Last week marked the one-year anniversary of Newspaper Death Watch, a blog I started on a whim but which has built enough readership to merit several hours of my time each week. In posting more than 150 entries over the last year and reading many times that many articles, I’ve learned a few things that I thought I’d share on this anniversary.

The catalyst for this blog was an essay I wrote nearly two years ago in which I predicted that the newspaper industry was about to undergo a business implosion that would be stunning in its speed and scope. I wasn’t by any means the first person to predict the collapse of the industry, but I was probably one of the few to foresee how fast it would occur.

That’s because I’ve followed the high tech industry for more than 20 years and repeatedly seen successful, stable businesses come apart at the seams when their environment changed: Digital Equipment, Compaq, Novell, WordPerfect, Wang Laboratories, Cullinet Software, Lotus, Silicon Graphics, and many others. It wasn’t a stretch to see two years ago that the same pattern was occurring in the newspaper business. The environment for publishers was changing in ways that would make their value proposition irrelevant very quickly. Demographic trends all pointed in that direction.

What went wrong

The inevitability of the industry’s self-destruction seems clear now, so there’s no news in that. But how could a business that was so stable and profitable for 150 years go into such a rapid tailspin? Two stories from the past year offered great insight into that question: Outgoing Wall Street Journal editor Paul Steiger’s farewell piece from the end of 2007 and Eric Alterman’s thoughtful analysis from the March 31, 2008 issue of The New Yorker.

Steiger’s piece was memorable for the stories it told about the excesses of the post-Watergate period. He remembers, for example, how one top editor put the kibosh on a proposal to tighten the belt by eliminating first-class travel for reporters. “I like flying first class,” Steiger quotes the man as saying with a smile. “You’re setting a bad example.” He also recounts internal struggles that occurred when newspapers went online, struggles that no doubt held back these papers from making the bold moves they needed to insure their survival. Steiger’s piece makes it clear that newspapers fumbled the opportunity to get out front of the Internet by focusing too much on protecting their print franchises.

Alterman notes the changes that occurred around the time of Watergate, when papers began to shed their partisan past and reposition themselves as impartial (read: bland) recorders of history. The scramble to win Pulitzers and duplicate the Washington Post‘s Watergate success resulted in millions of dollars being flushed on large Washington bureaus and expensive overseas correspondents. Basically, newspapers lost touch with their local constituencies and began writing for other journalists more so than for their readers.

Alterman also documents another ominous trend that began in the 1970s: the rise of the “insider journalist.” As reporters gained celebrity, their access to the great and powerful became a status symbol amongst their peers. Powerful people knew this, and they learned to exploit their access to leading journalists for their own gain as well. Readers weren’t served by any of this, and as the journalism world became clubbier during the 1980s and 1990s, the reading public lost interest.

This culminated in embarrassments like the Jayson Blair scandal and subsequent fallout in which a number of high-profile columnists at newspapers around the country lost their jobs. It was the low point of modern journalism: the profession had sunk so far that facts no longer mattered; if a reporter said something was true, then it must be true. Who had time to fact-check, anyway? There were gala dinners to attend and golf dates with a CEO.

Whistling Past the Graveyard

Meanwhile, newspaper executives knew full well what was going on around them. Circulation began sliding in the mid 1980s and demographic trends made it clear that young people didn’t read newspapers. A few papers saw catastrophe coming and made the leap to national circulation. They will survive the carnage.

The rest were addicted to the healthy and predictable profit margins of their business. Executives knew they were over-exposed to advertising from the shrinking department store industry and that their classified ad franchises were horribly vulnerable to online competitors. But why do anything? Their investors were fat and happy and there was no need to rock the boat.

This complacency is common in industries on the brink of collapse. IBM averaged $8 billion in annual profits during the decade before it lost $8 billion and nearly went out of business. Big companies often enjoy their most profitable years just before the undertow of market change sucks them under.

Watergate’s sad legacy

It’s too late for the newspaper industry to save itself. The average regular newspaper reader is 55 years old. Fewer than one in five people under the age of 25 ever reads a newspaper. They’re not going to start reading one now.

Reading accounts of the industry’s mistakes, I’ve become increasingly convinced that Watergate was the worst thing that ever happened to the newspaper industry. It transformed the role of the reporter from anonymous scribe to media celebrity. It distracted editors from the needs of their readers and diverted investment from productive local channels into wasteful global folly. For almost 30 years, the industry got away with these mistakes because it was the only game in town. Had executives acted a decade ago to dominate the online age, they might have saved themselves. But in this day of blogs, Wikipedia and Craigslist, newspapers don’t have a compelling value proposition.

Sure, online traffic is growing and online dollars are inching upward, but the top line is falling too fast. The union contracts negotiated two decades ago can’t be easily changed, the presses still need to be maintained and delivery truck drivers need to be paid. At some point during the next two years, the revenue and expense lines will cross, but there will be little left to cut without turning major metro dailies into expensive supermarket advertisers. There will be massive consolidation and a lot more layoffs.

I’ll continue to chronicle the sad decline of an American institution on this blog, but I’ll also write about some of the exciting experiments that are transforming journalism across multiple media. I firmly believe a new kind of journalism that embraces blogs, camera phones, Twitter, wikis, hyperlinks, search engines and millions of ordinary citizens will be far richer and more vibrant than the one that preceded it. We just have to clean up an ugly mess first.

Comments

comments

This entry was posted on Monday, March 31st, 2008 at 6:09 am and is filed under Advertising, blogging, BusinessModel, Circulation, Citizen Journalism, Classifieds, Demographics, Journalism, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

9 Comments

  1. March 31, 2008 @ 7:16 am



    As a daily checker of your blog I want to thank you for the great information and links you provide. I often link to articles on your blog and it is a permanent link on my list of links.
    As a recently bought out reporter with 30 years experience, the articles and suggestions here are direct hits. So keep up the good work and we’ll keep watching
    Jim
    freefromeditors.blogspot.com

    Posted by Jim
  2. March 31, 2008 @ 8:07 am



    Thanks, Jim. We’ve also added your blog to our blogroll. It was an oversight that it hadn’t been added earlier.

    Posted by paulgillin
  3. April 1, 2008 @ 5:12 am



    So do you envision a future where the mainstream consumes their general news from millions of bloggers, wikipedia, twitter, etc?

    I think your doomsday scenario is pretty sensational (not surprising because your occupation is new media evangelist). Sure, print newspapers may die. But I think a lot of existing big news organisations will migrate successfully to an online model.

    People will always want news, and seek out blogs etc for info on niche, in-depth content. But for general news, I think online newspapers will thrive and the ones that do well will probably be the existing brands and professional reporters/reporting style.

    Posted by Ash
  4. April 1, 2008 @ 7:50 am



    I agree with you up until your last point. History has demonstrated again and again that institutions that are disrupted by radical change never adapt to leadership roles in the new world. Microsoft is only the latest company to face that. People do want news, and it won’t be provided entirely by bloggers and camera phones. There will be professional news organizations, but they’ll look very different from the newspapers of today. Look at TechCrunch and Huffington Post as examples. The rules are all different, and the culture at newspapers just won’t be able to adapt to them.

    Posted by paulgillin
  5. April 1, 2008 @ 9:33 am



    Paul, I think you’ve got a correlation is causation error happening here.

    Your RIP list is mainly weak sisters in JOAs that should’ve disappeared decades ago, and your pointing to ad declines as if to say “this proves I was right” leaves out the fact that the collapse of the housing boom kicked every paper in the ass in the past year, but a housing collapse will not happen every year.

    Also, newspapers have gotten rid of a bunch of bad circulation in the last few years that overstates the rate of decline.

    I definitely think the good old days are over and that right now newspapers are getting their comeuppance for years of ignoring the obvious, but the beast’s will to survive is probably much stronger than you suspect.

    Posted by tom mangan
  6. April 2, 2008 @ 6:38 am



    I hope you’re right, Tom, but what survives will be a tiny shell of what these institutions once were. Few companies have the stomach to downsize by 70% or 80%, which is what most newspapers need to do. Having a lot of union contracts doesn’t help. I think we’ll see a lot of consolidation first, then titles in cities like Boston and San Francisco will go online-only and that trend will spread throughout the country. The demographics are all against most newspapers surviving in printed form beyond about the next decade.

    Posted by paulgillin
  7. April 2, 2008 @ 9:33 am



    OK, so we cut our newsroom from 170 to 45 … how on earth do we produce a competitive product w/that many people? Especially when they’re producing all this time-intensive video you want?

    Sounds to me like the operative necessity would be gathering eyeballs rather than gathering news.

    Take away the union contracts and you have operational flexibility to create a sweatshop nobody would ever want to work for. Good luck with that.

    Posted by tom mangan
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