Leslie Walker's .com Live
Discussion with John Sturm, President and CEO of the Newspaper Association of America
1 p.m. EST: Thursday, February 17, 2000
Irony abounds today in the newspaper industry. Net profit margins are running at a healthy 10 percent and ad revenues are booming. However, dot-coms are fattening their flat-land cousins for eventual slaughter with the ads they are buying. I believe it is only a matter of time before Internet news services grow so big that they displace their print counterparts. It starts with a siphoning of newspaper classified ad revenue into searchable online databases. It may take 20 years – and may not even be what most readers want – but newspapers on newsprint will die.
John F. Sturm, president and CEO of the Newspaper Association of America, strongly disagrees. He believes that good old-fashioned newsprint is here to stay. Join John and I at 1 p.m. Thursday in a battle of wits on which news medium is better, and which one will actually prevail.
Read Leslie Walker's February 3, 2000 column on the potential death of print newspapers, "All the News That Fits on Screen."
Submit your questions early.
Hello everyone. I hope you'll join today's debate on the future of newsprint. We want to hear from you. A special welcome to our guest, John Sturm, who is here to explain how the newspaper industry is meeting the challenge of the Internet.
First, I want to make clear my belief that while the Net challenges newspaper economics--especially the high cost of bundling all that information on paper and dumping it in front yards every 24 hours--I'm not saying all print products will die, or that newspapers can't reinvent themselves online.
Many of you know my views already from my column two weeks ago. In a few minutes we'll hear a different view from an industry expert, newspaper association president and CEO, John Sturm. We're reading your questions now, so keep sending them in!
Let's start with the big picture from inside the newspaper industry. I'd like to know why you think it's unlikely printed newspapers will go the way of the horse-and-buggy.
It sure seems like many individual pieces now bundled in newspapers--the latest headline news, sports scores, help wanted ads, homes-for-sale, and eventually maybe even retail display ads--are breaking apart and, one by one, becoming new media channels in cyberspace. Isn't this a long-term threat to printed newspapers?
John Sturm: Leslie, you invite a filibuster here. That's a very broad question with a lot of (good) answers.
But, let's do it the easy way: that's what your ancestors said when radio was invented, your parents said when TV came along and (voila!) you say when the internet arrived.
It didn't happen then and it won't happen now. Newspapers are near and dear to many, many people out there -- as you recently learned after your column. There is a great strength in newspapers -- the connection to the local community with a panapoly of links for news, information, entertainment, and serving local advertisers.
Remember, many people say it's MY newspaper.
Last: In December, a Yankelovich study found that newspapers were the number one (1!) consumer item that people wanted to survive into the new century -- 93% of respondents.
And here we are!
While readers may be flocking online, my understanding is that the ad revenue from print has not exactly transferred over to the Net. It seems that the willingness of Net users to pay for basic content has been tested and failed and classifieds -even online- seem to be fading, especially for items such as personal possessions which can be sold over auction sites. Where is the money going to come from for online newspapers?
You hit the $64,0000 question. As classified revenue migrates online----to sites like eBay for merchandise, Monster.com for jobs, and Realtor.com for home sales----where will newspapers get replacement revenue? Especially since as this reader points out, most news sites can't charge subscriptions online. It's not the way of the web.
My guess is the new revenue stream--if there is one--that will keep newspapers afloat as digital companies hasn't really been found yet. Newspaper companies are still looking. They need to design Web sites where local merchants will want to advertise and do business. So far, local merchants aren't online in great numbers, and it's unclear exactly how this might happen.
John, how do you think electronic newspapers will be funded in the future?
John Sturm: First, pls note that studies show that most online newspaper readers continue to use the print product -- in fact, some even more. There is little cannibalization of print.
Second, classifieds -- both online and in print -- are booming not fading. Newspaper revenues from classifieds grows each year --- and it's not just rate. Most newspapers have already extended print classifieds to online. In addition, consumers continue to cite newspapers as number one media choice for info about cars, jobs and homes.
I agree with you that newspapers are near and dear to many people's hearts. The volume of e-mail I got in response to this column was huge--bigger than anything except Amway going online--but I have to tell you the opinions were surprisingly divided. For everyone who can't imagine living without their rolled up newspaper, someone wrote it who is finding their own reading habits changing so dramatically that they agree newsprint in their front yard won't be a reality in 20 years.
The portability of the new display devices is very important. If I had a nickel for everyone who told me they carry their papers and magazines into the bathroom I'd be an Internet billionaire! But the technology is coming that will be even more portable than newspapers.
And let's face it, newspapers are a pain to read on trains and airplanes.
On the key portability question, do you doubt the new devices will have a big impact?
John Sturm: Newspapers companies increasingly see themselves as information companies, not just printers.
It's simple -- when those new distribution technologies come along in the future, we will be in the forefront of development.
No one else has the troops on the ground to develop the basic information that all of these devices need to thrive.
What are newspapers doing to stem the loss of younger readers today, and won't that simply accelerate with a generation that grew up online?
John Sturm: Younger readers use newspapers; they use them differently -- that's what our studies show -- and are the heaviest users of classified advertising in print and online.
Nevertheless, this is a concern for newspapers -- as well as our friends in the magazine and book businesses. We try to help papers use their products as part of the educational process and to develop a fundamental fondness for reading.
Does anyone know how many newspapers have online editions now?
John Sturm: More than 1100 U.S. dailies.
Go to newspaperlinks.com to find them all! Cool.
As more and more people get the news from the Internet and TV, when do you see the print edition of the news being diminished?
Here is where there's some irony. Short-lived, I think. The irony is that Internet companies are pouring hundreds of millions of dollars of advertising into print and TV at the moment, as they try to establish themselves. So ad revenue's not doing too shabby for old media at the moment!
As for a timetable, it's impossible to predict when print newspapers will really feel the economic pinch. I fear it could be a lot faster than 20 years before major metropolitan newspapers are in dire economic straits. John, your view?
John Sturm: No question that there are plenty of news sources out there -- probably another one tomorrow that wasn't here today. But, newspapers offer depth, context and opinion that others generally lack.
We also tend to cater to an educated audience.
Moreover, online gives us a way to break the tyranny of publishing only once a day.
Dot.com advertising has been growing, but other areas of national advertising in newspapers have been growing faster -- automotive and even some package goods. We hope to grow the dot.coms too, and it's proof of the power of newspapers to build brands and traffic.
My question to you is: what do these non-revenue companies do when we get into a recessionary period?
You say that users want newspapers to survive into the next century, but do advertisers want to continue paying high advertising rates that newspapers charge?
As a business, newspapers have a high barrier to entry which limits competition. With the Internet, the barrier to entry isn't as high and competitors are not geographically isolated.
How will newspapers change as advertising revenues continue to decline?
This is the question I have no answer to. Hence my opinion that newsprint editions could be in trouble.
John Sturm: It should be noted that ad revenues are not declining at newspapers (or other so-called mainstream media) -- they are increasing in the 5-6% annually -- with the most in national advertising, double-digit growth.
People will pay for products that are engaging, interesting, have value and utility -- and work for advertisers. That's been the case since Gutenberg and it will continue on the web too.
In regards to your comment about Leslie's journalistic ancestors being fearful of radio and TV, and though I agree with your basic point that print isn't dead, I have to comment: NPR is not the Washington Post. CNN is not the Washington Post. Fox Action News at 10 is by god not the Washington Post. washingtonpost.com IS the Washington Post. Except that washingtonpost.com hemmorages money and I don't have to pay to read it. True, I haven't given up my Sunday-only Post subscription to be here, but only because I don't want to fire up my computer every time I want to check the TV listings. I don't think newspapers are dead, either, but I think this is a much bigger challenge than radio and TV were.
John Sturm: I agree that it's a real, big challenge -- more so than TV and radio.
But it's also an opportunity for newspapers to do creative things on the web. After all, the government still keeps the local newspaper from owning a radio or TV station where it publishes a paper. At least there is no prohibition on doing our thing on the web.
John asks what revenue-less Dot.com companies will do when we get into a recession.
My guess is they will crumple, like many newspapers will unless they have gotten a loyal Web customer base by then. And it's hard to build loyalty online. But lots of the innovators like Monster and eBay are providing innovative ways of doing old things. I believe these players are not only here to stay, but will become the building blocks of big future businesses.
You make two key points:
1) Studies showing most newspapers readers continue reading print editions even after they start reading Web editions.
2) Classified revenues are still growing for newspapers.
I see neither as conclusive. Why? Because No. 2 is more important than No. 1. The real change agent is economics, not reader behavior.
Even if people keep reading print (and we are still VERY early in this game; I've read the studies on cannibalization and believe early studies don't mean much. You have to be online for a couple years before your behavior really changes) The fact is, when people go online, their use of new searchable classified sites will change the nature of that classified business for newspapers. It's already happening with personals, homes and jobs.
And finally, yes, classified print revenue may still be growing, but not as FAST as it was. The slowdown in the rate of growth in a booming economy is significant.
Your thoughts on these points?
John Sturm: Right, and a lot of those people are going to local newspaper sites for jobs, homes, apartments and cars.
The only slowdown in the growth of revenue from classifieds is in recruitment. Some of that may be the internet, but much results from a full-employment economy. How much more $$ can an employer put into classified ads for jobs?
Melbourne - Australia!:
CNN did a great job in reporting the Gulf War. But newspapers were indispensible for explaining and analysing the war.
How can newspapers compete today with the web, which is TV, radio and newspapers all in one?
Al Rados - Melbourne, Australia.
I agree that Web news services combine the best aspects of TV, radio and print. But in fairness, most of the big ones (Msnbc.com; CNNInternative, and washingtonpost.com, to name three of the top 10) have roots in those old media. Without those roots, they wouldn't be as fast on the Net as they have been.
John Sturm: Hey Al in Melbourne:
The awful truth is that the great bulk of the information that makes up the news comes from newspapers and the newspaper-owned Associated Press. Only AP and Reuters provide the basic stuff that CNN and NBC and CBS and Fox and all the rest use to do their reports.
I'm not sure I buy that answer that websites aren't cannibalizing their print parents. Many websites are developing far superior auto, job and home sites online than can be offered in print. And the latest opinions from the pros at last week's E&P conference in New Orleans indicated that more and more people were embracing online news sites instead of print sites. -One teen panel indicated that young people don't hardly look at papers at all anymore, in favor of the Web-. Seems to me that if printed newspapers are going to survive, shouldn't they find a new niche -or work better with their web counterparts on a joint plan for presenting the news?-
John Sturm: Our data does not suggest people are abandoning print for online. In fact, they continue to rely on newspapers first and they also use other media including the internet.
Many newspaper companies have or are working on partnerships that will make their presence on the web even more meaningful and exciting.
Hi John, my opinion, getting rid of newsprint is like getting rid of the oxygen we breath. However, I imagine instead of news stands they'll be computer stands set up in malls, buildings, may be newsstands will become newscompter stands....just walk up and hit enter and see what the leading stories are for the day. You know how you see phone booths set up in airports well the same concept for newscomputer stands.
For me there's nothing like a Sunday morning breakfast reading my print version of the post...of course along with the ink I get on my hands which end up on my robe, which causes my wife to get upset.....ok already point made, right?
What do you think?
John Sturm: Thanks, Mom.
Seriously, I believe when Leslie finally is right -- after we are all gone -- newspaper companies will have pioneered the electronic ink or flat-panel displays that will be the companion to ink on paper.
By the way, I'm with you on Sunday mornings -- if I can ever get the sports section away from my 11-year-old.
My own research shows that newspapers reap a substantial benefit from the "comfort" they provide -- newspaper reading is often a social activity. People share sections of the newspaper among the family or read while the family is watching TV and talking. Folks also like the feel of holding a newspaper.
Computers, on the other hand, tend to be cold isolators. The computer is usually located away from the family gathering spot and it tends to suck away one's attention. A computer can also be used by only one person at a time.
Is this an advantage that newspapers can capitalize upon, or is it only a fleeting aberration in technology?
University of Oregon
I do believe computers are cold, and the lessening of human contact in the era of ecommerce and ebusiness will be a thorny social issue. I already feel this in my own life. Way too much time spent in front of this machine. But I've been wondering lately whether portable devices and the gazillion Internet appliances under development--all of which should untether the global communications network from the confines of our desktop computers--will help ease this somewhat.
But only somewhat. You touch on a very troubling trend.
John Sturm: I believe you have touched a point -- and one that was on the front page of the Post and the NYTimes yesterday.
The comfort factor is something that is often underestimated. People like the experience, they like it when they discover something to read that they have never explored before. They even like the ads!
I wish I had a dollar for every time I have heard the phrase: Did you see that piece in the paper yesterday . . ?
I find that if I read about an event on line, either at a paper's website or a TV station's site, I realize that I have only a small piece of the picture. The more in-depth coverage, it seems to me, only can be found in the paper itself. Additionally I have the same reaction to TV news broadcasts. Comments ?
It is true that individual Web articles tend to be shorter and shallower than most print news articles. But a strength of Web news is in finding many more sources of information about any particular topic quickly, and not relying on the one in-depth article you might read in a newspaper or magazine. On the Web, it's easier to add context--links to other articles, past and present, about the same topic.
John Sturm: You have successfully identified one of the strengths of newspapers -- context, depth, etc. Good writing will always find an audience, regardless of how it is delivered.
Kansas City, KS:
Do you see any merit in newspapers attempting to charge for on line content, ie subscriptions?
What are newspapers doing successfully to try and protect that franchise? Withhold content? What is the successful recipe?
The Wall St. Journal Interactive and Consumer Reports have been the only two print products to be successful at collecting subscriptions online in a big way. Each has several hundred thousand paying subscribers.
The Net business model of using content to attract and audience and selling it to advertisers is of course familiar to TV, but not unfamiliar to newspapers either. Their subscription fees have always been a token of the actual distribution cost. But to answer your question, no, I don't think newspapers are going to be able to charge for news content online in the foreseeable future. Nor can they withhold content. They need alternative money streams to subsidize news, which is not going to pay for itself online. (It actually gets even more costly when it's a 24/7 news operation--the minute-ly news, as I call it)
John Sturm: Leslie is right. The Wall Street Journal with its specialized audience and terrific brand is the only successful newspaper subscription service online that we know of.
Frankly, I'm not sure anyone knows the sure-fire business model for the future. If we did, we would not be keeping it a secret from the thousands of newspapers in our membership.
Silver Spring, MD:
I wonder what you both think about the effect that the Web will have on the trade press. IN the DC area, there's a pretty big newsletter industry -250-plus- that all target these little niches... I think these weekly-biweekly focused news packages are doomed... -BTW, I am in the trade press, but with a monthly slick, which I think is safer because its mission --indepth feature and analysis -- is different
Niche newsletters lend themselves well to the Web, so long as they are willing to morph into a more interactive and deeper version than their print roots. Specialized news of all kinds does well online. It's easier said than done, of course, but every day I find a new niche Web site that is building an audience steadily and moving toward profitability faster than the founder thought.
John Sturm: This is not our bailiwick, but we all get our share of newsletters -- and most are now available online as well as in print.
Like you we've got a great newsprint tradition over here. And while I go to lots of web newspapers -yours for one- I still buy my daily and Sunday paper. Most of our big cities now get big free dailies handed out at train stations, tube trains, buses, airports, yet people still pay - in fact I read that sales are rising. Maybe it's different in the states but good old newsprint's seems to have a lot of life left in the UK. Remember the paperless office?
John Sturm: Hi to London:
Free or paid, it's still the best priced consumer item left.
See you in the Tube in a couple of weeks. Airfares to London are at an all-time low -- according to the newspaper, of course.
No question but a comment: what scares me the most about the future of newspapers is not the growth of the web but the continued growth of a sense of disconnection with the world outside of our own immediate environments. It seems to me that more and more people find no problem at all with just the barest awareness of what is going on in the world. That trend is very frightening, not just for those in the media, but for all of society.
John Sturm: In general, I tend to agree. There is not as much news from around the world as we once saw -- but that's also a result of the instantaneous nature of television and radio.
An Arlington reader wrote:
It seems to me that online news offers two advantages over print media, timeliness and customization for the individual subscriber. What is the print media industry doing to answer those challenges? BTW, although I read papers online I don't want to give up the printed copy.
I want to say I agree, I don't really want to give up my print edition, either. This is one time I hope I'm totally wrong! As for what the industry is doing, plenty. Most of the big news operations-washingtonpost.com, ABC News, MSNBC.com , New York Time on the Web-have gone to some form of live daily news. The Post started its "PM Extra Edition" last year, putting live news up every day after lunch on the Web site generated from the print newsroom. Sam Donaldson started a live Web news show last year, too, and recently The New York Times Washington bureau began a daily political Webcast as part of a joint venture with ABC News. I think this is only the beginning of live news from publications that previously published on a slower news cycle.
We've run out of time, folks.
John Sturm: It's been fun.
See you in the funnypapers.
Thanks for reading, John
We're closing dialogue. Thanks so much to our guest, John Sturm, for defending the newspaper industry. Let's hope he's right!
And thanks, too, to all of you who tuned in and asked thoughtful questions. We'll be having this discussion again, I'm sure.
Bye for now!
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