Newspapers and the New Technology

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Newspapers and the New Technology

Journalists and commentators have been asking the question for years:  "Can newspapers survive in the face of the Internet?"

As of 2009, The Pew Research Center for the People and the Press reported that 34 percent of people go online for news, while just 31 percent read newspapers.1 That was the first year in which the Internet topped the newspapers for readership, and it's a trend that's not likely to reverse.

According to GigaOM.com,2 2009 was also the worst year in a very long time for newspapers and their ad revenue.  Ad sales declined 28 percent from 2008, which had already set a record as being the worst year for newspapers since the Depression.  Newspaper ad revenue was cut nearly in half between 2006 and 2010, dropping from $47 billion to $24 billion.  While the newspapers are adding some ad revenue from their online sites, that's still only a tenth of what they earn in the printed edition.

The Columbia Journalism Review3 calculated revenues in dollars adjusted for inflation and concluded that the last time newspapers took in so little from advertising was 1963.  Making matters worse, the rates paid for the type of advertising that newspapers can do — aimed at a broad, mass media audience — have been on the way down as companies increasingly target ads more and more narrowly.

A study written by researchers at the University of California at Davis titled "Next Generation Unionism and the Future of Newspapers"4 reported that newspaper circulation peaked in 1984, well before the World Wide Web arrived.  According to the Newspaper Association of America, readership has been cut in half since then.

The UC Davis study concluded that one of the biggest handicaps that newspapers are suffering under is that they are run on a "factory model," in which production and deadlines are all-important.  In a very real sense, a newspaper is a factory.  Its economic viability is driven by the huge capital burden in machinery required to print the actual paper, which is the product that the company is set up to sell.

In most cases, a major component of the "factory model" is the presence of union labor.  Today's newspapers simply can't support the cost of union workers, their benefits, and retirement plans.  The money is not there.  Furthermore, "factory-based" business processes are a bad mismatch with the Internet.  The mix of legacy capital structure, business processes, and labor force explains why it's become almost impossible for newspapers to innovate.

As a result, newspapers — with few exceptions — have done a poor job of adapting to 21st century realities...

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