Tuesday, March 10, 2009

Going out of business?

Time Magazine has a sad, but not at all surprising story today titled, "The 10 Most Endangered Newspapers in America." It predicts that these 10 publications, which include 8 of the 50 largest in circulation in the U.S., will cease printing or fold completely in the next 18 months:
1. The Philadelphia Daily News. "The tabloid has a small staff, most of whom could probably stay on at Philly.com, the Web operation for both of the city dailies."
2. The Minneapolis Star Tribune. "It could survive if its rival, the St. Paul Pioneer Press, folds. A grim race."
3. The Miami Herald. "... it is more likely that the Herald will go online-only with two editions, one for English-language readers and one for Spanish."
4. The Detroit News.
5. The Boston Globe. "Boston.com, the online site that includes the digital aspects of the Globe, will probably be all that remains of the operation."
6. The San Francisco Chronicle. "The online version of the paper could be the only version by the middle of 2009."
7. The Chicago Sun-Times. "Its parent company, Sun-Times Media Group, trades for 3 cents per share."
8. The New York Daily News. "... no chance of recovering."
9. The Fort Worth Star-Telegram. "The Star-Telegram will have to shut down or become an edition of its rival."
10. The Cleveland Plain Dealer. "The Plain Dealer will be shut or go digital by the end of next year."

The seven biggest reasons I believe newspapers are dying right now?
1. The horrible economy;
2. The loss of small retailers' display ads to electronic media;
3. The loss of big retailers' display ads to inserts;
4. The loss of classifieds to Craig's List and similar companies;
5. The failure of newspaper publishers to figure out how to make money off of the Web;
6. The widespread availability of free news on the Internet and 24-hour cable TV; and
7. The general decline in literacy in our country.

Most people 50 and older still read newspapers and read books and magazines for pleasure. Most people under 30 don't read anything they don't have to and don't mind being terribly uninformed about the world around them. While there are still best sellers, like Harry Potter, which attract young readers, most young Americans don't go to the library, don't read magazines and never buy a novel. This trend has hurt the profits of publishers (and writers) of all forms of the written word. But because so many technological developments of the last twenty years stole away all of the profits of newspapers, the decline in literacy has hurt these publications the most.

I trace the origins of the decline and fall of the newspaper empire to the development of large-scale inserts in the 1970s. If you look at a newspaper from the 1960s or before, you'll notice that it is covered in expensive display ads. Every page of a newspaper, save the traditionally clean front and back pages, was a profit center. Even large advertisers, like Sears, JC Penney and Woolworth's bought expensive display ads. You couldn't read an article without seeing their advertising. But when discounters like Wal-Mart, K-Mart, Rite-Aid and Target began encroaching on their markets, the new advertising form of choice was the newspaper insert, over which the advertiser had more control. A full-color insert looks good on its shiny paper, and when a reader is perusing it, his mind is not distracted by the ads of other companies or newspaper stories on the same page. Inserts are much less profitable to the newspaper publisher. He cannot charge any premium for including a 12-page Home Depot mini-magazine. If the newspaper charged more than a delivery fee, Home Depot could simply get its insert delivered -- to more customers -- via the U.S. Postal Service. As big companies like Home Depot ran mom-and-pop shops out of business, newspapers uniformly paid the price. They couldn't get the huge chains to buy expensive display ads, and they lost at the same time the local merchants who still would.

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