Flawed business plan revealed!

Pearls Before Swine, 4/20/09

Gee, when you put it that way, it does seem kind of silly. Where was Goat when we needed him?

Web is killing the business of journalism

Jeff Jarvis is angry again, because of course he's right and others are wrong. This time his ire is targeted at those who responded to a very unscientific survey of " prominent members of the national news media" by The Atlantic for a piece about the affect of the Internet on journalism. According to the piece, 65 percent of those surveyed believe journalism has been hurt more than helped by the Internet.

This, of course, has Jarvis hopping mad: "Restrain me," he writes.

Alas, The Atlantic probably errs by not presenting the question more effectively, and Jarvis, myopic as always, errs because he's not savvy enough to see the real question and answer behind the piece. You see, the Internet has damaged journalism. There's no question. What Jarvis is angry about is that this would seem to indicate that web-based reporting is inferior. Most of it is, but that's not the takeaway here. It is that the Internet has damaged the business of journalism. Of that, there is no debate. Other factors have played a part in the demise of newspapers and other newsgathering organizations, everything from greed and managerial incompetence to the rising cost of newsprint. But the web is what has so thoroughly slammed newspapers. If the rest were the first small rocks to slide down the mountainside, then the web is the thunderclap that triggered the landslide.

Many wags have compared newspaper companies to buggy whip makers. Whatever. But using that analogy, the newspaper folks are saying that cars have damaged the business of making and selling buggy whips. Again, there is no debate there. But the Jarvises of the day would say, "How dare you say carmakers can't make a quality buggy whip!" That's not the point, is it? In that case, buggies and cars conveyed people, but they were very different. In this one, newspapers and the web both convey information, but they are very different. And yes, the car killed the buggy just as surely as the web is killing newspapers.

Now, The Atlantic doesn't ask, nor do the queried journalists respond, with answers to this exact question. But that is the overarching Q and A in this discussion. Sure, they say that reporting suffers, that attention spans are being shortened. But what they are really saying is that the way we once did business has been irreparably damaged. For some reason, this rankles Jarvis, who continues to push for the demise of print products despite the fact that some of us still prefer to have that option in the mix. Anything that gets in the way of that seems to make him see red. Too bad that so clouds his view.

What is killing newspapers? Not what you think

Finally, a look at the real reasons newspaper companies are failing. Yes, revenues are down everywhere because of a soft advertising market and a loss in subscription revenue as readers flock to the web, but, as Daniel Gross writes today in Slate, "not every newspaper company in the country has gone bankrupt as a result. And the failures may say more about a style of capitalism than an industry."

He cites the examples of Sam Zell, who put down 4 percent of the $8.2 billion asking price for the Tribune Co., somehow leaving it with an impossible-to-manage $13 billion in debt. Other, slightly less egregious examples are cited as well.

This proves, of course, that the calls from this corner and elsewhere that publicly traded companies should be prohibited from owning newspapers is not the answer. I still think it's a start. taking papers out of the hands of public companies that put profit gains before all else would surely help. A bill introduced by Maryland Sen. Ben Cardin that would allow newspapers to more easily operate as nonprofits is worth following.

Of course, you can't legislate stupidity, so problems like those brought on by Zell and others are hard to avoid unless the marketplace does a better job of stopping such maneuvers.

A voice of reason in newspaper/online debate

Allan Mutter offers the first analysis in the debate about whether newspapers could stop printing on paper that actually makes sense. Others, always unfathomably gleeful about the notion of the news no longer coming on paper, suggest that simply shutting off the presses is a logical solution to financial woes. Get rid of the cost of paper, printing and distribution, and you cut the business to its core, they argue. Cedar Rapids Gazette Editor Steve Buttry asserts that subscribers are paying for those costs with their subscriptions, not the news (thus ignoring the fact that they might also be paying for convenience or because they prefer that method of news delivery).

Jeff Jarvis raised interesting if flawed points in a December post about The Los Angeles Times when he took news that its online operation made enough to cover the editorial payroll as an indication that the Times could cease printing and go online only. What he ignores, of course, is that:

--the paper makes exponentially more on the paper product, and thus would lose those revenues,
--there are dozens (in this case) hundreds of people who sell and create those ads, as well as those who maintain the web site, none of whose salaries are included in this computation,
--no discussion of benefits or other costs is included in the discussion,
--any such move means drastic cuts in budgets and staffing. Preach all you want about crowdsourcing and the democratization of news, but coverage will suffer, at least in the short term.
--people might actually prefer the print product.

Mutter explores these (save for the last, which no one seems to care about) in his post. The most direct line, which I'm amazed even needs to be stated at this point, is this:

"But we are a long way from seeing a publisher make the proactive decision to pull the plug on a profitable print-on-paper operation. That’s because pulling the plug is not a decision a rational publisher can afford to make."

Those with no stake in the outcome but who have learned that being loud and cantankerous can double for veracity in the blogosphere will argue otherwise, but Mutter is exactly right.

Print may well go away as we move to online-only formats, but it won't happen any time soon. And I realize that the fact that I prefer to read a newspaper at the breakfast table with my family rather than sit by myself in the office scanning an RSS feed makes me some sort of out-of-step dinosaur, but as long as there are a few of us left, newspapers will need to cater to us if they hope to earn advertising revenue. If Jarvis got what he wanted and newspapers all stopped printing on paper tomorrow, most of those companies would be out of business by the end of the month.

Hirschorn to Times: Drop dead (by May)

Michael Hirschorn's provocative article in this month's Atlantic, "End Times," is the piece to read this week. In it, he suggests that the print edition of the New York Times, and thus, the Times as we know it, could be gone by May. Regardless of the math involved, that's a startling supposition.

My gut reaction is to rebel and worry. How could that be? But of course, business decisions that have nothing to do with the day-to-day operations of the paper are likely to sink it (and many others). I joked with someone today that my sound financial advice is "don't spend what you don't have." Sadly, a lot of media entities are going to go under in 2009 because they failed to follow that simple rule.

I'll get my main beef with Hirschorn's piece out of the way now. It's this ridiculous sentence: "It will also mean the end of a certain kind of quasi-bohemian urban existence for the thousands of smart middle-class writers, journalists, and public intellectuals who have, until now, lived semi-charmed kinds of lives of the mind." Bold words from a former VH1 exec and Spin magazine editor. Ever worked in a real newsroom, Michael? I doubt it, or you wouldn't call the grueling work of a good beat writer "a quasi-bohemain" existence that is part of a "semi-charmed life of the mind." Sure, having an inside look at the world and being able to flex creative muscles as you convey your view of it to the masses can seem like a pretty sweet gig, but it's hard work like any other, and to dismiss it is to be blinded by the tall buildings obscuring your view from Manhattan. I've long railed against opponents of "the media" who are really talking about the Post, the Times, the Journal and the networks -- not the thousands of papers and TV stations in smaller markets. It's sad when someone from one of those larger markets paints his own industry with the same broad brush.

That aside, there are thought-provoking aspects to Hirschorn's piece, but he doesn't take them anywhere. He throws his bomb by declaring the Times near dead, and then seems content to sit back and watch for the fallout. There is an entire analysis to be spun off from this short paragraph alone:

The conundrum, of course, is that those 1 million print readers, who pay actual cash money for the privilege of consuming the paper, and who are worth about five figures a page to advertisers, are far more profitable than the 20 million unique Web users, who don’t and aren’t. Common estimates suggest that a Web-driven product could support only 20 percent of the current staff; such a drop in personnel would (in the short run) devastate The Times’ news-gathering capacity.

I don't read the Times in print, but I do read the local daily that is also the subject of much "kill print, move online" talk. But media companies will die an even quicker death if they simply ditch paper and move to bits and bytes, for web ads draw a fraction of that earned from print ads, and no one pays for a subscription to a web site (the Journal notwithstanding). Some editors, like the Gazette's Steve Buttry, have interesting notions about what people pay for with a subscription (he argues it's simply the paper and the delivery, I argue that while that might be what they are actually paying for, most subscribers would say they're buying the news carried on those pages. No one pays to have blank paper delivered to their door). Why kill the one thing actually making money for you in a rush to move online, knowing it'll probably kill your product thanks to the resulting cuts in the process?

Why not, to get back to the central tenet of this blog, offer choice? If people want something to read at the breakfast table, why not offer it until it becomes economically unfeasible to do so? Of course, some may say we're already there, but if papers didn't need to pay off billions of dollars in debt accrued by executives whose eyes were bigger than their wallets, that might be a long ways off.

One last point: I read Hirschorn's piece online, not in print. I might not have done so had it not been among the shortest things I've ever seen in the Atlantic. had it been one of the magazine's typical 20-pagers, I would have printed it out or sought out a copy of the magazine. Not everything works online; some things, gasp, actually work better on paper. 'Nuf said.

Ultimately, Hirschorn's piece is the latest in a long line from those on the sidelines telling newspapers how things ought to be.

Digital is an option, not a replacement

Two seemingly disparate things have come together in my mind that help to amplify a point that I think is lost in the rush to declare most forms of hard media dead and to anoint digital anything and everything as the new king.

First came yet another Jeff Jarvis-related firestorm, this time over a New York Observer profile in which he is pitted (wrongly, he writes on his blog) against mainstream media types like the New York Times' Bill Keller. Jarvis is earning a lot of ink (digital and otherwise) because some see him as gleefully dancing on the grave of print journalism. I don't think he is, but I can see why some people think it, and that brings me to the second thing that hit the news today.

Atlantic Records announced that for the first time, digital sales brought in more than those of compact discs. While on first blush that would seem to support the arguments of those who say digital is (slowly, quickly?) killing all other formats, I think it really points out something more interesting: Fully half (or, 49 percent if you want to be specific) of the sales of Atlantic's music products came in the form of CDs. Despite the fact that we are rapidly moving toward a digital-only world, half of the company's customers choose to buy their music on discs of plastic.

I buy more of my music digitally these days than I do otherwise, but I make a decision every time I do buy music whether to go digital or disc. It's exactly the same decision I made back when I was in college and CDs were becoming the norm, only in reverse. If it was an impulse buy that I didn't imagine I would be listening to years later, I would buy it on the cheaper, admittedly inferior cassette. If it was something I knew (or at least suspected) I'd want to keep around for a long time, I'd pay the premium for a CD. Today, I'll get something on digital for a quick reward, but I'll still opt for a CD for the long haul. The superior sound quality, security and storage of a CD far outweighs the convenience of zero storage space that an MP3 offers.

The same thing applies to papers. While Jarvis and others are quick to say that newspapers as we know them are dying off, what they seem to miss is that many, many people still get a lot of their news from words printed on paper. (This is a very small sample, but check out this poll at Old Media, New Tricks blog. Even some of these most-plugged in netizens get their news from a print paper). Steve Buttry of the Cedar Rapids Gazette acknowledged this during a recent online chat. While the digital audience is growing that is where he expects to see the company's growth, "the print edition of The Gazette has a huge audience and large revenue stream that we think will support a healthy business for many years to come."

When I get up in the morning, I like nothing more than to scan headlines in the local paper while having a cup of coffee. The last thing I want to do is get right back on the computer to try to nose around news sites. You simply can't scan or sample on screen the way you can with a paper spread out on the breakfast table. But later in the day, online news is all I peruse. It would be a shame to lose one of those outlets.

The key, then, is for all media to look for ways to improve and bolster the core product while embracing digital outlets as an enhancement. Heck, the digital outlet might soon become the core product, but that doesn't mean the paper product should go away, just like CDs don't necessarily need to completely give way to digital. Choice is the key. The economics of offering choices are the sticking points that need to be worked out, but there are niche markets available all across the spectrum for those who figure out how to do so.