‘State of News Media’ Signals that Insubstantial Newspapers Require Reinvestment as Revenue Returns
"Poynter Institute ethicist Kelly McBride was visiting former colleagues at the Spokane Spokesman-Review last summer, when the conversation slid into the "how-bad-is-it?" mode. It has gotten so bad, one journalist said, that the independent contractors who deliver the paper complain that the Monday edition doesn't have enough throw-weight to get all the way up the porch."That's our metaphor for the state of the industry early in 2010. Newspapers, contrary to what is frequently alleged, are not dying in droves."But far too many American papers are at risk of becoming insubstantial. They lack the heft to be thrown up the front porch or to satisfy those readers still willing to pay for a good print newspaper."As they shed circulation at an accelerating pace, they lose value to advertisers. Worst case, the industry could simply keep shrinking, stall out as a business and be left without resources to reinvent itself."
"We may soon see the return of an old choice. Do papers extract most of the returning ad revenue in higher profits? Or will they recognize the damage done by the financial hurricane that swept through the industry and apply some substantial investment to developing new lines of business and rebuilding skimpy news reports in print and online?"
The math has always been tantalizing. If newsroom expense is typically 10 percent of revenues, it only takes sacrificing one point of profit margin to raise news investment 10 percent. But I'm not banking on those newspaper execs who have a short-term focus on the bottom line to see it just that way.