Earlier versions of this story incorrectly said that the New York Times Co. borrowed $250 billion from Mexican billionaire Carlos Slim Helu. The company borrowed $250 million. This version has been corrected.
Media Notes by Howard Kurtz
Thursday, February 19, 2009
When Arthur Sulzberger Jr. refused to talk to his own reporter about the financial condition of the New York Times Co., it was the latest sign of an industry in deep trouble.
After all, the Times is not only the nation's top-selling metropolitan daily but also boasts the top newspaper Web site, averaging 19.5 million unique visitors each month. Its struggles have sparked a passionate debate about how to wring more cash from the online world where the Times, like most newspapers, gives away its wares for free.
Sulzberger, the chief executive, declined to comment for an article last week that described the Times Co. borrowing $250 million at 14 percent interest from Mexican billionaire Carlos Slim Helu -- described by the paper two years ago as having a "robber baron reputation"-- while trying to arrange a sale-leaseback of its Manhattan headquarters and unload its stake in the Boston Red Sox.
The Times, which has barely cut its 1,300-person newsroom, the largest in the business, remains in better shape than many newspapers. The debate over its future is merely a snapshot of the argument over how to save newspapers from turning into tomorrow's Detroit automakers.
Thriving newspaper Web sites may be popular -- USA Today and The Washington Post also drew more than 10 million monthly visitors last year -- but they are slowly strangling print circulation. Online ad revenue remains far too modest to support the sizable reporting staffs that make newspapers worth reading and enable them to do real digging.
"We have to find some method to allow people to pay for content and make it easy, just one click," says Walter Isaacson, Time magazine's former managing editor. "The main problem isn't that people won't pay 15 or 25 cents for today's Washington Post. It's the rigmarole of putting in credit card numbers and e-mail addresses. We need to allow impulse purchases of content."
A wave of newspaper shutdowns seems likely this year as revenue continues to plummet. Tribune Co. and the Minneapolis Star Tribune are bankrupt. The Seattle Post-Intelligencer and Rocky Mountain News are for sale and will probably close if buyers cannot be found. Layoffs, buyouts and cutbacks are endemic. Even among the biggest papers, the Times has folded its Metro section into the paper, while The Post has killed its Sunday Source section and is dropping Book World as a separate section.
It was arguably a mistake for newspapers and magazines to hand out their goodies to anyone with a computer screen, but the culture of the Net was -- and is -- that everything should be free. The question now is whether that mind-set can be changed.
Isaacson argued in his old magazine that newspapers should adopt an iTunes model of charging for bits and pieces of content: "Steve Jobs got music consumers (of all people) comfortable with the concept of paying 99 cents for a tune instead of Napsterizing an entire industry."
But that struck a discordant note. People keep songs for a lifetime; news stories are ephemeral. And why would readers pay anything for, say, a Los Angeles Times piece on Hollywood when they can read Tinseltown news on Yahoo, Google, AOL, Huffington Post, Drudge and a thousand other Web sites? (Yes, most of these sites recycle and pontificate on the original reporting done by newspapers, but that distinction is lost on many folks.)
Michael Kinsley, founding editor of Slate, which once carried a $19-a-year subscription fee, noted in the Times that "we were quite self-righteous" about charging for content and believed that giving it away "was an insult -- as if we were just making Jell-O salad in order to sell Tupperware." Slate dropped the charge after a year. The Times itself abandoned an annual $50 fee for access to its columnists, which slashed their readership and walled them off from the thriving online conversation that is part of the Net's strength. (Only the Wall Street Journal has succeeded in billing its affluent audience; many of its 7.2 million monthly visitors can charge the fee to corporate accounts.)
Isaacson, now president of the Aspen Institute, says music might not be the perfect analogy but that newspapers can make "real money" even if, say, only 20 percent of their online readers kick in.