Best columns: Business
Issue of the week: Time to write newspapers’ obituary?
“Print newspapers are dying faster than you think,” said Timothy B. Lee in Vox.com. That the print industry is in decline will surprise no one, but the latest advertising revenue figures “tell a scary story.” Print ads declined 15 percent during the third quarter at Gannett, the country’s largest newspaper publisher and the owner of USA Today. Meanwhile, print revenues were down 17 percent at McClatchy (which owns The Miami Herald and The Sacramento Bee), 19 percent at The New York Times, and 21 percent at The Wall Street Journal; the last announced it will cut staff and eliminate sections to cope with the losses. Making matters worse: These ad revenues are dropping precipitously even as the overall economy is growing. Advertising has long been “a cyclical business,” and when newspaper revenues plunged during the recession, many in the industry imagined they would recover once the economy improved. That never happened. If newspapers are doing this badly during a recovery, “things will get much, much worse when the next recession hits.”
“Where do newspapers go from here?” asked Derek Thompson in TheAtlantic.com. Ironically, the future of print may be in its distant past. The earliest American newspapers relied on small numbers of subscribers who paid luxury prices for the product. Beginning in the 1830s, media innovators realized they could make more money selling cheap papers to bigger audiences, with the real profit coming from ads. Today, newspapers are once again refocusing on subscribers as a profit center. In 2000, circulation accounted for 26 percent of The New York Times’ revenue. Today, it’s 60 percent, “and growing.” Newspapers will need to experiment radically in order to survive the industry’s downturn, said Jennifer Saba in The New York Times. The trouble is, that’s unlikely to happen at a publicly traded media company. Investors really don’t have the patience to wait for struggling companies like Gannett and Tronc, which publishes the Chicago Tribune and Los Angeles Times, to test new content models and delivery methods. But hope may lie in next-generation media moguls like Amazon founder Jeff Bezos, who bought The Washington Post in 2013. “Many American newspapers would benefit from a steward willing to sacrifice short-term profit for a longer-term vision.”
“What if almost the entire newspaper industry got it wrong?” asked Jack Shafer in Politico.com. Over the past two decades, print papers have struggled mightily to reinvent themselves for the digital age. But a recent study shows that despite huge investments in “digital first” strategies, major newspapers have seen almost zero growth in online readership since 2007, with readers turning instead to news aggregators like Yahoo News and Google News. Digital ad revenue for newspapers increased from $3 billion to only $3.5 billion from 2010 to 2014. Surveys also show that most readers still prefer the print version of their daily newspaper to the web product. It sounds like heresy, but maybe newspapers should focus on what they’re good at—instead of fighting a digital war they can’t possibly win.
Free shipping isn’t really free
“Free shipping is a lie,” said Neal Ungerleider. American consumers have come to expect complimentary shipping for most of their online purchases, but the truth is that somebody still has to pay for all those new shower curtains and Bluetooth speakers to reach front doors. Merchants, feeling the pressure to offer both free deliveries and returns, say there’s now an emerging cost crisis, with the unsustainable expense threatening to put many small- and medium-size retailers out of business. Even mighty Amazon, which pioneered the perk, is beginning to feel the pinch. Amazon typically recovers only about 55 percent of the amount it spends on shipping. But with its expanding Prime service, Amazon’s net shipping costs—the difference between what it pays for deliveries and what customers pay in fees—reached nearly $1.75 billion in the third quarter, the company’s highest total ever outside the peak holiday season. That’s partly why Amazon is accelerating its efforts to build its own shipping infrastructure, “with fleets of cargo planes, tractor-trailers, and, someday, drones.” For smaller retailers, however, the cost of free shipping will either have to be added onto the prices of items or subsidized by investors. “The truth is that, like virtually everything else, ‘free’ shipping is not actually free.”
Silicon Valley’s generational divide
“Tech companies in Silicon Valley are ageist,” said Lucy Kellaway. The median age of workers at Facebook and LinkedIn is 29; for Google, it’s 30. Reports abound of otherwise qualified tech workers in their 40s and 50s buying hoodies, boning up on pop culture, and even injecting Botox “to fit in with their baby-faced colleagues.” But the biggest obstacle to older people getting work in Silicon Valley may be something tech startups are widely praised for: their organizational structure. Tech firms have tossed out old, rigid corporate models in favor of more open, nonhierarchical offices “built around conversation.” At “Hack Nights” across the industry, for instance, employees gather to pitch ideas to colleagues far into the night over beer and pizza. This may appeal to earnest 20-somethings, but “I view an evening like this with unmitigated horror.” I’m simply too old and cynical to believe such “controlled chaos” is productive. I suspect I’m not alone. But inevitably, these organizational ideas will spread beyond Silicon Valley, the same way its infantile office decor has turned even the frumpiest businesses into kindergartens. At least we oldsters can close our eyes to the graffiti walls and the beanbags. But to the philosophy that demands everyone be a true believer, “people in their 40s, let alone in their 50s or 60s, will have nothing to say.”