Newspapers: On The Digital Ropes

Newspapers are in trouble, and things keep getting worse. With circulation dropping and currently at the same level as 1946 (!), papers sold per capita are at a fraction of former levels. The death spiral could become fairly dramatic since newspapers have a lot of fixed costs and many are already losing money. Unlike internet enterprises, papers cannot easily scale back expenses as advertising revenues flow online. This will likely lead to continued consolidation of local papers and probably will become a death knell for many others.

Newsosaur has a nice summary post and Henry Blodget at Silicon Alley Insider has a good mini-analysis of the potential advertising revenue shakeout.

More Bad News For Newspapers

Two articles this week suggest how tough it’s becoming to turn a buck in the print media world. Jeff Jarvis at BuzzMachine and founder of eWeek, notes in “Whither Mags”, that major print efforts require a huge capital outlay before they can even hope to be profitable, and that the current high risk associated with print publications means we probably won’t see nearly as many new big magazine efforts.

Even more ominous for the future of the newspaper industry was the New York Times report showing circulation declines almost across the board for US Newspapers. The NYT Article “More Readers Trading Newspapers for Websites” has a great graphic showing how circulation has fallen at most newspapers since last year with an average drop of 2.4%.

Given the relatively thin profit margins at many papers and the fact many costs are fixed this does not bode well at all for the future of newspapers. The future of news is a far more complex question and I think the answer is not knowable at this time. Blogs are picking up some of the journalistic slack, but I’m not convinced they can pick up all of it. With subscription based news models in decline it is simply not clear that heavily capitalized news efforts can survive - let alone thrive - in the changing news landscape.

San Jose Mercury News: Too Old?

There is a great summary at Business Week of the remarkable rise and pending potential fall of Silicon Valley’s newspaper - the San Jose Mercury News. BW notes that in many ways the Mercury News saw it all coming, but still failed to position itself to profit from the migration of offline info to online info.

Although the article does not make this point, I'd suggest that the failure supports the idea that paradigm shifts do not come from old systems evolving into new ones even when the old systems “get it”, rather they come from new folks thinking out of the old boxes and building the next generation of innovative solutions basically from scratch.

Obviously new technology almost always rests on the shoulders of old technology, but it seems reasonable to assume that the next big things are not going to come from the previous big things, they are going to spring up from the harsh, quirky, and shifting sands of technology, inspiration, and innovation.

I would suggest that IBM might be an exception to this notion but clearly Microsoft, then Yahoo and Google, now YouTube, Myspace and Facebook all fit this model of major online changes coming more from scratch than from a slow simmering of existing ideas. This also helps explain the challenges of venture capitalists as they try to find “the next big thing”, a company that may only be known by the glimmer in a college kid’s eye.

If so, who is next?