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May 21, 2007

The hole in the news hole

Thomas Lifson
The San Francisco Chronicle is laying off a full one quarter of its newsroom staff, according to the Los Angeles Times.
About 80 union members and 20 management employees will lose their jobs, reducing the Chronicle's editorial staff to about 300. The paper had an editorial staff of 570 in 2000.
Wow! That's a whopping 47% reduction in people writing for the "news hole" (the content published in order to get you to read the advertising, which is the real business of a newspaper). How on earth are they going to attract readers with a staff cut so sharply? And what is going to happen to my favorite Chron writers (I do have them, depsite my political differences with the overall tenor of the paper)? The bloodbath has gotten so bad that I have moved to a posture of pity for big city dailies, even the left wing ones (which is to say, most of them).

Unlike many big-city newspapers, which have continued to make solid profits despite new-media challenges, the Hearst Co. publication has been losing money for years. The paper's daily circulation has declined by a third, from its 1990 peak of 566,020 to 373,805 in September.
Circulation is down 44% - still a massive loss, but not as massive as the overall staff reduction. Of course, we don't know what the next circulation report will tell us.

And during that period of time, the Hearst Co. ended the joint operating agreement with the San Francisco Examiner, which after running through a 60 million dollar payment to San Francisco's influential Fang family, was turned into a free tabloid, becoming the first of the budding Examiner chain of free tabloid dailies.

Clearly, a lot of former purchasers of the newspaper are now reading the news online for free (like me).

But its website, SFGate.com, has a robust following, with the sixth-largest audience of unique viewers (4.2 million) in April among American dailies. In another measure, by page views, SFGate.com ranks only fractionally behind latimes.com, the fourth-place Los Angeles Times website.

The problem for newspaper companies has been making money from those Web audiences. Big-city papers typically get about 5% of their ad revenue from the Web and 80% from print ads. (The rest comes from subscriptions and newsstand sales.)
Part of the problem is that you can't stick as much advertising on a web page as you can on a newspaper page. The other problem is that web advertising is too cheap. (Of course, as the publisher of American Thinker I am in the business of selling web advertising, and this just might color my perceptions.)

I think we are in the midst of a change in media that will seem in retrospect to have been fully predictable and accomplished in the blink of an eye. Many newspapers are hoping against hope that they will be able to make the transition to an all-internet edition, dropping the troublesome and expensive business of printing on dead trees entirely. For this to happen, however, internet advertising will have to become much more lucrative than it currently is.

The big internet advertising brokers are currently being snapped up by the likes of Microsoft and Google and Yahoo. They are betting billions of dollars each that internet advertising will continue to grow at a high pace and account for more and more of the total advertising market. A lot of others, including newspaper publishers and this website, too, hope they are right.

Thomas Lifson is editor and publisher of American Thinker.

Posted at 04:25 PM | Email | | Share Share
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