Blake Rutherford: Newspapers In The Digital Age

Editor’s note: Blake Rutherford, the author of this guest commentary, is a vice-president with The McLarty Companies.  He is the former director of public communications for Stone Ward.  A video of a recent Talk Business interview appears at the bottom of this post.

It is difficult not to get romantic about newspapers. They have always been around me: folded on tables, strewn on the floor, clipped, annotated, stacked up. We subscribed to the Democrat and the Gazette, and the Batesville Guard, the newspaper of my father’s youth. We got home delivery of The Sunday New York Times when it became available. Even our weekly church bulletin, The Tower, was delivered on newsprint.

Last month, Arkansas Times, an independent alternative weekly newspaper, announced that some of its content, including the popular Arkansas Blog, would be subject to digital subscriptions. As the halcyon days for newspapers became less frequent, I suppose something had to happen.

Newspapers have been in an awkward position since the emergence of the Internet in the mid-1990s. 1998, for example, was a particular devastating years for newspapers, although they didn’t know it. That year, AP voted to sell its content to Yahoo! who, in turn, provide it to consumers for free. Walter Hussmann, publisher of the Arkansas Democrat-Gazette, was on AP’s board at the time and voted against the measure.

“When you give away the news, it becomes a commodity. When something becomes a commodity, you lose your pricing power. And that’s where we are today,” he said in the American Journalism Review, in 2009. Today, Yahoo! News is the most trafficked news site on the Internet with more than 110 million unique visitors annually.

When Craig Newmark launched Craigslist, a cheaper, easier and more effective way to reach customers, newspapers saw revenue from classified ads plummet, while Mr. Newmark became very wealthy (Craigslist currently services 50 billion page views per month).

Google mastered online advertising in ways newspapers were unable to, and their growth has been astounding. When the mobile market took off in 2012, Google was able to geo-target in ways that made them more effective that local media. Today, Google leads all companies in search, display and mobile advertising, and the advertising market will continue to be driven by customized and geo-targeted ads based on a consumer’s online behavior.

Facebook continues to grow its relationship to journalism as it “creates the best personalized newspaper” for its more than 1 billion users, according to CEO Mark Zuckerberg.

This has made each of these entities vastly more attractive to advertisers. In 2012, 76 percent of the $2.6 billion spent on digital advertising went to six companies. When combined with the dramatic decline of print advertising (2012 revenues were the lowest in 62 years), it is rather easy to understand why newspapers are still adjusting their business models. After all, more than 300 newspapers have walled off some, or all, of their content.

At the national level there is good news on the subscriptions front. At The New York Times digital-only subscriptions are up 45 percent from a year ago. At McClatchy, their new subscription program will yield $25 million in added revenue this year.

In theory it makes sense for community-based newspapers like Arkansas Times because they report news at the grassroots level, something national outlets do not do. As Max Brantley remarked in a video on the Times’ website, “We’re a 24-hour-a-day more or less operation seven days a week,” he said, as if to beckon   Charles Foster Kane’s ghost.

The barriers to success, however, are real.

In 2010, the Pew Center for Excellence in Journalism found little evidence of brand loyalty among media outlets; 82 percent of readers said they would look elsewhere if their preferred news site started demanding payment. Amazon CEO Jeff Bezos, who has purchased The Washington Post, opined recently in an interview, “On the Web, people don’t pay for news and it’s too late for that to change.”

This is why I took notice of something else Times owner Alan Leveritt offered in his public statement. He noted, “[w]e take a page, too, from the much lauded Texas Tribune.”

The Tribune is a non-profit news endeavor that has, in significant part, pioneered a new way to finance journalism. In 2009, David Swensen and Michael Schmidt penned an op-ed in The New York Times that contained this proposal: “[t]here is an option that might not only save newspapers but also make them stronger: Turn them into nonprofit, endowed institutions — like colleges and universities. Endowments would enhance newspapers’ autonomy while shielding them from the economic forces that are now tearing them down.”

Their proposal was predicated on a 2008 report from Sanford C. Bernstein & Company that concluded, “The notion that the enormous cost of real news-gathering might be supported by the ad load of display advertising down the side of the page, or by the revenue share from having a Google search box in the corner of the page, or even by a 15-second teaser from Geico prior to a news clip, is idiotic on its face.”

The John S. and James L. Knight Foundation, which has invested millions of dollars into non-profit online news organizations, published a study on this issue in 2011 that determined, “A team of journalists creating a newspaper on the Web is not a sustainable proposition. In addition to business expertise, emerging news organizations need to embrace practices online and offline that include a sophisticated understanding of who they want to reach. They also need to experiment with ways to engage those communities in order to produce impact on civic life.”

The nonprofit model is not a panacea (and, despite the reference to Texas Tribune, it is not the intent of Arkansas Times to become nonprofit). Not long ago, for example, the Chicago News Cooperative, a high-profile nonprofit news initiative that began in 2009, closed its doors because grant funding dried up. But others have succeeded, and years later, I continue to be influenced by Swensen and Schmidt.

In the meantime, the potential of crowd funding in intriguing. The recent endeavor by Arkansas Times and InsideClimate News about the breach of Exxon’s Pegasus pipeline in Mayflower was a first for the industry. In his reporting, Sam Eifling, who is quite a talent, has illustrated the rigor of investigative journalism, and its need. It was exceptional work.

It is difficult to talk about digital news and not mention Politico, arguably the hottest political media brand in the country, which publishes its content for free online. Last week, when The Washington Post announced its sale to Mr. Bezos, Ross Douthat of The New York Times wrote that it is “Politico rather than The Post that’s the must-read for Beltway professionals and politics junkies everywhere.” Politico has been in operation for 7 years, The Washington Post for 136 years.

The reason for this rests in a 2008 interview John Harris gave to the Columbia Journalism Review. “Jim VandeHei and I started Politico in part because we thought that it was important that newsrooms organize themselves around the Web as a primary goal, rather than as a secondary goal around the print edition,” he said.

Deep pockets have helped. Politico’s publisher Robert Allbritton recently sold a batch of television stations including KATV in Little Rock for nearly $1 billion and indicated that he planned to invest heavily in Politico. In an interview with Washington Business Monthly he said, “This is the Golden Age of new media innovation, and I intend to stay on the leading edge of it.”

For a time in our state it appeared that Arkansas Times had monopolized the online space. The Arkansas Blog, the first of its kind by a statewide media outlet, quickly became the leading source for daily political news. It was quite an achievement, causing at least one prominent political columnist to declare years ago that the Arkansas section of the Democrat-Gazette was “obsolete.”

Whether that remains the case is up for debate. Political reporting in Arkansas, conducted by a number of outlets across all mediums, is quite good. The digital space has exposed some bright new voices and given new life to old ones. Independent political blogs have become centers of influence. Social platforms like Facebook have given elected officials and influencers a medium to create and share content, circumventing journalists by taking their message directly to the public. And the ability to share content across any number of social networks has given writers greater access to readers and vice versa.

Too many people have lost good jobs in journalism, and this effort may keep smart people working and reporting; our community needs more good and inquisitive minds on the beat, not less. But that sort of sentimentality is irrelevant in the context of running a business, I realize, and at some point the numbers no longer make sense.

I do not know what specifically brought the Times to this decision, but it was a bit of a shock. For much of my life it has made the free delivery of content central to its brand identity. Fair or not, readers have grown accustom to reading the Times for free, and changing their behavior, no matter how valuable the content, is difficult to do.