The crisis in newsgathering

By Phil Power

All across America, newspapers are in crisis.

In Michigan, the Detroit Free Press and Detroit News have cut home delivery to three days a week in an attempt to move advertising and readers to a “virtual newspaper” online. Shrunken “express editions” can be bought at newsstands or taken through the mail on the other days.

The Ann Arbor News will cease publication July 23, while the Flint Journal, Saginaw News and Bay City Times are going to three days a week publication. The Journal Register Company, owner of the Oakland Press, Macomb Daily, Daily Tribune of Royal Oak and many weekly newspapers throughout the tri-county area, is in bankruptcy.

It’s the same thing around the country. In Boston, only last-minute concessions by the unions saved the venerable Boston Globe from ceasing publication. The Seattle Post-Intelligencer has shut down, as has the Rocky Mountain News, while the industry buzz is that even the New York Times itself could be in trouble, saddled with too much debt and inadequate earnings to cover it.

This is an industry I know very well. Full disclosure: I spent more than 40 years as a publisher in the community newspaper segment of the industry. I sold the assets of my company, HomeTown Communications Network, Inc., which included the Observer & Eccentric Newspapers, to the Gannett Company in 2005.

So I’m both biased and heartbroken at what’s happening to my old business, including the announcement that most of the Eccentrics will be shut down at the end of May.

Why is this happening? Two things have come together in a perfect storm that is crushing what had been one of America’s most profitable and stable business models.

The first was the rise of a truly disruptive technology combining the computer, the web and all the companies that took advantage of the revolution in distribution of content. A consequence of this new technology is that the revenue base of the newspaper business model – advertising – has essentially gone away. (Most newspapers have traditionally shown a revenue profile of 75 percent advertising revenue and 25 percent circulation charges.)

The Internet has made it possible to distribute content through the web without having to pay for newsprint, ink and other costs of distribution. Not only that, but the lifeblood of many newspapers – advertising – has largely migrated to the Web, thanks to outfits like Google, which offers customers “pay for click” rates based on actual user activity. Classified advertising which sustained many newspapers for decades has migrated to sites like Craigslist, where ads are free — and some have been sorted into classifications that wouldn’t have been appropriate in family newspapers.

Midway through this revolution, the newspaper industry made a fundamental strategic error. It allowed free distribution of its content via the Internet. Instead of charging customers for access to their databases or for any individual news story, newspapers figured they would gain “eyeballs” on their web sites and grow Internet-based advertising revenue. True, but the unintended result was to train former newspaper readers that they could get for free what they used to pay for. And most people under 30 don’t care to read newspapers; they prefer getting their information through the Internet.

The other blow has been the catastrophic national recession, which has resulted in the near-collapse of much advertising, period.

Even with newspaper-owned web sites showing substantial increase in reader traffic, the recession has dried up advertising of any sort, whether automobile, real estate, retail.

By the time the country comes out of the downturn, it may be too late for many newspapers.

This presents a danger to our democracy that is so huge it almost can’t be exaggerated. Mark my words. This will lead to a national catastrophe so large as to be … invisible.

Let me explain. For more than a century, there were people we call “reporters” working in every community in America. Their job was to wander around asking impertinent questions, which became in turn the basis for stories published in local newspapers.

Some reporters were good, others not so much. Some newspapers were fair-minded and accurate; some were awful.

But newspapers had two essential functions. First, they were how the local community carried on a dialogue with itself. Whether it was weddings and deaths, the doings of the city council, the exploits of the high school football team – all these things and more represented the substance of a community talking with itself, a process mediated and facilitated through the local newspaper.

Moreover, the newspaper – if it was doing its job – was an institution providing the public with oversight over the conduct of public affairs. Without the tough-minded work of reporters for the Detroit Free Press, Kwame Kilpatrick would still be a corrupt and flashy mayor. Without the work of the Lansing press corps, the outrageous inability of our state’s leaders to put our financial house in order would be hidden from public view.

There were 60,000 print reporters and correspondents around the country three years ago, according to government records. But according to PaperCuts, a website that tracks industry job losses, an astounding 23,000 of those jobs have been lost since January 2008.

Five years from now, there may be less than half that number. And worse, they’ll mostly be concentrated in the big news centers of New York, Washington, Chicago and Los Angeles.

And then what will happen to places like East Lansing, Traverse City, Livonia and Farmington? No reporters and no local newspapers means no oversight in the public interest. No oversight means a field day for corruption and incompetence.

That will be a catastrophe. But it will be largely invisible. Because nobody will notice what no longer exists.

Now maybe the blogosphere will contribute a kind of citizen journalism that can make up for the death of local papers.

But it’s hard to see how the posts from bloggers can be subjected to the kind of fact-checking and professional standards that used to be what newspaper editors used to do.

Far better yet, maybe, just maybe, people in a community will decide that their local newspaper is a fundamentally important public utility that should be sustained by local taxes, like the public library. (Managing the oversight and governance of such an institution might be tricky, but it’s worthwhile taking a careful look.)

Alternatively, as is the case in some communities, perhaps philanthropic foundations will pay for web-based local news content.

Or on the other hand, communities may decide their own local newspaper is so important that they’ll rise to support it.

I was heartened to learn over the weekend that citizens in Birmingham have persuaded the Gannett Company to delay killing their Birmingham Eccentric, giving it a reprieve at least till July, by which time the staff needs to drum up 3,000 additional subscriptions.

Most often we do not notice what we do not know … Which is why people die of cancer. My greatest fear is that the loss of local newspapers will produce an information, oversight and conversational vacuum that will fundamentally change our lives.

And change them, that is, not for the better.

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Editor’s Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics, and a former chairman of the Michigan chapter of the Nature Conservancy. He is also the founder and president of The Center for Michigan, a centrist think-and-do tank which publishes the Michigan Scorecard. The opinions expressed here are Power’s own and do not represent the official views of The Center. He welcomes your comments at ppower@thecenterformichigan.net.