Newspapers Conspiring To Hasten Their Own Demise

James Warren of The Atlantic reports that a bevy of newspaper executives gathered yesterday in Chicago for a clandestine discussion about “Models to Monetize Content.” Amongst the participants are the New York Times, Gannett, E. W. Scripps, Advance Publications, McClatchy, Hearst Newspapers, MediaNews Group, the Associated Press, Philadelphia Media Holdings, Lee Enterprises and Freedom Communication. The unadorned agenda of this cabal of publishers is to figure out how to make news consumers pick up the tab that advertisers have traditionally paid.

Setting aside the obvious appearance of a violation of anti-trust laws, the main problem with these old-media relics is that they still don’t understand the problems confronting them.

First of all, they aren’t losing money because subscription receipts are declining. Subscription revenue, while not insignificant, was never the foundation of the industry’s financial well being. It is advertisers that keep newspapers (and most media) in business. The value of subscribers is due more to the fact that higher circulation brings higher ad revenue than to the value of the actual subscription price.

Secondly, subscriptions aren’t declining because newspapers cost too much. They are declining because too often the product isn’t worth paying for. That would be true whether it were delivered to your doorstep or your browser. The state of the economy cannot be overlooked as a contributor to the subscriber exodus either. But when newspapers respond to tough economic times by cutting newsroom staff, they have to expect that readers will notice the falloff in quality. Once people perceive that they aren’t getting their money’s worth, they will be no more likely to pay for an online subscription than the dead tree variety.

Warren astutely notes in his article that newspaper executives are not the brightest inks in the well. Many of them are holdovers from an era that hasn’t kept up with modern competition. Others are transplants from TV or radio who lack experience in a medium that has little in common with its electronic cousins. The evidence of their shortcomings is observable in their haste to alter a business model that has worked fine for a couple of hundred years or more. To respond to current financial woes by shifting from a model that relies on advertisers to one that pinches readers is profoundly shortsighted. The economy, and advertising revenues, are bound to recover, but dimwitted decisions by panicky publishers could aggravate and prolong what would otherwise be a temporary setback.

There are challenges facing the newspaper business, to be sure. But there is no reason to presume that the sort of broad distribution model that has led to success in virtually every form of media has suddenly become inoperative. Newspapers need to adapt to the digital world in a manner that promotes access and ubiquity. Walling themselves off by erecting subscription barriers can only make matters worse and result in further isolation and debt.

Finally, if they think that by colluding with one another to set the terms of doing business with them will endear them to their customers, they are even stupider than I thought.