How Newspapers Must Change to Survive

March 13, 2009 — -- Newspapers, ave atque vale (hail, brother, farewell).

Just remember: In the digital age, the death of an industry usually plants the seeds of its resurrection.

The past two weeks saw what may prove to be the tipping point in the history of newspapers. The Rocky Mountain News became the first major U.S. newspaper to close in the face of declining circulation and revenues created by competition from the digital media. Close on its heels may be the equally venerable San Francisco Chronicle, which announced that it would soon be seeking a buyer and, failing that, may go out of business.

This bad news is just the latest in what has been a long, sad downward spiral by the newspaper industry through most of this decade. The newspaper industry gave up denying that anything was wrong about five years ago, abandoned the fantasy that this was a temporary setback two years ago and now -- like a terminal patient completing the Kubler-Ross cycle -- has all-but resigned itself to imminent oblivion.

And, if things keep going the way they have, that's a pretty accurate prognosis.

I was one of the very first people in the national media to predict the death of newspapers (although Time editor Daniel Okrent gave a prescient speech on "The Death of Print" in 2000). I did so in this column in March 2005. Here's what I wrote:

"So, let's finally come out and say it: Newspapers are dead. They will never come back. By the end of this decade, the newspaper industry will suffer the same death rate -- 90-plus percent -- that every other industry experiences when run over by a technology revolution."

I was a little ambitious in that prediction, but not by much. There isn't a single major newspaper in this country that isn't in serious financial trouble. Even the industry's annual convention was cancelled this year. And waiting in the wings, not far behind the Rocky Mountain News and the Chronicle, are at least another dozen papers on the brink -- with the next to go likely the Seattle Post-Intelligencer. And you can now buy a share of New York Times stock for less than the price of its Sunday paper.

I also wrote this:

"Before it is all over, the number of 'newspapers' left in America will probably be less than 10 -- and they might not be individual papers but rather new entities created out of the current large chains."

Frankly, these days, that prediction -- especially if we're talking major metropolitan papers (small local papers are still doing pretty well) -- almost seems too optimistic.

The Digital Revolution Has Left Many in Its Wake.

As they say about leading the pack, it's always a good way to get shot in the back. And I took my fair share of arrows, many of them from veteran reporters who either dismissed my notions as absurd ("People will always want to read the morning paper with their coffee") or as calling down the Furies ("Articles like this certainly don't help matters"). I wonder how many of those commentators are still in the business today, and how many still believe those arguments.

The reason I was confident then in my predictions was not out any animus toward newspapers -- on the contrary, as I've written here before, I'm a fourth-generation newspaperman. I love newspapers. And some of the most satisfying moments in my career have been sitting in a café on a Sunday morning watching people around me reading something I'd written. No, what made me certain about this unfolding scenario were my experiences in the electronics industry. Over the years, I'd seen one traditional industry after another, all of them seemingly permanent, be destroyed by the arrival of the digital revolution.

In almost every case -- adding machines, arcade games, printing, letter writing, typing, LP records, clocks and watches, even older electronics businesses -- these once-giant industries had been so annihilated that they were almost erased from our memories, supplanted by wholly new industries defined by microprocessors, mass customization and Moore's Law.

Once I saw Google News and the first great blogs, it was obvious to me that this same destruction was about to happen to newspapers -- and that the real challenge was to overcome sentiment and tradition and look this transformation straight in the eye and accept the full implications of what I saw. The death of newspapers seemed impossible, but so did the death of typewriters. You had to bet on technology, wherever it led.

And, in newspapers, it has led us to where we are now. The "death of newspapers" is now generally assumed; it has become the common view that soon there won't be any major newspapers left in this country, with local papers soon to follow once Craigslist gets around to setting up shop in their backyards.

But that isn't what technology is telling us. Once again, the scenario presented by technology departs from the received view.

What the history of technology tells is that at some point, the slaughter stops. What remains are a handful of survivors. Some, like the handful of companies that still make typewriters, will cater to a small surviving pool of traditional customers. In newspapers, USA Today seems to have the greatest chance of ending up here (while the New York Times, which wants this slot, will never make it).

Some Newspapers Will Survive the Great Shakeout

The other survivors will be very different -- indeed they will look almost nothing like their former selves. They may bear the names of once famous newspapers, but that will be the only resemblance. Technology revolutions are like black holes: what comes out looks nothing like what went in.

If they are smart, some of the newspapers that survive this Great Shakeout have a chance to come all the way back and be major players in the next wave.

But, to do so, they have to recognize that everything has now changed -- and they have to break from their past, recognize the utterly changed nature of the marketplace and embark on a radically new strategy.

How? First of all: Don't try to preserve what you were. It's now too late. Look instead to what you must be in 10 years and get there in five. And for the next two years, do whatever it takes to survive.

What does that mean? Well, surprisingly, it means: Forget computers. Newspapers have already lost that battle. Instead, move on -- and target the next platform. My gut tells me that the future of news delivery is to e-Books, like Kindle, and, even more, Smart Phones. So rebuild your paper for those platforms -- automatic downloading of the daily news directly to e-books, and powerful new navigation and social-networking (i.e., story reporting and sharing) tools for the phone.

It also means a new business model. The blogosphere has made one major mistake: it has yet to create a truly viable revenue model. And that represents a huge opportunity. Advertisers are still wary of the Web because they don't see yet a vehicle that produces strong, verifiable results. That's also the reason why (besides all of that capital equipment, like presses and buildings) that newspapers didn't just migrate to the Web two years ago -- it would have led to massive revenue losses. But newspapers have now taken those losses anyway, so accept the inevitable. A revenue model will emerge for the Web, so take your lumps now, shrink to 10 to 20 percent of your original size, sell the buildings and presses, move exclusively to the Web, and get ready for the market to take off.

And, as long as you are thinking outside of the box, go all of the way. Why doesn't a consortium of newspapers buy Craigslist, leave it intact, and divvy up the ads by region? Why not team up with the largest local TV station and become its integrated video-print Web site? Or better yet, buy one of those emerging Web aggregators and embed yourselves within them. They're going to be your future competitors anyway, so co-opt them now.

We Will Always Need Newspapers

Finally, figure out a way to hang on to all of that reporting talent you have so indifferently tossed away. Turn them into contractors for a couple of stories per month, or put them on retainer. But don't lose them -- because five years from now there will be land rush on reporting talent to fill the new "newspapers." So tie them up now.

In the end, it's all about surviving short term, and starting over under the new rules long term. We will always need newspapers because we need news. But as to what form this transformed medium will take is as yet unknown. But we do have some ideas -- and it is those ideas that America's dying newspapers should now embrace, not wistful dreams of the past.

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

Michael S. Malone is one of the nation's best-known technology writers. He has covered Silicon Valley and high-tech for more than 25 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 was editor of Forbes ASAP, the world's largest-circulation business-tech magazine, at the height of the dot-com boom. Malone is the author or co-author of a dozen books, notably the best-selling "Virtual Corporation." Malone has also hosted three public television interview series, and most recently co-produced the celebrated PBS miniseries on social entrepreneurs, "The New Heroes." He has been the ABCNews.com "Silicon Insider" columnist since 2000.