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October 8, 2006
David Warsh, Proprietor


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Two Models for Newspapers

The newspaper industry has been experiencing a series of profound technological shocks, especially in America. Alternatives venues for advertising have proliferated. So have means of delivering the news, from broadcast to the Internet to giveaways. Newspaper profitability has sagged as a result. Share prices have fallen.  Proud old families have sold their birthrights, giving rise to concern for the industry’s future.

Whether today’s paper-and-ink newspaper undergoes major changes, but remains recognizably similar to its counterpart in the nineteenth century, or experiences one of those occasional revolutions in which the entire nature of the production process is transformed (in this case into something distributed digitally) remains to be seen.

For the present, however, the recent fracas over the Los Angeles Times — the Chicago Tribune, its corporate parent, fired the Times’ publisher last week over his unwillingess to make further newsroom cuts — underscores the fact that there are two fundamentally different business models for major newspapers in America. There are national papers, meaning The New York Times, The Wall Street Journal, USA Today and the Financial Times.

And there are a number of important metropolitan papers, of which The Washington Post is the prime example.

What’s the difference between the two?  It boils down to the price of the paper. The London-based FT, which is aimed at participants in global markets, costs $1.50 daily. Times and the Journal cost $1 apiece.  USA Today sells for 75 cents. And last month the Times raised the price of Sunday edition to $5.

The Washington Post costs 35 cents daily, $1.50 on Sundays.

How do they do it? Mainly by confining themselves to selling papers in the area around Washington, D.C. — around 750,000 of them daily, a million or so on Sunday. Meanwhile, the national papers print in locations all around the country. Geographic concentration means the Post attracts plenty of local advertising that the national papers miss — everything from grocery stores to help wanted. Less aggressive pricing makes for higher penetration of local communities, so the ads command higher rates.

A successful highly educational subsidiary, Kaplan, Inc., smooths out the ups and downs. But the key difference is the low-price high-volume big-tent model that the Post pursues. 

And what’s the difference in newspaper quality?  It depends on your tastes, of course.

But the explosion of news from the Post illustrates that a paper whose economic underpinnings are fundamentally local is capable of making a major contribution to the national news. (Granted, that the US Congess is “local” news in the District of Columbia is an advantage, but only of degree.) With the appearance of five remarkable books on Iraq by its reporters — Thomas Ricks’ Fiasco: The American Military Adventure in Iraq; Rajiv Chandrasekaran’s Imperial Life in the Emerald City: Inside Iraq’s Green Zone; Bob Woodward’s State of Denial: Bush at War, Part III; Karen DeYoung’s Soldier: The Life of Colin Powell; and Anthony Shadid’s Night Draws Nigh: Iraq’s People in the Shadow of America’s War — the Post is for the moment dominating the story.  

(The Times is a respectable second, with James Risen’s  State of War: The Secret History of the C.I.A. and the Bush Administration, Michael Gordon and Bernard Trainor’s Cobra II: The Inside Story of the Invasion and Occupation of Iraq, and drama critic-turned columnist Frank Rich’s The Greatest Story Ever Sold: The Decline and Fall of Truth from 9/11 to Katrina.) 

A newspaper — any newspaper — is a complicated place. The production of books by its reporters is merely a highly visible expression of the daily topic-choosing, fact-gathering, skepticism-mustering, narrative-creating and importance-ordering that is the essence of what a newspaper does to make its money. (Prizes count, too, but properly weighted, books are a better yardstick.)

By most measures, the national papers are doing all right, (though the generally excellent but tightly-focused Financial Times seems to be forever tottering on the edge of a precipice). It’s the local papers that are in real trouble, losing readers and advertising in a vicious circle necessitating ever-deeper cutbacks in staff. The decentralization that for more than a century has been a source of strength to American newspapers has been threatened by a series of rapid acquisitions of leading metropolitan papers.

In 2000, the Chicago Tribune bought the Los Angeles Times, the nation’s largest metropolitan newspaper (daily circulation around 840,000 as of a year ago), and with it the Baltimore Sun, Hartford Courant and Newsday. In 1993, the New York Times Co. bought The Boston Globe. All are declining under their new owners, at various rates, more rapidly than the industry as a whole.

It was once thought that there were significant economies of scale in owning many newspapers.  That is turning out not to be the case. Earlier this year the Knight Ridder chain of 32 newspapers, the nation’s second largest, was purchased by Sacramento’s McClatchy Newspapers. The new owners immediately sold off a dozen papers, including the Philadelphia Inquirer, which was purchased by a local group. (McClatchey thereby moved into second place among chains, behind leader Gannett Co.)

Much remains to be seen. After five years of trying to burnish the reputation of the LA Times, the Tribune has done in Los Angeles what Times did in Boston several years ago — put their own managers in charge on the ground.  What happens next is anybody’s guess. The fragility of trust in these markets makes it likely that further devolution will occur. If and when it does, there will be increasing interest in the model of the locally owned but widely read and thoroughly cosmopolitan Washington Post.

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