(Back on December 22nd, I started this post, and then didn't finish it. Considering the news in Seattle since then, I figured it was time to complete it.)
Newspapers are dying, rapidly. They've been going downhill for a while, but Craigslist is providing the final blow by depriving newspapers of their easiest profits.
See, when you figure out how much money newspapers make on classified ads on a per-square-inch (or more properly, a per-column-inch) basis, it's huge. They make more money on classifieds than they do on REGULAR advertising by a long shot.
Classified ads used to represent 40% of a newspaper's revenue. Compare that to how much actual space used to be in classifieds versus in regular ads, and you can see that classifieds were hugely important. On a revenue-per-column-inch basis, they made a fortune; a full-page ad in a newspaper (such as something you'd see a department store like Macy's or Nordstrom take out) doesn't cost nearly as much as the total amount brought in by a full page of classifieds.
Don't get me wrong- it's not ALL classifieds. They're just the straw- or more like the heavy bag of bricks- that broke the camel's back.
Even here in Seattle we're seeing this happen. We used to be one of the few cities in the United States that still had two major daily newspapers, the Seattle Times and the Seattle Post-Intelligencer. The P-I, though, is doomed; on January 8th the rumors flew and on the 9th they were confirmed:
The Seattle Post-Intelligencer, which first rolled off the presses in 1863 and has been the state's longest-publishing newspaper, is up for sale.
The newspaper's staff was called into a closed meeting today by Publisher Roger Oglesby. Present at the meeting was Hearst Newspaper President Steve Swartz, who told the newsroom that Hearst Corp. is starting a 60-day process to find a buyer.
If a buyer is not found, Swartz said, possible options include creating an all-digital operation with a greatly reduced staff, or closing its operations entirely.
In no case will Hearst continue to publish the P-I in printed form, Swartz said.
Regardless, he said, if no buyer is found, the P-I as a newspaper will not publish after the two months is up.
The P-I and Times were jointly operated. The Times handled all the printing, distribution, and advertising, along with some other backend work; the P-I maintained editorial independence and had its own newsroom and generated all the non-advertising content.
The P-I is published 6 days a week, with Sundays being a paper that has both names on the front, but the P-I only puts in three or four pages of content and the rest is the Times. Even with this kind of deal, known as the Joint Operating Agreement, they couldn't make money.
Even the Times is rumored to be in trouble, with only several months' worth of money on hand and they're losing money each day.
It's sad, sad, sad.
Anyway, this news is repeated all over the place. Even the New York Times, one of the greatest newspapers in the world, is said to be on extremely shaky financial ground.
So how can newspapers be saved? Well, first, let's look at the question of "do they need to be saved?"
I think the answer to this question is definitely 100% YES. Newspapers play a role in journalism that's unmatched by any other media outlet. They can go into far more investigation and detail than radio or TV; they can cover a much broader selection of news than any magazine; and despite how much I think the media dicks things up, their overall professionalism is (in total) so much more than the Internet it's barely even worth discussing.
Newspapers have broken nearly all of the major stories over the past several decades. Even now, it's been newspapers that broke the news of things like the NSA's secret wiretapping program or the Jack Abramoff scandal. Newspapers brought down President Nixon. The big weekly newsmagazines, like Time or Newsweek or US News and World Report, do a great job... but they're not newspapers.
The Internet and blogs (like mine, or DailyKos, or a whole host of others) rely upon newspapers. There's a huge subindustry that needs that steady, hourly feed of news; then we blogger types can post our entries full of comment and snark.
And I believe that the potential salvation of newspapers lies in this last fact.
The newspaper industry is seeing massive consolidation and change. Lots of things are no longer economical to cover for even the larger dailies. Why should, for example, each major daily have a reporter (or two or three) covering national government news in Washington DC? They can simply pull stories from the wire for FAR less than the costs of staffing a desk on the other side of the nation.
Likewise, there's no need for many lifestyle reporters- just get some syndicated TV reviewer, buy stories about lifestyle stuff (say, the growing popularity of "designer dogs" like labradoodles or whatnot) from the wire, and so forth. Boom, you can cut a ton of staff.
The reality is that newspapers are moving to a model where each city will have just a few reporters covering only local news in that city- the kinds of stories that don't come in on the wire- and then snagging all the rest of their content from those same types of reporters in OTHER cities over newswire services like Reuters or Associated Press or the other syndication services.
In reality, the need for even the major wire services is falling by the wayside; it's relatively easy for a group of papers to set up their own "wire service" thanks to the ubitquity of the internet and the speed of multi-way communications.
Advertising, online, isn't going to cut it. Even if papers are able to somehow do a Google-like breakdown of their viewers online and greatly increase their advertising revenue, the economics of it still don't work out.
But I believe there's two things we can do to save newspapers.
First, make them non-profit. The reality is that the public interest is GREATLY served by newspapers. The days of families being huge business barons from their papers is long, long gone; the smart money has moved on down the road into other media. Converting most of the papers into non-profit entities would save them large sums of money on corporate income taxes. In doing this, we could also give them tax breaks on a lot of other things- payroll taxes and stuff like that.
Second, and more important- we should change the law to allow all of the newspapers (or as many as would join this effort) to form a big, single-source provider for a true micropay service.
Micropay, for those who don't know, is one of those things that sounds great in theory but hasn't yet really worked out at all. Lots of people have had micropay solutions planned and created for the Internet, but nobody's really made it fly yet.
The idea of micropay is simple- it would be a method of transferring very SMALL sums of money, instantly, over the internet. Right now, the closest thing to a micropay provider online is PayPal; they've made it very easy to almost instantly transfer money from one account to the next.
The problem with PayPal is that it's not "micro" enough. Micropayments would be for amounts as little as five cents, or even just a penny, or perhaps even LESS than that, at a time. PayPal can't do that economically, because a ton of PayPal payments are still done with credit cards- and the minimum charge for a Visa or Mastercard transaction is around 30 cents plus 2%of the transaction total.
The ideal micropayment solution of the future would have to do a couple of things. First, it should have a fairly strict limit on how much could be transferred at one time MAXIMUM- something like a buck or two. Second, I believe it needs to have a no-refund policy. You use "micromoney" (for lack of a better term) to pay for something, and you don't like it... too bad, no refunds.
This second one is far more important than you might think. One of the reasons Visa and Mastercard can get away with charging what they do is because they have to collect enough money to cover charge-backs and refunds and fraud. This is really expensive.
The ideal micropay solution would be super quick and easy to use. Someone could just click on a web site, the micropayment charge comes up, you approve the charge, and instantly a few cents or a dime or something is transferred from you to the content provider.
Why would this help newspapers? Because there's so many of us out there using the internet to read news these days. They don't make any serious money right now on their online content, because the advertising rates are so low; but the amounts that people are willing to pay for the content is too low to be economically collected using current (ie, credit card or PayPal) means.
But if there were the virtual equivalent of a kid sitting on your desk who says "you want to read the Seattle Times today? Okay, it's a nickel", you'd probably pay it. And given the economies of scale that the Internet offers, a nickel a whack could wind up helping them out a LOT.
Now, I'm not a newspaper guy. I'm not an economist. I'm not a banker or anything that has any kind of specialty that would help in this. I'm just a guy who sees how things work sometimes, and I truly believe this would work... but we have to overcome some obstacles.
There's antitrust considerations for all the papers jointly setting up some kind of pay service. There'll be resistence to paying for content that we're used to getting for free. Setting a price will be difficult, because greedy beancounters will go crazy trying to maximize revenue.
But the technical stuff... I remain firmly convinced it could be worked out. And the biggest thing is that this system must be CHEAP and it must be SIMPLE. It needs to be the virtual equivalent of pulling out just a few cents from your pocket and handing it to someone- it must basically be cash, online.
No refunds, no tracking, no nothing- you just have an account with a few bucks in it, which you can recharge however often you want/need. Maybe have a max of 20 bucks in your "outgoing" account at any one time, so you can't get nailed by fraud; you're only out 20 bucks if somehow the hackers beat the system. No single transaction can be more than a predetermined amount- maybe 1 dollar.
But if this system were set up properly, it might work wonders. A popular blogger like Digby might set it up and collect a penny for each day's use of the site; that might not sound like much, but a penny a whack would make a site like, say, Daily Kos a hell of a lot more money than they get now.
The other key to making this system work is that it's got to be simultaneously and WIDELY implemented. If 75% of the major papers in the nation rolled to this system within the same month, essentially forcing all of us news junkies to buy into the system at the same time, and if they priced things LOW enough that we basically didn't change our reading habits... well, it's just crazy enough that it might work.
Look at it this way- what we're doing now, and all the stuff papers have tried over the past few years... none of that crap has worked worth a damn. Why not give it a shot?