Rem Rieder column: Extra, extra: Newspapers aren't dead

12:14 AM, Apr. 12, 2013  |  Comments

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Painfully slowly, not all that surely, but still, a new business model for newspapers is taking shape.

It's hardly time to uncork the Champagne. The challenges remain formidable. But after years of steady, ominous decline in the face of digital disruption, the long-derided dinosaurs are showing signs that they may not be leaving the building anytime soon.

The business will be smaller. The sky-high profits of years past are as over as the Spice Girls. But oblivion is not necessarily part of the equation.

The core question for newspapers in recent years has been, where is the money going to come from? The Internet blew up their lucrative advertising monopolies. Craigslist took their classifieds. And while newspaper websites significantly increased the size of their audiences, digital advertising, once seen as the holy grail, has been profoundly disappointing.

There are two major elements in the emerging survival strategy:

? Circulation revenue is increasing. The key: Charging for digital content. Newspapers are now making money from digital subscriptions and, more important, bundled subscriptions that give readers access to information in a multitude of ways.

? Newspapers are leveraging their skills to bring in revenue from activities other than journalism. Most significant is providing marketing services to local businesses trying to figure out how to flourish in a transforming environment. But newspapers are also earning money through e-commerce and hosting events.

"We are beginning to see a glimmer of a 2018 business model, one that is at least stable and at best shows some growth," says news analyst Ken Doctor, author of "Newsonomics: Twelve New Trends That Will Shape the News You Get." He adds, "We have pieces of the puzzle."

The outlines of the future are sketched out in an important report released last week by the Newspaper Association of America. Commendably, the study made a concerted effort to, for the first time, tally up money flowing in via the new revenue streams. The result is a much more accurate picture of the industry's health. It's a sign of how grim things have been that a report indicating revenue declined by 2 percent could be considered a hopeful sign. But it was the smallest drop in six years.

While advertising, once the lifeline of newspapers, continued to plummet (by 6 percent last year), circulation revenue was up 5 percent, the first year of growth since 2003. New ventures, such as marketing services, brought in $3 billion, and revenue from sources the NAA hadn't counted before, such as niche publications, brought in nearly as much.

The study underscores what a huge mistake it was for the industry to give away its content on the Internet for all of those years. Now about 400 papers are charging, and many more, including The Washington Post, will start doing so this year. "The key is the metered paywall (which allows readers to access a number of articles before they have to pay), and it works," Doctor says. By 2015 he believes such arrangements will be the default position for newspapers both in the United States and elsewhere.

To Tom Rosenstiel, executive director of the American Press Institute, a critical finding is that after years of decline, "now things are growing" in certain categories. At this point, he says, the newspaper business "is a mature industry and an emerging industry at the same time."

Newspapers were awfully slow to react to the ramifications of the digital revolution. "We're beginning to see signs of adaptation," says Rosenstiel, who worked on the report (API is now under the aegis of the NAA). "Skeptics might say it's been a long time coming, but it's coming."

Rosenstiel, the longtime director of the Pew Research Center's Project for Excellence in Journalism, thinks the mobile market offers newspapers a bright opportunity for future growth. "Before, newspapers saw technology as a threat," he says. "Mobile gives them a second bite. It could be very significant."

Media analyst John Morton, a longtime columnist for American Journalism Review, takes the long view. He points out that newspapers have been challenged before and lived to tell about it, citing the advent of television as an example. TV pretty much wiped out the metropolitan evening paper, and is one of the reasons there were once about 1,800 daily papers and now there are 1,400.

The digital juggernaut, Morton says, "is not going to kill the industry. But it's certainly going to change it."

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