Newspapers are in big trouble. Rupert Murdoch thinks Google is the problem, saying “Should we be allowing Google to steal all our copyrights?” asked the News Corp chief at a cable industry confab in Washington, D.C., Thursday. The answer, said Murdoch, should be, ‘Thanks, but no thanks.” Fred Wilson responds; “Google is distribution. It is the newsstand. If Rupert or any other newspaper owner chooses to take its content out of the Google index, there will be plenty of content left that can take its place.”
The Seattle Post Intelligencer and Christian Science Monitor shut down their print newspapers, but have online editions. The Rocky Mountain News shut down completely. The Boston Globe will be shut down unless the unions agree to $20M in cost cuts. The Chicago Sun-Times and 58 other newspapers owned by the holding company filed for bankruptcy last week. The Los Angeles Times and Chicago Tribune are also in bankruptcy. The Washington Post and New York Times have announced lay-offs and cost cutting measures. The San Francisco Chronicle lost $50M last year and just last month their unions agreed to cut 150 jobs and other cost cuts. The blog Paper Cuts reports there were 15,866 layoffs at US newspapers in 2008 and another 7,979 so far in 2009.
Newspapers have been losing money and market share for the past 10 years. Classified ads and Employment ads, huge money makers for newspapers, have been moving online to sites like craigslist and Monster.com. News is freely available on hundreds of online sites. This coupled with a deep recession that has slashed advertising budgets, has caused many newspapers to fail.
Newspapers were once a money machine. Big city newspapers had economies of scale not available to smaller town newspapers. The New York Times purchased the Boston Globe on Oct. 1, 1993, for $1.1 billion. Hearst Corp bought the San Francisco Chronicle for $660M in 1999. Now both papers are on the brink of failure.
TechMeme is my morning newspaper for tech news. There are many other online news aggregators that collect stories from newspapers, magazines, and blogs. All the major newspapers and TV networks have their own web sites with continuous news updates.
How can newspapers respond? Stick to their roots…local news. Stories about local politics, schools, sports, businesses, and events are not available from the big national news outlets. Hyper local news, at the neighborhood level, written by local people, will attract a local audience. Some newspapers have discontinued daily newspapers in favor of twice a week plus a Sunday paper. This reduces the costs of printing and distribution. There are no easy answers.
The economics of the newspaper business model have changed very quickly…faster than many of them have been able to adjust. It is almost inconceivable that the Boston Globe, Chicago Sun-Times, or San Francisco Chronicle could go out of print. But, it is a very real possibility in 2009.
