Wednesday, July 23, 2008

It's Not All Judith Miller's Fault

But that might be a good place to start working out what went wrong at the New York Times and other media outlets. The NYT's quarterly profits are down 82% and the paper is now cutting staff, outsourcing IT work (to India, I presume) and raising it's newstand price to $1.50. Here's how the NYT stock price is going this year:

Meanwhile the Tribune newspapers chief tells reporters:
"We're looking at some of the worst advertising numbers in the history of the world."
Here's the standard expert analysis:
The main reason why newspapers have lost so much ground over the past 20 years is that the adults who grew up reading a daily newspaper with their cornflakes and toast in the 1930s and 1940s (and so made reading a newspaper a daily habit) are dying off, and they are not being replaced. The growth of radio and the Internet are other factors behind the decline in newspaper sales, as is the shortage of time for newspaper reading.
What didn't get a mention there is Teh Credibility! The fact is that people don't trust politicians, but now they are less likely to trust their newspaper or other media sources too.

Now, it seems to me that in this current climate, there is a massive opportunity for credible, independent, progressive and informative news-based websites to grow.

The problem with traditional newspapers like NYT is that they have always operated as both content providers and public portals. That is, they have reporters on the ground providing news stories, and they publish that news in their papers (with their own political slant, of course). Compare that with the business model of wire services like Reuters, AP and AFP, who just supply information to others but do not publish their own papers.

Both traditional newspapers and wire services now have online portals. But a lot of the traditional papers' content is coming from the wire services. And they have to pay for that.

Mind you, wire service profits are also dramatically sinking nowadays. But to get a realistic picture, you have to factor in the obscene financial bubble manufactured by Alan Greenspan over the last eight years. Just take a look at this graph, which compares WaPo's 5-year share price (blue) against the New York Times (grey) and and Thomson-Reuters (black):

It's pretty obvious that NYT is The Biggest Loser. And it also seems clear that the wire service business model looks stronger in the long term.

Just by way of comparison, here's the News Corp graph. But remember, Murdoch makes a lot of his profits nowadays from movies and other ventures, which subsidize his losses on newspapers like the New York Post:

(That big jump occurred when Rupert Murdoch bent over one day on late 2004, and people realized that the sun really does shine out of his arse.)

Anyway, my point is that the traditional newspaper business seems to be shrinking, and personally I think Teh Credibility is a big part of that. Meanwhile, people are going online searching for news from sources they can trust. Look at the phenomenal growth of HuffPo, for example, or Josh Marshall's TPM. If you build it, they will come.

Isn't it way beyond time that somebody did the same thing in Australia? I know - Crikey have tried. But their subscriber-dependent business model is only one of that site's big problems. And Lawd knows I have made my own efforts in that direction, with very minimal success.

I think it's time somebody else with some high ideals and a bit of cash to spare gave it a shot.