How Newspapers May Survive

Local blogger Greg Patterson writes:

The Wall Street Journal is reporting that Gannett will soon be adding USA Today to it's local papers.

With this change, the Republic and USA Today are essentially a hybrid.  As print revenue continues to slide the USA Today side will grow and the Republic side will shrink.  Eventually, your morning Republic will consist of a copy of USA Today with enhanced local coverage.

This is a change I have expected for a long time.  The wire services have always existed as an attempt by local papers to share costs in national and international news gathering, but I would have expected this next step of national consolidation some time ago.  The internet allows not just the text, but the entire layout of newspapers to be transmitted instantly across the country.

The whole situation reminds me of television broadcasting, where local affiliates exist mainly as a byproduct of past technological limitations in signal transmission.  Satellite and cable have eliminated these restrictions, but still local affiliates exist, in part because there is some demand for local content but in part because of the fact that the government protects their existence (by law, cable and satellite operators must give you the local affiliate, they cannot give you the national feed).

This is what I wrote back in 2009

I actually think the problem with newspapers like the Washington Post is the "Washington" part.  Local business models dominated for decades in fields where technology made national distribution difficult or where technology did not allow for anything but a very local economy of scale.  Newspapers, delivery of television programming, auto sales, beverage bottling and distribution, book selling, etc. were all mainly local businesses.  But you can see with this list that technology is changing everything.  TV can now be delivered via sattelite and does not require local re-distribution via line of sight broadcast towers or cable systems.  Amazon dominated book selling via the Internet.  Many of these businesses (e.g. liquor, auto dealers, TV broadcasting) would have de-localized faster if it had not been for politicians in the pocket of a few powerful companies passing laws to lock in outdated business or technological models.

Newspapers are ripe for a restructuring.  How can one support a great Science page or Book Review section or International Bureau on local circulation?  How much effort do the NY Times, Washington Post, LA Times, SF Chronicle, etc. duplicate every day?  People tell me, "that's what the wire services are for."  Bah.  The AP is 160 years old!  It is a pre-Civil War solution to this problem.  Can it really be that technology and changing markets have not facilitated a better solution?

The future is almost certainly a number of national papers (ala the WSJ and USA Today) printed locally with perhaps local offices to provide some local customization or special local section.  Paradoxically, such a massive consolidation from hundreds of local papers to a few national papers would actually increase competition.  While we might get a few less stories about cats being saved from trees in the local paper, we could well end up not with one paper selection (as we have today in most cities) but five or six different papers to choose from  (just look at Britain).  Some of these papers might choose to sell political neutrality while some might compete on political affiliation.

  • Maximum Liberty

    I think that thinking of local newspapers as producers of news is historically wrong from a business perspective. Paid subscriptions was a minority of revenue since WWII. What local newspapers sell is delivery of advertising in paper form to homes. I suspect that one of the big reasons for the contraction of the news industry to a single dominant newspaper in town is a combination of:
    a. significant economies of scale in delivery within a dense metropolitan area -- it is extremely cheap to print another paper and throw it into the yard next to one where you are already delivering.
    b. competition from the US Postal Service -- the USPS delivers to every residence every day; an advertiser will compare advertising in the local newspaper against bulk mail.
    So, I think that combining these research desks is important for the big brand-name newspapers, but not so much for the local small-to-mid-market newspapers. While I hope you are right that consolidation of content creation for distribution allows national newspapers to compete for local advertising, but it's far from a foregone conclusion that combination of the news-generation components will be enough to compete with the Postal Service (who has zero news-generation cost).
    The other thing to know is that a lot of local newspapers depend heavily on revenues for posting in the "legal" section where notices of whatever have to be placed by law or court order (auctions, foreclosures, service of process by publication, etc.). Take that away and a lot of locals collapse. I think there's a business model where you could deliver that as junk mail through the USPS and eliminate half the local newspapers in the US, if the laws said that was an adequate substitute for publication in a newspaper. A national newspaper that creates local editions should want to do that very thing.
    Max

  • MingoV

    Newspapers can survive in a number of ways; none of them include delivery of printed news. Amazon got it right with its Kindle subscription services. News services could assemble daily news issues following the customization rules selected by the subscriber. The news issues would automatically upload to the subscriber's device.* A news provider could offer different types of subscriptions: low cost (many ads), moderate cost (only ads tailored to the subscriber), and high cost (no ads). This would be a huge win for advertisers (compared to printed newspapers), because many subscribers would use the links in the ads to go directly to the advertiser's web site. It would be easy to compare the effectiveness of various ads.

    *There are some web sites that provide this type of service for RSS feeds, but many desired news items don't have an RSS feed.

  • Gil G

    How might the gramophone continue to survive in this day and age of portable digital music technology?