Hard Choices for Old Media

Just a day after rolling out its op-ed pay service TimesSelect, the New York Times Company yesterday announced a 4% workforce cut that will send 500 employees packing, including well over 100 from the Boston Globe. Also on Tuesday, Knight-Ridder's Philadelphia division unveiled plans to cut 100 jobs from the Philadelphia Daily News and the Philadelphia Inquirer. An Editor & Publisher article on the downsizings blames "sluggish advertising results and higher newsprint prices," but NPR's David Folkenflik cited a more troubling factor in a report on today's All Things Considered:

Knight-Ridder, like many of its competitors, is publicly traded, so it also seeks to satisfy investors and the stock analysts who advise them. The way to drive up the price of the stock is to make sure profits grow each year.

As I've been saying all along, uncontroversially I hope, the focus on profits as the bottom line for news organizations tends to degrade journalistic integrity. Their once-generous margins have been eroded, Folkenflik reports, by "television, satellite radio, Internet sites, and apathy," so many papers/channels/radio networks have responded with the kind of "tarted-up" coverage that brings elder statesmen like Dan Rather to tears. Looking back, it seems as though the newspaper industry's bygone commitment to "serving the community," in the words of former Daily Camera executive editor Barrie Hartman, was underwritten by a dearth of competition--it flourished in a world without cell phones, Tivo, and the Internet, when people actually had time to sit down and read the paper every day. Now that these new media have made the bottom line a bigger deal, paper staffs and ultimately the industry's shrinking audience are feeling the pinch.

These trends cannot be stopped. Industry analyst John Morton put it perfectly in the E&P piece: "the most likely scenario over time is that newspapers are going to have to be happy with lower profit margins." Given the rise in competition and in the cost of basic resources such as newsprint, what other alternative is there? Unfortunately, as economic pressure ratchets up, the industry will see profit-based incentives continue to increase in strength and prominence, thereby furthering the downward spiral of news quality.

Is there any way to break this vicious cycle? My only answer right now involves the Internet, which, according to a recent Pew Research Center survey, has risen dramatically in popularity as a news source as newspapers have fallen. Both trends are particularly marked among young people (18-29), and there's no indication of any future reversals in either case. If the Internet represents the future of news consumption, usurping the traditional role of newspapers, news organizations' continued viability will depend on convincing users to pay for content. Ads alone won't keep them afloat. But since we already know that most web users are pretty averse to online subscriptions, someone's going to have to develop one hell of a business model to get this to work. In comments to my TimesSelect post, "Sarah" suggests a co-op subscription model, in which a large group of news providers would allow access to their entire network for one subscription price. That's the best idea I've heard so far, but I expect to be surprised by whatever new purchasing scheme(s) eventually ends up dominating the web news market.