L.A. Times: Turn Off Your Presses

David Westphal reports an important and historic crossing of the Rubicon for a major newspaper, recounting a discussion with LA Times editor Russ Stanton at USC: "Stanton said the Times' Web site revenue now exceeds its editorial payroll costs."

I've long been asked by newspaper people - as a challenge - when the web will cover the costs of the newsroom as it exists. I've said it won't, that the scale of the business is just different.

But if what Westphal reports is true - and I confirmed via email that I was reading him correctly (and it does make sense since both edit costs and web revenue run at about 10-15% of newspaper budgets) - then it means the Times could support its newsroom as it stands - after cutbacks aplenty - from the web. That's momentous.

So why not go ahead and turn off the presses and the trucks and turn the Times into a pure news enterprise, disaggregated from its production and distribution businesses?

Now factor into the post-paper newsroom budget the elimination of many tasks - print production, design, editing. Step back from that knife, Mr. Zell. Rather than eliminating those positions, they must be converted to enabling local networks of partners - freelancers, bloggers, citizens - to expand the journalistic reach of the paper into the community.

And now add in the rumor that the LA Times might get rid of its national - that is, Washington - and international coverage and hand it - or its readers - over to the Washington Post. I've been arguing for some time that the national papers - especially the Post but also the NY Times, the Wall Street Journal, and perhaps USA Today - could become the Washington bureau to the nation's papers, saving them all money, giving them all the flexibility to redirect staff (reporters and editors) to local coverage, and giving their readers the best coverage. It's reverse syndication.

The LA Times could play this same role with other papers if it provided the very best coverage of Hollywood and entertainment to them, in return for links and new audience and traffic. News becomes a network of links made by those who do what they do best and link to the rest.

Clearly, by getting rid of print production and distribution, the LA Times not only gets rid of huge costs - which usually amount to at least half a newspaper's budget - it also loses both circulation revenue and advertising revenue, which is much higher than digital revenue. As Westphal pointed out in our email exchange, some digital advertising is tied in bundles to print advertising and so the risk is that getting rid of print would hurt digital. But I suspect the opposite would happen: Some of that print advertising will now be forced online. Indeed, I've long argued that newspapers should force both readers and advertisers to online - to the future - and turning off the presses would do that.

There's no question that the scale of the business would be smaller, much smaller. But with only edit and advertising sales costs (I'd market only during the transition) it could be a profitable business - a profitable digital journalistic business. That is the promised land. Welcome to the future.

Note well that bankruptcy makes it easier for a paper the size of the LA Times to consider such a radical move because it resets labor and vendor contracts and relationships with creditors. That size has become a disadvantage for legacy players (and it is why I've thought that new players will enter and start to take over these markets). But what if, once past bankruptcy and the cost of shutting down print operations, the LA Times as a news service could be profitable and grow? Yes, grow. News is a growth industry today; newspapers aren't. But they could be again.

If they do it right, the papers shifts from relentless shrinkage back to practically limitless growth. If they create good hyperlocal networks, they can offer new content at much lower cost and risk (that is, through partnership rather than staffing) and attract new readers at a very local level (while also attracting new readers internationally with that Hollywood coverage). They can create new means to serve an entirely new and very large population of smaller local advertisers who could never afford to use the LA Times before. They could create new services and platforms and find new lines of business.

It almost makes me wonder whether bankruptcy was always part of Sam Zell's strategy (but I never assume any company or mogul thinks that far ahead). He might lose his investment but if he comes away with the ability to shed huge cost and emerge with profitable, growing enterprises, he could well more that make up for that with future value and even take Tribune Company public again.

All this is why I got a grant from the McCormick Foundation to create a New Business Models for News Project as part of the Center for Journalistic Innovation at CUNY. I plan to work with business students (volunteers?) to play out this model among many others. The time for speculation is over. The time for rebuilding is here.

Comments

[BLT1973]

Russ Stanton's comment is like Capt. Smith giving a shout out to the Titanic band for playing a great "Nearer My God to Thee."

[Ozarks]

The FCC allowed "consolidation" of news media to 5 or 6 oligarchies.That leveraged consolidation is what is killing newspapers. These oligarchies don't publish news they publish propaganda and keep rerunning no effort alleged news like the Caylee story. They ignore Senate Committee reports concluding that the Bush regime committed war crimes . The 5 or 6 oligarchies helped Bush "sell" the Iraq war, The price paid by Zell, Redman and Disney was extreme leveraged buyouts for all these FCC allowed consolidations and now they are up to their armpits in unsupportable debt. What do they do? they fire all reporters, editors and try to meet debt payments. They deserve no less: such as the Chicago Tribune chapter 11, the Miami Herald "sale" indicates liquidation is the answer to consolidation. And this consolidation is being dismantled by the American public.

[bayside]

I believe consolidation is what destroyed newspapers in the first place..This put all media in 5 corp. republicans hands and all media was forced to give us propaganda and lies until we wouldnt listen to what they were saying..Consolidation is not the answer ,it is the problem..Until media proves they can be trusted again, expect more problems..

[nomo555]

BINGO!! As soon as LA Times quit being my local paper representing us Angeleno's I quit reading.

[quantumspin]

If the LA Times is like my local newspaper, they shrank the news hole to the point where you had 80% of each page covered in ads. They dropped serious reporting and instead wrote articles such as 'How to Buy the Best BMW,' or ' Is Your Child a Star in the Making?' They dropped investigative journalism, and basically dropped journalism. But, they did what Americans want: the most popular print entity I hear is People Magazine, not The Economist.

As long as Americans chose to be personally dumb, their media will reflect this.

We may not like what the papers are doing (or their online versions), but they are mirroring our TRUE tastes back to us. We really could care less about the world---what matters is what Paris says, who won the weekend game, and where can we get 20" rims for less.

[phoebed]

There's another option too. I own a Kindle and subscribe to the Washington Post and the Independent (UK) electronically. Every morning I turn on the machine and read the newspapers in bed--no trying to retrieve a paper from the sidewalk, no having to go out to purchase it. Now I think the Kindle newspaper format leaves a bit to be desired (I want to be able to go out to a full page when I finish a particular article) but making reading the paper easier is a piece of cake.

Why would I subscribe to papers when I can read them free online? First, the electronic format is convenient and highly portable. I can't sprawl any old where with my laptop; with the Kindle I can (everywhere except the bath) and my eyes suffer from the back lighting. I can decide on a whim to read another paper too. The array of papers available is international in scope. No papers to recycle, etc. For the newspapers, it's additional income (the Kindle version is currently ad free). Will we all have electronic readers in a few years? Quite possibly so.

[BigHeadTodd]

Sure. Try reading the LA Times in the airport, on the beach, on mass transit, on the toilet the same way you read the print edition.

PEOPLE STILL READ INK ON PAPER AND LOVE IT.

If you want to bold enough to say, "Going exclusively online will help us reduce staff by the zillions and therefore "save" money" that is one thing. But offering an online-only product that is homogenized AP or WaPo stuff on a national scale is akin to me saying that if you enjoy the ride in your Jaguar, you love a Kia twice as much!

Name ONE person you know who clips a coupon off a newspaper website. Name ONE person who even goes to any of the places that advertise on a newspaper website. I'm sure the fellow in the Philippines who reads the "compelling" story about the premiere of "American Idol" on the LA Times website is going to go to buy his car at the Chevy dealer in Pismo Beach!

This is the biggest scam since "HDTV is coming next year" in 1985!

Maybe the business and technology will change in a dozen years or more for newspapers, but not if you're still draining reporters and columnists from your staffs and thinking that people will buy your "brand."

Hell, it's better and easier to get real news from any of a dozen sources...magazines, books, newsletters, even HuffPo...than reading the pabulum that passes for a daily newspaper these days.

[Swerinjer2]

Another American institution falling apart. Republicans are suicceeding in destroying our economy along with the government. Republicans should be considered enemy agents. They should be considered subversive elements to our government. they should be considered traitors to america. By definition they are traitors since they want to "make government small enough to strangle in a bathtub".

[ThePeacemakers]

I want to make Banks small enough to drown in a bathtub.

[MrRewrite]

The LAT has been doing a mediocre to poor job of covering L.A. and Southern California for about five to 7 years; they cheer-led the housing boom, failed to covering transportation or the development of metro and metrolink in any meaningful way and seem unable to hold public officials accountable; they're big on low-hanging fruit and institutional news, which has an easy paper trail to follow, and not very interested in getting out in front of issues that require taking a hard look at their previously lackadaisical approach to many issues from pollution, to traffic, to energy. The LAT has no vision, little sense of purpose or mission, and my guess is has a lot of dead-wood on its staff. After years of hoping I could find something in the Times that would make me think reading the NYT or the L.A. Weekly was not as good, I've given up. It's the paper that L.A. deserves, chasing items that it hopes TV will follow, or following items that are big on TV, shallow, quick - a mile wide and an inch deep. Good luck, I read it less and less each month. It's not a well-edited paper, with local business stories that need to be nationalized, and national business stories that need to be localized - and never are. Good riddance.

[RG59U]

I remember it, but they once delivered milk to my RFD parent's house. That era is gone, and Webvan proved the point: physical delivery of commodities doesn't work anymore. A Web-based newspaper with quality writing, good editorials, real journalism, breaking stories, accurate local stories where I can figure out the who-what-when-where in the first paragraph, and not the AP/Reuters/Shared news pool press coverage and same me-to stories, and longer classifieds will make me part with some money for a Web-only version (It also makes it harder for thieves to figure out I am not at home from the pileup of papers: on the doorstep and in the bushes. ) I don't even mind reading a formal-PDF- version with the layouts of the ads embedded like real papers on sheets, so my eye will be forced to catch at least one more Macy's ad, or some lame local-only "miracle machine/drug for what ails me/dust mite removal."

[Barbwire]

I have stuck with the Times through good times and bad. I have been horrifed to see cuts of excellent journalists, tabloid-style ads, the end of the Op-Ed section and the Books section, etc. I love holding the paper (especially for the crossword), but if the Times could go back to the excellent paper it was by going all online, then I guess I could adapt. But if it stays schlocky, then no.

[josephebacon]

Currently, I subscribe to the UK Guardian and Observer online editions. Each day, I can go to their main webpage and download the paper just as it was printed page by page. Saves me from tossing a lot of trash out each day! I may be interested in subscribing to an electronic version of the Los Angeles Times if they went back to the journalistic standards that Otis Chandler held them to before he was forced out.

[jennylens]

I'm 58. born and raised in LA, and grew up reading the LA Times til a few years ago when I could get more news, more local news, more accurate news online and from other publications (often free) that from that piece of trash. LA Times is irrelevant, a waste of paper, ink, transportation costs, etc. I can skim through its online presence in a matter of minutes. It's chi-chi, doesn't represent the city I was born in and love. Its writers aren't from here, don't care about the city nor its inhabitants, do I have to go on? In this day and age of SO MUCH NEWS, why do we need a paper which purports to be "local" when it has a very narrow point of view and clueless writers? If it curled up and died I wouldn't shed a tear.

You are worried about a loss of jobs? Well, everyone go online. Peddle your stories and your ads online. IF you truly know what you are doing, you can target your audience/market much more efficiently. NO WAY should the govt bail out the LA Times! They certainly don't write anything meaningful to most residents.

The LA Times gave up on my city long ago. As much as we need local news, I get far more news online and via emails. Power to the net and I come to bury, not praise the LA Times. Fer sure! And I mean it, man.

[67bug]

I agree with Jenny, it's a waste of paper. Everything is geared towards wealthy yuppies. The Times Magazine and the Home section are a total joke. The Arts section is focused on young hot celebs instead of the real arts....Don't ask me about the Sunday Times!

[Tremonius]

" It's chi-chi, doesn't represent the city I was born in and love. "

A long, long time ago, it seems to me, Photoplay was lambasted because of an article which was superficial and did not render the essence of its subject, much cherished by the angry writer. The subject was Jayne Mansfield.

[Jeff Jarvis - Huffpost Blogger]

There's no need for government subsidy and government subsidy is damned dangerous in any case: fox/henhouse.
Jimbo, no, I'm suggesting that they simply close a lot of the business. People will suffer, yes, but better they do it now and come out with a news organization on the other end than simply liquidate, which would happen in time.

[JimboSlice]

Do revenue from print operations exceed the variable costs of those operations? If so they need to keep the print business going so that they can pay off their creditors. Those printing presses and the buildings that house them were not constructed for free, and those creditors are real people too. You are advocating re-negging on old debts.

If my mortgage is up-side-down should I just walk away from it and look for a new place? Heck no, we live in a society, and to keep that society running there needs to be respect for creditors.

[MouthFountain]

The problem is so many publishers are simply distribution mechanisms, and suffer the same effects. I'm involved with educational publishing. Watch that change in a few years! The bar to compete is both lowered, and with respect to quality demanded, higher.

[research]

Logging, paper making, giants printing presses, fleets of trucks,

For DATA?

Physical Paper Newspapers are a fondly remembered relic of the past.

Your analysis is spot on.