Future of Newspapers - An Industry in Crisis

An Industry in Crisis

Ironically, these dilemmas facing the newspaper industry come as its product has never been more sought-after. "The peculiar fact about the current crisis," writes The New Yorker's economics writer James Surowiecki, "is that even as big papers have become less profitable they've arguably become more popular."

As the demand for news has exploded, so have consumers of the output of newspapers. (Both nytimes.com and washingtonpost.com, for instance, rank among the top 20 global news sites. But those consumers are now reading newspapers online for free, and although newspapers have been able to convert some of that viewership into ad dollars, it is a trickle compared to previous sources. At most newspapers, web advertising accounts for only 10–15% of revenues.

Some observers have compared the dilemma to that faced by the music industry. "What's going on in the news business is a lot like what's happening with music," said editor Paul Steiger, a 43–year journalism veteran. Free distribution of content through the internet has caused "a total collapse of the business model."

The revenue streams that newspapers counted on to subsidize their product have changed irrevocably: in 2008, according to a study by the Pew Research Center, more people in the United States got their news for free on the internet than paid for it by buying a newspaper or magazine. "With newspapers entering bankruptcy even as their audience grows, the threat is not just to the companies that own them, but also the news itself," observed writer David Carr of The New York Times in a January 2009 column.