United, Newspapers May Stand

BACK when I was a young media reporter fueled by indignation and suspicion, I often pictured the dark overlords of the newspaper industry gathering at a secret location to collude over cigars and Cognac, deciding how to set prices and the news agenda at the same time.
It probably never happened, but now that I fear for the future of the world that they made, I’m hoping that meeting takes place. I’ll even buy the cigars.
Even casual followers of the newspaper industry could rattle off the doomsday tick-tock: a digitally enabled free fall in ads and audience now has burly guys circling major daily newspapers with plywood and nail guns. The Rocky Mountain News is gone, The San Francisco Chronicle is on the bubble, and dozens of others are limping along on the endangered list.
Magazine and newspaper editors have canceled their annual conferences (good idea: let’s not talk to one another). But perhaps someone can blow a secret whistle and the publishers and editors could all meet at an undisclosed location.
My fantasy meeting goes something like this: a rump caucus could form where the newspaper industry would decide to hold hands and jump off the following cliffs together on the following actions.
¶No more free content. The Web has become the primary delivery mechanism for quality newsrooms across the country, and consumers will have to participate in financing the newsgathering process if it is to continue. Setting the price point at free — the newspaper analyst Alan D. Mutter called it the “original sin” — has brought the industry millions of eyeballs and a return that doesn’t cover the coffee budget of some newsrooms.
The big threat would be that newspapers could lose the readers they have, lots of them. The mitigating factor is that a lot of those readers aren’t paying anyway. And keep in mind that people are already paying for quality content all over the Web: The Wall Street Journal, Consumer Reports, The Arkansas Democrat-Gazette. Tiered Web access — from a bare-bones free product to a rich, customized subscription — could be among the solutions.
¶No more free ride to aggregators. Google announced that it would begin selling ads against Google News, with almost no financial accommodation to the organizations that generate that news. The book industry — of all Luddites — has extracted cash from Google, as did the wire services. Google, The Huffington Post and Newser have built their audiences and brands on other people’s labors.
Most aggregators are not promoting newspaper content; they are repurposing it to their own ends. Newspapers’ audiences are harvested and sold divorced from the content that attracted them in the first place. The risk would be making Google, the kingmaker on the Web, angry.
¶No more commoditized ads. Ad markets and remnant sales have been a lose-lose proposition, ginning up more and more ads for less and less revenue, turning a grim dollars-into-dimes model into a hopeless dimes-into-pennies proposition. Newspapers once thrived by selling scarce ad positions. The downside is turning down ads, and who can afford that right now?
¶Throw out the Newspaper Preservation Act. Regulatory reform will allow the industry to consolidate to an economically feasible model and preserve newsgathering. Does Seattle need two newspapers? Did Denver? Sure, it’s preferable for all kinds of reasons. But one is better than none.
Of course, my fantasy meeting will never come true. First, such a meeting would very likely be considered illegal, violating either the spirit or the letter of antitrust provisions, but what’s a little lawlessness when a lot of other major industries are expecting the government to bail them out? Second, at the best of times, newspaper publishers are not a risk-taking bunch, and these aren’t the best of times. Third, newspapers could not investigate collusion in other industries without feeling just a little queasy.
It’s worth remembering that the regulatory apparatus governing the industry was developed back when newspapers were the dominant local ad medium, with very little competition. In recent years, the Newspaper Preservation Act has done precisely the opposite of its framers’ intention, allowing joint operating agreements that let weak papers linger and pull down the alpha papers in Detroit, Seattle, Denver and Tucson.
The Justice Department still holds that combining local dailies is anticompetitive, but if that antiquated logic continues to prevail, there won’t be much left to regulate.
John Chachas of Lazard, a financial advisory company, and Tim Rutten of The Los Angeles Times have both called for an exemption to antitrust regulations as a matter of survival. After all, they point out, there is plenty of new competition for ads and minds.
But consolidation can’t proceed with the current regulatory strictures. The Twin Cities of Minneapolis and St. Paul have two newspapers — The Star Tribune and The Pioneer Press — but both are seriously endangered. History has demonstrated that another joint operating agreement is probably not the answer.
Hearst Newspapers, whose San Francisco Chronicle shared expenses and revenue with The Examiner in a joint operating arrangement, had invested $1 billion in San Francisco and is losing $1 million a week. The company has said that it will sell (fat chance) or close The Chronicle unless half of an already decimated newsroom is laid off. It is not bluffing. As soon as next week, another paper the company owns, The Seattle Post-Intelligencer, will reportedly become a Web-only publication with a skeleton staff.
“It is time that newspapers are allowed to collude in the public interest,” said Mr. Mutter, who blogs at Reflections of a Newsosaur. “In order to keep as many feet in the street as possible regardless of how they are branded and preserve editorial voices, the new competitive environment has to be considered. The Chronicle competes against The Mercury News, but it also competes against Craigslist, Zillow and Auto Trader.”
Philip Meyer, who wrote “The Vanishing Newspaper,” concurs: “Technology has destroyed the monopolies that these laws were designed to regulate.”
Of course, advocates of the free, independent press are rightfully chary about wholesale deregulation, but John Morton, the eminent newspaper analyst, said that individual newspaper companies can’t solve this problem by working alone.
“Only newspapers are economically organized to cover a broad swath of events,” he said. “A lot of aggregators have been taking advantage of that, and pretty soon, there will be nothing to aggregate. But that can’t really be discussed among newspaper owners because of antitrust problems.”
What is under attack is the fundamental machinery of the Fourth Estate, not just the local newspapers that some love to hate and others, including many young consumers, are indifferent to.
Whatever the solution, the capacity to produce accountability reporting, investigative journalism and robust coverage of public officials is not sustainable under current revenue models. And that is not a business problem; it’s a civic one.

Source: The New York Times