The Elbert Files: Newspapers in jeopardy
Friday, July 18, 2014 6:00 AM
Nearly 20 years ago, when The Des Moines Register was pulling back from statewide delivery, I wrote a memo to my bosses suggesting they convert out-state print subscribers to online readers.
As I recall, no one responded, which wasn’t surprising. I was not an executive or even a manager, just a business writer who occasionally covered technology. That’s how I first learned about the Internet, which was just beginning to develop commercial uses. It was still in a formative stage, with lots of glitches. Most people did not know what a website was or have any idea how the technology was about to subsume us.
It was another dozen or so years before newspaper executives began to take the Internet seriously. And when they did, their efforts were driven more by panic than strategy. I mention this because I just read a new book, “Saving Community Journalism; The Path to Profitability” by Penelope Muse Abernathy, a news executive-turned-academic at the University of North Carolina.
The book explains the historical role played by community newspapers and warns that the Internet has siphoned off both readers and advertisers to a point where some believe that it “could pose a crisis for democracy in the near future.”
As Abernathy notes, newspapers were not the first industry to experience creative destruction. Airlines, telecommunications and financial services experienced similar transitions, providing ample evidence of how the process works.
“Industries in the throes of creative destruction experience a tipping point or a waterfall moment (when) revenues and profits suddenly plummet and the old industry’s existence is put in jeopardy,” Abernathy wrote.
The waterfall moment for newspapers was around 2002, when print advertising revenue began a deep dive, falling from near $60 billion to below $20 billion in just seven years.
Newspapers large and small made deep cuts to preserve profitability, including the elimination of one out of three newsroom jobs.
For years, newspaper executives flailed about, failing to grasp what they needed to do to survive and prosper in the digital age. Only in the last couple of years have they begun to figure it out.
What they need to do, Abernathy said, is not pretty or easy. To have any hope in the future, she said, community newspapers need do three things: shed legacy costs associated with the print era, build new business across multiple platforms and aggressively pursue new revenue.
To get there, she said, they should cut costs by 6 percent a year for five years, and increase revenue by 6 percent a year for five years. Only by cutting costs by 30 percent and increasing revenue by 30 percent will community newspapers be able to pay for the upgrades in equipment and employee training they need to survive and prosper in the digital age, Abernathy said.
That means making tough choices about what they will give up and not cover going forward, which is much easier said than done. I can’t count the number of times during my last decade at The Des Moines Register that top editors said we needed to make tough choices, only to back down when it came time to choose.
Abernathy said that research shows that readers are understanding and will forgive a loss of quantity, but not a loss of quality.
And while preserving quality is essential, Abernathy said, it is pointless unless newspapers also figure out how to make money in the digital world. To do that, newspapers must become more creative in their use of digital ads, which have little stand-alone value but can become powerful sales drivers when paired with print and other new tools, including sponsorships, Abernathy said.
When properly used, she said, there are no equals to the advertising tools available to community newspapers for telling advertisers’ stories.
Not all community newspapers will survive the transition, she said, but the ones that do will find they have many advantages over television, billboards and other single-source media.
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