Beating a dead horse: another post about newspaper economics

I promised myself I would not step into the latest gnashing of teeth over the future of corporate media, but here I am.

About a week ago, David Simon (“creator of The Wire and Treme“), wrote this in the online Columbia Journalism Review:

It’s grievous what is happening to regional newspapers, especially. But the whole industry will continue to collapse until everyone swallows hard and goes behind a paywall…. Once the content of the larger papers is no longer available to aggregators, then regional papers can safely take that same path and, maybe, there is an online revenue stream that will allow high-end journalism to survive.

Short of that, the great Molly Ivins is right, this is nothing more than slow suicide.

Simon abandoned journalism (he once worked for the Baltimore Sun) for the confines of a pay-wall monopoly: HBO (owned by Time Warner and responsible for one-quarter of parent company profits in 2010). He’s clearly an excellent weaver of fictional stories, but that does not mean he understands digital economics or today’s news business or even the pressure that cable TV feels from fiber-to-the-home. CJR published an excellent rebuttal by Howard Owens, publisher of The Batavian, an online-only news site serving Genesee County, NY, but I have a different itch to scratch.

Simon’s short (four graphs, 300 words) post highlighted a sentiment Molly Ivins once expressed, but not in the way I remembered her characterization. Had she really advised newspapers to erect paywalls?

No, she did not. Not. Even. Close.

On March 23, 2006, she typed these words:

I don’t so much mind that newspapers are dying — it’s watching them commit suicide that pisses me off.

What was the hot news of the day? The McClatchy-Knight Ridder merger, a merger she attributed to “the fine folks on Wall Street.” (If you don’t understand southern sarcasm, go read the entire sentence.)

She rebutted the assertion that “the newspaper business is dying” by pointing out that profit margins for publicly traded U.S. newspaper publishers was “more than double the average operating profit margin of the Fortune 500” in 2005. She then acknowledged the loss in printed newspaper circulation.

But that’s not what she’s calling “suicide.” And it’s not paywalls either (emphasis added):

Our product isn’t selling as well as it used to, so they think we need to cut the number of reporters, cut the space devoted to the news and cut the amount of money used to gather the news, and this will solve the problem. For some reason, they assume people will want to buy more newspapers if they have less news in them and are less useful to people. I’m just amazed the Bush administration hasn’t named the whole darn bunch of them to run FEMA yet.

What cutting costs does, of course, is increase the profits, thus making Wall Street happy. It also kills newspapers.

Simon argues that newspapers need to paywalls to increase profits, which makes Wall Street happy.

Molly, like Simon and most of us associated with the news business, worried about who was going to dig out scandals; who would have the time and money to invest in investigative, watchdog journalism; who would verify and fact-check. But she did not think Wall Street was the answer, pointing out that the McClatchy-KR merger would reduce the number of journalists and researchers and outlets, not increase them.

The answer, Molly asserted in 2006, was this:

I’ve thought for years that newspapers should all be owned by nonprofits.

Simon might think that the lack of paywalls is a form of suicide, but I seriously doubt Molly Ivins would have.

I believe Molly would have thought paywalls a gift of the devil, not angels.

For prior writing on this topic, see:

• Online Revenue Cannot Rescue Newspaper Business Model (2011)
• Repeat After Me: Newspaper Consumers Have Never “Paid” For Content, MythBusters: Subscriptions Don’t Cover Salaries, Digital Information: Business Models In Flux (2010)
• No More Free Content, Follow Up: No More Free Content, The Future of Journalism Discussions Need Reality Economics, Thinking About “Free” (2009)
• Print Model Shifting, Publishers Experiment With Online Editions, Economics of Scarcity (2008)