Newspapers are Under-Scale

I am sure I could rattle off a myriad of problems at newspapers - changing lifestyles, the explosion of free content over the Internet, competition from cable TV, etc.  Built into these trends are some structural problems that newspapers probably cannot overcome.  At some point, there comes a time of survival when you have to stop fighting trends and start figuring out how to make money in the new regime.

Here is one thing I can say with certainty:  Every single newspaper in this country, with the possible exceptions of the WSJ and USAToday, but including the NY Times, are under-scale.

How do I know?  Just listen to the situation.  If they cut costs, they fear the quality of the product will fall and they will lose readership.  But the readership is already not covering costs and is in fact already falling.  This is a classic death-spiral of an under-scale entity.  It almost does not matter what caused the company to suddenly be under-scale when it previously was fairing OK -- technology change, new competition, shifts in customer expectations in habits, or all of the above.

There is no tweaking one can do in an underscale business.  One either needs to get much bigger, or find a defensible niche.  The latter is hard in the newspaper business, since these publications have essentially focused on just one metropolitan area or city, its hard to find a tighter niche that both has a customer following and would allow massive cost cutting.   Community newspapers are one example.  The only forward-looking idea I can come up with is a metropolitan sports-only daily.  Could such a thing sell in New York?  Possibly -- one can argue that is what the Dallas Morning News is, a sports daily with some news sections attached.

This scale problem should not be a particularly surprising finding.  The local newspaper business has always known it had a scale problem.   With thousands of newspapers across the country all reporting many of the same stories, there has always been a huge issue of duplication of effort.  Newspapers took a swipe at this problem with the formation of the Associated Press, which effectively acts as a shared reporting resource.

But it has been decades since this model has even been tweaked.  In that time, sophisticated new readers expect more than just bland 5-paragraph AP stories, and newspapers who rely on such content find most of their stories online for free, if not in their own paper, then in others.  And most large papers have been progressively tempted, for a variety of reasons, to have their own writers on national stories.  Ever seen the press pool for a Superbowl game?  The staff and talent they have built that could serve a whole country is only serving one city.

Many other local distribution models are dying or dead.  Local TV network affiliates were created when local re-broadcast was the only technologically feasible approach to getting TV signals to homes.  They survive today only through constant lobbying which has produced must-carry rules on cable and TV operators, or most of us would be just fine getting the network feed without local content (after all, how many folks watch CNN and FOX and MSNBC?).  Local auto distributorships and beverage wholesalers similarly fight rear-guard actions in the legislature against new national channels.

I think the time has come for publications like the NY Times to give up its city-centric model and go to full-bore national distribution.  My Arizona Republic has 4-5 standard sections plus an additional section (e.g. "Scottsdale") customized to my neighborhood.  I don't see why such a model would not work nationally  (the WSJ does something a bit similar but it is only customized regionally).  I would love a Washington Post delivered here that had an Arizona/Phoenix section and possibly a local sports section.

I can hear the cries now - but what about competition?  We will see thousands of newspapers collapse to 7 or 8 national brands.  But this is a false view of competition here.  Right now I have one newspaper choice.  Even having two or three national offerings with an Arizona section would increase my choice substantially.

  • feeblemind

    Your plan may slow the decline of some papers, but will it increase the newspaper reading demographic? I think not. IMO, it is too late for the dead tree format. The speed of delivery is just too slow. By the time you see an article in print, it will be a minimum of 12 hrs behind the net. Depending on the importance of the story, it can be days behind. And then there is the annoyance of newspaper clutter around the house and disposal.

  • Holmes

    But what about all of the gardeners and fishmongers who need the cheap source of mulch or fish wrap? Congress must act now to contain the adverse externalities of consolidation of the newspaper industry.

  • http://smilerz91.blogspot.com Chris

    Aren't there regulatory restrictions on how many markets a newspaper can operate in?

  • elambend

    I've noticed that local television stations are starting to get in where newspapers failed to, a full spectrum media presence. I think NBC has recognized how this could work, particularly in some big markets. Their latest pitch is "Locals Only" They are creating local themed events and making their web portals an important part of their media presence. I can get pretty much the same news at the local NBC affiliate's web portal as I can at the Chicago Tribune, as well as better weather and traffic.

  • http://www.humanadvancement.net/blog Kyle Bennett

    What we need is a dead-tree, home-delivered product that reports on and summarizes things that happened online the previous day - some portion of which was reporting on bricks and mortar stories.

    Seriously, though, the only niches I can see paper filling anymore are either hyperlocal reporting or delayed but highly in depth reporting. The drawback in the latter is that it is very expensive to do such work, it is the kind of reporting most subject to being slanted, and readers no longer appreciate being limited to one analysis. Therefore, the model for this could be to selectively, based on the anticipated interests of the target demographic - in fact, an open and explicit bias - present analysis from a variety of writers. The best source of that is now... online. In one sense, newspapers become "smart" and targeted aggregators of online content. They would compete on how effectively they strike the balance between bias and completeness.

    My first paragraph was only half joking, this would turn the current relationship between print and internet inside out.

  • DrTorch

    You'd really like to get the Wash Post? Ugh.

    I've thought a lot about this, mostly from the perspective of my small city hometown (whose newspaper claims to be libertarian, btw).

    I figure they do need to focus their reporters on local content and interest, in order to differentiate themselves from the internet and/or bigger Ohio papers. Then they need to find the cheapest source for state, national, interenational news.

    Of course they do that to a large extent, but I don't see much creativity from them as far as new content.

    The Wash Post on-line has put out cars.com, an very solid job search section, and they own Kaplan test prep (I believe). Obviously this hasn't saved the company entirely, but I think it has given them a shot at viability.

  • http://evilredscandi.blogspot.com EvilRedScandi

    While it's an interesting intellectual exercise to investigate how newspapers could be saved, it's actually much more satisfying to just let them reap their negative karma and die off. The time for dead-tree news is past.

    The problem is that "Journalism" itself is a more or less dead field. Most "news" these days consists of slightly edited press releases. Investigative and editorial content is slanted to the point of being useless. Frankly, there's nobody in the newspaper business (and very few in magazines) that I can take without a container-load of salt. And as long as I'm getting the news from people that I don't completely trust (no offense), I might as well enjoy the blog community. The quality of information is about the same, the writing is often more entertaining, and we can praise or bitch at the writers as appropriate or as our moods dictate ;-).

  • M Heiss

    I'm with EvilRedScandi on this. The idea that there is news content out there that is "unslanted" is laughable. Why should there be?

    I think the only way for newspapers to save themselves is to openly declare their slants, and cater to that niche. This would be a way for more liberty-minded people to be heard -- a libertarian paper could contract with guys like Austin Bay, Glenn Reynolds, Michael Yon, or Warren here to provide reporting, could pull analysis from willing bloggers, and could take advertisers geared to their niche.

    But I don't think it will actually happen.

  • Maximum Liberty

    The biggest reason that local newspapers are failing is competition from the U.S. Postal Service. The traditional newspaper model was to deliver advertising directly to the doorstep through delivery routes. As the postal service expanded its direct mail services, it competed away the profits that kept the newspaperss alive.

    Other pressures probably accelerated the decline: Strong labor unions kept wage costs high. Restrictions on media ownership prevented mergers.

    Concentration down to a comparative handful of highly branded national newspapers seems like the only rational response. I'd imagine that the TV news media and print news media will eventually tie together. So, you'd have the Fox Wall Street Journal, the MSNBC Post, the CBS Times, etc.

    Max

  • Mark

    I dont think the format is completely ready to die. Technology is there that can replace it, but it is still not wide spread enough. I dont know, I like having the actual paper paper in the bathroom to read!

    But, I also agree taht the only way to save these daily periodicals is to have them remove the facade of being non-biased. Back in the early days of the United States newspapers were slanted. The Democrats put out their own local paper and the Whigs/Federalists/Repubicans put out their own. Major cities had many newspapers and each had a target audience. One aspect that these papers provided was a direct response to the other. So Publicus might publish an op-ed in the New York Herald and Cicero might publish a direct response to that editorial in the New York Times.

    Add in the third party whackos and ethnic slants, we could return to the real glory days of newspapers.

  • http://evilredscandi.blogspot.com EvilRedScandi

    @Mark - Actually, my iPhone works decently for bathroom reading.

  • Mark

    Yea, I like my iPhone for that. But, I just got one recently and many people will never have that level of technology in the near term.

  • Dale

    I am not sure about the scale. I know a county of 10,000 that has no problem supporting a weekly. Of course, they concentrate on local news, and serve as communication center, too.

  • Michael Stack

    Might somebody offer an explanation of what it means for a business to be "under-scale"? I googled it and this blog post was at the top of the list. :) Unfortunately, I couldn't find anything else of value.

    TIA,

    Michael