Posted on 04/16/2005 10:29:58 PM PDT by CHARLITE
Craig Newmark already has tormented newspapers by creating a Web site where anyone can post ads at little or no cost, capturing an ever-growing share of the classified advertising market that had been one of the industry's most dependable sources of revenue.
Now, the founder of Craigslist.org is pondering ways to improve upon newspapers. He smells an opportunity, convinced that publishers are more interested in preserving short-term profits than pursuing online audiences who still passionately care about journalism but don't read newspapers.
``There is a lot of change coming and I want to make whatever contribution I can. I'm just not sure how yet,'' Newmark said.
Newmark's brainstorming may lead nowhere, but smarter newspaper publishers have learned to take the ideas of Internet entrepreneurs like him seriously as online search engines, help-wanted sites, the self-published journals known as ``blogs'' and other innovations chip away at readership and revenue.
A sense of urgency and concern has been running through the industry as news executives prepared for the annual meetings of the Newspaper Association of America and The Associated Press in San Francisco Sunday through Tuesday.
Attendees won't have to stray far from their hotels to get a snapshot of the innovative technology companies threatening newspapers' futures. A few miles away are the headquarters of not only Craigslist and assorted blogging services but also Google Inc. and Yahoo Inc., whose search engines make it increasingly easy for readers to stay informed without ever opening a newspaper.
``There are pockets of people within every (newspaper) who think we should be doing more on the Internet, but there are also other pockets of people who wish it would just all go away,'' said Ian Murdock, senior vice president of the San Francisco Chronicle.
Ignoring the online threat doesn't seem to be a viable business plan.
The Internet's U.S. audience has steadily climbed during the past decade, reaching 164 million people who spent an average of 84 minutes per day online during March, according to comScore Media Metrix. And while they're surfing the Net, they're often reading stories most newspaper publishers offer for free.
Meanwhile, the total paid circulation of U.S. newspapers has been declining for nearly 20 years, dwindling from a peak of about 63 million to about 55 million, the association said.
The newspaper industry is finding it particularly difficult to attract the younger readers prized by advertisers. Just 39 percent of adults 18 to 34 years old read a newspaper last year, according to the association. More than two-thirds of adults 55 or older still read a paper.
``Newspaper readers are dying off faster than they can be replaced,'' said industry analyst John Morton. ``It's a trend that's been exacerbated by the Internet. It's a fairly deep problem and it's not going away.''
Most newspapers remain moneymaking machines, cranking out operating profits of roughly $20 for every $100 in sales, Morton estimated. But most also realize that traditional profit sources are drying up as advertisers follow readers online.
Many publishers have reacted by cutting newsroom budgets in order to continue generating the earnings growth demanded by their shareholders, but some industry experts consider such moves suicidal.
By cutting costs when they should be spending more money to become more competitive on the Internet, newspapers are heading toward a ``profitable demise,'' said Jay Rosen, a New York University journalism professor who recently published a pessimistic essay about the industry's future.
``They won't stop the gravy train even though the engine is broken,'' Rosen said. ``How does such a thing eventually stop? It crashes.''
Newspapers can still save themselves, said Internet analyst Greg Sterling of the Kelsey Group. He still sees plenty of upside because most newspapers possess well-known local brands, backed by large staffs of experienced workers to report the news and sell ads.
``The market is still theirs to lose, but they have to do something relatively soon to make the consumer experience better,'' Sterling said.
Some of the largest publishers appear determined to become more prominent online players.
In the past few months, The New York Times Co. paid $410 million for About.com, which runs a network of special-interest Web sites, and Dow Jones & Co. bought financial news site MarketWatch Inc. for about $500 million. The Washington Post Co. recently bought the online magazine Slate from Microsoft Corp. for an undisclosed amount.
And just last month, Gannett Inc., the Tribune Co. and Knight Ridder Inc. each bought a 25 percent stake in Topix.net, a Web site that indexes thousands of online news stories.
``When we started talking to these guys, we were blown away about how pragmatic and astute they were about what's happening on the Internet,'' said Rich Skrenta, the CEO of Palo Alto-based Topix. ``These are heads-up, savvy media people.''
The same three newspaper publishers also are partners in Careerbuilder.com, a help-wanted site that has helped them counter the threat from online rivals like Monster.com and Craigslist.
Other publishers haven't fared as well against Craigslist, which remains an 18-employee operation, run out of a San Francisco home. The service offers classified ads in 105 cities in 21 countries, and is still growing organically, as countless people contribute free postings.
Craigslist makes its money by charging $25 to $75 to post help-wanted ads on sites focused on the San Francisco Bay area, New York and Los Angeles, but most of its ad postings remain free.
By comparison, a comparable classified ad in a major newspaper might cost as much as $700, according to a study commissioned last year by Classified Intelligence, a media consulting group. The same study estimated Craigslist deprived Bay Area newspapers of $50 million to $65 million in annual revenue.
Craigslist CEO Jim Buckmaster believes the study exaggerates his company's impact because the service attracts many listings that would never appear in a newspaper. ``I don't think it's a zero-sum business.''
Still, he said he's glad newspapers are facing more competitive pressure.
``Newspapers had a monopoly on their local advertising markets in the past, but monopolies don't work on the Internet,'' Buckmaster said. ``The more choices people have, the better.''
Oh here's a thought
Try hiring reporters that actually report the facts of a story and not their own personal agenda
If I wanted a liberals point of view .. then I would go read The Nation and David Corn's articles about how great the UN is
What has anyone heard about Craigslist?
Many publishers have reacted by cutting newsroom budgets in order to continue generating the earnings growth demanded by their shareholders, but some industry experts consider such moves suicidal.
The newspaper business is a business: its important customers are its advertisers, not its subscribers. If a local newspaper can get by running lots of wire stories with just two or three local stories per day, pull in lots of advertisers, and its subscribers will let it go to more than 50% advertising to content, it's a success.
If a newspaper runs lots of good content developed by its own staff but has few ads with a high percentage of each page devoted to content rather than advertising, it's most likely a failure.
The death knell of newspapers as more people discover it and use it. craigslist seems to exclude small towns, which may mean small town newspapers get a reprieve for a while.
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