Why Newspapers Won’t Die

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James Suroweicki, the man that made made the "wisdom of crowds" popular, weighs in on the wisdom-of-crowds-will-kill-old-media debate.

In some sense, the newspaper industry has succumbed to a speculative rush to judgment. People have looked at emerging trends-declining numbers of young newspaper readers, the boom in news and advertising on the Net-and decided that the future is already here. Yet, even in the age of Craigslist, newspapers benefit from the so-called "network effect." Since lots of potential buyers read the classifieds, potential sellers are more likely to list there, which, in turn, makes potential buyers more likely to keep reading. That's why seventeen billion dollars was spent on newspaper classifieds last year. And, while the Net has eroded newspapers' advantage in disseminating news, it has expanded their reach and influence. The Washinton Post, despite its drop in circulation, attracted more than eight million readers to its Web site in February, an increase of nearly three million over the same time last year. Papers may not have figured out how to maximize the monetary potential of this shift, but online advertising already earns them two billion dollars a year.

It's like Laurence mentioned in the comments on my Wisdom of Niches post. Newspapers are going through a painful learning process, but the end will be positive for the ones that survive.

I had coffee with some friends this morning and we were talking about the recent article on Digg in Business 2.0. We discussed how, as the site gets more members, the stuff on the front page gets increasingly worse. There is too much junk to filter through. One friend commented that there needed to be a way to filter through that crap on these types to just get the good stuff, to which I replied "you mean like… having editors?" It was kind of funny, but I guess you had to be there.

  • I think he’s wrong about the classified ads. It’s precisely in this area where the Internet has the most advantages, because of searching and linking capabilities. The critical mass that newspapers had in this market has been squandered: there are now websites focused on specific markets which have achieved critical mass on a nationwide basis.

    I think that very little business intelligence is demonstrated by most newspaper publishers, who seem content to keep doing things as they were always done. Example: why do almost all newspapers list stock prices by exchange, rather than in a consolidated alphabetic list? (Does anyone really say, “well, first I’ll look at all my NASDAQ stocks, then at all my NYSE stocks?) Another example: why are movie theaters usually listed under the corporate name of the chain, rather than by the neighborhood they’re in?

    I don’t think newspapers will disappear, but they will be grievously wounded, and the process has only begun.

  • Rob

    This is one of the areas that I most struggle with because I see the web moving in waves. First there are tons of niche sites and you can never find what you want. Then there is consolidation and everyone loves the “all under one roof model.” Then people get tired of wading through everything under one roof, and the niches start up again. A great example is the domain specific search engines that are popping up.

    So I see classifieds as going from local to national to international, back to local. Will newspapers be able to take advantage of that? I don’t know. It’s like you said, they aren’t known for their business savvy.

  • M

    “I had coffee with some friends this morning and we were talking about the recent article on Digg in Business 2.0. We discussed how, as the site gets more members, the stuff on the front page gets increasingly worse.”

    From my experience, Newsvine is trending in this direction as well.

  • sck

    Thoughts from a member of the so called Gen Y.

    I am the only one of my friends that actually purchases a paper copy of the NYT. I like the feel of the paper. But as I wake up in the morning and go to my computer before I retrieve the paper, I am thinking more and more about canceling my subscription. To me the question is not if newspapers will survive; young people still read news on a daily basis, they just read it online; the question is how to monetize the Internet in such a way that they can continue to provide quality coverage. For this they need a new business model. Not one young person I know actually uses the paper classifieds. It’s either Craigslist or the online edition of the classifieds, which is being replaced by free Craigslist. So will editors and newspapers vanish? I think not. But the paper editions sadly will.

  • Thanks for explaining why Slashdot will always be far better than Digg. Anyone can submit a story, but its group of editors decides which ones to promote.