From Wikipedia, the free encyclopedia - View original article
The decline of newspapers has been widely debated as the industry has faced down soaring newsprint prices, slumping ad sales, the loss of much classified advertising and precipitous drops in circulation. In recent years the number of newspapers slated for closure, bankruptcy or severe cutbacks has risen—especially in the United States, where the industry has shed a fifth of its journalists since 2001. Revenue has plunged while competition from internet media has squeezed older print publishers. This has strictly affected only the United States or the English-speaking markets though there is a large rise in sales for countries like China, Japan and India.
The debate has become more urgent lately, as a deepening recession has cut profits, and as once-explosive growth in newspaper web revenues has leveled off, forestalling what the industry hoped would become an important source of revenue. One issue is whether the newspaper industry is being hit by a cyclical trough and will recover, or whether new technology has rendered newspapers obsolete in their traditional format. To survive, newspapers are considering combining and other options, although the outcome of such partnerships has been criticized. Despite these problems, newspaper companies with significant brand value, which have published their work online, have a significant rise in viewership.
The newspaper industry has always been cyclical, and the industry has weathered previous troughs. But while television's arrival in the 1950s presaged the decline of newspapers' importance as most people's source of daily news, the explosion of the internet in the 1990s and the first decade of the 21st century increased the panoply of media choices available to the average reader while further cutting into newspapers' hegemony as the source of news. Both television and the Internet bring news to the consumer faster and in a more visual style than newspapers, which are constrained by their physical form and the need to be physically manufactured and distributed. The competing mediums also offer advertisers the opportunity to use moving images and sound. And the internet search function allows advertisers to tailor their pitch to readers who have revealed what information they are seeking—an enormous advantage.
The Internet has also gone a step further than television in eroding the advertising income of newspapers, as – unlike broadcast media – it proves a convenient vehicle for classified advertising, particularly in categories such as jobs, vehicles, and real estate. Free services like Craigslist have decimated the classified advertising departments of many newspapers, some of which depended on classifieds for 70% of their ad revenue. Research has shown that Craigslist cost the newspaper industry $5.4 billion from 2000-2007, and that changes on the classified side of newspaper business led to an increase in subscription prices, a decrease in display advertising rates, and may have impacted some newspapers' online strategy. At the same time, newspapers have been pinched by consolidation of large department stores, which once accounted for substantial advertising sums.
Press baron Rupert Murdoch once described the profits flowing from his stable of newspapers as "rivers of gold." But, said Murdoch several years later, "sometimes rivers dry up." "Simply put," wrote Buffalo News owner Warren Buffett, "if cable and satellite broadcasting, as well as the internet, had come along first, newspapers as we know them probably would never have existed."
As their revenues have been squeezed, newspapers have also been increasingly assailed by other media taking away not only their readers, but their principal sources of profit. Many of these 'new media' are not saddled with expensive union contracts, printing presses, delivery fleets and overhead built over decades. Many of these competitors are simply 'aggregators' of news, often derived from print sources, but without print media's capital-intensive overhead. Some estimates put the percentage of online news derived from newspapers at 80%.
"Newspapers are doing the reporting in this country," observed John S. Carroll, former editor of The Los Angeles Times for five years. "Google and Yahoo aren't those people putting reporters on the street in any number. Blogs cannot afford it." Many newspapers also suffer from the broad trend toward "fragmentation" of all media – in which small numbers of large media outlets attempting to serve substantial portions of the population are replaced by an abundance of smaller and more specialized organizations, often aiming only to serve specific interest groups. So-called narrowcasting has splintered audiences into smaller and smaller slivers. But newspapers have not been alone in this: the rise of cable television and satellite television at the expense of network television in countries such as the United States and United Kingdom is another example of this fragmentation.
Since the beginning of 2009, the United States has seen a number of major metropolitan dailies shuttered or drastically pruned after no buyers emerged, including The Rocky Mountain News, closed in February, and The Seattle Post-Intelligencer, reduced to a bare-bones internet operation. The San Francisco Chronicle narrowly averted closure when employees made steep concessions. In Detroit, both newspapers, The Detroit Free Press and The Detroit News, slashed home delivery to three days a week, while prodding readers to visit the newspapers' internet sites on other days. In Tucson, Arizona, the state's oldest newspaper, the Tucson Citizen, said it would cease publishing on March 21, 2009, when parent Gannett Company failed to find a buyer.
A number of other large, financially troubled newspapers are seeking buyers. One of the few large dailies finding a buyer is The San Diego Union-Tribune, which agreed to be sold to a private equity firm for what The Wall Street Journal called "a rock-bottom price" of less than $50 million – essentially a real estate purchase. (The newspaper was estimated to have been worth roughly $1 billion as recently as 2004.) The Sun Times Media Group, publisher of the eponymous bankrupt newspaper, fielded a meager $5 million cash bid, plus assumption of debt, for assets last claimed worth $310 million.
Large newspaper chains filing bankruptcy since December 2008 include the Tribune Company, the Journal Register Company, the Minneapolis Star Tribune, Philadelphia Newspapers LLC, Sun-Times Media Group and Freedom Communications.
Some newspaper chains that have purchased other papers have seen stock values plummet. The McClatchy Company, the nation's third–largest newspaper company, was the only bidder on the Knight-Ridder chain of newspapers in 2005. Since its $6.5 billion Knight-Ridder purchase, McClatchy's stock has lost more than 98% of its value. McClatchy subsequently announced large layoffs and executive pay cuts, as its shares fell into penny stock territory. (Although McClatchy faced delisting from the New York Stock Exchange for having a share price below $1, in September 2009, it was able to overcome this threat. Others have not been so lucky. In 2008 and 2009, three other U.S. newspaper chains have seen their shares delisted by the NYSE.)
Other newspaper company valuations have been similarly punished: the stocks of Gannett Company, Lee Enterprises and Media General traded at less than two dollars per share by March 2009, with The Washington Post Company's stock faring better than most, thanks to diversification into educational training programs – and away from publishing. Similarly, UK-based Pearson PLC, owner of The Financial Times, increased earnings in 2008 despite a drop in newspaper profits, thanks to diversification away from publishing.
The New York Times Company, hard-pressed for cash as its shares slid below five dollars per share, suspended its dividend, sold and leased back part of its headquarters, and sold preferred shares to Mexican businessman Carlos Slim in return for a cash infusion. But the credit rating agencies still cut the rating on Times Company's debt to junk status, and the cash crunch at The Times prompted it to threaten to shutter its Boston Globe unless workers made deep concessions. Even News Corp., the diversified media holding company overseen by Rupert Murdoch, was hit, forced to write down much of the value of newspaper publisher Dow Jones & Co. that it purchased for $5 billion in 2007. Apparently shelved are plans announced by Murdoch at the time of the acquisition to expand The Wall Street Journal's newsroom.
One development occurred in mid 2013, when billionaire Jeff Bezos, founder of Amazon.com, paid US$250 million for The Washington Post and several smaller newspapers. (The Post company had sold Newsweek a few years earlier.) The purchase, which ended the more than 80-year ownership of the paper by the Graham family, was called "generous" by publisher Katharine Weymouth, who was asked to remain at the helm. When it was noted that the paper might have to run stories which are critical of Amazon.com or Bezos in the future, Bezos agreed not to interfere with the newspaper's independence. Others[who?] have said that Bezos drastically overpaid for the paper, and that late publisher Katharine Graham might[weasel words] not have made the sale.
The deterioration in the United States newspaper market led one senator to introduce a bill in March 2009 allowing newspaper companies to restructure as non-profit corporations with an array of tax breaks. The Newspaper Revitalization Act would allow newspapers to operate as nonprofits similar to public broadcasting companies, barring them from making political endorsements.
|This section is outdated. (June 2013)|
In the United Kingdom, newspaper publishers have been similarly hit. In late 2008 The Independent announced job cuts. In January the chain Associated Newspapers sold a controlling stake in the London Evening Standard as it announced a 24% decline in 2008 ad revenues. In March 2009 parent company Daily Mail and General Trust said job cuts would be deeper than expected, spanning its newspapers, which include the Leicester Mercury, the Bristol Evening Post and the Derby Telegraph. One industry report predicted that 1 in 10 UK print publications would cut its frequency of publication in half, go online only or shut in 2009.
The challenges facing the industry are not limited to the United States, or even English-speaking markets. Newspapers in Switzerland and the Netherlands, for instance, have lost half of their classified advertising to the internet. At its annual convention slated for May, 2009, in Barcelona, Spain, the World Association of Newspapers has titled the convention's subject "Newspapers Focus on Print & Advertising Revenues in Difficult Times."
In September 2008, the World Association of Newspapers called for regulators to block a proposed Google–Yahoo advertising partnership, calling it a threat to newspaper industry revenues worldwide. The WAN painted a stark picture of the threat posed to newspapers by the search engine giants. "Perhaps never in the history of newspaper publishing has a single, commercial entity threatened to exert this much control over the destiny of the press," said the Paris-based global newspaper organization of the proposed pact.
But there are bright spots in the world market for newspapers. At its 2008 convention, held in Gothenburg, Sweden, the World Association of Newspapers released figures showing newspaper circulations and advertising had actually climbed in the previous year. Newspaper sales were up nearly 2.6% the previous year, and up 9.4% over the past five years. Free daily newspapers, noted the WAN, accounted for nearly 7% of all global newspaper circulation – and a whopping 23% of European newspaper circulation. Of the world's 100 best–selling daily newspapers, 74 are published in Asia – with China, Japan and India accounting for 62 of those.
Sales of newspapers rose in Latin America, Asia and the Middle East, but fell in other regions of the world, including Western Europe, where the proliferation of free dailies helped bolster overall circulation figures. While internet revenues are rising for the industry, the bulk of its web revenues come from a few areas, with most revenue generated in the United States, western Europe and Asia–Pacific region.
The increasing use of the internet search function, primarily through large engines such as Google, has also changed the habits of readers. Instead of perusing general interest publications, such as newspapers, readers are more likely to seek particular writers, blogs or sources of information through targeted searches, rendering the agglomeration of newspapers increasingly irrelevant. "Power is shifting to the individual journalist from the news outlet with more people seeking out names through search, e-mail, blogs and social media," the industry publication Editor & Publisher noted in summarizing a recent study from the Project for Excellence in Journalism foundation.
Where once the ability to disseminate information was restricted to those with printing presses or broadcast mechanisms, the internet has enabled thousands of individual commentators to communicate directly with others through blogs or instant message services. Even open journalism projects like Wikipedia have contributed to the reordering of the media landscape, as readers are no longer restricted to established print organs for information.
But the search engine experience has left some newspaper proprietors cold. "The aggregators and plagiarists will soon have to pay a price for the co-opting of our content," Rupert Murdoch told the World Media Summit in Beijing, China. "If we do not take advantage of the current movement toward paid content, it will be the content creators – the people in this hall – who will pay the ultimate price and the content kleptomaniacs who triumph."
Critics of the newspaper as a medium also argue that while today's newspapers may appear visually different from their predecessors a century ago, in many respects they have changed little and have failed to keep pace with changes in society. The technology revolution has meant that readers accustomed to waiting for a daily newspaper can now receive up-to-the-minute updates from web portals, bloggers and new services such as Twitter. The expanding reach of broadband internet access means such updates have become commonplace for many users, especially the more affluent, an audience cultivated by advertisers.
The gloomy outlook is not universal. In some countries, such as India, the newspaper remains more popular than internet and broadcast media. Even where the problems are felt most keenly, in North America and Europe, there have been recent success stories, such as the dramatic rise of free daily newspapers, like those of Sweden's Metro International, as well as papers targeted towards the Hispanic market, local weekly shoppers, and so-called hyperlocal news.
But these new revenue streams, such as that from newspapers' proprietary web sites, are often a fraction of the sums generated by the previous advertisement- and circulation-driven revenue streams, and so newspapers have been forced to curtail their overhead while simultaneously trying to entice new users. With revenues plummeting, many newspapers have slashed news bureaus and journalists, while still attempting to publish compelling content – much of it more interactive, more lifestyle-driven and more celebrity-conscious.
In response to falling ad revenues and plunging circulation, many newspapers have cut staff as well as editorial content, and in a vicious cycle, those cuts often spur more and deeper circulation declines—triggering more loss of ad revenues. "No industry can cut its way to future success," says industry analyst John Morton. "At some point the business must improve."
Overall, in the United States, average operating profit margins for newspapers remain at 11%. But that figure is falling rapidly, and in many cases is inadequate to service the debt that some newspaper companies took on during better times. And while circulation has dropped 2% annually for years, that decline has accelerated.
The circulation decline, coupled with a 23% drop in 2008 newspaper ad revenues, have proven a double whammy for some newspaper chains. Combined with the current recession, the cloudy outlook for future profits has meant that many newspapers put on the block have been unable to find buyers, who remain concerned with increasing competition, dwindling profits and a business model that seems increasingly antiquated.
"As succeeding generations grow up with the Web and lose the habit of reading print," noted The Columbia Journalism Review in 2007, "it seems improbable that newspapers can survive with a cost structure at least 50% higher than their nimbler and cheaper Internet competitors." The problem facing newspapers is generational: while in 2005 an estimated 70% of older Americans read a newspaper daily, fewer than 20% of younger Americans did.
"It is the fundamental problem facing the industry," writes newspaper analyst Morton. "It's probably not going away. And no one has figured a way out."
While newspaper companies continue to produce much of the award-winning journalism, consumers of that journalism are less willing to pay for it in a world where information on the web is plentiful and free. Plans for web-based subscription services have largely faltered, with the exception of financial outlets like The Wall Street Journal, which have been able to generate substantial revenues from subscribers whose subscriptions are often underwritten by corporate employers. (Subscriptions to the Journal's paid website were up 7% in 2008.) Some general-interest newspapers, even high-profile papers like The New York Times, have been forced to drop paid internet subscription services. Times Select, the Times's pay service, lasted for exactly two years before the company abandoned it.
Within the industry, there is little consensus on the best strategy for survival. Some pin their hopes on new technologies such as e-paper or radical revisions of the newspaper such as the Daily Me; others, like a recent cover story in Time magazine, have advocated a system that includes both subscriptions as well as micro-payments for individual stories.
Some newspaper analysts believe the wisest move is embracing the Internet, and exploiting the considerable brand value and consumer trust that newspapers have built over decades. But revenues from online editions have come nowhere near matching previous print income from circulation and advertising sales, since they get only about one-tenth to one-twentieth the revenue for a web reader that they do for a print reader; many struggle to maintain their previous levels of reporting amidst eroding profits.
With profits falling, many newspapers have cut back on their most expensive reporting projects – overseas bureaus and investigative journalism. Some investigative projects often take months, with their payoff uncertain. In the past, larger newspapers often devoted a portion of their editorial budget to such efforts, but with ad dollars drying up, many papers are looking closer at the productivity of individual reporters, and judging speculative investments in investigative reports as non-essential.
Some advocates have suggested that instead of investigative reports funded by newspapers, that non-profit foundations pick up the slack. The new non-profit ProPublica, a $10–million–a–year foundation devoted solely to investigative reporting and overseen by former Wall Street Journal editor Paul Steiger, for instance, hopes that its 18 reporters will be able to release their investigative reports free, courtesy of partnerships with such outlets as The New York Times, The Atlantic and 60 Minutes. The Huffington Post also announced that it would set aside funds for investigative reporting. Other industry observers are now clamoring for government subsidies to the newspaper industry.
Observers point out that the reliability and accountability of newspapers is being replaced by a sea of anonymous bloggers, many with uncertain credentials and points of view. Where once the reader of a daily newspaper might consume reporting, for instance, by an established Cairo bureau chief for a major newspaper, today that same reader might be directed by a search engine to an anonymous blogger with cloudy allegiances, training or ability.
Ironically, these dilemmas facing the newspaper industry come as its product has never been more sought-after. "The peculiar fact about the current crisis," writes The New Yorker's economics writer James Surowiecki, "is that even as big papers have become less profitable they've arguably become more popular."
As the demand for news has exploded, so have consumers of the output of newspapers. Both nytimes.com and washingtonpost.com, for instance, rank among the top 20 global news sites. But those consumers are now reading newspapers online for free, and although newspapers have been able to convert some of that viewership into ad dollars, it is a trickle compared to previous sources. At most newspapers, web advertising accounts for only 10–15% of revenues.
Some observers have compared the dilemma to that faced by the music industry. "What's going on in the news business is a lot like what's happening with music," said editor Paul Steiger, a 43–year journalism veteran, who further added that free distribution of content through the internet has caused "a total collapse of the business model."
The revenue streams that newspapers counted on to subsidize their product have changed irrevocably: in 2008, according to a study by the Pew Research Center, more people in the United States got their news for free on the internet than paid for it by buying a newspaper or magazine. "With newspapers entering bankruptcy even as their audience grows, the threat is not just to the companies that own them, but also the news itself," observed writer David Carr of The New York Times in a January 2009 column.
Depending on location and circumstances, each specific newspaper will face varied threats and changes. In some cases, new owners have increased their print, not trying to rely a lot more on digital services. However, in most cases, there is an attempt to find new revenue sources online that are less based on print sales. How much further ad sales will decline cannot be predicted with accuracy. The future will partly be shaped by the need for vision, leadership, and community support of local news and journalism. The future will be shaped by what citizens and consumers choose. The decline of well paid journalism and reliable news sources could level off if enough citizens choose to support it. Newspapers have a very important role to play, by holding governments to account, trying to stop corruption, and being an important contribution to democratic free speech. The future is not inevitable or predetermined.
Ultimately, the newspaper of the future may bear little resemblance to the newsprint edition familiar to older readers. It may become a hybrid, part-print and part-internet, or perhaps eventually, as has happened with several newspapers, including the Seattle Post-Intelligencer, the Christian Science Monitor and the Ann Arbor News, internet only. In the meantime, the transition from the printed page to whatever comes next will likely be fraught with challenges, both for the newspaper industry and for its consumers.
"My expectation," wrote executive editor Bill Keller of The New York Times in January 2009, "is that for the foreseeable future our business will continue to be a mix of print and online journalism, with the growth online offsetting the (gradual, we hope) decline of print." The paper in newspaper may go away, insist industry stalwarts, but the news will remain. "Paper is dying," said Nick Bilton, a technologist for The Times, "but it's just a device. Replacing it with pixels is a better experience." On September 8, 2010, Arthur Sulzberger Jr., Chairman and Publisher of The New York Times, told an International Newsroom Summit in London that "We will stop printing the New York Times sometime in the future, date TBD."
Mitchell Stephens calls for a turn toward "wisdom journalism" that will take a more evaluative, investigative, informed, and possibly even opinionated stance.
But even as pixels replace print, and as newspapers undergo wrenching surgery, necessitating deep cutbacks, reallocation of remaining reporters, and the slashing of decades-old overhead, some observers remain optimistic. What emerges may be 'newspapers' unrecognizable to older readers, but which may be more timely, more topical and more flexible. Less competition from other local printers will also be a major determining factor.
"Journalistic outlets will discover," wrote Michael Hirschorn in The Atlantic, "that the Web allows (okay, forces) them to concentrate on developing expertise in a narrower set of issues and interests, while helping journalists from other places and publications find new audiences." The 'newspaper' of the future, say Hirschorn and others, may resemble The Huffington Post more than anything flung at today's stoops and driveways.
Much of that experimentation may happen in the world's fastest-growing newspaper markets. "The number of newspapers and their circulation has declined the world over except in India and China," according to former CEO Olivier Fleurot of The Financial Times. "The world is becoming more digital but technology has helped newspapers as much as the Internet." Making those technological changes work for them, instead of against them, will decide whether newspapers remain vital – or roadkill on the information superhighway.
There will be a percentage of readers that refuse to use the internet and electronic screens, preferring hard copies. What this percentage will be, in various places and times, remains to be seen. Some readers have too much screen time already, and enjoy going back to paper and ink at times. Some ad attempts online are blocked, unlike a paper ad. The value of print advertising is that a significant percentage of the population will see the same ad, unlike specialized internet ads.
The US journalism schools are also pressured to adapt to the changing landscape. At the Walter Cronkite School of Journalism and Mass Communication, part of Arizona State University, a course on "The Business of Journalism" was retitled "The Business and Future of Journalism"  Introductory level courses at the Medill School of Journalism at Northwestern University include "Multimedia Storytelling" and "Introduction to 21st-Century Media." As print journalism wanes, journalism schools are focusing on the internet as a distribution medium, and are recalibrating courses to hone skills needed for jobs in the 21st century. Schools now include classes on computer programming as well as entrepreneurship. Rich Beckman, a professor at the University of Miami, said "There were deans all over the country saying, 'We're never going to teach computer programming in J-school.' Well, now they are." Centers for teaching new media innovation are being created at Columbia University and the City University of New York.
Although newspapers are struggling, and journalism jobs being eliminated, applications at the nation's journalism schools are increasing. The Columbia Journalism School reports a 44% jump from 2008, and the Annenberg School for Communication reports a 20% increase. Other schools report similar increases.