What do we do when a major city's daily paper becomes a zombie?

Despite high pentration of its market, New Orleans' newspaper is cutting back to three days a week. It's time for communities to invest in information that is about more than returning money to the owners.
New Orleans' long-time daily, "The Times Picayune," is going to three times a week publication.

New Orleans' long-time daily, "The Times Picayune," is going to three times a week publication. skooksie/Flickr

I was in New Orleans when news broke that the city’s daily newspaper, The Times-Picayune, plans to cut back its printing schedule to three times a week and lay off staff. It was my first time in the city since March, when I moved to Philadelphia after nearly five years there, working as a journalist and sharing the city’s newsbeat with the TP. As you’ve likely heard by now, the news made waves — people fretted, people drank free drinks at the old journo-dive Mollys in the Market, they formed Facebook groups that produced ugly if effective agitprop and organized into citizens groups.

They also penned legislative resolutions urging the newspaper’s owner to maintain the daily.

For me, the news was upsetting, if not altogether surprising; The Times-Picayune is the only daily newspaper in a region of 1.3 million people — and a well-read one at that with an extraordinarily high penetration rate of of 75.5 percent, meaning that three out of four people see the newspaper’s headlines every week, whether they get it delivered to their home, buy it in a newsbox or read at work, their corner bar or beauty parlor. Yet while virtually everyone counts on the TP, that “everyone” constitutes a shrinking pie — New Orleans is one of many American cities significantly smaller now than it was in the recent past.

In 2005, before Hurricane Katrina and the subsequent federal levee failure, the paper recorded a daily circulation of 261,000; in March of this year, the circulation hovered at 132,000, according to The New York Timeswhich broke the news, stunning the newspaper’s own staff who had not yet been informed by their boss-owners, Advance Publications, owned by the Newhouse family.

As that last fact may suggest, the paper’s owner is its other giant liability — Advance Publications operates primarily  not to serve the quarter of a million people who rely on the paper, but to remain profitable in an increasingly inhospitable marketplace challenged by declining advertising revenue and changing reader preferences.

While New Orleans is the first major American city to lose its daily print newspaper, it will likely not be the last. If the last week of announcements of similar cuts in small- to mid-sized cities is any indicator of what is to come, municipal journalism is in for a serious blood bath.

Not even Warren Buffett knows what to do. See his recent letter New Orleans musician Evan Christopher:

Dear Evan:

Naturally I’ve been following the Times-Pic situation with interest. I don’t know any of the facts on their profitability but was really surprised when they made the announcement. It seems to me that three days a week is simply unsustainable over the longer term. Either a publication is a newspaper or a periodical and I think three days a week crosses the line.

The one thing I’m quite sure of: It would not work to start a competing paper. I have no insight as to whether the Newhouse family would sell the Times-Pic to a local group. They do not have a history of selling anything. That’s something a member of the community should explore. Let me know if you learn more.New Orleans seems to me to be a very strongly defined community and I believe the Times-Pic has high penetration. Therefore, I’m puzzled as to why the economics don’t work on a seven-day basis. But I would have to have the detailed figures to make an analysis.

Sincerely,

Warren Buffett (non-musician)

I agree with Mr. Buffett that starting a competing newspaper is not the brightest idea. I also have no idea if Newhouse would sell and kind of doubt that would work out anyway; why sell an asset when you can bleed it lean then continue to wring it for whatever liquidity is left in its emaciated form?


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Comments:

Posted Fri, Jun 8, 4:47 p.m. Inappropriate

The best way to "invest" in the local newspaper is to subscribe to it. All too many people have become Internet free-riders. We are only beginning to see the results. If people won't pay for the daily paper, it will cease to exist.

But even if people did suddenly reverse trend, it's not at all clear that newspapers will survive. The Internet has already done too much damage.

Let me explain. As I do, you must remember a guiding principle of newspaper economics forever, i.e., long before anyone ever even heard of a computer, much less the Internet: Advertising pays for everything. News exists to lend credibility to the ads, and thereby draw eyeballs to them. This was true in 1910, 1920, 1950, 1980, and is true today. If that shocks you, then be shocked.

The economics of newspaper publishing run heavily against the Internet as a means of survival. While it does (obviously) save on the cost of printing and delivery, the Internet is far inferior to paper and ink as a means of delivering advertising -- and far more crucially, as a means of delivering advertising revenue.

It's simply too easy for people to avoid ads online. Without guaranteed exposure to ads, advertisers will not pay anything even remotely close to what they pay for newspaper display space. However, because print ads are sold on a "cost per thousand readers" basis, as paid circulation keeps declining, print ad rates drop and make daily publications less and less tenable. Claims about "readers" become relentlessly hollower as paid circulation drops.

There are some inescapable realities about newspapers:

1. Subscription and single copy sales pay for the cost of printing and distribution. Ad revenue pays for everything else. Once you don't have enough sales to finance the printing of the paper, you're done for.

2. Prior to Craigslist and EBay, classifieds were 40% of the ad revenue and display ads were 60%. Today, classifieds have mostly disappeared.

3. There are four types of classifieds: Auto, employment, housing, and general merchandise. Autotrader and the various free shoppers have gutted the auto category. Craigslist and Ebay took general merchandise. Craigslist took the apartments. The realtors themselves and various realty sites are rapidly taking homes and condos.

4. The Sunday paper makes all the money. The other six days are published at a loss.

5. Without those annoying pre-prints in the Sunday paper, it would also lose money.

6. Department stores (which aren't really department stores anymore, but clothing and housewares boutiques) and grocery store display ads, and to a lesser extent car dealer display ads, are pretty much all that stand between newspapers and falling over the cliff.

7. Fewer and fewer people do any kind of reading. The whole idea of a local "general circulation" newspaper is a myth that died not all that long after the big magazines (Life and Look and Saturday Evening Post and Time and Newsweek and Reader's Digest) died or became zombies.

The local "general circulation" newspaper is a specialty publication for literate, engaged upper-middle class whites, most of them over 50. The newspaper is like the symphony; everyone pays lip service to its virtues, while the subscribers keep dying off. Or like live major league sports, which have long ceased to be family events and would die without massive direct and indirect taxpayer subsidies. (Indirect? Just imagine if corporate entertainment was no longer classified as a business expense.)

If newspaper circulation suddenly doubled, most of these problems would remain, but maybe the newspaper would become a more attractive display ad venue. Maybe.

And even if the hipsters decided they'd be willing to pay for newspaper content online rather than regurgitating the absurd and immature pablum about how "information is free," the inability of online journalism to generate ad revenues would still be a huge issue.

NotFan

Posted Fri, Jun 8, 4:58 p.m. Inappropriate

By the way, New Orleans is not "the first major American city to lose its daily print newspaper." The Detroit Free Press and News deliver at home on Thursdays, Fridays, and Sundays only. If you look closely at the circulation numbers, you'll see that they don't reveal their Monday through Wednesday circulation. God only knows about Saturdays. I bet that the Sunday Free Press covers both days.

NotFan

Posted Sat, Jun 9, 6:01 p.m. Inappropriate


I've been a newspaper addict all my life, and I lived in New Orleans from 2003-2009.

A lot of the T-P's problems are out of the hands of the people who run the paper--Craigslist, competition from the Web in general, all the things that we've read about in cases of other city dailies.

But there are other problems that are T-P or New Orleans-specific. Overall the T-P is a poor product that emphasizes crime news, "entertainment news," and LSU/Saints football. Whereas it used to publish muckraking stories on a regular basis, while I was there it produced maybe a half-dozen pieces a year on really meaty topics, and many more pieces on inconsequential topics, but with the stories all prettified with graphics and other tricks to make them look like they meant something.

Again, this is a trend in many American dailies, the T-P is not unique in that regard. But the result is a product that is hard to get excited about. Like the P-I, the T-P *does* have a good history of active journalism. However, in our romanticizing about print journalism in the face of cutbacks, we overlook how those two newspapers (and many others) have steadily declined over the past two decades.

The forces leading to the decision to cut back the print edition of the T-P did not happen overnight, they represent many years of decline in quality that the paper needs to own up to.

I've seen that "penetration" statistic many times since the T-P announced its cutbacks. It has been offered as some kind of metric indicating success on the part of the newspaper. I think it's a bogus statistic, and I offer the actions of local advertisers as support of my assertion. Advertisers are smart, they want to know that their messages are getting into the hands and heads of the people they are targeting. If "penetration" means that readers are only reading the headlines and sports section, that is not enough to hold the interest of companies wanting to use the newspaper as a vehicle to sell their own products.

I can only hope that the T-P keeps a sufficient number of reporters who know how to cover the slime of New Orleans/Louisiana politics rather than simply read and regurgitate police blotters. Without those kinds of reporters . . . I don't wanna think about it . . . you get the current version of the P-I.

(The T-P's Katrina coverage was exceptional, and it is to be praised for sticking around and offering a sense of stability when the city really needed it. But it also did a lot to support rumors of looting and violence that turned out to be false--part of the dangers of life as a city daily. A lot of us relied on the national dailies such as the NYTimes to fill in the real information gaps.)

Lindy

Posted Sat, Jun 9, 8:22 p.m. Inappropriate

I can only hope that the T-P keeps a sufficient number of reporters who know how to cover the slime of New Orleans/Louisiana politics rather than simply read and regurgitate police blotters.

That depends entirely on whether or not people there will support their newspaper by paying for it. At this late date, it's hard to be optimistic.

If "penetration" means that readers are only reading the headlines and sports section, that is not enough to hold the interest of companies wanting to use the newspaper as a vehicle to sell their own products.

Hate to break the bad news to you, but that sports section you hate is probably the last redoubt of information that attracts anyone to the newspaper.

NotFan

Posted Sun, Jun 10, 11:06 a.m. Inappropriate

Good article. Thank you. Newspapers are probably indispensable to a functioning society and, assuming NotFan's analysis is accurate (I think it is), they are on their way out. But, note how much of what you and I read on the web comes from printed, supposedly profit generating, publications and then visualize that time when the newspapers are all gone. What's going to be on the web? Wall St. Journal maybe, a whole lot of doctrinaire websites and blogs. "Investigative journalism" will be limited (even more than now) to investigators looking for what they want to find. Sports teams and politicians will have their own "news" sites; people will still deliver ad bundles to your door accompanied by an editorial. If that happens I think some replacement for newspapers, on the web or in print, will find a way to make money. Because we will need it.

kieth

Posted Sun, Jun 10, 3:30 p.m. Inappropriate

There will be a replacement for newspapers. We just don't know what it is. I would look backwards in time for ideas, and consider the history of newspaper journalism.

It started as travel dispatches of interest mainly to merchants and that tiny sliver of the public that crossed oceans. Then it became scurrilous political pamphleteering, which is what the first amendment protected and what most of the "news" blogs are today.

Then the Civil War arrived, and with it the telegraph and the mechanical printing press. These things created a demand for factual reports from the battlefronts, and the means to deliver those facts cheaply. After that, the mass production and consumption economy arose, and merchants wanted a way to reach the public.

It was only when the merchants arrived in force that newspapers grew rapidly, and eventually consolidated. They peaked in the 1950s, and have been under challenge ever since, from a variety of forces. The Internet was only the latest, but it was by far the biggest threat because it has taken almost all of the classifieds, and hollowed out the circulation, making its function as a display ad medium less and less relevant every year.

Eventually, I think merchandising will drive the next big consolidation. The grocery stores are going to want a reliable way of reaching a lot of people. The department stores too. The sports businesses need a vehicle, and so do the car dealers.

But that will take time. The merchants don't have a clue, really. Someone else will have to invent the platform. They sure won't. The current journalism establishment won't do it either. They are laughably ignorant about business. They are the proverbial dunces who couldn't sell a heater to an Eskimo in January.

I think today's journalists will be replaced by a next-generation that will reconnect to journalism as it was once practiced, and which was forgotten after World War II, when reporters started becoming respectable and the owners and editors decided that they were something akin to the local library, required to give something to everyone. Consolidation, and the "Newspaper Preservation Act of 1962," which allowed joint operating agreements, propped up the corpse.

The next news outlets will look a lot more like the Drudge Report than the New York Times. They won't necessarily be all right-wing. One of these days, the left wingers will figure out how to talk to people too. They'll have to. But it'll be a future generation of liberals, less arrogant and less entitled. Crosscut could do it, if they weren't so stick-up-the-ass Seattle earnest and actually sat down amongst themselves, came up with a name that meant something and then asked themselves what 100,000 people here might want to know every day. I won't hold my breath.

Out of all the mess, there'll be "objective" journalism, but it will compete with everything else and won't be as olympian and removed as it became in its decadent "fourth estate" days. And then, as with everything else, that new structure will grow fat and happy, and will fall.

NotFan

Posted Sun, Jun 10, 3:54 p.m. Inappropriate

By the way, yes, it's ironic that so much of the "news" on the web comes from dead-tree organizations. When they do fail, for real, I think that's when the rubber will really hit the road.

I'm waiting for the day when a big city is truly without a newspaper. Once that happens, I think the replacements will pop up pretty quickly. But still, there's the economic issue. Even if people paid for the online version, like they do for the WSJ, it's not nearly enough.

True, you're not printing and distributing a physical product, but you're still maintaining a website and running servers. I think those costs are higher than a lot of people imagine, especially these days when readers want the stories updated immediately. So if people paid for the online subscription, without ads there isn't nearly enough money to buy a big staff and generate much profit.

The end result will probably be that the "professional journalist" will pretty much vanish. I can't see, at least for the foreseeable future, how anyone can wind up making much money from online journalism, given that the symbiotic relationship between editorial and advertising content simply doesn't exist online like it does in the print medium.

The Internet is the great disaggregator that way. If you want to see ads, you will do it. If you don't want to see ads, you won't. Until someone can figure out how to link news and advertising in such a way that people who see one will see the other, journalism as we've known it since WWII won't exist.

NotFan

Posted Sun, Jun 10, 10:17 p.m. Inappropriate

When I saw the headline I thought it was about the Seattle Times.

MarkS

Posted Mon, Jun 11, 11:49 a.m. Inappropriate

You don't get out much, do you? By comparison to most of the rest of the country, Seattle is lucky to have a metropolitan paper that's as good as it is. Yeah, they don't toe your line, so you hate 'em. Just wait until they're gone.

NotFan

Posted Wed, Jun 13, 7:01 p.m. Inappropriate

It aint as good as it was largely due to lack of competition. Looks like you have lower expectations than I do.

MarkS

Posted Thu, Jun 14, 1:10 p.m. Inappropriate

What an empty, illogical, meaningless comment. You have higher "expectations?" Tell me just what you "expect" at a time when the one newspaper in town is almost certainly losing money.

NotFan

Posted Thu, Jun 14, 11:03 a.m. Inappropriate

I loved the Seattle P-I and subscribed for many years, even to its last day when it had shrunk so much. I tried the Seattle Times. I subscribed for two years or so, but could not bear the editorial tone. In addition, I came to feel that buying a paper, 75% of which went directly into recycling and 10% of which was opinion with which I didn't agree was just a waste.

Two years or so later, I still mourn the loss of the paper every morning. It was how I started my day. I don't know the answer to how we'll get news in the future, but I sure don't like reading it online, and rarely do. The overwhelming number of ads which, unlike newspaper, cannot be removed from sight, have proved just too annoying. At this point, I rely on NPR and CNN. But still every morning I miss opening that paper to see what's happening.

Since I totally dislike the Times, I am glad to see it doing what the P-I did, which is reducing content and increasing ads. If it dies, I won't mourn. I'm not among the elitists to whom it panders. I think the very best writing I've seen about newspapers in years is Bill Virgin's last column for the P-I. You can find it here: http://www.seattlepi.com/business/article/Class-final-How-to-kill-an-American-newspaper-1302618.php

mspat

Posted Thu, Jun 14, 12:36 p.m. Inappropriate

Your money, your choice, even if it's a stupid one. As for your contention that the Seattle Times is "increasing ads," it's obvious that you don't pay any attention. Except for Sundays, there are hardly any ads in the paper.

If you're rooting for the last newspaper here to fail, you ought to be happier every month. As a kid, I was a newspaper carrier in a city less than half the size of present-day Seattle. Today's Times is much thinner than the papers I used to deliver, and has hardly any ads during the week.

It's only a matter of time, and maybe not very much time, before they do what the New Orleans and Detroit papers have already done.

NotFan

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