McClatchy Co.’s offer to buy Knight Ridder Inc., the
second-largest newspaper chain in the U.S., has elicited another
round of soul-searching about the newspaper business,
not to mention a good deal of Schadenfreude on both the
Internet-based right and left. The fact that there was only one
bidder is said to be yet more evidence that newspapers are
dying
– oh, no! – or it means that Drudge shall inherit the earth,
yippee!
McClatchy Co.’s offer to buy Knight Ridder Inc., the second-largest newspaper chain in the U.S., has elicited another round of soul-searching about the newspaper business,
not to mention a good deal of Schadenfreude on both the Internet-based right and left. The fact that there was only one bidder is said to be yet more evidence that newspapers are dying – oh, no! – or it means that Drudge shall inherit the earth, yippee!
There’s no question the industry has been subjected to a great deal of competitive pressure over the past decade or so, with promises of more to come as the Internet and wireless technology transform the way Americans receive news and information. And newspaper companies have struggled with how to handle these changes to their readers’ habits and their revenue models. Those of us who preach the benefits of creative destruction for everyone else are now getting to live the experience, and it isn’t always fun.
The Internet, for example, has put a strain on local classified advertising, once a virtual monopoly in many towns and cities. The ability to reach many people easily and cheaply – or in the case of sites such as craigslist or the nascent Google Base, free of charge – has hit this once-reliable newspaper revenue stream. And while this is bad for newspaper profit margins, it is good for local businesses that suddenly have alternative outlets for their ad dollars.
But for all that, both McClatchy and Knight Ridder remain profitable, stable companies that produce plenty of cash flow. The sale of Knight Ridder was precipitated not by financial distress inside the company but by a large institutional shareholder looking to cash out and avoid a loss on his shareholdings. Newspapers may not get the kind of stock-market valuations on present profits that the big Web sites do. But there is not yet one of those sites, as far as we are aware, that currently does what quality papers have done for years – independently gather, edit and supply reliable news and analysis. The one big Web company that tried to create such a product, Microsoft’s Slate webzine, sold it to the Washington Post Company.
Gathering news, reporting stories and making editorial decisions about what is important and of interest to readers – these are the core competencies of newspapers. And the Internet hasn’t changed those jobs at their fundamental level. Both the skills required to do them well and the newspaper brands with reputations for integrity remain valuable in the information marketplace. The news aggregators, such as Google News, are just that – collectors of other companies’ news products. Without news outlets to generate the material that Google searches and collates, there is no Google News.
News outlets have not always helped their case for the value of what they produce. News gathering can be expensive when done right, and giving away something that costs serious money to produce is not usually a great way to ensure either profitability or value-preservation. But that again is a problem of finding the appropriate distribution model in a new medium, which is separate from the question of whether newspapers today offer anything of value to their readers.
That value proposition – journalistic standards and editorial judgment – has arguably become more important than ever in a digital age in which you could spend the rest of your life wading through every search result the Internet has to offer on WMD in Iraq or what “really” happened on 9/11/01. But that way lies madness, not to mention tedium, without reliable guideposts about which information is worth your time. We think readers and advertisers will continue to pay something for that credibility and editing function, though how much remains to be seen.
A report just out from Columbia University’s Project for Excellence in Journalism and the Pew Charitable Trust finds that there are more media outlets than ever, but they are increasingly echoing each other. In this environment, the echoers will likely find it ever harder to pay their way when others are willing to offer the echo free.
Good and factual reporting and independent commentary of the kind you can’t get elsewhere is where the successful journalistic outlets will create value in the future, as they have in the past. The trick will be adapting old journalism standards to the new opportunities that technology offers.
Reprinted with permission from the Wall Street Journal
