Newspapers had a dreadful year in 2008. So, have they hit rock bottom or are they just beginning their decline? To find out, I caught up with Ken Doctor earlier this week.
Ken Doctor is author of the Content Bridges blog and is a leading authority on the newspaper industry. Ken had a 21-year career with Knight Ridder, serving as vp/content services, vp/strategy and vp/editorial for Knight Ridder Digital. He led the development of Pioneer Planet, the Saint Paul Pioneer Press' online service, which debuted in 1995. Today, Ken focuses on the emerging world of alternative media journalism both through his blog and as lead news analyst for industry consultants Outsell.
Content Matters: 2008 was a pretty painful year for the newspaper industry; what do you see for 2009?
Ken Doctor: No end in sight, unfortunately. Advertising makes up 80% of US newspaper revenues and ad spend tracks GDP, so the best anyone can hope for is some light for the holiday season. That means year-over-year ad revenue will be down 15-20% this year – and that’s against a bad 2008. Glimmer of hope: The stimulus package helps jump start car-buying, house-purchasing and job-getting – all bringing some renewed life to “classifieds.” So, overall, we’ll see the newspaper industry follow the theme of Steve Martin’s first album, “Let’s Get Small.”
CM: We’ve already seen the Detroit Free Press stop selling printed newspapers on slower weekdays, while the Seattle Post Intelligencer looks to go online-only or shutter its doors. Is a hybrid-model like Freep’s sustainable? In what markets might an online-only model work (if any)?
KD: Here’s the rub. On average, US newspaper companies only get 10% of their overall revenues from digital sources. So, the paradox: They can get legacy print costs (production, printing, physical distribution) by slimming the print product or delivering it fewer days, but the more they accelerate their readers and advertisers move to the web, the faster they lose high-value print dollars. Yes, the math of online-only works – but will only support a newsroom of maybe 20% the current size. So instead of 150 people in small city newsroom, online-only might support 30.
Strip away all the legacy costs of a print operation, and strip away heavy debt (which pushed the Tribune Company and the Star Tribune into bankruptcy and has put several other companies at its door) and you have online-only startups. These Knight Foundation-funded operations – MinnPost, Voice of San Diego, Chi-Town News, The Beacon (in St. Louis) – are good examples of how online-only can be built. They typically have staffs of 6 -12 people and lots of stringers. Dailies of course could support larger operations – they’ve got a lot of traffic already in place – but the model isn’t that dissimilar.
CM: If we start with the assumption that few news organizations will be able to adequately fund investigative reporting and international reporting, what’s the solution? Will it be a shared services model, funding from wealthy patrons or something else?
KD: It’s not just investigative and international reporting that’s at stake – it’s reporting overall. That’s the gap – local newspaper reporting. We depend on 1500 or so local dailies to tell us much of what’s going on in our communities. We’ve already lost a lot of reporting – at least 10-15% over the past two years – but it’s hard to point out ….what’s not there.
Who and what will bridge the gap? We’re seeing all kinds of efforts. We see NPR-like member-supported pushes. We see national and increasingly community foundations, foundations that are beginning to see local journalism like they used to see local arts – a community good that can’t stand on their own as “businesses.” We see angels, like the Sandler family that funded investigative site ProPublica.
They are all fine, but small potatoes for now. I’d like to see a major push to bridge the gap, even as it grows. Maybe a further tax on broadband service (where do the current taxes go anyway?) that would go into a pot to fund journalism.
CM: While newspapers may have limited control over macro issues, many of their actions (or inactions) have hastened their demise. Which newspapers do you feel have done a reasonably good job, all things considered, of navigating the changing landscape?
KD: The sad truth is that the top achievers in traffic, duration and digital revenue aren’t doing that much better than their low-achieving peers. So the New York Times and Washington Post are at the top of the heap for digital revenue – 12-13% of their overall revenue. Low achievers are doing 5 or 6%. The problem is that whether you are the top end of that or bottom end, you’ve failed to make the digital transition.
That said, both the Times and Post are clear leaders in innovation. Hearst and Scripps have both shown some impressive life in implementing the Yahoo Consortium behavioral targeting platform. McClatchy now tops 50% in the amount of online revenue that is “online-only,” a critical milestone.
CM: While newspapers are struggling, users are consuming more news content than ever before. What are the positive signs you see in the news industry?
KD: Ironically, within this creative destruction, we see the great promise of the Internet being fulfilled. Never before in human history can we get to so much news so easily from so many diverse sources and voices. Within newspapers, we see some good innovations in niching (Gannett’s Moms Like Me network of sites) and some smart adoption of blogging actually replacing “story-writing,” providing greater immediacy, greater interaction – and more content. Outside of newspapers, we’re seeing a wealth of start-ups from Politico to Global Post to the new city sites. Once the recovery begins, we’ll see lots more of the new efforts.
