Can Newspapers Reverse Their Decline?
Michael SocolowThe Baltimore Sun August 14, 2005

THOSE OF YOU who paid for this newspaper, turned to this page and are reading these words are a dwindling breed. The newspaper industry is in trouble. Its future is precarious, and the social, political and cultural ramifications of the decline of this uniquely positioned business will affect everybody - not simply you and your colleagues who are reading this op-ed, but the entire public sphere.

How did daily newspapers reach this point? Those who work for them - journalists and those on the business side - point primarily to the impact of new communications technology. The Internet, cable TV news and cell phones that provide headlines have irretrievably altered news consumption habits.

Other arguments include the idea that the average American news consumer now favors celebrity news and gossip over the kind of robust public interest reporting that was once a hallmark of the daily press. American youths, in particular, are blamed for this trend. Demanding news at their convenience, they insist it conform to their interests.
These trends unquestionably factor into the widespread circulation declines. But something important is missing from this analysis: what the newspapers themselves contribute to the problem.

Newspapers sell you their credibility. That is the single most important value of any newspaper brand in the marketplace.

Newspapers compete in a market that is not solely limited to their product category; thus, recent changes in the media landscape have intensified the importance of credibility.

Several severely damaging ethical lapses over the past four years not only have hurt the specific newspapers involved but have created a widespread feeling that reporters are less accurate and ethical than they once were. This may or may not be true. But the veracity of the statement is less important than the fact that a large proportion of the industry's consumer base believes it.
Improving reporting and editing at daily newspapers is a key component of several initiatives within the business. So is being more honest - called "transparency" - with the audience.

Newspapers should be applauded for their attempts to repair the self-inflicted damage done to their product.

Yet other key, but too often ignored, issues in the history of the newspaper business have played a role in the industry's problems. Very few Americans - or even journalists - realize that Congress passed, and President Richard M. Nixon in 1970 signed into law, the Orwellian-titled Newspaper Preservation Act. That law (essentially) allowed local newspaper monopolies to flourish throughout the country. In all but a handful of markets, dominant newspapers would employ tactics that in other industries would be considered restraint of trade in order to corner their local markets for newspaper advertising.

Joint operating agreements between newspapers that otherwise would have been competitors became legal. The cost certainty of operating in a noncompetitive environment allowed these "hometown" newspapers to grow fat with advertising revenue. New sections were added. Newspaper chains such as Gannett and Knight-Ridder scooped up these profitable properties around America. The chains grew accustomed to profit margins that would have been impossible to achieve in a truly competitive environment.

By the early 1990s, newspaper companies and their corporate owners believed double-digit profit returns were normal for the business. They forgot the competitive - almost cutthroat - atmosphere of the newspaper business before the 1970 legislation. Worse, they took their monopoly for granted and assumed news consumers were satisfied.

As soon as the marketplace opened, and the news audience had new options, those consumers started going elsewhere. First cable news in the 1980s and then the Internet in the late 1990s revealed a hunger for new news sources. Many alternative weeklies, including the most influential, began offering their product for free. The very product that comprised the bedrock of this monopoly business - news - began to be seriously devalued.
How did newspapers react?

They brought in consultants, armed with MBAs and experience in other troubled industries, to evaluate their operations. Recommendations were simple: Cut staff, cooperate more closely with advertisers (i.e., create "partnerships") and offer the public more of what it wants to read - not what experienced editors believe the public needs to read.

Demographic studies are used to identify a core readership and to serve it by providing more "news you can use." This has meant an increase in medical, travel and lifestyle news, often at the cost of international reporting and investigative pieces.

The reinvented newspaper has failed to stem the readership losses. The consultants' reports are useless so long as the leadership of the industry clings to profit margin goals that are unrealistic and were originally an artificial creation of antitrust exemption.

By desperately trying to serve its core - but dwindling - audience, the newspaper business is shortchanging that audience. Most newspapers are offering little more than a comfortable rehash of events that their consumers are already aware of. Instead, newspapers should be challenging their readers by providing difficult-to-obtain firsthand reports from around the world that are unavailable anywhere else. They should combine that reporting with bracing, counterintuitive commentary that would provoke thought and discussion in the civic arena.
In other words, daily newspapers should drop the consultants, lower their unrealistic earnings targets and do what they do best. If they fail to do this, they will have nobody to blame for their demise but themselves.

Michael Socolow is an assistant professor of American studies at Brandeis University in Massachusetts, where he directs the journalism program.