Jul 5, 2008

A difficult trend

The number of newspaper jobs eliminated in the last few years is staggering. According to a survey pulled together by Alan Mutter at "Reflections of a Newsosaur," 102,120 positions have been cut since 1990, and nearly half of the total came in the last three years.

You'd think that would be enough satisfy even the most blood thirsty of owners. But Mutter concludes the knife should have gone deeper still if publishers were to keep earnings in line with falling revenues. That, he said, is why more cut are expected.

In the last couple of years, 26,564 jobs were axed. Another 23,580 jobs should have been cut to keep up with falling revenues.

Worse yet, the newspaper business has decoupled itself from the rest of the economy. So while revenue losses are being accelerated by a poor economy (see Mutter's graph above), an upswing in the economy won't stop the slide as it has in the past. That means the jobs aren't coming back, unless someone finds a magic formula for making money off a product that is being given away online.

Or, as Mutter says it:
The industry is well into a period where its economics are governed by new and unprecedented social, demographic and technological developments that will alter forever the behavior of both advertisers and consumers. Economists call this a “secular” decline, as opposed to the “cyclical” declines that result from the ordinary ups and downs of the business cycle.

In other words, the recovery of the newspaper industry this time will require a far more proactive strategy than simply whacking headcount, hunkering down and waiting for the economy to rebound.
The slash and consolidate approach favored by many of the bigger chains has turned out to be about as sophisticated a prescription as amputation or bloodletting. While I dislike the word "proactive," newspaper owners are in desperate need of innovative thinking - and not the kind that comes from snake oil salesmen and accountants.

Rather than resorting to changes designed to excite the more infantile parts of the reader's brain (shorter, simpler, flashier), owners should go back to first principles and decide what it is journalism is supposed to do and then build a better business model around that. Unfortunately, money lust is blinding most of our newspaper barons to real innovation. Instead, they're looking for the quickest way to turn a profit. And that's turning newspapers into fast food.

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