How to Sink a Newspaper - Free news for online customers is a disastrous business plan
Collectively, the American newspaper industry spends $7 billion on news and editorial operations. This includes everything from copy editor salaries to sports travel expenses. In addition, the Associated Press spent about $600 million world-wide in editing and creating news. By offering this news for free, and selling it to aggregators like Google, Yahoo and MSN for a small fraction of what it costs to create it, newspaper readership and circulation have declined.
These declines are accelerating. In 2004 and prior years, industry circulation declines were usually less than 1%. Since March 2005, these declines have been 2%-3% per year. With declining readership comes declining ad revenues, which are followed by layoffs.
The newsroom layoffs are most troubling, as less news with less quality, context and details results in more declines in readership and later, declines in advertising. If the $7 billion spent covering news becomes $6 billion, and later $5 billion, it is not just the newspaper industry that gets hurt. Journalism will be diminished in America with less investigative and enterprise reporting; indeed, less reporting of state houses, city halls, school boards, business and sports. Clearly a lot is at stake.
It is time for newspapers to reconsider the ultimate costs and consequences of free news.
Comment: We have the USA Today and the Star Tribune delivered. I find the Sunday Star Tribune a complete waste of time and never read it (but Kathee and Roger do).