Good Luck, Newspaper Business!

Journalists of all types are having difficulty grasping that theirs is an industry that has peaked.

Last Updated: September 1, 2009 @ 11:16 AM

What was once a trump card for U.S. newspapers has become an Achilles heel, namely geography.

Apart from Canada and Australia, Western newspapers are fiercely competitive nationals. American proprietors had the luxury of 3 million square miles and four main times zones in which local newspapers could form an organic monopoly.

Even modest U.S. metro areas offered captive advertising markets that could support papers with mammoth weekend advertising, usually a city listings/features magazine and often free sheets too.

The topography remains but the economic landscape has changed forever; the circumstances will not return regardless of recovery.

Countless American editorials espoused globalization, but it doesn’t suit newspapers, only readers. It seems a great number of Americans have outsourced their news preferences to foreign providers, particularly British. (If news becomes chargeable the BBC stands to gain the most.)

Newspapers enjoy remarkable privileges; generalists and experts conducting post-mortems on everything. Whether it be government policy or company failure the papers are full of reprehension, scoldings and blame, often after the event.

There is apparently no topic on which a newspaper will prescribe corrective action. The only exception is their own plight; on that they are reliably hopeless.

And since journalists have a tendency to be rather self-important, they are having difficulty grasping that theirs is an industry that has peaked.

They are the new coal miners, the new car workers. Like GM, they’re selling minor variations of the same model, using graphics and a bit of local interest to differentiate each daily.

The news being what it is, they all use the same engine. And their fate won’t be any different from that of GM.

Like the bankers, media executives lost sight of the economic reality and squandered their subscription and readership base on an internet land grab.

No one compelled papers to give away their content free. This was an act of folly that would have been castigated in their business sections if it was in any other industry.

They are in a mess entirely of their own making; newspaper managers and proprietors are as culpable as bankers who threw money at people who couldn’t repay it and Detroit executives who greenlit rotten cars.

Involving politicians in the plight of newspapers is another mistake. If anything U.S. media is too close to power; its lamentable conduct in the run-up to the Iraq war could yet be an unflattering obituary.

Rather than reporting the news, U.S. papers have been starring in it. The payment for access hullabaloo at the Washington Post was simply incomprehensible.

The NYT’s running of a piece by Daphne Merkin where she blamed the Madoff victims when her brother Ezra was known to be up to his neck in the fraud was truly astounding. Yes, the victims where greedy and gullible, but this was nothing more than an apologist afterword.

If no editor knew that the Merkins were related or didn’t think the article was questionable then the level of expertise at the NYT is alarmingly low. That paper also ran an excruciating financial confessional that was promptly queried.

Accuracy in reporting is desirable but accuracy in autobiography is essential.

The Los Angeles Times, too, has been caught up in a series of ethical scandals involving prominent advertising, though to its credit the dissent has been internal.

That these papers entangle themselves in squabbles of their own invention as their fortunes dip is certainly bizarre, more so because they are the U.S. papers most likely to survive in a small and globalised news market; the vast majority of U.S. newspapers hold no interest for people beyond their boundaries apart from homesick expats.

Even if a paper has the financial muscle to survive they now face an army of industrious (and sometimes paranoid) bloggers who are making sure they no longer have the last word.

Rupert Murdoch has suddenly emerged as the talking head of internet charging, odd because in the British market he has spent many years, and many millions, squandering value with fruitless price wars to increase circulation.

The New York Times is said to be near a decision on a charging. They are talking the talk easily enough but the first to make the move has to consider the share price risks if subscribers numbers are low and web traffic plummets, highly probable if free options are available.

Murdoch seems to be keen on micropayments, presumably for those having no wish to subscribe but wanting access to a few articles, a decision which seems to me to undermine the business logic-the risk of readers trading down is high.

You either have readers and subscribers or you don’t. Editors and proprietors need to have honest confidence and conviction in what they are producing rather than all this shilly-shallying.

Another strategic mistake is to embrace Amazon’s Kindle, which will be available to customer of Amazon’s newspaper partners at a discount.

At Amazon’s HQ the runes have been read and they are determined to not to being sobbing over the demise of the book.

Their strategy is reminiscent of Microsoft convincing an unworldly IBM to take their operating system.

Newspapers should be wary of those bearing gifts. It is surely not coincidental that Sony is pushing its eReader without buying any publishers.

Its ferocious Hollywood lesson has been understood.

Content may be king but the hardware is heir apparent. If publishing is battered with the piracy level of music and film, Amazon and Sony will be shipping a lot of equipment.

Indeed when one considers how important the printed word is to the Internet, as opposed to music and video, it is not inconceivable that these portable readers could flourish unexpectedly in the platform-agnostic world of cloud computing.

Rather than newspapers saving themselves its Amazon’s future, and expansion, they would be financing.

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