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What the newspapers should have done is not take out so much debt. The one tiny inconvenient fact in the whole whinefest which is the newspaper industry today i
by hristov 17y ago
What the newspapers should have done is not take out so much debt. The one tiny inconvenient fact in the whole whinefest which is the newspaper industry today is that those runaway news paper costs everyone complains about are mostly due to debt service and not to "quality journalism." The debt was used to: (i) acquisitions and/or (ii) pay the owners nice dividends.
See there used to be a business model where newspapers would simply make acquisitions until there is a single paper in each city and then hike up ad prices and make a lot of money. This does not work anymore, because with the internet you can never entirely capture an advertising market. So now the papers are stuck with the enourmous debt of acquisitions and without the monopoly profits they were expecting.
Big f-ing deal. They made an incorrect business decision and now they are suffering the consequences. I don't know why I should be worried about that.
If somebody is worried about journalism, someone should start a news website with none/little debt and they should be able to make enough money for quality journalism and a tidy profit. Advertising online is valuable and one can get good money for ads on sites people really like to read. One may argue that this is already happening today.
- Perceval 17y agoSo it seems as though the railroad metaphor in the Economist blog was apt: once the railroads/newspapers could no longer use finance in order to establish monopolies and then extract monopoly rents from their customers, it was good old competition that did them in. There was a good article on a New Republic blog examining how Politico has managed to grow and make a profit, even in print, while traditional newspapers have continued to wither: http://www.tnr.com/article/the-scoop-factory?id=82d8d496-d402-4863-b98d-8967de7cc6ab http://www.tnr.com/article/the-scoop-factory?id=82d8d496-d40...
- hristov 17y agoNot sure about that metaphor. I don't know much about the railroad's pricing but it seems to me what did them in was that the government decided to subsidize their competitor. The government poured trillions of dollars into highways and there just wasn't much the railroads could do. The railroad is actually more efficient than the road so it is a very bad metaphor for a paper newspaper. Of course that did not matter once the government started making roads and offering them for free to all car owners.