Can we save what matters in American journalism?

Where goes the newspaper industry?

By Hal DeKeyser
Hal DeKeyser & Associates
WestValley101.com
EditorHal.blogspot.com

First, the good news: News isn’t going away. People are reading. The circulation of major metros is down but readership is up, and there are thousands of new sources of information out there easy to retrieve.

What is going away is the business model that has delivered news for a hundred years plus, particularly the monopoly model that has been dominant over the past few decades. The Age of Gannett is about to come to a close.

Newspapers, particularly dominant metros in big markets and the home town papers elsewhere, used to own classifieds, employment, automotive, housing, retail and national advertising. They owned local and regional news, sports and entertainment, with some sway in national and international but ceded much of that to broadcast. That was OK though, because readership, like politics, is local, particularly in America.

Now newspapers lead on local news and local sports, and that’s pretty much it, and the grasp on that isn’t solid. They’re still big in entertainment, but that readership has been fractured with all the other information sources – including electronic word of mouth. Classifieds, automotive, employment and housing have fallen off the cliff, and local and national retail is way down, as is circulation revenue. People in the biz are more worried about pink slips than yellow journalism.

A lot of people blame the Internet for that, and that certainly had a lot to do with the classified revenues, which used to be about 40 percent of the take. Newspapers are great smorgasbords but not great search engines. They’re great at collecting and presenting the stuff you didn’t know happened and therefore wouldn’t have asked about, like if a plane went down over Buffalo or who shot whom or a sale at Target or the congressman cavorting with an intern. They’re not so great at finding you matching hubcaps for a ’48 Hudson Hornet or a job as a project engineer for an airport tank farm expansion.

But newspapers were (and arguably still are) in the best position to take advantage of the new delivery system and revenue models that evolved around them. They haven’t.

No one had – or has – greater access to sources and readers than the industry that has been the filter between them for eons. They just were so used to winning for so long that when the going got tough they played prevent defense, and you know how many games that wins.

There are two other strikes on the newspaper industry. One is the general economy right now. Businesses are husbanding every dime, and that generally means that advertising is the first weight jettisoned from the sinking ship. Smart operators recognize that bad times are great times to build market share, when everyone else is bailing. But you have to have – and believe that you have – the resources to weather the storm, and that’s but a slice of the advertisers. So newspapers were a snowball heading downhill , and the economy gave them a big fat kick.

Also, the newspaper industry was the victim of its own success, and to some extent, the same kind of greed and over-reaching optimism about return that has sunk the real estate business.

When I was in the newspaper game, an operating profit of 20-25 percent wasn’t all that uncommon, particularly in monopoly markets. When I was running the Daily News-Sun in Sun City and the weekly papers in Glendale, Peoria and Surprise near Phoenix, my margin ran from 22-27 percent. When it went below 25 percent, I was in trouble. And that was the second and third papers in the market; we had to scramble for our dollars.

What happened was that smart, rich business people believed that trees grow to the sky and trend lines continue, and newspaper groups and individuals bought up these newspapers at high prices thinking they could pay them off with high-margin profit. They did so with highly leverages buy-outs that included enormous and expensive debt. Think Chicago Tribune and LA Times. When the business tanked, they couldn’t afford the debt, the cost of which often is tied to operating profit. If operating profit goes down – or falls off a cliff in times like these – the interest rate climbs, making more debt that’s harder to repay. So major metros went from making 20-30 percent margin to losing money while trying to repay increasingly expensive debt they never should have had in the first place. Kind of sounds like your formerly braggadocio real estate tycoon neighbor, doesn’t it?

What did they do about it? They cut expenses. They fired reporters, shuttered bureaus, cut out circulation in the out-zones that was expensive to deliver, reduced their own advertising and promotion. They cut the physical size of their papers, dropped or combined sections, dropped stocks, stopped covering some things, replaced-packaged out seasoned pros with interns and rookies. They outsourced printing, delivery, ad-building. They sold their real estate and leased back space and cut managers and middle managers. Some, like the East Valley Tribune, gave up whole communities and days of the week.

If this slowed the fall off the cliff, it’s only by comparison to what might have happened otherwise. Reporters still feel like musicians on the Titanic, just blowing sweet tunes with one eye closed until the cold water sucks them down. It ain’t pretty.

Let me put in a plug for the people still there. This is not the fault of the reporters, editors and photographers, other than being products of a culture that -- in spite of its often anti-establishment bent -- is about as resistant to change as the Taliban. These guys are struggling to put out a good paper every day amid all this gloom and doom and still, I think, individually do a good, necessary job with a mindset that what they do matters, which it does.

What’s the consequence of all this? Is there any way to save newspapers, and, if not, what’s the world going to look like without them?

While newspapers have been the burr in the saddle of government and politicians, I think one of the big downsides to the demise of newspapers would be an even greater slide in confidence in government and institutions. While journalists are about as popular as yesterday’s politician and today’s bankers, there are standards they employ that are not recognized in what has evolved in replacement news sources, like blogs and forums and the so-called citizen journalism.

I grew up in the business with editors who kicked my butt when I got it wrong, who were always asking me, “How do you know that?” “What’s the attribution?” “Can you get another source to confirm that?” That is definitely NOT the culture of blogs and the snarky Monday morning quarterbacking that pops up on the internet written (for lack of a more descriptive verb) by angry, drooling troglodytes in bathrobes who exist in a bizarro world where they actually are clever. If you want a sample, go to the wisdom posted on the requested comments following online stories. You want to put democracy in the hands of obnoxious knuckle-draggers and seventh-grade bullies?

How much do you think the general public will trust public institutions with that kind of negative drumbeat pounding louder and louder at them day after day by idiots and assholes – all cowering behind the skirts of anonymity? Combine that with the behavior we undoubtedly will get from government absent professional journalists keeping an eye on them?

So, who is going to be holding the governments’ feet to the fire about open meetings, open records, open government – particularly local government? Editors don’t have a broad legal knowledge, but I know Arizona’s Open Records and Open Meetings law, and the people who run government in places where I have worked knew that. I also know where to get help from legal professionals when I’m over my head on open government issues.

More pointedly, public officials knew I would rat them out when I caught them skirting open records and meeting law. If newspapers aren’t there to do that, who will? Who will know how to? Who will know why it matters to to care? Who will have the means and experience to do anything about it? How will politicians and bureaucrats behave without reporters and opinion writers holding their feet to the fire? I don’t like the answers to any of those questions.

Is there a silver bullet?

Sorry. No.

Newspapers have moved to the Internet and some of them provide good information and advertising information. So far, though, advertisers won’t pay the kind of rates for Internet ads that they will for print ads. People in the Internet jump around more, don’t stay on pages as long, and advertisers just won’t pay enough to run the whole operation. That may change with web innovation, but it doesn’t work yet.

Several proposals and interesting ideas are floating around the world of journalism. There are proposals to sell news through micro-payments, sort of like how Apple sells I-tunes, so people can pay nickels and dimes for the content they want. Someone has to come up with a way to make this simple and non-cumbersome, and there are a few interesting business models in the works. The biggest impediment to this seems to be the culture that says information on the web wants to be free. Well, the web makes information distribution very cheap, but it does little to lower the cost of gathering news. You can’t cover the war in Iraq in your pajamas in the middle of the night just by forwarding CNN links.

Another floated notion is to make newspapers into something like a private college, a public endowment that recognizes the value of the common good and voluntarily funds it. That’s the NPR model. That may work as well as NPR works – in a narrow and minor way – but I don’t have great hope that such a thing could replace the robust competitive news operations that most of us grew up on. How exciting would radio be if there was only NPR? That offers little hope for the future of community journalism.

Here’s what I think might work on the local level, but I’m not sure it will work on a metro or national level.

Local news providers could produce solid local news and resource material and deliver it over the internet cheaply enough to survive with lower rate advertising and multiple partners. It’s working – or hanging on – in several places, but we don’t know yet whether that’s because of committed operators or situations peculiar to those individual communities. The idea is that you really cover a community well and put it on a community-branded web site that turns into a community resource, and not just for news. It needs to have newcomer’s guides, information on schools, dining, a monitored forum (see troglodytes, above) and a place where entities as big as the Super Bowl and as narrow as the Wisconsin Club can get their information distributed.

I’m working on such as site now, called WestValley101.com. It’s not there yet – it needs more reporting resources – it’s pretty much rewritten releases and a little bit of reporting now. We have to find ways to get that broad information very cheaply and concentrate resources on the narrow, important information. Readers would use it like a newspaper, yellow pages, community information resource, entertainment calendar, town crier, chat. Advertising would be inexpensive enough and readership broad enough to pay for trained reporters to cover the community, keep government open and honest and provide a healthy and robust – yet at least somewhat civil – debate.

That’s not a model that pays to cover the Iraq war, but it might keep a better eye on the Peoria City Council than a citizen journalism or a dying newspaper model would. People with resources need to be willing to invest in this, and so far, no one’s beating down my door to buy a slice of my dream.

I’m a proponent of chaos theory, that we swing back and forth among things that work until we over-extend, and then we swing the other way. My guess is that when newspapers fold and the result is chaos, someone will come up with a way to fill those gaps and make a buck at it. There will be pain and confusion in the meantime. And some scum will get away with some stuff. That’s not an unfamiliar circumstance when it comes to progress.

Wish I had better news.

Hal DeKeyser has been a reporter, photographer, columnist, editorialist, editor, publisher, community and public affairs specialist and entrepreneur in Arizona and California for 30 plus years. He has run news operations in Mesa, Tempe, Chandler, Scottsdale, Sun Cities, Glendale, Peoria, Surprise, Buckeye and the West Valley as a region. Contact him via Hal@WestValley101.com or www.HalDeKeyser.com.