Thursday, August 13, 2009

Five key reasons why newspapers are failing

A Bill Wyman, who, I am assuming, has never played bass guitar for the Rolling Stones, is writing a series on why newspapers are failing. Part 1 can be found here.

One of the interesting points he makes is that "Consumers don’t pay for news. They have never paid for news." Instead, Wyman says, the advertisers were paying for the news and the basic business model for a newspaper was that is was not in the business of selling news, but in the business of selling advertising. However, when the newspapers subscribers grew older and died off, and were not replaced by younger ones, the newspapers should have changed their business model, but didn't. Why? "Because of a quirk in the way the newspaper industry was viewed by investors prevented that. Wall Street’s implacable demand for increased returns—ever-improving returns on a traditional net of 20 percent or more—which the papers and their parent companies focused on to the detriment of evolution."

"The papers could have used the money they were making to, in essence, buy the future of communications," Wyman writes. "Instead, they used it for something else: pleasing Wall Street, and consolidation. In other words, the papers were taking their profits and investing in a future not of technological change and institutional challenges, but one defined only by the search for more profits."

An interesting theory. I wonder what Belo head Robert Decherd thinks of it.

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