ORIGINAL LINK posted Oct. 30, 2005:
http://www.sptimes.com/2005/10/30/Business/Information_Age_finds.shtml

ORIGINAL HEADLINE: Information Age finds newspapers unready

By ERIC DEGGANS,
St. Petersburg [Fla.] Times Op/Ed Columnist
Published October 30, 2005
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This is something my bosses and colleagues may not want me to say. But newspapers are in some serious trouble these days, and not just for the reasons we usually cite.

Yes, we have suffered from shrinking circulation figures for some time. The latest dip was an average of 1.9 percent for the six-month period ending in March, according to data from the Audit Bureau of Circulations.

And, yes, there are the disappointing revenue figures - thanks to expenses from hurricanes and rising newsprint costs -- which have spurred job reductions and bureau closings at the Boston Globe, the Baltimore Sun, the Hartford Courant, the San Jose Mercury News, the Philadelphia Daily News, the Philadelphia Inquirer and the New York Times.

But the most discouraging piece of this decline may be its cause: newspapers have a tough time satisfying readers who live in an on-demand media world.

And while evidence grows that potential readers want their news delivered a different way, newspaper companies are spending millions to redesign and shrink a product fewer customers want.

"People under 30, under 35, want their news online ... delivered in a way so they can search it and be in control of the agenda-setting," said Tom Rosenstiel, director of the Project for Excellence in Journalism. "What's disappearing is the 7-day-a-week reader. And (newspapers) need to make the case (to advertisers and stockholders) that this is not a problem, it's a transition."

Brian Toolan, editor of the Hartford Courant, saw the economic climate spur elimination of 14 positions at his company this month, including six people in the newsroom. And he's increasingly concerned that the expansive,
something-for-everyone quality of newspapers - usually considered the form's greatest advantage - may now be its biggest stumbling block in cultivating new readers.

"The thing that keeps me up at night is, the younger readers we're not getting just don't want the mainstream quality of newspapers," said Toolan, who nevertheless unveiled an ambitious redesign of the Courant's Sunday magazine Oct. 16.

"They're looking for alternative venues because they like them more, they trust them more or they have cutting-edge qualities that a newspaper which lands (at) a home with (parents, grandparents and kids) ... couldn't risk giving them," he said.

And why should you care about this, unless you work for a newspaper or are related to someone who does?

Because the information gatherers in a major metropolitan daily fuel the news process for nearly every other strain of news media - from online to TV and radio.

Every newspaper fields dozens of staffers who reach into the community and dig up original, often unknown information. TV and radio stations, already working with slimmed-down staffs, use print reports as important signposts; many bloggers and news Web sites, which never had large reporting staffs, often link to or build on reports developed by major newspapers.

"A newspaper's core product isn't news or information. It's community influence," said Philip Meyer, a professor at the
University of North Carolina in Chapel Hill and author of The Vanishing Newspaper: Saving Journalism in the Information Age. "That's created with high-quality editorial product ... (In cutting staffers), newspapers aren't just eating their seed corn, they're burning down the barn."

Some experts have suggested newspapers develop story ideas thinking of the Internet first, with expansive, multilayered content online that is truncated for the print paper. Meyer expects newspapers eventually will publish less frequently, with breaking news handled by well-read Web sites.

"The newspaper business needs a lot of crazy ideas," he added, citing the success of USA Today, which journalists once
derided as "McPaper" for its short stories and colorful layout.

Worsening economics aren't making that task easy. Last month, after announcing a projected 20 percent drop in
third-quarter earnings, Knight Ridder Inc. revealed cutbacks of 75 newsroom jobs at its Philadelphia Inquirer, 25
editorial jobs at its Philadelphia Daily News and 52 newsroom jobs at its Mercury News in San Jose.

Similarly, the New York Times Co. outlined a cut of 500 positions company-wide, including 45 jobs in the New York Times newsroom and 35 editorial jobs at its Boston Globe newspaper (the Globe has already announced plans to close its national news department).

For journalists and readers, the job reductions may come as a shock, especially because newspapers - unlike the
near-bankrupt airline industry - still make significant profits.

The New York Times Co. last week announced a third-quarter revenue increase of 2.2 percent, with profits of $23.1-million (it was, however, a near-50 percent decline from the $48.3-million profit in third quarter 2004). In 2004, profit margins stood at 19.4 percent for Knight Ridder and 16.4 percent for the New York Times Co., according to industry analysts Morton Research, Inc.

But with advertising revenue rising slower than newsprint costs, those numbers are not good enough for Wall Street.

"The revenue growth is slower than the expenses growth; Business 101 tells you (these companies) ... need to run leaner," said Mike Kupinsky, an industry analyst for A.G. Edwards and Sons. "If the revenues were there based on the quality of the newspaper, why would revenues be going down?"

In response, some newspaper companies have decided to renovate their core product.

The Wall Street Journal, which has already debuted a new Saturday edition and tabloid format for its overseas editions, will save a projected $18-million annually starting in 2007 by shrinking its page width. The St. Petersburg Times hopes to save $3.5-million with a similar (but smaller) reduction next year.

The Star-Tribune in Minneapolis will join The Mercury News and Baltimore Sun in launching redesigns this year. Others (including the St. Petersburg Times' 2004 debut of the weekly tabloid *tbt), have created products aimed at building newspaper reading habits with smaller niches of consumers, such as young people or Spanish speakers.

But the Newspaper Association of America cites statistics showing that many more people read newspapers than pay for them: 77 percent of adults in the top 50 markets, and 60 percent of adults nationwide on Sundays. The trade group is urging members to sell advertising based on who uses the product (including free weekly editions and online).

And though millions of users access newspaper Web sites, online ads bring a fraction of the revenue they earn in print, partly because advertisers assume those who pay for the product pay the most attention to it, said Morton Research president John Morton.

So why aren't newspapers trying harder to make money on those online readers?

"Newspapers have never taken (spending on developing new products) seriously, because it has always been very easy to make money," said Morton, who resisted the idea that newspapers may be stuck in a permanent death spiral of declining circulation and staff cuts. "Now ... readers are dying off faster than they are being replaced."

And though it may be difficult for newspaper companies to find dollars for innovation, such effort is crucial to
newspapers' future, said Rosenstiel at the Project for Excellence in Journalism.

"You cannot expect business school graduates who work for stock market firms to understand where the media business is going," he added. "History shows, when an elusive audience congregates somewhere, advertisers eventually will pay to reach them."

Ball State University professor Bob Papper, who has co-authored a study analyzing 5,000 hours of media use among 400 subjects, said his numbers show newspapers should work harder to develop online environments.

In his survey, just 27 percent of those ages 25 to 34 looked at a newspaper daily, compared to 71 percent ages 65 and up. Those same 25- to 34-year-olds spent an average 3.6 minutes with a newspaper each day; from age 35 to 44, the figure jumped to 8.2 minutes, with both groups spending more than 10 times that duration online.

"(Newspapers) must stop defining (their) business as ink on dead trees," Papper said. "You need to define your business
as providing information to people. Ink on dead trees is just one way of delivering that information to people."

Times researchers Angie Holan and Carolyn Edds contributed to this report. Eric Deggans can be reached at 727 893-8521 or deggans@sptimes.com See his blog at www.sptimesphotos.com/blogs/media/
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