The Death of Newspapers? Part I.

The jungle drums predicting the death of newspapers seem to be growing ominously louder every week.

When established titles like the Christian Science Monitor announce they will stop printing a newspaper and shift their product online, it would be naïve not to interpret this move, and many others, as a sign that the industry is entering a painful period of massive restructuring.

Newspapers, and the media industries in general, are also going through severe cost-cutting measures, including layoffs, as they watch their top-line revenues go south. The only question is how long the agony will last. Maybe not the death rattle yet, but the prognosis is bleak.

Four years ago when Philip Meyer predicted, in his book The Vanishing Newspaper, that the final copy of the world’s last printed newspaper will roll off a printing press in the year 2043, it seemed vaguely alarming. The same dire scenario was evoked earlier this year in a New Yorker article citing Meyer’s book. Imagine that, a world without newspapers. Today Meyer’s prediction actually seems exceedingly diplomatic. That date is thirty-five years away. That date conveniently allows the entire generation in the top ranks of the newspaper business today to retire comfortably or go quietly to their graves before the ignominy of their profession’s unquiet demise.

Unquiet indeed. The debate about the death of Old Media is getting nasty. The latest salvo was a wicked piece in Slate that subtly traduced Web 2.0 media evangelist Jeff Jarvis, whose BuzzMachine blog enjoys a wide following. The Slate article was titled: “Is Jeff Jarvis gloating about the death of print?” Jarvis indeed has established a reputation for heralding a bold new era of “citizen journalism” based on networked Web 2.0 platforms. As an evangelist, he has been sharply critical of stubborn believers in the Old Religion – or, rather, Old Media – who just don’t understand that their business model is dying.

Slate’s slicing up of Jarvis was an Old Media counter-strike, though its target was more Jarvis personally than the substance of his ideas. Until now, Old Media advocates have been remarkably stoical as Web 2.0 evangelists, filled with passionate intensity, scoff at their outdated methods and proclaim their imminent extinction. True, some polemical Old Media voices have spoken up, like Andrew Keen, whose book The Cult of the Amateur is a reactionary defence of established media institutions and a shrill assault on citizen journalism. Conservatives claim that Web 2.0 evangelists are self-promoting hucksters jet-setting around the globe on someone else’s dime to industry conferences, where they scratch around for consulting jobs, pick up speaking gigs, and flog their snakeskin oil with juiced-up slogans and buzz-words about the inevitability of “social media”. That’s more or less the portrait of Jeff Jarvis that comes into focus in the Slate article.

I must confess that I frequently find myself agreeing with Jarvis’ analysis of the newspaper business. Perhaps that’s because, like him, I am a product of Old Media who now spends a good deal of my time thinking about New Media business models. I began in newspaper journalism 25 years ago – worked as a reporter, critic, correspondent, columnist, and eventually became Editor-in-Chief of a large national broadsheet, the National Post. I’ve also co-hosted a national TV show in prime time. I’ve moreover written two books about the Old Media business. The final chapter of one of them, published in 1999, was titled, “The Multimedia Revolution”.

In short, my long experience in newspapers and television procures a certain degree of confidence when critiquing Old Media. I know that business. At the same time, I don’t necessarily share the passionate convictions of Web 2.0 evangelism. While there can be little doubt that the Web 2.0 revolution has tremendous momentum at present, my own approach is more analytical than normative, more secular than evangelist.

My cards are now on the table. Now let’s return to newspapers. There can be little doubt, as previously noted, that the newspaper business is either dying or, at best, undergoing a profound structural transformation. There are many ways we can examine what is happening to newspapers, and bloggers like Jeff Jarvis are necessary voices in that discussion. So are the voices of his critics. I’d like to focus here on two issues:

First, the structural dynamics of the newspaper business that risk rendering the industry obsolete (I will address this issue in this post).

Second, the pervasive corporate culture in newspaper journalism that constrains the business from adapting to new market realities (an issue which I will address in a second post tomorrow). 

First, the industry’s structural dynamics. Let’s look at three pillars of the newspaper business: advertising, printing/distribution, and editorial.

Advertising. Five years ago when I was running the National Post, the advertising department was over-staffed with old-style “order takers”. We had dozens of advertising reps sitting in cubicles waiting for the telephones to ring. The senior advertising managers meanwhile were building good will in the old three-martini-lunch tradition. As Editor-in-Chief, I was dragged out to annual golf tournaments, pressured to make rubber-chicken speeches before clients, and arm-twisted into attending countless sales meetings because, I was told, big clients are always impressed when the top guy from “editorial” is in the room.

That was in 2003. The Web was exploding all around us. And yet I don’t think these grinding advertising sales rituals had changed much since the 1950s. I knew that the industry’s revenues were shifting online, and kept saying it. But nobody was listening. We didn’t even have editorial control of our own website. I logged on one day and punched in “George Bush”. This is the response the came up: “zero matches”. That’s when I knew we had a problem. And we did. Now let me ask this question: Was it really any different at most major daily newspapers?

Distribution. The first thing I learned as Editor of the National Post was that, while I was the most glamorous member of the paper’s executive team (editorial enjoys high prestige vis-à-vis the other departments), I certainly didn’t command the biggest budget. My editorial budget was less than 25% of the paper’s total cost structure. More than 50% of the budget was devoted to the grubby, low-prestige area of “manufacturing” – in other words, printing the newspaper. We were blowing half our revenues on just getting the product off printing presses (which, by the way, were in some cases owned by our fiercest competitors). Another big whack of the budget was getting the newspaper distributed – to subscribers’ homes, to hotels, to airports, and so forth. In sum, the vast majority of our cost structure was devoted not to “journalism”, but to below-the-neck functions of manufacturing the product and getting it to market.

I remember once giving a boardroom presentation to the senior corporate officers of my parent company, CanWest Global, a conglomerate that owns newspapers, television networks, radio stations, Web properties, and cable TV channels. The CEO was in the room, surrounded by the company’s top corporate officers. I was on my feet going through my plans and budget. Out of the corner of my eye, I noticed one of the top guys in the company, Tom Strike, tapping furiously on his calculator. Eminently likeable, Tom was known as a sharp “numbers” guy. As my publisher and I were walking everybody in the boardroom through our distribution costs, Tom was calculating the per-copy “yield”. I had a sinking feeling that his calculator was not my friend.

I was right. At one point, Tom looked up and said: “You’re in a shitty business”. Gulp. But he had a point. We had a negative per-copy yield. That’s why we were losing money. It wasn’t my editorial expenses. It was the enormous cost of getting the product printed and distributed. It was brain damage. When you are spending most of your budget getting a product to the doors of customers who don’t even have time to read it, but buy it out of habit or because it’s discounted, you’re in a shitty business.

No wonder newspapers like the Christian Science Monitor are going online. If you’re going to be disintermediated, you might as well disintermediate yourself.

Editorial. Most journalists are smart and hardworking, if egomaniacal and paranoid. I was once advised by a wise newspaper veteran that all newsrooms are essentially “adult daycare centres”. Not far from the truth. The real problem however, from a business point of view, is that journalists are totally disconnected from the realities of the business that employs them. And today, they are whistling past the graveyard.

I used to put my senior editors on the spot when we were discussing what should go on the front page. My ideas were much more expansive and less restricted by established journalistic values. I remember my Managing Editor once objecting to my lunacy by insisting to me: “But we have to the put the news on the front”. I replied: “News? Who says what’s news? You do?” Embarrassed silence.

Today, of course, newspaper editors are no longer the powerful “news” gatekeepers they used to be.  The rise of Web-based citizen journalism is disintermediating their traditional functions as gatekeepers and packagers. Newsgathering sites like Slashdot, Wikinews, Agoravox, Indymedia and many others have shifted power from “professional” journalists towards anyone who wishes to participate in the dissemination of information. In South Korea, for example, the OhMyNews site — whose motto is “Every Citizen is a Reporter” – has had a major impact on national politics in that country.

News has also been transformed by Web 2.0 platforms like Digg and Twitter. As the information flows following the recent Bombay terrorist attacks demonstrated, networked platforms like Twitter can get the “news” out faster than traditional media. As in Bombay, earlier this year when the devastating earthquake struck China, the first reports came not from media news reports, but from Twitter “tweets”. Thanks to Twitter, well-known blogger Robert Scoble reported the Chinese disaster an hour before major media like CNN. Scoble had been reading Twitter tweets from people in China while the earthquake was actually shaking the ground under their feet. In May, New Scientist reported that Facebook, Twitter, and GoogleMaps had been more efficient than traditional emergency services — which often rely on mass media — in responding to devastating California wildfires and the tragic Virginia Tech shooting rampages the previous year.

Make no mistake, Web 2.0 platforms are having a profound impact on how information is gathered and disseminated. News organisations, understandably, are inventing all sort of reasons and rationalisations to convince themselves that their own professional values and business models are unassailable (more on that tomorrow). In truth, they don’t have the luxury of being indifferent to these powerful forces. News organisations not only must reinvent their business models tied to vertical institutional structures and heavily dependent on increasingly stranded assets; they must also bring about a revolution in their corporate culture and professional values.

The first revolution (industry structure and organisation) is happening now, establishing its own facts. The second revolution (professional values and behaviour) will be harder to accomplish because it is meeting powerful forces of resistance. I will return to this subject tomorrow.