30 July 2009 · By Earl J. Wilkinson
Gannett, McClatchy, and the New York Times Company last week reported unexpected second quarter profits on the backs of cost-cutting efforts amid 30% declines in advertising.
Predictably, the chorus of “boos” from the blogosphere's intelligentsia gives no credit to the corporate blood-suckers who have sapped the life out of the status quo in our industry – not a moment of pause, not a back-handed compliment, nothing.
Well, those corporate types have saved their companies from most doomsday scenarios – at least for the time-being. And knowing a few of those blood-suckers personally, I know they are desperately trying to turn the ship of state in ways that reinvest those profits in the multi-media transformation that sometimes gets lost between the rhetoric of conferences and the reality of “shareholder value.”
The popular spin is that news corporations should reflect on the cutbacks needed to achieve these profits in bad times. That they should admit the errors of their ways. That the bloodbath in newsrooms has caused immeasurable harm. And – wait for it – now that we've re-established profitability, maybe we should consider restoring some of those editorial department jobs.
Numbers are a funny game. In the talking sport of newspapering, it's been suggested by prominent academics that an investment in “quality” – i.e., newsroom employment – equals better circulation.
Yet numbers can say many things.
For example, since the late 1970s it's a statistical fact that for every newsroom employee hired newspapers lost circulation.
Taking newsroom employment data from the American Society of News Editors (ASNE) and Sunday circulation data from the Newspaper Association of America (NAA), one can see that in 1980 U.S. daily newspapers employed 47,000 newsroom employees and generated 62.2 million circulation – that's 1,323 copies sold per newsroom employee.
Fast-forward to 2007 where U.S. newspapers employed 57,000 newsroom employees and Sunday circulation of 50.7 million – or 890 copies sold per newsroom employee. In other words, during a period when our industry employed 21% more newsroom employees, circulation fell 18%.
With or without an industry recession, something had to give.
By taking 1980 metrics and applying them to 2007, U.S. newspapers needed to shed nearly one-third of employees to balance newsroom employment with copies sold per employee.
And since the blogosphere loves numbers, had publishers kept to those 1980 ratios of newsroom employees to circulation and assuming an average US$25,000 per FTE in that time period, U.S. newspapers would theoretically have had an additional US$6.5 billion to invest in marketing, research, and business-building exercises that they otherwise chose not to spend money on – assuming, of course, that management doesn't pocket those savings.
But they chose to invest in The Product. And an adjustment needed to be made before we crashed forthrightly into the abyss.
What did publishers do in the past two years? In 2008, U.S. newspapers shed 18% of newsroom jobs, and you should expect to see numbers similar when 2009 accounting is done. Despite these efforts, there are no guarantees that newspapers have met up with 1980 benchmarks.
(If you don't like 1980 benchmarks, pick another year. If you don't like Sunday metrics, use average daily metrics. I'm trying to be kind with the Sunday selection. But pick something. Anything. Enough hypothetical data!)
These cutbacks were at least two decades overdue.
As the smoke clears from these tough cuts, the issues now are about:
Yet corporate managements haven't proven that they can reinvest these profits smartly – in database technologies, in sales forces that know the value of each medium, in New Age marketing beyond TV commercials, in research and development that's actionable. And, yes, in editorial outputs that connect with audiences.
“Quality” is not pouring more money down the drain of a broken system. “Quality” is connecting what we do with what our audience needs. What could our industry have done with US$6.5 billion in connective tissue during the past three decades? Instead, we chose to build a bigger magnet.
It's time to throw out the old playbook and write a new one.
Three cheers for those who have guided us out of the abyss!
Yet the changes have just begun.
Author/Contact: Earl J. Wilkinson is executive director and CEO of INMA. He may be reached at email@example.com or via Twitter at @earljwilkinson. This post is part of The Earl Blog at INMA.org.
blog comments powered by Disqus
Earl J. Wilkinson is executive director and CEO of INMA. In his interactions with INMA members worldwide, Earl has one of the broadest views of newspapers of anyone serving our industry today. He is a trendspotter and a leading advocate for cultural change, transformation, and innovation. This blog represents his unique view of the emerging global newsmedia industry.
Click below for “News Media Outlook 2013: The Print + Digital Dynamic in Exponential Times”
April 2013 ( 1 )