How To Save The Newspaper Industry

Somewhere in the basement at my parent’s house, there is a collection of newspapers that marked off important historical events from our family’s worldview. Copies of the St. Louis Post-Dispatch on the day that the US won the “Miracle on Ice” hockey game, anytime the St. Louis Cardinals won the World Series, Princess Diana’s death, 9/11, the commencement of war in Iraq, the death of Stan Musial—stuff like that. When I was in town this summer, I remember looking at the papers from a decade ago and thinking one thing—newspapers are total shells of their selves, even counting the not-too-distant past.

That is because, in an attempt to stem the losses from the steep drops in print circulations, most newspapers became more “bloggy” by syndicating a lot of content from Reuters and The Associated Press, while laying off many unique editorial personalities and cutting the size of the newspaper. And more importantly, most large newspapers have significantly cut back on the production of in-depth, three-thousand word news stories that are incredibly important to our civilization because they provide us with the kind of investigative information that you simply can’t get from  one-man blogging  operations that merely involve a guy tapping his fingers behind a keyboard.

Most of the debate on improving the financial viability of the newspaper industry focuses on whether particular newspapers should put a paywall around their site or rely on the income generated from the links and banners that show up on a website paid for by third-party businesses.

The debate misses the point: it’s all about traffic. And, if you want to build sustainable traffic, you need to rely on a combination of three things: sought-after editorial personalities (basically, you’d want a team of editorial columnists like William F. Buckley, Noam Chomsky, Phil Fisher, and so on, across the spectrum), controversial articles (writing an article titled “Why AT&T Will Go Bankrupt Before You Die” would get you gobs of page views), and, I would run a daily piece of in-depth journalism.

On that third element, I have something in mind like this recent New York Times article, which you can access by clicking here.

This NYT breaks down the stance of every US Senator in relation to using military action in Syria. It tells you that 25 members of the Senate support military action in Syria, 17 oppose, and the rest are  undecided. It tells you that 41 in the House support it, 153 oppose, and the rest are undecided. And then it gives you the most pertinent quote from every US Senator on Syria, giving us the chance to get a feel for the overall pulse of the Senate on potential military action.

That’s what good journalism looks like. If I owned a newspaper, I would make it an institutional imperative to put out a piece of highly informative, unique, in-depth content like that every single day. I would highlight it in a box at the top of the website automatically. It wouldn’t matter whether I used a paywall or relied on advertiser links and banners—either model would work. If people knew that my paper reliably produced content of that quality, I’d get enough subscriptions to make the model viable. And if I didn’t charge for it, I’d get gobs of page views from its wide dissemination that would allow me to carry bags of money (Mr. Monopoly style) to the bank each month.

This is why The Wall Street Journal is doing just fine, thank you, relative to the pain that affects most other print publications. Yeah, part of it is the fact that people carry more about money than any other interest topic, but it’s the fact that I get unique content from the WSJ on a reliable basis that is not even approximated anywhere else.

Most newspapers that I read are currently engaged in a “race to the bottom” where there are no traces of uniqueness and product differentiation that would demand my interest. Think about the financial blogosphere. There are thousands of unique sites that only say “clip coupons, spend less than you earn, and be frugal” in a monotonous voice that sounds like a cheap attempt to mimic the tone of the textbook. The best writers are the ones that come alive to the point where you can feel them emerging out of the computer screen to shake you from your reverie.

When I read Dividendmantra.com, I know I’m going to read a powerhouse “how-to guide” that can help you retire by the age of 40. When I read mrmoneymustache.com, I know I’m going to be hit over the head with optimism and cussing. When I go to controlyourcash.com, I know I’m going to see the authors of plain-vanilla financial advice get mocked. When I visit the biggerpockets.com forum, I know I’m going to read about passionate real estate gurus that have mastered the art of the real estate market. When I visit bogleheads.org, I know I’m going to read very nuanced debates about optimal asset allocation within the world of passive investing. Those websites are successful because they blend passion with a unique niche.

If I ran a newspaper, I would put out pieces like that New York Times article every day. The debate about using paywalls or ad banners misses the point. The big problem is traffic, and the reason newspapers aren’t getting the traffic they desire is because they have been laying off the fun editorial personalities and investigative journalists that differentiate newspapers from each other. If the Omaha paper becomes completely indistinguishable from, say, the Kansas City paper, should we really lament the failure of either?

Note: For those of you who read between the lines, this is also my way of saying that newspapers are terrible long-term investments. You would need excellent management to turn a profit in the newspaper industry, and because of shifting economics, there is no guarantee that it will last twenty years from now. Be like Charlie Munger, and stick with companies that “drown in cash.” Look to companies like Coca-Cola, PepsiCo, and Dr. Pepper, which barely missed a beat during the worse of the 2008-2009 economic crisis. Look at diversified giants like Colgate-Palmolive, Procter & Gamble, and Johnson & Johnson, which have such vast mechanisms that they cannot help but turn a profit.