Newspaper Business: "I'm Not Dead...Yet"

The Detroit Free Press and The Detroit News have broken some new ground in the continued downward spiral of print journalism. Unfortunately, they may have unearthed their own grave.

Both daily newspapers announced that they are discontinuing daily home delivery of their print editions. Only the most lucrative days of the week - Thursday, Friday, and Sunday - will maintain the practice of daily delivery. A print copy will be available at newsstands seven days a week, although it's expected to be a much slimmer offering, and editors have stated that an online version that replicates the print version will always be available. Whether the online edition will be pay-walled for subscribers only remains to be seen.

When I see the dailies use terms like "lucrative", I immediately jump to the conclusion that it's lucrative for them, not for me. I doubt the news content will be markedly better. Advertising revenues are certainly higher on those days, and ad dollars are a big driver of newspaper income. With circulation dropping, so are ad rates, and with some of the most reliable ad revenue streams (car dealers, real estate, etc.) struggling to survive themselves, there's less loot to throw around.

Coupled with increased production and paper costs, higher gasoline prices that impacts delivery expense, and the public moving definitively toward new information sources such as the internet, newspapers have seen the writing on the wall for years but have failed to react beyond cutting staff and looking for cheaper ways to move their product. A printed paper can generate about $1 per subscriber in revenue, while online readers only generate 10 cents. It's easy to see the math at work.

Why didn't the news business see this coming? It's a very simple market concept, supply and demand. There are as many people interested in the news today as there were twenty years ago, probably more. What has changed is the supply. There used to be three primary news sources - newspaper, radio, and broadcast television. They had a monopoly on the product, and they chose how much to release, and when. 

With the introduction of online news, the previous gatekeepers found themselves confronted with an almost endless supply as competition, and the new kids on the block were willing to produce their offering at a much lower cost. With the advent of email and the Google, tracking down sources and information began moving at the speed of light, which allowed for quicker turnaround via alternative delivery methods.

All of these factors lead to a big drop in price in other businesses, so why not the news biz? And the newspapers simply failed to adapt and instead built up huge amounts of debt as they attempted to muscle through their outdated business model. The recent bankruptcy filing by The Tribune Company, which owns the LA Times, Chicago Tribune, Baltimore Sun, and other daily papers, serves as a prime example of the dinosaur approach to news.

Much like Starbucks found that opening stores on every corner eventually saturated the coffee market to the point where their model was not sustainable, newspapers are finding that having multiple offerings in small geographic areas, all reporting essentially the same information except for small metro sections, isn't a brand differential. There's lots of state, national, and world news out there, often much more timely that what's tossed in my driveway each morning.

A new generation has grown up with electronic information at their fingertips and they have great comfort with that delivery mechanism. Older folks like me will get twitchy when we contemplate the loss of the tactile aspects of reading a printed newspaper, and we'll have to reconcile ourselves with never ferociously fighting the newsprint in a futile folding exercise. On the plus side, you don't have to run out in the rain to drag in www.nytimes.com so I guess it balances out.

Newspapers, like network news, were doing fine before they were purchased by mega-corporations and profit became the grail. It will be interesting to see how regional online news develops, and whether we'll see a return to in-depth local reporting to fill the niche that people seem to want. Maybe we'll discover that targeted content is the next big thing.