We’re moving into the endgame for newspapers today, though the industry hasn’t quite reached the Kubler-Rossian stage of acceptance.
Yesterday the venerable Christian Science Monitor announced it was abandoning daily print publication. In Portfolio, Marc Andreessen proposes that other newspapers follow suit and finally give up on print:
If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business — shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing.
The financial markets have discounted forward to the terminal conclusion for newspapers, which is basically bankruptcy. So at this point, if you’re one of these major newspapers and you shut off the printing press, your stock price would probably go up, despite the fact that you would lose 90 percent of your revenue. Then you play offense. And guess what? You’re an internet company.
The Intel reference here is an oblique reference to Andy Grove’s famous comment to the ASNE that the newspaper industry had three years to adapt or die.
That was in 1999.
Andreessen’s advice makes total sense in many ways — it would be fascinating and worthwhile for at least one major newspaper publisher to try it. This sort of turn-your-company-on-a-dime idea is part of the Silicon Valley ethos. But I just don’t see it happening.
Hard though it no doubt was, it’s still a lot easier for a hardware company like Intel to retool its fabs and its engineers to produce a different kind of chip than for a newspaper company to retool its reporters and editors to produce a different kind of media product.
Shutting off the presses at the New York Times, or any other major newspaper publisher, would make the company an “internet-only company.” But it wouldn’t make it an Internet Company, in the larger sense. You’d still have a newsroom full of people used to doing things a certain way, proud, with good reason, of that way, and suspicious of change. It’s much easier to build a new company from scratch than to transform an existing one into something new.
But the bigger problem isn’t psychological, it’s financial. I base my views on a decade of experience at Salon, trying to support an online-only newsroom with online-only revenues. It turns out that the hardest part of this massive and inevitable industrial transition is not reconstituting high-quality journalism in a new media environment. That’s only mildly hard. Top-notch journalists will always seek to do top-notch work.
The really tough part — the part that to this day remains unsolved — is figuring out how to support those top-notch journalists with the salaries and benefits they are accustomed to, and often deserve. (That’s not even taking into account the loss of jobs on the printing and distribution side. But they are disappearing eventually no matter what.) The problem today is not much easier than it was when we started Salon in 1995: Look at Politico — an online success d’estime that still earns 90 percent of its revenue from a niche print product.
Newspaper companies are clinging to their dwindling print profits because they can’t yet see a way to keep anything close to their current pay scale and benefits in an online-only world. And the hardest pill for the industry to swallow is that there may not be any way to do that.
Internet companies pay top dollar to their engineers, not their “content producers.” There is no shortage of reasonably high quality content on the Web, much of it produced for free or little pay. Of course blogs and “user generated content” can’t replace the collective output of the nation’s journalism professionals today. But they offer plenty of alternatives, and enough occasions on which they surpass the pros (or expose the pros’ failings) to keep readers occupied, and sometimes satisfied.
As Bruce Reed wrote in Slate last year during the Hollywood writer’s strike, “There is no such thing as a writer’s market. With or without subsidy, words are always in surplus, and it’s always a reader’s market.”
No amount of handwringing will change that. If newspapers are really going to take the leap Andreessen proposes, they will have to do it while simultaneously restructuring their deals with their employees and mandating painful cuts that nobody wants to accept. Which is why I don’t think they will do it at all.
Ironically, of course, those jobs will vanish anyway. As I wrote in June, I think the newspaper-company ships are doomed to sink, and individual journalists will have to find their own individual lifeboats and routes to shore. The sooner they start, the better.
ELSEWHERE: Mark Potts thinks “Newspapers haven’t even scratched the surface on potential online advertising revenue” and an exclusively online operation could rake in more money. I don’t know; I’ve been there, done that, and it’s not so easy. Alan Mutter says the magic multiple is 3 — newspapers would have to triple their current online revenue to break even.