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« Caucus Night | Main | The Language of Business »

Instapundit vs. WSJ on Newspapers

Yesterday, Glenn Reynolds suggested some things that newspapers could do to become more relevant and to stay alive:

  • First, I think I'd skip the "paper" part.
  • Second, I'd put some of the money I saved ... into hiring reporters and writers
  • Third, I'd stop insulting readers.
  • Fourth, I'd get readers involved.

On the same day, the WSJ (subscription required) discussed things newspapers are trying to do to make themselves more profitable:

  • New, smaller-circulation papers targeted at people who don't read Generation Y
  • New, smaller-circulation papers targeted at communities
  • Free (or low-cost) classifieds
  • Having search engines return advertising

Notice a difference? Reynolds is concerned with product; the WSJ is concerned with revenue model.

The WSJ also included this little bit of incoherence:

Newspapers remain a profitable business, despite the high fixed costs of printing plants, news-gathering staffs and home-delivery operations. As the primary advertising option in their local markets, most newspapers have enjoyed significant leverage with advertisers. They use that power to raise prices.

In 2005, publicly traded U.S. newspaper publishers reported that newspaper operations produced operating-profit margins of 19.2%, down from 21% in 2004, according to figures compiled by independent newspaper-industry analyst John Morton. He says that figure is still more than double the average operating-profit margin of the Fortune 500 companies.

Without seeing Morton's numbers, it's hard to know how he got there. It's also hard to see how this squares with the fact that newspapers have only maintained any profitability by cannibalizing each other at a rate that would make Idi Amin squirm. And self-cannibalizing, as well, which is the point of Reynold's item ). And raising prices in a declining market has a certain air of Detroit about it.

The fact is, both approaches are necessary. All of Reynold's product improvements won't make any difference if they can't figure out how to make the thing pay. Some newspapers are experimenting with the Net. The WaPo has turned the blogosphere into its comments section (although some blogs seem to ping generously in order to attract traffic). The Rocky has tried to get bloggers to cross-post in YourHub.

I got an email a couple of weeks ago from a local section editor asking for advice on what stories to cover. But if he had been reading the blogs, he wouldn't have needed to ask. (I answered anyway.) Mike Littwin insists that newspaper guys read the blogs obsessively, but the blogosphere itself (through Newsbusters, Powerline, a dozen other media-watch blogs) provides evidence on a daily basis that it's not doing much good.

To some extent, this is a matter of self-selection. After all, the Journal is a newspaper, and a business newspaper, so it's likely to focus on things like operating margins and revenue streams. Yet, in the past, it's covered other industries with far more attention to product, so I'm inclined to think that this isn't the business bias of the paper. To the extent that the Journal accurately reflects what newspaper magnates are thinking, they're decidedly not looking at their product.

And Detroit can tell them all about that.

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