December 19, 2008
When Nieman Lab’s Josh Benton interviewed me on Flip cam several weeks ago, he headlined the piece, “Rick Edmonds predicts a lot of coal in newspapers’ stockings.” Fair enough. Josh was asking mainly about the next six months. For reasons that don’t need belaboring, prospects are for more of the dismal same — cutbacks, bankruptcies, a few closings and more shifts to delivering a full print paper only some days of the week.
I thought it might be useful, though, to sign off for the holidays by recapitulating a few reasons for stepping back from the ledge when contemplating the future of the industry.
As 2009 begins, the cost picture has improved. With weak demand and a more favorable exchange rate against the Canadian dollar, the price of newsprint has flattened and will fall. Two-dollar-a-gallon gas won’t be forever, but it beats running a delivery fleet on $4-a-gallon gas, as was the case in summer 2008.
Also, those waves of newsroom cuts Jim Romenesko and I write about, will “cycle through” in 2009, helping newspapers on the cost side. If a large group was laid off in July 2008, that continues to deliver payroll savings through the first six months of 2009.
The recession won’t last forever, and when it is over as much as half the pressure on newspaper advertising revenues will go away. I heard a few optimists at the December investment meetings forecasting that the sun could come out from behind the clouds as early as the second half of 2009. A longer-running and deep downturn seems more likely. But, heck, I expect to live long enough to see pent-up demand sparking the auto business and developers taking out big print ads for new condo projects on the Florida beaches.
With online revenue growth slowing to a crawl the last two years, delivering better targeting — and thus justifying higher rates — is critical for the industry. Specialized Web sites — like Gannett’s triumvirate of moms, high school sports, and nightlife — is better than no targeting at all. The Yahoo partnership is better still, since it promises more quality display space for a variety of online display ads, and an ability to customize which ad is shown based on reader interests.
Results from the end of 2008 have been encouraging, with several of the companies at the December meetings reporting partial year increases of $1 million to $3 million in sales directly attributable to the Yahoo deal. The partnership system, now renamed APT, will be more broadly available as 2009 goes on and fully functional sometime in 2010.
The new business opportunities of serving news and advertising to mobile devices and making variations of the print editions available to electronic tablet formats like Amazon’s Kindle are both promising. For a starter, these are arrangements for which users will pay something for content, or more exactly, for the convenience of content matched to the new devices.
Also both are here now and building business quickly. The Associated Press and New York Times, among news companies with a big research and development capacity, are both jumping hard on the mobile market. If you have not seen the well-organized, up-to-the moment news report AP delivers to an iPod, get a young friend to show you. Advertising is iffier, but page view statistics rising up like the Matterhorn are a solid start.
I don’t mean to get readers giddy as they head off for holiday parties. The bad stuff is here and now; much of the good stuff could be delayed or disappointing. Also, there is a real chance that marketers in coming years will accelerate their shift to digital formats — some involving newspaper organizations’ offerings, many not. Nor can we rule out that the next Google or Craigslist, which no one is envisioning yet, could give the exposed newspaper business another knee-capping.
However my bottom line on the business at the end of 2008 remains — bad year, another bad year coming but more reasons for long-term hope than I saw at the end of 2007.
The Biz Blog will be on holiday hiatus until the week of January 5, unless there is industry news that merits comment — as there well may be.
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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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