Bear Market In Dead Trees

“For every action, there must be an equal and opposite reaction.” This law of physics applies in the business world, too. When you read things on the Internet – as you are doing right now – you are also not reading them in the traditional paper-and-ink format. So? Well, there are people who depend on you to buy paper imprinted with words and pictures. If you don’t, they are out of business.

The humble newspaper is in trouble – deep trouble. As people consume more of their news online or on television, newspaper readership is in a freefall. Fewer readers translates into less advertising revenue. Today McClatchy Co. (MNI), which publishes the Miami Herald, the Charlotte Observer, and other local papers, said its ad revenue slid by 20% in September. They expect more of the same in October.

Part of this is a result of the unfolding recession. Real estate agents are big advertisers, as are car dealers, and both industries are facing big problems of their own. Newspapers are also struggling with the more structural challenge: people simply don’t want what they are selling anymore. Other than retirees and others with abundant free time, how many people actually sit down and read through a newspaper anymore? Not many. Thanks to MTV, we have become a society of the short attention span. We still want news and information – but we want it customized and delivered in short, bite-size portions that don’t distract us for too long. The idea of relaxing with a newspaper and coffee is simply alien to most people under 40.

Newspapers are trying to evolve and expand their web presence. Some publishers are more successful than others, but even the best find that the ad revenue they can earn online is a fraction of what they were able to earn in the ink-and-paper world, not so many years ago. In the story linked above, McClatchy disclosed that its online ad revenue grew by 6.6% last month – but its print ad revenue was off 23% at the same time. And to make matters worse, free classified advertising revenue from sites like Craigslist is skimming off some of the newspaper publishers most profitable business.

Obviously these trends cannot continue indefinitely. Newspapers as we know them may not disappear any time soon, but they will have to change. Those that do not change will most certainly die. The race is on to see who survives.