The endless parade of layoffs, buyouts and cutbacks at many newspapers is depressing. Circulation is steadily declining and fewer and fewer people read the paper-and-ink version of the news.
But don't believe that it means that newspapers are doomed.
For starters, newspaper profit margins put most other businesses to shame. On average, a well-run newspaper makes a 20 percent annual profit, or about double that of the average Fortune 500 company.
Nearly every newspaper in America operates as a monopoly. This is especially true in smaller markets, such as where I live and work in southern Vermont.
Television news crews rarely visit my area unless there is a major event. Radio news barely exists, save for statewide coverage from Vermont Public Radio and one overworked newsman at our last remaining independently-owned commercial radio station. There is a lively local citizens' journalism Web site. The public access cable channel tapes the meetings of the various town boards. But for the most part, people here still turn to the local newspaper as their primary source of local news.
The monopoly in news also carries over into advertising. In most places where the newspaper is the only game in town for local news, it is also the dominant medium for local advertising. Craigslist or Monster.com don't have a very large presence in Vermont. Ebay is a pain to use if you don't have broadband Internet service, which is still a rumor in much of rural America. If you're trying to sell something or looking to buy something, chances are you're going to use a newspaper.
As fluffy as many newspapers have become, they remain the only news organizations with the resources to do real reporting. It is well-established that virtually every other news medium piggybacks on the work of newspapers. Read the blogs, listen to public radio or watch the nightly news, and you'll quickly see that much of what they're reporting has its genesis in a story from The New York Times, The Washington Post, USA Today or one of the other major newspapers around the country.
Much as people like to gripe about their local newspaper, it is usually seen as the most trusted source of information available. This trust and goodwill springs from the established newsgathering infrastructure. People still depend on newspapers for the depth and breadth of information that other mediums still can't provide.
Outside of the cities, I believe that newspapers will continue to thrive. Their monopoly positions ensure that they will be profitable, even in the face of the Internet. That's because, for all the hype about the wonders of the Web, most people still prefer to hold a paper-and-ink summary of the day's news in their hands, to be consumed at one's own leisure without being tethered to a computer.
This is not to say all is wonderful in newspapering.
The biggest source of problems in the business right now is Wall Street. When a newspaper becomes a publicly-traded business, it becomes beholden to shareholders who don't care about what goes in newspapers as long as a high profit margin can be maintained.
When times get hard and that 20 percent (or in some cases, 30 or even 40 percent) profit margin can't be achieved, investors demand cost-cutting. And that is achieved by getting rid of reporters and editors and putting less news in the paper.
If you wonder why some of the biggest newspapers in the country are seeing steep declines in circulation, that is the reason why. It's no different from putting 1.75 quarts of ice cream in a carton and selling it for the same price that a half-gallon carton used to sell for. Give the readers less and charge them the same (or sometimes more) for the newspaper, and the readers will start going elsewhere for news.
No business ever became successful by giving consumers less for their money. You can't expect people to keep paying for a crappy newspaper when they can get all the crap they want for free on TV, radio and the Web. You may achieve profit in the short term, but over time, you will eventually lose market share and ultimately go out of business.
I've been in journalism a long time, from the last gasp of typewriters, teletype machines and paste-up, to PCs, T-1 lines and pagination. And I been hearing talk about the demise of newspapers for almost as long as I've been in the business. Yet newspapers survive as highly profitable enterprises.
Despite all the recent scandals, newspapers remain the most trusted source of news. Certainly, they remain the most comprehensive source of news. The technology for news gathering and distribution continues to change, but it still comes down gathering facts, verifying them, arranging them so that they are accurate, interesting and understandable and getting that information into the reader's hands "" be it on paper or a computer screen.
The only thing that will kill papers is the greed of the people who own them. The quest for ever-higher profits leads to watered-down, cheapened newspapers, a strategy that ultimately comes back to bite those who think that less is more. Less is always less, and expecting people to believe otherwise is a good way to run a business into the ground.