Silicon Insider: Saving Newspapers

Nov. 10, 2005 — -- The votes are now in: Newspapers are officially dying.

Now we need to figure out how to save them.

I took a lot of grief from the media last March when I announced in this column that the era of newspapers was over. I took as evidence the fact that I, a newspaper veteran, no longer felt the need to read my usual three dailies, but instead chose to construct my own 'virtual newspaper' from stories at many different sites on the Web. I quoted a friend, a two-Pulitzer winner, as saying much the same thing.

If we don't read newspapers, I asked, what does that say about the rest of the reading public, people with far less visceral connections to newspapers? I went so far as to predict, what with newspapers losing 1 percent of their readership per year, and with the rise of cable TV, online news and the blogosphere, that most newspapers will be dead by the end of the decade.

The news of the last week makes my original prediction seem almost upbeat. It began with word that the largest shareholder (19 percent) of Knight-Ridder, Private Capital Management of Naples, Fla., told KR's board that the company should be broken up and sold because its parts were worth more than the whole. Not long after, Henry Berghoef, speaking for Harris Associates of Chicago, KR's third-largest shareholder (8.2 percent) called for the same thing -- adding that he "remained a big fan of newspapers."

That leaves only Southeastern Asset Management, KR's second largest shareholder (8.9 percent) … and it has asked permission to speak to Knight-Ridder's board.

In other words, Knight-Ridder, the most progressive and most technologically astute of all the great newspaper chains, is toast. Tellingly, its stock, anticipating a sale, has jumped -- overnight accomplishing what several years of KR layoffs and cutbacks could not. But even those gains may be short-lived, as analysts wonder who would actually want to buy a newspaper these days.

Incredibly, that was the least of the bad news in the newspaper world. The big bombshell hit on Monday, when the Audit Bureau of Circulations, which tracks newspaper readership, announced circulation changes for 20 major newspapers during the past six months.

The numbers were so astonishing that even media pundits seemed dumbfounded. Only The New York Times circulation was up -- just 0.5 percent. Meanwhile, the other major dailies are watching readers flee: The Los Angeles Times -- down 3.8 percent; The Washington Post -- down 4 percent; The Boston Globe -- down more than 8 percent; and, most incredible of all, the San Francisco Chronicle, down 16.4 percent.

Now, double those numbers for an annualized rate and it becomes apparent that America's newspapers aren't just slowly fading away. Many have now crossed the tipping point, and are in a flaming death spiral. If the 140-year-old San Francisco Chronicle continues at its current pace, it will be dead in three years. Even earlier, in fact, as another tipping point looms: when circulation numbers fall so low that advertisers either flee or demand a cut rate, and revenues no longer cover the cost of staff, printing plant and office facilities. For big newspapers, that probably comes at the 50 percent mark. And you can be sure that if the owners see that day coming, they'll attempt a fire sale long before it arrives

In other words, most of the nation's major newspaper companies could be on the block within the next 24 months, few with any chance of finding a buyer. And if that isn't the End, you ought to be able to see it from there.

So, if we now accept that newspapers are on the brink of oblivion, we need then to ask the next question: Should newspapers die?

You may think, based on my past writings, that I would be cheering the eminent demise of newspapers as just one more dinosaur industry made obsolete by the relentless advance of technology. But I have spent nearly 30 years working, in one way or another, with newspapers -- and if I am acutely aware of their weaknesses, I also appreciate their strengths. And if I, like many veteran journalists, am disappointed with today's newspapers, it is because they have become so distracted by the various threats to their future that many have abandoned those very attributes that not only make them vital to a free society, but also may be the key to their survival.

Consider the newspaper most in extremis, the San Francisco Chronicle, the newspaper of my childhood. One obvious reason why it has suffered the most precipitous circulation drop is that its readership base includes Silicon Valley, the most techno-sophisticated population on the planet. Of this crowd, a sizable portion simply doesn't read newspapers, and the rest likely get their news from the Web. A less discussed reason for the Chron's declining readership is the downward arc of the newspaper's writing quality, from the urbane wit of Herb Caen to the rectal-political stylings of Mark Morford.

But to my mind, the biggest reason why ever-fewer people are reading the Chron is that it really isn't a newspaper anymore. Predictable political views suffuse every section of the paper, right down to the food and wine pages. With the exception of the wire service stories (which have their own problems), every news story is a feature story or op-ed piece in disguise. Ironically, the last bastion of a balanced viewpoint in the entire paper is the editorial page. Everything else is pumped through the same filter.

One might think that a 'newspaper' that only reinforces one's own prejudices might be appealing to most readers. But, in fact, it is wearying -- and, eventually, superfluous. Human beings need debate, we crave to hear the other side, and we fear being deluded and wrong. Hence, the growing appeal in the Bay Area of Dan Gillmor's citizen news site, Bayosphere. Sure it's all opinion, all the time, written by amateurs -- but that is its strength: it at least offers a range of viewpoints.

As a technology writer, what's dispiriting about all of this is just how many times I've seen it before. Almost every big mature industry -- printing, typewriters, minicomputers, adding machines, copper wire telephony, etc. -- reacts the same way to the threat of a new, technology-driven competitor. Remarkably similar to the Kubler-Ross list of how people respond to their impending death, it goes like this:

1. Dismissal -- The typical reaction of an old, established industry to a hot new one is to dismiss it outright as unserious, unsophisticated and too small to take seriously. Remember the CBS executive's remark about bloggers just being amateurs in pajamas? Unfortunately for the old-line companies, smart entrepreneurs with good technology can quickly vault all of those limitations -- and grow very serious, and very big, very fast.

2. Denial-- At a certain point, the newcomers are too successful to be dismissed. Now, the old-liners respond by simply pretending they aren't there, falling back on the same hoary argument that "We're too old and too big to ever go away." Wrong on both counts.

3. Counterattack -- Denial doesn't work for long, as the numbers quickly undercut the argument. Suddenly, the old-liners notice that not only are their customers beginning to slip away -- taking profits with them -- but so is some of their top talent ... to the competition. It suddenly hits the old-liners that not only are they becoming less competitive, but, thanks to their growing brain, they are even losing the ability to compete. With that, the attitude shifts from feigned indifference to mounting anger: These newcomers are a threat! They must be stopped or at least regulated into toothlessness by the government.

4. Imitation -- Even as they attack their younger counterparts, the now-desperate old-liners are already scheming to copy them -- on the principle that "if that's what people want nowadays, let's give it to them." This is almost always a fatal move, because it takes the industry away from its core expertise and puts it in a deadly competition with an industry that not only knows the new turf better, but is much more nimble at moving around in it. Imitation almost always leads to …

5. Oblivion -- Companies don't have memories, people do. And when enough customers and employees leave an industry, it loses its desire to live. It may linger on in a shrunken, deracinated state, but for all intents and purposes, the once-great industry is dead.

For a half-century now, we have watched one industry after another head down this fateful path to the same miserable end -- and yet, no one ever seems to learn from it. And now it is the newspaper industry's turn. Right now, depending upon the paper, the industry is somewhere between steps 2 and 3, with papers attacking the legitimacy of the Web even as they turn their editorial content increasingly bloggy, subjective and biased. It won't work. Newspapers will never out-Web the Web.

What they don't seem to understand, perhaps because their fear and anger is too great, is that there is a way out of this death spiral, a different step 4: Rediscovery.

What newspapers have, and should be desperate not to lose, is not their office buildings or their printing presses, but their intellectual capital: that army of trained reporters that knows how to gather and present balanced news stories in clear, expository prose. If editors were to demand that again of reporters, that is what they would get back -- and consumers would find themselves offered a unique and well-differentiated product they can't get elsewhere, even on the Web.

In other words, if newspapers are to survive -- and they are running out of time -- they need to get back to their core expertise, bringing back the "news" even as they abandon the "paper."

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called "the Boswell of Silicon Valley," most recently was editor at large of Forbes ASAP magazine. He has covered Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years; and a 16-part interview series in 2001 called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books: his latest, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight" (Wiley).