1. The traditional newspaper industry only looks dead.
As is commonly known, the crisis in N.A. papers has mostly to do with unsustainable debt taken on by media moguls who acquired dailies and newspaper groups at the top of the market in 2000, and the subsequent purchasers who also vastly overpaid. Examples include the CanWest purchase of the Hollinger big-city papers in 2000; the Knight Ridder chain's purchase by the McClatchy chain, now a penny stock; and Chicago real estate developer Sam Zell's leveraged buyout of Tribune Co. (which earlier had acquired Times Mirror, owner of the LA Times and Baltimore Sun). Tribune, also owner of the Chicago Tribune and Orlando Sentinel, filed for bankruptcy protection only a year after Zell took control of it.
Rupert Murdoch's outlandishly priced $5-billion purchase of the Wall Street Journal last year already has triggered a significant writedown on that investment. Murdoch is conspicuous as a poor operator of newspapers. Both his flagship Times of London and New York Post are chronic moneylosers, their losses long pre-dating the Internet era. He's underwater with MySpace, as well, but that's another story. All worth keeping in mind as Murdoch wails about how newspaper readers must, must, must be made to pay for online content. Or he'll, I dunno, hold his breath until we do.
Great, mournful attention has been paid to recent newspaper deaths in Seattle, San Francisco and Denver. (The media loves to cover itself.) The dailies that perished were in each case runner-ups to a dominant paper. The death of the two-daily town is a trend that was well advanced prior to the current downturn, and already had claimed the "second" paper in Toronto (the Telegram, in 1971), the Washington Star, the Chicago Daily News, the St. Louis Globe-Democrat, the Memphis Press-Scimitar, the Courier-Express in Buffalo, the Ottawa Journal, Montreal Star, Calgary Albertan, Winnipeg Tribune and so on. The real story of the Seattle Post-Intelligencer and Denver's Rocky Mountain News is that they hung as long as they did.
Meanwhile, the fundamentals of the newspaper "habit" remain surprisingly strong, at least relative to the many obituaries written for Gutenberg's spawn. The financiers messed up, big time. But editors generally continue to serve their markets quite well. Most dailies today are losing money or at best are marginally profitable. That is almost entirely due to the biggest plunge in ad revenue since the Great Depression, amid a global economic downturn also worse than conditions since the Depression.
By most estimates, about two-thirds of the lost ad revenue will return when the economy is fully recovered. Because newspaper publishing luxuriated in some of the highest profit margins of any industry for the past century, it will be comfortably profitable again despite not returning to the peak ad revenue earlier this decade. And that does not include that average 6% to 8% of total ad revenue that papers now garner from online ads. Ads on newspaper websites continue to be heavily discounted. Newspaper advertising sales forces are still figuring out how most effectively to sell the new medium. And potential ad clients haven't yet learned how an innovative online ad can drive sales of their products.
Thus there is a tremendous upside in online ad revenues - for the reasons above, and because online newspaper reading is nowhere near as prevalent yet as is commonly assumed. In Canada in 2008, just 4% of adults 18+ read online newspaper editions exclusively. Many Canadians read both the print and online editions of their favourite dailies. Which suggests (a) a very strong hunger for news, and (b) that there are attributes unique to each of the print and online experiences that readers seek.
News and entertainment consumers have never had such a wide choice of alternatives to traditional daily newspapers. Yet, in Canada, 73% of adults 18+, or 13.7 million people, continue to read at least one "dead-tree" edition of a daily newspaper each week. Amost half of adults (48%) have read yesterday's paper; 69% have read at least one weekday paper in a given week; and 77% have read a paper's print or online edition in the past week including weekend editions.
Conditions in the U.S. are similar, with a decline in newspaper readership of just 7% since the 2002 peak, compared with a 10% drop for prime-time television in 2007 alone. About one-third of Americans, or more than 104 million adults, read the print edition of a newspaper every day, according to the Newspaper Association of America, and more than 115 million read a Sunday paper. Papers remain popular enough with the young, 65% of the 18-24 and 25-34 demographics having read a print or online newspaper edition at least once each week in 2008. The audience for U.S. newspaper websites has soared 75% since 2004, to 73 million unique visitors a month.
2. Panic.
The "death of newspapers" story line is unique to N.A. European papers continue to flourish. True, the reading habit is stronger in Europe, where half a dozen "quality" dailies and another half dozen tabloids duke it out in London alone. It is not uncommon for Greek consumers to read three or four dailies each day, and for Parisians to take three papers daily. Why? Because European papers are more opinionated, they stand for something, they often are strongly aligned with a political party or political philosophy. I am leaving out here sports and other specialized dailies, such as the ethnic press. Polish and Russian expatriates in Munich and Chinese-born adults in Toronto make time to read a local metro daily as well as a local daily in their mother tongue.
You have to wonder about the death of newspapers when Toronto has six English-language dailies. (Again I'm leaving out a vibrant local ethnic press). Montreal, Calgary, Edmonton and Vancouver each support two local dailies plus the Globe and Mail and National Post. The two-daily town survives in Quebec and Winnipeg,
The decline in N.A. of the two-paper town accompanied an undeniable gradual drop in newspaper penetration rates. Again, why? Because the remaining, monopoly paper, eager to keep the dead paper's readers it had effortlessly inherited, became determined not to offend them. The monopoly papers that have now dominated our industry for decades stopped having a forceful point of view. They stopped being interesting.
The crusading ethic or gutter-press instincts of competing papers disappeared, replaced by a monopoly paper whose quest for increased readership no longer took the form of "scoops" or investigative journalism or even pandering to the lowest common denominator. (That was the Toronto Sun's remarkably successful formula, of immigrant and gay bashing and a Page 2 "Sunshine Girl" before it was neutered by new owner Quebecor, making the paper irrelevant to its former audience. This is one case that does not bring me to tears.)
The new key to success has been to not alienate anyone. To not be controversial. Combine that with the "objectivity" doctrine drilled into J-school students beginning in the 1960s. Which was compounded by the media's inflated sense of its power after Watergate, and accompanying self-imposed mandate of being extraordinarily fair. The result has been the "one-the-one-hand, on-the-other" journalism of today. Today, any newspaper article describing what is blatently true must include in equal measure the views of nutbars holding the opposite view. "These things we hold to be self-evident" would not pass muster with contemporary newsroom managers. Instead, the operating principle is: "This story's not balanced, everyone you quote says water is wet. Go back and get the other side."
Coincident with this trend was the curse of chain ownership, which usually if not always imposed a sameness in content and design across papers often spanning the continent. An integral part of this "absentee ownership" was the revolving door of newspaper management, as publishers and editors in chief were constantly reassigned within the chain to different cities. The tradition of a publisher and chief editor having roots in the community perished. Chain-wide "templates" for everythng from story selection and article length to human resources techniques and front-page layout methods gave the Tampa Tribune and Cleveland Plain Dealer so similar an appearance that readers were primed for a radical alternative - which ulitmately arrived in the form of Internet newsites and "blogs." (To see how enduring is the lookalike reality in newspapers, click here.)
It is striking that not one major newspaper in America objected to the "war of choice" in Iraq in 2003, with the exception of a desultory editorial-page skepticism in the New York Times. (Which the Times made up for with reporter Judith Miller's fraudulent, front-page Times stories about phantom WMD in Saddam's Iraq, just ahead of the crucial U.S. Senate vote that greenlighted America's worst foreign-policy blunder since Vietnam.)
Canadian papers were no different. Only the Toronto Star opposed the war in the run-up to the March 2003 invasion; the Globe and Mail and the CanWest papers were in lockstep support of the Bush administration's delusional vision of a reinvented pro-Israel, pro-West Mideast with Saddam out of the way. That was hardly an isolated incident. N.A. dailies have been afflicted by groupthink, afraid of their own shadows, for so long that it is something of a miracle they retain the substantial audiences they still command. The reason they do is the overriding importance to readers of local news, which only the hometown paper covers in anything approaching comprehensive detail.
Newsrooms once were grumpy places, a curmudgeon sitting at every third desk. Long acquaintance with fires, floods, layoffs and municipal and corporate corruption will do that to you. But now they're morose places, hangdog expressions all around as we've come to believe our own exhaustive reporting on the supposed decline of our industry. There have been repeated waves of layoffs at major N.A. papers. These have been due partly to the advertising drought, but mostly to the struggle of feckless owners to make monthly payments to banks and bondholders.
The Internet is so fascinating an invention, by now its ubiquity informing a journalist's thoughts so thoroughly, that a great many newspaper managers have become panic-stricken about the imminent demise of their businesses. One hears constantly this singular refrain: "We need a new business model, and no one has a clue what that might be." Too many publishers imagine themselves to be buggy-whip makers at the turn of the last century, just waiting for the last few customers to straggle out and then close the doors for the last time on a business that has no future.
We are experimenting with all manner of innovations, from "repurposing" reporters to also write blogs or become videographers to devising newspaper websites with a so many new, so-called "user-friendly" applications that they are, in fact, becoming ever more difficult to find your way around - or "navigate," as we say. Most newspaper websites are good or very good,. But most also have at least some features that no journalist would come up with. There's one major paper with a new website that now enables you to view the day's news in traditional newspaper format, or, at the click of your mouse, have all those same stories arranged in rows of blocks without photos or illustrations, or a third option in which all these stories are arranged in the form of pictures that one clicks on to get the text. I'm told that, at least in the early going, many online readers enjoy this novelty. To me it looks like a newspaper that can't make up its mind about that most essential of functions, ordering the news so the reader see what the editors consider most important for them to know.
Such novelties arise because newspaper websites are not designed by journalists, but by computer software writers, the two groups speaking languages largely incomprehensible to the other. There's no stopping applications like the one I just described, because the "techies" are in charge, and techies are prone to do whatever technology enables them to do, whether it's useful to the "end-user" or not. This is what Steve Ballmer, the CEO of Microsoft, calls "geek sex." At Microsoft meetings on prototypes with far too many bells and whistles, Ballmer asks his programmers, "Is this truly useful to our customer or is it just geek sex?" Usually it's the latter and it's removed.
One of the great truisms that disturbs our sleep is that young people are no longer taking up the newspaper habit. They are, presumably, defectors to the Internet. And yet, the average age of readers of CanWest's 11 big-city papers is only 47. Which means that while a lot of 60-somethings are reading the Victoria Times Colonist and the Ottawa Citizen, so are a lot of people in their 30s and late 20s.
In my 30 years in business journalism, a year hasn't gone by when I didn't hear about the growing crisis of our industry's failure to capture young readers. The CBC periodically tears up its entire programming schedule in pursuit of young viewers and listeners, killing off shows with large loyal audiences of relatively high-income earners in order to experiment with programs aimed at kids with scant disposable income and which usually fail. Chasing after audiences with the attention span of a gnat is lunacy. I wanted to be a journalist since Grade Six, but I didn't acquire the habit of reading a newspaper each day until my 20s. Young people have too much frantic growing up to do, and dense textbooks to master and essays to write, to spend half and hour each day with a newspaper, It was ever thus.
Newspaper managers are fretting over smartphones and Facebook and Twittering. They're in a panic that somehow a communication device that enables me to send a maximum 141-character message is some kind of threat to the knowledge disseminated by newspapers and magazines, with their in-depth coverage of the why and how of events and what's to be done about solving the world's problems.
Newspapers have survived magazines, the telegraph, radio and television. They will not only survive but exploit the Internet, which already has exploded the size of my newspaper's audience from one million to close to two million, and transformed my metro daily into a paper that reaches the entire planet. I could never have imagined, stepping out of the Ryerson journalism school for the last time in 1979, that someday the columns and features I write for a Toronto newspaper would be read by people in Singapore, London and Fort Worth, Texas. But every small-town paper with a website - and almost every paper and magazine has one - can now be read worldwide, on the date of publication. Our I should say the hour of publication, since newspaper websites are updated constantly through the day. In that sense - and this is a very big deal - these are the greatest days in the history of newspapers, which have never commanded such a vast, global audience.
Which raises the question of whether we actually need a new business model. I see newspaper executives with their hair on fire, and they're trying to put it out with a hammer. Yes, we must evolve. We must, in the same competitive spirit of old, strive to put out the best newspapers, online and print, in the world. Because the flipside of Londoners being able to read the Star in real time is that the Star's audience now reads the Guardian and the Washington Post.
It strikes me that our business model of the pre-one-paper town is the one that will ensure our survival and prosperity. We simply have to be the most interesting paper, online and in print, that our potential readers can choose from. There's no rocket science to this. We have to go back to scooping the competition - and Lord knows we've never had more competition than today. We have to describe gang violence and offer solutions to it that we have learned work in other places. We have to expose scoundrels and celebrate heroes. We have to employ columnists so good that they each command audiences of 40,000 to 100,000 readers all on their own - who, by definition, have a strong point of view. We must rediscover our dormant crusading instinct. And, of course, if you're a metro paper, nothing happens in your city without you knowing about it and covering it with as many resouces as required.
3. The competitive advantage of newspapers.
The CanWest big-city papers have been around, on average, for 122 years. CanWest's Montreal Gazette dates from 1778. In every city in N.A., the oldest medium, most deeply knowledgeable about the community, and with a reputation for that knowledge, is the local daily newspaper. The strongest media brand name in any city is that of its dominant newspaper.
A few years back, the folks at Procter & Gamble decided that the American consumer needed a new type of dust mop. Instead of dipping your mop repeatedly in a pail of soapy water, this new mop would have the cleaning agent embedded in the slab of foam at the business end of the mop. P&G had to come up with a cleaning agent that wouldn't drip or evaporate in transit to the stores. The compound had to be strong enough to clean your floor but not so strong that it left scratches on it. P&G had to come up with winsome name name for this thing. It had to test-market what seemed a quite unnecessary invention. And to decide how to price it. And design it, everything from the packaging to the fit of the handle in your hand. They then had to convince millions of North Americans that they must have this product.
When I first heard of the Swiffer mop I thought it was idiotic, unable to imagine sensible people shelling out a premium price for a dust mop. But I also thought, this is Procter & Gamble, one of the greatest marketers in history. An enterprise that's been around since 1837, and has such long-established relationships with Wal-Mart, Loblaws and every other national retailer that, basically, P&G is able to force products onto the market on the strength of its reputation and marketing prowess. The local grocer is thinking, I've made a fortune over the years on sales of Tide, Pampers and Crest toothpaste, I'll certainly give this new P&G product a try. And you know the rest. Swiffer - I still think it's a ridiculous concept - generates sales in the hundreds of millions of dollars for Procter & Gamble.
In my business, we also have been around a long time, for at least a century in the case of most papers. Like P&G, we have immense resources, more than our non-newspaper media rivals. Unlike P&G and its Swiffer, we don't have to explain what news is, and why it's valuable to our existing and potential customers. All my colleagues and I have to do is be better journalists than our rivals, just as P&G has to stay a few steps ahead of Colgate and Unilever. We need simply to go back to what we once did so well - being the first to tell you about Marilyn Bell's extraordinary feat in swimming the width of Lake Ontario, and crusading for an end to child poverty and gang violence in our community. And expressing a strong point of view about the things we believe will make our readers healthier and more prosperous - whether it's a new industrial policy to revive our Southern Ontario economy, or championing more research dollars for breast cancer. We have to surprise and entertain. We have to be willing to offend, in causes we know to be right.
It's really quite simple. We need to be essential.
McClatchy (NYSE:MNI) is not a penny stock. Currently trading at $3.41. I get your point, but please get your facts straight.
Posted by: McClatchy Employee | 10/20/2009 at 01:44 PM
Dear MC:
Closed at $3.40 USD today. Yikes. Thanks for correcting me. Duh, if it was a penny stock it would have been forcibly delisted, which is what's happening with our CanWest newspaper chain - which may account for my brain cramp but not laziness in checking first. Cheers, David
Posted by: David Olive | 10/20/2009 at 06:07 PM
A long read David. You make your point well.
Only one comment - I do hope Rupert Murdoch holds his breath until we give in...will solve one major problem - and I don't think the Ozzies will lament either!
Posted by: Wascally Wabbit | 10/20/2009 at 06:49 PM
That should have ME, not MC. Again, thanks for setting me straight. Any chance you're with one of the three Bs?
Hi WW: Yes, much too long a read. Thanks for hanging in. I get to disliking Murdoch at times, then I remember he gave us the Simpsons? Didn't he? An odd thing, but I expect Aussies of the current generation would remember Conrad Black more than Murdoch, from the former six-year-long part-ownership of the Fairfax chain. Then again, Murdoch's father was a very big noise Down Under, so the self-exile of the son might not matter so much in Sydney and Melbourne.
Posted by: David Olive | 10/21/2009 at 10:44 PM