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Newspapers Losing Advertising and Readers

“In the old days, the agenda-setting and the issue-framing was a closed shop,” Justin Sayfie, a Fort Lauderdale lobbyist and top Republican fundraiser, told St. Petersburg Times columnist Adam C. Smith. “You had the big media organizations, and their reporters were basically controlling the issue-framing and agenda-setting. Now that power to frame issues and set agendas is democratized.”

Sayfie was talking about blogging. He is the force behind the online Sayfie Review which reaches about 5,000 readers every day. Smith notes that breaking through on the national level with a blog is extremely difficult, however reaching readers on a local level is easier. Thus the upsurge in popularity of local political blogs. When you consider Sayfie’s comments about blogs, you have to wonder even more at why newspapers are so vexed over getting some dominance in the blog field. Steve Outing of the Poynter Institute penned a guide to citizen journalism in general called “The 11 Layers of Citizen Journalism [1].” Outing, like Dan Gillmour and other insightful journalists, finds the phenomenon of citizen journalism fascinating and one that’s important to understand. But even as he does a fine job of explaining possible ways newspapers can explore the phenomenon, he notes while some are enthusiastic, “[M]ostly I hear concern and healthy skepticism.”

One might note the same thing among bloggers and citizen journalists, not all of whom are keen on being drawn into a partnership with establishment media. After all, isn’t part of the success of citizen journalism the failure of media to cover issues of interest to certain “netizens,” or cover them in a certain way, thereby creating a market for Internet writers?

Typically, newspapers view practically any piece of paper with a paid ad on it as a competitor. Over the years many newspapers have gobbled up local community newspapers, giving them even more of a monopoly over advertising revenue in a given area. Many blogs and other amateur news sites don’t even have advertising on them yet, but that is changing .

When it comes to new Internet sources, playing defense won’t be good enough for newspapers, according to Dave Morgan writing in Media Post. Morgan wrote his article after attending the Newspaper Association of America (NAA) “Future of Newspapers” conference in Chicago. He shared some interesting research by marketing giant McKinsey. Even though most newspapers saw their classified advertising revenue rebound over the last two years, Morgan said, McKinsey concluded that they had not only lost “very significant market share in most classified ad categories, but they have suffered an extraordinary amount of ‘price destruction’ at the same time.”  Morgan wrote that Internet competitors like Craigslist have “destroyed” as much as 75% newspaper pricing in key categories such as employment and general merchandise. So as he points out, newspapers are not only losing business to the Internet, but they are losing control of their rate cards, too. The days of unilaterally controlling their rate cards are over.

Morgan sees Google and their multiplying electronic cousins who are capturing local ad dollars as presenting a competitive profile that is much more threatening than just having another local newspaper to contend with. Also such websites have dramatically lower cost structures. By comparison newspapers have to deal with vast overhead including printing presses, newsprint, distributors, and hundreds or thousands of employees to pay. As the trend accelerates, Morgan sees ad rates dropping, then newspaper revenue dropping, precipitously.

This forecast may explain one reason newspapers are fumbling to try to absorb some of the popularity of blogs and citizen journalism. It’s a defensive maneuver.