A Hard Look at the Economics of Newspapers

Things are getting crazy out there. In the past few days, Steve Rubel of Edelman Digital has declared that "the end of tangible media" will arrive by January 2014, while David Carr at The New York Times used his weekend column to decry newspapers that let their most experienced, talented writers walk away (or, worse yet, shove them out the door) in an effort to cut costs. "It's the content, stupid" is what it comes down to.

Commenting on Rubel's sensational piece, Mark Hopkins over at Mashable lumps the newspaper industry in with the music industry and dismisses them as sectors that "will not transition to digital media, but be replaced by a new guard that has the will and ambition to create viable solutions in this arena." Meanwhile Henry Blodget at Silicon Alley Insider agrees with Carr's conclusion that newspapers should look to areas beyond experienced journalists' salaries for expense reduction but -- ever practical -- quickly focuses back on the issue at hand:

The new economics of newspapers, in a web-only world, will only support a fraction of the news-gathering costs that were affordable in the old world.

As if in response to this statement, Carr's colleague and Times media reporter Richard Perez-Pena today had a really interesting piece looking at a group of metro-focused, Web-based organizations that do the hyperlocal, investigative work that larger regional dailies (if they exist) are unable or unwilling to undertake. But these journalists are not all super-experienced, and they work for far less than reporters at larger publications. Most importantly, these organizations are -- dun dun DUN -- non-profits. As Buzz Woolley, co-founder and original financial supporter of VoiceofSanDiego, one of these non-profit investigative teams, said:

Information is now a public service as much as it’s a commodity ... It should be thought of the same way as education, health care. It’s one of the things you need to operate a civil society, and the market isn’t doing it very well.

And there we have it.

The debate about media -- looking at its current iterations and into the future -- swirls, in large part, around two things. First, what is the value (to society and to shareholders, respectively) of "professional journalism," like that produced by the Times and Wall Street Journal? And, second, if it is valuable but can't continue to exist in its current iteration, what would/should/will replace it? Carr offers a succinct response for the former, and a wave at the latter:

The critical point of difference journalism offers is that it can reduce the signal-to-noise ratio and provide trusted, branded information. That will be a business into the future, perhaps less paper-bound and smaller, but a very real business.

If it's a business, e.g. a money-making enterprise, at all.

Being an all-digital organization would offer significant flexibility in terms of saving dollars on overhead that can be put toward reporting budgets. Of course, non-profits come with their own risks, including an uncertain cash flow. Oh, and who's going to cover the international news?

At this point no one knows what the alternative looks like. Some seem content to allude vaguely to the free market idea that sufficiently innovative organizations will take over, or that the current major companies will find a way to stay in business and maintain some semblance of quality no matter how much they dislike what that looks like. Others throw their hands up: Alex Pareene at Gawker, in a post succinctly entitled "The Future of Journalism Is In the Hands of Idiots," exhaustedly concludes, "In closing, we hate the internet."

There is one person, however, who is not worried about quality or format in the long haul. Who else but News Corp. chief Rupert Murdoch (by way of Editor & Publisher's Fitz & Jen):

The newspaper, or a very close electronic cousin, will always be around ... It may not be thrown on your front doorstep the way it is today. But the thud it makes as it lands will continue to echo around society and the world.

Then again, Murdoch has been content to lose of millions of dollars per year for long periods on The Times of London (previously) and the New York Post (currently). One thing's for sure: a locked up economy and declining ad market will reshape the media landscape quickly and forcefully, hitting both on and offline mediums hard.