Can Newspapers Be Saved?

Have you noticed the number of layoffs being announced by newspapers of late? When the New York Times announced in February 2008 that they were cutting 100 positions from their newsroom, it was a sad moment. A prominent national paper that informs our opinion and dialogue was announcing a cutback. Then the San Francisco Chronicle announced last May that 25% of its staff would be cut by the end of summer. Since then The Washington Post, The LA Times, Chicago Tribune, Baltimore Sun, and just last month The Atlanta Journal Constitution all announced layoffs. One report states that there have been more than 70,000 US media layoffs since 2000.

Then I noticed that the newspaper vending machine for The Seattle Times was removed from a sidewalk location on my way to work. I always stopped at the vending machine, read the headlines, and if I saw an interesting article I’d go to my desk and pull up Seattletimes.com. All of this led me to think…will we see an acceleration of newspapers going digital or going away? Will the paper versions of these newspapers be a thing of the past? Should I have bought more of those newspapers on my way to work?

Why do I care?

All the obvious reasons! Newspapers inform our opinion, educate us, entertain us, and keep us in touch with the world. They employ some of the most educated and experienced writers and somehow I believe that as the resources at national newspapers decrease, the chances of the Woodward-Bernstein team uncovering the Watergate scandal, for example, go down in tandem. As do the chances of a great, well-researched, well-articulated news piece on the Iraq war, our presidential election process, health care, social security, and most importantly, the Seattle Mariners.

People have been watching the plight of newspapers for some time now, as the digital era marches on. So let’s be frank, this topic is not virgin territory. In the February 2007 version of Vanity Fair, Michael Wolff wrote an article titled “Is This the End of News?“, where he argues that the newspapers have no clear revenue model to pursue online, and that they are undermanned when faced with the likes of Facebook, Google, Digg, etc. He is not very hopeful that the major newspapers will find and pursue viable solutions to transition their businesses.

If we lose some of our national newspapers, what will we reference for informed opinion on important subjects? Will we rely on the Drudge Report? Valleywag? The Onion? Blogging sites? Entertainment Tonight? For some, the free online magazines or bloggers are plenty to meet their news needs. For many others, we believe the large national papers are important, whether that be the New York Times, The LA Times, The Washington Post, San Francisco Chronicle, Miami Herald, etc.

So why are newspapers cutting staff, struggling to make money, make payroll, and hold up subscription levels? Yes, online news and information is a big reason. I can read most national papers like newyorktimes.com for a fraction of what I pay for the paper version (many of the digital versions of national newspapers are free).

There is no easy fix. As newspapers try to move their business online, they further reduce their minimal subscription revenue and, more importantly, face substantially more competition for advertising dollars. Twenty years ago, offline, the newspapers were the kings of their respective cities, and advertisers needed to be there. Online, an advertiser can use Google or Yahoo! or other online traffic sources to target consumers in a given city.

So what is a newspaper to do? Well, they have tried many models. To date, unfortunately, there has been limited success. Here are some of the avenues that newspapers have pursued:

1. Some have tried to transform their entire business via M&A activity – like when NYT bought About.com. The M&A route takes a great deal of money and effort, but if a newspaper group has the resources, this is a legitimate way to try and bring the online advertising and online business DNA into an organization, provided senior management is truly committed.
2. Some have tried to sell a blend of offline and online newspaper placements. The challenge is that there typically is not enough online newspaper traffic to make up for the offline spend.
3. More recently, some of the newspapers have tried to band together and bundle their traffic for advertisers in an effort to make up ground on volume. The question is how much traffic do you need to be relevant to an advertiser? The other problem is that most online advertisers want the major search engines to be an important part of the mix when they place their online marketing buy.
4. Other newspapers have tried something else: They try to package newspaper advertising sales with a Google/Yahoo! search marketing package. In effect, they want to “draft” off the success and name recognition of Yahoo! and Google. One of the challenges here is that the newspaper sales teams may not understand the online search marketing sale as well as the newspaper sale. It takes a substantial amount of training and incentives to change behavior in the newspaper sales team. To date, very few newspapers have committed the financing and muscle to succeed in this regard.

As I said at the top, I care about newspapers – whether in the online or offline form. I want them to succeed, flourish, and have the means to staff the best writers in the country. What I am going to read in the park while I drink my coffee on Sunday? The Catcher in the Rye? Forget it! I want my old school newspaper! I want to read the columns from my local scribes, and from folks like George Will, Maureen Dowd, Mitch Albom. Next time I will offer a couple of possible solutions for newspapers to defend their advertising dollars, and potentially grow them over time.

John Keister is Chief Operating Officer, President and a member of the board of directors of Marchex. The Locals Only column appears on Mondays at Search Engine Land.