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March 2009

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Contact Ken Custer at 303-277-9840.


On the Fate of Newspapers

By Ken Custer

Note: This original article was written and published before the Rocky Mountain News ceased operations. Only the lead paragraph has been updated.

For Colorado, the demise of the Rocky Mountain News, though not unanticipated, came a little sooner than anticipated as no long ago the E.W. Scripps said they would make a decision March 31. Every effort had been made to find a buyer for the newspaper but the not we interested or could afford the financial needs. MediaNews Group, owners of The Denver Post is dissolving the Denver Newspaper Agency, the Joint Operating Agreement between the Post and the News that was formed in 2001. All News subscribers are now receiving The Denver Post

What does this mean for Colorado?
First and foremost, subscribers lose the voice of a second opinion on all issues along with not having highly respected columnists. Next, a fleet of professional journalists will be without jobs and little chance of staying in the newspaper business. Lastly, though the JOA already virtually eliminated the competition, advertisers will have to pay whatever is demanded if they want to use a major daily newspaper to promote their wares.

Why is this happening?
It all comes down to dollars and cents. Circulation and therefore advertising is declining. The younger generations are not newspaper oriented and the Internet has become their major source of information. Which then brings up the question, “Why pay for a subscription when you can get it for free.” This will be discussed later in the article.

Advertising dollars are following the younger generation into new media. Expenses continue to escalate as paper, ink and salaries increase. A major source of revenue for newspapers has always been the classified ads. Today the online entities such as e-bay, Craigslist and Monster.com have taken this revenue away. Also, the current economic conditions are eliminating some traditional newspaper advertisers. Though newspapers, like radio, TV and magazines, have created Websites to compete online, these sites cannot generate the revenue that display advertising always has and is what supported a staff of professional journalists. When the ink turns red, serious adjustments have to be made or it's time to take the drastic action now required by E.W. Scripps.

What are the alternatives?
In most cases, the suburban newspapers such as the Sentinel Group, are keeping their heads above water. They rely on the retail businesses in their marketing area that don't need and can't afford broader media. This makes it more difficult for major print advertisers such as auto dealers and furniture stores to create print ads for a variety of formats. However, as suburban newspapers start working together and standardize their product, they can become a viable alternative.

Is it just Colorado that is losing newspapers?
Absolutely not! This is a common problem throughout the country. Tribune Company, owners of the Chicago Tribune, has filed for Chapter 11 bankruptcy and is converting their broadsheet format to tabloid to save on paper. The Detroit Free Press and Detroit News are limiting home delivery to Thursday, Friday and Sunday while continuing daily newsstand sales, all to cut production costs. The Seattle Post Intelligencer has been placed on the block and owner Hearst Corp. has stated they will not publish a print version of the paper by the end of March. The Christian Science Monitor will no longer provide a printed newspaper and will be 100% online. And so it goes, San Francisco, Tucson, New York and many other newspaper markets are making extreme adjustments to fit the times.

To get additional insight on the future of newspapers, Advertising & Marketing Review has asked HARRISON COCHRAN, Publisher of the Aurora Sentinel, and ED OTTE, Executive Director of the Colorado Press Association to contribute their thoughts.


One paper town is past tense
By Harrison Cochran

And then there was one - not!
With the anticipated closure, of the 150-year-old Rocky Mountain News columnists are bemoaning a “one newspaper town.”

That is so wrong.
Every street corner is crowded with community papers, alternatives, free dailies and even fabrications like the Onion. More local papers reach suburban doorsteps each week than metro dailies and did even before their melt down.

The Joint Operating Agreement (JOA) which propped up a “failing newspaper,” even if they named the wrong one, was at best life support. The misnamed Newspaper Preservation Act proposed to maintain two vigorous editorial voices was out dated before if was legalized in 1970 and No JOA has done anything but prolong death from economic Darwinism.

To blame the demise of one Denver paper or the anticipated closures in Minneapolis, Chicago, Seattle and Tucson on cyber competition overlooks the impact economics and demographics.

Some of this misconception is perpetuated by movies and Lou Grant, which made papers look like giant newsrooms with presses in the basement.

In fact newspapers are mainly (90 percent) a manufacturing, marketing and distribution engine delivering a perishable product by hand every day rain or shine, As revenues tumbled below production costs papers forced to cut journalists curtail deliveries, and charge more for less started down a slippery slope. In many cities including Denver, most notably at the Post, cheap money and greed contributed to the problems as borrowing against cash flow to pay inflated prices got them deeper in debt.

How similar to the mortgage crisis are leveraged media companies?
Neither the Internet nor the economy killed the papers; they just revealed long-standing weaknesses. Declining circulation, aging readers and advertisers with more choices than they have dollars were underlying causes. The death spiral accelerated as classified advertising migrated to Monster, Craig's and other free sites.

If misery loves company, papers could take solace that network television and radio are struggling just as bad and most magazines even more. Tell that to a severed journalist.

Publishers' discussions in the last 10 years have sounded like climate change debate - disagreements heated even as advertising and readership melted away. While newspapers were debating whether to charge for content or register readers Google gobbled a gazillion page views.

The sheer hubris of journalists self image as the vessels of vetted truth is what has many wrong headed right wringers suggesting that newspapers are getting their just deserts as the liberal press. But the idea that content killed the messenger is like blaming the closure of 600 Starbucks on bad coffee. As one wag put it, “The Internet is to newspapers as Gutenberg was to the town crier.” That may be clever and true but it misses the point of a perfect storm where demographic change and disruptive technology has been driven by a decaying economy.

Strangely the “long tail” of the Internet may provide newspapers, or more accurately news companies that also print newspapers a ray of hope. The fragmentation of page views and inability to deliver a local audience within driving distance may send dollars back to community papers and local web sites.

And as print dollars morph into cyber pennies only companies with healthy publishing profits will support newsgathering functions.

In the meantime most newspapers, no different than car dealerships, Realtors or ad agencies are in a terminal game of “Survivor” trying not to be voted off the island.

Harrison Cochran is Publisher of the Aurora Sentinel newspapers, chair of the Mile High Suburban Press, a past president of the Suburban Newspapers of America, past board member of Channel 12, Colorado Press and the National Newspaper Association. Contact: publisher@aurorasentinel.com


Another View
Ed Otte
Executive Director, Colorado Press Association

Lost amid the avalanche of bad economic reports involving print journalism are two factors:
1. The role newspapers play in people's lives.
2. The impact of Wall Street.
Consider the second statement first and, to borrow the (Bill) Clinton campaign slogan - it's the economy, stupid.

Newspaper profit margins began to change when recruitment and automotive classifieds slipped away to websites. Real estate ads followed when Realtor websites and other Internet offerings siphoned off that revenue stream.

Some newspapers were less affected because of their geographic advantage and deep roots in the community. Those that did lose classified revenue were adjusting to the changes when the nation's economy started to free-fall last fall.

Foreclosures, tight credit and job losses damaged consumer confidence. That hurt retailers and that led to a slump in display advertising.

Newspapers are always thin this time of year. First quarter ad revenue declines produce fewer pages and smaller news holes. But that early-year characteristic is more pronounced in 2009. Even financially healthy papers are now cautious because no one knows when the economy will rebound.

This states the obvious but the economy must be cited as the culprit in any discussion about newspapers.

No one criticizes the owner of a Main Street restaurant for curtailing hours in a recession. Fewer people are dining out, and the owner must manage expenses.

No one blames the owner of a well-established clothing store for closing its doors. People stop buying new clothes, and the owner can't pay the monthly bills.

The restaurant's menu was still appealing. The clothier's merchandize was still fashionable.

It's the economy.

Newspapers face the same challenge but some critics claim the medium is the problem. Newspapers, they say, are no longer relevant.

Really?

Tell that to people who live in Westcliffe who read in the Wet Mountain Tribune about the $152,000 to be distributed to local non-profit organizations.

Or Ouray residents who are kept informed about the Home Rule Charter Commission meetings by reading the Ouray County Plaindealer.

Or people who read the front-page market reports from area grain elevators in the (Springfield) Plainsman Herald. That information is valuable to farming communities in Baca County.

Or Leadville residents who read in the Herald Democrat about Lt. Gov. Barbara O'Brien's visit to explain how the state's budget-cutting plans will affect Lake County.

Or people who read in The Johnstown Breeze about the school district's decision to resume serving peanut butter in school cafeterias. Think that's not important? It is to parents of school-age children.

These examples illustrate the point that newspapers - in print and online - inform people about vital issues and help them form intelligent opinions.

Bottom line: Newspapers, regardless of the delivery system, are the reliable source of local news, information and advertising. That holds true for metro newspapers, such as the Rocky Mountain News, and for small, rural weeklies.

The relevant newspapers will survive.

To contact Ed Otte, call 303-571-5117 X11 or email eotte@colopress.net.


So what is the answer to save newspapers?
The easy answer is, pay for a newspaper subscription and buy ad space. Unfortunately, buying ad space doesn't make sense if it doesn't fit your businesses needs and, why pay for a subscription when you can go online and get it for free. Other answers are being considered.

The cover story on the February 16, 2009 edition of Time is titled “How to Save Your Newspapers.” One article is by former Managing Editor of Time and President of the Aspen Institute, Walter Isaacson, the other by Josh Quittner, former magazine editor is titled “The Race for A Bette Read.”

Isaacson charts the decline in circulation over the last year by The New York Time -3.6%, Los Angeles Times -5.2%, Daily News -7.2%, New York Post -6.3% and The Washington Post -1.9%. During this same period, the unique visitors online grew +15%, +34%, +6%, +53%, +99%, +60%, and +13% respectively. Thus, indicating that, though circulation is down, newspaper readership is up. Why? Because it's free, it's easy and you can read it when you want.

Quittner points out that everyone has been trained that any information on the Internet should be and is free. This was not a problem when the economy was robust and selling online banner ads was easy. Now those ads are going away, revenue is gone, and the content is still free. This does not support a staff of professional journalist.

The answer from both authors is to start charging the online reader. A lot easier said then done for several reasons. Apple linked the iPod to iTunes and got people to pay for the music instead of downloading it free from Napster. The Wall Street Journal subscriptions for their Website rose 7% in a gloomy 2008. These entities have worked out a successful online payment system. At this time, this is a major drawback for any small change charge. How do you collect 10 cents or 20 cents to read the Rocky Mountain News online? At this time, Adobe, Pixel Qi, Plastic Logic and many others are developing payment software and hand held screens for downloading and reading online information. Another question to be answered, should a newspaper be presented online in it's current format or is a new hybrid format needed? What ever the answer, the chances these developments will be in time to save the Rocky Mountain News and other newspapers seems to be slim.

There are many opportunities to gather information on the Internet. Personal blogs, opinions and stories abound. But, most are by amateurs, many with an axe to grind and without an unbiased opinion. The loss of professional journalism, presenting a well-researched story, leaves everyone believing only what they agree with and never getting both sides of an issue. The loss of newspapers is a loss of one of the basic freedoms that founded this country.


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