Monday, July 6, 2009

Further evidence of newspaper decline

On Sunday, the SF Chronicle stopped printing its paper, laying off 200 union printers and shifting the work to an outside contractor. Compared to going out of business, it’s small potatoes, but it’s one more data point in the long secular decline of newspapers (not to mention unionization of non-government workers).

By going to the market (rather than vertical integration), the Chronicle was able to not only save costs but get more up-to-date printing presses. The Chronicle does not see printing as a core competency, and thus abandoning the traditional vertical integration (at least in a large metropolitan area like SF) makes sense. Still, the in-house story seemed slanted towards the nominal benefits (“wrinkle-free era begins”) rather than the cost savings.

Still, this is fiddling around the margins. The real issue is (as with record companies) how to charge when everyone expects to get it for free.

Eric Etheridge of the NYT summarizes the latest hopes of newspapers to be able to increase online revenues to replace disappearing printed paper revenues. One of the newest briefs in support of the newspapers comes from Richard Posner, a law and economics guru who is perhaps the most influential US judge today who will never sit on the Supreme Court. And The Newspaper Project keeps grasping at straws that it hopes will someday mean “Happy days are here again!”

On the other hand, Kevin Kelleher thinks efforts to impose a pay wall after all these years are doomed to fail. He opens in dramatic form:

Dear reader, the newspapers are sorry. They made a terrible mistake that drove you away: For years and years, they let you read their stories online for free. And so in the depths of the worst recession of our lives, they are now going to make us all pay.

If that sounds at all illogical, there's an excellent chance you are not a newspaper executive. It makes sense to Les Hinton, CEO of News Corp.'s (NWS) Dow Jones & Co. and publisher of the Wall Street Journal, who not only acknowledged the mistake in a recent speech but credited it with feeding Google's (GOOG) vampyric "lust for newspaper blood." Hinton said all those free news stories on the Web "gave Google's fangs a great place to bite."
I think the jury is still out, but if I had to bet whether the average (not top 5) US newspaper will be able to institute a pay wall, I’d put the odds south of 4-to-1.

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