I guess maybe the idea is that the New York Times could have become the Huffington Post before the Huffington Post did. But how profitable is the Huffington Post, or any other website for that matter?

Ezra,

The problem is that while there is more news, there is less real local coverage.

-g

Except Ezra there are things newpapers could have done. They though didn't see themselves as Classified Ad delivery devices but instead as "the press". So instead of big companies consolidating they could have bought eBay.

But how profitable is the Huffington Post, or any other website for that matter?

Well, the Huffington Post does make a profit. But it's incredibly depressing if the Huffington Post is the future of news: stories from the wire plus sloppily-written celebrity editorials.

Uh, how much of the recent woes in the newspaper industry are directly caused by the present economic meltdown? Without an historic collapse in the stock market, would the news biz really be in as bad a shape as it is now? I'm not disputing the trends affecting newspapers, but it sure seems like there's been an intervening event unconnected to those trends that's pushing newspapers over the cliff.

Mike

Well, the Huffington Post does make a profit.

It can't be very much of one, though. The way this internet business seems to be working out is that you can make money, but it is still relatively modest money (with a handful of exceptions, maybe).

I mean, I don't know how profitable the New York Times ever was. But imagine if HuffPo actually had to pay a staff the size of the NYT's. Imagine if they couldn't just sponge off of traditional media outlets for their stories, but had to send their own reporters to Iraq and Pakistan etc.

I don't think Huffpoo makes a profit, it just had another +/-$25 mill VC funding.

Most public goods suffer from a collective action problem. News is just another public good.

What's more interesting and what I haven't seen Shirky talk about (although I might have just missed it) is that the rise of the "click advert metric" is slowly eating advertising from the inside out.

When the newspapers do finally collapse, the advertising industry is going to shrink by quite some amount. As soon as you measure the effectiveness of advertising, the value proposition turns out to be a lot smaller than... well... advertised.

This has massive implications, long term, for the "eyeball economy," but no-one seems to want to talk about it.

To tell you the truth, Jeff Jarvis came on board relatively late in the game and never had that much to say that was original in any case.

The local coverage slack is being taken up by the emergence of neighborhood versions of weeklies that operate web sites, provide constant updates, and tweet constantly. They seem to be gaining some traction with display ads too, as well as affiliating with neighboring communities, and tracking emergency services, local hearings, etc. Coverage is better too. More photos, more contributed material and comments, more dynamism.

It may not be journalism, but it is news at the local level, and continuous breaking news at that.

The channel is flipping over to being driven from the bottom and syndicated (maybe) from the top.

Ezra:

I hope you realize this means the same thing for the American Prospect. Unless you can find a true benefactor willing to fund your operations without concern for losses, you might want to polish off that resume and keep it polished in perpetuity.

orcmid:

but those sites often use news from local news papers and comment on the news or lack any journalistic standards as to either be political pedestals for the leanings of the site operator(s) or trade in rumors and gossip so as to lose credibility when a serious news story erupts.

Secondly, they do not cover the run of the mill stories, but trade in the sensationalistic stories and are if anything, a localized bastardized child as if Drudge, TMZ and Dailykos mated and decided one town was enough for them.

TAP is a non-profit, and has always been funded without concern for losses. Same goes for most political magazines, and national magazines in general. Hell, even The New Yorker loses money most years, and they're atop the food chain! Which is why I'm acutely aware of how few people actually want to "buy" news. We've always been in this space. We've never had local monopolies. And so we've never had a business model that works without donations.

Online advertising may be a weak revenue stream but that is in part because it is poorly targeted. Online ads are national. Seems like there would be an opening for LOCAL online advertising. Local news is the main value added from a regional paper anyway -- local sports, local government, not the sort of things you'll get from the NY Times. Couple that with local, targeted advertising and maybe there is room for a new business model.

Classifieds are a harder problem to solve, but there are two serious problems with Craig's List -- nothing ever comes off it, sold or unsold, and it is rife with fraud. Again, there is room for value added service here.

I agree with g. There are two markets for news that I can think of that are still viable. As I say every time this subject comes up, there's local news; lots of people need or want to know about planned developments or school budgets or local legal battles but don't have time to attend the meetings themselves. I know you should never say never, but I have a hard time imagining it would ever become profitable to take care of that whole market by Internet companies as we now think of the term. And lately I've become part of another market: people who commute by public transportation. For commuters, technology could eventually make online news as cheap and convenient as picking up a paper in a box at the bus or metro station, but that will take years yet. And both media markets are well-suited to targeted advertising.

The new technology is bad news for the existing newspaper companies, but I don't know if consumers or democracy would miss out at all. In many ways, blogs have already been more effective as an adversarial press than the actual press. Media decentralization will mean there won't be any certain voices people "can trust" on a regional or nationwide basis, but that hasn't been the case since 24-hour cable news replaced network news anyway.

Ezra:

well congratulations on not requiring add revenues to fund operations. Job security (for now at least). However, do you really think that such a model can exist for the huge costs entailed for traditional news gathering organizations. And if so, please, rather than post the 1 millionth post on why current newspapers are failing, you could provide some sense as to how the same function provided for by these organizations will be satisfied by the future alternative you envision.

I am including coverage of local board meetings, hearings, substantive pieces on the struggles of the community as well as investigative reporting shining the light on the politicians.

I fear that you and I agree - there is no future alternative. My contention is that news is not valued, and therefore, the kind of news from local papers you would value as acting as a pillar of democracy. However, the fact that Americans do not value this news can only lead to a reduction of transparency and oversight of the powerful.

It is sad, because so many who depend on newspapers (bloggers) to help provide them with the information and data points to allow them to write substantively about transportation policy, for example are all too willing to almost celebrate the demise.

Yet, no one has provided me an explanation for what they thing comes after and why it is not as threatening to our world as I seem to think it is.

Paul: most online advertisers support local targeting. The technology will continue to be refined, but it already offers better granularity than, say, TV or radio.

Cyrus: In London and lots of other cities there are free newspapers that largely exist as commuting reading. Metro is probably the biggest chain?

Ezra, I think you've missed what Shirky was talking about. What no one could do anything about is indeed what's happening. But there's plenty newspapers could have done to stay in business. If the NYT, for example, had become Craigslist before there was a Craigslist, I bet they'd have a pretty good revenue stream right there. Craigslist is profitable and does not run on an advertising model. The entire point is that if newspapers had gotten the whole internet thing a long time ago, the landscape would be very different.

On my blog (editor.blogspot.com) I wrote a couple of weeks ago:

Unlike so many of our poorly informed critics, I do not believe our current circumstances are primarily the result of mistakes. They are, rather, the simple and inevitable result of being in a mature business that has been overtaken by transformational change that would have turned us inside-out no matter what we had done.

Here's what I told the newspapers to do.

But first -- I didn't pretend that my advice would keep their businesses going in the same way they had been going for the last couple of generations. My advice would have resulted in the news flowing from sources to readers without being interrupted by the coming of the Internet as a publishing medium.

I gave this advice specifically to the NY Times, but it would have worked for any paper.

1. Open a blogging server so you can offer nytimes.com hosted blogs.

2. Offer a nytimes.com hosted blog to anyone who is cited as a source in a NY Times print piece. This way we know that the people writing under the NYT banner are people who the Times considers at least interesting if not authoritative.

3. When a news story happens, in addition to running the usual print story, do a roundup of perspectives from nytimes.com hosted blogs.

I made this pitch in 2002, at the same time I pitched them on supporting RSS 2.0, which they did with great results. Had they adopted the editorial side of the advice I think the news process if not the news business would be in much better shape now than it is.

Here's a piece I wrote recently in rebuttal to Jarvis, who always seems to approach the problem from the p.o.v. of the publishers (as you do). I try to approach it from the point of view of the users, the sources of news and the people who read the news (often the same people)...

I agree with ezra. There is no competing with free.

When I worked in the music Industry, few worried about the insane contracts that artists were *forced* to sign with their labels. Wham was playing to a packed Wembley stadium with little financial return, thanks to the greed of record labels. TLC would become bankrupt even though they had sold millions of albums. Yet we are somehow supposed to feel sorry for the death of the industry as it was.

When the courts awarded record compensation for the utter rubbish printed in regard to the disappearance of Maddie in the most reputable of traditional newspapers, few commented on the role of the editor and real journalism. Where was Keen and his amateur bashing moment? Are we meant to feel sorry for them too?

Madoff showed us that even the most *respected* and *authorative* professionals can leave us wishing we’d invested our lives savings in a p2p lending scheme. Where were the experts then?

There are many reasons that have led to the current turmoil – the reality is that the market needed this. We seem to forget all the companies that are doing well in this time of change. Traditional vs non-traditional is mostly a futile debate with the latter yet to show its capacity to create real financial returns.

The Cluetrain Manifesto revealed great insight but you’d have to be foolish to use it as a manual for change. We are after all meant to read, think and then act instead of taking every *expert’s* claim as the next *how to*.

I agree with Ezra's general thesis that the newspapers were unsavable. A couple of notes:

Over at BoingBoing, Clay Shirky engages in a bit of self-congratulatory schadenfreude for predicting the collapse of the newspaper business model back in 1993.

Shirky wrote the piece in 1995, not 1993.

He essentially couldn't have written the piece in 1993. What was obvious in 1995 was still deeply obscure in 1993.

Much is lost amidst this, particularly in terms of local coverage. Which is why, aside from journalists losing their jobs, few are actually upset over the changes roiling the industry.

I've got to assume there is a typo in there. I can't figure out how the second sentence could possibly follow the first sentence without a typo or some serious obtuseness.

The fact of the loss of local coverage is precisely why non-journalists think the death of the newspapers is A Bad Thing.

And, of course, it's not going to be limited to local coverage. While local coverage is disappearing first, (and this alone ought to deeply worry folks in a democracy with an interest in good government), there will also be eventual losses in coverage of everything outside of a few globally spotlighted issues.

The death of the newspapers is gradually bringing about a monoculture of news. And in much the same way that monocultures in agriculture leave us poorer, so will the coming monoculture of news.

Efficiency through specialization and mass production is generally a good thing, but there are certain areas where greater efficiency really does leave us poorer, and information is one of them.

There is no crisis.

No one will miss big city newspapers, except for big city newspaper owners and employees.

"I gave this advice specifically to the NY Times, but it would have worked for any paper."

I love you, Dave Winer, but the Big Three newspapers had (and still have) opportunities that are simply not there for the Dubuque Telegraph Herald.

The problem is: Where is the reporting going to come from? There's a lot less reporting now than there was twenty years ago, and if the trend discussed here continues, there won't be any. Who will pay for it? If all the newspapers die, not only will their reporters cease being reporters, but the wire services will die too--I don't think Yahoo can keep them alive. No broadcast or cable television news organization in the US does anything like serious reporting now; they haven't in years. The network news programs are an embarrassment, and the News Hour on PBS is a talk show. I guess that leaves the BBC.

Petey, thanks for the love -- and I'll have to think about what you said, I think the model could have worked for a small town. I've lived in small towns and read small town papers (Madison Wisconsin, St Augustine Florida). But... At least one news organization could survive the transition by morphing. It's irresponsible for news organizations to leave their users high and dry. But high and dry we will be, so we'll have to reconstitute the news organization we need from the scraps that are left behind when they collapse, finally, fully.

The deeper story with HuffPo is their aggregation model, which in my lay opinion is a fair-use powder keg:
http://blog.wired.com/business/2008/12/huffpo-slammed.html

But the salable product of newspapers was not news. It was local advertising and classifieds.

Let's refine that a bit, even though it still works out the same: the salable product of newspapers was an audience for ads. (Same with TV and radio stations and channels.) The reporting, the comics, the op-eds are all there to grab and hold the audience so that advertisers can try to sell things to them.

So the problem is that there are now competing, cheaper ways to deliver an audience to advertisers.

I don't know if newspspers as we know them can survive or not. But I hope they're asking questions like:

1) Who will still pay to advertise with us in 2015, and how much are they likely to be willing to pay?

2) What's the most cost-effective way we can provide them with an audience they'll still be willing to pay for?

3) What sort of mix of content will work best to hang onto that audience?

4) What content that we provide now, can we provide a lot more cheaply?

5) Particularly, if we think of ourselves as reporters, what non-reporting content can we save money on, in order to have money to pay for reporters?

(A sea change has already happened: content of all sorts is worth less than it used to be. If I were running a newspaper, I'd be renegotiating the price I pay for things like comics and Dear Abby and op-ed columnists, down to near zero.)

6) How can I make our reporting operations more efficient? Can't a lot of our stories be researched directly from original sources via the Web, with a couple of phone calls and emails at the end to solicit comment from the appropriate people?

7) How much of our reporting is fundamentally non-informative, that could simply be cut? How much of it is stenography?

8) How much of our budget do we actually spend on reporters who really need to be onsite somewhere, whether it's Kirkuk or New Orleans after Katrina? Is it small enough, and valuable enough, to save?

For those who seem to be commenting without any experience or knowledge whatsoever, if there is no money to be made in advertising online then somebody better tell Google and Yahoo pretty quickly. They've been making billions of dollars not only selling advertising themselves, but taking a piece of the action by farming out the advertising they can't handle themselves to others.

There are plenty of profitable websites out there (I own happen to own 20+ of them myself) who make their living off advertising. Those who are claiming that the online revenue streams are "weak" or other such nonsense only put their own ignorance on display.

I'll note that points 4, 6, 7, and 8 from low-tech cyclist neatly outline how the monoculture of news will come about.

How does this square with the average 28% profit margin of Non-USA Today) gannett newspapers in 2007?

The monoculture of news has been with us for a long while. It's called the AP wire. Of course, now it's just going to be strikingly obvious that foreign bureaus have been closed for most major newspapers for over 20 years, and that aside from the NY Times, the Post (maybe) and the AP, we have been receiving a horribly stunted version of news. (I'd get all Chomsky on ya, but ya know.)

But it always strikes me as weird when bloggers, whose primary task is to comment on news articles, cheer that newspapers are dying. It's a bit like cheering that you've just set fire to the corn fields of your small village. But blog triumphalism has always been a phenomenon of people who couldn't live without this technology crowing about the demise of everything that's brought them there. Blogging's a bit sociopathic, after all.

For those who haven't seen it, there's a good piece in the most recent New Yorker about the future of newspaper funding.

At the end of his piece, Surowiecki says:
"For a while now, readers have had the best of both worlds: all the benefits of the old, high-profit regime—intensive reporting, experienced editors, and so on—and the low costs of the new one. But that situation can’t last. Soon enough, we’re going to start getting what we pay for, and we may find out just how little that is."

Guess we'll see if that's indeed true.

But thank god people like Ezra and Matt have Sugar Daddies willing to subsidize their thoughts. Of course, with the loss of underlying reporting to provide them with the stories to fill their blogs, this will become harder.

Ezra and Matt seem all to happy to see the newspapers go, but yet, still have not answered the question: Where will they get their information in the future?

1993? Please. Shirky is a Johnny Come Lately.
http://mikecane2008.wordpress.com/2008/12/05/blind-for-over-twenty-five-years/

One example: In 1995, I told my bosses that they were going to get dumped by real-estate agents and that the real value in that market was information: the complete inventory of homes held by the multiple listing services. So I told them they should go into the real estate business so they could get access to that data - in and out. We'd never do that, that said; that would compete with our advertisers. Those advertisers showed far less loyalty to paper than papers to them.

That is one example.

To start to answer the bigger question: If execs had listened to Shirky et al 14 years ago - which is a damned long time to make a transition - they could have retrained staff, created new products online, promoted those new products, built networks, and much more.

Yes, we in papers put sites online. But the problem was that the newspapers, where the resources and value were, refused (oh, so often) to do anything to benefit online. I lived through that.

The reason Clay and I are sad is that it may be too late for many of them.

Ezra,

Great thread. I will only add that there have always been people who believed in and implemented things of which we wrote. I had a terrific client in WKRN-TV in Nashville, who, in 2004, built a blog network, a local blog aggregator, turned their newsroom into VJs, and tried to break the mold at every level. All of the trends were pointed northward, until the station's owner gutted the innovations for financial reasons.

The signs were there for anybody to see, and those of us who shouted the alarms loudly (and I don't give a shit who was first) have the scars of the naysayers who thought us insane for pointing out what was actually pretty obvious.

My motives have always been to help the industry of media, but it has not been an easy task, for media really hasn't wanted the help.

"I told you so" is little comfort to anyone, but here's what really grates me. I was always told "your ideas are too big" or "you're three years ahead of time." If that's true, I answer, then why aren't you listening to me today? Three years from now, the same people will be asking for my advice on the things I was telling them about three years ago.

So to answer your question as to what would've happened had people paid attention, I'd honestly respond that they wouldn't be in the serious situation they're in. The economy, remember, masks bigger issues.

Terry

As a great quote about analysts go... Even a broken clock is right twice a day.

Oh, knock it off, Jeff. You haven't been part of the "we in papers" equation since I was in preschool, and I'm 36 now.

Mick,

I left my full-time newspaper-company job three years ago and consult for a few newspaper companies now.

Why don't we talk about the substance of the debate at hand - what would have happened if the ships had tried to turn earlier - rather than resorting to shoolyard insult (even if, by your math, my resignation date and your attendance of preschool puts you in third grade now. ;-)

@Jim B:

You're missing the point. Although there is money to be made in online advertising, it is an absolute pittance compared to traditional print advertising. It is this revenue stream from the print product that newspapers use to pay for their reporters and operating expenses. If they were foreced to rely solely on Internet ad revenue, these papers would simply cease to exist.

Furthermore, the comparision to Google and Yahoo is not a fair one to make. These companies are Internet GIANTS who serve ads across the entire web, while newspapers are dealing with revenue from advertising appearing only on their sites.

@everyone:

I have to say that not all local coverage is suffering. Although many of my fellow journalists working for the chain newspapers are worried about layoffs and their organizations shrinking, my experience has been the opposite. I work for a small community newspaper, and our sales are brisk. Our community in southeastern Louisiana has two other newspapers competing for eyeballs, and we're all profitable.

I know this phenomenon is not isolated to my little region, because meet with the editors and publishers of other small, non-chain newspapers on a regular basis, and their stories are the same...

Which leads me to my prediction for the future of the newspaper industry: Hyperlocalization and niche publication. The reason why small community newspapers aren't feeling the pinch is because they serve a very specific market. Our readers are aware that if they're reading an actual newspaper, they have a trustworthy source for their news, whereas Joe Blow's blog post or tweet about last night's council meeting is almost certain to be his one-sided view of what happened.

One caveat: Although I do think that these niche and hyperlocal publications will rely upon a traditional model and employ degreed journalists, they won't be nearly as large as even magazines with modest circulations.

The newspaper industry is not doomed to failure, only much-needed restructuring.

Quote: ...because meet with the editors and publishers of...

There was supposed to be an "I" in there.

A lot of the problems the newspaper industry faces today were inevitable, and I doubt anyone could have done anything to avoid a major shakeout. But there certainly were many things that newspapers could have done to change their model had newspaper companies not been so arrogant. The reality is that in most markets, one daily morning newspaper emerged as the survivor, and as a result of surviving that newspaper had a monopoly in the market and became a cash cow. Newspaper owners thought this situation would go on forever and were utterly unprepared and unwilling to embrace change until it was too late. With news slipping towards commodity status, newspapers needed to leverage their expertise into premium products (and by that I don't mean products that ask people to pay for columnists on the internet)

I first accessed the internet in 1987. It was not hard to immediately see the potential for a revolution in the way people consume information. Online services like The Source and Compuserve had already been around for a few years, although they were expensive. I certainly wouldn't claim that I had any idea how this revolution would occur, but that that would be one, I had little doubt. Anybody who has read Thomas Kuhn's works knows about how paradigm shifts in science - well, in business, they often work the same way. It's inevitable that paradigm shifts will crush many structures devoted to the old paradigm, but it is not inevitable that it will crush all of them, because usually there are forward thinkers in an industry that "catch the wave." In the case of the newspaper industry, it seems like almost everybody in a position of power decided to stay on the side of the pool where drowning was inevitable.

I'm certainly not one of those people who thinks that we can survive the death of newspapers just fine. Oh, sure, there are a lot of crappy papers that contain little besides ap reports, the comics, and a few crime headlines, and I won't mourn those. But other places - in particular one the west coast - are already suffering from the loss of news. In some areas, areas that require specific expertise and more analysis than reporting, blogs can replace and even improve on what newspapers do. But in other areas, society has clearly already started to suffer as a result of the loss of news; the Bush administration has been able to getaway with a lot of crap in areas that the net elite just doesn't care about because there's been nobody covering those areas.

That guy is going to have a hell of a time getting the tar off his foot. I suppose that's a predictable problem going to the beach in (what I presume is) the middle east.

Hey,you will do better.your posts have inspired me! - I love the way you directly get to the point, and then work outwards. I’ve been trying to do figure out what I want to say about ,that would allow me to do exactly the same thing.

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