The Information Business

The New Yorker's "Financial Page" this week was on "News You Can Lose" and the demise of newspapers. Some highlights:

Many traditional advertisers, like big department stores, are struggling, and the bursting of the housing bubble has devastated real-estate advertising.

(One of my first jobs out of college was in the advertising department of Thalhimers where I manually constructed, with type and glue, the many full page ads we ran in the two daily newspapers. There were several of us who did that, as well as a row of cubicles full of copywriters and artists. Imagine the payroll for that staff, not to mention we then paid the Times-Dispatch and News Leader to run all these ads. The A section was full of them every day. If there were no cell phone industry, I think the paper would have hit the skids even sooner. Cell phone ads still fill the pages.)

Papers' attempts to deal with the new environment by cutting costs haven't helped: trimming staff and reducing coverage make newspapers less appealing to readers and advertisers.

Newspapers have about half as many subscribers as they did four decades ago--but the Internet helped turn that slow puncture into a blowout. Papers now seen to be the equivalent of the railroads at the start of the 20th century--a once-great business eclipsed by a new technology....Had the bosses realized they were in the transportation business, rather than the railroad business, they could have moved into trucking and air transport, rather than letting other companies dominate...if newspapers had understood they were in the information business, rather than the print business, they would have adapted more quickly and more successfully to the Net.

Local papers could have been more aggressive in leveraging their brand names to dominate the market for online classifieds, instead of letting Craigslist usurp that market.

None of the important aggregation sites, to say nothing of Google News, are run by a paper. Even now, papers often display a "not invented here" mentality, treating their sites as walled gardens, devoid of links to other news outlets.

The real problem for newspapers, in other words, isn't the Internet; it's us. We want access to everything, we want it now, and we want it for free. That's a consumer's dream, but eventually it's going to collide with reality: if newspapers' profits vanish, so will their product.

There are many possible futures one can imagine for them, from becoming foundation-run nonprofits to relying on reader donations to that old standby, the deep-pocketed patron.

For a while now, readers have had the best of both worlds: all the benefits of the old, high-profit regime--intensive reporting, experienced editors, and so on--and the low costs of the new one. But that situation can't last. Soon enough, we're going to start getting what we pay for, and we may find out just how little that is.

(Case in point, very few blogs offer unbiased reporting. More common is the editorializing model, and even more common is the navel-gazing model, the blogs as life trivia diaries, of interest to only the writer. You have to spend time pouring through all the headlines and opening paragraphs, trying to separate the three models. It would be great if the local aggregation websites would do that sorting for you.)