Posted: November 24, 2009

Q2 tech report: Paper losses

Many regard the newspaper industry’s travails as a symptom of media evolution. Newsprint and subscriptions are out. The Internet and ad-supported models are in. But who will pay news gatherers of the future?

Eric Peterson

Not everyone mourned the Rocky Mountain News’ death in February that made Denver a one-daily town. Least of all newly minted U.S. Congressman Jared Polis.

“Who killed the Rocky Mountain News?” Polis asked rhetorically the day after the paper shut down. “We’re all part of it, for better or worse, and I argue it’s mostly for the better. The media is dead, and long live the new media, which is all of us.” But here’s what Polis overlooks. Blogger-led sites, reliant on unpaid citizen journalists, are rich in opinion and aggregation but woefully short on original reporting. Sure, Web-based citizen journalism is on the rise, but could Bob Woodward and Carl Bernstein have broken Watergate if reporting was their after-hours hobby?

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Pressmen look over the final Feb. 27 edition of the Rocky Mountain News. Photo by Linda McConnell

In subsequent interviews, Polis softened his stance and sounded a remorseful tone, but his quotes had already spread like wildfire around the blogosphere — but only after they were reported … by the paid, professional journalists at The Denver Post.

The era of the daily

Before there was the state of Colorado, there was the Rocky Mountain News. Denver founding father William Byers launched the newspaper right in the middle of Cherry Creek in 1859, in order to straddle the not-yet-merged shantytowns of Denver City and Auraria. Many of the early stories in the Rocky covered the Arapaho and the tribe’s interactions with the new white communities of gold miners and assorted hanger-ons.

The Arapaho warned Byers it was only a matter of time before a flood would send his printing press floating toward the Platte River. Byers ignored them. By 1864, the press was indeed underwater. Byers decided it was best to move out of the middle of the creek. In the 21st century, the Rocky again found itself underwater. This time, it did not make it to higher ground. Rocky parent the E.W. Scripps Co. saw its newspaper profits sink by more than 60 percent to $16.5 million in 2008 as newspaper revenue declined by 16 percent. The Rocky lost $16 million on its own, and Scripps put the paper up for sale in December.

A buyer did not emerge, and the paper published its last edition Feb. 27, less than two months before its 150th birthday – and a few days after Amazon began shipping its second-generation Kindle, an electronic device that includes the wireless transmission of newspapers.

Four years after Colorado attained statehood, 1880 was the beginning of the golden age of the daily newspaper. At the time, there were 11,000 daily papers in the country. The Rocky’s longtime adversary began as the Denver Evening Post in 1892, and not unlike many blogs born in the Internet age, it was launched to serve a purely political purpose: getting Democrat Grover Cleveland elected into the West Wing. The task accomplished, the paper folded in 1893, then rose again under new ownership a year later.

By 1920, the average American household received 1.3 papers a day.  E.W. Scripps Co. bought the Rocky in 1926, and it barely survived the Great Depression. But many dailies were again on life support by the 1960s, and joint operating agreements emerged by way of the Newspaper Preservation Act in 1970. Of 28 JOAs that have been signed since, nearly half have come to an end with one daily folding.

Today there are 1,400 dailies in the U.S. In the face of increased competition from the Internet, cable television and online media, there likely will be less than half that many by 2020. The Rocky’s story is obviously not unique.

An industry in chaos

Earlier this year, Detroit became the first major metro area in the U.S. without daily delivery, cutting back to a Thursday, Friday and Sunday schedule. The Seattle Post-Intelligencer began publishing online-only on March 18 after 146 years as a newspaper. The owner of the Philadelphia Inquirer and Daily News filed for bankruptcy in February. Days later, Hearst Corp. announced the San Francisco Chronicle, after losing $50 million in 2008, was for sale and could be closed — which would make San Francisco the nation’s first zero-newspaper town.

“Newspapers are getting hit with a triple whammy,” says Steve Outing, a Boulder-based online news media expert. “There’s a bad economy and fewer advertising dollars rolling in. A lot of them took on a lot of debt when times were high. We’ve got a lot of layoffs and a lot of little papers shutting down. In two-newspaper towns like Denver, Seattle and Tucson, the advertising dollars can’t support two papers anymore.”

After falling by more than 9 percent in 2007, newspaper advertising revenue nationwide dove 17 percent in the first three quarters of 2008 — the steepest decline in decades. More recent numbers, not yet available, are likely to be even grimmer. As circulation is only about 20 percent of a typical newspaper’s revenue, classified and retail advertising are two pillars of revenue that have been respectively hammered by free ads on craigslist and the recession.

“The other big hit on the newspaper industry is that they haven’t moved quickly,” Outing says. “Now they’re at where they’re at, with 150-year-old newspapers shutting down. The Rocky was the failing paper at the time of the JOA (2001), and I believe it just postponed what was going to happen anyway. If the economy hadn’t turned so fast, it probably wouldn’t have happened right now, but it would have happened eventually anyway.”

San Francisco has long been on the front end of the move toward online delivery of the news. The city, after all, is the birthplace of craigslist, now the bane of newspaper classified advertising salespeople from coast to coast. But can anything truly replace the information and investigative vacuums left behind when a daily disappears?

“We’re used to looking at the bottom line and looking at money more than community,” says University of Denver journalism professor Lynn Schofield Clark. “It’s just easier to evaluate dollars. How do you realize what will be missed until it’s gone?”

In light of the steady flow of taxpayer money going to Wall Street and Detroit in recent months, the situation with the newspaper industry begs the question: Why not a newspaper bailout? Not likely, says Outing. “Most editors look at that pretty skeptically. It doesn’t fit well with the ethics of journalism.”

Clark is of a different opinion. “The BBC is a revered news organization around the world with a ton of government support historically,” she says. “Denver would be an interesting case study for that.”

The U.S. government has stepped in to support the newspaper business in several past periods of trouble. The U.S. Postal Service gave newspapers a special rate when the ink on the Constitution was barely dry, and the aforementioned Newspaper Preservation Act of 1970 granted the industry an antitrust exemption. But the Obama administration has given little indication it will step in this time and salve newspapers’ economic ills.

A new model?

Some industry observers say Denver Post parent MediaNews is in as bad a financial position as any newspaper conglomerate in the country, but since the company is privately held, no one but CEO William Dean Singleton and his inner circle know for sure. Could Denver go from being a two-newspaper town to a zero-newspaper town?

“This is déjà vu all over again,” says Charlotte Grimes, a journalism professor at the Newhouse School at Syracuse University in New York. “What we need is not to panic and realize journalism is going through an evolution, as it does every 100 years. We need people to step up and become the new Pulitzers and Hearsts and Scrippses. We need some wonderful eccentrics to step up and become the next generation of press barons.” 

While the Internet represents a new method of delivery, the job description of a journalist hasn’t changed, she adds. “We shouldn’t confuse platform and purpose. Purpose remains the same.”

Among alternatives adhering to that purpose, The Denver Daily News emerged in 2001 as a free daily and today distributes 10,500 copies a day, but the Internet is obviously the new, rapidly growing frontier. According to Nielsen Online, the websites of the nation’s 10 largest dailies saw a whopping 16 percent increase in the number of unique visitors in 2008 — the same percentage that newsprint consumption declined in the U.S. last year. However, none of these top 10 dailies set their clocks to mountain time — a problem for Denver’s reporters.

“How can we journalists in the West work through those organizations that are drawing a national audience?” says DU’s Clark. “If we don’t have a good business model, how do journalists support themselves? That is something we have to take seriously as a community and a society. This is a big part of the discussion of what we want to be as the United States.”

In the context of such a national conversation, there is no shortage of interesting takes on the newspapers of the future. Primarily funded by charitable foundations, ProPublica is an independent nonprofit newsroom focused on national investigative journalism. At Spot.Us, reporters post story ideas for readers and news organizations to fund in $25 increments. Around $1,000 is required to fully fund a story. The organization is currently focused on California’s Bay Area, with hopes to expand into other areas. And the Voice of San Diego is a lauded nonprofit online newspaper staffed by professional journalists, covering local stories of all kinds.

As Aspen Institute CEO and former journalist Walter Isaacson opined in Time magazine in February, dailies must find out how to charge for a dollar or two a month for online content. He thinks an advertising-only model perverts journalistic standards and is too subject to economic downturns. “(W)e have a world in which phone companies have accustomed kids to paying up to 20 cents when they send a text message,” he wrote, “but it seems technologically and psychologically impossible to get people to pay 10 cents for a magazine, newspaper or newscast.”

There are nascent efforts to offer subscriptions for mobile delivery via Twitter and Amazon’s Kindle reader, but no new idea has yet to snowball into a big industry trend. The New York Times offers headlines on the former and all-out subscriptions on the latter, wirelessly delivered for $13.99 a month.

Websites such as Examiner.com and Associated Content, both based in Denver, offer readers plenty of free citizen-produced, ad-supported content, but offer contributors little in the way of compensation or editorial checks and balances. These are critical holes to fill in order to maintain journalistic quality as delivery shifts from newsprint to pixels. Emerging the days after the final newsprint edition of the paper went to press in late February, IWantMyRocky.com began publishing stories and blogs by 30 former Rocky reporters, edited by a team of former Rocky editors. The site originally served as a clearinghouse between staffers and readers but has since evolved, says Mel Pomponio, a former Rocky editor and founding member of IWantMyRocky.com. “Editorially, it resembles how we were working on the Web for the Rocky Mountain News.”

The Web effort, rechristened In Denver Times, needs to attract 50,000 readers willing to pledge $4.99 to $6.99 per month by April 23 –  the 150th anniversary of the Rocky. If that happens they’ll receive an undisclosed amount of funding from Denver investors Brad Gray, Kevin Preblud and Benjamin Ray and launch on May 4.

Citizen journalists and bloggers rely on professional journalists, notes Pomponio, and are much more likely to reference a story by a pro than to do in-depth investigative reporting on their own. “People don’t realize that out of the gate,” she says. “We are professionally trained journalists. “We have an ethical code. We have made sacrifices so we can do this. We’ve spent years honing our crafts.”

The project is fueled by a passion for good journalism, Pomponio says. “We feel there’s a legacy to protect, 150 years of outstanding journalism.”

But passion alone doesn’t pay the bills, she adds. “Everybody’s doing it for nothing, at least for now. …We’ve also been working on getting severance packages from Scripps.” Steve Caulk, a Rocky staffer from 1982 to 2003 and currently owner of ProConnect Public Relations in Westminster, is not optimistic about their chances. “The problem is, how are you going to make money at it?”

And Caulk sees more tumult for all newspapers in the months and years ahead. “I think a lot of newspapers are going to die. Nationally, the number of news-gatherers in professional newsrooms is going to dwindle. I think we’re going to go through a cycle in the near future where there is not as much news on the Internet as there used to be.”

Syracuse’s Grimes compares the current shakeout to the rise of Scripps with papers that targeted the masses instead of the elite audiences favored by Pulitzer and Hearst. “He said, ‘Let’s popularize this,’ and that’s what they did. They figured out new ways to make money. And they made a lot of money and did a lot of good in the process.”

In Grimes’ mind, there is no reason the same process of reinvention won’t happen all over again today. “Good reporting still draws an audience. We are going to figure out new ways to create revenue streams. You get the knowledge from a news story forever.

We will know about Walter Reed Army Hospital forever, thanks to good journalism. Why wouldn’t somebody pay
for that?”

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Denver-based writer Eric Peterson is the author of Frommer's Colorado, Frommer's Montana & Wyoming, Frommer's Yellowstone & Grand Teton National Parks and the Ramble series of guidebooks, featuring first-person travelogues covering everything from atomic landmarks in New Mexico to celebrity gone wrong in Hollywood. Peterson has also recently written about backpacking in Yosemite, cross-country skiing in Yellowstone and downhill skiing in Colorado for such publications as Denver's Westword and The New York Daily News. He can be reached at Eptcb126@msn.com

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Readers Respond

How long are we going to have to endure these articles about a former publication's demise? If anyone really cared, the paper would still be up and running! Let's let the dead rest in peace! By Media Mark Walker on 2009 04 15

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