Six Pixels of Separation - The Blog
July 17, 2008 8:59 PM

Google Not Optimistic About The Future Of Newspapers

A day does not stroll by that someone, somewhere remarks on the murky waters ahead for the newspaper industry. Shel Holtz (Blogger over at A Shel Of My Former Self and Co-host of the always excellent Podcast, For Immediate Release - The Hobson And Holtz Report) says, "new media don't kill old media." It would seem like Google CEO, Eric Schmidt, is thinking a little differently.

Check out this quote from the Los Angeles Times article, Google CEO Schmidt: Hollywood Will Do Fine On The Net; Newspapers Not So Much:

"The outlook for newspapers, on the other hand, is 'bleak,' and Schmidt said that's 'a tragedy,' in part because 'investigative reporting is so important for democracy.'

'The optimism is that there are more people online than ever, older businesses will discover how to monetize and we will all get through this,' said Schmidt, explaining that Google's impact on the world of classified ads had been part of the problem for print journalism. 'I would love that to be true. The evidence does not support that view.'"

All this comes hot on the heels of the news that Google now takes up to 77% of all search ad share (up two percentage points from last year). You can read more about that here: CNET -Google's Search Ad Share Now Up To 77 Percent. I might as well also link you through to their earnings (which were also just released) - The New York Times - Google Earnings Are Below Forecasts, And Shares Fall.

I had lunch today with a fellow Journalist (yes, I do still consider myself a Journalist - it's a hard habit to break) and we had an interesting talk about the challenges that newspapers face. Society clearly has a need for this medium, but readership is down, salaries for journalists have not moved up in forever, there are more and more writers, but less and less space, the overall ad revenue ain't what it used to be, and the industry leaders are heavily leveraged on staff, machinery and infrastructure.

Things have to change, but how?

I love reading my morning newspaper. I even love the weekly flyers from the electronic shops. I wish the paper was thicker and I wish more advertisers could pull ROI from advertising in newspapers. I'm not sure why the publishers don't leverage the digital channel to really push their content "out there" and engage their readers with a real multimedia experience. I know some that are trying... and we all know many more that are failing miserably.

I would love your thoughts on this news item too: The Toronto Star - Profit Sags 36 Per Cent At Gannett:

"Gannett Co., the largest newspaper publisher in the United States, has reported a 36 per cent drop in second-quarter earnings as the newspaper industry's woes caused a sharp decline in revenue.

Profit was $233 million (U.S.), or $1.02 per share, down from $366 million, or $1.56, a year earlier, the publisher of USA Today said yesterday... Revenue fell 10 per cent to $1.72 billion."

I can personally attest to the fact that there are some pretty progressive and brilliant minds at many of the leading newspapers trying to figure this all out. I'm hopeful that they'll be able to uncover newer business models sooner rather than later.

By Mitch Joel


Comments Comments Feed
  • Posted by Shel Holtz
    Mitch Joel

    A great post, Mitch. There are, indeed, bleak days ahead for the newspaper industry. Still, nobody has taken me up on my $100 bet that I'll be able to buy a newspaper out of a rack on the street in 10 years. There will be fewer newspapers. They'll be smaller. And, I believe, they'll be hyper-local and contain less "news." But as somebody pointed out to me just the other day, when you take a subway in New York in the morning, EVERYBODY is reading a newspaper, not their PDAs. The newspaper industry just needs to figure out what works better in print and the economic model to support it. Many won't figure it out in time to save themselves, but some will.

    Reply
  • Posted by Don O'Connor
    Mitch Joel

    Newspapers will not fade away, but reinvent themselves to suit the new environment. Surely some will fail, but the innovative will manage to survive. Has convergence played a role in the decline of the newspaper? Telecommunications and broadcasting companies alike have grown to include several facets of media such as websites, radio stations, newspapers, T.V stations, and so on.

    I, too, hope newspapers survive. You suggested that some organizations are trying to change. One example I can think of are the free newspapers like The Metro or 24 Hrs (Sun Media). Not packed with a lot of substance, but I think they may be used as intermediaries. If you like what they have to say maybe you'll buy the real newspaper. Just some thoughts!

    Reply
  • Posted by Jose Leal
    Mitch Joel

    I find it interesting that most people fail to see that what is happening to newspapers is not what happened when radio or television came on the seen. Today, the newspapers are being impacted by much more than a new media, the Internet offers a new communications medium. That takes control away from the media organizations and puts it squarely in the hands of the people.

    Even if you ignore the impact of the internet and social media, I don’t think that newspapers can survive the ecological impact of the print medium. We can’t continue to rape our forests to make paper. Add to that the amount of energy that it takes to produce, bulk transport, print and distribute, it will shortly not make economic sense. Maybe it already doesn’t.

    As if that wasn’t enough, the corporatization of the media has caused it not to be able to adapt. How can a media conglomerate be expected to change when the only thing its shareholders are looking at is earnings?

    BTW Shel Holtz – I’m more than willing to take you up on the bet.

    Reply
  • Posted by Jay Moonah
    Mitch Joel

    While I agree to certain extent with Jose that this is different in some ways to previous media revolutions that were driven simply by a new media form, it still doesn't mean that newspapers will go away. I DO agree the big media conglomerates (like, incidentally, the one that Jose and I both worked for) will increasingly move their business away from print as the margins get worse, but the prospect of print newspapers being abandoned, I don't buy it for a second. Maybe Quebecor and Canwest and the like will stop producing big city, big budget papers, but others will come in and take their place. And I have even greater doubts small town papers will disappear any time soon as they are still really the only common source for news in many, many communities.

    As I often do I'll lean on McLuhan who said "people don't read newspapers, they get into them like a warm bath." The impact of media forms like paper cannot be displaced simply by displaying the same information in another form because it's about more than the information. Much, MUCH more. That's not going to change in 10 years, hell that's not going to change in a few generations. My 9 month old daughter _might_ not be able to get a newspaper off the stand by the time she's a grandmother... maybe. But I wouldn't bet a $100 on that, either.

    Reply
  • Posted by Shel Holtz
    Mitch Joel

    You're on, Jose.

    Reply
  • Posted by CT Moore
    Mitch Joel

    I see the local Montreal paper try to pull readers through to the site, and their efforts seem completely impotent -- but maybe that's just 'cause I'm a cynical ass.

    I think what's going to save newspaper (if they can be saved) are the advertisers. It's going to the advertisers that can find a way to successfully involve audiences in a compelling offline/online interaction that are going to provide newspapers an out.

    Reply
  • Posted by Mark James
    Mitch Joel

    I've been working on providing newspapers with an alternative revenue source to advertising: allowing them to get paid for helping their readers choose the right product.

    Unfortunately many are currently seeing it more as a threat to their ad revenue than an opportunity to also earn income from some of their journalism.

    Reply
  • Posted by Kelly Manix
    Mitch Joel

    As a young newspaper reader, there is something more fitting about having a cup of coffee with your newspaper and not your iPhone. However among my generation, I am the minority. Like vinyl LPs though, there will always be a market for nostalgia however small it may be. It is sad to see the newspaper industry struggle.

    Reply
  • Posted by Brian
    Mitch Joel

    I give most large papers 5 years. I can't see them around in 10. Chalk one up for the environment! Too bad shareholders :)

    Reply
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  • Newspapers aren't dying... They're dead! from Linking Local, the wikiDOMO Blog

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