Thoughts on the current state of the media: Part 1

Being a journalism student this year, after having experienced almost ten years in the workforce, has brought me to some interesting conclusions about the current state of journalism. For those who don't know, the newspaper industry is having a panic attack. Publishers and analysts decry dropping circulations, the cost of investigative reporting, plummeting profit margins (Oh no! Down to 35%!) and, of course, the internet. Today I want to talk about the drop in classified revenue.

For years, your local newspaper controlled the rates of classified advertising and made a substantial profit that subsidized things like cheap newsstand prices. For the first six or seven years that the internet was popular, newspapers maintained this dominance. But as people developed online classified systems that cost less for sellers and buyers, for instance monster.com for jobs, newspapers' classified share began to erode.

At first, things like monster.com weren't too much of a threat because they were still profit-based and usually charged for services. But when craigslist.org started to gain popularity on the mostly-free model, (that has really been the model of the internet age after all), newspapers didn't react.

The fact is, the consolidation of the industry under very few owners and their obsession with profit margins, made it impossible for the industry to react creatively. Newspaper owners were making money hand over fist. They didn't want to lose that. They already had dominance in the local classifieds, had they switched to a less costly model, say, even a dollar an ad, or god-forbid, free, they would have been able to beat off any threat from craigslist, instead they stuck to their old models, and slowly became obsolete.

Now publishers accuse craigslist of killing the newspaper industry in order to justify huge cuts in newsroom staff and talent. Jon Stewart recently brought this issue up in an interview with craigslist founder, Craig Newmark. His response:

"An even bigger threat is the pressure from Wall Street to get like 10 or 20 percent profit margins. Maybe papers should focus on better Web sites, delivering the news better through the Net."

Essentially, newspapers are sticking to that old logic. They cut quality, pander to the lowest common denominators and most simplistic ideologies, with the result being that they're no longer fulfilling the public need for critical, investigative, journalism. And they're surprised when the public starts to act like they're not relevant. Because of corporate consolidation, (thanks Clinton circa 1996), everything is lowered to the logic of profit margins, thus the industry doesn't have the flexibility to react when threatened by new technology or changing situations.

Craigslist isn't killing newspapers; newspapers' greed is killing newspapers.