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The newspaper summit: Lots of lines, all going the wrong way

Some 50 newspaper executives met in Reston, Va., Friday for the American Press Institute’s “Summit on Saving an Industry in Crisis.” McClatchy, Hearst, E.W. Scripps, and The New York Times Co. were there, along with many others. Did anything come of it? Well, they agreed to reconvene in six months, but media blogger Steve Outing doesn’t think they have that long.

Chuck Peters, the chief executive of The Gazette Company in Eastern Iowa, liveblogged the otherwise-closed-door summit, which attracted comments from new-media gadflies, including Jeff Jarvis and Michelle McClellan. From the looks of that account and the API’s summary of the meeting, however, the newspaper executives didn’t get far beyond acknowledging their industry’s systemic problems. Perhaps, as Mark Potts said while the summit was still in progress, “the wrong people are in the room.”

Turnaround specialist James Shein did present a frightful chart that portrayed newspapers on a rapidly plummeting roller coaster. It reminded me of a slide that Nick Denton highlighted from Sequoia Capital’s advice for surviving the economic downturn. Since they’re both plotted over time, I’ve laid them on top of each other to make a point:

Shein’s Thunder Mountain ride to oblivion (the thin black line) isn’t inevitable, at least not for everyone. But getting off that track requires a change in cash flow — more revenue, fewer expenses. So here’s one problem: Newspaper executives seem to think they can increase revenue in this climate, when ads sales are declining both in print and online. Many talk of finding new revenue streams in social networking, data collection, and subscription services. But even if there is fruit on those trees, it’s a long way from summer, and the colored lines on that chart are saying expenses need to be cut dramatically yesterday (green) or else troubled companies will fall into a death spiral (red). When your stock is “worthless” — a label recently slapped on McClatchy and GateHouse Media — the best you can hope to do is take a dive and pray the water isn’t shallow. (Apologies for all the metaphors in this graf. Reality is easier to confront when it’s coated in similtude — thus, The New York Times comparing newspapers to bicycles and Circuit City.)

This imperative for cost-cutting is why, of course, most American media companies are gutting their newsrooms, a practice that Shein notably discouraged at the API summit. There are no easy answers here, but I think more insight was to be had last week in Monte Carlo than in Reston. That was the site of the Monaco Media Forum, which has posted a bunch of videos from the conference on YouTube. The one to watch is the keynote by Jeffrey Cole, director of the USC Annenberg Center for the Digital Future. (It’s embedded below.) He said:

Traditionally a big-city newspaper, whether The London Times, The New York Times, the Globe and Mail in Canada, traditionally 70 percent of a big-city newspaper has been advertising. There will never come a day that 70 percent of thenewyorktimes.com will be advertising. But while their revenues from advertising may be smaller, they also — if you look at a newspaper’s budget, only 30 percent of it goes to editorial, goes to writers and editors. Seventy percent of it goes to printing and distribution, and those costs almost disappear in a digital world.

When drastic cuts are required, it seems crazy to focus them on the minority portion of one’s business. Maybe a few newspaper executives who saw Shein’s crisis curve on Friday and are seeking to follow Sequoia’s survival model will be frightened enough to consider taking a chunk out of the printing and distribution side of their expenses by getting out of print, in whole or in part. There are many downsides and risks to that move, of course, but as one attendee at the API summit said, “We have nothing to lose.”

Here’s the full video of Cole’s speech:

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Ann Marie Lipinski    July 24, 2014
The Nieman Foundation for Journalism at Harvard wants to hear your idea for making journalism better. Come spend a few weeks working on it in Cambridge.
  • http://brendanwatson.net/blog/ Brendan

    But what about changes to content strategies? If advertising, printing and distribution were the only challenges circulation wouldn’t also be taking a nose dive. I argue that newspapers need to rethink their fundamental mission (http://brendanwatson.net/blog/?p=58) and peel back to a ‘core function’ (http://brendanwatson.net/blog/?p=30)

  • http://www.narrativeforce.wordpress.com Dadigan

    It’s pretty telling that so few of the executives knew how Twitter worked (according to Chuck).

    It’s frustrating at my graduate school, and I imagine at other j-schools, how pessimistic the faculty can be. They’re too busy mourning the death of what they knew rather than trying to figure out how it will evolve.

    Fine by me. More chances for the folks with the chutzpah to experiment even if they don’t have a safety net. That’s the sort of reporter I want writing my news anyway.

    It’s just unfortunate the younger generation of journos isn’t getting the training it needs.

  • http://www.niemanlab.org Zach Seward

    @Brendan: I’m not optimistic that newspaper companies — at least most of those at the API summit — can successfully reinvent themselves under current business conditions. Even in the best circumstances, corporations are not very good at changing what they do. So I don’t think that ads, printing, and distribution are the only challenges, and I like the thoughts in your posts, but I would argue that the innovation you’re hoping for is not likely to emerge from most legacy newspapers.

  • http://cpetersia.wordpress.com Chuck Peters

    Thanks for doing this.

    I do think good things are coming out of the API Summit, including a more focused sense of urgency, and other events to pick up threads of the necessary conversations.

    One of these is the Information Valet Project December 3-5 at Columbia, MO, which is referenced at http://densmore.newshare.com/wiki/index.php/Event-blueprint

    I do believe that Brendan raises a key point at http://brendanwatson.net/blog/?p=58

    All of our efforts to personalize the information must be in a meaningful context, which must be provided by people who are willing to put the multitude of inputs into context.

    Chuck

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