20 August 2009

Pinto’s Point

Future of newspapers

By Jim Pinto

Today, only 27% of Americans picked up a newspaper, whereas 37% regularly go online for news, and 66% of people get their news from TV.

It is common knowledge that newspapers are now in serious decline. One by one, large icons in the business are going bankrupt, or they are being sold off to private investors who want either to “milk” the business or convert to some other business model.

The newspaper industry cannot survive in the age of the Internet. Classifieds, their most profitable advertising, is quickly shifting online to sites like Craigslist, and display advertising is close behind. Compared with static images in newspapers, web advertising can be bright and colorful, with movement to attract attention and quick changes to match content.

The “killer” difference with Internet advertising is results are traceable through counting page views and “pay per click.” By comparison, print advertising cannot prove actual results, but can only cite total circulation.

Newspapers saw the Internet coming in the early 1990s, but their plans to deal with it were flawed. They tried to educate the public about copyright law, but they ignored new payment models. They thought they could use technology to make content harder to share, but that did not work. They pursued radio and TV profit models by becoming purely ad-supported. But, free, clickable, online content is hard to beat.

Some think the value of the “press” is much more than news; it lies in holding governments to account. Just because newspapers go away does not mean news sources will die. News sources will always find the biggest megaphone they can find to get their views out. That simply is not newspapers any more.

The Internet has expanded the news process, and speeded it up. By the time a daily newspaper is actually read, the news may already have changed. The weeklies and monthlies are completely outdated as far as news is concerned; all they have left is carefully considered commentary, after the news.

Washington may be inching closer to some sort of newspaper bailout, which is nonsense. A government subsidized “free press” is not free at all. Newspapers employ a mere 0.2% of the U.S. labor force and generate only 0.36% of the GNP. That is small enough to dump.

Newspapers are outdated businesses with outdated technology. Printing The New York Times costs twice as much as sending every subscriber a free Amazon Kindle. Besides, printing newspapers hurts the environment (wasted paper), and delivery of millions of copies of newsprint wastes energy.

Related links:

• Newspapers Must Be Allowed To Fail:
  http://www.businessinsider.com/what-to-tell-people-who-want-a-newspaper-bailout-2009-5
• Do Newspapers Have a Future?
  http://www.time.com/time/magazine/article/0,9171,1538652,00.html
• Who killed the newspaper?
  http://www.economist.com/opinion/displayStory.cfm?Story_ID=7830218

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.