Retired Pastor Ruminates

RF: Thanks for taking the time to do this, Martin. Your interview a year ago was among my most visited posts. You seem to be the go-to guy on this story, with your extensive background in the newspaper business. Any chance your reporting will become a book someday? Or is that just another dying medium? 

ML: I have a feeling that books will be around a lot longer than newspapers, because people want them for their permanence — they've never regarded newspapers that way. Printed text and graphics in books is a data storage medium, and one that has proven extremely durable (in contrast to various electronic media that are already obsolete, like 8-tracks and video discs). Printed news on newsprint is not data storage, but simply a convenient delivery mechanism that can be replaced if something better comes along, like digital delivery in one format or another. So can books, and that's indeed happening — but for many people and many purposes, the user interface as well as the permanence of the printed book won't be improved enough in a digital format. I don't imagine church liturgists reading the scripture lesson from an iPad, for example (although come to think of it, why not, really?). As for me writing a book, it could happen, but I'm not working on anything. I think there is an overarching story to be told about the decline of American newspapers that has been going on for the last 50 years, but that's a pretty big project. 

RF: One of the things I took away from our discussions last year was that the “crisis” in the newspaper business was actually not a new event so much as a continuation of a declining trend going back to the 1960’s. What has happened since last year? 

ML: More of the same. The industry has still not had a calendar quarter with growth in total ad revenue, and paid circulation continues to fall at a pretty disastrous pace. Late last year industry execs began to tout an improving picture in the form of "moderating declines" — that is, a reduction in the annualized rate of loss from more than 20 percent to something in the teens. This is good news only if you're Dilbert's "pointy-headed boss," who said in a recent strip, "We’ve been doing great since we redefined success as a slowing of failure.” The figure for first quarter of 2010 which just came out is a loss of 10 percent. (It was a loss of 11.4 percent in print, a gain of 4.9 percent in online advertising — the first in two years, combining for a loss of 9.7 percent overall and the 15th losing quarter in a row.) It's possible that the second quarter will show just a single digit decline, with some companies reporting gains. But remember that this is on top of four years with a cumulative loss of about half (46 percent) of total newspaper ad revenue, and the recession officially ended six months earlier. And of course there is absolutely no indication of an end or reversal of those 50-year trendlines (lower household penetration on the circulation side, and smaller share of total U.S. ad spending on the advertising side). 

RF: On your Nieman blog you have been making and tracking your predictions on this story. How have your predictions panned out this past year, and what do you see taking place by this time next year when we do our third annual interview? 

ML: I posted the results of my 2009 predictions back in December, along with a new set of predictions for 2010. As it turns out, I was right that the stock market would be up about 15 percent during 2009, and that newspaper stocks would beat the market. (Basically, they had nowhere to go but up or out.) The rest of it was a mixed bag, with more wrongs than rights. I was most wrong in thinking that newspaper revenue would stabilize by the end of the year — as noted above, the losses were still well into the double digits at year-end. So for next year I'm being more cautious. My first-quarter ad revenue prediction was actually very close; I predicted a loss of 11 percent, it came in at 10 percent. I predicted online revenue would break eight consecutive losing quarters with a break-even result; it came in with a 4.9 percent gain, as noted above. I predicted a 7.5 percent circulation loss for the six-month period ending March 31; it came in at 8.7 percent weekdays and 6.5 percent Sundays. I also made a prediction regarding tablets — this is back in December before iPad mania began. I expected Apple's tablet to hit later in the year, but I predicted a price point of $500 plus the data plan; it's actually $499. Beyond that, I predicted there would be a wave of consolidation in the newspaper industry, which hasn't happened yet, but the year's not over. I also said that there will be big growth in the consumption of news on mobile devices, which includes tablets. And my bet on the Dow for 2010 is that it will be up 8 percent. So far it's down 2.5 percent, so I guess I'm looking for a bounce. And I said that newspaper companies would lag the market as revenue continues to decline — that's true of the New York Times Company and a few others, but not of Gannett, McClatchy and Scripps. 

RF: Electronic readers existed this time last year, but it would have been hard to predict their burgeoning popularity, especially Apple’s iPad. How does this new technology impact the newspaper?

ML: Right, the iPad is just huge, with more than 2 million units sold so far. I posted a set of strategic suggestions to publishers with respect to the iPad and other tablets, which has gotten a pretty good response. Here's the original post at NiemanLab; I refined this into a white paper at “News After Newspapers.” To put it in a nutshell, I think that publishers need to take tablets seriously, especially the iPad. Tablets will be much bigger as leisure-time devices than as workplace tools; they'll be used at home and on vacation; they'll be used in conjunction with other media (like surfing the web while watching TV). As confirmation, there's already data showing that iPad share of web browsing peaks on weekends. And because of their leisure-time utility, tablets will power a major increase in online shopping, which has been kind of stuck in neutral for a few years. All of those are good reasons for publishers to explore how to use them. Nobody really knows yet what kinds of news and advertising formats will work best on tablets, but the experimentation has begun. 

RF: I read the New York Times for free on-line most weekdays (I buy the print version on Sundays). The Times has announced it will begin charging for on-line content next year. There are some successful pay-for-content periodicals (I pay for both the Economist and The New Yorker, for example), but when Newsday put its on-line content behind a pay wall last October they only attracted thirty-five paid subscribers. What’s your best guess about the Times experiment? 

ML: I'm reluctantly coming around to the idea that the Times might make this work, just as the Wall Street Journal, the Financial Times and others have done for some time already. You might still be able to read a lot of Times stuff for free, because they'll be setting the threshold before the meter starts to run pretty high. This is counterintuitive — they believe that their most loyal, most intensive readers are will be willing to pay, so they'll charge them and not the casual browsers. And they may be right. But I think that a year from now when we do this again, while the Times pay system might be working, most content at most newspaper sites around the country will still be freely available, because the kind of content that most papers can offer, relative to the richness of the Times, simply doesn't give them any pricing power. If they try "paywalls" of any kind, most newspapers will be disappointed.

RF: I first heard the anecdote from you about the student in the focus group who said, “If the news is that important, it will find me.” When you told that to the Monday Evening Club, several of us were dismayed by the story, as if it depicted an uninterested and disengaged youth. But this past year I find it to be more and more true. In a media-saturated culture where we are all plugged in, the news more and more does seem to seek us out. And part of what that means is that by the time my wife asks me if I know about something she is reading in the daily newspaper, I have usually known it already for a day. Clearly the role of the daily in dispensing the breaking stories is changed. Is there a new role for them? 

ML: Yes, but many of them don't really understand it, unfortunately. The right role for a local news organization (let's start by not calling it a news "paper") is to be a platform-independent generator of news content. That means gathering news and distributing by whatever means are most appropriate, in a continuous cycle. That might include sending out Tweets about breaking news, as well as using Twitter and text-messaging to source information from readers; doing the same on Facebook and on reporters blogs; building multiple versions of a story that can go out as an email alert, a web site story, or via a tablet or smartphone app; and participating in and moderating reader comment discussion of it. The printed newspaper becomes a niche product with content pulled out of that stream every 24 hours for distribution to those who prefer that format, but it should no longer be the organization's core, driving product. 

RF: Last year you mentioned the loss of classified ads to the internet as another piece of the crisis. I notice that my kids and their young adult friends buy and sell everything on-line, from apartments to cars and pets. What has happened to that trend in the past year, and what does it mean for newspapers? 

ML: That trend has continued unabated; classified advertising revenue was down 38 percent during 2009 and another 14 percent in the first quarter of 2010. It's running at about one-third the pace it was five years ago, still sliding, and it's never coming back. What newspapers should worry about now is whether retail advertising and shopping on iPad and other tablets can take a similar bite out of what's left of newspaper display advertising and insert advertising. That's a real danger. There are no retail marketers or advertising agencies trying to figure out how to spend more money in newspapers. They're all interested in how to do more advertising and selling on mobile devices of all kinds. 

RF: Thanks, Martin. We’ll see if newspapers survive long enough for us to have another interview next year.