Exactly How the Newspaper Industry Lost the Future

What It Did

What It Failed to See

In the beginning, there was dried melted lead and newsprint. As a teenager whose family owned a daily newspaper for five generations, I grew up watching men melt ponderous bars (‘pigs’) of that metal in clanking, closet-sized mechanisms that were designed a century ago and were part foundry and part typewriter. Cooling quickly, the lines (‘slugs’) of metal type that the operator had typed were then locked into multiple-column trays, onto which black ink was smeared and endless rolls of wide newsprint paper impressed.

For four centuries after Gutenberg’s invention of the printing press circa 1450, the hallmark limitation of publishing technologies was that every recipient of an edition must receive exactly the package of contents. In other words, there was no practical way of producing a unique edition according to each reader’s own unique mix of needs, interests and tastes. From this inherent limitation of the analog printing press and similar Industrial Era technologies, the theories, doctrines, and production practices of Mass Media arose; and not because each and every reader didn’t want to obtain the optimal mix of contents to his own individual desires. The very existence of this hallmark limitation would become overlooked and largely forgotten, until it becomes ‘the elephant in the room’ at the start of the Informational Era.

For my newspaper family and its employees, that centuries-old routine radically changed when in 1972 we purchased refrigerator-sized boxes that contained boards of computer chips (an amazing 16-kilobytes of RAM), the circuitry in each of which was wired to the electron gun of a cathode ray tube (the same device used by early black & white television sets) that was aimed through a lens to focus onto column-width sized rolls of white photographic paper. Those rolls, sealed in lightproof canisters, which then developed in a darkroom machine, yielding seemingly endless paper columns of black type. Those strips were then pasted aside one another onto newspaper page-size easels, which were then, via a process called offset lithography, a somewhat alchemical technology for most pressmen, turned into printing press sheets that were inked and onto which endless rolls of newsprint were impressed. To house this new technology, we built an entirely new factory and demolished the old one that contained the now obsolete melted lead mechanisms.

The computerized development of offset lithography during the 1960s-70s would become the newspaper industry’s first encounter with computerization. Besides eliminating the centuries-old letterpress (i.e., type made from melted lead) printing technologies for newspapers , offset lithography would during the 1980s make the production and publication of specialty (i.e, ‘niche’) magazines financially feasible, increasing by a magnitude the numbers of magazine titles available on local newsstands or by postal delivery. Meanwhile during the 1970s, computer technologies hd begun to advance and implement cable television (CATV), which increased consumers’ access to video beyond just the few over-the-air TV stations broadcast within their region. As the number of stations and networks available via CATV began to exceed those within most states or provinces, topical and specialty channels and networks (all news, all sports, cooking, history, cartoon, etc.) began to founded and populate CATV channels. Offset lithography for magazines and CATV for broadcasters each markedly increased consumers’ access and choices of news beyond just the contents that were published locally in daily newspapers or broadcast locally by over-the-air stations.

In the late 1970s and through the 1980s, there were experiments in France and in Silicon Valley with what was called teletext or videotext: technologies in which the boards of computer chips wired to electron guns would display texts directly onto surfaces of fluorescent glass (i.e., television monitors of that era). These displays were ‘read-only’, meaning that the user might be able to choose which story to read, similar to switching to another television channel, but had little, or no, other interactivity with the contents.

Such teletext or videotext experiments (French post office and  France Télécom’s Minitel, British Telecom’s Viewdata, or Knight Ridder and AT&T’s Corporation’s Viewtron) were largely attempts by information companies either to enter the financial information markets that would later become dominated by Dow Jones, Thomson Reuters, and Bloomberg, or to consumerize such markets. Virtually all such efforts were unsuccessful.

Once personal computers became widely sold during the 1980s, more news contents were placed ‘online’ but with little. Virtually all such contents, including those delivered via commercial online services such as Prodigy and CompuServe, were offered in merely plain text online: just a single font with lower-case or capitalized letters. It wasn’t very compelling. That situation didn’t initially change when the World Wide Web was invented then in 1991 opened to the public. Contents on the early Web were in all text, generally a single font, with no graphics, photos, animations, audio, or video. Although commercial online services were working to engineer more graphical interfaces, the results would be graphically limited, and each such services was working on a different proprietary version of a graphical user interface which would be available only for its own customers’ use. What doomed all those commercial online services was the Web’s open, non-proprietary business model, plus the release in late 1992 of NCSA Mosaic, Web browsing software that could display images, audio, and video, all ‘in-line’ with text rather than in separate window. This ‘converged’ (i.e., multimedia) browser, which could combine contents from various forms of 20th Century media, was the precursor of today’s web browsers. It and the Web’s open (i.e., non-proprietary) access model catalyzed millions of people to use online (i.e., ‘computer-mediated’ or colloquially ‘digital’) media.

The worldwide success of the Internet (and likewise that of its subset, the World Wide Web) is due to its open and non-proprietary business model (no one owns it and you need not pay a license fee or royalty to use it). The opening to the public of the Internet, which had been a private network for western governments and their militaries and scientific researchers, increased consumers’ access and choices of news and other information (including entertainment and commercial information) by many magnitude.

The ultimate result of that was the greatest change in the history of media: people’s access and choices of contents switched from relative scarcity to surplus (or even overload). The societal ramifications of this change are only beginning to be understood.

Starting in 1996, publishers of news began chasing that audience. Several major publishers of newspapers had dabbled with videotext during the 1980s and with proprietary online services during the early years of the 1990s. Yet it was the online popularity of the Mosaic-style Web browsing software that motivated their senior managers to become serious about online. They saw online as a means of ‘repurposing’ their printed news content and developing a new and ancillary revenue stream from print or, at least, online promotional vehicles for their printed products. The multimedia, graphical capabilities of the Mosaic-style Web browsing software allowed them to place ‘banner’ advertising adjacent to online texts, similar to the revenue model that for decades had been earning up to 80 percent of North American newspapers’ revenues and up to 20 percent of revenues of newspapers in other countries. As for the sources of the rest of newspapers’ revenues, there were dozens of experiments from 1996 through 1999 by North American and European newspapers to see if consumers would pay to read these online editions. With the exceptions of financial newspapers such as The Wall Street Journal and the Financial Times, all such experiments failed. Nevertheless, there were discussions at daily newspaper industry conference of a possible future in which that industry might no longer needs to purchase, print, and distributed paper editions; that online publisher might eventually eliminate those costs, which ranged between 50 and 70 percent of expenses for most newspapers. One famous proposal during the 1990s was that newspaper companies might someday purchase and distribute to consumers digital reading devices into which the newspapers companies could electronically deliver graphically equivalent digital version of editions.

Unfortunately, most publishers myopically misperceived this epochal switch of people’s access and choices of contents from relative scarcity to surplus as something merely incremental, not something which would radically change the media environment including media economics.

Moreover, most publishers nowadays have either forgotten or weren’t around when during the second half of the 1990s newspaper and magazine publishers experimenting with changing for online contents and subsequently discovered that didn’t want to pay (with the notable exceptions of business people who would pay to see financial or trade journals online). A myth later formed that consumers continually refusing to pay for online contents when in actuality that result was a remarkably simple matter of economics: when you increase consumers’ access to and supply of international, national, feature, sports, and business contents by several magnitudes, the amount that they are willing to pay for such content decreases by an equal number of magnitudes. Moreover, the contents in a package of news ‘unbundles’ when it is placed online until what’s left is that publication’s local or specialty contents that consumers can’t find anywhere else. The amount of purely local or pure speciality news contents of an average daily newspaper (minus its advertisements) was approximately 40 percent and nowadays is merely 10 to 20 percent of its total news contents. For a newspaper that was worth paying the equivalent of $1 per day in its printed version, that means it is nowadays worth less than 10 to 20 cents to the consumer when published online, equivalent to $3 to $6 per month and not the $15 to $25 per month which most newspaper publishers demand online. This means there is very little market for what publishers want consumers to pay.

The digital possibilities of offering to consumers searchable versions of all of a corporate chain of newspapers’ news stories and classified advertisement also appealed to newspaper companies, as did the further possibility of offering stories and classified ads from all of a nation’s newspapers. Several such experiments were launched in 1996 through 1998 by newspaper companies either working alone or together. These experiments occurred before Google, CraigsList, Monster.com, or social media existed. Unfortunately for the newspaper industry, few of these experiments made sense by a company alone, and newspaper companies were reticent to work together after a century or more of competing against one another.

The largest and most notable of the U.S. daily newspaper industry’s attempts to work together was its New Century Network (NCN) consortium of major media corporations. That endeavor suffered huge problems getting those companies to work together, and ultimately spun apart no sooner than had NCN’s first products been launched. Although the newspaper industry was preaching ‘convergence’ online, it didn’t want to converge itself, nonetheless interoperate as companies. Nor would the media industries sectors (newspapers, magazines, radio, television, etc.) and their trade associations converge, even as consumers were seeking multimedia convergence and new purely Internet-based competitors such as Google and Facebook had no such qualms about separation of sectors.

During the opening years of this new millennium, the majority of households and offices in developed countries obtained ‘broadband’ online access, which radically changed how consumers used online media. Hundreds of millions of people began switching their media consumption habits from traditional modes, such as printed editions and over-the-air broadcasts, to online. Broadband no longer required consumers to monopolize a voice telephone line to go online, something they had done for short periods. Instead, broadband was ‘always on’ whenever they needed it. Plus, it delivered contents at speeds that catalyzed widespread usage of audio and video online.

During 2007, a media professor from the University of Nevada published an academic paper entitled ‘Online Revenue Business Model Has Changed Little Since 1996’. She could just have well as published that title today. Most newspaper website seem as is stuck into aspic in the late 1990s. They might now offer video and podcasts, but otherwise precious little has changed in what they offer–despite the rise of ‘consumer-generated contents’ online, the rise of social media, and people’s access and choices of contents having changed from relative scarcity to surplus (or even overload). It is as if the daily newspaper industry had given up improving its new media endeavors just when even greater changes to the new media environment arose.

Widespread implementation of Bluetooth and WiFi wireless connectivity during the first decade of the 21st Century, spread this connectivity throughout their homes and offices, making it even more convenient. And the development of ‘smartphone’ Internet telephony after 2006 gave consumers’ access to this cornucopia of contents wherever they roamed.

Although most accesses to daily newspaper websites nowadays are from smartphones, most newspaper websites nonetheless are still designed for viewing from desktop computers, which are the devices that those website’s office-bound designers themselves use.

By 2007, most media companies in developed countries were earning record revenues, even though the circulations of their periodicals had flattened. Moreover, their digital revenues had steadily increased. For example, the U.S. daily newspaper industry earned $44 billion during 2006, of which $2 billion was from its online editions. Many junior media executives, who had been in charge of digital operations during the 1990s. are promoted to corporate executive positions, overseeing both print and digital.

The decline of the U.S. newspaper industry actually began during the mid-1980s. That’s when its readership (i.e., circulation, adjusted for population growth) peaked. It is also when offset lithography had already made publication of specialty magazines economical and CATV system had been reached the majority of the U.S. population. The opening of the Internet to the public increased the declines of an industry that had already begun losing its consumers.

The ‘Great Recession’, which began in late 2007, stunned the media industries. Their advertising revenues began dropping precipitously, as did their circulation revenues when large numbers of consumers began cancelling subscriptions to printed editions, relying instead upon free access to those periodicals’ websites. To survive, most media companies stop hiring new employees and began ‘buyouts’ of senior staff, who generally have higher salaries than do junior staff. The companies then begin laying off junior staff, to further reduce operating costs to match declining revenues. The results of these moves are the decimation of talent and experience within the media industries. Meanwhile, financial mergers and acquisitions of media companies increase, because reduced competition reduces expenses and because mergers cause personnel redundancies that can be further eliminated. The media industries hope the declines suffered during the Great Recession will be ‘cyclical’, meaning that revenues will increase and return or exceed those recorded before the recession.

Newspaper employees, notably those from newsrooms, commonly blame the decline of the daily newspaper industry on corporate greed or on consumers who either won’t pay for news or who don’t care about it. Yet those are merely excuses and not the larger dynamics underway. These newspaper employees don’t understand their industry’s own history of decline, which began decades ago and is rooted in the ways that increasing consumers’ access and choices of news, entertainment, and other information has made obsolete the Industrial Era production, packaging, and business models of daily newspapers. As indeed, most Mass Media models have become obsolete now that the Industrial Era has ended and the Informational Era begun.

Yet that doesn’t happen once the Great Recession ends. Within twelve years, including ten after the recession ends, the U.S. daily newspaper industries annual revenues have dropped from $42 billion to below $22 billion. The industry has also lost between half and two-thirds of its daily circulation and readership. The digital revenues that the industry had hoped might compensate for those loses have increased, but only from $2 billion to $ billion annually. Most of the industry responds by erecting online paywalls that limit consumers from reading more than a few stories monthly unless they pay fees of between $5 and $15 per month. Meanwhile, more than half of all national and local digital advertising revenues are being earned by Individuated Media giants such as Google and Facebook. By the time when during the spring of 2020 a pandemic suddenly quarantines most developed countries. further reducing the industry’s remaining advertising revenues by 50 to 80 percent, the daily newspaper industry’s financial situation passed from dire to grave. The industry’s trade journals and pundits are discussing whether newspapers should be reincorporated as untaxable not-for-profit entities or receive subsidies from governments to continue operating. No other media industry in history has ever suffered such a steep and sudden reversal of fortunes and fate.

Moreover, most publishers and newsroom staff seemed flummoxed by the rise of Individuated Media, which has already begun replacing the Industrial Era’s Mass Media as the predominant means by which most people in developed countries now obtain news, entertainment, and other information. Individuated Media are computer-mediated products and services which algorithmically process information and produce, package, and deliver entirely bespoke–not merely personalized (‘Dear Joe, here is the Chronicle’s daily sports newsletter…’) or even customized (an otherwise uniform product to which some other forms of contents have been added or subtracted), but instead an entirely unique product (individuated from its onset) is delivered to each and every consumers. For example, Facebook’s 2.6 billion users certainly give it mass reach, yet each of those users simultaneously sees and entirely different mix of contents than any other does, something quite unlike a Mass Media product. Search engines and social media services are forms of such Individuated Media, as are specific genre or topical individuated services such as Pandora, Spotify, and Flipboard. Individuated Media provides consumers with feeds of contents that much better match each consumer’s individual mix of needs, interests, beliefs, and tastes, than can any Mass Media product, or even mix of Mass Media, products, can provide. Still stuck between 1996 or 2006, newspaper websites never reached the future we call today.