Craigslist & the death of newspapers

John Podhoretz has a lengthy article at Commentary examining the decline of the newspaper business.

Podhoretz uses the opening in Washington D.C. of the new glass, marble and steel $475 million Newseum - meant by the newspaper industry as both an explanation to the public of what it does and a tribute to itself - as a launch point for a lucid, informed and detailed discussion of factors affecting the decline and impending deaths of American newspapers.

The atricle's titled The News Mausoleum.

I want to share with you the portion of Podhoretz's article that deals with Craigslist. It provides a relatively brief history of how Craigslist came to be what it is and how its impacting the newspaper industry.

Here's that portion of The News Mausoleum, after which I'll make a few comments below the star line and invite your comments.

From Podhoretz - - -

The personal computer was going to be the way to reach these and other new people, if only someone could figure out how. Ironically, the breakthrough in this regard—the development in 1993 of the graphic interface called Mosaic, which gave birth to the creature known as the “website”—turned out to be far cheaper than any of the visionaries could have imagined.

Still, they were more forward-thinking than their counterparts in most other industries when faced with similar challenges. Not only did the news business know what was coming, it even knew where it was going to be hurt most severely.

Katharine Graham, who ran the Washington Post, once told me that the primary reason she was worried about the future of her paper lay with the threat posed by the computer to, of all things, classified advertising.

That conversation took place in 1987—seven years before a man in San Francisco started a local bulletin board to let his friends know about cultural events in town. His name was Craig Newmark, and he, more than any other person, is the Shiva of the newspaper business, the destroyer of worlds.

Newmark began publishing his “list” as a website in 1995, only two years after the invention of the web browser and in the only region in the United States where people had grown truly comfortable using the new medium then known as the World Wide Web.

In short order, his friends told other friends, and Craigslist.org became popular.

His readers began posting both job listings and items for sale. These were arranged in a simple and comprehensible manner, were easily searched, and were free. The site soon expanded to other cities.

Craigslist became the first place any urban dweller under the age of thirty would go to find a used couch, a part-time job, or a roommate. In short order, realtors, too, began listing apartments and houses for rent. There arose an entire web-based industry following the Craigslist model: help-wanted sites like Monster.com, journalismjobs.com, and mediabistro.com.

Classifieds have always been the most profitable element in any newspaper. They divide a broadsheet page into as many as 200 ads, each one sold separately and at full price (unlike larger display advertising, which is often sold at a discount).

The rule of thumb is that the more spaces can be sold on any given page, the more money can be made per ad. Thus, two half-page ads can be sold for more than a full page, four quarter-page pages can be sold for more than two half-pages, and so on.

The rise of the Craigslist model has devastated classified advertising in newspapers, once the only place in a city to sell a used car or list a job opening.

True, today’s newspapers have duplicated all their classified ads on their websites, and they have attempted to best Craigslist and its emulators by offering different features, new ways to search, and so forth.

But the result is harder to use, and in any case why should you spend $100 putting something up for sale in the paper when you can post it on Craigslist for free? Why list a job for $200 when you can list it for $10?

There is no answer to these questions. The only solution is for newspapers to lower their prices to Craigslist levels, but at that point someone else will come along and restore the entirely free model, and the end result will be the same.

Last year, classified advertising dropped nationally by more than 16 percent; overall, it is down 34 percent since 2000. Over the next ten years, the cash cow of any newspaper will dry up entirely.(emphasis added)

Feverishly anticipating the demise of their 19th-century industrial product, newspapers are once again renewing their efforts to take advantage, somehow, of the growth of the Internet. But they are uniquely ill-positioned to do so.

When it comes to reporting the news, their greatest competitive asset is the size of their news-gathering and news-writing staffs. But they can afford those staffs only because of advertising revenue. And, on the web, they will generate only a fraction of the advertising revenue they have been able to generate in print as an effective monopoly. Moreover, and unlike the case with every other rival they have faced in the past, the technical cost of competing with them is astonishingly low.

All they will have left is a very powerful brand—the term we now use for what used to be called a name. That brand will be worth a very great deal, but it will not be worth enough on its own to produce the kind of comprehensive news portrait that has been the defining purpose of urban and regional newspapers for a century and a half.

That is why, to many observers, it seems a certainty that these brands will eventually be bought out by Internet monoliths, like Google and Yahoo, which are hungry for “content.”

Podhoretz' entire article is here.

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Comments:

Some of what's hit the newspaper industry in the last 20 years it just couldn't fend off.

Podhoretz does an excellent job explaining why some of the industry's problems are not of its own making.

But some are, most notably the failure of so many newspapers to "protect the brand."

I'm constantly amazed by the number of journalists who, on the one hand, say they realize "the public's confidence in our integrity" is their most valuable asset, but who, on the other hand, don't seem to understand how to protect and strengthen that confidence in their integrity. In fact, they often kick it away.

You all know where I'm going.

Many journalists act as if the editor's Sunday column trumpeting "our resolve to bring you the news fairly and accurately" is all it takes to keep the public's trust.

They're wrong, of course. Just as technology is exposing newspapers to new competition for ad revenue, it's exposing the flaws in their news reporting.

When those flaws are pointed by readers who, thanks to technology have "the hard data," many journalists, rather than correcting, resort to spin, denial, and the like.

Thirty years ago they could get away with that. No longer.

Well, I've said enough. I'd like to hear what you have to say.