Stop the press! The future of US journalism

American newspapers are reeling under the recession, with advertising and circulations slumping. Now the industry is looking for new sources of revenue. Stephen Foley reports

It is 4 July 2009, Independence Day in the US, and there are fireworks online. A nation of internet users log on, click for their favourite newspaper sites to catch up on the weekend news, only to be stopped in their tracks. On website after website, the following message: "Dear reader. In order to save the newspaper industry and promote quality journalism, it has become necessary to begin charging a subscription for online access. Click here to enter your credit card details."

Will it happen? Surely not in such a dramatic fashion, but the issue of charging for online content is suddenly at the top of the industry's agenda, a decade after newspapers began building websites that allowed their readers to look at the day's news for free without buying the paper.

The Independence Day "big bang" is a tongue-in-cheek suggestion from John Morton, whose Morton Research Inc in Maryland has analysed the newspaper industry for decades. "I think it would be a fitting day in a nation founded on the principle that a free press is essential to the functioning of government," he said.

An all-at-once move would most likely attract the attentions of the competition authorities, suspicious of collusion. But the point is that the long, slow decline in print edition circulations is now being disastrously compounded by a slump in advertising revenues. Several prominent US papers have already stopped the presses for ever, dozens more are threatened with closure or bankruptcy, and almost all the rest are cutting staff and scaling back their coverage. Something has to give, and soon.

An increasing number of desperate industry executives have concluded that squeezing dollars directly from online readers is the only way to make up the shortfall. Sceptics call it suicidal. Mr Morton says it will be a "wrench", but that newspapers now are being "nibbled to death" anyway.

"Most newspapers decided early on that they had to offer everything for free on the internet, but that only opened the door to aggregator websites which profit from other people's journalism.

"Although it brought in some advertising, online revenues accounted for only about 8 per cent last year and they haven't grown very robustly. One reason is that online advertising is priced cheaply, because there is so much competition. The way the online model is now, it will never be able to support the journalism that is the lifeblood of what newspapers do."

Of course, the newspaper industry did not just get a bump on the head during the frenzy of the Nineties and start misreading the meaning of "free" in the phrase "free press". There have been repeated attempts to charge for access to parts of newspaper's sites, typically a ring-fenced area of premium content such as pieces by columnists and historic articles.

The trouble is they have never generated the numbers of subscribers needed. Even The New York Times abandoned its two-year experiment in subscription services in 2007, having stalled at just 227,000 paid-up users.

The industry's trade body in the US has been trumpeting to advertisers the growth of online readership of newspapers, which was up 7.9 million in January to 74.8 million visitors, an increase of 11.9 per cent over the same period a year ago. Much was made of a report that the Los Angeles Times now gets enough money from ads on its website to cover the newsroom budget, although there are many other overheads that it does not yet cover.

But now, after years of exponential growth, online ad revenues are flatlining, so executives are again debating whether and how they might make online fees stick this time around. Most are still at the hope, not the expectation, stage of their deliberations. It is a delicate balancing act and much damage could be done if the introduction of fees is not handled delicately. We do know the identity of the first to break from the pack. The Long Island-based daily Newsday, one of the two paid-for tabloids in the New York metropolitan area, used to be part of the Tribune Group, which owns the Chicago Tribune and the LA Times, but it was sold last year after Tribune's owner, Sam Zell, struggled (and ultimately failed) to prevent that group from falling into bankruptcy. Newsday's new proprietor is the television giant Cablevision, which has signalled it will be introducing fees for online journalism.

"When we purchased Newsday, we were aware of the long-term issues facing the traditional newspaper industry," Tom Rutledge, the chief operating officer, said on a conference call after Cablevision's results a fortnight ago. "We plan to end the distribution of free web content and make our newsgathering capabilities a service to our customers." The company later described the future Newsday site as "an enhanced, locally focused cable service", but quite what that means will only be fleshed out in the coming months.

"You can't just charge because you want to charge. You can't just flip the switch and start asking people to pay for things that are free now," says Alan Mutter, the Silicon Valley executive and former newspaper boss, whose blog Reflections of a Newsosaur chronicles the travails of the industry.

"However, if a new product is sufficiently valuable that customers will pay, or unique so that they must buy it from you, then it is possible."

The Wall Street Journal, purchased by Rupert Murdoch in 2007, is the only newspaper to keep most of its online content exclusive to subscribers. The wily old mogul talked about scrapping fees and making up the difference by charging advertisers more for access to an increased numbers of readers, but was talked out of it, concluding that the maths did not work.

The Financial Times has launched a special, paid-for service amalgamating news and data on China for interested readers. Other specialist experiments are sure to follow.

Rick Edmonds, media business analyst at the Poynter Institute, a Florida school for journalists, says there could be mileage in charging for downloads of the paper to mobile devices, particularly Amazon's Kindle and similar electronic books. He worries, however, that newspapers that introduce wholesale fees online will haemorrhage readers and lose more money in advertising than they raise from readers. Executives should concentrate instead on raising advertising prices by better targeting ads, he says, or perhaps suing Google News to get it to pay for aggregating news-papers' content.

Something must be done. Every week brings news of new disasters. Across the US, advertising revenues are falling at a faster pace than at any point in 37 years. Last month, two regional newspaper groups – Philadelphia News-papers, the owner of the famous Inquirer, and the Journal Register Co – went bust on the same weekend. On 27 February, the Rocky Mountain News reverted to the layout of its first edition from 1859 to publish its final edition under the headline "Goodbye, Colorado".

This week, McClatchy, which owns 30 daily papers, said it would shed a further 1,600 jobs, reducing its workforce to two-thirds of what it was a year ago as it struggles to manage a mountain of debt.

Tomorrow, workers at the 144-year-old San Francisco Chronicle will vote to accept hundreds of lay-offs and other concessions after Hearst, its owner, threatened to shut it down if it could not stem losses of more than $50m (£36m) a year.

Seattle's second-biggest paper, the Post-Intelligencer, is expected to go internet-only in the coming days after failing to find a buyer.

Even the biggest papers in the land are suffering. The New York Times Co, owner of the august Manhattan daily nicknamed the Old Gray Lady, was forced on the mercies of Mexico's richest man, Carlos Slim, who lent it money at a 14 per cent interest rate in order to replace loans coming due this year. The company had already axed the dividend it pays its owners, including the controlling Ochs-Sulzberger dynasty, and mortgaged its headquarters for $225m this week.

"This is a true crisis, and one of the most toxic economic environments in our lifetime," Mr Mutter says. "There is serious retrenchment going on everywhere, and the next phase of this is that many of the weaker papers in two-newspaper markets will succumb, or at least will metamorphose into something quite different. Many will become digital-only, or fully digital except for Sundays and maybe Thursdays, but they will stop trying to be seven-day publications."

In a widely read online discussion with readers, Bill Keller, the New York Times editor, declared himself "an incurable optimist about the future of good journalism". He said: "The law of supply and demand suggests that the market will find a way to make the demand pay for the supply... In the next year or two news organisations will have to make some major decisions about the role of print versus online, the balance of advertising revenue and subscription revenue, the extent to which they will chase a premium audience versus a mass audience, and so on."

In the interim, the bloodletting continues. Across the country's 1,400 titles, 15,000 jobs were lost last year, according to Paper Cuts, a website monitoring lay-offs, and the pace has accelerated since the New Year. Supporters worry that newspapers may be gutting the very thing they need to survive – an ability to produce must-read journalism. And another concern is developing, one about articles like this. They put advertisers off.

"Newspaper coverage of lay-offs in their industry tends to be disproportionate, and having newspapers talking down their own business is not helping," Mr Mutter says. "The people who tend to buy advertising are local businessmen. These people see each other at the golf club, they've read the stories, they say that the local paper is not what it used to be – and it becomes self-fulfilling."

Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Head of Marketing - London

£60000 - £85000 per annum: Ashdown Group: Interim Head of Marketing / Marketin...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Digital Project Manager

£25 - 30k: Guru Careers: A Digital Project Manager is needed to join an exciti...

Paid Search Analyst / PPC Analyst

£24 - 28k + Benefits: Guru Careers: We are seeking a Paid Search Analyst / PPC...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments