That was the simple but chilling valuation analysis of the sage of Omaha when asked what he thought of the future of the newspaper business at his annual shareholders meeting. He said that newspapers had lost the key characteristic that made them “essential” and thus could see no floor for stemming the losses from the traditional business model.
Against that backdrop, the New York Times Company negotiated past its deadline this weekend with unions over the future of the Boston Globe. Reports indicated that unless there were major concessions agreed to by the unions, the Boston Globe would be shut down.
According to USC’s Annenberg Center for the Digital Future more of us are going online to get our news. The latest survey by the Center found online readership up to 53 minutes in 2008 from 41 minutes per week the prior year. More telling, of those survey 22% said they had canceled at least one newspaper or magazine subscription in the last year.
I keep coming back to Buffet’s concept of “essential” and while I see his point this is not a new problem for the newspaper business. Radio and television long ago eliminated the exclusive control newspapers had over access to deliver news and other content to the public. And yet, newspaper survived for another 100 years. Today, online advertising, while growing, does not yet have the saturation potential that newspapers delivered every morning to our front step. The challenge for newspapers is not really their capacity to change, but their unwillingness to do so—and do it fast enough to avoid bleeding to death.
The typical newspaper response to these business model assaults has been to cut the news gathering staff—the content—instead of the back office cost of printing, logistics and delivery. The great irony in the death of once great newspapers is that—at the end—it may have been self-inflicted by a lack of vision about how to remain “essential” to readers and advertisers.
There is a reason internet use for online access to news is growing. It is because—at the heart of the matter—we want content—meaty, honest, and timely coverage of breaking news delivered without spin or political bias. And then, we want opinion and analysis delivered side by side with news to help us understand what it all means and its implications. The technology is available today to save newspapers; they simply have chosen not to face their traditional business model failures and the encroachment of the internet and other technologies until faced with certain death by the fall of advertising revenue accelerated in the current recession.