Bad news has spread across traditional media at a breathtaking rate. Fortune’s Richard Siklos ticks off some of the sorry numbers. It’s not just the newspaper industry that’s suffering.
Quoting Michael Nathanson, media analyst at Sanford Bernstein, Siklos notes that this is the first time in memory that a coincident election and Olympic year has been accompanied by a decline in ad spending. “Excluding Internet spending, ad spending across all traditional media in this year’s third quarter was down 8.5 per cent, the sixth consecutive quarter of declining spending,” he writes.
Siklos quotes Craig Huber of Barclays Capital forecasting that “classified advertising as a percentage of newspapers’ revenue will decline to 26 per cent in 2009 from 36 per cent in 2006. Meanwhile, newspapers’ share of total U.S. ad expenditures…will have declined to 10 per cent next year from 20 per cent in 1999.”
But it’s not just newspapers. Yahoo just reported a 64% drop in quarterly earnings. Google stock is off more than 45% and analysts are cutting their forecasts of online spending growth. The only winners at this point appear to be subscription services that derive a significant portion of their revenue from non-advertising sources. While the story stops short of pointing to a generalized decline in advertising, the numbers leave you wondering. Could it be that businesses are beginning to question the value of advertising and that those doubts are creeping into the numbers? Could be. On the other hand, it could also just be a crummy economy.
“Get Me Bangalore!”
Maureen Dowd writes about a newspaper that’s offshoring editorial content and learning to make it work. James McPherson is the editor and publisher of Pasadena Now, a small weekly. A year ago, he fired his entire editorial staff and farmed out coverage to a staff of Indian writers he recruited on Craigslist. He pays them about $7.50 per 1,000 words, compared to the $30,000 to $40,000 he was paying each reporter annually. The Indian writers “report” via telephones, web harvesting and webcams, with support and guidance from McPherson and his wife.
Reaction to the idea was brutal at first, but the concept of editorial offshoring is gaining traction. Dowd counts MediaNews Group chairman Dean Singleton among the ranks of executives who have recently talked about massive offshoring to save costs. Singleton says most preproduction work for MediaNews’s California papers is already outsourced to India, which has cut costs by 65 percent.
If the idea sounds preposterous, think about it. How many people in a standard newsroom never leave the building? Any job that primarily involves computer and phone work is a candidate for offshoring. Between cell phones, webcams, virtual meetings and instant messaging, the need for face-to-face contact is diminishing to the point of irrelevance in many cases. On-site reporters will always have value, but in the future they could become a small corps of feet on the street feeding copy to a virtualized production force that is largely invisible. The compelling cost efficiencies give publishers a lot of incentive to be creative.
Ex-LA Times Editor Takes on Zell
Former Los Angeles Times editor James O’Shea comments at some length on recent statements by Tribune Co. CEO Sam Zell about the failure of newspapers to listen to their customers. O’Shea has a problem with that philosophy. “If all we had to do was ask readers what they wanted in a newspaper and then give it to them, wouldn’t someone have done that years ago?” he asks? In fact, they did. “I’ve seen dozens of papers march down that road to no success.”
O’Shea agrees that journalists have done a poor job of demonstrating their value as stewards of the public trust, but he thinks that failure is actually due to their efforts to listen too closely to their customers. The conventional marketing wisdom is that readers want soft, lifestyle stories and the more we give them that pabulum, the more we undermine our value as serious journalists. “To the extent we blur the differences between these once-distinct voices with pandering coverage that resembles advertorial and not editorial we play right into this trap,” he writes.
After nearly 2,500 words of analysis, O’Shea fails to deliver a prescription for change. “Newspapers have to figure out how to deliver journalism that makes the public believe we once again are a public trust, something of value and something they won’t hesitate to pay for,” he writes. Hear, hear! How are we going to do it? O’Shea doesn’t offer any ideas. That makes this piece ultimately rather disappointing.
If the newspaper industry is dying, apparently no one told Saharra White. The California State University, Northridge journalism major pooled her savings and donations from friends last year to launch Say It Loud!, a newspaper for African-Americans of the San Fernando Valley. “I wanted to start the newspaper because there are black people in the Valley doing some positive things,” she says. Say It Loud! is one of about 200 black community newspapers across the US, according to the Black Newspaper Publishers Association. White says she felt the stunning election of an African-American as President demanded new media to cover the impact of the Obama administration on America’s future. She distributed the paper in print for a year, but now has gone online-only as a matter of economic necessity.
The Cleveland Plain Dealer is laying off 27 staffers by phone this morning because not enough people took the paper up on its buyout offer. In a memo yesterday, Editor Susan Goldberg told Guild local 1 employees that those selected for layoff will be notified by 9:30 a.m. Anyone who doesn’t get a call should come in to work.
The publisher of the San Jose Mercrury News has told employees to brace for more layoffs early in the new year. The company has already cut newsroom employment by 50%.
The Charleston (W. Va.) Daily Mail will switch from afternoon to morning publication, giving the city two morning papers. The Daily Mail and the Charleston Gazette will continue to compete with each other, despite the fact that they share production staffs and distribution networks. They also share about 6,000 readers who subscribe to both publications. Afternoon newspapers have all but disappeared in the US.
While executives and journalists fret about the implications of life without newspapers, Donna Freedman writes on MSN Money Blog about more practical matters: what’s she going to use to clean her windows? The alarming shrinkage of daily newspapers is going to leave people with a shortage of packing material, impromptu gift-wrap and puppy-training supplies, she worries. “Without newspapers, what will I put at the front door to soak up moisture from wet shoes? To say nothing of the fact that I would no longer be able to say, ‘These are the Times that dry men’s soles,'” she groans. Several visitors pick up on the fun, offering eulogies for Sudoku puzzles lost and fish ‘n chips that lost their appeal on polystyrene platters.
This entry was posted on Tuesday, December 2nd, 2008 at 9:05 am and is filed under Advertising, Business News, BusinessModel, Demographics, Future of Journalism, Layoffs, NewMedia, Newspapers, Solutions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.