Black and White, in the Red

Newspapers in the U.S. and elsewhere are now under siege as their bases of power - readers and advertisers - flee to the Internet. The managements have thus been forced to seek creative ways to deal with their losses

Last week the small kingdom of Bhutan, surrounded in the north by China and from the south by India, made history: Its first print newspaper saw the light of day. The Christian Science Monitor is also making history this year: On November 25, the American newspaper will celebrate 100 years since its establishment. However, that event is being marked in a completely different way than that of the Bhutan paper.

On Tuesday of last week, the management of the Monitor announced that, in view of its continuing financial losses, as of April 2009, its printed version will change from a daily to a weekly, and the ongoing news updates will be posted on the paper's Web site. A reputable media organization that reports on developments from all corners of the globe - and which, despite its name, does not proselytize - the Monitor is not the first newspaper in the United States to move away from print so extensively and to shift its focus to the Internet, but it is the largest, the best known and the most respected paper to have done so thus far.

The U.S. newspaper industry has been suffering for 20 years from a drop in the number of readers. In 1984, the daily papers boasted 63.3 million readers; now that number stands at less than 50 million. The proportion of adults who read papers there has been dropping for at least 40 years. One major reason for this is cable television; however, it never had a seriously detrimental effect on newspapers' income; they continued to be profitable. Most of them have a monopoly in the areas where they are distributed and therefore did not have to worry about that.

But in the past five years, the medium in the U.S. and elsewhere in the world has been under siege, as its two bases of power - readers and advertisers - move over to the Internet. At first it was a gradual process, then it picked up and now it is happening at a dizzying speed. In the six-month period that ended in September, for example, the weekday readership of the top 500 U.S. newspapers fell by 4.6 percent, as compared with the same period last year.

So far, unlike the Monitor, most newspapers have dealt with the crisis in the sector mainly by cutting costs and dismissing workers. And now that the economic crisis is quickly turning into a recession, the dismissals are becoming more far-reaching and frequent.

This process is taking place even among the most established publishers in the U.S. Last week, The Los Angeles Times fired 75 workers, after dismissing 250 at the beginning of July, and cutting the number of pages in its print version by 15 percent. Also last week, Gannett, the largest newspaper publisher in the U.S., announced that it would lay off 10 percent of the employees at its local newspapers.

Other newspapers have tried to join forces to control costs. This process is not new: About 150 years ago, a group of U.S. papers set up the Associated Press, which generates news items for its clients in a way similar to that of the Itim news agency in Israel. But lately, many of the country's newspapers have become angry about the way AP is run and the fees it charges, and have left it or threatened to do so. Presently, such a group of papers in America's Northeast is examining the possibility of sharing content.

The unimaginable

Now, for the first time, some newspapers are doing something that was previously unimaginable: They are "firing" readers. The managements of these papers, aware that there are readers who do not bring in much of a profit or even cause losses - such as those who do not pay for their copies themselves - have checked their databanks and stopped sending papers to people who do not help their publication's financial situation.

Such steps are a means for dealing with cyclical economic changes. But when a sector of the economy undergoes such paradigmatic changes, alterations probably have to be made in the business model. Newspapers the world over, however, still cling to the traditional models. The reason is simple: Many are profitable and believe that only print products can still help sustain the papers' economic well-being and the influence of their owners, editors and management. An online newspaper with one million readers is still a much smaller enterprise than a print newspaper with one million readers, or even a printed paper with a quarter of a million readers.

Also, newspapers' managements, workers and suppliers specialize in print products. The papers employ large numbers of workers and operate on a heavily industrial basis, very different from the online media, which are much less labor and capital intensive, and rely much more on innovation and technology. However, reality is pushing papers to try their hand at new models. The most widespread innovative model is the free newspaper, but it is thus far unclear whether it will prove economically viable.

On the online front, there is more innovation. It is at least a decade since newspapers simply made do with downloading their print editions onto the Internet and hoping for the best. Today Web sites are updated much more quickly and even compete with their own print editions over the right to be the first to publish scoops.

Recent innovations include the exploitation of various social elements, from basic ones such as blogs, to incorporating fully fledged social networks into their news sites; displaying content provided by third parties, including readers and even competing organizations; using advanced video techniques; accelerated entry into portable Internet, which has gained significant momentum in the wake of the launching of the iPhone, which has dramatically improved the experience of accessing content on cellular phones; and even letting readers tap into the wealth of information available to the newspapers, so as to create new content products themselves.

On the business front, managers of newspapers' Internet sites are much more prepared today than in the past to consider larger-scale and more direct advertising methods, and to collaborate with commerce sites.

Meanwhile, however, none of these experiments has produced a model that can compensate newspapers for the loss of revenue on their printed products, nor have they even come close to doing so. True, the number of readers of online newspapers is increasing significantly, but the additional revenue from the Internet constitutes only one-fifth to one-quarter of the total loss of revenue from the printed editions.

The powers-that-be at The Christian Science Monitor apparently came to the conclusion that the Internet will never compensate financially for the printed product, and that they have to reconcile themselves to a significant reduction in their business. After all, it is not clear whether this step will reduce the number of the newspaper's readers, if at all, or its impact on decision makers. And if the message is indeed more important than the medium, maybe this is not such a bad decision.