let's take a quick tour:

Fact No. 1: Despite everything you've heard, newspapers, even these days, remain remarkably popular. Some readers have left us (and many, it should be said, were dropped by cost-conscious publishers who no longer wanted to deliver papers to far-flung subscribers). But what's largely overlooked in the gloom is how many people newspapers reach each day. Almost 50 million buy one daily, and nearly 117 million read one, according to the Newspaper Association of America's research. Throw in 66 million unique visitors to newspaper Web sites each month, and the conclusion is inescapable: Lots of people want what newspaper journalists produce.

Fact No. 2: Newspaper readers – so often derided as old and unattractive to advertisers – are actually better educated and more affluent than TV news viewers. The average newspaper, for example, reaches about seven in 10 households with incomes of more than $60,000 annually, compared with about four in 10 for CNN and Fox News, according to Mediamark Research.

Fact No. 3: Every traditional news medium has lost market share, and some have lost more than newspapers. According to the Project for Excellence in Journalism, ratings for late local newscasts on network-affiliated stations across the country were 6.7 percent lower during the November 2007 sweeps than the previous year – a faster decline than newspaper circulation (down 2.6 percent daily, 3.5 percent on Sunday) during roughly the same period. This isn't a one-time aberration, either. Local TV stations in Washington, D.C., for example, have seen the ratings for their 6 p.m. newscasts plunge 37 percent from 1997 to 2007. Over the same period, the Washington Post's Sunday circulation has dropped 16 percent. Yet the local TV news business remains relatively strong, with far fewer layoffs and cutbacks and less end-of-an-era weariness than in most print newsrooms.

So if the problem with newspapers really isn't too few customers, or too many undesirable ones, why are they so threatened these days?

The problem has little to do with the reporting, packaging and selling of information. It's much bigger than that. The gravest threats include the flight of classified advertisers, the deterioration of retail advertising and the indebtedness of newspaper owners. Wrap all these factors together and you've set in motion the kind of slash-and-burn tactics that will hasten, not forestall, the end.

For decades, newspapers enjoyed what economists call a "scarcity" advantage. In most cities, there was only one outfit that could profitably collect, print and distribute the day's news, and it could raise prices even as it delivered fewer readers each year. Indeed, monopoly daily newspapers enjoyed enormous profit margins – sometimes as much as 25 percent or more – until very recently. But the scarcity advantage has faded; the Internet has essentially handed a free printing press and a distribution network to anyone with a computer.

The real revelation of the Internet is not what it has done to newspaper readership – it has in fact expanded it – but how it has sapped newspapers' economic lifeblood. The most serious erosion has occurred in classified advertising, which once made up more than 40 percent of a newspaper's revenues and more than half its profits. Classified advertisers didn't desert newspapers because they disliked our political coverage or our sports sections, but because they had alternatives. Craigslist and eBay and dozens of other low-cost and no-cost classified sites began gobbling newspapers' market share a few years ago. What they didn't wipe out, the tanking economy did. During the first half of 2008, print classified advertising nosedived more than 25 percent, as withering job, real-estate and auto listings erased $1.8 billion in revenue from newspaper companies' books. Newspapers have been uniquely hurt – television never had classifieds to lose.

Similarly, the disappearance of local chain stores over the past two decades has fallen like a series of hammer blows on newspapers. In my city, the names of the dearly departed included such homegrown advertisers as Hechinger hardware stores, Trak Auto Parts, Crown Books, Dart Drug, Peoples Drug, Raleigh's clothing stores and the department stores Woodward & Lothrop, Garfinckel's and Hecht's. TV lost some of these advertisers, too, but has gained the likes of Wal-Mart and other big-box outlets, which tend to buy airtime, not newspaper space.

Newspapers that were hoping to be rescued by their online ad businesses woke up to a sobering reality in mid-2007. By then, it was becoming clear that online advertising wasn't growing fast enough to make up for the rapid disappearance of print ads (see "Online Salvation?" December 2007/January 2008). In fact, at the moment, online ads aren't growing at all. Sales at newspaper Web sites fell 2.4 percent in the second quarter of 2008. This may be as ominous a development as the meltdown of print. Online newspaper revenues had grown smartly in every quarter since the Newspaper Association of America began tracking them in 2003. No longer.

There's still much that many newspapers can do to improve their Web sites: adding Twitter feeds, social networking applications, Google map mashups (maps over-laid with data), on-demand mobile information and, of course, more video. All good. But let's not kid ourselves. The online business model is still uncertain, at best. An online visitor isn't as valuable to advertisers as a print customer. Online readers tend to dart in and out, spending far less time on a newspaper site than a subscriber spends with a paper. And a portion of the traffic (how much depends on the paper) comes from outside the paper's circulation area, making these visitors irrelevant to local advertisers. I'm not really surprised that newspapers haven't figured out how to make the Web pay for all the things that print traditionally has. There may not even be a business model for it. But again: Can you really blame the newsroom for that?

The last wound is self-inflicted. Newspaper companies and other investors completed highly leveraged takeover deals just as the newspaper business rolled off the table. It's no coincidence that the most troubled newspapers are the ones owned by companies that took on enormous IOUs just as the newspaper apocalypse began. Some of these companies – Tribune, McClatchy, Journal Register, MediaNews Group, Avista Capital Partners, GateHouse Media – are now cutting like mad to stay ahead of the debt boulder bearing down on them. Meanwhile, Copley, Advance, Cox, Landmark and Blethen have all put some of their newspaper holdings up for sale. This all but guarantees more debt for the papers' new owners – assuming, of course, that the sellers can find buyers in the first place (see The Newspaper Business, page 76).

So add it up. Could smarter reporting, editing and photojournalism have made a difference? Can a spiffy new Web site or paper redesign win the hearts of readers? Surely, they can't hurt. But if we, and our critics, were realistic, we'd admit that much is beyond our control, and that insisting otherwise is vain. As British media scholar and author Adrian Monck put it in an essay about the industry's troubles earlier this year: "The crops did not fail because we offended the gods."

As is, I fear we're deep into the self-fulfilling prophecy stage now. In many ways, newspapers are dying...because they're dying. As their cash flow shrivels, owners aren't willing, or able, to invest in their papers to arrest the rate of decline, if not reverse it. Each cut in editorial staffing and newshole makes the newspaper less useful and attractive, which makes the next round of cuts inevitable, and so on. Some newspapers entered their death spiral months ago.

I suspect someday our former readers will be peering forlornly toward their empty doorsteps and driveways and wondering where the paper they once loved has gone. I will share their sadness, but not their shock. I've got some news for you, dear readers: Our disappearance wasn't your fault. And as a journalist, I can safely say, it wasn't ours, either.

Paul Farhi (farhip@washpost.com), a Washington Post reporter, writes frequently about the media for the Post and AJR.