Specifics on Newspapers from 'State of News Media' Report
Posted: 3/16/2009  |  By: Jennifer Saba
The business of journalism is quickly running of out time to transform its model, a new study from the Project in Excellence in Journalism found.

The State of the News Media Report -- the foundation's sixth edition -- is also the "bleakest" confirming massive job losses, plunging advertising revenue and a drop in profit margins.

The authors of the report said that newspaper advertising revenue fell 23% in the last two years, accounting for the major job cuts in the industry. Nearly one out every five journalist working for newspapers in 2001 is now gone and that this year "may be the worst yet" for layoffs.

The severe recession has only hastened the decline. The report estimated the downturn "at least doubled the revenue losses in the news industry in 2008" and "it swamped most of the efforts at finding new sources of revenue. In trying to reinvent the business, 2008 may have been a lost year, and 2009 threatens to be the same."

Compounding this problem is that more people migrated to the Internet "fairly dramatically" in 2008 with visits to the top 50 news sites increasing 27%. At the same time, the amount generated from online advertising has fallen due to a glut of inventory. The report said that the average rate charged per 1,000 views dropped in half to a paltry 26 cents.

"At least in the short run, a bigger online audience has worsened things for legacy news sites, not helped them," said the report

The report found the following major trends:

* The focus about how to finance the news industry -- particularly micropayments and nonprofit ownership -- is likely misplaced. "The micropayment idea was tried and rejected by users early on and has run into headlong resistance from online advocates," the report said.

And the non-profit model has limited resources. Tom Rosenstiel, director of the Project in Excellence in Journalism, said $20 million in donations is currently underwriting journalism. "That doesn't come close to compensating the cost of operating newsrooms today," he said adding that a cable model where a news fee built into monthly Internet access is more promising.

* Power is shifting to the individual journalist from the news outlet with more people seeking out names through search, e-mail, blogs and social media.

* News organizations are focusing more on pushing online content out rather than bringing audiences in to the site.

* The idea of partnerships -- shared content between or among former rivals -- "may offer prospects" for the future business model.

* The rise of cable news is accelerating the "minute-by-minute judgment" in political journalism.

* The press was much more "reactive" and less enterprising in its campaign coverage. In one example, the report cited that in 1992, The Washington Post produced 13 big profiles of candidates while in 2008 it was only three.

For all the dreariness surrounding the industry, Rosenstiel pointed out that newspapers have a surprising amount of strength. He doubts that a major city in the United States will lose a newspaper in the foreseeable future. "We don't really think that is likely to happen in 2009 or really likely to happen anytime soon," he said. "[Newspapers'] problem is fundamentally a revenue problem, not an audience problem."

Many newspaper operators have operating capital that is "still pretty robust," Rosenstiel said. "Profit is more the norm, than not."

The report found that on average operating profit margins for newspapers are about 11%. However the margins are falling and are often not enough to cover debt payments for some companies.