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Rex
Smith
Photo:
Alicia
Solsman
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Death
On Your Doorstep
There
has been no shortage of ink spilled onto the broadsheet pages
of daily newspapers over the collapse of the print industry.
It has become a staple story of the new century and a dramatic
one at that: A single Web site wipes out hundreds of millions
of dollars in classified-ad revenue in a few quick years;
legions of anonymous bloggers exert sway over public opinion
equal to that of any self-respecting, war-mongering newspaper
baron. This week, the big story is that Journal Register Company,
which owns The Record, The Saratogian,
Kingston’s Daily Freeman, and the Community News
in Clifton Park—and which recently shuttered The Independent
in Columbia County—has filed for bankruptcy protection. According
to the Associated Press, JRC claims its revenues are down
20 percent since 2006, and the company’s debt surpasses its
assets by more than $100 million.
Last year, 21,000 newspaper employees in this country cleared
out their desks to join the ranks of the unemployed, because
their jobs just ceased to exist. These editors, photographers,
and reporters found that technology had delivered a way to
supplant them, just as it did to the manufacturing sector
before them. As Greg Dahlmann, a former WAMC producer, puts
it: “Their job function has been disaggregated.” A rough tally
of the layoffs and early retirements over the past six months
throughout the Capital Region’s newspaper industry totals
more than 50 people.
Rex Smith, managing editor of the Times Union, is harried
and running late between appointments when he sits down to
discuss the perilous fate of his industry. As one would expect,
he doesn’t have much good news to offer. January was a bad
month. Smith had to lay off a couple of part-time employees,
and the paper scaled back its print product by 28 pages a
week, cutting out its Monday, Tuesday, and Wednesday feature
sections.
“We
did a buyout last summer, seven or eight positions,” Smith
says, “and then we have had some attrition. What we’re told
is our company doesn’t really believe that the newspaper revenues
are going to come back this year. And I think that it is only
a matter of time, unless there is a sudden resurgence in the
American economy, I don’t see how we can avoid anything other
than a smaller newsroom in the future.”
At its height in 1997, the TU employed 147 people in
its newsroom. The average had been 134, Smith says. Now they
are down to 120.
The
Daily Gazette in Schenectady, at its height in 1990, employed
110 newspeople. Now it employs 50 scattered throughout a newsroom
filled with empty desks. In one corner of the newsroom, now
dark and unused, is the once-buzzing clips library, where
full-time staffers would cut out articles from each issue
and store them away in a wall of metal file cabinets. Reporters
and editors now help themselves to the old clips, or go online
for PDFs.
Last month was miserable for Judith Patrick, the managing
editor of the Gazette. The paper shed 10 employees
in a single round of layoffs. It was a drastic move, made
in the hopes that it would stave off any further layoffs in
2009. Since May of last year, the Gazette has been
trapped in a sickening three-month cycle of layoffs.
It was just too crushing for morale.
“All
together, since last May,” Patrick says, “we have laid off
19 people—reporters, editors, photographers, clerks, a receptionist
who we loved dearly.”
The Gazette dropped its Lifestyles section three times
a week, as well.
“The
fact is that the traditional business model for newspapering
isn’t working well anymore,” says Smith. “All those big advertisers
who have been buying all those nice, big full-page ads are
vanishing.” It is a trend that is only quickening in this
economic downturn. “Circuit City is gone. Off goes Rex Appliance.
And you worry about the department stores. You worry about
Macy’s.”
Although Smith does entertain some pet notions for how to
“save journalism,” neither he nor his parent company, Hearst
Corp., nor anyone else has yet to offer a compelling strategy
for how to reverse the industry’s steady decline. So far,
and for the foreseeable future, truncating against losses
appears the only real strategy.
On the second Friday in February, managing editor Parry Teasdale
stood with members of his staff at the bottom of the steps
of his Hillsdale-based newspaper, The Independent,
and listened as a JRC representative told them all that their
jobs no longer existed starting at the end of the day. “They
came down, and said, ‘You’ve done a good job, people. This
is a good paper, but you know that the company is in trouble,
so finish the issue you are doing, clean out your desks and
don’t come back,’” says Teasdale. “And then they closed down
a paper that existed for 36 years.’”
The corporation issued its official statement, and handed
it off to Teasdale to distribute to his shell-shocked staff.
The only blank that was left on the company’s edict for Teasdale
to fill in was how old the paper was. It appeared that nobody
at JRC, he says, “knew how long the paper had been in existence.”
(Teasdale has signed a non-defamation agreement with JRC as
part of his severance package, so he chooses his words about
his former employers carefully.)
He had been the editor of the Woodstock Times for 15
years before taking the managing editor position at The
Independent. When he started in 2000, the twice-weekly
community sheet was owned by a local couple who had bought
it from its original owners. In 2001, the paper was sold to
JRC. “They sold it,” Teasdale says, “when newspapers were
still being paid for at really high rates. JRC was on an acquisition
binge.”
JRC’s acquisition binge is legendary in the business. According
to a 1999 American Journalism Review article by Mary
Walton, after going public in 1997, JRC attacked the newspaper
industry with a two-prong ownership strategy: acquire as many
properties as possible and squeeze these news operations for
as much profit as they could produce. The company developed
a reputation for cutthroat management, Walton’s article continues,
by paying its reporters at the time a base salary of $17,000,
straining its employees under the constant threat of firing,
forcing them to perform multiple job functions, even checking
reporters’ car odometers against their expense accounts. A
30-year newspaper veteran told Walton that his stint at JRC
was the worst experience in his career: “I can live with cautious
people looking to cut fat, but not bone and muscle. That’s
what JRC does.”
“JRC,”
Teasdale says, “became the poster child of financial trouble
because it had such a huge debt load.”
“The
company made a bet,” he continues. “They bought up a lot of
properties. They wanted to grow by acquisition, because it
is very slow to create new companies. But the thing about
being the bigger fish that swallows the smaller fish is that
you always have to be worried about the fish behind you. And
in the late ’90s, and in the early part of this century, one
of the ways to prevent having the bigger fish from swallowing
you up was by having debt. You would be much less attractive
for takeover if the company that buys you would have to assume
a lot of debt. So JRC made a bet in 2004 on buying a large
chain of suburban newspapers in Detroit. Now, maybe it seemed
like Detroit was going to come roaring back after two decades
of faltering, but they spent hundreds of millions of dollars.”
This was when the newspapers still had a patina of invincibility,
he says, and the financial culture was—as is now so obvious—deluded
by its own equal sense of invincibility. The banks were happy
to allow JRC to leverage itself to the maximum.
“Then
the economy turned sour, and the banks wanted their money
back,” Teasdale says.
Before JRC was kicked out of the New York Stock Exchange,
its shares were trading at 3 cents.
Yet JRC doesn’t stand alone in its ruthless pursuit of profits.
Until only the past few years, owning a newspaper chain had
been an extremely lucrative business proposition, providing
profit margins upwards of 30 percent. The industry was once
full of properties that were seen, as Warren Buffet described,
as “indestructible slot machines.”
“In
the 1990s,” says former Times Union editor Dan Lynch,
“there was a fundamental change in the newspaper business
to a wide variety of thinking that was not for the better.
A conviction set in at the highest levels of the newspaper
business that daily newspapers were a ‘mature industry.’ And
since most of these newspapers are owned by large multimedia
corporations, the thinking was that now is the time to milk
these things for cash, because this is an industry without
any realistic possibility of growth. So let’s cut the staff.
Let’s not print anything in the paper that might piss off
anybody and disrupt the flow of revenue.”
Lynch worked for the Times Union during the ’80s and
’90s, the modern heyday of the newspaper industry, and remembers
most of that time fondly. But by the time he left the paper,
he was happy to be done with the business. Newspapers were
all too willing, he says, to trade their constitutionally
protected privilege of “holding government accountable” for
revenue.
“There
was an unspoken, but very real, determination on the part
of the upper-level managers of the newspaper industry in general
that they wanted to do less and less of the kind of reporting
that would piss off the power structure and would cost them
money.” For example, The New York Times, he notes,
took a large state grant for the construction of a new office
building in Manhattan. “And it is not unreasonable to presume
that made them less eager to report on corruption in the Pataki
administration. That led to an inevitable decline in the product
that is evident to everybody.”
“And
that is just one example,” he adds. “There are plenty of others.”
At the same time, in the 1990s, while newspaper owners were
looking to maximize profits by gutting the newsrooms, the
captains of this “mature industry” saw in a new technology
an opportunity to further cut costs.
“As
the Internet came to life,” says Lynch, “publishers all over
the country began to believe that it was a technology that
would allow them to abandon the print product. They wouldn’t
have to have those big presses. They wouldn’t have to have
all those trucks. They wouldn’t have to pay for paper. We
could just put this thing online and our costs would drop
dramatically. All across the country, including at the Times
Union, publishers began to take their prized and very
expensive news content and put it online for free.”
“The
thought,” Rex Smith adds, “seven or eight years ago was, here
comes this Internet thing. We’re gonna improve our Web site,
and people will buy ads, and we’re just going to go for lots
of traffic, and the traffic will attract the advertising,
and the advertising will support our staff.”
Lynch disagreed with that strategy. His argument at the time:
“We paid a lot of money for this content. This is what distinguishes
us from our competition. If you are going to put it online
for free, especially at a time when you don’t know how you
will transfer ad revenue from the paper product to the online
product, you will be creating a free competitor to us, which
will be ourselves. It will be like taking a rattlesnake to
bed with you.”
At the beginning of 2009, Rex Smith started his weekly column
with the retelling of an otherwise pleasant chat he had with
an old pal, sitting by a fireplace, drinks in hand, on the
unpleasant subject of the death of the printed newspaper.
“He mentioned a prediction he had read online, suggesting
that The New York Times would stop publishing this
year,” Smith wrote. “And if that’s true, he seemed to wonder,
what kind of 2009 could the Times Union have?”
Smith assured his friend that the TU would be OK, regardless
of the fact that the industry’s leading trade magazine posited
that 2008 had been the worst year in the history of the industry,
with no reason to think 2009 would be much better. Smith continued:
“Fact is, we’re still at the dawn of the Internet Age, so
disruptions in communications industries, in particular, shouldn’t
surprise us.”
A week later, it seemed the Internet Age was still weighing
on Smith’s mind.
“Yes,”
he wrote again in his column, “the Web is a great democratizing
tool. A tiny investment of time and virtually no cash can
turn every one of us into publishers, able to reach further
than the greatest press tycoon of the last century could have
dreamed. Yet the very diversity of the Web presents its limitation,
for it stages an anarchy of ideas vying for our attention.”
The day before this column ran, the Hearst Corp., which owns
the TU, announced that it would be putting the Seattle
Post-Intelligencer up for sale, and that if it couldn’t
find a buyer in six months, the paper would either be closed
down or migrated to an online-only model.
Smith was working on the 2009 budget when he wrote those columns,
he says, and jokes that he was thinking “a lot about the end
of time.” Facing further budget cuts and continued layoffs,
with news that one of the TU’s sister papers could
simply be turned off, he says, he was “quite torn, and I was
asking myself, ‘How are we going to preserve journalism?’
”
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Greg
Dahlman and Mary Darcy
Photo:
Alicia Solsman
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How
are we going to preserve journalism? That’s the question that
the newspaper industry has been asking itself incessantly
over the past year. Smith says there are two popular trends
of thinking making the rounds among the media moguls and intelligentsia.
One is the nonprofit model. The benefit of this model, says
Smith, is that it would relieve newspapers from the burden
of producing 20-percent profit margins, free them from worrying
about Macy’s, and with the proper support of a foundation,
allow them to return, guns ablaze, to the mission of journalism.
There are newsrooms that have successfully adopted this model.
Pro Publica, a nonprofit newsroom in New York City run by
Stephen Engelberg, a former New York Times investigative
reporter, is a leading example, producing acclaimed pieces
of in-depth journalism that are then offered to daily newspapers
to publish. The TU, Smith says, was the first paper
in America to run an article generated out of Engelberg’s
shop.
There are other, locally focused examples of the nonprofit
model, whether online-only—the St. Louis Beacon, the
Voice of San Diego—or in the traditional sense, such
as the Poynter Institute-owned St. Petersburg Times.
“So maybe there is some hope for great reporting in that,”
Smith says, but the argument for nonprofit ownership is an
old one—the Associated Press is a nonprofit—and has its own
inherent flaws.
For one thing, Smith says, nonprofits are prohibited by law
from endorsing candidates. “They are not allowed to advocate
for candidates or try to influence legislation. Well that’s
not a good posture for the press, either.”
But more to the point, it seems very unlikely that there is
enough money for widespread support of that model. Steve Coll,
a former managing editor for Washington Post, once
did a calculation to determine the size of foundation it would
take to run a newsroom such as the Post’s. He figured
that it would need to be worth $2 billion. “Well, there are
1,500 daily newspapers in America,” Smith says. “That’s a
lot of billions of dollars that have to be donated to support
the current infrastructure.”
And simply being a nonprofit does nothing to insulate a newsroom
from the economic pressures that face for-profit ventures.
According to the World Editors Forum, St. Petersburg Times
has failed to meet its goal of producing a profit margin
of at least 10 percent since 2006, and has suffered its own
rounds of layoffs.
The other popular thread, Smith says, is micropayments. This
month, Walter Isaacson, the former managing editor of Time
magazine, returned to the magazine to stand on his old soapbox
and pitch for an industrywide adoption of a system of micropayments.
“We
need something like digital coins or an E-ZPass digital wallet”
Isaacson wrote, “a one-click system with a really simple interface
that will permit impulse purchases of a newspaper, magazine,
article, blog or video for a penny, nickel, dime or whatever
the creator chooses to charge.”
“Under
a micropayment system,” he continued, “a newspaper might decide
to charge a nickel for an article or a dime for that day’s
full edition or $2 for a month’s worth of Web access. Some
surfers would balk, but I suspect most would merrily click
through if it were cheap and easy enough.”
Smith is cautiously optimistic about this prospect, he says,
as what the TU has found in trying to implement free
registration is that online readers don’t want roadblocks.
“You
are probably like me,” he says. “If I have to register, I
will usually just back up and go somewhere else,” he says.
“But, if we have content that is really desirable, if people
know that it is behind this little wall, and the wall is not
that hard—it’s a cheap wall—then maybe there’s a future in
that.”
“So
I don’t think we have the model figured out,” Smith concludes.
“But the solution seems to be, well, it’s probably not going
to be in our traditional core product.”
Newspapers, as the traditional core product, won’t be what
saves journalism. Instead, as Dan Lynch muses, the future
might look a lot like the journalism of the 19th century.
“I think that it might be, essentially,” he says, “a fiercely
competitive environment of Web sites doing what newspapers
used to do, and the newspaper will probably be one of those
competitors, but just one of those competitors.”
Multiple business models battling it out online, he guesses,
for local readers, and local money.
It isn’t a bad guess. Already, hundreds of such sites have
flickered into existence across the country, stepping into
the vacuum left by the news industry’s contraction. Some of
these sites are blogs—collaborative blogs, insiders’ blogs,
professionals’ blogs. Some sites are small community-news
outfits based on citizen journalism or discussions forums
for a local community. Some are professional journalistic
endeavors supported by local philanthropy.
In Albany, WAMC alums Greg Dahlmann and Mary Darcy have stepped
into the breach with their own version of a hyper-local news
site, All Over Albany. The model of AOA is half Web aggregation—crawling
cyberspace for anything that might interest readers—and half
original content. The original content that they produce is
lighthearted, written by themselves or by freelancers, and
it covers the Capital Region’s restaurants and shopping, with
profiles of people from Albany neighborhoods.
“This
is the content that we wanted to read,” Darcy says, “but that
we couldn’t find anywhere else.”
They have been doing AOA for about a year now. So far, AOA
is not a moneymaker. For Dahlmann and Darcy, it’s a second
job, supported by their small production business.
“We
wake up, and we work, and we go to bed,” Dahlmann half-jokes.
“We
are livin’ it, right now. It’s not a job,” Darcy says, “it’s
a way of life.”
“But
the fact is that a lot of people have failed at this already,”
Dahlmann says. He points to Dan Gilmore, an early proponent
of citizen journalism, author of the seminal book We the
People, and co-founder of Bayosphere. Bayosphere began
in 2005 with an ambitious agenda to be the voice of San Francisco,
written by San Franciscans, and it failed after seven months.
“If there is anybody who knows what is up, it is him. And
it didn’t work. We are already through an iteration of people
trying this and failing. I don’t think that you can criticize
them for failing. That is a totally natural part of this process.
Good for them, they went and tried and now we know that it
didn’t work, and we can move on.”
In New York City, Dahlmann jokes, every block has a Web site.
In Brooklyn, each neighborhood has at least one site, sometimes
more, competing to be the voice of their community. Small,
grassroots news sites increasingly are becoming a part of
local Web communities.
“It
just goes to show you that people have a thirst for local
information,” Dahlmann says. Dahlmann says that he believes
that AOA, and sites like it, are well-positioned to reach
further into their local communities, and expand into a more
thorough newsgathering organizations. But the grim reality
behind most of these sites is that they face the same economic
challenges that the larger, well-funded newspaper chains face:
The Web has yet to prove profitable for any but the widest-reaching
news sites. “Whether there is a future here for any of them,
or if there is a future for us, we have no idea.”
chardin@metroland.net
Chet Hardin, Metroland’s news editor, was employed
by The Saratogian from 2005 to 2006.
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