I forgot to post my comments to the Five Points Rotary on Friday. As you know, I hate to write anything (for public consumption, that is) without posting it here. And since it elaborates on a discussion we’ve had on a couple of recent posts (about the sorry state of the newspaper industry), I might as well go ahead.

Some of you will note that I’ve used the little self-mocking anecdote at the beginning before. Hey, it got me a laugh the first time, so why not stick with it? Only one person in the crowd had heard it before — a fellow member of the Columbia Rotary who was attending the Five Points club as a pre-emptive “make-up” in order to skip listening to Gov. Mark Sanford at our club on Monday (name withheld to protect the guilty). Anyway, here’s my speech:

Current and Future Challenges in the Newspaper Industry

Rotary Club of Five Points

10/9/09

Here’s a story that went over well during Health & Happiness at my own Rotary Club:

One Saturday several months ago, I was walking through Columbiana mall when I was accosted by a pretty young woman with an exotic accent who grabbed my hand and started buffing my left thumbnail with some device in her hand while extolling the virtues of a line of cosmetics from the Dead Sea in Israel. I was helpless in her grasp – how do you pull away from a pretty young woman who’s holding your hand insistently and standing so close that you smell the sweet fragrance of her chewing gum as she breathes into your face?

But, being unemployed and having no disposable income, I did manage to resist buying anything. Moments later, I posted something about the encounter on Twitter. By the time I left the mall, several acquaintances had Twittered back to say that they had encountered the same young woman, and had been less successful at resisting the sales pitch. My friend Mike Fitts wrote, “Yes, they’re ex-Mossad agents (you know, the Israeli secret service) who’ve gone into the Mary Kay business, I’m pretty sure. Three minutes in, I told them where the explosives were hidden.”

Bottom line, and the moral of the story:

If The State newspaper had these ladies selling advertising, I’d still have a job!

As you may know, I’m the former vice president and editorial page editor of The State, where I worked as an editor for 22 years. I was the best known of the 38 people who were laid off in March. The reason I don’t have a job now is that the newspaper couldn’t bring in enough revenue to pay my salary. I suppose I’d feel picked on and persecuted if not for the fact that, as a vice president of the company, I had sat in on senior staff meetings in which, for the last few years, each week’s revenue figures were worse than the week before – sometimes dramatically worse.

There was no way that the newspaper could continue paying all the people it once paid to write and edit the paper. People had been laid off before me, and people have been laid off since then, and while I’m no longer privy to those dismal weekly reports, I have no particular reason to believe the industry has hit bottom yet.

Note that I say, “The Industry.” This is not a problem peculiar to The State. In fact, sad to say, but The State is probably somewhat better off than the average. Other newspapers have closed, while still others – most notably The Chicago Tribune, have gone into bankruptcy.

Nor is it a problem confined to newspapers, or to papers in this country. I was interviewed by a journalist from France’s largest weekly newsmagazine earlier this week, and he spoke of how his publication is suffering. Nor is the problem limited to print: Conventional television stations, once gold mines for their owners, are suffering as well. But the problem is most acute in print.

What is the problem? Well, it’s not a lack of interest in news. The demand for news – indeed, for news conveyed by the written word – is a great as always. And it’s not competition from the Internet – not in the simple sense. But the Internet does play a huge role, just probably not in the way you think.

The fact is, no one is better positioned to bring you news on the Web than newspapers. They still have far more reporting resources and expertise than any other medium in local and state markets. And it’s the easiest thing in the world for newspapers to publish their content online – far easier, and far, FAR cheaper, than publishing and delivering the news to you on paper. Eliminate the need to print and distribute the paper version, and you eliminate half of a newspaper’s cost (most of the rest being personnel).

There are a couple of problems with that, though: While newspaper circulation is down everywhere, there is still enough of a demand for the paper version that newspaper companies can’t simply abandon the traditional medium. If they did, someone else – most likely a bare-bones startup without the traditional paper’s fixed costs – would step in to take that money off the table.

The second problem is that without the revenue from print ads, as reduced as such revenue is, newspapers would have even more difficulty paying their reduced staffs.

And that points to the main way in which the Internet is killing newspapers: While it’s easier and even cheaper to publish content online, and newspapers can provide more such content than anyone, newspapers can’t maintain the staff levels it takes to do that with Web advertising.

The problem is that on the Web, the market won’t bear prices comparable to the prices newspapers have been able to charge for print ads. Sell just as many Web ads as you did print ones in the past, and you lose huge amounts of revenue.

Basically, that’s the problem facing The State and every other newspaper in the country. There’s no problem in the relationship between journalist and reader; that’s as strong as ever (and the people who mutter about newspaper’s dying because they’re “too liberal” or “too conservative” – and believe me, I’ve heard both of those many, many times – simply don’t know what they’re talking about). The demand for news, particularly U.S. political news, has never been greater.

The problem is between the newspaper and a third party – the advertiser. That’s what has always supported newspapers in this country. If you think you’re paying for it through your subscription you’re wrong – that pays for maybe an eighth of the cost of producing the newspaper. The problem is that the advertising is going away.

The business model that has made newspapers so prosperous in the past – not long ago, owning a newspaper was like having a license to print money – is simply melting away.

And no one that I know of has figured out what the new business model will look like.

I firmly believe the answer is out there somewhere – the demand for news will eventually lead to a profitable way to pay for gathering and presenting it – but no one has found it yet.

QUESTIONS?

By the way, the topic was suggested by the Rotarian who invited me to speak. I try to deliver what is requested when I can.

I left a generous amount of time for questions, and was not disappointed. That’s always my favorite part of a speaking engagement. I’m never completely at ease during the actual speech part, because I can’t tell whether I’m reaching my audience or not. That’s one reason I speak from notes, or even write it out as I did here, if I have time. Otherwise, I can get flustered and lost as I stand there wondering, Is anybody even interested in this?

So to keep that suffering to a minimum, I keep the formal speech part short, and as soon as I start interacting with the audience, I’m completely comfortable, whatever questions come up.

In this case, the questions were mostly directly related to my topic (which is slightly unusual; generally the topics are across the board), although I did get one or two about Mark Sanford and Joe Wilson.

A good time was had by me, and I hope by all.