9 Feb 2009 7:00 am   //   Filed under: Media

The biggest myth about newspapers

“Newspapers aren’t in that much trouble. They still have huge profit margins!”

I keep seeing statements to this effect on journalism blogs. Here’s why this is total bunk.

When you or I check our bank statements, we look at how much we’re making and how much we’re spending. Earning more than you spend? Great! But you aren’t a company. A company’s mission is to build value. If a company is worth less in 2009 than it was in 2008 and 2007, and will keep losing value into the foreseeable future, it is failing and something has to change fast. This scenario probably describes every major newspaper company in the United States. When a company is losing value, it doesn’t matter how sweet their margins are. When you’re sinking into the sea, nobody cares how fast your ship can go.

Similarly, there’s an argument that because there is demand for news, the news business will be OK. Half of that is true. People crave news, and in this information-driven society, the demand feels stronger than ever. But at the same time, thanks to the Internet, everyone can draw from a bottomless well of free information. So you have growing demand, but suddenly you also have an unlimited supply. Just because there’s increasing demand for air doesn’t mean you should start an air company.

I am not a fatalist when it comes to newspaper companies. I think the right combination of quality journalism, useful digital platforms, and creative advertising strategies will eventually sustain the business. Until then, we need to call b.s. on the people (especially journalists) who repeat spin and bad information in the interest of optimism.

Previous posts:

Dec. 23, 2008: It’s time to get worried about the Internet
Nov. 23, 2008: Two storylines about the state of journalism
Oct. 31, 2008: Violin players on the Titanic