Back in July I interviewed the management of most of the major syndicates regarding how they viewed their future in an industry that many think is in decline. For the most part, they were very upbeat, positive and even bullish on the newspaper industry. They probably could have sensed from my line of questioning, that I entered into the interview with a certain gloomy bias.
But along comes an article that once again validates the doom that nearly encapsulates my view of the newspaper industry. For anyone whose work/income is tied to the newspaper industry, this would be an important piece to read. It’s author, Paul Gillin, maintains that the metro paper as we know it will be gone within a decade.
So here’s where the spiral begins. Newspapers’ profitable classified advertising business will be all but gone in 10 years, a victim of the vastly superior results and economics of search-driven online advertising. Display advertising will be under intense pressure from alternative media, including not just Web sites but an emerging class of small print publications and supermarket advertisers that serve local audiences (print publishing is getting cheaper, too). The department stores and cell phone companies that sustain newspapers’ display advertising business will apply intense pressure on papers to bring down their prices.
Newspapers will be forced to lay off staff in order to maintain margins. Cuts in services will lead to cuts in editorial coverage, making papers less relevant to subscribers. As circulation declines, advertising rates will have to come down to remain competitive. This will put more pressure on margins, leading to more layoffs, more cost cuts, more circulation declines and more pressure on margins. Once this spiral begins, it will accelerate with breathtaking speed. And it has already begun.