Consumer Guide for Today's Media

By Asher Fusco

It's no secret that the newspaper business is going through some major changes as consumers shift their habits and new media pushes itself further into the picture. But the ups and downs - mostly downs, recently - of the traditional newspaper business haven't grabbed much national attention or brought about many shockwaves among ordinary people.

That could be changing as the news' news gets worse.

According to the International Herald-Tribune, many major newspapers have made, or are about to make, large-scale personnel cuts. Because of shrinking advertising revenue, big papers are becoming smaller, eliminating as many as 100 staffers at a time or completely dropping their foreign bureaus.

2007 was a bad year for newspapers, and early returns in 2008 haven't looked any better. According to Richard Perez-Pena's story, advertising revenues dropped about seven percent on average in 2007 and some newspapers' circulation plummeted as much as 30 to 40 percent in recent years.

On the bright side, many major papers are still making money, and a lot of it. Gannett, one of the largest media holding companies in the world, enjoyed a 21 percent profit margin last year.

A decrease? Yes. A disaster? Maybe not.

Some of the statistics near the end of Perez-Pena's story bear out the fact that people are still turning to newspapers for their news, even if they're not picking up a hard copy every day. The news-hungry public is taking in its news online nowadays - the papers just need to find a way to turn a profit with their Web sites.

By Asher Fusco

The Los Angeles Times recently joined the ever-expanding list of newspapers offering buyouts to large chunks of their staff.

According to Kevin Roderick's Los Angeles media blog, LA Observed, the buyouts may have been "suggested" to the staff members, and every employee who opts for a buyout will receive it. Roderick's list of cuts numbers 30 LA Times employees, including film, real estate and legal writers, along with two Pulitzer Prize winners.

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It doesn't come as much of a surprise these days when a newspaper streamlines its staff. Profit margins may still be high, but they aren't as high as they once were for many papers, giving higher-ups plenty of reason to push the panic button. In the past few months alone, similar cuts have taken place at USA Today and the New York Times, two of the nation's major newspapers.

The NYT isn't only offering buyouts, it just isn't going to fill its open positions anymore, and has even threatened layoffs.

With all of these vacant positions, you'd think a post-graduation job search would be a piece of cake...doubtful.

According to an Associated Press story published March 13, the CEO of Gannett Co., received a 36 percent raise last year.

Gannett, the largest newspaper company in America, publishes 85 daily newspapers, including USA Today, The Detroit Free Press and The Indianapolis Star. Craig Dubow, the company's CEO, made about $5.8 million in 2006 before adding about $2 million worth of Gannett stock to his salary.

Gannett's stock has plummeted over the past several years and lost about half of its value in the past year alone. This certainly seems like a strange strategy - "Hmmm...we aren't making money. I know, maybe I should give myself a raise."

Gannett has gained notoriety for cutting the staffs of their media properties in the interest of saving money. Obviously, the CEO's raise isn't worth much right now, considering how his company's stock has fallen, but perhaps Dubow sees success lurking somewhere on the horizon. Whether that success comes from a prudent business model or reducing budgets by downsizing remains to be seen.

In an informative, well-written and extremely lengthy piece written for the March 31 edition of The New Yorker, Eric Alterman examines the business of newspaper and its seemingly impending death.

Alterman explains the history of American newspapers and details the struggles papers such as The New York Times and The Los Angeles Times have weathered in recent years. According to the story, The New York Times' stock has depreciated 54 percent in the past three-plus years, and The Washington Post is making more money through sister company Kaplan than its news organization.

Until recently, newspapers were accustomed to operating as high-margin monopolies. To own the dominant, or only, newspaper in a mid-sized American city was, for many decades, a kind of license to print money. In the Internet age, however, no one has figured out how to rescue the newspaper in the United States or abroad. Newspapers have created Web sites that benefit from the growth of online advertising, but the sums are not nearly enough to replace the loss in revenue from circulation and print ads.

This is the newspaper's dilemma: It can move content to the web, but it cannot yet earn money with web-based content. Online advertising does not create nearly as large a windfall as print advertising, and consumers have not yet bought into (pun intended) paying for online content.

According to figures in Alterman's story, only eight percent of people aged under 35 said they would consider reading newspapers in the future. While newspapers tread the waters of the web, readers - especially young readers - are visiting blogs for breaking news and commentary. Information-seekers turn to "The Huffington Post" or "The Drudge Report" for their politics, "Deadspin" and "The Big Lead" for their sports and "TMZ" for entertainment updates.

Problem is, blogs aren't news organizations. Bloggers can offer deft commentary, but more often than not rely on traditional news operations for their stories - traditional media that check sources, (usually) adhere to ethical standards and get out of their armchairs to report stories.

Despite the many failures at newspapers, the vast majority of reporters and editors have devoted years, even decades, to understanding the subjects of their stories. It is hard to name any bloggers who can match the professional expertise, and the reporting, of, for example, the Post ’s Barton Gellman and Dana Priest, or the Times’ Dexter Filkins and Alissa Rubin.

Alterman's example illustrates why blogs - and the public as a whole - will always need legitimate news organizations: Accountability and professionalism are key tenets of journalism. Newspapers, online or otherwise, are staffed with reporters and editors schooled in the ethics and standards of the profession.

Bloggers do serve an important role: They often offer insight and diverse opinion on the stories generated by news organizations. Blogs can augment traditional media, but they can't replace it.

- Asher Fusco

By B.J. Rains

It looks like newspaper's ad revenue is going downhill. In a recent story published by E&P, a study done by the Newspaper Association of America shows that total print advertising revenue dropped in 2007 by 9.4 percent to 42 billion from 2006.

It seems like more and more advertisers are taking their money to other platforms such as TV and the radio. With virtually every newspaper offering free reading of their stories online, subscriptions to print newspapers has been declining over the recent years. Companies are starting to realize the decline in interest of print newspapers and deciding to wisely take their advertising dollars elsewhere.

Newspapers are run by advertising so the less money that the paper is bringing in from ad revenue, the less things the paper will be able to do. At the Kansan, the more ad space that they have sold, the bigger and more color pages the paper can be. Its the same at bigger papers, but on a much bigger scale. If newspapers can't keep ad revenue from falling any further, they may soon have to start cutting costs - which could mean some writers or editors may soon be looking for new jobs.

By B.J. Rains

In an effort to gain more national advertisers and increase ad revenue, 26 newspaper companies have joined an industry-backed online advertising sales network called QuadrantOne. A story published in the Kansas City Star on March 21st said newspapers such as The Star and the Dallas Morning News joined the group that doubled the size to over 250 newspapers.

The goal of the group is to gain more business from national advertisers. The group, QuadrantOne, will "create a centralized pool of standardized ad units from newspapers across the country that can be sold in blocks to large advertisers."

Its a pretty good idea by the newspapers, because as I discussed in my previous blog, they are starting to lose money on ad revenue and are looking for new ways to increase revenue. Finding new national companies to have advertise in their papers will not only help their newspaper, but it will help the companies that are advertising reach a new audience. It seems like a good partership that could end up helping both parties involved.

By B.J. Rains

Newspapers are finding themselves more and more in debt these days, and some owners are being forced to put their papers up on the selling blocks to try and cut their losses before they get any worse. Its a growning problem in the newspaper business, one that experts can't figure out.

In a story published in the New York Times, it was "reported in Crain’s New York Business that Mr. Zell has put Newsday, one of Tribune’s more lucrative assets, on the auction block. In January, Mr. Tierney told unions at his papers that the company was confronting a “dire situation” and needed to cut expenses by 10 percent to meet debt payments."

It then went on to mention Chris Harte, publisher of the newspaper in Minneapolis, and how he was having trouble making all of his payments this year. It's a shame that newspapers are not doing well these days, but nobody is really sure why.

It seems that more and more people are buying newspapers and expecting to turn them into a large profits but that just hasn't been the case. Owners are quickly finding out that making money in the newspaper business is becoming harder and harder. They are trying new ideas for revenue that I have discussed in my previous blogs, but at this point, nothing seems to be working. If Newsday, one of the biggest papers in the US, is forced to be sold, then you know that this issue is a serious problem that needs to be addressed.

The widely-held perception among media critics is that newspapers are a dying breed: A medium running dry on funds and ways to make its product seem lucrative to ad buyers.

Of course, it doesn't help matters when the industry's best and brightest writers are taking flight to the greener pastures of television or the Internet. One such print expatriate is David Aldridge, who started his sportswriting career at The Washington Post before dabbling in television while working as a reporter for TNT and ESPN. He also wrote for ESPN.com. Several weeks ago, Aldridge announced that he was leaving his current writing gig at The Philadelphia Inquirer to focus on his work at TNT.

Aldridge's departure is another in a long procession of talented sportswriters migrating away from print to emerging mediums. Tony Kornheiser decided Monday Night Football offered more exposure than The Washington Post, Kevin Blackistone took a buyout at The Dallas Morning News before taking up with XM Radio and AOL Sports, and ESPN.com has lured writers such as Tim Griffin, Pat Forde and Heather Dinich away from their old papers.

Losing that sort of talent is certainly a downer, but the newspaper industry shouldn't fret, according to Aldridge. In an interview with the sports blog "The Big Lead", Aldridge discussed his love for the medium and explained why papers aren't facing an absolute dead end.

I think the smart papers understand that this is not a death sentence, but a transition. It is not a bad thing that more people are creating their own media reality, whether it’s with the music on their I Pods or the favorite channels lists they have, or what choices they make on the internet. Papers have to be part of that buffet, but the delivery system is going to be different, that’s all. We don’t ride in carriages driven by horses anymore because we found that getting in a car was faster. That’s all this is. Information will be distributed. It is up to papers to find a way to distribute it online in an entertaining way and in a way that they can monetize. “Circulation” will surely drop, but the total number of eyeballs on a story may not, and that’s all that matters;

Aldridge said newspapers may need to take a very bold step in the near future: Making their most popular columnists exclusively available online. ESPN.com has already started this by placing recognizable reporter Buster Olney and well-respected author Rob Neyer behind its "ESPN INsider" curtain.

Who knows if readers will bite on the idea of paying for the material of Jason Whitlock or Bill Plaschke. Newspapers may have to find out someday.

- Asher Fusco

According to Steven Pearlstein of The Washington Post, yes.

Pearlstein tackled the big issue facing newspapers - the emergence of new media and the shrinking profit margins of traditional media - and decided that newspapers can survive. But only if they adapt properly.

Right now, many newspapers are trying to cut their way to success by not only reducing the number of employees but also reducing the size, scope and quality of their news product. Space for national and international news is shrinking; news services and columnists are being dropped; coverage of business or religion or the arts is reduced or nearly eliminated. This strategy is silly on two levels.

To begin with, people are becoming better educated, more sophisticated and more global in their orientation, not less. The days are long gone when daily newspapers could satisfy readers -- particularly the younger and more affluent readers that advertisers crave -- by hiring inexperienced young reporters to write desultory stories about city council and planning board meetings or by filling much of the news hole with bowling scores, school lunch menus and bad photographs of high school sporting events.

News executives will often try to justify dumbing down their product, or making it more parochial, by explaining that local coverage is their unique competitive advantage and that readers who want more can always get it somewhere else these days, often for free online.

Pearlstein advocates newspapers settling for diminished profit margins for the time being, keeping their rosters full of talent, and putting out a stellar product. That hasn't been the trend lately - papers are cutting staff left and right, cutting pages from sections and cutting travel budgets steeply.

All of that results in an inferior product that no one - especially young people - wants to consume. Why would young people open up their newspaper to see four pages of middling local sports coverage when they could just as easily log on to ESPN.com for comprehensive national, regional and local coverage?

Newspaper executives will have to ask themselves this and other questions and come to the logical decision: Newspapers have to offer readers something worthwhile, or else the industry truly is doomed.

In Pearlstein's words:

"If you ask me, the challenge facing our industry is not that readers have lost faith in their newspapers, but that newspapers have lost faith in their readers."

- Asher Fusco

By B.J. Rains

The Minneapolis Star-Tribune is having big financial problems and has hired private equity powerhouse Blackstone Group to try and help them fix their problems.

Its becoming a big problem across the country. Newspapers have been struggling to stay afloat, struggling to gain enough advertising revenue to keep them on the positive side. As the article says, it "reflects just how rapidly the newspaper business -- and the credit markets -- have deteriorated in the past year. Across the country, in big cities and small, newspapers are struggling with declining readership and steep declines in advertising, especially lucrative real estate and automobile classifieds."

One of the big reasons for the declining readership is the fact that all of the newspapers have now switched to online websites. Most newspapers allow people to read all of their content online for free. Some force you to register and still offer the content for free, while a very small amount of newspapers charge you to read content.

But the majority of newspapers allow you to read the content online for free. Why would someone who is struggling to pay his bills or doesn't have a lot of extra money pay to receive the paper each morning when he can just go online and read the stories for free? Its common sense. The internet is costing newspapers a lot of money in subscriptions because more and more people are just canceling their subscriptions and reading the content for free online.

In one of my previous blogs, I mentioned how newspapers are trying to increase ad revenue online, and that will help greatly for some newspapers. But the fact that papers are offering their content online for free is causing them to lose lots of money. Papers don't want to switch to subscription based content online, however, because they don't want to be the first and only paper that does it. People will just go to another newspaper that offers free content and get their info there. Unless they all do it at once, I don't see it happening anytime soon.

Either way, financial trouble is a growing problem that newspapers are having to deal with. Hopefully for the Star Tribune, they will be able to turn it around fast and avoid any longterm problems.

By B.J. Rains

It may seem crazy, but the recent housing crisis is actually helping newspapers. More and more houses are being forclosed at an alarming rate, and the result is more advertising revenue for newspapers. Forclosure notices are required to appear in newspapers and with houses forclosing at a record rate, newspapers are finding some much needed revenue.

Newspapers have long argued that websites such as craigslist have taken millions of dollars away from the online and print newspaper advertising but as the article says, foreclosure notices have to be in the newspaper and craigslist is not acceptable for them according to most local governments. Its a much needed stream of revenue for newspapers who have been struggling for a long time due to the decline in ad revenue and subscription revenue. The crisis will not last forever, but its a temperary help to some struggling newspapers budgets.

A new blog entitled the Newspaper Deathwatch lists the daily decline or gain of newspaper distribution of the top newspapers in the United States. Just to show how bad newspaper subscriptions are struggling, an example from the blog shows that "The New York Times lost more than 150,000 copies on Sunday. Circulation on that day fell a whopping 9.2% to 1,476,400." That is just rediculous that 150,000 copies are being lost in circulation from one day to the next. Something needs to be done to help these newspapers from going bankrupt.